Ur-Energy Inc. 2026 Q2 Earnings Call

Today's discussion includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results to differ materially. We do not undertake to update or revise any forward-looking statements except as required by law. Today's presentation includes disclaimers related to forward-looking statements, risk factors, and projections, along with cautionary notes to investors. Please review these carefully, together with the risk factors described in our Form 10-K, our Form 10-Q, and other public filings with the SEC and Canadian securities regulators. I will now turn the call over to our CEO and President, Matt Gili.

Thank you, Alex. Thank you everyone for joining us today. In addition to Alex, joining me on the call today are Roger Smith, CFO, Steve Hatten, COO, Ryan Schierman, VP of Regulatory Affairs, and Jade Walle, VP Finance. We continue to believe the uranium market is supported by durable long-term fundamentals. More and more nuclear energy is recognized as an essential source of reliable baseload generation. Global capacity is projected to nearly double by 2040. Governments, including the U.S. government, are prioritizing secure domestic fuel supplies, and initiatives in Washington, D.C. are expected to put a premium on U.S.-produced uranium. At the same time, there is a structural gap in the industry between expected demand for uranium and primary mine supply.

We are positioned right in the center of that gap because we are one of the very few companies that produce U.S. uranium, and we are poised to produce a lot more. We are doing this by building America's first district-scale ISR uranium operation through disciplined capital efficient growth. Now let's talk about our operations. In the second quarter, we drummed 141,000 pounds of yellowcake at Lost Creek. That is 47% more than we drummed in the first quarter of this year and 26% more than the second quarter of last year. We shipped 150,000 pounds. Again, that is 44% more than the first quarter and 42% more than the second quarter of last year. In other words, we are executing on our production strategy.

We met our delivery commitments, selling 215,000 pounds under our contracts, which brought in $14.4 million in sales revenue. We maintained our low-cost production profile, another reason why Ur-Energy is positioned as a leading U.S. ISR producer. Our cash cost per pound sold, including ad valorem and severance taxes, stayed low at $40.20 per pound. With $95.3 million in unrestricted cash, we ended the quarter with significant liquidity. This means we have the financial flexibility to continue advancing our production growth strategy. We still had a healthy 348,000 pounds of finished inventory at the conversion facility for contracted deliveries. We also proactively deferred 300,000 pounds of 2026 deliveries to 2027 and 2029 to decrease ramp-up risk and increase flexibility relating to our remaining 2026 delivery commitments.

Overall, we believe that our second quarter shows the type of operational execution and solid financial foundation needed to continue to increase production and create long-term value for our shareholders. Now I'm going to talk a little bit about our flagship ISR mine at Lost Creek. To grow production at Lost Creek, we worked during the quarter on various optimization efforts. This work included installing a sand filtration system to address fine particles from the well field that impact flow rates and production. Consider that we drummed more pounds of uranium in the second quarter than any quarter since we started ramp up in 2022 without the sand filtration system. Although the system was installed in the second quarter, it wasn't fully commissioned and online until July. We have been making great progress on other projects as well.

We broke ground on our wastewater treatment facility in July, and we are on track to finish our reverse osmosis upgrades and a new maintenance program by year end. Our infrastructure investments are enhancing operational capacity and reliability at Lost Creek to support higher sustained production levels. We had 17 active drill rigs at Lost Creek that kept our well field expansion plans on track. We made progress on delineation drilling in our fourth and fifth mine units. Subject to regulatory approval of our well field package, we expect to start well field construction in mine unit 5 by year end. This additional drilling is accelerating well field development to ensure a steady pipeline of production areas to support future output. Together, these initiatives are expanding Lost Creek's production capacity and reinforcing the operational foundation for sustainable long-term growth Turning to Shirley Basin.

We reached some important milestones in our growth strategy since the end of the first quarter to expand our production platform beyond Lost Creek. Shirley Basin is designed as a satellite facility with uranium captured on resin transported to Lost Creek for further processing and drumming. In the second quarter, we began capturing uranium at Shirley Basin, and with just limited operations, captured 10,634 pounds. Operations were limited because we needed regulatory authorization from the state to commence full operations and start shipments to Lost Creek, and we received that authorization in late June. Today, I'm excited to share the plant at Shirley is now in full operation, and 6 of the 10 production columns in the plant are online. All infrastructure and processes are in place to transport uranium to Lost Creek. We are ready. The only work left is to finish commissioning and inspecting the specialty trailers for hauling resin, and that first shipment is imminent.

Operating Shirley Basin as a spoke to the Lost Creek hub allows us to increase production while leveraging existing processing infrastructure. That said, we also have processing optionality. We are employing the hub and spoke model to improve capital efficiency and accelerate cash flow. Shirley Basin is fully licensed to operate as an independent production hub in the future. That gives us strategic flexibility as we continue to grow in the Great Divide Basin and continue to advance our growth pipeline. We have optimization activities at Shirley Basin planned through 2027, including wastewater treatment using engineering from the Lost Creek Wastewater Treatment Project. As Shirley Basin ramps up production, we expect it to become a large contributor to our long-term production profile.

Now I want to talk for a minute about our growth pipeline. We are an operating uranium mining company, but we are not limited by our existing operations. We have an exploration and development portfolio with multiple opportunities to add resource and expand production. Later this third quarter, we are planning to start an exploration program with 120 holes at our Lost Creek South project. This 16 square mile project offers strong potential to leverage our existing Lost Creek plant infrastructure with shorter development timelines and lower capital requirements. Our Lost Soldier project is another potential spoke for the Lost Creek hub. Baseline environmental studies are underway at Lost Soldier to support a potential permitting decision as we continue to de-risk the project. We have also started work on a technical report for Lost Soldier that we plan to complete by year-end.

Our North Hadsell project also remains an encouraging exploration opportunity following our first quarter drilling results, where 13 of 33 drill holes intersected uranium mineralization. Together, these projects strengthen our long-term organic growth pipeline. They provide multiple opportunities to expand production while leveraging our established Wyoming district ISR platform and our significant licensed capacity. We are producing today while advancing a district scale Wyoming pipeline. We are positioning the company to benefit from a structural domestic uranium bull market. We are executing our strategy. This includes growing a scalable two-asset ISR production platform by further optimizing Lost Creek and ramping up Shirley Basin, advancing low capital organic growth opportunities to extend our hub and spoke production model across Wyoming. We are leveraging our ISR operating expertise, our permitted assets, and our processing capacity to efficiently convert resource into future production.

We are capitalizing on the growing strategic importance of U.S. uranium production and maintaining disciplined operational execution and capital allocation to support sustainable production growth and shareholder returns. We have a unique advantage with our expertise and proven success permitting projects efficiently and without long delays. We also have the operating expertise and are building the scale to become the partner of choice in the consolidation and development of Wyoming's uranium districts. With that, I'll turn the call back to the operator and open it up for Q&A.