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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 SEPTEMBERJUNE 30, 20172020

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.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, Colorado80127
(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: 720-981-4588720-981-4588

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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                      Accelerated filer                Non-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 25, 2017,July 31, 2020, there were 146,009,205160,478,059shares 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


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 of this documentbelow 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 controlled, steady-statesafe, reduced-level production operations at Lost Creek,Creek; (ii) the outcome of our production projections for 2020; (iii) the impacts of COVID-19 (Coronavirus) on our business, operations, and determinationsfinancial liquidity, and the impacts of future developmentthe pandemic directly and construction priorities; (ii) anticipated production of Lost Creek for 2017 and timing for bringingindirectly on the additional header houses in Mine Unit 2; (iii)uranium market; (iv) the timing and outcome of permitting and regulatory approvals of the amendment for uranium recovery at the LC East and the KM horizon; (iv)Project; (v) the ability to complete additional favorable uranium sales agreements including spot sales if the market warrants and production inventory is available; (v)as may be advantageous to the potential of our exploration and development projects, including Shirley Basin;Company; (vi) the timing and outcome of applications for regulatory approval to build and operate an in situ recovery mine at Shirley Basin; (vii) the outcome of our forecasts and production projections; and (viii) resolution of the continuing challenges within the uranium market, including supply and demand projections.projections; (viii) the timing and impact of implementation of recommendations made by the United States Nuclear Fuel Working Group for the revival and expansion of domestic nuclear fuel production; (ix) the outcome of ongoing efforts to extend the restrictions imposed by the Russian Suspension Agreement or to otherwise safeguard the U.S. from renewed dumping of Russian uranium products into our markets; (x) whether cost-savings measures which have been and will be implemented will be sufficient to support our operations; (xi) the level of loan forgiveness to be obtained for our loans under the SBA Paycheck Protection Program; and (xii) the ability and timing to ramp up when market conditions warrant, as well as the costs and level of dilution in doing so. 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,production; capital expenditures,expenditures; operating costs,costs; mineral resources, grade estimates and recovery rates, grades andrates; 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 United States;U.S.; risks associated with current variable economic conditions; challenges presented by current inventories and largely unrestricted imports of uranium products into the U.S.; 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;production operations; compliance with environmental laws and regulations; wastewater management; uncertainty regarding the pricing and collection of accounts; 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; adverse changes in general business conditions in any of the countries in which we do business; changes in size and structure; the effectiveness of management and our strategic relationships; ability to attract and retain key personnel;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 United States;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"

1

Table of Contents

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 March 3, 2017.February 28, 2020.

1


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. NI 43-101 permits the reporting of an historical estimate made prior to the adoption of NI 43-101 that does not comply with NI 43-101 to be disclosed using the historical terminology if the disclosure: (a) identifies the source and date of the historical estimate; (b) comments on the relevance and reliability of the historical estimate; (c) to the extent known, provides the key assumptions, parameters and methods used to prepare the historical estimate; (d) states whether the historical estimate uses categories other than those prescribed by NI 43-101; and (e) includes any more recent estimates or data available.

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-K10-Q may not be comparable to similar information disclosed by U.S. companies. In particular, the term “resource” does not equate to the term “‘reserves.“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.U.S. standards.

NI 43-101 Review of Technical Information: James A. Bonner, Michael Mellin, Ur-Energy Vice President Geology,/ Lost Creek Mine Geologist, P.Geo. and Qualified Person as defined by NI 43-101, reviewed and approved the technical information contained in this Form 10-Q.

2


PART I

Item 1. FINANCIAL STATEMENTSSTATEMENTS

Ur-Energy Inc.

Unaudited Interim Consolidated Balance Sheets

(expressed in thousands of U.S. dollars)

June 30,

December 31,

2020

2019

Assets

Current assets

Cash and cash equivalents (note 4)

5,567

7,752

Accounts receivable

7

22

Inventory (note 5)

7,485

-

Prepaid expenses

969

885

14,028

8,659

Inventory (note 5)

-

7,426

Restricted cash (note 6)

7,463

7,463

Mineral properties (note 7)

41,958

43,212

Capital assets (note 8)

22,812

23,630

72,233

81,731

86,261

90,390

Liabilities and shareholders' equity

Current liabilities

Accounts payable and accrued liabilities (note 9)

2,255

2,211

Current portion of long term debt (note 10)

1,683

-

Environmental remediation accrual

75

72

4,013

2,283

Notes payable (note 10)

11,460

12,215

Lease liability

70

12

Asset retirement obligations (note 11)

31,260

30,972

Other liabilities - warrants (note 12)

498

575

43,288

43,774

47,301

46,057

Shareholders' equity (note 13)

Share Capital

Class A preferred shares, without par value, unlimited shares authorized; 0 shares issued and outstanding

-

-

Common shares, without par value, unlimited shares authorized; shares issued and outstanding: 160,478,059 at June 30, 2020 and 160,478,059 at December 31, 2019

185,754

185,754

Contributed surplus

20,781

20,317

Accumulated other comprehensive income

3,685

3,654

Deficit

(171,260)

(165,392)

38,960

44,333

86,261

90,390

 

 

 

 

 

September 30,

 

December 31,

 

2017

 

2016

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents (note 3)

2,146

 

1,552

Accounts receivable (note 4)

7,897

 

16

Inventory (note 5)

1,720

 

4,109

Prepaid expenses

812

 

829

 

12,575

 

6,506

Restricted cash (note 6)

7,557

 

7,557

Mineral properties (note 7)

45,271

 

47,029

Capital assets (note 8)

27,428

 

28,848

 

80,256

 

83,434

 

92,831

 

89,940

Liabilities and shareholders' equity

 

 

 

Current liabilities

 

 

 

Accounts payable and accrued liabilities (note 9)

3,391

 

3,625

Current portion of notes payable (note 10)

4,704

 

4,502

Environmental remediation accrual

79

 

85

 

8,174

 

8,212

Notes payable (note 10)

15,881

 

19,435

Asset retirement obligations (note 11)

26,910

 

26,061

 

50,965

 

53,708

Shareholders' equity (note 12)

 

 

 

Share Capital

 

 

 

Class A preferred shares, without par value, unlimited shares authorized; no shares issued and outstanding

 -

 

 -

Common shares, without par value, unlimited shares authorized; shares issued and outstanding: 146,009,205 at September 30, 2017, 2017 and 143,676,384 at December 31, 2016

176,653

 

174,902

Warrants

4,109

 

4,109

Contributed surplus

15,516

 

15,201

Accumulated other comprehensive income

3,670

 

3,604

Deficit

(158,082)

 

(161,584)

 

41,866

 

36,232

 

92,831

 

89,940

The accompanying notes are an integral part of these interim consolidated financial statements.

Approved by the Board of Directors

/s/ Jeffrey T. Klenda, Chairman of the Board/s/ Thomas Parker, Director

3


Ur-Energy Inc.

Unaudited Interim Consolidated Statements of Operations and Comprehensive Loss

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

 

 

 

 

 

 

 

 

 

Three months ended  September 30,

 

Nine months ended September 30,

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

Sales (note 13)

11,693

 

12,068

 

38,342

 

21,529

Cost of sales

(11,157)

 

(5,818)

 

(24,025)

 

(12,767)

Gross profit

536

 

6,250

 

14,317

 

8,762

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Exploration and evaluation

(560)

 

(828)

 

(2,162)

 

(2,370)

Development

(1,454)

 

(1,108)

 

(3,499)

 

(2,384)

General and administrative

(1,070)

 

(972)

 

(3,748)

 

(3,796)

Accretion of asset retirement obligations (note 11)

(135)

 

(134)

 

(401)

 

(399)

Write-off of mineral properties (note 7)

 -

 

 -

 

 -

 

(62)

Income (loss) from operations

(2,683)

 

3,208

 

4,507

 

(249)

Interest expense (net)

(332)

 

(474)

 

(1,063)

 

(1,543)

Warrant mark to market adjustment

 -

 

 5

 

 -

 

36

Loss on equity investment

(5)

 

(3)

 

(5)

 

(5)

Write-off of equity investments

 -

 

(900)

 

 -

 

(1,089)

Foreign exchange loss

(40)

 

(6)

 

(57)

 

(279)

Other income (expense)

57

 

(27)

 

120

 

15

Net income (loss) for the period

(3,003)

 

1,803

 

3,502

 

(3,114)

 

 

 

 

 

 

 

 

Income (loss) per common share

 

 

 

 

 

 

 

Basic

(0.02)

 

0.01

 

0.02

 

(0.02)

Diluted

(0.02)

 

0.01

 

0.02

 

(0.02)

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

Basic

145,918,020

 

143,605,552

 

145,707,532

 

141,324,039

Diluted

145,918,020

 

144,258,513

 

146,617,488

 

141,324,039

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

Net income (loss) for the period

(3,003)

 

1,803

 

3,502

 

(3,114)

Other Comprehensive income (loss), net of tax

 

 

 

 

 

 

 

Translation adjustment on foreign operations

48

 

 2

 

66

 

251

Comprehensive income (loss) for the period

(2,955)

 

1,805

 

3,568

 

(2,863)

Three months ended June 30,

Six months ended June 30,

2020

2019

2020

2019

Sales (note 14)

6,934

11,479

8,304

16,291

Cost of sales

(6,517)

(11,163)

(9,622)

(16,309)

Gross profit (loss)

417

316

(1,318)

(18)

Operating Expenses

Exploration and evaluation

(554)

(490)

(945)

(1,264)

Development

(343)

(292)

(616)

(458)

General and administrative

(1,187)

(1,153)

(2,440)

(3,291)

Accretion of asset retirement obligations (note 11)

(143)

(144)

(288)

(287)

Loss from operations

(1,810)

(1,763)

(5,607)

(5,318)

Net interest expense

(195)

(168)

(327)

(364)

Warrant mark to market adjustment

(231)

(105)

42

(638)

Foreign exchange gain (loss)

(8)

(10)

7

(28)

Other income

17

15

17

15

Net loss for the period

(2,227)

(2,031)

(5,868)

(6,333)

Loss per common share

Basic and diluted

(0.01)

(0.01)

(0.04)

(0.04)

Weighted average number of common shares outstanding

Basic and diluted

160,478,059

159,820,583

160,478,059

159,775,245

COMPREHENSIVE LOSS

Net loss for the period

(2,227)

(2,031)

(5,868)

(6,333)

Other Comprehensive loss, net of tax

Translation adjustment on foreign operations

4

(24)

31

(23)

Comprehensive loss for the period

(2,223)

(2,055)

(5,837)

(6,356)

The accompanying notes are an integral part of these interim consolidated financial statements.

4


Ur-Energy Inc.

Unaudited Interim Consolidated Statement of Shareholders’ Equity

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Capital Stock

 

 

 

Contributed

 

Comprehensive

 

 

 

Shareholders'

 

Shares

 

Amount

 

Warrants

 

Surplus

 

Income

 

Deficit

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

#

 

$

 

$

 

$

 

$

 

$

 

$

Balance, December 31, 2016

143,676,384

 

174,902

 

4,109

 

15,201

 

3,604

 

(161,584)

 

36,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

549,952

 

518

 

 -

 

(169)

 

 -

 

 -

 

349

Common shares issued for cash, net

 

 

 

 

 

 

 

 

 

 

 

 

 

  of $88 of issue costs

1,536,169

 

1,081

 

 -

 

 -

 

 -

 

 -

 

1,081

Redemption of vested RSUs

246,700

 

152

 

 -

 

(221)

 

 -

 

 -

 

(69)

Non-cash stock compensation

 -

 

 -

 

 -

 

705

 

 -

 

 -

 

705

Net income (loss) and comprehensive income (loss)

 -

 

 -

 

 -

 

 -

 

66

 

3,502

 

3,568

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2017

146,009,205

 

176,653

 

4,109

 

15,516

 

3,670

 

(158,082)

 

41,866

Accumulated

Other

Capital Stock

Contributed

Comprehensive

Shareholders'

Shares

Amount

Surplus

Income

Deficit

Equity

#

$

$

$

$

$

Balance, December 31, 2018

159,729,403

185,221

19,930

3,670

(156,974)

51,847

Redemption of vested RSUs

-

-

(6)

-

-

(6)

Non-cash stock compensation

-

-

188

-

-

188

Net loss and comprehensive loss

-

-

-

1

(4,302)

(4,301)

Balance, March 31, 2019

159,729,403

185,221

20,112

3,671

(161,276)

47,728

Exercise of stock options

206,160

190

(56)

-

-

134

Redemption of vested RSUs

-

-

(1)

-

-

(1)

Non-cash stock compensation

-

-

182

182

Net loss and comprehensive loss

-

-

-

(24)

(2,031)

(2,055)

Balance, June 30, 2019

159,935,563

185,411

20,237

3,647

(163,307)

45,988

Balance, December 31, 2019

160,478,059

185,754

20,317

3,654

(165,392)

44,333

Non-cash stock compensation

-

-

234

-

-

234

Net loss and comprehensive loss

-

-

-

27

(3,641)

(3,614)

Balance, March 31, 2020

160,478,059

185,754

20,551

3,681

(169,033)

40,953

Non-cash stock compensation

-

-

230

-

-

230

Net loss and comprehensive loss

-

-

-

4

(2,227)

(2,223)

Balance, June 30, 2020

160,478,059

185,754

20,781

3,685

(171,260)

38,960

The accompanying notes are an integral part of these interim consolidated financial statements.

5


Ur-Energy Inc.

Unaudited Interim Consolidated Statements of Cash Flow

(expressed in thousands of U.S. dollars)

Six months ended June 30,

2020

2019

Cash provided by

Operating activities

Net loss for the period

(5,868)

(6,333)

Items not affecting cash:

Stock based expense

464

370

Loss from net realizable value adjustments

4,456

4,103

Depreciation and amortization

2,164

2,201

Accretion of asset retirement obligations and reclamation

288

287

Amortization of deferred loan costs

35

60

Warrants mark to market gain (loss)

(42)

638

Gain on disposition of assets

(16)

-

Gain on foreign exchange

(7)

(28)

Other loss (gain)

3

(2)

Change in non-cash working capital items:

Accounts receivable

14

4

Inventory

(4,515)

1,462

Prepaid expenses

(67)

(174)

Accounts payable and accrued liabilities

36

76

(3,055)

2,664

Investing activities

Mineral property costs

-

(8)

Increase in other deposits

(5)

-

Proceeds from sale of property and equipment

18

-

Purchase of capital assets

(34)

(125)

(21)

(133)

Financing activities

Proceeds from exercise of stock options

-

134

RSUs redeemed to pay withholding or paid in cash

-

(7)

Proceeds from debt financing

893

-

Repayment of debt

-

(2,555)

893

(2,428)

Effects of foreign exchange rate changes on cash

(2)

64

Net change in cash, cash equivalents and restricted cash

(2,185)

167

Beginning cash, cash equivalents and restricted cash

15,215

13,830

Ending cash, cash equivalents and restricted cash (note 15)

13,030

13,997

 

 

 

 

 

Nine months ended September 30,

 

2017

 

2016

 

 

 

(Restated -
note 2)

Cash provided by (used in)

 

 

 

Operating activities

 

 

 

Net income (loss) for the period

3,502

 

(3,114)

Items not affecting cash:

 

 

 

Stock based expense

705

 

603

Depreciation and amortization

3,810

 

3,852

Accretion of asset retirement obligations

401

 

399

Amortization of deferred loan costs

91

 

114

Provision for reclamation

(6)

 

(1)

Write off of equity investments

 -

 

1,089

Write-off of mineral properties

 -

 

62

Warrants mark to market gain

 -

 

(36)

Gain on disposition of assets

 -

 

(14)

Loss on foreign exchange

59

 

281

Recognition of gain on deferred contract

 -

 

(2,588)

Other loss

 5

 

 5

RSUs redeemed to pay withholding or paid in cash

(68)

 

(9)

Proceeds from assignment of sales contract

 -

 

5,085

Change in non-cash working capital items:

 

 

 

Accounts receivable

(7,881)

 

(3,289)

Inventory

2,389

 

(60)

Prepaid expenses

120

 

(86)

Accounts payable and accrued liabilities

(361)

 

273

 

2,766

 

2,566

 

 

 

 

Investing activities

 

 

 

Mineral property costs

(10)

 

 -

Funding of equity investment

(5)

 

(5)

Proceeds from sale of property and equipment

 -

 

91

Purchase of capital assets

(173)

 

(281)

 

(188)

 

(195)

 

 

 

 

Financing activities

 

 

 

Issuance of common shares for cash

1,169

 

6,568

Share issue costs

(60)

 

(880)

Proceeds from exercise of stock options

349

 

 9

Repayment of debt

(3,443)

 

(6,486)

 

(1,985)

 

(789)

 

 

 

 

Effects of foreign exchange rate changes on cash

 1

 

(64)

 

 

 

 

Net change in cash, cash equivalents and restricted cash

594

 

1,518

Beginning cash, cash equivalents and restricted cash

9,109

 

9,000

Ending cash, cash equivalents and restricted cash (note 14)

9,703

 

10,518

The accompanying notes are an integral part of these interim consolidated financial statements.

