Exhibit
99.2
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
September
30, 2009
(expressed
in Canadian dollars)
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Introduction
The
following provides management’s discussion and analysis of results of operations
and financial condition for the three months and nine months ended September 30,
2009. Management’s Discussion and Analysis (“MD&A”) was prepared
by Company management and approved by the Board of Directors on October 28,
2009. This discussion and analysis should be read in conjunction with
the Company’s audited consolidated financial statements for the years ended
December 31, 2008, 2007 and 2006. All figures are presented in
Canadian dollars, unless otherwise noted, and are in accordance with Canadian
generally accepted accounting principles.
In
December 2008, the Company changed its policy for accounting for exploration and
development expenditures. In prior years, the Company capitalized all
direct exploration and development expenditures. Under its new
policy, exploration, evaluation and development expenditures, including annual
exploration license and maintenance fees, are charged to earnings as incurred
until the mineral property becomes commercially mineable. Management considers
that a mineral property will become commercially mineable when management has
determined it is economically viable and it can be legally mined, as indicated
by the receipt of key permits. This change has been applied
retroactively and all comparative amounts in this MD&A have been restated to
give effect to this change. These changes are discussed more fully
under the heading “Changes in Accounting Policies Including Initial
Adoption”.
The
Company was incorporated on March 22, 2004 and completed its first year-end on
December 31, 2004. 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; 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 “Ur-Energy” or
the “Company”. The Bootheel Project, LLC which was consolidated in
prior periods is no longer consolidated since the Company’s equity interest has
been reduced to 25% as discussed in the heading “The Bootheel Project,
LLC”.
Forward-Looking
Information
This
Management’s Discussion and Analysis contains "forward-looking statements"
within the meaning of applicable United States and Canadian securities laws.
Shareholders can identify these forward-looking statements by the use of words
such as "expect", "anticipate", "estimate", "believe", "may", "potential",
"intends", "plans" and other similar expressions or statements that an action,
event or result "may", "could" or "should" be taken, occur or be achieved, or
the negative thereof or other similar statements. These statements are only
predictions and involve known and unknown risks, uncertainties and other factors
that may cause the Company’s actual results, performance or achievements, or
industry results, to be materially different from any future results,
performance, or achievements expressed or implied by these forward-looking
statements. Such statements include, but are not limited to: (i) the Company’s
belief that it will have sufficient cash to fund its capital requirements;
(ii) receipt of
(and related timing of) a U.S. Nuclear Regulatory Commission (“NRC”) Source
Material License, Wyoming Department of Environmental Quality (“WDEQ”) Permit
and License to Mine and other necessary permits related to Lost Creek; (iii)
Lost Creek and Lost Soldier will advance to production and the initial
production timeline of Lost Creek scheduled for late 2010; (iv) production rates,
timetables and methods at Lost Creek and Lost Soldier; (v) the Company’s
procurement plans and construction plans at Lost Creek; (vi) the licensing
process at Lost Soldier which efforts are expected to be streamlined; (vii) the
timing, the mine design planning and the preliminary assessment at Lost Soldier;
(viii) the completion, timing and results of various
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
exploration
programs including, without limitation, new exploration targets at Lost Creek,
LC North and LC South and (ix) the regulatory issues at the Screech Lake project
and related exploration. Other factors include, among others, the
following: future estimates for production, production start-up and operations
(including any difficulties with startup), capital expenditures,
operating costs, mineral resources, recovery rates, grades and prices; business
strategies and measures to implement such strategies; competitive strengths;
estimated goals; expansion and growth of the business and operations; plans and
references to the Company’s future successes; the Company’s history of operating
losses and uncertainty of future profitability; the Company’s status as an
exploration and development stage company; the Company’s lack of mineral
reserves; the hazards associated with mining construction and production;
compliance with environmental laws and regulations; risks associated with
obtaining permits in Canada and the United States; risks associated with current
variable economic conditions; the possible impact of future financings;
uncertainty regarding the pricing and collection of accounts; risks associated
with dependence on sales in foreign countries; the possibility for adverse
results in potential litigation; fluctuations in foreign exchange rates;
uncertainties associated with changes in government policy and regulation;
uncertainties associated with the Canadian Revenue Agency’s audit of any of the
Company’s cross border transactions; adverse changes in general business
conditions in any of the countries in which the Company does business; changes
in the Company’s size and structure; the effectiveness of the Company’s
management and its strategic relationships; risks associated with the Company’s
ability to attract and retain key personnel; uncertainties regarding the
Company’s need for additional capital; uncertainty regarding the fluctuations of
the Company’s quarterly results; uncertainties relating to the Company’s status
as a non-U.S. corporation; uncertainties related to the volatility of the
Company’s shares price and trading volumes; foreign currency exchange risks;
ability to enforce civil liabilities under U.S. securities laws outside the
United States; ability to maintain the Company’s listing on the NYSE Amex (the
“NYSE Amex”) and Toronto Stock Exchange (the “TSX”); risks associated with the
Company’s possible status as a "passive foreign investment company" or a
"controlled foreign corporation" under the applicable provisions of the U.S.
Internal Revenue Code of 1986, as amended; risks associated with the Company’s
investments and other risks and uncertainties described under the heading “Risk
Factors” of the Company’s Annual Report on Form 20-F (“Annual Information Form”)
dated March 18, 2009 which is filed on SEDAR at www.sedar.com and with the U.S.
Securities and Exchange Commission at www.sec.gov.
The
potential quantity and grade ranges set forth in regards exploration targets at
Lost Creek, LC North and LC South are conceptual in nature. There has been
insufficient exploration to define a mineral resource at the targets at LC North
and LC South. It is uncertain if further exploration will result in the
target being delineated as a mineral resource.
