Exhibit
99.2
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
June
30, 2008
(expressed
in Canadian dollars)
UR-ENERGY
INC.
MANAGEMENT’S
DISCUSSION AND ANALYSIS
For
the Three and Six Month Periods Ended June 30, 2008
(Information as at August 7, 2008 unless otherwise
noted)
Introduction
The
following provides management’s discussion and analysis of results of operations
and financial condition for the three and six month periods ended June 30, 2008
and 2007. Management’s Discussion and Analysis was prepared by Company
management and approved by the Board of Directors on August 7,
2008. This discussion and analysis should be read in conjunction with
the Company’s audited annual consolidated financial statements for the years
ended December 31, 2007 and 2006.
The
Company was incorporated on March 22, 2004 and completed its first year-end on
December 31, 2004. All figures are presented in Canadian dollars,
unless otherwise noted, and are in accordance with Canadian generally accepted
accounting principles. The consolidated financial statements include
all of the assets, liabilities and expenses of the Company and its wholly-owned
subsidiaries Ur-Energy USA Inc.; NFU Wyoming, LLC; Lost Creek ISR, LLC; The
Bootheel Project, LLC; NFUR Bootheel, LLC; Hauber Project LLC; NFUR Hauber, LLC;
ISL Resources Corporation; ISL Wyoming, Inc.; and CBM-Energy Inc. All
inter-company balances and transactions have been eliminated upon consolidation.
Ur-Energy Inc. and its wholly-owned subsidiaries are collectively referred to
herein as the “Company”.
Forward-Looking
Statements
This
Management Discussion and Analysis may contain or refer to certain
forward-looking statements relating to expectations, intentions, plans and
beliefs. Forward-looking information can often be identified by forward-looking
words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “intend”,
“estimate”, “may” and “will” or similar words suggesting future outcomes, or
other expectations, beliefs, plans, objectives, assumptions, intentions or
statements about future events or performance. These statements reflect
management’s current beliefs and are based on information currently available to
management. Forward-looking information may include reserve and resource
estimates, estimates of future production, unit costs, costs of capital projects
and timing of commencement of operations, and is based on current expectations
that involve a number of business risks and uncertainties. Factors that could
cause actual results to differ materially from any forward-looking statement
include, but are not limited to, those listed in the “Risk Factors” section of
the Company’s Annual Information Form dated March 26, 2008 which is filed on
SEDAR, failure to establish estimated resources and reserves, the grade and
recovery of ore which is mined varying from estimates, capital and operating
costs varying significantly from estimates, delays in obtaining or failures to
obtain required governmental, environmental or other project approvals,
inflation, changes in exchange rates, fluctuations in commodity prices, delays
in the development of projects, the failure to obtain sufficient funding for
operating, capital and exploration or development requirements and other
factors. Forward-looking statements are subject to risks, uncertainties and
other factors that could cause actual results to differ materially from expected
results. Potential shareholders and prospective investors should be aware that
these statements are subject to known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from those
suggested by the forward-looking statements. Potential shareholders and
prospective investors are also cautioned not to place undue reliance on
forward-looking information. By its nature, forward-looking
information
involves numerous assumptions, inherent risks and uncertainties, both general
and specific, that contribute to the possibility that the predictions,
forecasts, projections and various future events will not occur. The Company
undertakes no obligation to update publicly or otherwise revise any
forward-looking information whether as a result of new information, future
events or other such factors which affect this information, except as required
by law.
Nature
of Operations and Description of Business
The
Company is a development stage junior mining company engaged in the
identification, acquisition, evaluation, exploration and development of uranium
mineral properties in Canada and the United States. The Company has not yet
determined whether its properties contain mineral reserves that are economically
recoverable. The recoverability of amounts recorded for mineral exploration
properties and deferred exploration expenditures is dependent upon the discovery
of economically recoverable resources, the ability of the Company to obtain the
necessary financing to complete the development of these properties and upon
attaining future profitable production from the properties or sufficient
proceeds from disposition of the properties.