6


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 20172020

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

1.

Nature of Operations

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 was continued under the Canada Business Corporations Act on August 8, 2006. Headquartered in Littleton, Colorado, the Company is an exploration stage mining company, as defined by U.S. Securities and Exchange Commission (“SEC”) Industry Guide 7. The Company is engaged in uranium mining and recovery operations, with activities including the acquisition, exploration, development and production of uranium mineral resources located in Wyoming. As ofIn August 2013, the Company commenced uranium production at its Lost Creek Project in Wyoming.

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 containproperty contains mineral reserves. However, the Company’s “AmendedPreliminary 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.

Liquidity Risk

2.SummaryOur operations are based on a small number of Significant Accounting Policieslarge sales.  As a result, our cash flow and therefore our current assets and working capital may vary widely during the year based on the timing of those sales.  Virtually all our past sales were under term contracts which specify delivery quantities, sales prices and payment dates. As a result, we performed cash management functions over the course of an entire year and were less reliant on current commodity prices and market conditions. As our remaining term contracts were completed in 2020 Q2, we have become more dependent on current commodity prices until we are able to enter into new term contracts.

As at June 30, 2020, the Company’s financial liabilities consisted of trade accounts payable and accrued trade and payroll liabilities of $0.7 million which are due within normal trade terms of generally 30 to 60 days, notes payable of $13.3 million, and asset retirement obligations with estimated settlement dates until 2033.

The payment schedule for the $12.4 million State Bond Loan was modified on October 1, 2019 to defer principal payments for eighteen months (see note 10). As at July 31, 2020, quarterly principal payments are scheduled to resume on April 1, 2021, with 2 payments falling due within the 12 months from the as at date.

On April 16, 2020, we received $0.9 million under the U.S. Small Business Administration (“SBA”) Payroll Protection Program (“PPP”), which was created under the Coronavirus Aid, Relief and Economic Security

7

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2020

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

Act (the “CARES Act”). We anticipate the loans will meet the requirements for forgiveness under this program (see note 10).

On July 31, 2020, the Company announced 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 estimated fees and expenses of approximately $0.4 million, net proceeds to the Company are expected to be $4.3 million, which are expected to be received on or about August 4, 2020. See note 17 – Subsequent Event for discussion of the offering.

In addition to our cash position and expected registered direct offering net proceeds, our finished, ready-to-sell, conversion facility inventory is immediately realizable, if necessary. While our current cash position should be sufficient to cover our expected expenditures for the remainder of the year, we anticipate selling a significant portion of our existing finished-product inventory in 2021 at market prices in effect at that time, unless market conditions change, or we choose to obtain additional financing.

3.

Summary of Significant Accounting Policies

Basis of presentation

These unaudited interim consolidated financial statements do not conform in all respects to the requirements of United StatesU.S. generally accepted accounting principles (“US GAAP”) for annual financial statements. The unaudited interim consolidated financial statements reflect all normal adjustments which in the opinion of management are necessary for a fair statementpresentation of the results for the periods presented. These unaudited interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2016.2019. We apply the same accounting policies as in the prior year. The year-end balance sheet data were derived from the audited financial statements and certain information and footnote disclosures required by US GAAP have been condensed or omitted.

Earnings and loss per share calculations

Diluted earnings per common share are calculated by including all options which are in-the-money based on the average stock price for the period as well as RSUs which were outstanding at the end of the quarter. The treasury stock method was applied to determine the dilutive number of options.  Warrants are included only if the exercise price is less than the average stock price for the quarter. In periods of loss, 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.

7


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2017

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

New accounting pronouncements which may affect future reporting

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606).” The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606, Revenue from Contracts with Customers.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of the promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Early application is not permitted.  We have reviewed our contracts as well as our procedures and do not anticipate any changes in the manner or timing with which we reflect our revenues.

In January 2016, the FASB issued ASU 2016-1, Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825). The amendments in this ASU supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be remeasured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. The amendments improve financial reporting by providing relevant information about an entity’s equity investments and reducing the number of items that are recognized in other comprehensive income. This guidance is effective for annual reporting beginning after December 15, 2017, including interim periods within the year of adoption, and calls for prospective application, with early application permitted. Accordingly, the standard is effective for us beginning in the first quarter of fiscal 2018. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize all leases, including operating leases, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted.  Now, the only leases we hold are for vehicles, equipment, and office space in one location.  The office lease is the only one which will be in effect as of the date of implementation of the standard.  We have gathered the necessary information for proper disclosure of that lease once the ASU is effective.  We will continue to monitor any new leases to ensure that we have all the information necessary to handle the transition to the new standard and properly report the transactions.  We do not anticipate the new standard will affect our net income materially, but will result in additional fixed assets and the related lease liabilities. 

8


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2017

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

New accounting pronouncements which were implemented this year

In July 2015, the FASB issued ASU No. 2015-11,Inventory (Topic 330): Simplifying the Measurement of Inventory.  ASU 2015-11 requires that inventory within the scope of this ASU be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments apply to all inventory, measured using average cost which is how the Company measures inventory. For all entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. This is consistent with our past policies and had no financial or reporting impact when implemented during the first quarter.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation - Improvements to Employee Share-Based Payment Accounting (Topic 718), which involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  Under the new standard, income tax benefits and deficiencies are to be recognized as income tax expense or benefit in the income statement and the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period.  Excess tax benefits should be classified along with other income tax cash flows as an operating activity.  Regarding forfeitures, the entity may make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. This ASU is effective for fiscal years beginning after December 15, 2016 including interim periods within that reporting period.  We currently recognize no income tax expense or benefit due to significant income tax credits and net operating losses which are fully reserved under a valuation allowance.  There was therefore no effect on our accounting or reporting at the time of implementation earlier this year.  We have made the election to continue to recognize losses from forfeitures at inception rather than when they vest or occur.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows – Restricted Cash a consensus of the FASB Emerging Task Force (Topic 230), which addresses the presentation of restricted cash in the statement of cash flows.  Under the new standard, restricted cash will be presented with cash and cash equivalents in the statement of cash flows instead of being reflected as non-cash investing or financing activities.  A reconciliation of the make-up of the ending cash, cash equivalent and restricted cash balance will be required for entities who reflect restricted cash as separate items on the statement of financial position.  In addition, a description of the restrictions on the cash will be required.  This ASU is effective for fiscal years beginning after December 15, 2017 including interim periods within that reporting period, however early adoption is permitted.  We elected to adopt this standard as of the first quarter.  Accordingly, the cash balances reflected in the Statement of Cash Flows have been increased by $7.6 million which has been the restricted cash balance since December 31, 2015.  In addition, we have added note 14 – Supplemental Information to the Statement of Cash Flows which reconciles the cash balances shown on the Statement of Cash Flows with the appropriate balances on the Balance Sheet.

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Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2017

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

3.Cash and Cash Equivalents

4.

Cash and Cash Equivalents

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

 

 

 

As at

September 30, 2017

 

December 31, 2016

$

 

$

As at

June 30, 2020

December 31, 2019

$

$

Cash on deposit at banks

1,704

 

580

1,518

1,755

Money market funds

442

 

972

4,049

5,997

 

 

 

2,146

 

1,552

5,567

7,752

4.Accounts Receivable

The Company’s accounts receivable consist of the following:

 

 

 

 

 

As at

 

September 30, 2017

 

December 31, 2016

 

$

 

$

Trade accounts receivable

 

 

 

Company A

7,821

 

 -

Other Companies

64

 

 9

Total trade receivables

7,885

 

 9

Other receivables

12

 

 7

 

 

 

 

Total accounts receivable

7,897

 

16

The names of the individual companies have not been disclosed for reasons of confidentiality.

5.  Inventory

The Company’s inventory consists of the following:

 

 

 

 

 

As at

 

September 30, 2017

 

December 31, 2016

 

$

 

$

In-process inventory

221

 

897

Plant inventory

824

 

461

Conversion facility inventory

675

 

2,751

 

 

 

 

 

1,720

 

4,109

108


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 20172020

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

5. Inventory

The Company’s inventory consists of the following:

As at

June 30, 2020

December 31, 2019

$

$

In-process inventory

-

-

Plant inventory

138

-

Conversion facility inventory

7,347

7,426

7,485

7,426

Inventory to be sold within 12 months

7,485

-

Total Inventory

-

7,426

In conjunction with our lower of cost or net realizable value (“NRV”) calculations, the Company reduced the inventory valuation by $1,326$4,456 and $10,263 for the quarter and $2,219 for the ninesix months ended SeptemberJune 30, 2017.2020 and year ended December 31, 2019, respectively.

6.Restricted Cash

The Company’s restricted cash consists of the following:money market accounts and short-term government bonds.

 

 

 

 

 

As at

 

September 30, 2017

 

December 31, 2016

 

$

 

$

 

 

 

 

Money market account

7,457

 

7,457

Certificates of deposit

100

 

100

 

 

 

 

 

7,557

 

7,557

The bonding requirements for reclamation obligations on various properties have been agreed to by the Wyoming Department of Environmental Quality (“WDEQ”), the Wyoming Uranium Recovery Program (“URP”) and the Bureau of Land Management (“BLM”) and the Nuclear Regulatory Commission (“NRC”) as applicable.  The restricted money market accounts are pledged as collateral against performance surety bonds which are used to secure the potential costs of reclamation related to those properties. Surety bonds providing $27.1$29.9 million of coverage towards specific reclamation obligations are collateralized by $7.5 million of the restricted cash at SeptemberJune 30, 2017.2020.

7Mineral Properties

The Company’s mineral properties consist of the following:

 

 

 

 

 

 

 

 

 

Lost Creek

 

Pathfinder

 

Other US

 

 

 

Property

 

Mines

 

Properties

 

Total

 

$

 

$

 

$

 

$

Balance, December 31, 2016

14,016

 

19,866

 

13,147

 

47,029

 

 

 

 

 

 

 

 

Acquisition costs

 -

 

 -

 

10

 

10

Change in estimated reclamation costs (note 11)

613

 

(165)

 

 -

 

448

Amortization

(2,216)

 

 -

 

 -

 

(2,216)

 

 

 

 

 

 

 

 

Balance, September 30, 2017

12,413

 

19,701

 

13,157

 

45,271

119


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 20172020

(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.

Property

Mines

Properties

Total

$

$

$

$

Balance, December 31, 2019

10,184

19,850

13,178

43,212

Amortization

(1,254)

-

-

(1,254)

Balance, June 30, 2020

8,930

19,850

13,178

41,958

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 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. Other royalties exist on certain mining claims at the LC South, LC East and EN Projects. Currently, 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 December 2013. Under the terms of the SPA, the Company purchased Pathfinder Mines Corporation (“Pathfinder”) to acquire additional mineral properties. 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, a 5% production royalty under certain circumstances and the assumption of $5.7 million in estimated asset reclamation obligations and other consideration. At June 30, 2016, the royalty expired and was terminated.

8.Capital Assets

The Company’s capital assets consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

September 30, 2017

 

December 31, 2016

 

 

 

Accumulated

 

Net Book

 

 

 

Accumulated

 

Net Book

 

Cost

 

Depreciation

 

Value

 

Cost

 

Depreciation

 

Value

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Rolling stock

3,420

 

3,195

 

225

 

3,251

 

2,966

 

285

Enclosures

32,991

 

6,467

 

26,524

 

32,991

 

5,229

 

27,762

Machinery and equipment

1,262

 

669

 

593

 

1,262

 

599

 

663

Furniture, fixtures and leasehold improvements

119

 

103

 

16

 

119

 

98

 

21

Information technology

1,157

 

1,087

 

70

 

1,153

 

1,036

 

117

 

 

 

 

 

 

 

 

 

 

 

 

 

38,949

 

11,521

 

27,428

 

38,776

 

9,928

 

28,848

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Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 20172020

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

8.

Capital Assets

9.Accounts Payable and Accrued LiabilitiesThe Company’s capital assets consist of the following:

As of

As of

June 30, 2020

December 31, 2019

Accumulated

Net Book

Accumulated

Net Book

Cost

Depreciation

Value

Cost

Depreciation

Value

$

$

$

$

$

$

Rolling stock

3,450

3,340

110

3,452

3,311

141

Enclosures

33,008

11,008

22,000

33,008

10,181

22,827

Machinery and equipment

1,439

847

592

1,426

808

618

Furniture, fixtures and leasehold improvements

119

117

2

119

115

4

Information technology

1,123

1,085

38

1,100

1,072

28

ROU Assets

92

22

70

83

71

12

39,231

16,419

22,812

39,188

15,558

23,630

 

9.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:

 

 

 

 

 

 

As at

September 30, 2017

 

December 31, 2016

$

 

$

As at

June 30, 2020

December 31, 2019

$

$

Accounts payable

862

 

725

598

523

Payroll and other taxes

1,563

1,483

Severance and ad valorem tax payable

1,328

 

1,649

94

205

Payroll and other taxes

1,201

 

1,251

 

 

 

3,391

 

3,625

2,255

2,211

10.

Notes Payable

10.Notes Payable

On October 15, 2013, the Sweetwater County Commissioners approved the issuance of a $34.0$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 is payablewas to be paid in 28 quarterly installments commencing January 1, 2015 and continuing through2015.  

11

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2020

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

On October 1, 2021.2019, the Sweetwater County Commissioners and the State of Wyoming approved a six-quarter deferral of principal payments beginning October 1, 2019. The next principal payment is therefore due April 1, 2021 and the last payment will be due in April 2023.

On April 16, 2020, we obtained 2 SBA PPP loans (one for each of our subsidiaries with U.S. payroll obligations) through 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 we qualified for and received 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, 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. To have the full amount of the loans forgiven, the following requirements must be met within that period, and be sufficiently documented in the application for forgiveness:

(1)Spend not less than 60% (previously 75%) of loan proceeds on eligible payroll costs.
(2)Spend the remaining loan proceeds on
a.additional eligible payroll costs above 60%;
b.payments of interest on mortgage obligations incurred before February 15, 2020;
c.rent payments on leases dated before February 15, 2020; and/or
d.utility payments under service agreements dated before February 15, 2020
(3)Maintain employee compensation levels (subject to specific program requirements).