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. Due to the nature
of the uranium mining methods to be used by the Company on the Lost Creek
property, and the definition of “mineral reserves” under NI 43-101, which uses
the CIM Definition Standards, the Company has not determined whether the
properties contain mineral reserves. However, the Company’s April
2008 National Instrument 43-101 (“NI 43-101”) “Preliminary Assessment for the
Lost Creek Project Sweetwater County, Wyoming” outlines the economic viability
of the Lost Creek project, which is currently in the permitting process with
state and federal regulators. The recoverability of amounts recorded
for mineral properties is dependent upon the discovery of economically
recoverable resources, the ability of the Company to obtain the necessary
financing to develop the properties and upon attaining future profitable
production from the properties or sufficient proceeds from disposition of the
properties.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
The
Company is focused on uranium exploration in Wyoming, USA where the Company has
12 properties. Of those 12 properties, ten 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 one property in the Greater Black Hills and one
property in the Powder River Basin. The Company also has uranium
exploration properties in the Thelon Basin, Northwest Territories, Canada, where
it has two properties; and Baker Lake Basin, Nunavut, Canada, where it has one
property.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Selected
Information
The
following table contains selected financial information as at September 30, 2009
and December 31, 2008.
|
|
|
As
at
September
30, 2009
$
(Unaudited)
|
|
|
As
at
December
31, 2008
$
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
87,306,019 |
|
|
|
101,533,965 |
|
|
Liabilities
|
|
|
2,208,278 |
|
|
|
3,256,634 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets
|
|
|
85,097,741 |
|
|
|
98,277,331 |
|
|
|
|
|
|
|
|
|
|
|
|
Capital
stock and contributed surplus
|
|
|
157,531,450 |
|
|
|
157,118,019 |
|
|
Deficit
|
|
|
(72,433,709 |
) |
|
|
(58,840,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity
|
|
|
85,097,741 |
|
|
|
98,277,331 |
|
The
following table contains selected financial information for the three and nine
months ended September 30, 2009 and 2008 and cumulative information from
inception of the Company on March 22, 2004 to September 30, 2009.
|
|
|
Three
Months
Ended
September
30, 2009
$
(Unaudited)
|
|
|
Three
Months
Ended
September
30, 2008
$
(As
restated)
(Unaudited)
|
|
|
Nine
Months
Ended
September
30, 2009
$
(Unaudited)
|
|
|
Nine
Months
Ended
September
30, 2008
$
(As
restated)
(Unaudited)
|
|
|
Cumulative
from
March
22, 2004
through
September
30, 2009
$
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Total
expenses (1)
|
|
|
(5,336,536 |
) |
|
|
(9,186,720 |
) |
|
|
(13,989,070 |
) |
|
|
(18,020,241 |
) |
|
|
(84,868,853 |
) |
|
Interest
income
|
|
|
130,519 |
|
|
|
573,608 |
|
|
|
749,899 |
|
|
|
1,963,297 |
|
|
|
6,828,338 |
|
|
Loss
from affiliate
|
|
|
(13,490 |
) |
|
|
- |
|
|
|
(13,490 |
) |
|
|
- |
|
|
|
(13,490 |
) |
|
Foreign
exchange gain (loss)
|
|
|
(814,255 |
) |
|
|
(425,801 |
) |
|
|
(2,112,975 |
) |
|
|
70,349 |
|
|
|
3,455,264 |
|
|
Other
income (loss)
|
|
|
1,085,947 |
|
|
|
(18,203 |
) |
|
|
975,115 |
|
|
|
(26,888 |
) |
|
|
938,477 |
|
|
Loss
before income taxes
|
|
|
(4,947,815 |
) |
|
|
(9,057,116 |
) |
|
|
(14,390,521 |
) |
|
|
(16,013,483 |
) |
|
|
(73,660,264 |
) |
|
Recovery
of future income taxes
|
|
|
797,500 |
|
|
|
- |
|
|
|
797,500 |
|
|
|
- |
|
|
|
1,226,555 |
|
|
Net
loss for the period
|
|
|
(4,150,315 |
) |
|
|
(9,057,116 |
) |
|
|
(13,593,021 |
) |
|
|
(16,013,483 |
) |
|
|
(72,433,709 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Stock based compensation
included
in total expenses
|
|
|
282,314 |
|
|
|
2,195,006 |
|
|
|
757,288 |
|
|
|
4,243,892 |
|
|
|
15,519,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share:
Basic
and diluted
|
|
|
(0.04 |
) |
|
|
(0.09 |
) |
|
|
(0.14 |
) |
|
|
(0.17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per common share
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
The
Company has not generated any revenue from its operating activities to
date. The Company’s expenses include general and administrative
expense, exploration and evaluation expense, development expense and write-off
of mineral property costs. Acquisition costs of mineral properties
are capitalized. Exploration, evaluation and development
expenditures, including annual maintenance and lease fees, are charged to
earnings as incurred until the mineral property becomes commercially
mineable.
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.
Summary of Quarterly
Financial Information
The
following table contains summary quarterly financial information for each of the
eight most recently completed quarters.
|
|
Quarter Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sep.
30
|
|
Jun.
30
|
|
Mar.
31
|
|
Dec.
31
|
|
Sep.
30
|
|
Jun.
30
|
|
Mar.
31
|
|
Dec.
31
|
|
|
|
2009
|
|
2009
|
|
2009
|
|
2008
|
|
2008
|
|
2008
|
|
2008
|
|
2007
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
(As
restated)
|
|
(As
restated)
|
|
(As
restated)
|
|
(As
restated)
|
|
(As
restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Total
expenses
|
|
(5,336,536 |
) |
|
(3,616,032 |
) |
|
(5,036,502 |
) |
|
(7,947,470 |
) |
|
(9,186,720 |
) |
|
(5,502,306 |
) |
|
(3,331,215 |
) |
|
(6,406,006 |
) |
|
Interest
income
|
|
130,519 |
|
|
218,637 |
|
|
400,743 |
|
|
531,148 |
|
|
573,608 |
|
|
600,409 |
|
|
789,280 |
|
|
879,410 |
|
|
Loss
from affiliate
|
|
(13,490 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Foreign
exchange gain (loss)
|
|
(814,255 |
) |
|
(1,933,051 |
) |
|
634,331 |
|
|
5,585,970 |
|
|
(425,801 |
) |
|
(156,296 |
) |
|
652,446 |
|
|
(247,066 |
) |
|
Other
income (loss)
|
|
1,085,947 |
|
|
(117,332 |
) |
|
6,500 |
|
|
- |
|
|
(18,203 |
) |
|
3,000 |
|
|
(11,685 |
) |
|
10,000 |
|
|
Loss
before income taxes
|
|
(4,947,815 |
) |
|
(5,447,778 |
) |
|
(3,994,928 |
) |
|
(1,830,352 |
) |
|
(9,057,116 |
) |
|
(5,055,193 |
) |
|
(1,901,174 |
) |
|
(5,763,662 |
) |
|
Recovery
of future income taxes
|
|
797,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
429,055 |
|
|
Net
loss for the period
|
|
(4,150,315 |
) |
|
(5,447,778 |
) |
|
(3,994,928 |
) |
|
(1,830,352 |
) |
|
(9,057,116 |
) |
|
(5,055,193 |
) |
|
(1,901,174 |
) |
|
(5,334,607 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share – basic and diluted
|
|
(0.04 |
) |
|
(0.06 |
) |
|
(0.04 |
) |
|
(0.02 |
) |
|
(0.09 |
) |
|
(0.06 |
) |
|
(0.02 |
) |
|
(0.06 |
) |
Overall Performance and
Results of Operations
From
inception to September 30, 2009, the Company has raised net cash proceeds from
the issuance of common shares and warrants and from the exercise of warrants and
stock options of $138.7 million. As at September 30, 2009, the
Company held cash and cash equivalents, and short-term investments of $48.8
million. The Company's cash resources are invested with banks in
Canada and the United States in deposit accounts, guaranteed investment
certificates, certificates of deposit, and money market accounts. The Company
has made significant investments in mineral properties and exploration,
evaluation and development expenditures.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Mineral
Properties
The
Company’s mineral properties are located in Wyoming, USA, Northwest Territories,
Canada, and Nunavut, Canada.
