Uranium miner Ur-Energy has expanded the quantity of product to be delivered under a sales agreement concluded in August to 600 000 lb/y of triuranium octoxide (U3O8), plus or minus a small optional flex, starting in 2024.
The original agreement was for 400 000 lb/y of U3O8.
Having secured these sales commitments, Ur-Energy has made the decision to immediately ramp up production at its operating Lost Creek uranium mine, in Wyoming, in the US, to levels sufficient to deliver into these current contracts.
The company will target an initial yearly production rate of 600 000 lb of U3O8, representing 50% of Lost Creek's licensed wellfield production capacity of 1.2-million pounds.
This production level will provide an economy of scale and a stable, long-term revenue stream to Ur-Energy, while leaving enough room for growth and additional sales into new contracts or the spot market.
Because of the advanced construction and drilling efforts Ur-Energy has already made in preparation for ramp up, it expects to start production in the first quarter of 2023 and reach the initial yearly production rate by the end of the same year.
CEO John Cash says Western nuclear companies continue to support production from Lost Creek by signing new and expanded contracts.
“We will continue our efforts to layer in additional contracts with strong profit margins with the goal of maximising production at Lost Creek and further reducing our proven low cost of production.
“The growth in our contract book gives us the confidence to ramp production at Lost Creek to 600 000 lb/y. Our entire team has been working toward this goal for several years and we are excited to bring our low cost, flagship property back into meaningful production,” he says.
Cash adds that in addition to Ur-Energy’s Lost Creek mine, its Shirley Basin project has all major permits and licences required to build and operate a one-million-pound-a-year production facility. “To further prepare for construction and operations at Shirley Basin, we plan to install the monitor wells for the first Shirley Basin mine unit in Spring 2023.”
He says the company’s current contract book fills just over 25% of Ur-Enrgy’s yearly licensed wellfield capacity of 2.2-million pounds and only 14% of its yearly licensed processing capacity of 4.2-million pounds.” This leaves us considerable room to increase production, open satellite operations, toll process material for other companies, and sell into a rising market.”
Meanwhile, Ur-Energy also reports that the National Nuclear Security Administration (NNSA) – a semi-autonomous agency of the US Department of Energy – has awarded it, through its wholly-owned subsidiary Lost Creek ISR, a contract to sell 100 000 lb of domestically-produced U3O8 to the national Uranium Reserve at a sales price of $64.47/lb.
Ur-Energy will provide the material for this one-time purchase from its existing US-produced inventory of 324 000 lb.
As such, total revenue of $6.45-million will be realised in March after the material is delivered to the NNSA.
Ur-Energy states that the strong price of the sale is an indication of the value of domestically produced uranium, compared to published global prices and is likely an indication that domestic inventories are in short supply.
Further, Ur-Energy intends to retain its remaining inventory of 224 000 lb, which was intentionally not bid into the Uranium Reserve, to sell into long-term contracts with commercial leaders in the nuclear industry.