For any portion of the loans that are not forgiven, the program provides 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). Any remaining amount owing on the loans has a two-year maturity (April 16, 2022), unless renegotiated with the lender for up to a five-year term, with an interest rate of one percent per annum. We anticipate the loans will meet the requirements for forgiveness under this program, but at this time we have not yet applied for or received loan forgiveness and therefore have treated the PPP loans as debt.

Deferred loan fees include legal fees, commissions, commitment fees and other costs associated with obtaining the various financings. Those fees amortizable within 12 months of September 30, 2017 are considered current.financing.

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 20172020

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

The following table lists the current (within 12 months) and long term portion ofsummarizes the Company’s debt instrument:instrument.

As at

June 30, 2020

December 31, 2019

$

$

Current debt

SBA - Payroll Protection Program Loan

395

-

State Bond Loan

1,305

-

Less deferred financing costs

(17)

-

1,683

-

Long term debt

SBA - Payroll Protection Program Loan

498

-

State Bond Loan

11,136

12,441

Less deferred financing costs

(174)

(226)

11,460

12,215

 

 

 

 

 

As at

 

September 30, 2017

 

December 31, 2016

 

$

 

$

Current debt

 

 

 

Sweetwater County Loan

4,826

 

4,623

Less deferred financing costs

(122)

 

(121)

 

4,704

 

4,502

 

 

 

 

Long term debt

 

 

 

Sweetwater County Loan

16,245

 

19,891

Less deferred financing costs

(364)

 

(456)

 

15,881

 

19,435

ScheduleThe schedule of remaining payments on outstanding debt as of SeptemberJune 30, 2017:2020 is presented below.

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

Total

 

2017

 

2018

 

2019

 

2020

 

2021

 

Maturity

$

 

$

 

$

 

$

 

$

 

$

 

 

Sweetwater County Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

2020

2021

2022

2023

Final payment

$

$

$

$

$

SBA - Payroll Protection Program Loan

Principal

21,071

 

1,180

 

4,895

 

5,183

 

5,487

 

4,326

 

01-Oct-21

893

98

596

199

-

16-Apr-22

Interest

2,666

 

303

 

1,039

 

752

 

447

 

125

 

 

14

9

5

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

State Bond Loan

Principal

12,441

-

3,971

5,566

2,904

01-Apr-23

Interest

1,269

179

659

368

63

Total

23,737

 

1,483

 

5,934

 

5,935

 

5,934

 

4,451

 

 

14,617

286

5,231

6,133

2,967

11.Asset Retirement and Reclamation Obligations

11.

Asset Retirement and Reclamation Obligations

Asset retirement obligations ("ARO") relate to the Lost Creek mine and Pathfinder projects and are equal to the present value of all estimated future costs required to remediate any environmental disturbances that exist as of the end of the period discounted at a risk-free rate.using discount rates ranging from 0.33% to 7.25%. Included in this liability are the costs of closure, reclamation, demolition and stabilization of the mines, processing plants, infrastructure, aquifer restoration, waste dumps and ongoing post-closure environmental monitoring and maintenance costs.

At SeptemberJune 30, 2017,2020, the total undiscounted amount ofcurrent closure estimate was $29.8 million and the estimated future cash needs was estimatedcost to be $26.9complete the reclamation, including inflation, is $39.9 million.  The schedule of payments required to settle the ARO liability extends through 2033.future

The restricted cash as discussed in note 6 is related to the surety bonds which provide security to the governmental agencies on these obligations.

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 20172020

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

 

 

 

 

 

For the period ended

 

September 30, 2017

 

December 31, 2016

 

 

 

 

 

$

 

$

Beginning of period

26,061

 

26,061

Change in estimated liability

448

 

(534)

Accretion expense

401

 

534

 

 

 

 

End of period

26,910

 

26,061

reclamation extends through 2033. The present value of the estimated future closure estimate is presented in the following table.

For the period ended

June 30, 2020

December 31, 2019

$

$

Beginning of period

30,972

30,384

Change in estimated liability

-

11

Accretion expense

288

577

End of period

31,260

30,972

The restricted cash discussed in note 6 is related to the surety bonds that provide security to the governmental agencies on these obligations.

12.

Other Liabilities

As a part of the September 2018 public offering, we sold 13,062,878 warrants priced at $0.01 per warrant. NaN warrants are redeemable for one Common Share of the Company’s stock at a price of $1.00 per full share. As the warrants are priced in US$ and the functional currency of Ur-Energy Inc. is Cdn$, this created a derivative financial liability. The liability created and adjusted quarterly is a calculated fair value using the Black-Scholes technique described below as there is no active market for the warrants. Any income or loss is reflected in net income for the period. The revaluation as of June 30, 2020 resulted in a loss of $232 and a gain of $41 for the three and six month periods ended June 30, 2020 which is reflected on the unaudited interim consolidated statement of operations and comprehensive loss.

12.Shareholders’ Equity and Capital Stock

13.

Shareholders’ Equity and Capital Stock

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 including certain amendments, on May 18, 2017.7, 2020. Eligible participants under the Option Plan include directors, officers, employees and consultants of the Company. Under the terms of the Option Plan stock options granted prior to the May 2017 amendment generally vest with Option Plan participants as follows: 10% at the date of grant; 22% four and one-half months after grant; 22% nine months after grant; 22% thirteen and one-half months after grant; and the balance of 24% eighteen months after the date of grant. Following the May 2017 amendment of the Option Plan, future 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 options remains unchanged.is five years.

14

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2020

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

Activity with respect to stock options is summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

average

 

 

 

Options

 

exercise price

 

 

 

#

 

$

 

 

 

 

 

 

Balance, December 31, 2016

 

 

9,748,934

 

0.63

 

 

 

 

 

 

Granted

 

 

500,000

 

0.69

Exercised

 

 

(549,952)

 

0.64

Forfeited

 

 

(485,698)

 

0.64

Expired

 

 

(870,434)

 

0.81

 

 

 

 

 

 

Outstanding, September 30, 2017

 

 

8,342,850

 

0.69

Weighted-

average

Options

exercise price

#

$

Balance, December 31, 2019

11,076,583

0.64

Forfeited

(51,798)

0.59

Expired

(200,000)

0.84

Outstanding, June 30, 2020

10,824,785

0.61

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 so there is no0 intrinsic value as of the date

15


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2017

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

of grant. The fair value of options vested during the ninesix months ended SeptemberJune 30, 20172020 was $0.7less than  $0.1 million.

As of SeptemberJune 30, 2017,2020, 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

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.61

 

885,071

 

0.2

 

 -

 

885,071

 

0.2

 

 -

 

07-Dec-17

0.62

 

466,441

 

0.6

 

 -

 

466,441

 

0.6

 

 -

 

25-Apr-18

0.99

 

100,000

 

0.8

 

 -

 

100,000

 

0.8

 

 -

 

01-Aug-18

0.96

 

739,976

 

1.2

 

 -

 

739,976

 

1.2

 

 -

 

27-Dec-18

1.35

 

100,000

 

1.5

 

 -

 

100,000

 

1.5

 

 -

 

31-Mar-19

0.82

 

777,896

 

2.2

 

 -

 

777,896

 

2.2

 

 -

 

12-Dec-19

0.91

 

200,000

 

2.7

 

 -

 

200,000

 

2.7

 

 -

 

29-May-20

0.69

 

640,969

 

2.9

 

 -

 

640,969

 

2.9

 

 -

 

17-Aug-20

0.64

 

1,088,327

 

3.2

 

 -

 

1,088,327

 

3.2

 

 -

 

11-Dec-20

0.58

 

2,844,170

 

4.2

 

 -

 

1,534,590

 

4.2

 

 -

 

16-Dec-21

0.82

 

300,000

 

4.4

 

 

 

96,000

 

4.4

 

 

 

02-Mar-22

0.58

 

200,000

 

4.9

 

 -

 

0

 

0.0

 

 -

 

07-Sep-22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.69

 

8,342,850

 

3.0

 

 -

 

6,629,270

 

2.5

 

 -

 

 

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

$

$

$

0.63

516,902

0.1

-

516,902

0.1

-

17-Aug-20

0.59

897,508

0.4

-

897,508

0.4

-

11-Dec-20

0.54

2,337,434

1.5

-

2,337,434

1.5

-

16-Dec-21

0.75

300,000

1.7

-

300,000

1.7

-

02-Mar-22

0.54

200,000

2.2

-

132,000

2.2

-

07-Sep-22

0.66

1,769,411

2.5

-

1,187,174

2.5

-

15-Dec-22

0.57

200,000

2.7

-

133,333

2.7

-

30-Mar-23

0.68

976,259

3.1

-

339,859

3.1

-

20-Aug-23

0.67

822,768

3.5

-

278,351

3.5

-

14-Dec-23

0.58

2,804,503

4.4

-

-

-

-

05-Nov-24

0.64

10,824,785

2.6

-

6,122,561

2.1

-

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 of Cdn$0.720.70 as

15

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2020

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

of the last trading day in the period ended SeptemberJune 30, 2017,2020, that would have been received by the option holders had they exercised their options as of that date. The total number of in-the-money stock There were 0 options outstanding as of September issued or exercisable that were in the money at June 30, 2017 was nil. The total number of in-the-money stock options exercisable as of September 30, 2017 was nil.2020.

We elect to estimate the number of awards expected to vest in lieu of accounting for forteituresforfeitures when they occur.   

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”). The RSU Plan was approved by our shareholders most recently on May 5, 2016.2, 2019.

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Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2017

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

Eligible participants under the RSU Plan include directors and employees of the Company. RSUs in a grant redeem on the second anniversary of the grant. Upon RSU vesting, the holder of an RSU will receive one common share,1 Common Share, for no additional consideration, for each RSU held.

Activity with respect to RSUs is summarized as follows:

 

 

 

 

 

 

 

 

 

Number

 

Weighted

 

 

 

of

 

average grant

 

 

 

RSUs

 

date fair value

 

 

 

 

 

$

Unvested, December 31, 2016

 

 

1,273,990

 

0.60

 

 

 

 

 

 

Vested

 

 

(337,380)

 

0.74

Forfeited

 

 

(26,654)

 

0.58

 

 

 

 

 

 

Unvested, September 30, 2017

 

 

909,956

 

0.60

Number

Weighted

of

average grant

RSUs

date fair value

Balance, December 31, 2019

1,155,928

0.65

Forfeited

(13,433)

0.59

Outstanding, June 30, 2020

1,142,495

0.62

As of SeptemberJune 30, 2017,2020, outstanding RSUs are as follows:

 

 

 

 

 

 

 

 

 

Number of

 

Remaining

 

Aggregate

 

 

unvested

 

life

 

Intrinsic

Grant date

 

RSUs

 

(years)

 

Value

 

 

 

 

 

 

$

December 11, 2015

 

248,226

 

0.20

 

144

December 16, 2016

 

661,730

 

1.21

 

384

 

 

 

 

 

 

 

 

 

909,956

 

1.03

 

528

Number of

Remaining

Aggregate

outstanding

life

intrinsic

Grant date

RSUs

(years)

value

$

August 20, 2018

225,774

0.15

115

December 14, 2018

215,587

0.46

110

November 5, 2019

701,134

1.35

358

1,142,495

0.94

583

Warrants

The following represents warrant activity during the period endedAs of September 30, 2017:

 

 

 

 

 

 

 

 

 

Number

 

Weighted-

 

 

 

of

 

average

 

 

 

Warrants

 

exercise price

 

 

 

 

 

$

Outstanding, December 31, 2016

 

 

5,844,567

 

0.97

 

 

 

 

 

 

Outstanding, September 30, 2017

 

 

5,844,567

 

0.97

2019, one of our officers retired. Under the terms of our RSU Plan, his 54,431 outstanding RSUs automatically vested. On December 15, 2019, 28,686 RSUs were redeemed for Common Shares. The balance of his RSUs will be redeemed for cash or stock at the compensation committee’s discretion in conjunction with the scheduled redemptions of those grants.   

1716


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 20172020

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

Warrants

On September 25, 2018, the Company issued 13,062,878 warrants to purchase 6,531,439 of our Common Shares at $1.00 per full share (see note 12). The following represents warrant activity during the period ended June 30, 2020:

Number

Number of

of

shares to be issued

Per share

warrants

upon exercise

exercise price

Outstanding, December 31, 2019

13,062,878

6,531,439

1.00

Outstanding, June 30, 2020

13,062,878

6,531,439

1.00

As of SeptemberJune 30, 2017,2020, outstanding warrants are as follows:

 

 

 

 

 

 

 

 

 

 

 

Remaining

 

Aggregate

 

 

Remaining

Aggregate

Exercise

 

Number

 

contractual

 

Intrinsic

 

 

Number

contractual

Intrinsic

price

 

of warrants

 

life (years)

 

Value

 

Expiry

of warrants

life (years)

Value

Expiry

$

 

 

 

 

 

$

 

 

$

0.96

 

4,294,167

 

1.0

 

 -

 

24-Jun-18

1.00

 

1,550,400

 

1.2

 

 -

 

27-Aug-18

13,062,878

1.2

-

25-Sep-21

 

 

 

 

 

 

 

 

0.97

 

5,844,567

 

1.0

 

 -

 

 

Share-based compensation expense

Share-based compensation expense was $0.2 million and $0.7 million, respectively, for the three and nine months ended September 30, 2017 and $0.2 million and $0.6$0.5 million for the three and ninesix months ended SeptemberJune 30, 2016, respectively.2020 and $0.2 and $0.4 million for the three and six months ended June 30, 2019.

As of SeptemberJune 30, 2017,2020, there was approximately $0.5$1.1 million of total unrecognized compensation expense (net of estimated pre-vesting forfeitures) related to unvested share-based compensation arrangements granted under the Option Plan and $0.3$0.4 million under the RSU Plan. The expenses are expected to be recognized over a weighted-average period of 1.01.9 years and 1.11.2 years, respectively.

CashNaN cash was received from the exercise of stock options exercised duringfor the three and ninesix months ended SeptemberJune 30, 2017 totalled $nil and $0.3 million, respectively, and less than2020.  Cash of $0.1 million forwas received from options exercises in the three and ninesix months ended SeptemberJune 30, 2016.2019.

17

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2020

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

Fair value calculations

The initial fair value of options and RSUs granted is determined using the Black-Scholes option pricing model for options and the intrinsic pricing model for RSUs. There were no0 options or RSUs granted in either the nine months ended September 30, 2017 or the nine months ended September 30, 2016 nor were there any options

18


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2017

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

granted in the nine months ended September 30, 2016.  The assumptions used for the options granted during the ninesix months ended SeptemberJune 30, 2017 were as follows:2020 and June 30, 2019.

Nine months ended September 30,

2017

Expected option life (years)

3.72-3.74

Expected volatility

57%

Risk-free interest rate

1.0%-1.6%

Expected dividend rate

0%

Forfeiture rate

5.3%-5.9%

The Company estimates expected volatility using daily historical trading data of the Company’s Common Shares, because this is recognized as a valid method used to predict future volatility. The risk-free interest rates are determined by reference to Canadian Treasury Note constant maturities that approximate the expected option term. 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 recognition of expense on options that are ultimately expected to vest over the expected option term. Forfeitures were estimated using actual historical forfeiture experience.