Wyoming, USA
Properties
Lost
Creek Project
The
Company acquired certain of its Wyoming properties when Ur-Energy USA entered
into a Membership Interest Purchase Agreement (“MIPA”) with New Frontiers
Uranium, LLC effective June 30, 2005. Under the terms of the MIPA, the
Company purchased all of the issued and outstanding membership interests in NFU
Wyoming, LLC. Assets acquired in this transaction include the extensively
explored and drilled Lost Creek and Lost Soldier projects, and a development
database including more than 10,000 electric well logs, over 100 geologic
reports and over 1,000 geologic and uranium maps covering large areas of
Wyoming, Montana and South Dakota. The 100% interest in NFU Wyoming was
purchased for an aggregate consideration of $24,515,832 (US$20,000,000) plus
capitalized interest.
A royalty
on future production of 1.67% is in place with respect to 20 claims comprising a
small portion of the Lost Creek project claims.
The Lost
Creek uranium deposit is located in the Great Divide Basin, Wyoming. The deposit
is approximately three miles (4.8 kilometers) long and the mineralization occurs
in four main sandstone horizons between 315 feet (96 meters) and 700 feet (213
meters) in depth.
As
identified in the June 2006 Technical Report on Lost Creek, 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.
The Company continues to
advance matters to obtain an NRC Source Material License for the Lost Creek
project. In October 2007, the Company submitted its Application
to the NRC. In June 2008, the NRC notified the Company that the
acceptance review had been completed and the Application was found
sufficient for technical review. In November 2008, the NRC provided
the Company with a Request for Additional Information (“RAI”) for the Technical
Report portion of the Application. The Company submitted responses to
all of the technical RAIs during the fourth quarter of 2008 and the first
quarter of 2009. In March 2009, the NRC provided the Company with an
RAI for the Environmental Report portion of the Application. A
response was sent to the NRC in June 2009. In August 2009, the
Company submitted its responses to the remaining health physics
items. In June 2009, the NRC issued its Generic Environmental Impact
Study (“GEIS”). In addition to the GEIS guidelines, the NRC has
advised all applicants for new ISR operations that a site-specific Supplemental
Environmental Impact Study (“SEIS”) is required. The Company
anticipates the issuance of Lost Creek's NRC license in the second quarter of
2010.
The
Company continues to advance matters to obtain a Wyoming Department of
Environmental Quality Permit to Mine for the Lost Creek project. In
December 2007, the Company submitted the Lost Creek Permit to Mine Application
to the WDEQ (the “WDEQ Application”). The WDEQ Application was deemed
complete in May 2008. WDEQ has issued technical comments and the
Company anticipates completing its responses to all items
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
in the
fourth quarter of 2009. Ur-Energy anticipates the issuance of Lost
Creek's WDEQ permit prior to the NRC License issue in 2010.
At the
end of the second quarter 2009, the Company submitted to the WDEQ-Water Quality
Division an application for permits for up to five Class 1 Underground Injection
Control (UIC) disposal wells. These wells, utilized for deep geologic
disposal of liquid byproduct material, will be located within the Lost Creek
permit area. The Company acquired detailed data including formation
stratigraphy, reservoir extent and properties, water quality and assessment of
well injection rates from a deep test well drilled in late
2008. This data set was used to support the application. WDEQ
processing of this particular application has been delayed as a result of their
staffing issues.
The
Company has established a framework to demonstrate the economic viability of the
Lost Creek project. In April 2008, the Company released an
independent technical report under NI 43-101 prepared by Lyntek Inc.
(“Lyntek”) The purpose of the report was to provide an analysis and
preliminary assessment of the potential economic viability of the mineral
resource of the Lost Creek project. The base case in the preliminary
assessment 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. Lyntek
also concluded that the uranium is leachable with a reasonable solution of
bicarbonate and peroxide (and by extension, oxygen) and that an overall recovery
of uranium in the range of 85% appears reasonable. The Lyntek report
is available for review on www.sedar.com
..
The
Company continued the development program at Lost Creek during
2009. The first phase of the 2009 program included:
|
|
·
|
Drilling
and installation of 15 monitoring wells (11,770 feet / 3,590 meters) to
obtain and monitor water quality and hydrologic data for the purpose of
permitting an additional mineralized horizon underlying the horizon
presently being permitted.
|
|
|
·
|
Mechanical
integrity testing of installed baseline and monitoring wells and the
installation of submersible pump equipment to facilitate ongoing water
sampling requirements.
|
A
continuation of the delineation drilling program began in July with 235
additional drill holes planned for completion by the end of November 2009.
As at September 30, 2009, 136 of these holes were completed at the approximate
rate of 55 holes per month. The program is expected to encompass over
160,000 feet (48,770 meters) of drilling and will support definition of future
proposed mining areas.
In 2009,
the Company’s engineering staff, assisted by TREC Inc, completed the detailed
designs and specifications for all components of the Lost Creek
plant. Pre-qualification of contractors has been completed and the
bid process for construction is on-going.
Although
construction of the Lost Creek plant will not begin until receipt of the
necessary permits, request for quotations for all major process equipment at the
Lost Creek project were prepared and solicited from vendors and
contractors. Bids are currently being evaluated and procurement will
be ongoing throughout 2009.
One
purchase order totaling US$1,323,834 was issued during the second quarter of
2009 for ion exchange columns and other process equipment. Payments
of US$861,370 have been made, with a final payment due upon
completion. An additional purchase order for US$319,357 was issued
during the second quarter in order to
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
initiate
the drawing and approval process for other plant equipment. Progress
payments will be required once the final drawings are approved, the final
configuration is decided upon and the final price is determined.
Lost
Soldier Project
The Lost
Soldier project is located approximately 14 miles (22.5 kilometers) to the
northeast of the Lost Creek project. The property has over 3,700 historical
drill holes defining 14 mineralized sandstone units. The Company
maintains 143 lode mining claims at Lost Soldier, totaling approximately 2,710
mineral acres. A royalty on future production of one percent, which
arises from a data purchase, is in place with respect to certain claims within
the project. During the third quarter, members of the Company’s staff
continued to progress with engineering studies and mine design
analysis. The Company continues to anticipate that applications for
Lost Soldier will come in the form of amendments to the Lost Creek license and
permit to mine after those licenses are obtained.
