Ur-Energy Releases 2017 Year End Results
News Release
10758 W. Centennial Rd. Suite 200
Littleton, CO 80127
Phone: 720.981.4588
Fax: 720.981.5643
www.ur-energy.com
Ur-Energy Releases 2017 Year End Results
Littleton, Colorado (PR Newswire – March 2, 2018) Ur-Energy Inc. (NYSE American:URG TSX:URE) (“Ur-Energy”
or the “Company”) has filed the Company’s Annual Report on Form 10-K, Consolidated Financial Statements, and
Management’s Discussion & Analysis, all for the year ended December 31, 2017, with the U.S. Securities and
Exchange Commission on EDGAR at www.sec.gov/edgar.shtml and with Canadian securities authorities on SEDAR
at www.sedar.com. These filings also may be accessed on the Company’s website at www.ur-energy.com.
Shareholders of the Company may receive a hard copy of the consolidated financial statements, free of charge,
upon request to the Company.
Ur-Energy CEO, Jeff Klenda provided the following on the Company’s 2017 performance: “Despite difficult market
conditions, which persisted throughout the year, I am ve ry pleased to report that we generated $14.0 million in
gross profits and $5.4 million in free cash flows, while at the same time improving our safety performance and not
subjecting our shareholders to unwanted dilution. Our people made this possible through their hard work,
initiative, and innovative approaches to the operation of this Company. I would like to express my deep gratitude
for their many contributions.
“Still, uneven trade practices continue to put pressure on an already weakened market, forcing additional
production cuts, cost reductions and unfortunately, the loss of valuable, highly-experienced employees, who
either leave due to the vagaries of the situation, or are forced to leave as more and more cut backs are announced.
The situation is not simply a matter of project economic s, for as you know, our Lost Creek project is a very
economical project, but one of far greater importance: th e national security of our very own country. It is for
this, and many other reasons, that we participated in the filing under Section 232 of the Trade Expansion Act of
1962. Rest assured, we will do what we can to prot ect our employees, our shareholders, our Company and our
nation from this growing dependence on foreign uranium products, which is contrary to U.S. national security.”
Financial Results
The Company ended the year with a cash and cash equiva lents balance of $3.9 million. We recognized a gross
profit of $14.0 million on sales of $38.4 million during 2017. The gross profit from uranium sales was $13.9 million
in 2017, which represents a gross profit margin of a pproximately 36%. The Company realized an average price
per pound sold of $49.09, as compared to $39.49 in 20 16. The increase was primarily due to higher average
contract prices in 2017 as compared to 2016. Also, there were no spot sales in 2017, while 2016 included spot
sales that lowered the average price for that year. Our cash cost per pound sold for the year was $24.08 while our
total cost per pound sold was $31.28. Respectively, this compares to $17.15 and $28.20 in 2016.
We recorded $1.4 million income from operations after deducting total operating expenses of $12.6 million, which
includes exploration and evaluation expenses, development expenses and general and administrative expenses.
After recording interest and other expenses, the net earnings before income taxes for the year was $0.1 million,
as compared to a net loss before incomes taxes of $3.0 million in 2016. As at February 28, 2018, our unrestricted
cash position was $7.5 million.
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Lost Creek Operations
During 2017, 265,391 pounds of U3O8 were captured within the Lost Creek plant. A total of 254,012 pounds were
packaged in drums and 257,213 pounds of the drummed inventory were shipped to the conversion facility where
261,000 produced pounds were sold to utility customers. The cash cost per pound and non-cash cost per pound
for produced uranium presented in the following Production Costs and U 3O8 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 manage ment to assess business performance and determine
production and pricing strategies. They may also be used by certain investors to evaluate performance.
