Ur-Energy(URG) - 2021 Q4 - Annual Report

Part I Business and Properties Ur-Energy is a US-based uranium mining company operating the Lost Creek in-situ recovery (ISR) facility in Wyoming since 2013, with limited production in 2021 due to low uranium prices - The company is engaged in uranium mining, recovery, and processing, primarily through its Lost Creek Project in Wyoming, which began operations in 2013[28] - Due to persistent low uranium prices, production operations were limited in 2021, with only 251 pounds of U3O8 captured, and no sales of U3O8 were made in 2021[28] - The company is classified as an "exploration stage issuer" under S-K 1300 because it has not established proven or probable mineral reserves through a pre-feasibility or feasibility study[29] - The Lost Creek processing facility has a licensed capacity of up to 2.2 million pounds U3O8 per year, with about 1.2 million pounds per year allocated for its own wellfields, and excess capacity for maintenance flexibility and potential toll processing[43][44] Our Mineral Properties Ur-Energy's primary mineral assets are the Lost Creek Property and the Shirley Basin Project in Wyoming, both advanced with Lost Creek in operation and Shirley Basin fully permitted Mineral Resources Summary (as of Dec 31, 2021) | Project | Measured & Indicated (lbs U3O8) | Inferred (lbs U3O8) | Assumed Pricing (per lb) | | :--- | :--- | :--- | :--- | | Lost Creek Property | 11,914,000 | 6,607,000 | $50.80 to $66.04 | | Shirley Basin Project | 8,816,000 | - | $61.68 to $66.04 | - The Lost Creek Property consists of the core Lost Creek Project and five adjoining projects (LC East, LC West, LC North, LC South, EN), covering approximately 35,400 acres in Wyoming's Great Divide Basin[46][66] - The Shirley Basin Project, a historic mine site, is fully permitted for ISR mining, with plans to utilize a satellite plant and process loaded resin at the Lost Creek facility[91][99][44] - As of December 31, 2021, 2.735 million pounds of U3O8 have been produced from the Lost Creek Project, which has been subtracted from the Measured Resources[55][58] Competition and Mineral Prices The uranium industry is highly competitive, with prices negotiated privately and showing a significant increase in 2021 Uranium Price Trends (U3O8 per pound) | Date | Spot Price (US$) | Long-Term Price (US$) | | :--- | :--- | :--- | | End of 2020 | $30.20 | $35.00 | | End of 2021 | $42.05 | $42.75 | - Competition includes larger companies and state-owned enterprises with greater financial resources, making it difficult to secure favorable off-take agreements[127] Government Regulations The company's operations are subject to extensive and costly federal, state, and local environmental, health, and safety regulations - Operations are subject to comprehensive regulation by multiple authorities, including the WDEQ, BLM, and EPA, which can cause delays and require significant capital outlays[131][133] - The National Environmental Protection Act (NEPA) process can take months or years to complete, with regulations revised in 2020 and currently undergoing further phased amendments[134] Our Employees As of December 31, 2021, Ur-Energy employed 21 full-time and 2 part-time staff, with reduced staffing due to controlled production levels and a focus on cross-training - At year-end 2021, the company had 21 full-time employees across its Colorado and Wyoming locations, reflecting reductions in force due to controlled production levels[144][145] - Extensive cross-training at the Lost Creek site has been completed to facilitate safer operations and prepare for a smoother transition to full production[146] Risk Factors The company faces significant risks from the volatile uranium market, operational uncertainties, extensive regulations, and financial constraints - Market Risks: The uranium market is volatile and challenged by unrestricted imports from state-owned enterprises, with uncertainty surrounding the establishment of a U.S. national uranium reserve[153][154] - Operational Risks: The company operates without established mineral reserves, increasing economic and technical risk, while mining operations involve significant hazards and property titles for unpatented claims have inherent uncertainties[166][165][169] - Financial Risks: The business is capital-intensive, and future funding is not assured, with restrictive covenants in the State Bond Loan (approximately $12.4 million outstanding) limiting the ability to sell secured assets, including the Lost Creek Project[183][184] - Regulatory Risks: The business is subject to extensive and evolving environmental laws (e.g., General Mining Law amendments, EPA rulemakings) that can delay production and increase costs[163][170][172] - General Risks: The ongoing impacts of the COVID-19 pandemic on supply chains, cybersecurity threats, and the recent Russian invasion of Ukraine pose additional uncertainties to the business and global uranium markets[199][205][210] Unresolved Staff Comments The company reports no unresolved staff comments - None[212] Legal Proceedings The company reports no legal proceedings - None[213] Mine Safety Disclosure The company's operations at Lost Creek are not subject to regulation by the Federal Mine Safety and Health Administration (MSHA) - The company's operations are not subject to regulation by MSHA under the Mine Act[214] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Ur-Energy's common shares are listed on the NYSE American and Toronto Stock Exchange, with 217,193,664 shares outstanding as of March 3, 2022, and no dividends paid or planned - Common Shares are listed on the NYSE American (URG) and the Toronto Stock Exchange (URE)[218] - As of March 3, 2022, there were 217,193,664 Common Shares issued and outstanding[218] - The company has not paid any dividends and has no current intention to declare them in the foreseeable future[220] Management's Discussion and Analysis of Financial Condition and Results of Operations In 2021, Ur-Energy reported a net loss of $22.9 million with no U3O8 sales, while