Projects
Adjacent to Lost Creek
The
Company has expanded its land holdings around the Lost Creek project, and
currently controls a total of 1,736 unpatented mining claims and two State of
Wyoming sections for a total of approximately 33,760 mineral acres including the
Lost Creek permit area, LC North, LC South, EN and the Toby project
areas. Since the start of the third quarter of 2009, 209 additional
lode mining claims were acquired and are included in the above
totals.
Initial
drilling at LC North in 2007 was conducted to investigate numerous occurrences
of uranium-bearing intercepts detected by historical exploration drilling by
previous operators in the 1970s; and to examine their relationships to the
mineralization to be mined at the Lost Creek project. In the 2007 drill program,
30 holes were drilled for a total of 29,600 feet (9,022 meters).
In 2008,
exploration drilling of 11,370 feet (3,468 meters) was completed at the EN
project. In January 2009, the Company completed an agreement reducing an
existing royalty on claims and an area of interest arising from transactions
dating back to 2006. With regard to the EN project, and three other areas,
the Company was able to eliminate the area of interest and to reduce the royalty
from two percent (2%) to one percent (1%) on certain specified mining
claims.
The
results of the 2007 and 2008 drilling programs outside of the Lost Creek permit
area along with information from over 725 historic drill holes confirmed
mineralization occurring in multiple target horizons, many of which correlate
stratigraphically with mineral horizons in the Lost Creek permit area. Drilling
in these areas was at variable and wide spacing and did not allow confirmation
of mineral continuity or estimation of resources. The results
indicate the potential for extension of the Lost Creek mineral trends into the
surrounding project areas as well as the possibility of previously unidentified
mineral horizons.
In August
2009, the Company announced the results of in-house geologic evaluations of the
Lost Creek Permit Area and adjacent properties held by the Company which contain
multiple exploration targets demonstrating the potential to contain 24 to 28
million pounds U3O8 (not National Instrument
43-101 compliant). Company geologists, using Ur-Energy drilling and
historic data, have identified a minimum of an additional 120 compiled linear
miles (193 kilometers) of new redox fronts with potential for resource
development on these properties. This is in addition to the approximately 36
miles of redox front containing the current Lost Creek deposit. The new
exploration targets on LC North and LC South properties (adjacent to the Lost
Creek Permit Area) consist of at least 10 individual sinuous redox fronts within
four major stratigraphic horizons identified by Ur-Energy
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
geologists
using an in-house database of historic drill holes and new Ur-Energy drill
holes. The Company is currently evaluating the exploration potential and
is recommending future exploration programs for these areas. The newly
identified fronts occur within the same stratigraphic horizons that are present
in the area of the Lost Creek deposit. Estimation of the potential
of the new fronts is based on the observed similarity of alteration
characteristics, grade and thickness of mineralization to that currently
identified in the Lost Creek deposit. These potential quantity and grade
ranges are conceptual in nature. There has been insufficient exploration to
define a mineral resource. It is uncertain if further exploration will
result in the target(s) being delineated as a mineral resource.
Currently,
field exploration continues on the Company’s other Wyoming projects in addition
to the ongoing evaluation of the exploration database owned by the
Company. The Company decided to drop its mining claims in Arizona in
the first quarter of 2009.
The
Company completed the sale of the Moorcroft database to Peninsula Minerals
Limited (“Peninsula”) (ASX:PEN) in August 2009 for
US$1,000,000, and a royalty on future production from a broad-ranging project
area in the Eastern Powder River Basin of Wyoming in which Peninsula reports
that it currently controls mineral rights and/or surface access rights over a
combined land holding of 23,400 acres, and that it is the dominant mineral
rights holder in the area. The Company obtained the Moorcroft database as
a part of its acquisition of NFU Wyoming, LLC in 2005, which also included
several other historic databases. The net profit from this sale is
included in Other Income in the Statement of Operations.
The
Bootheel Project, LLC
In 2007,
the Company entered into an agreement with Target Exploration & Mining Corp.
and its subsidiary "Target"). Effective March 31, 2009, Target became
a wholly-owned subsidiary of Crosshair Exploration & Mining Corp (TSX: CXX)
(“Crosshair”) through a plan of arrangement. Under the terms of the
2007 agreement, the Company 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. Crosshair
completed agreements in 2008 for additional rights and leased lands in the
Bootheel property area, in which the lessor has a 75% mineral interest in the
net mineral acres. With the completion of those agreements, the Bootheel Project
covers total defined areas at the Bootheel property and the Buck Point property
of approximately 8,524 gross and 7,895 net mineral acres.
In 2008,
Crosshair completed a 50,000 feet (15,250 meters) drilling program on the
Bootheel property. In January 2009, Target announced that it had completed the
acquisition of the final historic data package on behalf of the Bootheel Project
comprising geophysical and geological data from approximately 290,000 feet of
drilling carried out by Cameco, Kerr McGee and Uradco. The Company
had earlier contributed data to the Bootheel Project it had acquired in a 2007
transaction.
Crosshair released an independent
resource estimate on the Bootheel property under National Instrument 43-101 in
the third quarter of 2009. This NI 43-101 resource estimate
reports that the Bootheel property contains an indicated resource of 1.09
million pounds U3O8 and an inferred resource of 3.25
million pounds U3O8 at an average grade of 0.037%
U3O8. This NI 43-101 report was posted by
Crosshair on Sedar. There is a royalty of one percent on future
production of uranium and associated minerals from certain lands in the Bootheel
Project. An additional royalty of 0.5% is in place with respect to 28
claims acquired in 2006.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Crosshair
completed its earn-in of a 75% interest in the Bootheel Project during the third
quarter of 2009 by spending US$3.0 million in exploration costs, and issuing
125,000 shares of Target’s common stock to the Company. As a result
of the Company now having a 25% interest in the project, it is no longer the
controlling member of the Bootheel Project. Therefore the manner in which the
costs for the project’s Bootheel and Buck Point properties are reported in the
financial statements has changed from being fully consolidated in the Company’s
accounts to the investment in the project being treated as an equity
investment. This equity investment is accounted for under the equity
accounting method with the net investment reflected on the Balance
Sheet. The Company’s share of expenses incurred is shown as loss from
affiliate on the Statement of Operations
Other
Joint Arrangements
In 2007,
the Company entered into agreements with Trigon Uranium Corporation and its
subsidiary ("Trigon"). Under the terms of the agreements, the Company
contributed its Hauber property to Hauber Project LLC (the “Hauber
Project”). The Hauber Project is located in Crook County, Wyoming and
consists of 205 unpatented lode mining claims and one state uranium lease
totaling approximately 4,570 mineral 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 completed and a settlement of remaining obligations of Trigon was
reached in July 2009.
