LITTLETON, Colo., March 1, 2019 /PRNewswire/ -- Ur-Energy Inc. (NYSE American:URG)(TSX:URE) ("Ur-Energy" or the "Company") has filed the Company's Annual Report on Form 10-K, Consolidated Financial Statements, and Management's Discussion & Analysis, all for the year ended December 31, 2018, with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov/edgar.shtml and with Canadian securities authorities on SEDAR at www.sedar.com. These filings also may be accessed on the Company's website at www.ur-energy.com. Shareholders of the Company may receive a hard copy of the consolidated financial statements, free of charge, upon request to the Company.
Ur-Energy CEO, Jeff Klenda said of the Company's 2018 performance: "I am pleased to advise that, during 2018, we generated $11.3 million in gross profits, reported positive earnings of $0.03 per share, and built our inventory position to over 375,000 pounds of finished, ready to sell, product. We achieved these results while at the same time maintaining a perfect safety record of no lost-time accidents at Lost Creek. Our people made this all possible through their dedication and hard work, and I would like to express my thanks for their many contributions.
"These accomplishments are even more notable in the current uranium market. Our Company has distinguished itself throughout these challenging times by focusing on the often forgotten, but true measures of business performance, such as receiving the highest value from our contractual commitments while keeping our cash operating costs as low as reasonably possible. All the while, we have maintained our Lost Creek assets and retained our core technical and management staff. With initial development costs of approximately $14 million and no significant capital expenditures, these measures also provide us with the operational leverage for an efficient and low-cost ramp-up at Lost Creek when market conditions improve or there is a successful outcome to the Section 232 trade action."
Financial Results
The Company ended the year with a cash and cash equivalents balance of $6.4 million. We recognized a gross profit of $11.3 million on sales of $23.5 million during 2018, which represents a gross profit margin of approximately 48%. The Company realized an average price per pound sold of $48.86, as compared to $49.09 in 2017. The decrease was primarily due to one small, tax-driven, spot sale made in early 2018. Our average cost per pound sold for the year was $24.76, as compared to $27.95 in 2017.
We recorded $1.3 million of income from operations after deducting total operating expenses of $10.0 million, which included exploration and evaluation expenses, development expenses and general and administrative expenses. After recording other income and expenses, the net income before income taxes for the year was $4.5 million, as compared to net income before incomes taxes of $0.1 million in 2017. As at February 27, 2018, our unrestricted cash position was $6.4 million.
Lost Creek Operations
During 2018, 302,164 pounds of U3O8 were captured within the Lost Creek plant. A total of 286,358 pounds were packaged in drums and 287,873 pounds of the drummed inventory were shipped to the conversion facility where 10,000 produced pounds were sold on the spot market. The cash cost per pound and non-cash cost per pound for produced uranium presented in the following Production and Production Costs and Sales and Cost of Sales tables are non-US GAAP measures. These measures do not have a standardized meaning within US GAAP or a defined basis of calculation. These measures are used by management to assess business performance and determine production and pricing strategies. They may also be used by certain investors to evaluate performance. We have restated the cost of uranium sales in 2017 and the related costs per pound to exclude the lower of cost or net realizable value ("NRV") adjustments made during that year to provide better comparisons to the current year. There were no changes to the financial statements for 2017. Please see the tables below for reconciliations of these measures to the US GAAP compliant financial measures.
Production and sales figures for the Lost Creek Project are as follows:
Production and Production Costs | Unit | 2018 Q4 | 2018 Q3 | 2018 Q2 | 2018 Q1 | 2018 | ||||||||||||
Pounds captured | lb | 48,304 | 80,604 | 89,209 | 84,047 | 302,164 | ||||||||||||
Ad valorem and severance tax | $000 | $ | 30 | $ | 81 | $ | 133 | $ | 179 | $ | 423 | |||||||
Wellfield cash cost (1) | $000 | $ | 459 | $ | 422 | $ | 516 | $ | 671 | $ | 2,068 | |||||||
Wellfield non-cash cost (2) | $000 | $ | 400 | $ | 400 | $ | 400 | $ | 403 | $ | 1,603 | |||||||
Ad valorem and severance tax per pound captured | $/lb | $ | 0.62 | $ | 1.00 | $ | 1.49 | $ | 2.13 | $ | 1.40 | |||||||
Cash cost per pound captured | $/lb | $ | 9.50 | $ | 5.24 | $ | 5.78 | $ | 7.98 | $ | 6.84 | |||||||
Non-cash cost per pound captured | $/lb | $ | 8.28 | $ | 4.96 | $ | 4.48 | $ | 4.79 | $ | 5.31 | |||||||
Pounds drummed | lb | 53,654 | 78,441 | 74,302 | 79,961 | 286,358 | ||||||||||||
Plant cash cost (3) | $000 | $ | 1,154 | $ | 1,109 | $ | 1,230 | $ | 1,226 | $ | 4,719 | |||||||
Plant non-cash cost (2) | $000 | $ | 484 | $ | 485 | $ | 493 | $ | 492 | $ | 1,954 | |||||||
Cash cost per pound drummed | $/lb | $ | 21.51 | $ | 14.14 | $ | 16.57 | $ | 15.33 | $ | 16.48 | |||||||
Non-cash cost per pound drummed | $/lb | $ | 9.02 | $ | 6.18 | $ | 6.64 | $ | 6.15 | $ | 6.82 | |||||||
Pounds shipped to conversion facility | lb | 67,040 | 72,902 | 74,416 | 73,515 | 287,873 | ||||||||||||
Distribution cash cost (4) | $000 | $ | 47 | $ | 36 | $ | 34 | $ | 19 | $ | 136 | |||||||
Cash cost per pound shipped | $/lb | $ | 0.70 | $ | 0.49 | $ | 0.46 | $ | 0.26 | $ | 0.47 | |||||||
Pounds purchased | lb | - | - | 100,000 | 370,000 | 470,000 | ||||||||||||
Purchase costs | $000 | $ | - | $ | - | $ | 2,225 | $ | 9,251 | $ | 11,476 | |||||||
Cash cost per pound purchased | $/lb | $ | - | $ | - | $ | 22.25 | $ | 25.00 | $ | 24.42 | |||||||
Notes: | |
1 | Wellfield cash costs include all wellfield operating costs. Wellfield construction and development costs, which include wellfield drilling, header houses, pipelines, power lines, roads, fences and disposal wells, are treated as development expense and are not included in wellfield operating costs. |
2 | Non-cash costs include the amortization of the investment in the mineral property acquisition costs and the depreciation of plant equipment, and the depreciation of their related asset retirement obligation costs. The expenses are calculated on a straight-line basis, so the expenses are typically constant for each quarter. The cost per pound from these costs will therefore typically vary based on production levels only. |
3 | Plant cash costs include all plant operating costs and site overhead costs. |
4 | Distribution cash costs include all shipping costs and costs charged by the conversion facility for weighing, sampling, assaying and storing the pounds prior to sale. |
In total, wellfield, plant and distribution cash costs were very consistent quarter on quarter during 2018. The respective cash costs per pound increased overall during the year primarily driven by decreasing levels of production. The more significant increase in cash and non-cash costs per pound in Q4 was driven by lower quarterly production, which is a typical result as a mine matures and older operating patterns, particularly in MU1, remain in the flow regime.