The
Company is focused on uranium exploration in the following areas: (i) Wyoming,
USA where the Company has fifteen properties. Of those fifteen
properties, eleven are in the Great Divide Basin, two of which (Lost Creek and
Lost Soldier) contain defined resources that the Company expects to advance to
production. The Company’s other Wyoming projects include two
properties in the Shirley Basin, one property in the Greater Black Hills, and
one property in the Powder River Basin; (ii) South Dakota, USA where the Company
has acquired certain state mineral leases in Harding and Fall River Counties;
(iii) Arizona, USA where the Company has acquired a property in Yuma County;
(iv) the Thelon Basin, Northwest Territories in northern Canada where it has
three properties; (v) Hornby Bay, Nunavut in northern Canada where it has a
royalty interest in two properties; and (vi) Baker Lake Basin, Nunavut, Canada,
where it has one property.
Selected Interim
Information
The
following table contains selected interim financial information as at June 30,
2008 (unaudited) and December 31, 2007.
|
|
|
As
at
June
30,
2008
$
(unaudited)
|
|
|
As
at
December
31,
2007
$
|
|
|
Total
assets
|
|
|
138,474,261 |
|
|
|
137,350,775 |
|
|
Long-term
future income tax
liability
|
|
|
438,965 |
|
|
|
1,167,000 |
|
|
Asset retirement
obligation
|
|
|
273,199 |
|
|
|
181,672 |
|
The
following table contains selected unaudited interim financial information for
the three and six month periods ended June 30, 2008 and 2007 and cumulative
information from inception of the Company on March 22, 2004 to June 30,
2008.
|
|
|
Three
Month
Period
Ended
June
30, 2008
$
(unaudited)
|
|
|
Three
Month
Period
Ended
June
30, 2007
$
(unaudited)
|
|
|
Six
Month
Period
Ended
June
30, 2008
$
(unaudited)
|
|
|
Six
Month
Period
Ended
June
30, 2007
$
(unaudited)
|
|
|
Cumulative
from
March
22,
2004 to
June
30, 2008
$
(unaudited)
|
|
|
Revenue
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Total expenses(1)
|
|
|
(2,955,614 |
) |
|
|
(2,575,642 |
) |
|
|
(5,594,716 |
) |
|
|
(4,491,498 |
) |
|
|
(25,597,780 |
) |
|
Interest
income
|
|
|
600,409 |
|
|
|
699,684 |
|
|
|
1,389,689 |
|
|
|
988,494 |
|
|
|
4,973,683 |
|
|
Foreign
exchange gain (loss)
|
|
|
(156,301 |
) |
|
|
719,046 |
|
|
|
496,145 |
|
|
|
858,188 |
|
|
|
408,065 |
|
|
Other
income (loss)
|
|
|
3,000 |
|
|
|
- |
|
|
|
(8,685 |
) |
|
|
- |
|
|
|
(8,685 |
) |
|
Loss
before income taxes
|
|
|
(2,508,506 |
) |
|
|
(1,156,912 |
) |
|
|
(3,717,567 |
) |
|
|
(2,644,816 |
) |
|
|
(20,224,717 |
) |
|
Recovery
of future income
taxes
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,468,657 |
|
|
Net
loss for the period
|
|
|
(2,508,506 |
) |
|
|
(1,156,912 |
) |
|
|
(3,717,567 |
) |
|
|
(2,644,816 |
) |
|
|
(16,797,717 |
) |
|
(1)
Stock based
compensation
included
in
total
expenses
|
|
|
(1,195,741 |
) |
|
|
(1,108,171 |
) |
|
|
(2,048,886 |
) |
|
|
(1,701,247 |
) |
|
|
(8,187,809 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share:
Basic
and diluted
|
|
|
(0.03 |
) |
|
|
(0.01 |
) |
|
|
(0.04 |
) |
|
|
(0.03 |
) |
|
|
|
|
|
Cash
dividends per
common
share
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
The
Company has not generated any revenue from its operating activities from
inception to date. The Company’s expenses include costs for
promotion, regulatory authority and transfer agent fees, professional fees,
general and administrative costs, general exploration expense, write-off of
deferred exploration expenditures and amortization of capital
assets. The Company has recorded significant stock based compensation
costs which were included in total expenses or were
capitalized
as a component of deferred exploration expenditures. Costs directly related to
exploration projects are initially capitalized as either mineral exploration
property costs or deferred exploration expenditures.
No cash
dividends have been paid by the Company. The Company has no present
intention of paying cash dividends on its common shares as it anticipates that
all presently available funds will be invested to finance new and existing
exploration and development activities.