Production figures for the Lost Creek Project are as follows:
Production and Production Costs Unit 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 YTD
Pounds captured lb 67,982 52,812 65,257 79,340 265,391
Ad valorem and severance tax $000 $ 160 $ 119 $ 227 $ 241 $ 747
Wellfield cash cost (1) $000 $ 686 $ 743 $ 599 $ 889 $ 2,917
Wellfield non-cash cost (2) $000 $ 574 $ 730 $ 780 $ 776 $ 2,860
Ad valorem and severance tax per
pound captured $/lb $ 2.35 $ 2.25 $ 3.48 $ 3.04 $ 2.81
Cash cost per pound captured $/lb $ 10.09 $ 14.07 $ 9.18 $ 11.20 $ 10.99
Non-cash cost per pound captured $/lb $ 8.44 $ 13.82 $ 11.95 $ 9.78 $ 10.78
Pounds drummed lb 60,461 48,336 70,833 74,382 254,012
Plant cash cost (3) $000 $ 1,210 $ 1,120 $ 1,267 $ 1,488 $ 5,085
Plant non-cash cost (2) $000 $ 493 $ 494 $ 491 $ 491 $ 1,969
Cash cost per pound drummed $/lb $ 20.01 $ 23.17 $ 17.93 $ 20.00 $ 20.02
Non-cash cost per pound drummed $/lb $ 8.15 $ 10.20 $ 6.93 $ 6.61 $ 7.75
Pounds shipped to conversion facility lb 73,367 36,797 74,406 72,643 257,213
Distribution cash cost (4) $000 $ 48 $ 24 $ 26 $ 47 $ 145
Cash cost per pound shipped $/lb $ 0.65 $ 0.65 $ 0.35 $ 0.65 $ 0.56
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
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 th e 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.
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In total, wellfield, plant and distribution cash costs we re very consistent quarter on quarter during 2017. The
respective cash costs per pound increased overall during th e year primarily driven by decreasing levels of
production.
U3O8 Sales and Cost of Sales
Sales and cost of sales Unit 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 YTD
Pounds sold lb - 289,000 241,000 250,000 780,000
U3O8 sales $000 $ - $ 11,674 $ 11,797 $ 14,819 $ 38,290
Average contract price $/lb $ - $ 40.39 $ 48.95 $ 59.28 $ 49.09
Average price per pound sold $/lb $ - $ 40.39 $ 48.95 $ 59.28 $ 49.09
U3O8 cost of sales (1) $000 $ 376 $ 11,157 $ 6,573 $ 6,295 $ 24,401
Ad valorem and severance tax cost
per pound sold $/lb $ - $ 3.15 $ 4.26 $ 4.00 $ 3.60
Cash cost per pound sold $/lb $ - $ 29.11 $ 31.54 $ 26.12 $ 29.51
Non-cash cost per pound sold $/lb $ - $ 17.52 $ 19.13 $ 15.48 $ 17.92
Cost per pound sold - produced $/lb $ - $ 49.78 $ 54.93 $ 45.60 $ 51.03
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 $ 31.28
U3O8 gross profit $000 $ (376) $ 517 $ 5,224 $ 8,524 $ 13,889
Gross profit per pound sold $/lb $ - $ 1.78 $ 21.68 $ 34.10 $ 17.81
Gross profit margin % 0.0% 4.4% 44.3% 57.5% 36.3%
Ending Inventory Balances
Pounds
In-process inventory lb 26,796 22,306 19,010 28,164
Plant inventory lb 9,043 21,948 10,446 14,019
Conversion facility inventory lb 94,077 17,813 160,094 113,528
Total inventory lb 129,916 62,067 189,550 155,711
Total cost
In-process inventory $000 $ 315 $ 221 $ 352 $ 712
Plant inventory $000 $ 369 $ 824 $ 479 $ 670
Conversion facility inventory $000 $ 3,831 $ 675 $ 6,620 $ 4,379
Total inventory $000 $ 4,515 $ 1,720 $ 7,451 $ 5,761
Cost per pound
In-process inventory $/lb $ 11.76 $ 9.92 $ 18.46 $ 25.28
Plant inventory $/lb $ 40.81 $ 37.53 $ 45.85 $ 47.79
Conversion facility inventory $/lb $ 40.72 $ 37.89 $ 41.35 $ 38.57
Note:
1. Costs of sales include all production costs (notes 1, 2, 3 and 4 in the previous Production and Production Costs
table) adjusted for changes in inventory values.