Canadian
Properties
Screech
Lake Property, Thelon Basin
The
Company continued its discussions with First Nations groups and Aboriginal-owned
business corporations during the first nine months of 2009. An
agreement was secured with Lutsel K’e Dene First Nation to conduct surface
exploration work in 2009. Ur-Energy is the only exploration company
to have been granted this right to conduct field operations in the Thelon Basin
district. No drilling was conducted in 2009.
Work
carried out in the third quarter of 2009 included claim maintenance, an
audio-magnetotelluric (“AMT”) survey and collection of over 500 surface samples
for bio-leach and soil gas analysis. This field program was completed in early
September 2009 and results are being evaluated. The primary purpose of the AMT
geophysics was to determine depth to the top of the unconformity. The
two geochemical techniques utilized are tools recently developed in the
Athabasca Basin to locate anomalous geochemical signatures over blind uranium
ore bodies. The choice of the survey parameters resulted from Ur-Energy’s
participation in the Canadian Mining Industry Research Organization research
program on the application of surface geochemical methods in the Athabasca
Basin. For future programs the calculated depth measurements will better define
drill equipment requirements and have defined, in part, near-surface
unconformity targets and better definition of cross-structures.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Three
Months and Nine months Ended September 30, 2009 Compared to Three and Nine
months Ended September 30, 2008
The
following table summarized the results of operations for the three and nine
months ended September 30, 2009 and 2008.
|
|
Three Months Ended September
30,
|
|
|
|
2009
|
|
2008
|
|
Change
|
|
Change
|
|
|
|
$
|
|
$
|
|
$ |
|
|
% |
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
Nil
|
|
Nil
|
|
NA
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
1,248,210 |
|
|
2,427,921 |
|
|
(1,179,711 |
) |
|
-49 |
% |
|
Exploration
and evaluation expense
|
|
2,214,050 |
|
|
4,068,091 |
|
|
(1,854,041 |
) |
|
-46 |
% |
|
Development
expense
|
|
1,878,899 |
|
|
2,404,895 |
|
|
(525,996 |
) |
|
-22 |
% |
|
Write-off
of mineral properties
|
|
(4,623 |
) |
|
285,813 |
|
|
(290,436 |
) |
|
-102 |
% |
|
Total
expenses
|
|
(5,336,536 |
) |
|
(9,186,720 |
) |
|
3,850,184 |
|
|
-42 |
% |
|
Interest
income
|
|
130,519 |
|
|
573,608 |
|
|
(443,089 |
) |
|
-77 |
% |
|
Loss
from affiliate
|
|
(13,490 |
) |
|
- |
|
|
(13,490 |
) |
|
- |
|
|
Foreign
exchange gain (loss)
|
|
(814,255 |
) |
|
(425,801 |
) |
|
(388,454 |
) |
|
91 |
% |
|
Other
income (loss)
|
|
1,085,947 |
|
|
(18,203 |
) |
|
1,104,150 |
|
|
-6066 |
% |
|
Loss
before income taxes
|
|
(4,947,815 |
) |
|
(9,057,116 |
) |
|
4,109,301 |
|
|
-45 |
% |
|
Recovery
of future income taxes
|
|
797,500 |
|
|
- |
|
|
797,500 |
|
|
- |
|
|
Net
loss for the period
|
|
(4,150,315 |
) |
|
(9,057,116 |
) |
|
4,906,801 |
|
|
-54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share – basic and diluted
|
|
(0.04 |
) |
|
(0.09 |
) |
|
0.05 |
|
|
-56 |
% |
|
|
Nine Months Ended September
30,
|
|
|
|
2009
|
|
2008
|
|
Change
|
|
Change
|
|
|
|
$
|
|
$
|
|
$ |
|
|
% |
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
Nil
|
|
Nil
|
|
NA
|
|
|
- |
|
|
General
and administrative
|
|
4,008,718 |
|
|
6,032,435 |
|
|
(2,023,717 |
) |
|
-34 |
% |
|
Exploration
& evaluation expense
|
|
4,724,946 |
|
|
7,958,531 |
|
|
(3,233,585 |
) |
|
-41 |
% |
|
Development
expense
|
|
5,152,967 |
|
|
3,743,462 |
|
|
1,409,505 |
|
|
38 |
% |
|
Write-off
of mineral properties
|
|
102,439 |
|
|
285,813 |
|
|
(183,374 |
) |
|
-64 |
% |
|
Total
expenses
|
|
(13,989,070 |
) |
|
(18,020,241 |
) |
|
4,031,171 |
|
|
-22 |
% |
|
Interest
income
|
|
749,899 |
|
|
1,963,297 |
|
|
(1,213,398 |
) |
|
-62 |
% |
|
Loss
from affiliate
|
|
(13,490 |
) |
|
- |
|
|
(13,490 |
) |
|
- |
|
|
Foreign
exchange gain (loss)
|
|
(2,112,975 |
) |
|
70,349 |
|
|
(2,183,324 |
) |
|
-3104 |
% |
|
Other
income (loss)
|
|
975,115 |
|
|
(26,888 |
) |
|
1,002,003 |
|
|
-3727 |
% |
|
Loss
before income taxes
|
|
(14,390,521 |
) |
|
(16,013,483 |
) |
|
1,622,962 |
|
|
-10 |
% |
|
Recovery
of future income taxes
|
|
797,500 |
|
|
- |
|
|
797,500 |
|
|
- |
|
|
Net
loss for the period
|
|
(13,593,021 |
) |
|
(16,013,483 |
) |
|
2,420,462 |
|
|
-15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share – basic and diluted
|
|
(0.14 |
) |
|
(0.17 |
) |
|
0.03 |
|
|
-18 |
% |
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Expenses
Expenses
include general and administrative expense, exploration and evaluation expense,
development expense and write-off of mineral property costs. These
expenses decreased by $3.9 million and $4.0 million during the three and nine
month periods, respectively. This decrease was driven in large part
by the decrease in stock compensation expense. This decrease is a
result of lower on-going expense due to a decrease in the
weighted-avergage option price and the voluntary return to the Company by option
holders of options with an exercise price of C$4.75 or higher in the third
quarter of 2008. Previously unrecognized stock based compensation
cost of $2.2 million was recognized at the cancellation date.