Overall
Performance and Results of Operations
The
Company has advanced its plans from incorporation on March 22, 2004 to
date. From inception to June 30, 2008, the Company has raised total
net cash proceeds from the issuance of common shares and warrants and from the
exercise of warrants, compensation options and stock options of $138.7
million. As at June 30, 2008, the Company held cash and cash
equivalents and short-term investments of $73.5 million. The
Company's cash resources are invested with major banks in bankers' acceptances,
guaranteed investment certificates, certificates of deposit, or money market
accounts. The Company has made significant investments in mineral exploration
properties and exploration expenditures.
Mineral
Exploration Properties and Deferred Exploration Expenditures
During
the three and six month periods ended June 30, 2008, the Company expended cash
of $109,724 and $252,613 (2007 – $366,893 and $455,600), respectively on mineral
exploration property costs. The most significant component of these
costs is staking and claim costs. During the three and six month
periods ended June 30, 2008, the Company incurred deferred exploration
expenditures totaling $1,593,156 and $2,286,227 (2007 – $1,624,852 and
$2,728,929), respectively. The most significant component of spending
was on permitting and development of the Lost Creek and Lost Soldier
projects.
Wyoming
Properties
Lost Creek
Project
The Lost
Creek uranium deposit is located in the Great Divide Basin, Wyoming. The deposit
is approximately three miles (4.8 kilometres) long and the mineralization occurs
in four main sandstone horizons between 315 feet (96 metres) and 700 feet (213
metres) in depth.
As
identified in the June 2006 Technical Report on Lost Creek, National Instrument
43-101 (“NI 43-101”) compliant resources are 9.8 million pounds of U3O8 at
0.058 percent as an indicated resource and an additional 1.1 million pounds
of U3O8 at
0.076 percent as an inferred resource. During 2006, 17 cased
monitoring and pump test wells were completed on the property, and the initial
testing was completed successfully.
In 2007,
significant drilling was conducted and up to four drill rigs were operated
simultaneously to allow for completion of the following work on the
project:
|
|
·
|
Installation
of pump test and monitor wells for baseline and engineering
data;
|
|
|
·
|
Orebody
delineation drill holes to better define the orebody for well field
planning;
|
|
|
·
|
Condemnation
drill holes to assure that the plant site will not be built over any part
of the orebody; and
|
|
|
·
|
Water
wells for water for the drilling
operation.
|
Completion
of the 2007 drilling program resulted in 58 additional monitor and pump test
wells, 2 water wells and a total of 195 delineation drill holes. This
enabled the Company to obtain additional baseline and hydrogeologic data within
the first mine unit area for engineering assessments; for the State of Wyoming
Department of Environmental Quality ("WDEQ") Permit to Mine application; for the
US Nuclear Regulatory Commission ("NRC") Source Material License application;
and, for the WDEQ Mine Unit #1 Permit application. In addition, six condemnation
holes were drilled to make certain the potential target plant location was not
over any part of the ore body. The 2007 drilling program was
concluded in early December 2007 and the Company incurred total drilling costs
of approximately $2.6 million.
In 2007,
the Company submitted its Application to the NRC for a Source Material License
for the Lost Creek project. This license is the first stage of obtaining all
necessary licenses and permits to enable the Company to recover uranium via in
situ recovery method at the Lost Creek project. The collection and compilation
of the extensive environmental background data for the application have taken
more than two years. The NRC has indicated that the application review process
can take up to 18 months to complete. In February 2008, the Company
requested that the NRC application for its Lost Creek project be withdrawn to
enable the Company to include upgrades to its application with respect to the
project's operational plan and other advances in the health physics information
and analyses. In March 2008, the Company re-submitted the Source
Material License application to the NRC. In June, the NRC notified
the Company it deemed the Lost Creek application complete and acceptable. The
NRC thereafter commenced its detailed technical and environmental review of
the Company’s application, a process which generally is complete in 150
days.
Also in
2007, the Company submitted the Lost Creek Mine Permit Application to the WDEQ.
Beginning in 2008, individual mine unit applications for each well field will be
submitted to cover each mine unit or well field that will be produced on the
Lost Creek project. In May, the Company received notice from the WDEQ
that the agency found application to be complete, and authorized the Company to
proceed with formal Public Notice of the application, which was subsequently
completed by the Company.
