Exhibit
99.1
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
December
31, 2009
(expressed
in Canadian dollars)
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Introduction
The
following provides management’s discussion and analysis of results of operations
and financial condition for the years ended December 31, 2009, 2008 and
2007. Management’s Discussion and Analysis (“MD&A”) was prepared
by Company management and approved by the board of directors on March 5,
2010. This discussion and analysis should be read in conjunction with
the Company’s audited consolidated financial statements for the years ended
December 31, 2009, 2008 and 2007. All figures are presented in
Canadian dollars, unless otherwise noted, and are in accordance with Canadian
generally accepted accounting principles.
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”.
Forward-Looking
Information
This
MD&A 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 which 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 United States Nuclear Regulatory Commission Source and
Byproduct Material License; Wyoming Department of Environmental
Quality Permit and License to Mine and all other necessary permits
related to Lost Creek;
(iii) Lost Creek and Lost Soldier will advance to production and the
production timeline at Lost Creek scheduled for early 2011; (iv) production
rates, timetables and methods at Lost Creek and Lost Soldier; (v) the Company’s
procurement and construction plans at Lost Creek; (vi) the licensing process at
Lost Soldier; (vii) the timing, the mine design planning and the preliminary
assessment at Lost Soldier; (viii) the completion and timing of various
exploration programs, including without limitation, those as LC North and LC
South ; (ix) the potential of new exploration targets in the area of Lost Creek,
including those at LC North and LC South, to contain 24 – 28 million pounds of
U3O8 (not NI
43-101 compliant); (x) timing, completion, and funding for and results of
further exploration programs at the Bootheel Project and Hauber Project; and
(xi) the community and regulatory issues with the Screech Lake project and
related exploration. These 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 corporation" 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 5, 2010 which is filed on SEDAR at www.sedar.com and with the U.S.
Securities and Exchange Commission at www.sec.gov.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
The
potential quantity and grade ranges set forth in regards exploration targets at
Lost Creek, LC North and LC South are conceptual in nature only. There has been
insufficient exploration to define a mineral resource at the new exploration
targets at Lost Creek, LC North and LC South. It is uncertain if further
exploration will result in the target(s) 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 National Instrument
43-101 (“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 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.
The
Company is primarily focused on uranium exploration in Wyoming, USA where the
Company has 12 properties. Of those, ten properties are in the Great
Divide Basin, and two of those (Lost Creek and Lost Soldier) contain defined
resources that the Company expects to advance to
production. Among its other properties, the Company also
has two uranium exploration properties in the Thelon Basin, Northwest
Territories, Canada.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Selected
Information
The
following table contains selected financial information as at December 31, 2009
and December 31, 2008.
|
|
|
As
at
December
31, 2009
$
|
|
|
As
at
December
31, 2008
$
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
81,702,205 |
|
|
|
101,533,965 |
|
|
Liabilities
|
|
|
(1,550,675 |
) |
|
|
(3,256,634 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
assets
|
|
|
80,151,530 |
|
|
|
98,277,331 |
|
|
|
|
|
|
|
|
|
|
|
|
Capital
stock and contributed surplus
|
|
|
157,725,036 |
|
|
|
157,118,019 |
|
|
Deficit
|
|
|
(77,573,506 |
) |
|
|
(58,840,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity
|
|
|
80,151,530 |
|
|
|
98,277,331 |
|
The
following table contains selected financial information for the years ended
December 31, 2009, 2008 and 2007 and cumulative information from inception of
the Company on March 22, 2004 to December 31, 2009.
|
|
|
Year
Ended
December
31, 2009
$
|
|
|
Year
Ended
December
31, 2008
$
|
|
|
Year
Ended
December
31, 2007
$
|
|
|
Cumulative
from
March
22, 2004
through
December
31, 2009
$
|
|
|
Revenue
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Total
expenses (1)
|
|
|
(17,408,449 |
) |
|
|
(25,967,711 |
) |
|
|
(22,959,356 |
) |
|
|
(88,288,232 |
) |
|
Interest
income
|
|
|
890,915 |
|
|
|
2,494,445 |
|
|
|
2,816,398 |
|
|
|
6,969,354 |
|
|
Loss
from equity investment
|
|
|
(17,855 |
) |
|
|
- |
|
|
|
- |
|
|
|
(17,855 |
) |
|
Foreign
exchange gain (loss)
|
|
|
(3,506,111 |
) |
|
|
5,656,319 |
|
|
|
(806,420 |
) |
|
|
2,062,128 |
|
|
Other
income (loss)
|
|
|
940,237 |
|
|
|
(36,638 |
) |
|
|
- |
|
|
|
903,599 |
|
|
Loss
before income taxes
|
|
|
(19,101,263 |
) |
|
|
(17,853,585 |
) |
|
|
(20,949,378 |
) |
|
|
(78,371,006 |
) |
|
Recovery
of future income taxes
|
|
|
368,445 |
|
|
|
- |
|
|
|
429,055 |
|
|
|
797,500 |
|
|
Net
loss for the period
|
|
|
(18,732,818 |
) |
|
|
(17,853,585 |
) |
|
|
(20,520,323 |
) |
|
|
(77,573,506 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Stock based compensation included in total expenses
|
|
|
950,874 |
|
|
|
4,567,206 |
|
|
|
6,138,922 |
|
|
|
15,713,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share:
Basic
and diluted
|
|
|
(0.20 |
) |
|
|
(0.19 |
) |
|
|
(0.24 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per common share
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
The
Company has not generated any revenue from its operating activities to
date. The Company’s expenses include general and administrative
(“G&A”) 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
8 most recently completed quarters.
|
|
|
Quarter
Ended
|
|
|
|
|
Dec.
