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Late last week, Ur-Energy (URG, URE) announced its Q2/2024 results. On the operational front, production was highlighted by 70,679 lbs U3O8 captured, 64,170 lbs dried & packaged and 70,390 lbs shipped (as previously announced on July 16). The captured figure represents a notable +85% sequential increase as three header houses came online in 1H/2024. Note as well that header house 2-9 (HH2-9) came online in mid-July while HH2-10 is scheduled to come online in mid-August. Given the strong results, process inventory now stands at 86,204 lbs with finished inventory held at the conversion facility totaling 74,625 lbs (35,199 lbs were shipped to the conversion facility on July 25, 2024). Post-results, reaffirmed guidance (lower end of 550,000-650,000 lbs) and financing, we maintain our NAV8% valuation methodology for the currently expected operations at Lost Creek and Shirley Basin. Based on a $120 per lb LT uranium forecast, our 1.10x NAV8% multiple remains. This equates to upside of +189% from the most recent intra-day quote.
As opposed to Q1/2024 when there were no contracted deliveries, during this latest quarter, 75,000 lbs U3O8 were delivered at an average realized price of $61.65 per lb for gross proceeds of $4.6M. Over the remainder of 2024, the company received notice from customers for the delivery of 495,000 lbs in 2H/2024. We highlight the fact that Ur-Energy currently has a contract book for a total of 5.7M lbs covering the 2024-2030 period. Deliveries for FY/2025 are committed to three customers for a base amount recently increased by 30,000 lbs to reach 730,000 lbs. This was due to the recent election from one customer to flex up its purchases by 10%.
On July 29, 2924 it was announced that the public offering for 57.15M common shares (priced at $1.05) was closed. In addition to the cash previously held in treasury prior to the offering, the company now holds ~$121.3M of cash in treasury - this large war chest equates to approximately 1/3 of current mcap.
The company stated that it is "currently bidding on an acquisition opportunity involving a significant non-producing uranium asset in the United States". Recall that Ur-Energy presently has two assets - the currently producing Lost Creek and the rapidly progressing Shirley Basin. Combined, these two assets amount to ~28.0M lbs (global) of U3O8.
We note that compared to US based peers such as enCore Energy (EU) and Peninsula Energy (PENMF), Ur-Energy's 28.0M lb resource base lags far behind. We continue to highlight this point, as is best demonstrated above. Barring any strategic acquisitions, given the current asset portfolio, management remains adamant that when Shirley Basin is brought online (expected in late 2025), the annual production capacity will grow from 1.2M lbs annually to 2.2M lbs. Our estimates remain as depicted below:
Shares of Ur-Energy currently trade at 0.38x NAV. We maintain our 1.10x NAV8% target multiple ($120 per lb LT) for Lost Creek and Shirley Basin. This equates to share upside of +189% from the most recent intra-day quote.
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