14. Sales

13.  Sales

Sales have been derived from U3O8 being sold to domestic utilities, primarily under term contracts, as well as to a trader through spot sales.

Disaggregation of Revenues

The following table presents our revenues disaggregated by source and type:

Six months ended June 30,

2020

2019

$

%

$

%

Sale of produced inventory

Company A

-

0.0%

7,482

45.9%

Company B

-

0.0%

2,406

14.8%

-

0.0%

9,888

60.7%

Sales of purchased inventory

Company C

8,300

100.0%

3,995

24.5%

Company B

-

0.0%

2,406

14.8%

8,300

100.0%

6,401

39.3%

Total sales

8,300

100.0%

16,289

100.0%

Disposal fee income

4

0.0%

2

0.0%

8,304

100.0%

16,291

100.0%

1918


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 20172020

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

Sales consist of:

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

2017

 

2016

 

$

 

 

 

$

 

 

Sale of produced inventory

 

 

 

 

 

 

 

Company A

7,821

 

20.4%

 

 -

 

0.0%

Company B

3,141

 

8.2%

 

9,471

 

44.0%

Company C

1,777

 

4.6%

 

 -

 

0.0%

Company D

 -

 

0.0%

 

6,375

 

29.6%

Company E

 -

 

0.0%

 

3,075

 

14.2%

 

12,739

 

33.2%

 

18,921

 

87.9%

Sales of purchased inventory

 

 

 

 

 

 

 

Company B

10,211

 

26.5%

 

 -

 

0.0%

Company C

15,340

 

40.0%

 

 -

 

0.0%

 

25,551

 

66.6%

 

 -

 

0.0%

 

 

 

 

 

 

 

 

Total sales

38,290

 

99.9%

 

18,921

 

87.9%

 

 

 

 

 

 

 

 

Disposal fee income

52

 

0.1%

 

21

 

0.1%

Recognition of revenue from sale of deliveries under assignment

 -

 

0.0%

 

2,587

 

12.0%

 

 

 

 

 

 

 

 

 

38,342

 

100.0%

 

21,529

 

100.0%

The names of the individual companies have not been disclosed for reasons of confidentiality.

15.

Supplemental Information for Statement of Cash Flows

14.Supplemental Information for Statement of Cash Flows

Cash per the Statement of Cash Flows consists of the following:

 

 

 

As at

September 30, 2017

 

September 30, 2016

$

 

$

As at

June 30, 2020

June 30, 2019

$

$

Cash and cash equivalents

2,146

 

2,961

5,567

6,536

Restricted cash

7,557

 

7,557

7,463

7,461

 

 

 

9,703

 

10,518

13,030

13,997

16.

Financial Instruments

20


Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2017

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

15.Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, restricted cash, deposits, 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 deposits,deposit, money market accounts and demand deposits. These instruments are maintained at financial institutions in Canada and the United States.U.S. Of the amount held on deposit, approximately $0.6$0.9 million is covered by the Canada Deposit Insurance Corporation, the Securities Investor Protection Corporation or the United StatesU.S. Federal Deposit Insurance Corporation, leaving approximately $9.1$12.2 million at risk at SeptemberJune 30, 20172020 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 SeptemberJune 30, 2017.2020.

All of the Company’s customers have Moody’s Baa or greater ratings and purchase from the Company under contracts with set prices and payment terms.

Liquidity risk

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

As at SeptemberJune 30, 2017,2020, the Company’s financial liabilities consisted of trade accounts payable and accrued trade and payroll liabilities of $1.6$0.5 million which are due within normal trade terms of generally 30 to 60

19

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2020

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

days, two notes payable due within approximately two years and a note payable which will be payable over a period of four years.approximately three years (see note 10).

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, 2016,2020 for a three-year period.  Subsequent to June 30, 2020, we utilized the registration statement for a $4.68 million registered direct offering. See note 17 – Subsequent Event.

On May 29, 2020, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with MLV & Co. LLC andB. Riley FBR, Capital Markets & Co.Inc., as amended August 2017, under which we may, from time to time, issue and sell Common Sharescommon shares at market prices on the NYSE American or other U.S. marketLLC through the distribution agentsAgent for aggregate sales proceeds of up to $10,000,000. During 2017, weThe Sales Agreement replaces the prior At Market Issuance Sales Agreement entered into by the Company on May 27, 2016, as amended. We have sold 1,536,169 Common Shares undernot used the sales agreement at an average price of $0.76 per share for gross proceeds of $1.2 million. After deducting transaction fees and commissions we received net proceeds of $1.1 million.facility in 2020.

We expect that any major capital projects will be funded by operating cash flow, cash on hand, sales of existing inventories, and/or additional financing as required. If these cash sources are not sufficient, certain capital projects could be delayed, or alternatively we may need to pursue additional debt or equity financing to which there is no assurance that such financing will be available at all or on terms acceptable to us.us (see note 2).

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Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2017

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

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 either the ninesix months ended SeptemberJune 30, 20172020 or the comparable ninesix months in 2016.2019. 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 differ from that shown above.

17.

Subsequent Event

On July 31, 2020, the Company announced 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 estimated fees and expenses of approximately $0.4 million, net proceeds to the Company are expected to be $4.3 million. The common share warrants will expire two years from the date of issuance and will allow the holders to purchase our common shares at an exercise price of $0.75 per whole common share. Closing of the offering is expected to occur on or about August 4, 2020.

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Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2020

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

As the warrants are priced in US$ and the functional currency of Ur-Energy Inc. is Cdn$, this will create a derivative financial liability. The fair value of the liability will be created and adjusted quarterly using the Black-Scholes technique described herein as there is no active market for the warrants. Any income or loss will be reflected in net income for the period. We anticipate that the public offering proceeds will be used to sustain operations, and for working capital and general corporate purposes.

21

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.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, 2016.2019.

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 United States.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 March 3, 2017.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 for further processing, storageto be weighed, assayed and sales.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 have multiplewere contractually committed to sell 200,000 pounds of U3O8  sales agreements in place with various U.S. utilities for the sale of U3O8 during H1 2020, at mid- and long-term contract pricing.an average price of approximately $42 per pound. We entered into purchase agreements for delivery of purchased product into those contractual commitments. The multi-year sales agreements representaverage 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 anticipatedremaining 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

22

monitor and adhere to State, Federal and public health guidance as it evolves. Our staff continues, thus far, to remain healthy. As previously noted, due to the persistently depressed uranium market, our staff at Lost Creek has been reduced by 67 percent through the reductions in force we have implemented since 2016. This does not include the complete elimination of contract work performed at the site. For our remaining employees at Lost Creek, we have altered certain work and commuting arrangements, implemented physical distancing procedures and other suggested precautions, and continue to assess the developing situation. Similarly, our production at Lost Creek has been intentionally reduced by more than 97 percent since the beginning of 2016. The COVID-19 situation has not yet altered our planned production guidance for 2020 at Lost Creek, which remains at minimal levels, and did not impede our 2020 Q2 sale. Because our existing finished inventory is stored and accounted for at the conversion facility, current COVID-19 restrictions are not expected to impede any future product sales or transfers.

SBA Paycheck Protection Program

In response to the COVID-19 (Coronavirus) pandemic, Congress enacted the CARES Act on March 27, 2020. Among other provisions, it created the Paycheck Protection Program (“PPP”) through 2021. These agreements individually do not represent a substantial portionthe SBA. As an eligible borrower under the program, we worked solely with our primary bank in Littleton, BOKF, to apply for two loans (one for each of our annual projected production,subsidiaries with U.S. payroll obligations) to support continuing operations and payroll obligations, and in efforts to avoid further reductions in force or furloughs. Following review of our business is therefore not substantially dependent upon any oneapplications by our lender and the SBA, and having met program requirements, we were approved for both loans by the SBA. The combined loan amount we qualified for under the program was $0.9 million, which we received on April 16, 2020. The Flexibility Act, which became law on June 5, 2020, changes key provisions of the agreements.PPP, including maturity of the loans, deferral of loan payments, and forgiveness of PPP loans, with revisions being retroactive to the date of the CARES Act. As well, throughout Q2, the SBA and Department of Treasury (“Treasury”) published additional guidance and rules related to the PPP, which included modifications and clarifications affecting the term of the loans, and the forgiveness process (portion of payroll expenses, allowable non-payroll expenses and application process). Under the current provisions of the program, we anticipate the loans will meet the requirements for forgiveness. See note 10 to the Unaudited Interim Consolidated Financial Statements and discussion under Liquidity Outlook.

U.S. Nuclear Fuel Working Group and Recent Market Changes

On July 12, 2019, the White House issued a “Memorandum on the Effect of Uranium Imports on the National Security and Establishment of the United States Nuclear Fuel Working Group,” through which it established the United States Nuclear Fuel Working Group (the “Working Group”) to develop recommendations for reviving and expanding domestic uranium production. On April 23, 2020, the Working Group, through the Department of Energy (“DOE”), released its report, “Restoring America’s Competitive Nuclear Energy Advantage – A strategy to assure U.S. national security.” Relevant to uranium miners, the recommendations included, first, that the U.S. government make direct purchases of 17 to 19 million total pounds of U3O8 proposed to commence in 2020 to replenish the American Assured Fuel Supply uranium reserve. Additionally, it is recommended that a new national uranium reserve be established through DOE’s proposed budgeted purchases for 10 years, beginning in FY2021. If budget appropriations are secured and the program implemented, these purchases would provide direct support to the front end of the fuel cycle and help re-establish our nation’s critical capabilities. As included in the President’s FY2021 Budget Request, during the first year, it is expected that the reserve would directly support the operation of at least two U.S. uranium mines and the sole U.S. conversion facility. The balance10-year budget item is for $150 million per year.  In July, however, the U.S. House Committee on Appropriations decided not to fund the budget item without obtaining further information from DOE. The Committee directed DOE to submit a plan for the proposed establishment of our Lost Creek production will be sold through spot sales and through additional multi-year agreements.

a

23


uranium reserve within six months. There are alternative avenues to appropriations, including through the Senate process; it is not known at this time, however, the actions DOE will pursue.

Changes

Additionally, the report calls for support of the Department of Commerce (“DOC”) efforts to Boardextend the Russian Suspension Agreement to protect against future uranium dumping. A lower cap on Russian imports should be considered. Consistent with many of Directorsthe conclusions in the report finding myriad national security concerns, another of the recommendations is that the NRC be permitted to deny imports of nuclear fuel fabricated in Russia or China for national security purposes. In its ground-up approach, the report then recommends a restart of the sole U.S. conversion plant beginning no later than 2022 and produce 6,000 to 7,500 tons of UF6 and thereafter to restart domestic enrichment in or about 2023, with at least 25 percent of material being unobligated. By law, unobligated material must be sourced domestically. At this time, no specific actions as a result of the report have been taken and there can be no certainty of the outcome of the Working Group’s findings and recommendations in terms of how and when the recommendations will be implemented. See additional discussion under Looking Ahead.

DuringIn the quarter,first half of the year, several announcements had an impact on the global uranium market. In March, Cameco announced a temporary suspension of production at its Cigar Lake uranium mine due to concerns over the COVID-19 pandemic. At the same time, processing at the related McClean Lake Mill was suspended. The Cigar Lake suspension has meant that there is no uranium production in Canada. On July 29, Cameco announced its intention to restart production operations at Cigar Lake beginning in September, while acknowledging it will not be able to make up the four months of lost production. In April, Kazatomprom announced its plan to reduce onsite staff to minimum numbers and reduce its production plans for 2020 by approximately 10.4 million pounds U3O8. That reduction in operational activities was extended, with a plan subsequently announced to gradually increase mine site staff beginning in August, if safety considerations permit. Also due to the pandemic, Cameco suspended processing at its Port Hope UF6 conversion facility in April and re-opened the facility in May.

Equity Financing

On July 31, 2020, we announced 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 appointmentCompany of Kathy E. Walker$4.68 million. After estimated fees and expenses of approximately $0.4 million, net proceeds to our Board of Directors (the “Board”).  The appointment was effective September 7, 2017, and expands the size of the BoardCompany are expected to seven. Ms.  Walker is the president and chief executive officer of Elm Street Resources Inc., an energy marketing company based in Paintsville, Kentucky. She brings more than 30 years’ experience in various energy-related business endeavorsbe $4.3 million, which are expected to our Board. Ms. Walker holds an MBA from Xavier University. Prior to starting Elm Street Resources, she served as secretary and controller of Agip Coal, USA, a subsidiary of the Italian National Energy Agency ENI. She is currently a member of the National Coal Council and board member of the Kentucky Coal Association; a member of the Kentucky Judicial Campaign Conduct Committee; and a member of the Morehead State University Board of Regents. Previously, Ms. Walker served as the chair of the Energy and Environment transition team for Kentucky Governor Matt Bevin; was a founder and board member of First Security Bank, Lexington, Kentucky and of Great Nations Bank, Norman, Oklahoma.be received on or about August 4, 2020.

Mineral Rights and Properties

We have 12 U.S. uranium properties. Ten of our U.S.uranium properties are located in the Great Divide Basin, Wyoming, including Lost Creek. Currently, we control nearly 1,900 unpatented mining claims and three State of Wyoming mineral leases for a total of approximately 37,500 acres (15,530 hectares) 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”). Additionally, inIn the Shirley Basin, Wyoming, our Shirley Basin Project comprises more than 3,5003,700 Company-controlled acres. Our Lucky Mc Project holds 1,800 acres in Fremont County, Wyoming. Our Excel gold project holds approximately 2,100 acres of mining claims in Nevada.

24

Lost Creek Property

For the ninethree months ended SeptemberJune 30, 2017, contract sales from2020, 4,119 pounds of U3O8 produced atwere captured within the Lost Creek totaled 261,000 pounds. The Company also sold  519,000plant and 2,892 pounds of purchased U3O8In total, 780,000 pounds were packaged in drums. Our inventory at an average price of $49.09 were sold for revenues of $38.3 million.the converter totaled approximately 268,552 at June 30, 2020. The Results of Operations are detailed further below.

Development and Operations at Lost Creek

Production rates at Lost Creek during the quarter were short of  the projected level of 60,000 to 70,000 dried and drummed pounds, however year-to-date production is on track to meet the projected level of 250,000 to 300,000 pounds for the year. We continued to operate Mine Unit 1 (“MU1”) header houses throughout the quarter, and brought online the first of the header houses in Mine Unit 2 (“MU2”), HH2-2, during the quarter. Our limited development plan for 2017 continues with construction work ongoing to develop the first three header houses in MU2. We expect to bring the second MU2 header house online in 2017 Q4, with the third house coming online early in 2018.

Regulatory Update

Applications for amendment to the Lost Creek licenses and permits were submitted in 2014. The amendments are intendedseek to include recovery from the KM horizon and to include recovery of the uranium resource in the LC East projectProject immediately adjacent to the Lost Creek project.Project. Reviews by both the NRCWDEQ continue to progress. The BLM has completed its review and WDEQ were commencedgranted approval. We anticipate that all permits and in September 2015, the BLM issued a Notice of Intent to prepare an environmental impact statementauthorizations for the amendments. We are responding to additional comments from the agencies, as partmodification of the review process.Lost Creek licenses and permits to recover uranium in the LC East Project will be completed in 2020.