31
|
|
|
Sep.
30
|
|
|
Jun.
30
|
|
|
Mar.
31
|
|
|
Dec.
31
|
|
|
Sep.
30
|
|
|
Jun.
30
|
|
|
Mar.
31
|
|
|
|
|
2009
|
|
|
2009
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Total
expenses
|
|
|
(3,419,379 |
) |
|
|
(5,336,536 |
) |
|
|
(3,616,032 |
) |
|
|
(5,036,502 |
) |
|
|
(7,947,470 |
) |
|
|
(9,186,720 |
) |
|
|
(5,502,306 |
) |
|
|
(3,331,215 |
) |
|
Interest
income
|
|
|
141,016 |
|
|
|
130,519 |
|
|
|
218,637 |
|
|
|
400,743 |
|
|
|
531,148 |
|
|
|
573,608 |
|
|
|
600,409 |
|
|
|
789,280 |
|
|
Loss
from equity investment
|
|
|
(4,365 |
) |
|
|
(13,490 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Foreign
exchange gain (loss)
|
|
|
(1,393,136 |
) |
|
|
(814,255 |
) |
|
|
(1,933,051 |
) |
|
|
634,331 |
|
|
|
5,585,970 |
|
|
|
(425,801 |
) |
|
|
(156,296 |
) |
|
|
652,446 |
|
|
Other
income (loss)
|
|
|
(34,878 |
) |
|
|
1,085,947 |
|
|
|
(117,332 |
) |
|
|
6,500 |
|
|
|
- |
|
|
|
(18,203 |
) |
|
|
3,000 |
|
|
|
(11,685 |
) |
|
Loss
before income taxes
|
|
|
(4,710,742 |
) |
|
|
(4,947,815 |
) |
|
|
(5,447,778 |
) |
|
|
(3,994,928 |
) |
|
|
(1,830,352 |
) |
|
|
(9,057,116 |
) |
|
|
(5,055,193 |
) |
|
|
(1,901,174 |
) |
|
Recovery
of future income taxes
|
|
|
(429,055 |
) |
|
|
797,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net
loss for the period
|
|
|
(5,139,797 |
) |
|
|
(4,150,315 |
) |
|
|
(5,447,778 |
) |
|
|
(3,994,928 |
) |
|
|
(1,830,352 |
) |
|
|
(9,057,116 |
) |
|
|
(5,055,193 |
) |
|
|
(1,901,174 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share – basic and diluted
|
|
|
(0.06 |
) |
|
|
(0.04 |
) |
|
|
(0.06 |
) |
|
|
(0.04 |
) |
|
|
(0.02 |
) |
|
|
(0.09 |
) |
|
|
(0.06 |
) |
|
|
(0.02 |
) |
Overall Performance and
Results of Operations
From
inception to December 31, 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 December 31, 2009, the Company
held cash and cash equivalents, and short-term investments of $43.4
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 Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Mineral
Properties
The
Company holds mineral properties in the United States and Canada, including in
Wyoming and the Northwest Territories, which total more than 220,000 acres
(approximately 89,000 hectares).
USA
Properties
Lost
Creek Project – Great Divide Basin, Wyoming
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, other properties, 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 % as an indicated resource and an additional 1.1 million pounds of
U3O8 at
0.076 % as an inferred resource.
Lost Creek Regulatory
History
The
Company continues to advance matters to obtain an NRC Source and Byproduct
Material License (the “NRC License”) for the Lost Creek
project. The NRC is required to complete two reports, the
Safety and Environmental Report (“SER”) and the Supplemental Environmental
Impact Statement (“SEIS”), prior to issuing an NRC License. Based
upon guidance from the NRC, Ur-Energy anticipates the issuance of its NRC
License in the third quarter 2010. The history and milestones to date
of the NRC application process for Lost Creek are as follows:
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
|
DATE
|
EVENT
|
|
October
2007
|
Company
submitted Application to the NRC
|
|
June
2008
|
NRC
notified the Company that the Acceptance Review was complete: the
Application was found sufficient to proceed with technical
review
|
|
September
2008
|
NRC
delay in completion of the draft Generic Environmental Impact Study
(“GEIS”) for in-situ recovery announced; anticipated publication delayed
until June 2009
|
|
November
2008
|
NRC
provided the Company with a Request for Additional Information (“RAI”) for
the technical review portion of the Application
|
|
Fourth
quarter 2008-first
quarter 2009
|
The
Company submitted responses to the NRC’s RAI for Lost Creek technical
review.
|
|
March
2009
|
NRC
provided the Company with an RAI for the environmental review portion of
the Application
|
|
May
2009
|
NRC
advised all applicants for new ISR operations that, in addition to the
GEIS guidelines, a site-specific SEIS will be required
|
|
June
2009
|
The
Company submitted responses to the NRC’s RAI for Lost Creek environmental
review
|
|
June 2009
|
GEIS
issued by NRC
|
|
August
2009
|
The
Company submitted additional responses to health physics RAI
items
|
|
December
2009
|
Draft
SEIS on Lost Creek issued by NRC and draft SER completed by
NRC
|
|
February
2010
|
The
Company submitted comments regarding Draft SEIS
|
|
March
2010
|
NRC extends comment period until March 3; the NRC is
processing comments received from the public and other
regulators
|
The U.S.
