UR-Energy is a uranium mining and exploration company focused on developing and operating uranium projects in the United States.
How would you describe the first years of UR-Energy’s Lost Creek project, which started production in 2013 – the year of the Fukushima nuclear disaster?
It took many years to reach the point where we were ready to build and commence operations, along with extensive exploration and delineation drilling. The Fukushima disaster drove down global demand and prices. However, we were largely insulated from that for a number of years because we had the foresight to sign long-term contracts with several major U.S. utilities, securing our prices and ensuring good revenue going forward.
Once construction was completed in 2013, we decided to proceed with production to fulfill those contracts, having locked in that revenue. Despite the nerve-wracking drop in prices, it demonstrated the wisdom of long-term contracting with utilities, which prefer to secure long-term supply. Our contracts saw us through until late 2020, with a few non-site-specific contracts allowing us to buy pounds on the open market and sell them to utilities, sometimes improving profitability. Overall, the early years of Lost Creek were marked by fantastic production, very low costs, and technically strong deposits with high recovery rates.
A lot of people are still hesitant when it comes to uranium mining’s environmental credentials. How does the in-situ method you are using at Lost creek help make uranium mining more environmentally friendly?
I appreciate you asking about in-situ mining, as many people are unfamiliar with it. It is a unique form of mining that started here in Wyoming at the Shirley Basin mine back in 1961. In-situ means "in the place" in Latin, and we recover the mineral in place without moving rock or digging tunnels. Instead, we install water wells on a roughly 100-foot grid. Injection wells pump water, carbon dioxide, and oxygen into the permeable sandstone aquifer containing the ore. The oxygen oxidizes the mineral, changing its valence state, and forms a highly soluble uranyl carbonate.
This solution is then pumped to the surface through the central well and processed in a plant using ion exchange resins to capture the uranium, while the water is recycled back into the ground. The process continues until the ore body is depleted, and then we move to a new area. On the surface, the mine looks like a field of grass and shrubs with small brown wellheads. Once mining is complete, we cut off the wellheads, restore the groundwater, and within a few years, the area shows no signs of mining activity. The land can be repurposed for anything, with no residual or radiologic impact.
We are very proud of this fact, and it is a key part of our narrative when discussing nuclear power and in-situ mining at Ur-Energy. The positive environmental impact of our operations has helped us gain more acceptance, even among traditionally skeptical green NGOs, by highlighting the reduced CO2 emissions and minimal land disturbance associated with our projects.
You are in the process of revitalizing the Shirley Basin mine. Tell us about the project’s timelines, and where its restarting will position UR-Energy?
Early this year, our board decided to move forward with the build-out of our second flagship property, which will also utilize in-situ recovery and is located in Wyoming. Since that announcement, we have been actively installing the first monitor well ring around the initial production area, enhancing an existing access road into the brownfield project, and working on detailed engineering for electrical, foundations and other infrastructure. We have also ordered long lead items, like ion exchange pressure vessels, which are being manufactured in Casper, Wyoming.
By spring next year, we will break ground on a satellite processing plant, which will take about six months to complete. This relatively small footprint facility is licensed to produce 1 million pounds of U308 per year, complementing our Lost Creek mine’s licensed capacity of 1.2 million pounds per year.
Combined, these facilities will bring us to a licensed mine capacity of 2.2 million pounds per year. We are excited to ramp up this new facility, achieve economies of scale, and drive down our overall production costs, positioning Ur-Energy as a significant player in the uranium mining industry.
Is the industry ready to meet growing demand? Do you sense that heavy regulations can hamper uranium mining from expanding?
Mining is heavily regulated, and adding the nuclear component increases the regulatory level significantly, creating a high barrier to entry for many mining companies. Very few companies have successfully transitioned into the nuclear space. As of today, only three companies in the U.S. are actively mining uranium. Globally, this number does not increase dramatically. Many global supplies come from government-owned entities rather than private companies like Ur-Energy.
The World Nuclear Association projects significant growth in uranium demand, from the current 175 million pounds per year to around 340 million pounds per year by 2040. This dramatic increase presents challenges due to regulatory oversight, technical barriers, financing, and labor shortages. While the industry is up to the task, it will remain small, with few players succeeding. Importantly, achieving this demand will require higher pricing than today's long-term price of about $80 a pound. Though Ur-Energy is economically viable at current prices, many other projects, especially those outside the U.S., will need much higher prices to justify production.
Are higher uranium prices a prerequisite for you to consider further expansion?
For some projects, yes. We are fortunate to have a couple of other projects in our portfolio that are likely economic at today's prices, which we will continue to advance. Lost Creek will remain in production, Shirley Basin will come online, and we will assess other projects like North Hadsall and Lost Soldier based on their economics. Many other global assets will require much higher pricing to justify production. Kazakhstan, the world's largest producer, benefits from economic resources and government-run programs, giving them an edge over Western producers.
Do you detect an emerging bipartisan support for uranium in the U.S.?
In my 30-plus-year career, I have never seen such strong bipartisan support for uranium in the U.S. The recent Russia uranium ban, passed unanimously across party lines in both the House and the Senate, is a testament to this support. President Biden signed it into law, demonstrating the unified stance on cutting off Russian supplies. Additionally, the ADVANCE Act, promoting nuclear and small modular reactors, was passed with compelling majorities in both the House and Senate.
Geopolitically, Russia and Kazakhstan are crucial players in the uranium market. Russia is the largest processor of uranium, and Kazakhstan is the largest miner. Russia's influence over Kazakh production is significant, with several joint ventures in place. Recently, higher taxes on Kazakh uranium production were announced, which may have geopolitical implications. We believe that by late this decade, most Kazakh uranium production will go to Russia and China, not the West. This underscores the need for Western miners to fill the supply gap, and Ur-Energy is prepared to grow its production portfolio in the U.S. to meet this demand.
Where do you picture Ur-Energy five years from now?
Five years from now, we will continue to operate in an environmentally responsible manner, ensuring our team gets home safely every night. Our focus will be on ramping up production at our flagship property, Lost Creek, completing the build-out at Shirley Basin, and continuing to expand our production portfolio. Ultimately, our objective is to be a mid-tier uranium producer with production exceeding five million pounds per year. We will primarily focus on the U.S., but we may also explore global opportunities.