There were no U 3O8 sales in Q4. For the year, we sold 780,000 pounds all of which were under contract at an
average price per pound of $49.09 for total uranium sales of $38.3 million. There were no spot sales during the
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year. A total of 261,000 pounds were sold from Lost Creek production. Additionally, we sold 519,000 purchased
pounds into our contractual obligations.
In 2017 Q4, our cost of sales totaled $0.3 million. This is the result of lower of cost or net realizable value inventory
adjustments which are included in our cost of sales, recorded during the quarter. For the year, our average cost
per pound sold was $31.28, as compared to $28.20 in 2016. In 2017, we purchased 519,000 pounds at an average
price of $21.35 per pound. The average cost of the 261, 000 pounds we sold from production was $51.03 per
pound. As previously discussed, our produced costs per pound were substantially higher than in 2016 due to lower
volumes. This, combined with the write down of $2.6 million from lower of cost or net realizable value
adjustments, increased our cost of produced product sold by $10.34 per pound.
On a combined basis, the total avera ge cost per pound sold of $31.28 was composed of $1.20 per pound for ad
valorem and severance taxes, $24.08 per pound of cash costs from production and purchases, and $6.00 per
pound of non-cast costs related to production.
At the end of the year, we had approximately 94,077 pounds of U3O8 at the conversion facility at an average cost
per pound of $40.72. The following table shows the average cost per pound of the conversion facility pounds.
Ending Conversion Facility Inventory
Cost Per Pound Summary Unit 31-Dec-17 30-Sep-17 30-Jun-17 31-Mar-17
Ad valorem and severance tax cost per pound $/lb $ 1.65 $ 2.41 $ 2.82 $ 2.74
Cash cost per pound $/lb $ 25.31 $ 22.47 $ 24.62 $ 23.48
Non-cash cost per pound $/lb $ 13.76 $ 13.01 $ 13.91 $ 12.35
Total cost per pound $/lb $ 40.72 $ 37.89 $ 41.35 $ 38.57
Generally, the cost per pound in ending inventory at the conversion facility increased during the year. The increase
was directly related to the lower production figures as production costs were relatively consistent, or decreasing
slightly, during the year.
US GAAP Reconciliations
The cash costs, non-cash costs and per pound calculations are non-US GAAP measures we use to assess business
performance. To facilitate a better understanding of these measures, the tables below present a reconciliation of
these measures to the financial results as presented in our financial statements.
Average Price Per Pound Sold
Reconciliation Unit 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 YTD
Sales per financial statements $000 $ 26 $ 11,693 $ 11,821 $ 14,828 $ 38,368
Less disposal fees $000 $ (26) $ (18) $ (24) $ (9) $ (77)
U3O8 sales $000 $ - $ 11,675 $ 11,797 $ 14,819 $ 38,291
Pounds sold - produced lb - 180,000 31,000 50,000 261,000
Pounds sold - purchased lb - 109,000 210,000 200,000 519,000
Total pounds sold lb - 289,000 241,000 250,000 780,000
Average price per pound sold $/lb $ - $ 40.40 $ 48.95 $ 59.28 $ 49.09
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Total Cost Per Pound Sold
Reconciliation 1 Unit 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 YTD
Ad valorem & severance taxes $000 $ 160 $ 119 $ 227 $ 241 $ 747
Wellfield costs $000 $ 1,260 $ 1,473 $ 1,379 $ 1,665 $ 5,777
Plant and site costs $000 $ 1,703 $ 1,614 $ 1,761 $ 1,979 $ 7,057
Distribution costs $000 $ 48 $ 24 $ 26 $ 47 $ 145
Inventory change $000 $ (2,795) $ 5,731 $ (1,690) $ (1,652) $ (406)
Cost of sales - produced $000 $ 376 $ 8,961 $ 1,703 $ 2,280 $ 13,320
Cost of sales - purchased $000 $ — $ 2,196 $ 4,870 $ 4,015 $ 11,081
Total cost of sales $000 $ 376 $ 11,157 $ 6,573 $ 6,295 $ 24,401
Pounds sold produced lb — 180,000 31,000 50,000 261,000
Pounds sold purchased lb — 109,000 210,000 200,000 519,000
Total pounds sold lb — 289,000 241,000 250,000 780,000
Average cost per pound sold -
produced (1) $/lb $ - $ 49.78 $ 54.93 $ 45.60 $ 51.03
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 $ 31.28
Note:
1. The cost per pound sold reflects both cash and non-cash costs, which are combined as cost of sales in the
statement of operations included in this filing. The ca sh and non-cash cost components are identified in
the above production cost table.