Bureau of Land Management (“BLM”) has determined that its project environmental
review and approval will be independent of the environmental review process
carried out by the NRC. In response, the Company submitted a Plan of Operations
to the BLM in November 2009. The BLM appointed a coordinator for the review
process and the review, including public comment and selection of a contractor
for the environmental review, has commenced. The BLM’s decision of record on the
Plan is expected in the summer of 2010.
The
Company continues to advance matters to obtain a WDEQ 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
was deemed complete in May 2008. Throughout 2009, WDEQ issued various
technical comments in its review of the Application, and the Company has filed
responses to those comments. The data package for Mine Unit #1 was
submitted to the WDEQ in December 2009 and initial comments were received from
WDEQ in February 2010. The Company anticipates filing its responses to
those comments before the end of first quarter 2010. Ur-Energy
anticipates the issuance of Lost Creek's WDEQ Permit to Mine in the summer of
2010.
On March
5, 2010, the U.S. Fish and Wildlife Service (“USFWS”), in compliance with a
federal court order, submitted a finding of “warranted for listing but precluded
by higher priorities” with regard to the greater sage grouse – whose habitat
includes Wyoming. A finding that listing is “warranted but precluded”
results in recognition of the greater sage grouse as a candidate for listing.
This finding is reconsidered annually, taking into account changes in the status
of the species. When higher priority listing actions have been addressed by the
USFWS for other species, a proposed listing rule is prepared and issued for
public comment. This means that until the USFWS finalizes a listing
determination, the greater sage grouse will remain under state management.
As a part of its WDEQ Application, the Company has submitted a Wildlife
Protection Plan regarding, among other issues, the sage grouse. The Company
conducted several meetings during 2009 and early 2010 with the WDEQ
and Wyoming Department of Game and Fish to facilitate the processing and
acceptance of the mitigation plan as a part of the WDEQ Permit.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
The
Company has submitted to the WDEQ-Water Quality Division an application for a
permit for up to five Class 1 Underground Injection Control (“UIC”) disposal
wells. These wells, utilized for deep geologic disposal of liquid
waste, 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 2008. This data set was used to support
the application which was submitted to WDEQ – Water Quality Division on June 29,
2009. WDEQ processing of this particular application was delayed initially as a
result of WDEQ staffing issues, but progressed with the issuance in late
November 2009 of technical comments, to which the Company submitted its
responses on February 1, 2010. The Company anticipates the receipt of
this permit in the second quarter of 2010.
The
Sweetwater County Development Plan was approved in December 2009. The
Air Quality permit was issued by the WDEQ to Lost Creek on January 20,
2010. Additional permit applications are under review by various
agencies, with approvals expected in advance of the NRC License.
Lost Creek Development
Program – Drilling, Planning and Procurement
The
Company 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”),
entitled Preliminary Assessment for the Lost Creek Project Sweetwater County,
Wyoming (“Preliminary Assessment”). The Preliminary Assessment
provides an analysis of the 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 Preliminary
Assessment is available for review on www.sedar.com.
The
Company continued its development program at Lost Creek during
2009. The first phase of the 2009 program included the 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. The Company also completed mechanical integrity testing of
installed baseline and monitoring wells and the installation of submersible pump
equipment to facilitate ongoing water sampling requirements.
In July
2009, the delineation drilling program at Lost Creek continued with 235
additional drill holes originally planned. As the program progressed,
additional drill holes were planned and the program was extended through
February 2010, to further investigate mineralization found in unanticipated
locations. As of February 28, 2010, 277 holes were completed (for a
total of 196,840 feet (59,341 meters)) to support definition of future proposed
mining areas. As well, in early 2010, additional monitor wells
were drilled and other work completed
During
2009, the Company’s engineering staff, assisted by TREC Inc., completed the
detailed designs and specifications for all components of the Lost Creek
plant. The Company’s bid process was completed in fourth quarter
2009, when the Company announced its selection of Fagen, Inc. as general
contractor of the Lost Creek plant construction project. Although
construction of the Lost Creek plant will not begin until receipt of the
necessary permits, requests for quotations for all major process equipment at
Lost Creek were prepared and solicited from vendors and
contractors. Bids were evaluated and procurement was ongoing
throughout 2009.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
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$861,525 have been made, with a final payment due upon
completion. An additional purchase order for US$319,357 was issued
during the second quarter of 2009 to 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.
Company
Projects Adjacent to Lost Creek
In 2009,
the Company expanded its land holdings around Lost Creek and currently controls
a total of 1,753 unpatented mining claims and two State of Wyoming sections for
a total of almost 34,000 mineral acres including the Lost Creek permit area, LC
North, LC South, EN and Toby project areas. These totals include the
292 lode mining claims acquired by the Company during 2009 by way of staking and
purchase agreements.
Initial
drilling at LC North in 2007 was conducted for the purpose of investigating
numerous occurrences of uranium-bearing intercepts detected by historical
exploration drilling by previous operators in the 1970s and examining 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 with regard to the
EN project reducing an existing royalty from two percent (2%) to one percent
(1%) on specified mining claims and eliminating an area of interest arising from
transactions dating back to 2006. 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 horizons within the EN project area.