significantly improving liquidity to $46.2 million in cash through $54.9 million in financing activities Financial Performance Summary (2021 vs. 2020) | Metric | 2021 (in thousands USD) | 2020 (in thousands USD) | | :--- | :--- | :--- | | Sales | $16 | $8,316 | | Cost of Sales | ($7,000) | ($12,968) | | Gross Profit (Loss) | ($6,984) | ($4,652) | | Loss from Operations | ($16,757) | ($13,341) | | Net Loss | ($22,938) | ($14,785) | | Loss per Share | ($0.12) | ($0.09) | - The company made no U3O8 sales in 2021, compared to selling 200,000 pounds in 2020, with the 2021 gross loss of $7.0 million driven by a lower of cost or net realizable value (NRV) adjustment to inventory[236][268][269] - Cash and cash equivalents increased to $46.2 million at year-end 2021 from $4.3 million in 2020, primarily due to raising $54.9 million from financing activities[280] - In February 2021, the company closed a public offering for gross proceeds of approximately $15.2 million, and also raised $33.4 million in gross proceeds through its At Market (ATM) facility during 2021[248][296] - The company's $0.9 million in SBA Paycheck Protection Program (PPP) loans and accrued interest were fully forgiven in Q2 2021, resulting in a $903 thousand gain on debt forgiveness[250][278] Results of Operations In 2021, Ur-Energy reported no U3O8 sales and a $7.0 million gross loss due to an inventory write-down, while total operating costs increased to $9.8 million from $8.7 million in 2020 U3O8 Sales and Gross Profit (2021 vs. 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | U3O8 Pounds Sold | - | 200,000 | | U3O8 Sales | $0 | $8.3M | | U3O8 Cost of Sales | $0 | $5.2M | | U3O8 Gross Profit | $0 | $3.1M | | Gross Profit Margin | 0.0% | 37.8% | - Cost of sales per the financial statements included a $7.0 million lower of cost or NRV adjustment in 2021, compared to a $7.8 million adjustment in 2020[269] - Development expenses increased by $0.8 million in 2021, primarily due to drilling and supply costs for the development of Mine Unit 2 at Lost Creek[273] - At year-end 2021, the company held 283,790 pounds of U3O8 in inventory at the conversion facility, comprising 267,049 produced pounds and 16,741 purchased pounds[265] Liquidity and Capital Resources The company's liquidity significantly strengthened in 2021, with cash and cash equivalents increasing by $41.9 million to $46.2 million, driven by $54.9 million from financing activities Cash Flow Summary (2021) | Activity | Cash Flow (in millions USD) | | :--- | :--- | | Cash from Operating Activities | ($11.7) | | Cash from Investing Activities | ($1.2) | | Cash from Financing Activities | $54.9 | | Net Increase in Cash | $41.9 | - As of December 31, 2021, the outstanding balance on the Wyoming State Bond Loan was $12.4 million, with principal payments deferred until October 1, 2022[286][287] - The company has a universal shelf registration to sell up to $100 million in securities and an At Market Issuance Sales Agreement to sell up to $50 million in common shares[292][293] - As of March 3, 2022, the company's unrestricted cash position was $44.7 million, with an additional inventory of nearly 284,000 pounds of U3O8 worth approximately $14.4 million at recent spot prices[300][301][304] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to commodity price risk due to uranium price volatility, interest rate risk on cash and debt, and low currency risk - The company is subject to commodity price risk, as its future sales and profitability are directly impacted by fluctuations in uranium prices[318] - Interest rate risk exists for cash equivalents and deposits, but the company's main debt facility, the State Bond Loan, has a fixed interest rate of 5.75%[316][286] - Currency risk is considered low, with a balance of approximately $2.4 million Canadian dollars held as of December 31, 2021, to pay Canadian expenses[317] Controls and Procedures As of December 31, 2021, management concluded that the company's disclosure controls and internal control over financial reporting were effective - Management concluded that the company's disclosure controls and procedures were effective as of the fiscal year ended December 31, 2021[340] - Based on the COSO framework, management concluded that the company maintained effective internal control over financial reporting as of December 31, 2021[343] Part III Information required for Part III, covering Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, Certain Relationships, and Principal Accountant Fees, is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting of Shareholders Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2022 proxy statement, and a Code of Ethics is available on its website - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[349] - The company has adopted a Code of Ethics, the full text of which is available on its website[350] Executive Compensation Information regarding executive compensation is incorporated by reference from the company's 2022 proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[351] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership is incorporated by reference from the company's 2022 proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[352] Certain Relationships and Related Transactions, and Director Independence Information regarding related transactions and director independence is incorporated by reference from the company's 2022 proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[353] Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the company's 2022 proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[354] Part IV Exhibits and Financial Statement Schedules This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K, including technical reports for the Lost Creek and Shirley Basin properties - The Consolidated Financial Statements filed with this report begin on page F-1[356] - Technical Report Summaries for the Lost Creek ISR Uranium Property and the Shirley Basin ISR Uranium Property are filed as exhibits 96.1 and 96.2, respectively[359]