The cost of sales includes ad valorem and severance taxes related to the extraction of uranium, all costs of
wellfield, plant and site operations including the related depreciation and amortizati on of capitalized assets,
reclamation and mineral property costs, plus product dist ribution costs. These costs are also used to value
inventory and the resulting inventoried cost per pound is compared to the estimated sales prices based on the
contracts or spot sales anticipated for the distribution of the product. Any costs in excess of the calculated market
value are charged to cost of sales.
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Year Ended December 31, 2017 Compared to Year Ended December 31, 2016
The following table summarizes the results of operations for the years ended December 31, 2017 and 2016 (in
thousands of U.S. dollars):
Year ended December 31,
2017 2016
$ $
Sales 38,368 27,305
Cost of sales (24,401) (15,848)
Gross profit 13,967 11,457
Exploration and evaluation expense (2,623) (2,964)
Development expense (4,340) (2,886)
General and administrative expense (5,090) (4,740)
Accretion expense (527) (534)
Write-off of mineral properties - (62)
Net profit (loss) from operations 1,387 271
Interest expense (net) (1,377) (1,977)
Warrant mark to market gain - 36
Loss from equity investment (5) (5)
Write-off of equity investments - (1,089)
Foreign exchange loss (50) (278)
Other income 121 15
Income (loss) before income taxes 76 (3,027)
Income tax recovery (net) - 17
Net income (loss) 76 (3,010)
Income (loss) per share – basic 0.00 (0.02)
Income (loss) per share – diluted 0.00 (0.02)
Revenue per pound sold 49.09 39.49
Total cost per pound sold 31.28 28.20
Gross profit per pound sold 17.81 11.29
Guidance for 2018
In 2017, the average spot price per pound of U 3O8, as reported by Ux Consulting Company, LLC and TradeTech,
LLC, increased approximately 17% from $20.25 in December 2016 to about $23.75 per pound in December 2017.
In early 2017, spot pricing moved higher on news of supply-side reductions, only to retreat to the $20 level, where
it remained until November 2017. In November, spot prices again increased following several new supply-side
announcements. Thus far in 2018, th e average spot price per pound of U 3O8 has decreased to $21.63 as of
February 28, indicating the fundamentals of market pricin g have not changed sufficiently to warrant further
development of MU2.
In response to this persistently weak uranium market, we took aggressive measures in 2016 and 2017, and will
again do so in 2018. In 2016, we deliberately slowed development activities at MU2, reduced costs, and focused
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on enhancing production efficiencies from our operating MU1 header houses. In 2017, we continued to employ
this limited-development strategy, implemented further cost reductions, and supplemented existing mine
production with favorably priced uranium purchases to meet our 2017 contractual commitments. For 2018, we
have suspended further MU2 development activities, implemented further cost reductions, and secured purchase
contracts for nearly 100% of our 2018 delivery obligations.
For 2018, we expect to sell 470,000 pounds under term contracts at an average price of approximately $49 per
pound. We have entered into purchase contracts to cover 460,000 pounds at an average price of approximately
$24 per pound. Production from our operating MU1 and MU2 header houses, expected to be between 250,000
and 350,000 pounds, will be used to build an inventor y position of finished, ready-to-sell, product at the
conversion facility.
We recently implemented a limited reduction in force to further streamline our operations and reduce costs. This
is the third reduction in force in force in two years; the layoffs since 2016 have affected personnel in all three
company locations. The most recent reduction was fo cused on those departments not directly related to
production and is expected to reduce our labor costs by approximately $0.6 million per year.
Together, these actions will give the Company the addition al flexibility necessary to quickly react to changing
market conditions and easily re-start development activi ties in MU2 when warranted. With future development
and construction in mind, the staff who were retained ha d the greatest level of experience and adaptability
allowing for an easier transition back to full operations.