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 NI
43-101 compliant). These potential quantity and grade ranges are
conceptual in nature, only. 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. 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 fronts 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 geologists during the evaluation. The Company continues to
evaluate 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.
Lost
Soldier Project – Great Divide Basin, Wyoming
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 (1%),
which arises from a data purchase, is in place with respect to certain claims
within the project. In 2009, the Company’s staff continued with
engineering studies and mine design analysis of Lost Soldier. The
Company continues to anticipate development of regulatory applications for Lost
Soldier will come be made the Company obtains the Lost Creek licenses and permit
to mine, and as corporate priorities are determined for the development of the
lands adjacent to Lost Creek.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Hauber
Project LLC – Northeastern Wyoming
The
Company’s Hauber property 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. In 2007, the Company entered into
agreements with Trigon Uranium Corporation and its subsidiary ("Trigon") for the
formation of a venture project to be known as Hauber Project LLC (the “Hauber
Project”). Under the terms of the agreements, the Company contributed
its Hauber property, and Trigon was to make contributions through eligible
exploration expenditures on the property. Having resigned from
the Hauber Project effective August 1, 2008, Trigon and the Company resolved the
continuing obligations of Trigon by settlement agreement in July
2009.
Effective
December 1, 2009, NCA Nuclear, Inc. (“NCA Nuclear”), a subsidiary of Bayswater
Uranium Corporation, entered the Hauber Project as a Member, entitled to earn in
to 75% interest through the expenditure of US$1,000,000 in qualified exploration
costs over a four-year period. NCA Nuclear will also act as Manager
of Hauber Project.
In
January 2010, NCA Nuclear completed an NI 43-101 mineral resource estimate of
the properties at the Hauber Project, authored by Thomas C. Pool, P.E., of
International Nuclear, Inc. The resource estimate concludes the Hauber Project
properties hold approximately 1.45 million pounds of eU3O8 (Indicated
Resources) in 423,000 tons at an average grade of 0.17% eU3O8. Bayswater
has filed the NI 43-101 report on www.sedar.com.
As a part
of its 2010 obligations under the venture agreement, NCA Nuclear will drill at
least two drill holes for the purpose of testing in situ recovery amenability of
the uranium mineralization.
The
Bootheel Project, LLC – Shirley Basin, Wyoming
Crosshair
Exploration & Mining Corp (“Crosshair”) completed its earn-in of a 75%
interest in the Company’s subsidiary, The Bootheel Project, LLC (the “Bootheel
Project”) during the third quarter of 2009. The interest arises from
a venture agreement entered into by the Company and a subsidiary of then Target
Exploration & Mining Corp. (“Target”) in June
2007. Effective March 31, 2009, Target became a
wholly-owned subsidiary of Crosshair through a plan of
arrangement. Crosshair’s 75% interest was acquired by spending US$3.0
million in qualified exploration costs, and issuing 125,000 common shares of
Target to the Company (which was exchanged for 150,000 common shares of
Crosshair in its acquisition of Target).
Under the
terms of the 2007 agreement, the Company contributed its Bootheel and Buck Point
properties to 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. Various royalties exist on future production of uranium and
other minerals from the Bootheel Project properties.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
In 2008,
Crosshair completed a 50,000 feet (15,250 meters) drilling program on the
Bootheel property. In January 2009, Crosshair announced that, on behalf of the
Bootheel Project, it had completed the acquisition of the final historic data
package comprising geophysical and geological data from approximately 290,000
feet (88,400 meters) of drilling carried out by Cameco, Kerr McGee and
Uradco. Additional historic data, acquired by the Company in 2007,
has also been made available to the Bootheel Project.
Crosshair
released an independent resource estimate on the Bootheel property under NI
43-101 in the third quarter of 2009. This NI
43-101 resource estimate reports that the Bootheel property contains 1.09
million pounds of U3O8 (indicated
resource) in 1.4 million short tons, at a grade of 0.038% U3O8, and an
inferred resource of 3.25 million pounds U3O8 (in 4.4
million short tons) at an average grade of 0.037% U3O8. This NI
43-101 report was filed by Crosshair on www.sedar.com.
As a
result of Crosshair’s earn-in, the Company now has a 25% interest in the
Bootheel Project. As the Company is no longer the controlling Member
of the Bootheel Project from the date Crosshair completed its earn-in, the
Project is now accounted for using the equity accounting method with the
Company’s proportionate share of the Project’s loss included in the Statement of
Operations from the date of earn-in and the Company’s net investment reflected
on the Balance Sheet.
Additional
U.S. Exploration Activities and Company Databases
In August
2009, the Company completed the sale of the Moorcroft Database to Peninsula
Minerals Limited (“Peninsula”) 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 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 of $1,079,475 from this sale
is included in the Company’s Other Income in the Statement of
Operations.
Ongoing
evaluation continues of the exploration databases owned by the
Company.
Throughout
2009, the Company acquired rights in additional lands, and field exploration
programs continued. The Company dropped its mining claims
in Arizona in the third quarter of 2009.
Canadian
Properties
Screech
Lake Property, Thelon Basin, Northwest Territories
Throughout
2009, the Company continued its discussions with First Nations groups in respect
to its Screech Lake property. An agreement was secured with Lutsel
K’e Dene First Nation to conduct surface exploration work in 2009 but no
agreement has been obtained to carry out drilling.