24


Shirley Basin Project

WDEQ continues with its technical review of our applicationapplications for a permit to mine at Shirley Basin, which was submitted in December 2015. Work is well underway on other applications for all necessary authorizations to mine at Shirley Basin. We have monitored the development of the Wyoming “agreement state” program, by which the NRC will delegate its authority for source material licensure and other radiation safety issues to the WDEQ. We understand that the development of the Uranium Recovery Program (“URP”) remains on schedule for full implementation and transition likely occurring in 2018. Based upon that timing, we currently anticipate submitting our application for a source material license for our Shirley Basin toProject. We anticipate the State URP.processes to be complete, with necessary permits and authorizations received, in 2020. The BLM has completed its review and granted approval of the project. Additionally, work is well underway on initial engineering evaluations, designs and studies for the development of Shirley Basin operations.

25


Results of Operations

U3O8 ProductionThe following tables provide detailed financial information on our sales, cost of sales, gross profit and Sales

During the three months ended September 30, 2017, a total of 52,812 pounds of U3O8 were captured within the Lost Creek plant. 48,336 pounds were packaged in drums and 36,797 pounds of the drummed inventory were shipped to the conversion facility. We sold 289,000 pounds of U3O8 during the period of which 109,000 pounds were purchased. Inventory, production and sales figures for the Lost Creek Project are presentedending inventory as they relate to U3O8 pounds.  

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

The U3O8 and cost per pound measures included in the following tables. We are presenting the data in the tables for the last four quarters because the nature of our operations is not regularly based on the calendar year. We therefore feel that presenting the last four quarters is a more meaningful representation of operations than comparing comparable periods in the previous year and enables the reader to better perform trend analysis. 

The cash cost per pound and non-cash cost per pound for produced uranium presented in the following Production Costs and U3O8 Sales and Cost of Sales tables are non-US GAAP measures. These measures do not have a standardized meaning within US GAAP or a defined basis of calculation. These measures are used by management to assess business performance and determine production and pricing strategies. They may also be used by certain investors to evaluate performance. Please see the tables, below, for reconciliations of these measures to the US GAAP compliant financial measures. Production figures for the Lost Creek Project are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production and Production Costs

    

Unit

    

2017 Q3

    

2017 Q2

    

2017 Q1

    

2016 Q4

    

2017 YTD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds captured

 

lb

 

 

52,812

 

 

65,257

 

 

79,340

 

 

103,558

 

 

197,409

 

Ad valorem and severance tax

 

$000

 

$

119

 

$

227

 

$

241

 

$

247

 

$

587

 

Wellfield cash cost (1)

 

$000

 

$

743

 

$

599

 

$

889

 

$

864

 

$

2,231

 

Wellfield non-cash cost (2)

 

$000

 

$

730

 

$

780

 

$

776

 

$

777

 

$

2,286

 

Ad valorem and severance tax per pound captured

 

$/lb

 

$

2.25

 

$

3.48

 

$

3.04

 

$

2.39

 

$

2.97

 

Cash cost per pound captured

 

$/lb

 

$

14.07

 

$

9.18

 

$

11.20

 

$

8.34

 

$

11.31

 

Non-cash cost per pound captured

 

$/lb

 

$

13.82

 

$

11.95

 

$

9.78

 

$

7.50

 

$

11.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds drummed

 

lb

 

 

48,336

 

 

70,833

 

 

74,382

 

 

111,049

 

 

193,551

 

Plant cash cost (3)

 

$000

 

$

1,120

 

$

1,270

 

$

1,488

 

$

1,336

 

$

3,878

 

Plant non-cash cost (2)

 

$000

 

$

493

 

$

491

 

$

491

 

$

493

 

$

1,475

 

Cash cost per pound drummed

 

$/lb

 

$

23.17

 

$

17.93

 

$

20.00

 

$

12.03

 

$

20.04

 

Non-cash cost per pound drummed

 

$/lb

 

$

10.20

 

$

6.93

 

$

6.61

 

$

4.44

 

$

7.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds shipped to conversion facility

 

lb

 

 

36,797

 

 

74,406

 

 

72,643

 

 

98,775

 

 

183,846

 

Distribution cash cost (4)

 

$000

 

$

24

 

$

26

 

$

47

 

$

68

 

$

97

 

Cash cost per pound shipped

 

$/lb

 

$

0.65

 

$

0.35

 

$

0.65

 

$

0.69

 

$

0.53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds purchased

 

lb

 

 

109,000

 

 

210,000

 

 

200,000

 

 

 -

 

 

519,000

 

Purchase costs

 

$000

 

$

2,196

 

$

4,870

 

$

4,015

 

$

 -

 

$

11,081

 

Cash cost per pound purchased

 

$/lb

 

$

20.15

 

$

23.19

 

$

20.08

 

$

 -

 

$

21.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26


Notes:

1

Wellfield cash costs include all wellfield operating costs. Wellfield construction and development costs, which include wellfield drilling, header houses, pipelines, power lines, roads, fences and disposal wells, are treated as development expense and are not included in wellfield operating costs.

2

Non-cash costs include the amortization of the investment in the mineral property acquisition costs and the depreciation of plant equipment, and the depreciation of their related asset retirement obligation costs. The expenses are calculated on a straight line basis so the expenses are typically constant for each quarter. The cost per pound from these costs will therefore typically vary based on production levels only.

3

Plant cash costs include all plant operating costs and site overhead costs.

4

Distribution cash costs include all shipping costs and costs charged by the conversion facility for weighing, sampling, assaying and storing the U3O8 prior to sale.

Production levels during the current quarter continued to decline, reflecting our deliberate restriction of production in light of the persistently weak uranium market. Total production costs, which have remained relatively consistent in the past, decreased nearly five percent in 2017 Q3 compared to Q2 and 18% compared to Q1.  The decrease resulted from a combination of certain non-recurring charges not being repeated and the previously announced cost reduction efforts. 

Pounds captured decreased 12,445 pounds from 2017 Q2 as the first header house in MU2 started up during the period and did not significantly impact the total production for the quarter.  Total wellfield costs decreased $14 thousand during the quarter.  Ad valorem and severance taxes decreased due to lower production rates and year-to-date tax adjustments.  Non-cash costs decreased due to certain reclamation assets becoming fully depreciated during the quarter. Wellfield cash costs increased during the quarter due to higher labor costs as several positions in wellfield operations that had been open for some time were filled and because Q2 included one-time health insurance premium credits.  In addition, wellfield personnel were working additional hours to complete the scheduled work on Mine Unit 2, which contributed to the increase.  Because of the decrease in production, the wellfield cash cost per pound captured increased $4.89 per pound in 2017 Q3. Wellfield non-cash costs are generally fixed.  Although wellfield non-cash costs decreased during the quarter, the related wellfield non-cash cost per pound captured still increased $1.87 per pound because of the decrease in pounds captured.

Pounds drummed decreased 22,497 pounds in 2017 Q3.  Total plant costs decreased $148 thousand during the quarter.  All of the decrease was in plant cash costs.  Plant cash costs were lower in Q3 because of lower consumables costs and a major repair cost in Q2.  Because of the significant decrease in pounds drummed, the plant cash cost per pound drummed increased $5.24 per pound during the quarter. Plant non-cash costs are fixed so the related plant non-cash cost per pound drummed increased $3.27 per pound because of the decrease in pounds drummed.  

Pounds shipped decreased 37,609 pounds in 2017 Q3, which included one shipment.  There were two shipments in Q2.  Distribution costs in 2017 Q3 were slightly lower than the previous quarter with lower shipping costs partially offset by higher conversion facility fees .  The distribution cash cost per pound increased $0.30 per pound shipped during the quarter due to shipping fewer pounds.

27


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and cost of sales

    

Unit

    

2017 Q3

    

2017 Q2

    

2017 Q1

    

2016 Q4

    

2017 YTD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds sold

 

lb

 

 

289,000

 

 

241,000

 

 

250,000

 

 

100,000

 

 

780,000

 

U3O8 sales

 

$000

 

$

11,674

 

$

11,797

 

$

14,819

 

$

3,270

 

$

38,290

 

Average contract price

 

$/lb

 

$

40.39

 

$

48.95

 

$

59.28

 

$

32.70

 

$

49.09

 

Average price per pound sold

 

$/lb

 

$

40.39

 

$

48.95

 

$

59.28

 

$

32.70

 

$

49.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 cost of sales (1)

 

$000

 

$

11,157

 

$

6,573

 

$

6,295

 

$

3,082

 

$

24,025

 

Ad valorem and severance tax cost per pound sold

 

$/lb

 

$

3.15

 

$

4.26

 

$

4.00

 

$

2.98

 

$

3.44

 

Cash cost per pound sold

 

$/lb

 

$

29.11

 

$

31.54

 

$

26.12

 

$

18.27

 

$

28.82

 

Non-cash cost per pound sold

 

$/lb

 

$

17.52

 

$

19.13

 

$

15.48

 

$

9.57

 

$

17.33

 

Cost per pound sold - produced

 

$/lb

 

$

49.78

 

$

54.93

 

$

45.60

 

$

30.82

 

 

49.59

 

Cost per pound sold - purchased

 

$/lb

 

$

20.15

 

$

23.19

 

$

20.08

 

$

 -

 

 

21.35

 

Average cost per pound sold

 

$/lb

 

$

38.61

 

$

27.26

 

$

25.18

 

$

30.82

 

$

30.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 gross profit

 

$000

 

$

517

 

$

5,224

 

$

8,524

 

$

188

 

 

14,265

 

Gross profit per pound sold

 

$/lb

 

$

1.78

 

$

21.68

 

$

34.10

 

$

1.88

 

 

18.29

 

Gross profit margin

 

%

 

 

4.4%

 

 

44.3%

 

 

57.5%

 

 

5.7%

 

 

37.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Inventory Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

lb

 

 

22,306

 

 

19,010

 

 

28,164

 

 

29,891

 

 

 

 

Plant inventory

 

lb

 

 

21,948

 

 

10,446

 

 

14,019

 

 

12,274

 

 

 

 

Conversion facility inventory

 

lb

 

 

17,813

 

 

160,094

 

 

113,528

 

 

84,689

 

 

 

 

Total inventory

 

lb

 

 

62,067

 

 

189,550

 

 

155,711

 

 

126,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

$000

 

$

221

 

$

352

 

$

712

 

$

897

 

 

 

 

Plant inventory

 

$000

 

$

824

 

$

479

 

$

670

 

$

461

 

 

 

 

Conversion facility inventory

 

$000

 

$

675

 

$

6,620

 

$

4,379

 

$

2,751

 

 

 

 

Total inventory

 

$000

 

$

1,720

 

$

7,451

 

$

5,761

 

$

4,109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost per pound

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

$/lb

 

$

9.92

 

$

18.46

 

$

25.28

 

$

30.01

 

 

 

 

Plant inventory

 

$/lb

 

$

37.53

 

$

45.85

 

$

47.79

 

$

37.56

 

 

 

 

Conversion facility inventory

 

$/lb

 

$

37.89

 

$

41.35

 

$

38.57

 

$

32.48

 

 

 

 

Notes:

1

Cost of sales include all production costs (notes 1, 2, 3 and 4 in the previous Production and Production Cost table) adjusted for changes in inventory values.

U3O8 sales of $11.7 million for 2017 Q3 were based on selling 289,000 pounds at an average price of $40.39.  We did not make any spot sales during the quarter. Of the 289,000 pounds sold, 180,000 were from produced inventory and 109,000 were from purchased U3O8.  For the quarter, our cost of sales totaled $11.1 million at an average cost of $38.61 per pound.

On a cash basis, the average cost per pound sold was $27.69, which yielded average cash margins of $12.70 per pound and generated cash gross profits of $3.7 million during the quarter.  The average cash cost per pound

28


sold was composed of produced and purchased pounds.  The cash cost per produced pound sold was $32.26, including ad valorem and severance taxes, and the cash cost per purchased pound sold was $20.15.

Due to our low production volumes, we have been experiencing lower of cost or net realizable value adjustments, which totaled $1.3 million for the quarter.  These costs are included in our cost of sales for the period and reduced the reported gross profit for the period. Total gross profit was $0.5 million, or approximately 4%.

At the end of the quarter, we had approximately 17,813 pounds of U3O8 at the conversion facility at an average cost per pound of $37.89, which reflects the net realizable value of the product at that location.  We intend to sell this product into our lowest priced, 2018 term contract in January.  While this assumption did increase the non-cash, net realizable value adjustment for the quarter, it will also lower the actual cash paid out for 2018 severance and ad valorem taxes, which are based on the sales value of the product.

The following table shows the average cost per pound of the conversion facility pounds.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Conversion Facility Inventory
Cost Per Pound Summary

 

Unit

30-Sep-17

 

30-Jun-17

 

31-Mar-17

 

 

31-Dec-16

Ad valorem and severance tax cost per pound

 

$/lb

 

$

2.41

 

$

2.82

 

$

2.74

 

$

2.72

Cash cost per pound

 

$/lb

 

$

22.47

 

$

24.62

 

$

23.48

 

$

19.44

Non-cash cost per pound

 

$/lb

 

$

13.01

 

$

13.91

 

$

12.35

 

$

10.32

Total cost per pound

 

$/lb

 

$

37.89

 

$

41.35

 

$

38.57

 

$

32.48

Generally, the cost per pound in ending inventory at the conversion facility increased during recent quarters. The increase was directly related to the lower production rates as production costs were relatively consistent during the periods and decreased in the most recent quarter.  The increase also relects our deliberate restriction of production considering the persistently weak uranium market.  While the cost per pound is higher than the current spot market price, it is projected to be sold into existing term contracts at prices greater than the current carrying amount.  The cost per pound declined this quarter because the estimated sales price used in the net realizable value calculation was based on selling the 17,813 pounds into an upcoming lower-priced sales contract.

Reconciliation of Non-GAAP sales and inventory presentation with US GAAP statement presentation

As discussed above, the cash costs, non-cash costs and per pound calculations are non-US GAAP measures we use to assess business performance. To facilitate a better understanding of these measures, the tables below present aWhere applicable, reconciliation of these measures to US GAAP financial statement presentation are included within the financial results as presented in our financial statements.respective table.

29


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Price Per Pound Sold Reconciliation

 

Unit

 

2017 Q3

    

2017 Q2

    

2017 Q1

    

2016 Q4

    

2017 YTD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales per financial statements

 

$000

 

$

11,693

 

$

11,821

 

$

14,828

 

$

5,776

 

$

38,342

Less disposal fees

 

$000

 

$

(18)

 

$

(24)

 

$

(9)

 

$

(8)

 

$

(51)

Less revenue from sale of deliveries under contract

 

$000

 

$

 -

 

$

 -

 

$

 -

 

$

(2,498)

 

$

 -

U3O8 sales

 

$000

 

$

11,675

 

$

11,797

 

$

14,819

 

$

3,270

 

$

38,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds sold - produced

 

lb

 

 

180,000

 

 

31,000

 

 

50,000

 

 

100,000

 

 

261,000

Pounds sold - purchased

 

lb

 

 

109,000

 

 

210,000

 

 

200,000

 

 

 -

 

 

519,000

Total pounds sold

 

lb

 

 

289,000

 

 

241,000

 

 

250,000

 

 

100,000

 

 

780,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average price per pound sold

 

$/lb

 

$

40.40

 

$

48.95

 

$

59.28

 

$

32.70

 

$

48.09

Sales

Unit

    

2020 Q2

    

2020 Q1

    

2019 Q4

    

2019 Q3

YTD 2020

U3O8 Sales Reconciliation (1)

Sales per financial statements

$000

$

6,934

$

1,370

$

10,849

$

5,115

$

8,304

Less disposal fees

$000

$

(4)

$

-

$

(1)

$

-

$

(4)

U3O8 sales

$000

$

6,930

$

1,370

$

10,848

$

5,115

$

8,300

U3O8 pounds sold

lb

167,000

33,000

180,000

122,500

200,000

U3O8 price per pound sold

$/lb

$

41.50

$

41.52

$

60.26

$

41.76

$

41.50

U3O8 Sales by Product

U3O8 Sales

Produced

$000

$

-

$

-

$

-

$

-

$

-

Purchased

$000

$

6,930

$

1,370

$

10,848

$

5,115

$

8,300

$000

$

6,930

$

1,370

$

10,848

$

5,115

$

8,300

U3O8 Pounds Sold

Produced

lb

-

-

-

-

-

Purchased

lb

167,000

33,000

180,000

122,500

200,000

lb

167,000

33,000

180,000

122,500

200,000

U3O8 Price per Pounds Sold

Produced

$/lb

$

-

$

-

$

-

$

-

$

-

Purchased

$/lb

$

41.50

$

41.52

$

60.26

$

41.76

$

41.50

$/lb

$

41.50

$

41.52

$

60.26

$

41.76

$

41.50

Note:

1.Sales per the financial statements include revenues from disposal fees received at Shirley Basin. The disposal fees do not relate to U3O8 pounds sold and are excluded from the U3O8 sales and U3O8 price per pound sold figures.

