Ur-Energy Inc. [URE-TSX, URG-NYSE American] said it has 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 project in Wyoming.
“Completing the supply agreement marks the first step of Ur-Energy’s strategic product marketing plan by which the company intends to commit a portion of its future uranium production into term sales agreements with U.S.-based nuclear utilities,’’ the company said in a press release.
“This initial agreement calls 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.
“Sales prices are anticipated to be profitable on a company-wide, all-in cost basis and are escalated annually from the initial pricing in 2023,” it said.
Pursuant the company’s request, the sales agreement is conditional on Ur-Energy securing additional contractual commitments to support a development decision. The company said it is 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 is a uranium mining company and operator of the Lost Creek in-situ recovery uranium facility in south central Wyoming. The company said it has produced, packaged and shipped approximately 2.6 million pounds of U308 from Lost Creek since the commencement of production.
Ur-Energy has all major permits and authorizations to begin construction at Shirley Basin, the company’s second in-situ uranium facility in Wyoming and is in the process of obtaining remaining amendments to Lost Creek authorizations for expansion of Lost Creek.
In-situ recovery involves processing the uranium while it is still in the ground through the injection of catalyzing agents into the ore.
In-situ-recovery is only possible in porous geological formations (like sandstone) which are amenable to such a technique. On average, the capital spend needed to put an ISR uranium project into production is less than 15% of the cost to build a conventional hard-rock uranium mine.
Aside from the production cost, ISR leaves a much smaller environmental footprint because it does not require the construction of a tailings impoundment facility.
On Tuesday, Ur-Energy shares eased 4.6% or $0.07 to $1.45. The shares are currently trading in a 52-week range of $2.72 and $1.26.
Since the commencement of operations in 2013, through 2021, production at Lost Creek has totalled approximately 2.7 million pounds of U308, from two mining areas known as MU1 and MU2.
In addition to its efforts to secure contracts with utilities, Ur-Energy has recently submitted a bid proposal to the U.S. Department of Energy in response to the DOE’s solicitation for the purchase of up to one million pounds of domestically produced uranium to implement its Uranium Reserve Program.