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. Commenced in August 2009, this field
program was completed in early September 2009. 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. No drilling was conducted in 2009. However, for future
programs, the calculated depth measurements obtained through this year’s
geophysical work 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 Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Year
Ended December 31, 2009 Compared to Year Ended December 31, 2008
The
following table summarizes the results of operations for the years ended
December 31, 2009 and 2008.
|
|
|
Year
Ended December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
Change
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
General
and administrative
|
|
|
(5,430,480 |
) |
|
|
(6,904,564 |
) |
|
|
1,474,084 |
|
|
|
-21 |
% |
|
Exploration
and evaluation expense
|
|
|
(4,944,227 |
) |
|
|
(9,922,798 |
) |
|
|
4,978,571 |
|
|
|
-50 |
% |
|
Development
expense
|
|
|
(6,931,303 |
) |
|
|
(8,854,536 |
) |
|
|
1,923,233 |
|
|
|
-22 |
% |
|
Write-off
of mineral properties
|
|
|
(102,439 |
) |
|
|
(285,813 |
) |
|
|
183,374 |
|
|
|
-64 |
% |
|
Total
expenses
|
|
|
(17,408,449 |
) |
|
|
(25,967,711 |
) |
|
|
8,559,262 |
|
|
|
-33 |
% |
|
Interest
income
|
|
|
890,915 |
|
|
|
2,494,445 |
|
|
|
(1,603,530 |
) |
|
|
-64 |
% |
|
Loss
from equity investment
|
|
|
(17,855 |
) |
|
Nil
|
|
|
|
(17,855 |
) |
|
NA
|
|
|
Foreign
exchange gain (loss)
|
|
|
(3,506,111 |
) |
|
|
5,656,319 |
|
|
|
(9,162,430 |
) |
|
|
-162 |
% |
|
Other
income (loss)
|
|
|
940,237 |
|
|
|
(36,638 |
) |
|
|
976,875 |
|
|
|
-2666 |
% |
|
Loss
before income taxes
|
|
|
(19,101,263 |
) |
|
|
(17,853,585 |
) |
|
|
(1,247,678 |
) |
|
|
7 |
% |
|
Recovery
of future income taxes
|
|
|
368,445 |
|
|
Nil
|
|
|
|
368,445 |
|
|
NA
|
|
|
Net
loss for the period
|
|
|
(18,732,818 |
) |
|
|
(17,853,585 |
) |
|
|
(879,233 |
) |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share – basic and diluted
|
|
|
(0.20 |
) |
|
|
(0.19 |
) |
|
|
(0.01 |
) |
|
|
5 |
% |
Expenses
Total
expenses for the year 2009 were $17.4 million which include G&A expense,
exploration and evaluation expense, development expense and write-off of mineral
property costs. These expenses decreased by $8.6 million from a 2008
total of $26.0 million. This decrease was driven in large part by the
decrease in stock compensation expense of $3.6 million. This decrease
is a result of lower ongoing expense due to a decrease in the weighted-average
option price and the voluntary return to the Company by option holders of
options with an exercise price of $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 out of which $0.9 million was
recorded in G&A expense and $1.3 million was recorded in exploration and
evaluation expense.
G&A
expense relates to the Company’s administration, finance, investor relations,
land and legal functions. The primary reason for the decrease in
these expenses in 2009 was lower stock compensation expense, which decreased
$1.5 million during the year due to the 2008 cancellation discussed
above. Excluding stock compensation expense, G&A expense remained
constant for the year.
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 stage. This transition happens when 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 $1.6 million during the year. Exploration costs in
Canada decreased $1.1 million as a result of a larger exploration program at the
Company’s Bugs project in Nunavut in 2008 compared to the program conducted at
Screech Lake in 2009. Stock compensation expense charged to exploration and
evaluation declined $1.4 million in the year.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
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 $1.9 million for the year compared with 2008. The primary
changes in development costs for the year were reductions in costs related to
the deep test well for ground water sampling in support of the application for
Class I UIC permit of $2.2 million, decreases in drilling costs of $0.9 million,
decrease in stock compensation of $0.3 million and decreases in logging costs of
$0.2 million. These were offset by increases in labor of $0.6 million
and permitting of $1.2 million for the year. Combined expenditures
for mineral development activities (exploration, evaluation and development)
decreased by $6.0 million for the year ended December 31, 2009, when compared to
the comparable period in 2008.
During
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. In 2008, the Company wrote off $0.3 million of
mineral property costs related to the Harding and Fall River projects in South
Dakota.
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.
During
the year ended December 31, 2009, the Company sold its database of geologic
information related to its Moorcroft project in Wyoming for US$1.0
million. The gain of $1.1 million on this sale is reported in Other
Income for 2009.
The net
foreign exchange loss for the year ended December 31, 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 period.
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 a future tax liability in 2009 for the tax benefit that
was renounced, while reducing capital stock by the same amount.
In 2009
and 2008, the Company recorded operating losses in both Canada and the United
States. The benefit of these losses has been recognized only to the
extent that the Company had future income tax liabilities arising from the
issuance of flow-through shares. Consequently, the Company recorded
an income tax recovery in 2009 to offset the future income
tax. Management has concluded that it is not yet more likely than not
that the remaining losses, and prior years’ loss carryforwards and other tax
assets will be realized, and therefore the Company has recorded a full valuation
allowance against these amounts.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Loss per Common
Share
Both
basic and diluted loss per common share for the year ended December 31, 2009
were $0.20 (2008 – $0.19). 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.
Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007
The
following table summarizes the results of operations for the years ended
December 31, 2008 and 2007.
|
|
|
Year
Ended December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
Change
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
General
and administrative
|
|
|
(6,904,564 |
) |
|
|
(7,305,315 |
) |
|
|
400,751 |
|
|
|
-5 |
% |
|
Exploration
and evaluation expense
|
|
|
(9,922,798 |
) |
|
|
(15,654,041 |
) |
|
|
5,731,243 |
|
|
|
-37 |
% |
|
Development
expense
|
|
|
(8,854,536 |
) |
|
Nil
|
|
|
|
(8,854,536 |
) |
|
NA
|
|
|
Write-off
of mineral properties
|
|
|
(285,813 |
) |
|
Nil
|
|
|
|
(285,813 |
) |
|
NA
|
|
|
Total
expenses
|
|
|
(25,967,711 |
) |
|
|
(22,959,356 |
) |
|
|
(3,008,355 |
) |
|
|
13 |
% |
|
Interest
income
|
|
|
2,494,445 |
|
|
|
2,816,398 |
|
|
|
(321,953 |
) |
|
|
-11 |
% |
|
Foreign
exchange gain (loss)
|
|
|
5,656,319 |
|
|
|
(806,420 |
) |
|
|
6,462,739 |
|
|
|
-801 |
% |
|
Other
income (loss)
|
|
|
(36,638 |
) |
|
Nil
|
|
|
|
(36,638 |
) |
|
NA
|
|
|
Loss
before income taxes
|
|
|
(17,853,585 |
) |
|
|
(20,949,378 |
) |
|
|
3,095,793 |
|
|
|
-15 |
% |
|
Recovery
of future income taxes
|
|
Nil
|
|
|
|
429,055 |
|
|
|
(429,055 |
) |
|
NA
|
|
|
Net
loss for the period
|
|
|
(17,853,585 |
) |
|
|
(20,520,323 |
) |
|
|
2,666,738 |
|
|
|
-13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share – basic and diluted
|
|
|
(0.19 |
) |
|
|
(0.24 |
) |
|
|
0.05 |
|
|
|
-21 |
% |
Expenses
Total
expenses for the year ended December 31, 2008 were $26.0 million as compared to
$23.0 million in 2007. Total expenses include G&A expense,
exploration and evaluation expense, development expense and write-off of mineral
property costs.
Overall,
2008 total expenses increased $3.0 million as compared to 2007. The
increase in total expenses was primarily due to increased expenditures on the
Company’s exploration and development projects, the continued expansion of the
Littleton, Colorado and Casper, Wyoming offices, and increases in non-cash
amortization of capital assets and write-off expenses. The increase
in total expenses was partially offset by a decrease in non-cash stock based
compensation expense.
G&A
expense relates primarily to the Company’s administration, finance, investor
relations, land and legal functions in Littleton, Colorado. During
2008, the Company continued to expand the Casper, Wyoming office. The
Company strengthened key staffing areas adding eight positions primarily aimed
at enhancing operating expertise at the Casper office. Accordingly,
the Denver and Casper offices were also expanded to accommodate and support the
staffing additions.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Exploration,
evaluation and development expenditures increased $3.1 million in 2008,
primarily due to the transition of the Company’s Lost Creek property from the
evaluation stage to the development stage. During 2008, the Company
spent approximately $1.9 million in evaluation activities and $8.8 million in
development activities related to the Lost Creek property, which were expensed
in accordance with the Company’s revised accounting
policies. Additionally, the Company incurred significant expenditures
on other exploration and evaluation properties including the Bugs property in
Canada and the Lost Soldier property in the United States.
During
the year, the Company recorded significant non-cash stock based compensation
expenses related to stock options. In September 2008, the Company
gave the holders of options with an exercise price of $4.75 or higher the
opportunity to voluntarily return all or a portion of these options to the
Company by September 30, 2008 without any promise or guarantee that the option
holders will receive any further options. Options for 2,490,000
shares with a weighted exercise price of $4.82 were returned to the
Company. Previously unrecognized stock based compensation cost of
$2.2 million was recognized at the cancellation date. Including the
above, for 2008, stock based compensation expenses of $4.6 million (2007 –
$6.1 million) were included in total expenses. These non-cash
expenses represent approximately 18% of total expenses (2007 –
27%).
During
the third quarter of 2008, the Company relinquished leases associated with the
Harding and Fall River projects in South Dakota and wrote-off the approximately
$0.3 million in costs related to these projects. There were no write
offs in 2007.
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 year ended December 31, 2008, the Company earned
interest income on these investments of $2.5 million, as compared to $2.8
million in 2007. After the May 2007 bought deal public offering and
the March 2008 flow-through share private placement financing, the Company’s
average cash resources increased significantly. However, the Company
does not generate any revenue from operating activities and its average cash
resources, and the resulting interest income, have declined since the two
financings were completed.
During
the year ended December 31, 2008, the Company recorded a net foreign exchange
gain of $5.7 million as compared to a $0.8 million loss during the same
period in 2007. This 2008 net foreign exchange gain arose primarily
due to cash balances held in U.S. dollar accounts as the U.S. dollar
strengthened relative to the Canadian dollar during the period, while in 2007
the U.S. dollar declined in value relative to the Canadian dollar.