Although we made a small (10,000 pound) spot sale in Ja nuary, we are not forecasting any further spot sales for
2018 at this time; we may, however, choose to do so if market conditions improve. We expect our average gross
profit in 2018 to be between $10 and $12 million, whic h represents a cash-basis gross profit margin of between
45% and 50%.
Operating costs in 2018 are expected to be lower than 2017 because of the suspended MU2 development
activities. Other costs including capital expenditures and loan repayments will be similar to 2017.
As at February 28, 2018, our unrestricted cash position was $7.5 million. Given our current cash resources,
contracted sales positions, and expected margins, we do not anticipate the need for additional funding in the near
term unless it is advantageous to do so.
The Company has contractual sales commitments of 470,000 pounds during 2018, at an average price of
approximately $49 per pound. We have established the schedule for those commitments and determined that an
effective model for dealing with the current pricing en vironment is to continue production from our fully
operational header houses in MU1 and MU2, and purchase uranium at favorable low-prices in order to meet our
sales commitments. This operating strategy for Lost C reek will allow us to control production costs, minimize
development expenditures, maximize cash flows and maintain the flexibility to respond to market conditions.
About Ur-Energy
Ur-Energy is a uranium mining company operating the Lost Creek in-situ recovery uranium facility in south-central
Wyoming. We have produced, packaged and shipped more than two million pounds from Lost Creek since the
commencement of operations. Applicati ons are under review by various agen cies to incorporate our LC East
project area into the Lost Creek permits, and we have be gun to submit applications for permits and licenses to
operate at our Shirley Basin Project. Ur-Energy is engaged in uranium mining, recovery and processing activities,
including the acquisition, exploration, development and op eration of uranium mineral properties in the United
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States. Shares of Ur-Energy trade on the NYSE Amer ican under the symbol “URG” and on the Toronto Stock
Exchange under the symbol “URE.” Ur-Energy’s corporate office is in Littleton, Colorado; its registered office is in
Ottawa, Ontario. Ur-Energy’s website is www.ur-energy.com.
FOR FURTHER INFORMATION, PLEASE CONTACT
Jeffrey Klenda, Chair & CEO
866-981-4588
Cautionary Note Regarding Forward-Looking Information
This release may contain “forward-looking statements” within the meaning of applicable securities laws regarding
events or conditions that may occur in the future ( e.g., results of 2018 production and the ability to meet
production targets; ability to easily restart development activities and otherwise quickly react to changing market
conditions; whether additional funding will be required in the nearterm; the outcome of the Department of
Commerce Section 232 investigation, including whether the Secretary of Commerce will make a recommendation
to the President and the nature of the recommendation, whether the President will act on the recommendation
and, if so, the nature of the action and remedy; the ex pected benefits of the proposed remedies in the trade
action, including: restoring a sustainable U.S. uranium mining industry and the benefits of a sustainable domestic
uranium mining industry to U.S. national security, bolst ering national defense, and supporting energy security;
and the expected impacts on U.S. production and the U.S. uranium mining industry) and are based on current
expectations that, while considered reasonable by management at this time, inherently involve a number of
significant business, economic and competitive risks, unc ertainties and contingencies. Factors that could cause
actual results to differ materially from any forward-looking statements include, but are not limited to, capital and
other costs varying significantly from estimates; failure to establish estimated resources and reserves; the grade
and recovery of ore which is mined varying from estimates; production rates, methods and amounts varying from
estimates; delays in obtaining or failures to obtai n required governmental, environmental or other project
approvals; inflation; changes in exch ange rates; fluctuations in commodity prices; delays in development and
other factors described in the public filings made by the Company at www.sedar.com and www.sec.gov. Readers
should not place undue reliance on forward-looking stat ements. The forward-looking statements contained
herein are based on the beliefs, expectations and opinions of management as of the date hereof and Ur-Energy
disclaims any intent or obligation to update them or revise them to reflect any change in circumstances or in
management’s beliefs, expectations or opinions that occur in the future.