In
February 2008, an in-house economic analysis on the Lost Creek project was
completed by the Company’s engineering team. An independent technical report
under NI 43-101 was subsequently prepared by Lyntek Inc. The purpose
of the report was to provide an independent analysis and preliminary assessment
of the potential economic viability of the mineral resource of the Lost Creek
project. The resulting base case in the preliminary assessment
prepared by Lyntek returned a pre-tax internal rate of return of 43.6% at a
price of US$80 per pound U3O8, and
demonstrated that the project would be economic at prices above US$40 per pound
U3O8.
In 2008,
current activities on the property include
|
|
·
|
delineation
of the ore body (specifically Mine Unit 1) to define production zones and
the first monitor well ring (300 drill
holes);
|
|
|
·
|
installation
of the mine unit 1 monitor well ring began in July (69 cased
wells);
|
|
|
·
|
exploration
drilling on the Lost Creek project (100 drill
holes);
|
|
|
·
|
use
of the prompt fission neutron logging truck and tool to evaluate
disequilibrium in deposits;
|
|
|
·
|
purchase
and mobilization of operational equipment to the site (backhoes, water
truck, forklift, light and heavy trucks, trailers, offices, hose reel,
generators and cementers); and
|
|
|
·
|
surveys
of soils, and installation of geotechnical borings to assist in evaluation
of pland and road facilities
design.
|
A royalty
on future production of 1.67% is in place with respect to 20 claims comprising a
portion of the Lost Creek project.
Lost Soldier
Project
The Lost
Soldier project is located approximately 14 miles (22.5 kilometres) to the
northeast of the Lost Creek project. The property has over 3,700 historical
drill holes defining 14 mineralized sandstone units. As identified in the July
2006 Technical Report on Lost Soldier, NI 43-101 compliant resources are 5.0
million pounds of U3O8 at 0.064%
as a measured resource, 7.2 million pounds of U3O8 at 0.065%
as an indicated resource and 1.8 million pounds of U3O8 at 0.055
percent as an inferred resource.
All
environmental baseline studies were completed in 2007 and in January 2008, the
Lost Soldier deposit was turned over to the Company’s engineering staff for
detailed engineering evaluation and study. In March 2008, the Company
requested a separate docket number and technical assignment control number for
the Lost Soldier project from the NRC, in preparation for a separate license
application for the Lost Soldier project.
Other U.S.
Properties
The
Company is currently permitting the 2008 exploration drilling programs for its
other US properties including the LC North, EN and North Hadsell
projects. In addition, an in-house team of geologists continues to
evaluate the extensive well log and exploration database owned by the
Company.
In 2007,
the Company entered into an agreement with Target Exploration & Mining Corp.
and its subsidiary ("Target"). Under the terms of the agreement, the Company,
through its wholly-owned subsidiary, NFUR Bootheel, LLC, contributed its
Bootheel and Buck Point properties to The Bootheel Project, LLC (the “Bootheel
Project”). The properties cover an area of known uranium occurrences
within the Shirley Basin in Albany County, Wyoming. The total project covers a
defined area of approximately 6,000 acres. Target is earning into an
interest in the Bootheel Project by spending US$3.0 million in exploration
costs, and issuing 125,000 shares of its common stock to the Company, all over a
four year period. Target timely issued its second installment of
stock (25,000 shares) in May 2008. In 2008, Target is carrying out a
50,000 feet drilling program on the properties of the Bootheel Project. The
purpose of the program is to bring the historic resources in National Instrument
43-101 compliance.
Also in
2007, the Company entered into agreements with Trigon Uranium Corporation and
its subsidiary ("Trigon"). Under the terms of the agreements, the Company,
through its wholly-owned subsidiary, NFUR Hauber, LLC, contributed its Hauber
property to Hauber Project LLC (the “Hauber Project”). The Hauber
property is located in Crook County, Wyoming and consists of 205 unpatented lode
mining claims and one state uranium lease totaling approximately 5,160
acres. Effective August 1, 2008, Trigon tendered its resignation as a
Member and the Manager of
the
Hauber Project. Transition of management of the Hauber Project back
to the Company is ongoing. Before Trigon's decision not to proceed it
had contracted, as Manager of the Project, for several outside geologic and
hydrologic analytical projects, which were completed and submitted during the
first half of 2008. The consultants employed abundant historic data
to define the geologic setting and assess the potential of the Hauber Project
properties for the recovery of uranium through ISR mining
methods. Further in house analysis of these reports is underway by
the Company.
