Ur-Energy ramps up U.S. uranium production

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Ur-Energy Inc. [URE-TSX, URG-NYSE American] said Monday it will ramp up production at its Lost Creek uranium mine in Wyoming.

The move comes after the company said it has expanded the quantity to be delivered into sales agreement that was announced in August, 2022. At that time, the company said it had signed a multi-year sales agreement with a leading U.S. nuclear utility to supply uranium produced from a project owned and operated by the company’s U.S. subsidiaries, including its Lost Creek mine.

This initial agreement called for the annual delivery of a base amount of 200,000 pounds of uranium concentrates over a six-year period, beginning in the second half of 2023, the company said.

Pursuant the company’s request, the sales agreement was conditional on Ur-Energy securing additional contractual commitments to support a development decision. The company said it was in ongoing discussions with other domestic utilities with the objective of layering in sufficient additional term offtake contracts to incentivize a full ramp up of production at Lost Creek.

Ur-Energy now says the agreement announced in August has been amended to increase the annual delivery by 100,000 pounds of U308 beginning in 2024 at the same pricing levels.

The company’s total sales quantity now under contract will be 600,000 pounds of U308 annually, beginning in 2024, plus or minus a small, optional flex. Having secured these sales commitments, Ur-Energy has made the decision to immediately ramp up production at the Lost Creek in-situ recovery uranium facility to levels sufficient to deliver the current contracts.

The company said it will target an initial annual production rate of 600,000 pounds of U308, which represents 50% of Lost Creek’s licensed well field production capacity of 1.2 million pounds. This production level will provide an economy of scale and a stable long-term revenue stream to the company while leaving ample room for growth and additional sales into new contracts or on the spot market.

“Because of the advanced construction and drilling efforts, the company has already made in preparation for ramp up, we expect to commence production in the first quarter of 2023 and reach the initial annual production rate in the fourth quarter of 2023,’’ the company said.

Meanwhile, Ur-Energy said the National Nuclear Security Administration [NNSA], a semi-autonomous agency of the Department of Energy, has awarded the company a contract to sell 100,000 pounds of domestically-produced U308 to the national Uranium Reserve at a sales price of US$64.47 per pound. Ur-Energy will provide the material for this one-time purchase from its existing U.S.-produced inventory of 324,000 pounds.

Total revenue of US$6.4 million will be realized in March, 2023, after the material is delivered to NNSA, the company said.

Meanwhile, Ur-Energy shares eased 1.9% or $0.03 to $1.55 in light trading activity. The shares are currently trading in a 52-week range of $2.49 and $1.26.

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