Income
taxes
In 2008,
the Company recorded operating losses in both Canada and the United
States. Management has concluded that it is not yet more likely than
not that these losses, and prior years’ loss carryforwards and other tax assets
will be realized, and therefore the Company has recorded a full valuation
allowance against these amounts.
In 2007,
the Company also recorded losses in both jurisdictions against which full
valuation allowances were applied, except in respect of the Company’s ISL
Resources Corporation (“ISL Resources”) subsidiary. The Company
acquired ISL Resources in 2004 and recorded a future tax liability upon the
acquisition related to the difference between management’s estimate of the tax
basis and the fair value assigned to the assets acquired. In 2007,
management filed tax returns for ISL Resources for the pre-acquisition period
and established additional tax basis for the ISL Resources assets and
consequently recorded a reduction in the future tax liability related to these
assets.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Loss per Common
Share
Both
basic and diluted loss per common share for the year ended December 31, 2008
were $0.19 (2007 – $0.24). 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
December 31, 2009, the Company had cash resources, consisting of cash and cash
equivalents and short-term investments, of $43.4 million, a decrease of $21.6
million from the December 31, 2008 balance of $65.0 million. The
Company's cash resources consist of Canadian and U.S. dollar denominated deposit
accounts, guaranteed investment certificates, money market funds and
certificates of deposit. During the twelve months ended December 31,
2009, the Company used $17.0 million of its cash resources to fund
operating activities and $1.5 million for investing activities (excluding short
term investment transactions), with the remaining $2.7 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 source of cash flow from
operations. The Company does not expect to generate any cash
resources from operations until it is successful in commencing production from
its properties. Operating activities used $17.0 million of cash
resources during the year ended December 31, 2009, as compared to $16.5 million
for the same period in 2008. The primary reasons for the increased
expenditures was cash used to settle 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 lower interest rates.
During
the year ended December 31, 2009, the Company invested cash resources of $2.0
million in mineral properties, bonding deposits, capital assets and
pre-construction activities related to plant design and equipment purchases at
Lost Creek. The majority of these expenditures went toward increased
bonding deposits ($0.9 million) and deposits related to ordering Lost Creek
processing facility equipment that has a long manufacturing lead time ($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.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Effective
January 1, 2010, the Rights Agent was changed to Computershare Investor Services
Inc., pursuant to a successor agreement to the Rights
Plan. Notice of the change of Rights Agent was provided to
shareholders of the Company.
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 December 31, 2009 and December 31, 2008 is as
follows:
|
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares
|
|
|
93,940,568 |
|
|
|
93,243,607 |
|
|
|
696,961 |
|
|
Stock
options
|
|
|
8,361,452 |
|
|
|
6,228,700 |
|
|
|
2,132,752 |
|
|
Fully
diluted shares outstanding
|
|
|
102,302,020 |
|
|
|
99,472,307 |
|
|
|
2,829,713 |
|
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 composed of:
|
|
|
As
at
|
|
|
As
at
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
on deposit at banks
|
|
|
308,918 |
|
|
|
392,170 |
|
|
Guaranteed
investment certificates
|
|
|
287,500 |
|
|
|
9,087,500 |
|
|
Money
market funds
|
|
|
25,564,505 |
|
|
|
1,031,882 |
|
|
Certificates
of deposit
|
|
|
6,296,400 |
|
|
|
15,288,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,457,323 |
|
|
|
25,799,735 |
|
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
The
Company’s short term investments are composed of:
|
|
|
As
at
|
|
|
As
at
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guaranteed
investment certificates
|
|
|
2,342,637 |
|
|
|
25,693,540 |
|
|
Certificates
of deposit
|
|
|
8,589,464 |
|
|
|
13,480,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,932,101 |
|
|
|
39,174,200 |
|
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 cash equivalents and short-term investments
consist of Canadian dollar and U.S. dollar denominated guaranteed investment
certificates and certificates of deposits. They bear interest at
annual rates ranging from 0.25% to 2.50% and mature at various dates up to
December 15, 2010. These instruments are maintained at financial
institutions in Canada and the United States. Of the amount held on
deposit, approximately $7.2 million is covered by either the Canada Deposit
Insurance Corporation or the Federal Deposit Insurance
Corporation. Another $1.3 million is guaranteed by a Canadian
provincial government, leaving approximately $37.7 million at risk should the
financial institutions with which these amounts are invested cease
trading. As at December 31, 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
December 31, 2009 the Company’s liabilities consisted of trade accounts payable
of $1,046,963, 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 a significant portion of its cash
equivalents and short-term investments in U.S. dollars, and holding cash
equivalents and short term investments which earn interest.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
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 considered in excess of day to day requirements on short-term deposit with
the Company's banks so that they 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 U.S. 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
December 31, 2009 the Company had cash and cash equivalents, short term
investments and bonding deposits of approximately US$38.1 million (US$26.5
million as at December 31, 2008) and had accounts payable of US$0.8 million
(US$1.7 million as at December 31, 2008) which were denominated
in U.S. 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 U.S. dollar denominated assets and liabilities at
year 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 U.S. dollar foreign
exchange rate would have a +/- $3.9 million impact on net loss for the year
ended December 31, 2009. This impact is primarily as a result of the
Company having yearend cash and investment balances denominated in U.S. dollars
and U.S. dollar denominated trade accounts payables. 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 +/- $0.6
million impact on net loss for the year ended December 31, 2009. This
impact is primarily as a result of the Company having cash and short-term
investments 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 twelve months ended December 31, 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 Year Ended December 31, 2009
(Information
as at March 5, 2010 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.