Data Package
Acquisition
In 2007,
the Company completed the acquisition of a data package from Power Resources
Inc. ("PRI") pertinent to exploration and development in the Shirley Basin,
Wyoming for a total purchase price of US$180,000, which was paid in two equal
installments in 2006 and 2007. The data includes drill hole logs for more than
1,000 drill holes, historical resource reports, maps, drill summaries,
individual drill hole summaries, handwritten notes, and digital printouts from
such previous operators as Cherokee, Kerr McGee, URADCO (PP&L), and Mobil as
well as historical feasibility reports from Dames & Moore and Nuclear
Assurance.
The
Company has made any data covering its Bootheel and Buck Point properties, and
certain other data, available to the venture it has with Target.
The data
purchase agreement includes a 1% royalty interest payable to PRI on uranium and
associated minerals and materials produced from the Bootheel and Buck Point
properties which include 269 lode mining claims and two state uranium
leases.
Canadian
Properties
Bugs Property, Baker Lake
Basin
In
September 2006, the Company entered into an option agreement to acquire the Bugs
property in Nunavut, Canada. The Company has earned a 100% interest
in the property by issuing a total of 85,000 common shares to the
vendor. The vendor retains a 2% net smelter royalty, of which 1% is
subject to a buyout for $1.0 million. The Bugs property initially consisted of
11 contiguous mineral claims in the Kivalliq region of the Baker Lake Basin,
Nunavut. In 2008 the Company staked additional mineral claims
contiguous to the original eleven.
In 2006,
a fixed wing aeromagnetic and radiometric survey was conducted on the entire
property. The data from this survey resulted in the selection of seven targets
based upon structural offset and dilation features in combination with magnetite
depletion. In 2007, one of the seven targets was examined; the remaining targets
are the focus of the summer 2008 exploration program.
During
2007, the Company re-sampled the high-grade boulder area identified by work
conducted during the 1970s by Cominco. New assays include values as high as 4.7%
and 6.0% U3O8. Additional
radon surveys were successful in outlining poorly exposed bostonite occurrences
over several kilometers in length and located an area of extremely high radon
flux which is interpreted by the Company to indicate a concentration of
hydrothermal uranium mineralization known as the Lowkey Lake Zone
(“LLZ”). The radon survey has also indicated a bedrock source of one
of the high-grade historic Cominco boulder occurrences associated with
hydrothermal breccias with individual boulders assaying up to 0.55% U3O8.
This mineralization has been the subject of a radon survey and is
slated for subsequent drill-testing in 2008. Drill testing of the Gamma
bostonite dyke is also anticipated.
Screech Lake Property,
Thelon Basin
In 2006,
an environmental screening study was completed on the Screech Lake Project and
in September 2006, the application for a land use permit to conduct drill
testing of the Screech Lake anomalies was referred to the Mackenzie Valley
Environmental Impact Review Board (“Review Board”) for environmental assessment.
The environmental assessment was completed in February 2007 and in May 2007, a
report and recommendation from the Review Board was issued. The Review Board
recommended to the Minister of Indian and Northern Affairs Canada that the
Company’s application to conduct an exploratory drilling program at the Screech
Lake property be rejected due to local native community concerns.
In
October 2007, the Company received notification that the Minister of Indian and
Northern Affairs Canada had adopted the recommendation of the Review Board. As
part of the decision, the Minister did confirm that the decision does not affect
the legal standing of the Company’s Screech Lake mineral claims. Discussions
with the Minister and other interested parties led the Company to conclude that
the rejection of the Screech lake drilling program was influenced, in part, by
land claims issues between First Nations groups and the Federal government, and
to a lesser extent, environmental concerns. The Company believes that
it has proposed an exploration program which maintains the highest possible
environmental standards. In the Company’s application for a land use permit,
extensive mitigation measures were proposed to ensure that the drilling program
would have minimal short-term environmental impact and no long-term
effect.
During
2007, the company established a Special Committee of the Board of Directors
(“Special Committee”) to liaise with First Nations groups. The
Company is in ongoing discussions with the First Nations groups and the
discussions have been positive.
Hornby Bay
Properties
On 2006,
the Company completed a definitive agreement with Triex Minerals Corporation
(“Triex”) with respect to its Mountain Lake and Dismal Lake West
properties. Pursuant to the option agreement, Triex obtained a 100%
interest in the properties in September 2007. The Company retains a
5% net smelter return royalty interest in the properties with Triex having the
right to purchase one-half of the royalty for $5,000,000. The
Mountain Lake property comprises 41 claims and the Dismal Lake West property
comprises 17 claims.