The Company delivers U3O8 to a conversion facility and receives credit for a specified quantity measured in pounds once the product is confirmed to meet the required specifications. When a delivery is approved, the Company notifies the conversion facility with instructions for a title transfer to the customer. Revenue is recognized once a title transfer of the U3O8 is confirmed by the conversion facility.

In March 2016, the Company assigned its 2016 contractual delivery obligations under two of its sales contracts to a natural resources trading company in exchange for a cash payment of $5.1 million. The first delivery occurred in 2016 Q3 while the second occurred in 2016 Q4. The Company reflects the payment as revenue when the related deliveries under the contracts are settled.  Accordingly, the Company recognized the revenue in the respective quarters as shown above.

3026


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Cost Per Pound Sold

Reconciliation 1

    

Unit

 

2017 Q3

    

2017 Q2

    

2017 Q1

    

2016 Q4

    

2017 YTD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ad valorem & severance taxes

 

$000

 

$

119

 

$

227

 

$

241

 

$

247

 

$

587

Wellfield costs

 

$000

 

$

1,473

 

$

1,379

 

$

1,665

 

$

1,641

 

$

4,517

Plant and site costs

 

$000

 

$

1,614

 

$

1,761

 

$

1,979

 

$

1,829

 

$

5,354

Distribution costs

 

$000

 

$

24

 

$

26

 

$

47

 

$

68

 

 

97

Inventory change

 

$000

 

$

5,731

 

$

(1,690)

 

$

(1,652)

 

$

(703)

 

$

2,389

Cost of sales - produced

 

$000

 

$

8,961

 

$

1,703

 

$

2,280

 

$

3,082

 

$

12,944

Cost of sales - purchased

 

$000

 

$

2,196

 

$

4,870

 

$

4,015

 

$

 —

 

 

11,081

Total cost of sales

 

$000

 

$

11,157

 

$

6,573

 

$

6,295

 

$

3,082

 

 

24,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds sold produced

 

lb

 

 

180,000

 

 

31,000

 

 

50,000

 

 

100,000

 

 

261,000

Pounds sold purchased

 

lb

 

 

109,000

 

 

210,000

 

 

200,000

 

 

 —

 

 

519,000

Total pounds sold

 

lb

 

 

289,000

 

 

241,000

 

 

250,000

 

 

100,000

 

 

780,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average cost per pound sold - produced (1)

 

$/lb

 

$

49.78

 

$

54.93

 

$

45.60

 

$

30.82

 

$

49.59

Average cost per pound sold - purchased

 

$/lb

 

$

20.15

 

$

23.19

 

$

20.08

 

$

 -

 

$

21.35

Total average cost per pound sold

 

$/lb

 

$

38.61

 

$

27.27

 

$

25.18

 

$

30.82

 

$

30.80

In 2020 Q2, we sold 167,000 purchased pounds under a term contract at an average price of $41.50 per pound.  There were no sales of produced inventory in the first six months and we do not anticipate any sales of produced inventory in 2020.

Cost of Sales

Unit

    

2020 Q2

    

2020 Q1

    

2019 Q4

    

2019 Q3

YTD 2020

U3O8 Cost of Sales Reconciliation (1)

Cost of sales per financial statements

$000

$

6,517

$

3,105

$

6,451

$

7,515

$

9,622

Lower of cost or NRV adjustment

$000

$

(2,174)

$

(2,282)

$

(2,074)

$

(4,087)

$

(4,456)

U3O8 cost of sales

$000

$

4,343

$

823

$

4,377

$

3,428

$

5,166

U3O8 pounds sold

lb

167,000

33,000

180,000

122,500

200,000

U3O8 cost per pound sold

$/lb

$

26.01

$

24.94

$

24.31

$

27.98

$

25.83

U3O8 Cost of Sales by Product

U3O8 Cost of Sales

Ad valorem and severance taxes

$000

$

6

$

3

$

22

$

(14)

$

9

Wellfield cash costs

$000

$

154

$

128

$

158

$

210

$

282

Wellfield non-cash costs

$000

$

557

$

618

$

611

$

611

$

1,175

Plant cash costs

$000

$

1,064

$

910

$

898

$

1,045

$

1,974

Plant non-cash costs

$000

$

490

$

490

$

494

$

490

$

980

Distribution costs

$000

$

(3)

$

-

$

26

$

12

$

(3)

Inventory change

$000

$

(2,268)

$

(2,149)

$

(2,209)

$

(2,354)

$

(4,417)

Produced

$000

$

-

$

-

$

-

$

-

$

-

Purchased

$000

$

4,343

$

823

$

4,377

$

3,428

$

5,166

$000

$

4,343

$

823

$

4,377

$

3,428

$

5,166

U3O8 Pounds Sold

Produced

lb

-

-

-

-

-

Purchased

lb

167,000

33,000

180,000

122,500

200,000

lb

167,000

33,000

180,000

122,500

200,000

U3O8 Cost per Pound Sold

Produced

$/lb

$

-

$

-

$

-

$

-

$

-

Purchased

$/lb

$

26.01

$

24.94

$

24.31

$

27.98

$

25.83

$/lb

$

26.01

$

24.94

$

24.31

$

27.98

$

25.83

Note:

1

1.

Cost of sales per the financial statements include lower of cost or net realizable value (“NRV”) adjustments. The NRV adjustments do not relate to U3O8 pounds sold and are excluded from the U3O8 cost of sales and U3O8 cost per pound sold reflects both cash and non-cash costs, which are combined as cost of sales in the statement of operations included in this filing.  The cash and non-cash cost components are identified in the above inventory, production and sales table.

figures.

The costCost of sales per the financial statements includes ad valorem and severance taxes related to the extraction of uranium, all costs of wellfield plant and siteplant operations including the related depreciation and amortization of capitalized assets, reclamation and mineral property costs, plus product distribution costs. These costs are also used to value inventory and theinventory. The resulting inventoried cost per pound is compared to the estimated sales pricesNRV of the product, which is based on the contracts or spotestimated sales anticipated for the distributionprice of the product, net of any necessary costs to finish the product. Any costs

27

inventory value in excess of the calculated market value areNRV is charged to cost of sales.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.

Production costs attributed to inventory increased six percent from the previous quarter. Following another particularly harsh winter limiting access to the site, seasonal field and maintenance projects were undertaken at Lost Creek in Q2. As a result, labor and related costs increased during the quarter. Ad valorem and severance taxes increased due to higher dryer volumes. Wellfield cash costs increased 20 percent from 2020 Q1 due to increases in labor and supply costs while wellfield non-cash costs decreased slightly from 2020 Q1 due to assets becoming fully depreciated. Plant cash costs increased due to the higher labor and road maintenance costs. Plant non-cash costs were unchanged.

In 2020 Q2, we sold 167,000 pounds of purchased inventory. The 167,000 pounds were purchased at a weighted average cost of $26.01 per pound. There were no sales of produced inventory in the first six months, and therefore, no cost of sales from produced inventory. We do not anticipate any sales of produced inventory in 2020, unless it is advantageous or necessary to do so.

28

Gross Profit

Unit

    

2020 Q2

    

2020 Q1

    

2019 Q4

    

2019 Q3

YTD 2020

U3O8 Gross Profit by Product

U3O8 Sales (see Sales Table)

Produced

$000

$

-

$

-

$

-

$

-

$

-

Purchased

$000

$

6,930

$

1,370

$

10,848

$

5,115

$

8,300

$000

$

6,930

$

1,370

$

10,848

$

5,115

$

8,300

U3O8 Cost of Sales (see Cost of Sales Table)

Produced

$000

$

-

$

-

$

-

$

-

$

-

Purchased

$000

$

4,343

$

823

$

4,377

$

3,428

$

5,166

$000

$

4,343

$

823

$

4,377

$

3,428

$

5,166

U3O8 Gross Profit

Produced

$000

$

-

$

-

$

-

$

-

$

-

Purchased

$000

$

2,587

$

547

$

6,471

$

1,687

$

3,134

$000

$

2,587

$

547

$

6,471

$

1,687

$

3,134

U3O8 Pounds Sold

Produced

lb

-

-

-

-

-

Purchased

lb

167,000

33,000

180,000

122,500

200,000

lb

167,000

33,000

180,000

122,500

200,000

U3O8 Gross Profit per Pound Sold

Produced

$/lb

$

-

$

-

$

-

$

-

$

-

Purchased

$/lb

$

15.49

$

16.58

$

35.95

$

13.78

$

15.67

$/lb

$

15.49

$

16.58

$

35.95

$

13.78

$

15.67

U3O8 Gross Profit Margin

Produced

%

-

-

-

-

-

Purchased

%

37.3%

39.9%

59.7%

32.9%

37.8%

%

37.3%

39.9%

59.7%

32.9%

37.8%

The last produced inventory was sold in 2019 Q2. Since then, all sales have been from purchased inventory. In 2020 Q2, we sold 167,000 pounds of purchased inventory for $41.50 per pound. The pounds were purchased for a weighted average cost of $26.01 per pound. The resulting gross profit was $15.49 per pound.

29

U3O8 Production

Unit

    

2020 Q2

    

2020 Q1

    

2019 Q4

    

2019 Q3

    

YTD 2020

U3O8 Production

Pounds captured

lb

4,119

4,113

5,004

7,256

8,232

Pounds drummed

lb

2,892

1,433

7,116

9,367

4,325

Pounds shipped

lb

-

-

20,643

37,710

-

Pounds purchased

lb

167,000

33,000

180,000

122,500

200,000

Production rates were better than guidance for the quarter. However, we continue to restrict our production in light of the persistently weak uranium market. Pounds captured remained consistent with 2020 Q1. To minimize drying costs, we only dry and package  when we have captured enough material for a complete load. As a result, pounds drummed may lag longer and vary from pounds captured more than usual.  Pounds drummed increased 1,459 pounds from 2020 Q1. There were no shipments in the quarter as we shipped all available product to the conversion facility in December 2019 and have not drummed enough product in 2020 to justify a shipment.

30

Ending Inventory

Unit

    

30-Jun-20

    

31-Mar-20

    

31-Dec-19

    

30-Sep-19

U3O8 Ending Inventory

Pounds

In-process inventory

lb

9,267

8,304

5,396

8,074

Plant inventory

lb

4,326

1,433

-

13,526

Conversion inventory - produced

lb

219,802

219,802

220,053

199,411

Conversion inventory - purchased

lb

48,750

48,750

48,750

48,750

Value

In-process inventory

$000

$

-

$

-

$

-

$

-

Plant inventory

$000

$

138

$

42

$

-

$

384

Conversion inventory - produced

$000

$

6,079

$

6,082

$

6,250

$

5,721

Conversion inventory - purchased

$000

$

1,268

$

1,209

$

1,176

$

1,252

Cost per Pound

In-process inventory

$/lb

$

-

$

-

$

-

$

-

Plant inventory

$/lb

$

31.90

$

29.31

$

-

$

28.39

Conversion inventory - produced

$/lb

$

27.66

$

27.67

$

28.40

$

28.69

Conversion inventory - purchased

$/lb

$

26.01

$

24.80

$

24.12

$

25.68

Produced conversion inventory detail:

Ad valorem and severance tax

$/lb

$

0.75

$

0.75

$

0.77

$

0.91

Cash cost

$/lb

$

17.48

$

17.49

$

17.95

$

18.28

Non-cash cost

$/lb

$

9.43

$

9.43

$

9.68

$

9.50

$/lb

$

27.66

$

27.67

$

28.40

$

28.69

At the end of the quarter, we had approximately 268,552 pounds of U3O8 at the conversion facility including 219,802 produced pounds at an average cost per pound of $27.66, and 48,750 purchased pounds at an average cost of $26.01 per pound.

31


Three and ninesix months ended SeptemberJune 30, 20172020 compared to the three and ninesix months ended SeptemberJune 30, 20162019

The following tablestable summarize the results of operations for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 (in thousands of U.S. dollars):

 

 

 

Three months ended  September 30,

2017

 

2016

$

 

$

Three months ended June 30,

2020

2019

$

$

Sales

11,693

 

12,068

6,934

11,479

Cost of sales

(11,157)

 

(5,818)

(6,517)

(11,163)

Gross profit

536

 

6,250

417

316

Exploration and evaluation expense

(560)

 

(828)

(554)

(490)

Development expense

(1,454)

 

(1,108)

(343)

(292)

General and administrative expense

(1,070)

 

(972)

(1,187)

(1,153)

Accretion

(135)

 

(134)

(143)

(144)

Net profit (loss) from operations

(2,683)

 

3,208

Net loss from operations

(1,810)

(1,763)

Interest expense (net)

(332)

 

(474)

(195)

(168)

Warrant mark to market gain

 -

 

 5

Loss from equity investment

(5)

 

(3)

Write-off of equity investment

 -

 

(900)

Warrant mark to market loss

(231)

(105)

Foreign exchange loss

(40)

 

(6)

(8)

(10)

Other income

57

 

(27)

17

15

Net income (loss)

(3,003)

 

1,803

 

 

 

Net loss

(2,227)

(2,031)

Loss per share – basic and diluted

(0.02)

 

0.01

(0.01)

(0.01)

 

 

 

Revenue per pound sold

40.39

 

47.36

 

 

 

Total cost per pound sold

38.61

 

29.09

 

 

 

Gross profit per pound sold

1.78

 

18.27

U3O8 price per pound sold

41.50

43.31

U3O8 cost per pound sold

26.01

34.06

U3O8 gross profit per pound sold

15.49

9.25

32


 

 

 

 

 

Nine months ended September 30,

 

2017

 

2016

 

$

 

$

 

 

 

 

Sales

38,342

 

21,529

Cost of sales

(24,025)

 

(12,767)

Gross profit

14,317

 

8,762

Exploration and evaluation expense

(2,162)

 

(2,370)

Development expense

(3,499)

 

(2,384)

General and administrative expense

(3,748)

 

(3,796)

Accretion expense

(401)

 

(399)

Write-off of mineral properties

 -

 

(62)

Net profit (loss) from operations

4,507

 

(249)

Interest expense (net)

(1,063)

 

(1,543)

Warrant mark to market gain

 -

 

36

Loss from equity investment

(5)

 

(5)

Write-off of equity investments

 -

 

(1,089)

Foreign exchange loss

(57)

 

(279)

Other income

120

 

15

Net income (loss)

3,502

 

(3,114)

 

 

 

 

Income (loss) per share – basic

0.02

 

(0.02)

 

 

 

 

Income (loss) per share –  diluted

0.02

 

 -

 

 

 

 

Revenue per pound sold

49.09

 

40.95

 

 

 

 

Total cost per pound sold

30.80

 

27.63

 

 

 

 

Gross profit per pound sold

18.29

 

13.32

Six months ended June 30,

2020

2019

$

$

Sales

8,304

16,291

Cost of sales

(9,622)

(16,309)

Gross profit (loss)

(1,318)

(18)

Exploration and evaluation expense

(945)

(1,264)

Development expense

(616)

(458)

General and administrative expense

(2,440)

(3,292)

Accretion expense

(288)

(286)

Net loss from operations

(5,607)

(5,318)

Net interest expense

(327)

(364)

Warrant mark to market gain (loss)

42

(638)

Foreign exchange gain (loss)

7

(28)

Other income

17

15

Net loss

(5,868)

(6,333)

Income per share – basic and diluted

(0.04)

(0.04)

U3O8 price per pound sold

41.50

44.94

U3O8 cost per pound sold

25.83

33.67

U3O8 gross profit per pound sold

15.67

11.27

Sales

We sold 167,000 and 200,000 pounds of U3O8 during the three and six months ended June 30, 2020, respectively for an average price of $41.50 per pound. We sold a total of 289,000265,000 and 780,000362,500 pounds of U3O8 during the three and ninesix months ended SeptemberJune 30, 20172019 for an average price of $40.39$43.31 and $49.09,  respectively per pound and 200,000 and 462,000 pounds of U3O8 during the three and nine months ended September 30, 2016 for an average price of $47.36 and $40.95,$44.94, respectively, per pound. The 2017 sales were all from term contractscontracts.