As a part
of their annual mineral property analysis, management reviewed all of the
Company’s significant mineral properties for potential impairment as at December
31, 2009.
For the
Company’s Lost Creek property, management reviewed the calculations done as of
December 31, 2009 and determined that despite a slight decline in the future
prices of uranium, the underlying costs, assumptions and timelines had not
changed significantly and therefore no impairment existed as of December 31,
2009. Management calculated the future net cash flows using estimated
future prices, indicated resources, and estimated operating, capital and
reclamation costs.
Other
than for those properties written off during the year, management did not
identify impairment indicators for any of the Company’s mineral
properties.
At
December 31, 2008, the disruption and uncertainty in the global economy and the
decrease in the Company’s share price over the previous year caused management
to review all of the Company’s significant mineral properties for potential
impairment. Management concluded that the fair value of these
properties exceeded the carrying amount. No impairment charges were
recorded as at December 31, 2008 as a result of those reviews.
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.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Changes
in Accounting Policies Including Initial Adoption
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 pre-production 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, 2010 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 an IFRS project team leader. In the
third quarter of 2009, staff members attended an intensive workshop and
conducted an IFRS scoping study and IFRS management plan to assess
the impact of the transition to IFRS on the Company’s accounting policies and to
establish a project plan to implement IFRS. The scoping and
management plan were approved by the Company’s Audit Committee on October 28,
2009.
The
following table summarizes the Company’s plans for implementing the IFRS
Changeover.
|
Key
Activity
|
|
Milestones/Deadlines
|
|
Effort
Accomplished by December 31, 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
Preparation
of a Project Management Plan to accomplish the conversion
|
|
IFRS
Scoping Study and Project Management Plan prepared by the end of Q4
2009
|
|
Draft
IFRS Scoping Study and Project Management Plan approved by the Company’s
Audit Committee on October 28, 2009
|
|
|
|
|
|
|
|
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
|
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
|
Key
Activity
|
|
Milestones/Deadlines
|
|
Effort
Accomplished by December 31, 2009
|
|
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 presented in October 2009;
Training
program commenced
|
|
|
|
|
|
|
|
Financial
Statement Presentation
|
|
Preliminary
outline of basic financial statements under IFRS by end of Q2
2010
Work
to commence following comprehensive component evaluation and issues
resolution
Ready
for implementation by end of 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
|
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Evaluation
of Disclosure Controls and Procedures
As of the
end of the period covered by this MD&A under the supervision of our Chief
Executive Officer and our Chief Financial Officer, we evaluated the
effectiveness of our disclosure controls and procedures, as such term is defined
in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act
of 1934 (the “Exchange Act”). Based on this evaluation, our Chief Executive
Officer and our Chief Financial Officer have concluded that the Company’s
disclosure controls and procedures are effective to ensure that information the
Company is required to disclose in reports that are filed or submitted under the
Exchange Act: (1) is recorded, processed and summarized effectively and
reported within the time periods specified in Securities and Exchange Commission
rules and forms, and (2) is accumulated and communicated to Company
management, including our Chief Executive Officer and our Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
The Company’s disclosure controls and procedures include components of internal
control over financial reporting. Management's assessment of the effectiveness
of the Company’s internal control over financial reporting set forth below is
expressed at the level of reasonable assurance because a control system, no
matter how well designed and operated, can provide only reasonable, but not
absolute, assurance that the control system's objectives will be
met.
Management’s
Report on Internal Control over Financial Reporting
Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, the Company’s management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act
Rules 13a-15(f) and 15d-15(f). The Company’s internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.
All
internal control systems, no matter how well designed, have inherent
limitations. Therefore even those systems determined to be effective can provide
only reasonable assurance with respect to financial statement preparation and
presentation. Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
Under the
supervision and with the participation of Company’s management, including our
Chief Executive Officer and Chief Financial Officer, an evaluation was conducted
of the effectiveness of the Company’s internal control over financial reporting
as of December 31, 2009 based on the framework set forth in Internal
Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that evaluation,
Company management concluded that, as of December 31, 2009, our internal control
over financial reporting was effective.
Changes
in Internal Control over Financial Reporting
There has
been no change in our internal control over financial reporting during the
fiscal year ended December 31, 2009 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
Ur-Energy
Inc.
(a
Development Stage Company)
Management’s
Discussion and Analysis
For
the Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
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 5, 2010 which is filed on SEDAR at www.sedar.com and 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 Year Ended December 31, 2009
(Information
as at March 5, 2010 unless otherwise noted)
Directors and
Officers
Jeffrey
T. Klenda, B.A. – Chairman and Executive Director
W.
William Boberg, M. Sc., P. Geo. – President, Chief Executive Officer and
Director
James M.
Franklin, PhD, FRSC, P. Geo. –Director and Technical Committee
Chair
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
|
Website
www.ur-energy.com
Trading
Symbols
TSX:
URE
NYSE
Amex: URG
Independent
Auditors
PricewaterhouseCoopers
LLP, Vancouver
Corporate Legal
Counsel
Fasken
Martineau DuMoulin LLP, Ottawa
Corporate
Banker
Royal
Bank of Canada, Ottawa
Transfer
Agent
Computershare
Investor Services Inc., Toronto
Computershare
Trust Company N.A. (U.S. Co-Transfer Agent and Co-Registrar), Golden,
CO
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