General
and administrative (“G&A”) expense relates to the Company’s administration,
investor relations, land and legal functions. The primary reason for
the decrease in these expenses in 2009 was lower stock compensation expense,
which decreased $1.1 million and $2.3 million during the three and nine month
periods, respectively. Excluding stock compensation expense, G&A
expense decreased $0.1 million during the three month period and increased
$0.3 million during the nine month period. The small nine month
increase was driven by higher labor costs reflecting the expansion of the
Company’s Littleton, Colorado office.
The
primary reason for the decrease in exploration and evaluation expense was the
transition of the Company’s Lost Creek property from the evaluation stage to the
development state. This transition happens whenever sufficient
evidence of mineral resources has been identified to justify the development of
the property for mining activities and filing the applications for the mining
permits. As a result, direct project evaluation expenditures
decreased $0.5 million and $1.3 million during the three and nine
month periods, respectively. Stock compensation expense charged to
exploration and evaluation declined $0.8 million and $1.2 million in
the respective periods. Exploration costs in Canada decreased $0.7
million and $0.9 million for the three and nine month periods, respectively, as
a result of a larger exploration program at the Bugs project in 2008 compared to
the program conducted at Screech Lake in 2009.
Development
expense relates entirely to the Company’s Lost Creek property, which entered the
development stage in the second quarter of 2008. Total costs were
lower by $0.5 million for the three month period and higher by $1.4 million for
the nine month period when compared with the same periods in
2008. The primary changes in development costs for the three month
period were permitting, up $0.3 million, drilling down by $1.0
million and costs for the deep test well for ground water sampling in support of
the application for Class I UIC permits was up $1.0 million. Changes
in development costs for the nine month period included permitting increasing
$0.8 million, drilling decreasing $1.5 million, and labor increasing $0.5
million. Combined expenditures for mineral development activities
(exploration, evaluation and development) decreased by $2.4 million and
$1.8 million for the three and nine months, ended September 30, 2009,
respectively, when compared to the comparable period in 2008. The
lower costs can be attributed to lower drilling activity levels in 2009 and
significantly reduced stock option expenses.
During
the first nine months of 2009, the Company wrote off $38,878 in mineral property
costs associated with claims in Yuma County Arizona and $63,561 of Eyeberry
property costs in Canada. There were no similar write
offs in the comparative period for 2008.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Other income and
expenses
The
Company's cash resources are invested with banks in deposit accounts, guaranteed
investment certificates, certificates of deposit, and money market
accounts. The decrease in interest income was driven by lower average
cash resources and lower average interest rates in 2009 as compared to those in
2008.
The net
foreign exchange loss in the nine months ended September 30, 2009 arose
primarily due to cash resources held in U.S. dollar accounts as the U.S. dollar
weakened relative to the Canadian dollar during the periods.
Income
Taxes
During
2008, the Company raised $2,750,000 through the sale of common shares covered by
a flow-through election. This election requires that all capital
raised under this election be used for exploration and evaluation of Canadian
mineral interests prior to the end of the following calendar
year. The Company then files a document with Revenue Canada
renouncing its right to claim those expenditures for income tax purposes and
passes them through to the purchasers of the common shares.
During
2009, the Company filed the renouncement with the taxing authorities and
completed the expenditure of the funds raised in 2008. As a result,
the Company recognized the future tax benefit that was renounced.
Loss per Common
Share
The
diluted loss per common share is equal to the basic loss per common share due to
the anti-dilutive effect of all convertible securities outstanding given that
net losses were experienced.
Liquidity
and Capital Resources
As at
September 30, 2009, the Company had cash resources, consisting of cash and cash
equivalents and short-term investments, of $48.8 million, a decrease of $16.2
million from the December 31, 2008 balance of $65.0 million. The
Company's cash resources consist of Canadian and US dollar denominated deposit
accounts, guaranteed investment certificates, money market funds and
certificates of deposit. During the nine months ended September 30,
2009, the Company used $12.0 million of its cash resources to fund
operating activities and $2.3 million for investing activities, with the
remaining $1.4 million decrease being related to the effects of foreign exchange
rate changes on cash resources.
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 resources from
operations until it is successful in commencing production from its
properties. As a result, operating activities used $12.0 million of
cash resources during the nine months ended September 30, 2009, as compared to
$10.4 million for the same period in 2008. The primary reasons for
the increased expenditures was cash used to lower the balance of payables, and
lower interest income that was offset by the sale of the Moorcroft
database The Company received less interest income in 2009 due to
lower average cash resource balances and interest rates.
During
the nine months ended September 30, 2009, the Company invested cash resources of
$2.3 million in mineral properties, bonding deposits, capital assets and
construction activities related to plant design and
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
equipment
purchases at Lost Creek. The majority of these expenditures went
towards increased bonding deposits ($0.9 million) and Lost Creek
construction activities ($1.1 million).
Financing
Transactions
On
November 7, 2008 the Company’s board of directors approved the adoption of a
shareholder rights plan (the “Rights Plan”) designed to encourage the fair and
equal treatment of shareholders in connection with any take-over bid for the
Company's outstanding securities. The Rights Plan is intended to
provide the Company’s board of directors with adequate time to assess a
take-over bid, to consider alternatives to a take-over bid as a means of
maximizing shareholder value, to allow competing bids to emerge, and to provide
the Company’s shareholders with adequate time to properly assess a take-over bid
without undue pressure.
Although
the Rights Plan took effect immediately, in accordance with TSX requirements,
the Company sought approval and ratification by its shareholders. At
the annual and special meeting of shareholders held on April 28, 2009, the
shareholders of the Company approved and ratified the Rights Plan.
The
Company has established a corporate credit card facility with a U.S. bank. This
facility has an aggregate borrowing limit of US$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.
Outstanding
Share Data
Information
with respect to outstanding common shares, warrants, compensation options and
stock options as at September 30, 2009 and December 31, 2008 is as
follows:
|
|
|
September
30, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares
|
|
|
93,940,568 |
|
|
|
93,243,607 |
|
|
|
696,961 |
|
|
Stock
options
|
|
|
8,382,903 |
|
|
|
6,228,700 |
|
|
|
2,154,203 |
|
|
Fully
diluted shares outstanding
|
|
|
102,323,471 |
|
|
|
99,472,307 |
|
|
|
2,851,164 |
|
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 cash and cash equivalents are comprised of:
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
|
|
|
As
at
|
|
|
As
at
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
on deposit at banks
|
|
|
620,586 |
|
|
|
392,170 |
|
|
Guaranteed
investment certificates
|
|
|
2,787,500 |
|
|
|
9,087,500 |
|
|
Money
market funds
|
|
|
25,495,673 |
|
|
|
1,031,882 |
|
|
Certificates
of deposit
|
|
|
19,549,800 |
|
|
|
15,288,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,453,559 |
|
|
|
25,799,735 |
|
Credit
risk
Financial
instruments that potentially subject the Company to concentrations of credit
risk consist of cash and cash equivalents, short term investments and bonding
deposits. The Company’s financial instruments consist of Canadian
dollar and US dollar denominated deposit accounts, guaranteed investment
certificates, money market funds and certificates of deposits. They
bear interest at annual rates ranging from 0.15% to 3.50% and mature at various
dates up to June 14, 2010. The instruments with initial maturity over
three months have been classified as short-term investments.