Cost of Sales

Cost of sales per the financial statements includes ad valorem and included 180,000severance taxes related to the extraction of uranium, all costs of wellfield and 261,000plant 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 producedU3O8 in ending inventory and 109,000 and 519,000do not relate to the pounds of U3O8 sold during the period.

All sales in 2020 were from purchased uraniumproduct. The weighted average purchase price was $26.01 and $25.83 for the three and ninesix months, respectively, per pound. In the six months ended SeptemberJune 30, 2017, respectively.2019, 41 percent of the product sold was from purchased inventory and 59 percent was from produced inventory. The 2016 sales consistedcost per pound

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Table of 200,000 and 362,000 pounds delivered under term contracts at $47.36 and $43.77 per pound, respectively, and 100,000 pounds forContents

of the nine month period sold onproduced inventory was higher than the spot market at $30.75 per pound.

Cost of Sales

Forpurchased inventory, which led to the three and nine months ended September 30, 2017, ourhigher average cost per pound sold for produced inventory increased $20.69in 2019 of $34.06 and $21.96 compared to the same periods in 2016.  These increases are a function of the reduced production volumes discussed above.   In 2017, we purchased 109,000 and 519,000 pounds of uranium$33.67 per pound for the three and nine month periods at average cost of $20.15 and $21.35 per pound, respectively.  Our average

33


cost per pound was $38.61 for the quarter and $30.80 for the ninesix months ended September 30, 2017, which represents an increase of $9.52 and $3.17 per pound, as compared to 2020.

In the three and nine month periodssix months ended June 30, 2020, cost of sales per the financial statements included $2.2 million and $4.5 million, respectively, in 2016.lower of cost or NRV adjustments compared to $2.0 and $4.0 million in the comparable period in 2019.

Gross Profit

OurThe gross profit from(loss) per the salefinancial statements for the three and six months ended June 30, 2020 was a profit of uranium totaled $0.5$0.4 million and $14.3a loss of $1.3 million, respectively. Excluding the lower of cost or NRV adjustments, the U3O8 gross profit was $2.6 million and $0.5 million for the three and ninesix months, ended September 30, 2017 and represented gross profits of $1.78 and $18.29 per pound, or 4% and 37%respectively, which represents gross profit margins respectively.  This compares to Q3 2016 where our grossof approximately 37 percent and 40 percent. Gross profits totaled $3.7exclusive of NRV adjustments of $2.1 million and $6.2$4.1 million forin the three and ninesix months and represented gross profits of $18.27 and $13.32 per pound, or 39% and 33%ended June 30, 2019, respectively represents gross profit margins respectively. 

We have limited our development activitiesof approximately 21 percent and thereby reduced production in light of the current depressed spot market as discussed in previous filings.  While we have taken measures to reduce operating costs, most of our costs are relatively fixed at all production levels, so the reduced production directly relates to the increase in our cost per pound for produced product.  One of the largest costs we cannot reduce is our non-cash costs for depreciation and amortization.  As we do not have reserves and are therefore an exploration company under the guidelines of the U.S. Securities and Exchange Commission, we cannot use production or mineralization as a basis for calculating depreciation or amortization. As a result, our expense for those items are the same now as they were when our production rate was significantly higher. Currently, these non-cash costs total $1.3 million25 percent. The primary reason for the quarter and $3.8 million forlower gross profit margin in 2019 was because it included sales of higher cost produced pounds, which increased the nine months ended September 30, 2017.

Because of the fixed nature of our costs, our inventory cost exceeded the net realizable value of the inventory. Accordingly, we reduced the inventory cost by $1.3 million for the quarter and $2.2 million for the nine months. These costs are added to the cost of sales calculations for our produced product for the quarter.  Because we only sold 180,000 pounds and 261,000 pounds of produced product for the quarter and nine months ended September 30, 2017, this increased our cost per pound sold of produced uranium by $7.37 for the quarter and $8.50 for the nine months.in that year.

The net result is that while our overall production cost per pound has increased, much of that increase is due fixed nature of our costs such as  the non-cash amortization of plant and mineral assets, and the inability to adjust the amortization to reflect current production.

Operating Expenses

Total operating expense for the three and ninesix months ended SeptemberJune 30, 2017 were $3.22020 was $2.2 million and $9.8$4.3 million, respectively. Operating expenses include exploration and evaluation expense, development expense, and G&A expense.expense and accretion. These expenses increased by $0.2compare to the three and $0.8six month periods ended June 30, 2019, which were $2.1 million and $5.3 million, respectively. The increase for the quarter primarily related to the timing variance of maintenance payments for certain of our federal mining claims, which were paid in the second quarter of this year as compared to being paid in Q3 of last year. Lower labor costs accounted for most of the same periodsfavorable difference for the six month periods. In Q1, after considering uranium market conditions, and other factors including worldwide economic conditions and market reactions to COVID-19, our Board chose to not pay bonus awards for 2019 performance. Our Board may, in 2016.the future, consider the feasibility of making some payout of the bonus amounts.

Exploration and evaluation expense consists of labor and associated costs of the exploration and evaluation departments as well as land holding and costs including drilling and analysis on properties which have not reached the permittingdevelopment or operations stage. These expenses were $0.6$0.4 million and $2.2$0.8 million for the three and ninesix month periods ended SeptemberJune 30, 2017,2020, respectively and $0.8$0.5 million and $2.4$1.3 million for the samecomparable periods in 2016.2019. All costs associated with the geology, regulatory compliance and geological information systemsevaluation departments, as well as the costs incurred on exploration-stage projects as described above, are reflected in this category. The quarterly increase and year-to-date decrease in 2020 are primarily due to the claim maintenance timing difference and the decision to not pay the bonus awards, respectively, as discussed above.

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 and Lucky Mc properties as they arewhich is in a more advanced stage.stage and Lucky Mc, which is near the end of reclamation at the historic mine site. Development expenses increased by $0.3$0.1 million and $1.1$0.2 million during the three and ninesix months ended June 30, 2020, compared to the same periods in 2019. The increases related to the timing of the claim payments as discussed above and costs associated with completing the licensing of LC East and Shirley Basin.

34


2016.  The increase was primarily related to the limited development activities at MU2, including the drilling and construction activities associated with the first three header houses.

G&A expense relates to the administration, finance, investor relations, land and legal functions of the Company and consists principally of personnel, facility and support costs. Total G&A expense decreased $0.9 million for the six months ended June 30, 2020 compared to 2019 but was little changedcomparable for the three month periods ended June 30. The year-to-date decrease was mainly attributable to the decision to not pay the bonus awards, and nine months ended September 30, 2017 compared to 2016. a reduction in legal and related fees associated with the Section 232 trade action incurred in 2019.

Other Income and Expenses

Net interest expense declined $0.1 and $0.5 millionremained consistent during the three and ninesix months ended SeptemberJune 30, 20172020 compared to the prior year. The expense decline was directly attributable toIn October 2019, the State granted a six-quarter deferral of principal payments reducingon the outstanding note balancesState Bond Loan, so the principal balance did not change significantly.

As a part of the Wyoming state loanSeptember 2018 public offering, we sold 13,062,878 warrants priced at $0.01 per warrant. As the warrants are priced in US$ and the payoff in 2016functional currency of the RMB loan.

In 2016,Ur-Energy Inc. is Cdn$, this created a derivative financial liability. The fair value of the Company performedliability is adjusted quarterly impairment analyses based onusing the mineralization atBlack-Scholes technique as there is no active market for the Bootheel property andwarrants. Any income or loss is reflected in net income for the then current spot price.  It determined that impairments reflecting the then current spot price were warranted, whichperiod. The revaluation as of June 30, 2020 resulted in a chargeloss of $0.9$0.2 million for the quarter and $1.1a gain of less than $0.1 million for the nine months. Upon further analysis, it was determined that the deteriorating market conditions have made the investment not currently economically viable.  Therefore,six month period ended June 30, 2020, while the ownership interest will continue to be carried byrevaluation in 2019 resulted in losses for the Companythree and the related resources retained, the Company wrote off the remaining basis in the investment assix month periods ended June 30, 2019 of December 31, 2016.$0.1 million and $0.6 million, respectively.

Earnings and Loss(loss) per Common Share

The basic earnings (loss)and diluted losses per common share for the three and ninesix months ended SeptemberJune 30, 20172020 were ($0.02)$0.01 and $0.02,$0.04, respectively, andcompared to basic and diluted earnings (loss)losses of $0.01 and ($0.02) for 2016. The diluted loss$0.04 per common share for the three months ended September 30 2017 and the nine months ended September 30, 2016same periods in 2019. The diluted losses per common share were equal to the basic losslosses per common share due to the anti-dilutive effect of all convertible securities outstanding given thatas there is no dilution for options, warrants and RSUs when net losses wereare experienced.  For the nine months ended September 30, 2017, there were 909,956 RSUs included in the diluted earnings per share calculations.  For the three months ended September 30, 2016, there were 652,961 RSUs included in the diluted earnings.  The result was diluted earnings per share of $0.2 and $0.1 for the respective periods.  Dilution from options and warrants were not included as the strike price exceeded the then current market price of the Common Shares.

Liquidity and Capital Resources

As of SeptemberJune 30, 2017,2020, we had cash resources consisting of cash and cash equivalents of $2.1$5.6 million, an increasea decrease of $0.6$2.2 million from the December 31, 20162019 balance of $1.5$7.8 million. The cash resources consist of Canadian and U.S. dollar denominated deposit accounts and money market funds. We generated $2.8used $3.0 million fromfor operating activities during the ninesix months ended SeptemberJune 30, 2017.2020. During the same period, we used $0.2less than $0.1 million for investing activities, and $2.1generated $0.9 million forfrom financing activities.

On October 23, 2013, we closed a $34.0 million Sweetwater County, State of Wyoming, Taxable Industrial Development Revenue Bond financing program (“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 iswas to be payable in 28 quarterly installments which commenced January 1, 2015 and continue through October 1, 2021.2015. The State Bond Loan is secured by all of the assets at the Lost Creek Project. As of SeptemberJune 30, 2017,2020, the balance of the State Bond Loan was $21.0$12.4 million. On October 1, 2019, the Sweetwater County Board of Commissioners and the State of Wyoming approved a six-quarter deferral of principal payments beginning October 1, 2019. As at July 31, 2020, quarterly principal payments are scheduled to resume on April 1, 2021, with two payments falling due within the 12 months from the as at date.

On April 16, 2020, we obtained two SBA PPP loans (one for each of our subsidiaries with U.S. payroll obligations) through the 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 we qualified for was $0.9 million.

35


The Flexibility Act, which became law on June 5, 2020, 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, 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. To have the full amount of the loans forgiven, the following requirements must be met within that period, and be sufficiently documented in the application for forgiveness:

(1)Spend not less than 60% (previously 75%) of loan proceeds on eligible payroll costs.
(2)Spend the remaining loan proceeds on
(a)additional eligible payroll costs above 60%;
(b)payments of interest on mortgage obligations incurred before February 15, 2020;
(c)rent payments on leases dated before February 15, 2020; and/or
(d)utility payments under service agreements dated before February 15, 2020.
(3)Maintain employee compensation levels (subject to specific program requirements).

For any portion of the loans that is not forgiven, the program provides 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). Any remaining amount owing on the loan has a two-year maturity (April 16, 2022), unless renegotiated with the lender for up to a five-year term, with an interest rate of one percent per annum. We anticipate the loans will meet the requirements for forgiveness under this program, but at this time we have not yet applied for or received loan forgiveness.

On August 19, 2014,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,Common Shares, warrants to purchase our Common Shares, our senior and subordinated debt securities, and rights to purchase our Common Shares and/or our senior and subordinated debt securities. The registration statement became effective September 12, 2014.May 27, 2020 for a three-year period. Subsequent to June 30, 2020, we utilized the registration statement for a $4.68 million registered direct offering.  See note 17 to the Unaudited Interim Consolidated Financial Statements – Subsequent Event, for the details of the offering.

On May 27, 2016,29, 2020, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with MLV & Co. LLC andB. Riley FBR, Capital Markets & Co.Inc., as amended August 2017, under which 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 distribution agentsagent for aggregate sales proceeds of up to $10,000,000. During 2017, weThe Sales Agreement replaces the prior At Market Issuance Sales Agreement entered into by the Company on May 27, 2016, as amended. We have sold 1,536,169 Common Shares undernot used the sales agreementfacility in 2020.

On July 31, 2020, the Company announced 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 an averagea combined public offering price of $0.76$0.52 per common share forand accompanying warrant, with gross proceeds to the Company of $1.2$4.68 million. After deducting transactionestimated fees and commissions we receivedexpenses of approximately $0.4 million, net proceeds of $1.1to the Company are expected to be $4.3 million.

During 2017, a total of 549,952 stock options have been exercised, which has generated $0.3Collections from U3O8 sales for the six months ended June 30, 2020 totaled $8.3 million.

Collections for the nine months from U3O8 sales totaled $30.5 million. 

Operating activities generatedused cash of $2.8$3.0 million during the ninesix months ended SeptemberJune 30, 20172020 as compared to $5.6generating $2.7 million during the same period in 2016.2019. The net incomeprimary reason for the nine months ended September 30, 2017 was $6.6 million greater thanvariance is that 2019

36

included sales of existing inventory and 2020 did not.  In 2019, we sold 213,750 pounds from inventory that we produced and paid for in 2018. As a result, all 2019 sales proceeds related to the corresponding loss in 2016. Atproduced pounds contributed to cash provided by operating activities for the endyear.  In 2020, all sales were from purchased product and the cost of the third quarter we sold $7.8 millionpurchased pounds reduced the amount of produced uranium, butcash provided by operating activities for the proceeds were not received until early October.  In 2016, we generated $5.1 million from the assignment of deliveries scheduled for later in 2016 to a uranium trader.year.