In
January 2008, Triex announced a $3.1 million budget for 2008 work programs for
their Hornby Bay properties. The program includes 5,000 metres of
diamond drilling in eighteen holes to evaluate untested targets and also
includes constructing an ice air strip, re-opening the Kirwan Lake camp and
conducting additional resistivity surveys. By July 2008 Triex
announced that it had completed 2,450 metres of drilling at Mountain
Lake.
Expenses
Total
expenses for the three and six month periods ended June 30, 2008 were $3.0
million and $5.6 million, respectively, as compared to $2.6 million and $4.5
million during the same respective periods in 2007. The increase in
total expenses from the previous year was primarily due to higher general and
administrative expenses.
General and administrative expense was $2.3 million and $4.3
million for the three and six month periods ended June 30, 2008 as compared to
$1.7 million and $2.8 million for the same period in 2007. The
increase in general and administrative expense relates primarily to the
continued expansion of the Denver, Colorado and Casper, Wyoming offices.
During
2007, the Company strengthened key staffing areas adding five geologists, two
land men, a Vice President of Mining & Engineering, three mining engineers,
a Chief Financial Officer and other key management, legal and finance
positions. In 2008, the Company has added an additional eight
positions primarily aimed at enhancing operating expertise at the Casper Wyoming
office. Accordingly, the Denver and Casper offices have been expanded
to accommodate and support the staffing additions. As a result,
higher labor, recruiting and relocation costs together with increased office
expenses accounted for the majority of the increase in general and
administrative expense.
The
amortization of capital assets also increased as compared to the previous
year. The increase was primarily due to depreciation on new assets
that were purchased in 2007 and during the first half of 2008 as the Company
added field vehicles and field equipment to facilitate the exploration and
development work programs. Other expense areas including promotions,
regulatory and transfer agent fees, professional fees, and general exploration
were consistent with the previous year.
Other
income and expenses
The
Company's cash resources are invested with major banks in bankers' acceptances,
guaranteed investment certificates, certificates of deposit, and money market
accounts. During the three and six month periods ended June 30, 2008, the
Company earned interest income on these investments of $0.6 million and
$1.4 million, respectively, as compared to $0.7 million and $1.0 million
for the same respective periods in 2007. Following the May 2007
bought deal financing and the March 2008 private placement, the Company’s
average cash resources, and the resulting interest income, increased
significantly.
During
the six months ended June 30, 2008, the Company recorded a net foreign exchange
gain of $0.5 million as compared to $0.9 million during the same period in
2007. This net foreign exchange gain arose primarily due to cash
balances held in U.S. currency as the U.S. dollar strengthened relative to the
Canadian dollar during the period.
Loss
Per Common Share
Both
basic and diluted loss per common share for the three and six month periods
ended June 30, 2008 were $0.03 and $0.04 (2007 – $0.01 and $0.03).
Liquidity
and Capital Resources
As at
June 30, 2008, the Company had cash and cash equivalents and short-term
investments of $73.5 million, a decrease of $2.8 million from the December 31,
2007 balance of $76.3 million. During the six months ended June 30,
2008, the Company used $1.8 million to fund operating activities, generated $2.7
million from financing activities and spent $3.7 million on investing
activities.
On March
25, 2008, the Company completed a non-brokered private placement of
1,000,000 flow-through commons shares at $2.75 per share raising gross
proceeds of $2,750,000. Total direct share issue costs were
$115,314. During the six months ended June 30, 2008, the Company
realized cash proceeds from the exercise of previously issued stock options
totaling $90,000. As at June 30, 2008, the Company had outstanding a
total of 8,970,600 stock options with exercise prices ranging from $1.25 to
$5.03.
During
the six months ended June 30, 2008, the Company invested cash of $2.7 million in
mineral exploration property costs, deferred exploration expenditures and
related bonding and other deposits. The majority of these
expenditures went towards the Lost Creek project where project evaluation and
development activities continue. The Company also invested $1.0
million for the purchase of capital assets. The majority of these
expenditures were for field vehicles and field equipment purchased to facilitate
the exploration and development work programs in Wyoming.
The
Company has financed its operations from its inception primarily through the
issuance of equity securities and has no sources of cash flow from
operations. The Company will not generate any cash flow from
operations until it is successful in commencing production from its
properties.