These
instruments, including bonding deposits, are maintained at financial
institutions in Canada and the United States. Of these amounts,
approximately $7.5 million is covered by either the Canada Deposit Insurance
Corporation or the Federal Deposit Insurance Corporation; leaving approximately
$41.4 million at risk should the financial institutions with which these
amounts are invested be rendered insolvent. As at September 30, 2009,
the Company does not consider any of its financial assets to be
impaired.
Liquidity
risk
Liquidity
risk is the risk that the Company will not be able to meet its financial
obligations as they fall due. The Company manages liquidity risk
through regular cash flow forecasting of cash requirements to fund exploration
and development projects and operating costs.
As at
September 30, 2009 the Company’s liabilities consisted of trade accounts payable
of $1,192,658, all of which are due within normal trade terms of generally 30 to
60 days.
Market
risk
Market
risk is the risk to the Company of adverse financial impact due to changes in
the fair value or future cash flows of financial instruments as a result of
fluctuations in interest rates and foreign currency exchange
rates. Market risk arises as a result of the Company incurring a
significant portion of its expenditures and having a significant portion of its
cash equivalents and short-term investments in United States dollars, and
holding cash equivalents and short term investments which earn
interest.
Interest rate
risk
Financial
instruments that expose the Company to interest rate risk are its cash
equivalents and short term investments. The Company’s objectives for managing
its cash and cash equivalents are to ensure sufficient funds are maintained on
hand at all times to meet day-to-day requirements and to place any amounts which
are
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
considered
in excess of day-to-day requirements on short-term deposit with the Company's
banks to earn interest. When placing amounts of cash and cash equivalents on
short-term deposit, the Company only uses high quality commercial banks and
ensures that access to the amounts placed can generally be obtained on
short-notice.
Currency
risk
The
Company incurs expenses and expenditures in Canada and the United States and is
exposed to risk from changes in foreign currency rates. In addition, the Company
holds financial assets and liabilities in Canadian and US dollars. The Company
does not utilize any financial instruments or cash management policies to
mitigate the risks arising from changes in foreign currency rates.
At
September 30, 2009, the Company had within its cash and cash equivalents, short
term investments and bonding deposits approximately US$38.8 million (US$26.5
million as at December 31, 2008) denominated in US dollars and accounts payable
of US$0.9 million (US$1.7 million as at December 31, 2008) denominated in US
dollars.
Sensitivity
analysis
The
Company has completed a sensitivity analysis to estimate the impact that a
change in foreign exchange rates would have on the net loss of the Company,
based on the Company’s net US dollar denominated assets and liabilities at the
period end. This sensitivity analysis assumes that changes in market interest
rates do not cause a change in foreign exchange rates. This
sensitivity analysis shows that a change of +/- 10% in US dollar foreign
exchange rate would have a +/- $4.2 million impact on net loss for the nine
months ended September 30, 2009. This impact is primarily as a result
of the Company having cash and investment balances denominated in US dollars and
US dollar denominated trade accounts payables at September 30,
2009. The financial position of the Company may vary at the time that
a change in exchange rates occurs causing the impact on the Company’s results to
differ from that shown above.
The
Company has also completed a sensitivity analysis to estimate the impact that a
change in interest rates would have on the net loss of the Company. This
sensitivity analysis assumes that changes in market foreign exchange rates do
not cause a change in interest rates. This sensitivity analysis shows
that a change of +/- 100 basis points in interest rate would have a +/- $0.4
million impact on net loss for the nine months ended September 30,
2009. This impact is primarily as a result of the Company having
cash, short-term investments and bonding deposits invested in interest bearing
accounts. The financial position of the Company may vary at the time
that a change in interest rates occurs causing the impact on the Company’s
results to differ from that shown above.
Transactions
with Related Parties
During
the nine months ended September 30, 2009 and 2008, the Company did not
participate in any material transactions with related parties.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Proposed
Transactions
As is
typical of the mineral exploration and development industry, the Company is
continually reviewing potential merger, acquisition, investment and venture
transactions and opportunities that could enhance shareholder
value. Timely disclosure of such transactions is made as soon as
reportable events arise.
Critical
Accounting Policies and Estimates
Mineral
Properties
Acquisition
costs of mineral properties are capitalized. When production is attained, these
costs will be amortized on the unit-of-production method based upon the
estimated recoverable resource of the mineral property.
The
Company assesses the possibility of impairment in the net carrying value of its
mineral properties when events or circumstances indicate that the carrying
amounts of the asset or asset group may not be
recoverable. Given the current disruption and uncertainty in
the global economy, and the decrease in the Company’s share price over the last
year, management reviewed all of its significant mineral properties for
potential impairment and concluded that the fair value of these properties
exceeded the carrying amount and no impairment charges were recorded as at
December 2008. Management believes there has been no change in the
status of these properties and no impairment charge is required as at September
30, 2009.
Stock Based
Compensation
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 make estimates regarding the
expected volatility of the Company’s stock over the future life of the equity
instrument, the estimate of the expected life of the equity instrument, the
expected volatility of the Company’s common shares, and the number of options
that are expected to be forfeited. 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
Exploration and Development
Expenditures
In
December 2008, the Company changed its policy for accounting for exploration and
development expenditures. In prior years, the Company capitalized all
direct exploration and development expenditures. Under its new
policy, exploration, evaluation and development expenditures, including annual
exploration license and maintenance fees, are charged to earnings as incurred
until the mineral property becomes commercially mineable.
Management
considers that a mineral property will become commercially mineable when
management has determined it is economically viable and it can be legally mined,
as indicated by the receipt of key permits. Development expenditures
incurred subsequent to the receipt of key permits will be capitalized and
amortized on
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
the
unit-of-production method based upon the estimated recoverable resource of the
mineral property. Management believes that this treatment provides a
more relevant and reliable depiction of the Company’s asset base and more
appropriately aligns the Company’s policies with those of comparable companies
in the mining industry at a similar stage.