During the first nine months of 2017, the Company used $3.4 million for principal payments on the Sweetwater debt.  This was partially offset by the $1.1 million (net) from the sales of shares under the At Market Issuance Sales Agreement and $0.3 million from the exercise of stock options.

Liquidity Outlook

As at October 25, 2017,July 31, 2020, our unrestricted cash position was $9.1$4.1 million. In September 2017, we sold 180,000 pounds

On July 31, 2020, the Company announced a $4.68 million registered direct offering of uranium for9,000,000 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 $7.8$4.68 million. After estimated fees and expenses of approximately $0.4 million, net proceeds to the Company are expected to be $4.3 million, which wereare expected to be received on or about August 4, 2020.

In addition to our cash position and expected registered direct offering net proceeds, our finished, ready-to-sell, conversion facility inventory is immediately realizable, if necessary. While our current cash position should be sufficient to cover our expected expenditures for the remainder of the year, we anticipate selling a significant portion of our existing finished-product inventory in early October.  Our next contract sales are scheduled2021 at market prices in effect at that time, unless market conditions change, or we choose to take place in early January 2018.obtain additional financing.

We expect that any major capital projects will be funded by operating cash flow, cash on hand, sales of existing inventories, and/or additional financing as required. If these cash sources are not sufficient, certain capital projects could be delayed, or alternatively we may need to pursue additional debt or equity financing to which there is no assurance that such financing will be available at all or on terms acceptable to us. We have no immediate plans to issue additional securities or obtain funding other than that which may be required due to the uneven nature of cash flows generated from operations;funding; however, we may issue additional debt or equity securities at any time.

Looking aheadAhead

Following multiple announcements of industry production suspensions and reductions earlier this year, U3O8 spot prices increased nearly 33 percent to $33 per pound in June. U3O8 spot prices have traded between $32 and $34 per pound since April. The production cuts amount to as much as 46 million pounds of primary production on an annualized basis and are expected to widen the supply deficit as global demand continues to grow.

At

On April 23, 2020, the endWorking Group released its Plan to Revitalize the Domestic Uranium Mining Industry, which details the steps required to revitalize the domestic uranium mining and broader nuclear industries. As set forth above, the most relevant recommendation for the uranium mining sector is that the U.S. government should make direct purchases of 17 to 19 million total pounds of U3O8 to replenish the American Assured Fuel Supply uranium reserve. Additionally, the report recommends the establishment of a national uranium reserve, which is included in the President’s Fiscal Year 2021 Budget Request; during the first year, it is expected that the reserve would directly support the operation of at least two U.S. uranium mines. The budget item is for $150 million per year from FY2021 to FY2030. However, in July the U.S. House Committee on Appropriations decided not to fund the budget item without further information from DOE, for which they directed DOE to submit a plan for the proposed establishment of a uranium reserve within six months of the third quarterappropriation bill’s enactment.

37

Additionally, the average spot pricereport calls for support of U3O8,the DOC efforts to extend the Russian Suspension Agreement to protect against future uranium dumping through implementation of a lower cap on Russian imports. Consistent with many of the conclusions in the report finding myriad national security concerns, another of the recommendations is that NRC be permitted to deny imports of nuclear fuel fabricated in Russia or China for national security purposes. In its ground-up approach, the report then recommended a restart of the U.S.’s sole conversion plant and thereafter the restart of domestic enrichment, with reserved amounts for unobligated material, which is material used for national defense needs. By law, unobligated material must be sourced domestically.

In July 2020, Energy Secretary Brouillette told the House Energy and Commerce Subcommittee on Energy that DOE is working to end U.S. reliance on Russia for nuclear fuel. DOE wants to process American-sourced uranium into high-grade fuel at the DOE facility in Portsmouth, Ohio next year. Centrifuges have been moved from DOE’s Oak Ridge laboratories to Portsmouth. Additionally, DOE is working with lawmakers to authorize the creation of the uranium reserve.

On July 30, 2020, U.S. Senator Barrasso, Chairman of the Senate Committee on Environment and Public Works, introduced draft legislation designed to revitalize the country’s nuclear infrastructure.  The American Nuclear Infrastructure Act of 2020, as reportedit is known, includes the authorization for a uranium reserve to fuel America’s nuclear reactors with domestic fuel, among other items to preserve America’s uranium industry.  Similar legislation was introduced in the House of Representatives by Ux Consulting Company, LLCRepresentatives Cheney and TradeTech, LLC, was approximately $20.33 per pound. Market fundamentalsLatta on July 29. The Senate draft legislation is scheduled for a legislative hearing on August 5.

Still, no specific action or remedies have not changed sufficientlyresulted from the Working Group’s plan at this time and, while the report is strong in its recommendations, there can be no certainty of the final outcome of the Working Group’s findings and recommendations, or the timing and impact of any actions taken in response to warrantthose findings and recommendations. This includes both the accelerated developmentCongressional budget appropriations process and recently proposed legislation related to the national uranium reserves. The outcome of MU2. these continuing processes and its effects on the U.S. uranium market, therefore, remains uncertain.

We continue to maintain operational readiness at our fully permitted Lost Creek Mine with experienced technical and operational staff and a well-maintained plant. After nearly seven years of production at Lost Creek, we are developing MU2 at a controlled rate as approved by our Board of Directorsstill producing in the first quarter,mine unit and the initial three header houses of the second mine unit. Ur-Energy is prepared to rapidly expand uranium production at Lost Creek, to an annualized run rate of one million pounds.

The Lost Creek facility has the constructed and licensed capacity to process up to two million pounds of U3O8 per year and the previously reported mineral resources to feed the processing plant for many years to come. A ramp-up of production at Lost Creek will continue with further development in the first two mine units, followed by the ten additional mining areas as defined in the Lost Creek Property Preliminary Economic Assessment, as amended. With future development and construction in mind, our current staff members were retained as having the greatest level of experience and adaptability allowing for an easier transition back to full operations. Lost Creek operations can increase to full production rates in as little as six months following a go decision, simply by developing additional header houses within the fully permitted MU2. Development expenses during this six-month ramp up period are estimated to be approximately $14 million and are almost entirely related to MU2 drilling and header house construction costs.

38

We will continue to closely monitor the uranium market and any actions or remedies resulting from the Working Group’s report, DOE’s and DOC’s efforts, or legislative actions which will allow uspositively impact the uranium production industry. Until such time, we will continue to produce at a level that will satisfy a portion of our term contracts.

36


In March, we implemented a limited reduction in labor force, which will serveminimize costs and maximize ‘runway’ to further streamline ourmaintain current operations and is expectedavoid unnecessary dilution while maintaining the operational readiness needed to reduce our labor costs by approximately $0.8 million per year.ramp-up production when called upon.

Through September 30, 2017, we sold 780,000 pounds of U3O8 under contract at an average price of approximately $49 per pound.  We purchased 519,000 pounds at an average cost of $21 per pound. The remaining 261,000 pounds were delivered from our produced inventory. We do not anticipate any further sales this year.

We expect to bring the second MU2 header house on line in 2017 Q4 and the 2017 Q4 production target for Lost Creek is between 65,000 and 75,000 pounds U3O8 dried and drummed. Full year 2017 production guidance is unchanged at between 250,000 and 300,000 pounds, but our production rate may be adjusted based on operational matters and other indicators in the market.

As at October 25, 2017, our unrestricted cash position was $9.1 million.

Transactions with Related Parties

There were no transactions with related parties during the quarter.

Proposed Transactions

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, 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.

As of SeptemberJune 30, 2017,2020, the average current spot and long termlong-term prices of U3O8 were $20.33$35.50 and $30.50,$32.80 respectively. This compares to prices of $20.25$24.93 and $30.00$32.50 as of December 31, 2016. As2019. The prices have remained relatively steadydeclined slightly since December 31, 2016 and no other factorsMay primarily based on a lack of volume. The long-term prices have not yet responded to the trend as there have been identified, management has not done any additional impairment testing.virtually no transactions in this category.  

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.

37


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.

39

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 warrants is recalculated quarterly 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.

New accounting pronouncements which may affect future reporting

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).”  The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606 Revenue from Contracts with Customers.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of the promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Early application is not permitted.  We have reviewed our contracts as well as our procedures and do not anticipate any changes in the manner or timing with which we reflect our revenues.

In January 2016, the FASB issued ASU 2016-1, Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825). The amendments in this ASU supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be remeasured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. The amendments improve financial reporting by providing relevant information about an entity’s equity investments and reducing the number of items that are recognized in other comprehensive income. This guidance is effective for annual reporting beginning after December 15, 2017, including interim periods within the year of adoption, and calls for prospective application, with early application permitted. Accordingly, the standard is effective

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for us beginning in the first quarter of fiscal 2018. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize all leases, including operating leases, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted.  Now, the only leases we hold are for equipment, office space in one location and a limited number of leases on selected mineral properties.  We do not anticipate the additional disclosures to reflect those leases will have an impact on our statement of financial position, as the total future lease payments are not material.

New accounting pronouncements which were implemented this year

In July 2015, the FASB issued ASU No. 2015-11,Inventory (Topic 330): Simplifying the Measurement of Inventory.  ASU 2015-11 requires that inventory within the scope of this ASU be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments apply to all inventory, measured using average cost which is how the Company measures inventory. For all entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. This is consistent with our past policies and had no financial or reporting impact when implemented during the first quarter.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation - Improvements to Employee Share-Based Payment Accounting (Topic 718), which involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  Under the new standard, income tax benefits and deficiencies are to be recognized as income tax expense or benefit in the income statement and the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period.  Excess tax benefits should be classified along with other income tax cash flows as an operating activity.  Regarding forfeitures, the entity may make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. This ASU is effective for fiscal years beginning after December 15, 2016 including interim periods within that reporting period.  We currently recognize no income tax expense or benefit due to significant income tax credits and net operating losses which are fully reserved under a valuation allowance. There was therefore no effect on our accounting or reporting at the time of implementation earlier this year. We have made the election to continue to recognize losses from forfeitures at inception rather than when they vest or occur.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows – Restricted Cash a consensus of the FASB Emerging Task Force (Topic 230), which addresses the presentation of restricted cash in the statement of cash flows.  Under the new standard, restricted cash will be presented with cash and cash equivalents in the statement of cash flows instead of being reflect as non-cash investing or financing activities.  A reconciliation of the make-up of the end ending cash, cash equivalent and restricted cash balance will be required for entities who reflect restricted cash as separate items on the statement of financial position.  In addition, a description of the restrictions on the cash will be required.  This ASU is effective for fiscal years beginning after December 15, 2017 including interim periods within that reporting period, however early adoption is permitted.  We elected to adopt this standard as of the first quarter.  Accordingly, the cash balances reflected in the Statement of Cash Flows have been increased by $7.6 million which has been the restricted cash balance since December 31, 2015.  In addition, we have added note 14 – Supplemental Information to the

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Statement of Cash Flows which reconciles the cash balances shown on the Statement of Cash Flows with the appropriate balances on the Balance Sheet.

Off Balance Sheet Arrangements

We have not entered into any material off-balanceoff 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 25, 2017,July 31, 2020, we had outstanding 146,009,205160,478,059 Common Shares and 8,330,08510,824,785 options to acquire Common Shares.

Item 3.  QUANTITAVEQUANTITATIVE 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 financings.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.

Currency risk

At SeptemberJune 30, 2017,2020, we maintained a balance of approximately $0.2$0.3 million in foreign currency resulting in a low currency risk which is our typical balance.

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Commodity Price Risk

The Company is subject to market risk related to the market price of U3O8. We have U3O8 supply contracts with pricing fixed or based on inflation factors applied to a fixed base. Additional future sales would be impacted by both spot and long-term U3O8 price fluctuations. Historically, U3O8 prices have been subject to fluctuation, and the price of U3O8 has been and will continue to be affected by numerous factors beyond our control, including the demand for nuclear power, political and economic conditions, and governmental legislation in U3O8 producing and consuming countries and production levels and costs of production of other producing companies. The spot market price for U3O8 has demonstrated a large range since January 2001. Prices have risen from $7.10 per pound at January 2001 to a high of $136.00 per pound as of September 2007. The spot market price was $20.25$32.45 per pound as of October 25, 2017July 31, 2020 as reported by TradeTech.TradeTech, LLC and UxC, LLC.

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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 inInternal Controls over Financial Reporting

No changes in our internal control over financial reporting occurred during the ninesix months ended SeptemberJune 30, 20172020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. LEGAL PROCEEDINGSPROCEEDINGS

No new legal proceedings or material developments in pending proceedings.

Item 1A. RISK FACTORSFACTORS

There have been no material changes for the nine months ended September 30, 2017 from thoseIn addition to our previously stated risk factors, set forth in our Annual Report on Form 10-K.10-K, we add the following with respect to COVID-19 (Coronavirus).

COVID-19 (Coronavirus), declared a pandemic in March 2020, has had a significant negative impact on the global economy and commodity and equity markets, and the outlook remains uncertain. Although none of our staff has yet been directly affected, falling ill, the pandemic situation poses risk to our business and operations,

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and could adversely impact our operations, business and financial condition if our employees, regulators, suppliers or other business partners are prevented from conducting routine operations for periods of time. While we are monitoring these conditions including government restrictions on movement and operations, it is impossible to predict the extent of any such impact or the levels of success of responsive actions to impacts, as the circumstances continue to evolve, including in unforeseeable ways. We are a highly-regulated industry and while the regulators are standing by to address operational impacts from illness, governmental restrictions and other effects, it remains uncertain whether all impacts can be timely addressed with our operations and with the regulators. We are and will remain fully engaged with our employees in our efforts to protect their health and safety.

To the extent the COVID-19 (Coronavirus) pandemic may adversely affect our business and financial results as discussed above, it may also have the effect of heightening many of the other risks described under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2019 such as those relating to our ability to access additional capital, which could negatively affect our business. Because of the highly uncertain and dynamic nature of events relating to the COVID-19 pandemic, it is not currently possible to estimate the impact of the pandemic on our business. However, these effects could have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely.

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

None

Item 3. DEFAULTS UPON SENIOR SECURITIESSECURITIES

None

Item 4. MINE SAFETY DISCLOSUREDISCLOSURE

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.

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Item 5. OTHER INFORMATION

None

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Item 6. EXHIBITSEXHIBITS

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*101.INS

Inline XBRL Instance Document

X

101.SCH*101.SCH

Inline XBRL Schema Document

X

101.CAL*101.CAL

Inline XBRL Calculation Linkbase Document

X

101.DEF*101.DEF

Inline XBRL Definition Linkbase Document

X

101.LAB*101.LAB

Inline XBRL Labels Linkbase Document

X

101.PRE*101.PRE

Inline XBRL Presentation Linkbase Document

X

104

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

X

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed not filed for purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

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SIGNATURES

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.

UR -ENERGY INC.

Date: October 27, 2017August 5, 2020

By:

/s/ Jeffrey T. Klenda

Jeffrey T. Klenda

Chief Executive Officer

(Principal Executive Officer)

Date: October 27, 2017August 5, 2020

By:

/s/ Roger L. Smith

Roger L. Smith

Chief Financial Officer

(Principal Financial Officer and

Principal Accounting Officer)

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