The
Company has established a corporate credit card facility with a US bank. This
facility has an aggregate borrowing limit of U.S. $250,000 and is used for
corporate travel and incidental expenses. The Company has provided a
letter of credit and a guaranteed investment certificate in the amount of
$287,500 as collateral for this facility.
Financing
Transactions
The
Company completed a non-brokered private placement of 1,000,000 flow-through
commons shares at $2.75 per share on March 25, 2008 and raised gross proceeds of
$2,750,000. Total direct share issue costs were
$115,314.
Outstanding
Share Data
Information
with respect to outstanding common shares, warrants, compensation options and
stock options as at June 30, 2008 and December 31, 2007 is as
follows:
|
|
|
June
30,
2008
|
|
|
December
31,
2007
|
|
|
Common
shares
|
|
|
93,243,607 |
|
|
|
92,171,607 |
|
|
Warrants
|
|
|
- |
|
|
|
- |
|
|
Compensation
options
|
|
|
- |
|
|
|
- |
|
|
Stock
options
|
|
|
8,970,600 |
|
|
|
8,010,700 |
|
|
Fully
diluted shares outstanding
|
|
|
102,214,207 |
|
|
|
100,182,307 |
|
Off-Balance
Sheet Arrangements
The
Company has not entered into any material off-balance sheet arrangements such as
guarantee contracts, contingent interests in assets transferred to
unconsolidated entities, derivative instrument obligations, or with respect to
any obligations under a variable interest entity arrangement.
Financial
Instruments and Other Instruments
The
Company’s financial instruments consist of cash and cash equivalents, short-term
investments, amounts receivable, bonding and other deposits and accounts
payable. The fair value of these instruments approximates their
carrying amount due to their short term to maturity.
The
Company’s cash equivalents and short-term investments consist of Canadian dollar
and U.S. dollar denominated guaranteed investment certificates, certificates of
deposit and money market accounts. These instruments are classified
as held-to-maturity and carried at cost plus accrued interest. They
bear interest at annual rates ranging from 2.5% to 3.2% and mature at various
dates up to June 26, 2009.
The
Company’s accounts receivable and accounts payable are accounted for at
amortized cost.
It is
management’s opinion that the Company is not exposed to significant interest,
currency or credit risk arising from its financial instruments except for U.S.
dollar foreign currency risk with respect to cash and cash equivalents and
bonding deposits held in US dollars. As at June 30, 2008 the Company
held approximately US$12.0 million in cash and cash equivalents and bonding
deposits ($18.3 million at December 31, 2007). The Company has not
entered into any foreign exchange contracts or other strategies to mitigate this
risk.
Transactions
with Related Parties
As at
June 30, 2008, the Company did not participate in any material transactions with
any related parties.
Proposed
Transactions and Listing Application Approval
As is
typical of the mineral exploration and development industry, the Company is
continually reviewing potential merger, acquisition, investment and joint
venture transactions and opportunities that could enhance shareholder
value. Timely disclosure of such transactions is made as soon as
reportable events arise.
In
January 2008, the Company filed documentation with the United States Securities
and Exchange Commission on Form 40-F to register the common shares of the
Company and filed an application to list the common shares with the American
Stock Exchange, LLC (“AMEX”). The application was subject to review
by the AMEX, and on July 18, 2008, the AMEX approved for listing the common
shares of the Company. Trading of the common shares of the Company on
the AMEX commenced on July 24, 2008 under the symbol “URG”.
Critical
Accounting Policies and Estimates
Acquisition
costs of mineral exploration properties together with direct exploration and
development expenditures are capitalized. When production is
attained, these costs will be amortized. If properties are abandoned
they are written off at that time. If properties are considered to be
impaired in value, the costs of the properties and related deferred expenditures
will be written down to their estimated fair value at that
time. Management uses its best estimates for determining the fair
value of mineral properties based on expenditures incurred, the results of any
exploration conducted, prevailing market conditions and future plans for the
projects.
The
Company is required to record all equity instruments including warrants,
compensation options and stock options at fair value in the financial
statements. Management utilizes the Black-Scholes model to calculate the fair
value of these equity instruments at the time they are issued. Use of
the Black-Scholes model requires management to estimate the expected volatility
of the Company’s stock over the future life of the equity instrument and to
estimate the expected life of the equity instrument. Determination of these
estimates requires significant judgment and requires management to formulate
estimates of future events based on a limited history of actual results and by
comparison to other companies in the uranium exploration and development
segment.