The
Company has accounted for this change in accounting policy on a retroactive
basis. The comparative operating results for the three and nine
months ended September 30, 2008 were restated as follows: expenses
increased by $5.4 million and $8.7 million, net loss increased by $5.8 and
$9.0 million, and loss per common share increased by $0.06 and $0.09,
respectively.
The
Company will continue to capitalize the acquisition costs of mineral properties
and capital assets.
New Accounting
Standards
Effective
January 1, 2009, the Company adopted CICA Handbook Section 3064, “Goodwill and
Intangible Assets”, which replaces Section 3062, “Goodwill and Intangible
Assets”. The new standard establishes revised standards for the recognition,
measurement, presentation and disclosure of goodwill and intangible assets. The
new standard also provides guidance for the treatment of preproduction and
start-up costs and requires that these costs be expensed as
incurred. The adoption of this standard did not have a material
impact on these consolidated financial statements.
International Financial
Reporting Standards
In
February 2008, the Canadian Accounting Standards Board ("AcSB") announced that
the requirement for publicly-accountable companies to adopt International
Financial Reporting Standards (“IFRS”) will be effective for interim and annual
financial statements relating to fiscal years beginning on or after January 1,
2011. The transition date of January 1, 2011 will require the restatement
for comparative purposes of amounts reported by the Company for the year ended
December 31, 2010.
During
the second quarter of 2009, the Company’s senior finance staff attended IFRS
training classes and identified the IFRS project team leader. In the
third quarter of 2009, staff members attended an intensive workshop and
conducted IFRS scoping study and IFRS management plan to assess the
impact of the transition to IRFS on the Company’s accounting policies and to
establish a project plan to implement IFRS. The scoping and
management plan were approved by the Audit Committee on October 28,
2009. Following this initial diagnostic step, the Company will
proceed to make a determination of the impact of transition to IFRS on its
financial statements and systems.
The
following table summarizes the Company’s plans for implementing the IFRS
Changeover.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
| |
|
|
|
|
|
Key
Activity
|
|
Milestones/Deadlines
|
|
Effort
Accomplished by September 30, 2009
|
| |
|
|
|
|
| Phase
1: Preliminary Scoping Study |
|
|
|
|
| |
|
|
|
|
|
Preparation
of the IFRS Scoping Study
Understand,
identify and assess the overall
effort
required by the Company to produce financial
information
in accordance with IFRS
|
|
IFRS
Scoping Study and Project Management
Plan
prepared by the end of Q4 2009
|
|
Draft
IFRS Scoping Study and Project Management
Plan
prepared and subsequently approved by the
Company’s
Audit Committee on October 28, 2009 |
| |
|
|
|
|
|
Preparation
of a Project Management
Plan
to accomplish the conversion
|
|
|
|
|
|
|
|
|
|
|
| Phase
2: Project Setup and Evaluation |
|
|
|
|
| |
|
|
|
|
| Project
set up |
|
Identification
of key differences between Canadian
GAAP
and IFRS for each significant accounting
component
by end of Q4 2009
|
|
Key
components identified and ranked in terms of
financial
statement impact and implementation
effort/complexity
|
| |
|
|
|
|
|
Comprehensive
Component Evaluation and
Issues
Resolution
|
|
Comprehensive
component evaluations completed
by
Q2 2010
|
|
As
part of the Phase 1 IFRS Scoping Study, preliminary
component
evaluations were completed and significant
accounting
policy choices identified.
Comprehensive
component evaluations are underway.
|
| |
|
|
|
|
| Systems
Evaluations and Training |
|
Systems
and internal control evaluations completed
by
Q2 2010
|
|
Internal
and Financial Reporting Control Documentation
was
completed with consideration of the changes that the
conversion
to IFRS will require. |
| |
|
|
|
|
| |
|
Education
and training programs for board members
and
top management commenced by Q4 2009 and
staff
by Q2 2010
|
|
Executive
Summary of Phase 1 Scoping Study ready for
presentation
in October 2009.
Training
program commenced
|
| |
|
|
|
|
| Financial
Statement Presentation |
|
Preliminary
outline of basic financial statements
under
IFRS by end of
|
|
Work
to commence following comprehensive component
evaluation
and issues resolution
|
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
| |
|
|
|
|
|
Key
Activity
|
|
Milestones/Deadlines
|
|
Effort
Accomplished by September 30,
2009
|
| |
|
|
|
|
|
|
|
Q3
2010
|
|
|
|
|
|
|
|
|
| Phase
3: Implementation and Embedding |
|
|
|
|
| |
|
|
|
|
|
Implement changes |
|
Quantification
of changes to Canadian GAAP
statements
to arrive at IFRS based numbers
|
|
Will
commence in Q2 2010 for the 2010 opening balances
and
continue through Q1 2011 for all 2010 statements
|
| |
|
|
|
|
|
Embed
the change |
|
Embed
the changes into the accounting and
reporting
systems in order to be ready for
conversion
in Q1 2011
|
|
Overall
IFRS implementation on
track |
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 Report on Form 20-F (Annual Information Form)
dated March 18, 2009 which is filed on SEDAR at www.sedar.com or on the U.S.
Securities and Exchange Commission’s website at www.sec.gov.
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.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Three and Nine months Ended September 30, 2009
(Information
as at October 28, 2009 unless otherwise noted)
Directors and
Officers
Jeffrey
T. Klenda, B.A. –Chairman and Executive Director
James M.
Franklin, PhD, FRSC, P. Geo. –Director and Technical Committee
Chair
W.
William Boberg, M. Sc., P. Geo. – President, Chief Executive Officer and
Director
Paul
Macdonell, Diploma Public Admin. – Director and Compensation Committee
Chair
Robert
Boaz, M. Econ., Hon. B.A. – Director and Corporate Governance and Nominating
Committee Chair
Thomas
Parker, M. Sc., P.E. – Director and Audit Committee Chair
Harold A.
Backer, B. Sc. – Executive Vice President Geology and Exploration
Wayne W.
Heili, B. Sc. – Vice President, Mining and Engineering
Paul W.
Pitman, B. Sc. Hon. Geo., P. Geo. – Vice President, Canadian
Exploration
Roger L.
Smith, CPA, MBA – Chief Financial Officer and Vice President Finance, IT &
Administration
Paul G.
Goss, J.D., MBA – General 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:
55
Metcalfe Street, Suite 1300
Attn:
Virginia K. Schweitzer
Ottawa,
Ontario K1P 6L5
Phone:
(613) 236-3882
|
Web Site
www.ur-energy.com
Trading
Symbol
TSX:
URE
NYSE
Amex: URG
Independent
Auditor
PricewaterhouseCoopers
LLP, Vancouver
Corporate Legal
Counsel
Fasken
Martineau DuMoulin 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