Changes
in Accounting Policies Including Initial Adoption
On
January 1, 2008, the Company adopted the following Canadian Institute of
Chartered Accountants (“CICA”) Handbook Sections:
|
|
·
|
Section
3862, Financial Instruments – Disclosures, and Section 3863, Financial
Instruments – Presentation. These new disclosure standards
increase the Company’s disclosure regarding the nature and risk associated
with financial instruments and how those risks are managed. The
new presentation standard carries forward the former presentation
requirements.
|
|
|
·
|
Section
1535, Capital Disclosures. This new standard requires the
Company to disclose its objectives, policies and processes for managing
its capital structure.
|
|
|
·
|
Section
1400, General Standards on Financial Statement
Presentation. This standard requires management to assess at
each balance sheet date and, if necessary, disclose any uncertainty
surrounding the ability of the Company to continue as a going
concern. The adoption of this standard had no impact on the
Company’s disclosures in these interim financial
statements.
|
Disclosure
Controls and Procedures
The Chief
Executive Officer and Chief Financial Officer of the Company evaluated the
effectiveness of the Company’s disclosure controls and procedures (as defined in
the rules of the Canadian Securities Administrators) and concluded that the
Company’s disclosure controls and procedures were effective as of June 30,
2008.
Internal
Controls
No
changes have occurred in the Company’s internal control over financial reporting
during the most recent interim period that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Risks
and Uncertainties
The
Company is subject to a number of risks and uncertainties due to the nature of
its business and the present stage of development of its
business. Investment in the natural resource industry in general, and
the exploration and development sector in particular, involves a great deal of
risk and uncertainty. Current and potential investors should give
special consideration to the risk factors involved. These factors are
discussed more fully in our Annual Information Form dated March 26, 2008 which
is filed on SEDAR.
Other
Information
Other
information relating to the Company may be found on the SEDAR website at www.SEDAR.com or on
the U.S. Securities and Exchange Commission’s website at www.sec.gov
..
Directors
and Officers
Jeffrey
T. Klenda, B.A. – Chair and Managing Director
W.
William Boberg, M. Sc., P. Geo. – President, Chief Executive Officer and
Director
Harold
Backer, B. Sc. – Executive Vice President
Wayne
Heili, B. Sc. – Vice President, Mining and Engineering
Paul W.
Pitman, B. Sc. Hon. Geo., P. Geo. – Vice President, Canadian
Exploration
James M.
Franklin, PhD, FRSC, P. Geo. – Chief Scientist, Director and Geoscience Advisory
and Oversight Committee Chair
Paul
Macdonell, Diploma Public Admin. – Director and Compensation Committee
Chair
Robert
Boaz, M. Econ., Hons. BA – Director and Gorporate Governance and Nominating
Committee Chair
Thomas
Parker, B. Sc., M. Eng. – Director and Audit Committee Chair
Roger
Smith, CPA, MBA – Chief Financial Officer and Vice President Finance, IT
&
Administration
Paul G.
Goss, J.D., MBA – Corporate Counsel and Corporate Secretary
Corporate
Offices
|
United
States Headquarters:
10758
West Centennial Road, Suite 200
Littleton
(Denver), Colorado 80127
Phone:
(720) 981-4588
|
Canadian
Exploration Office:
341
Main Street North, Suite 206
Brampton,
Ontario L6X 3C7
Phone:
(905) 456-5436
|
|
Wyoming
Operations Office:
5880
Enterprise Drive, Suite 200
Casper,
Wyoming 82609
Phone:
(307) 265-2373
|
Registered
Canadian Office:
1128
Clapp Lane, PO Box 279
Manotick
(Ottawa), Ontario K4M 1A3
Phone:
(613) 692-7704
|
Web
Site
www.ur-energy.com
Trading
Symbol
TSX:
URE
AMEX:
URG
Independent
Auditor
PricewaterhouseCoopers
LLP, Ottawa
Corporate
Legal Counsel
McCarthy
Tétrault LLP, Ottawa
Corporate
Banker
Royal
Bank of Canada, Ottawa
Transfer
Agent
Equity
Transfer & Trust Company, Toronto
Registrar
and Transfer Company (Co-Transfer Agent and Co-Registrar) New York