Ur-Energy Inc. (URG) on Q2 2024 Results - Earnings Call Transcript
Operator: Greetings. Welcome to your Ur-Energy's 2024 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Penne Goplerud, Ur-Energy's General Counsel. You may begin.
Penne Goplerud: Thank you. Thank you all for joining us for our teleconference and webcast this morning. We are required to draw the attention of all of our participants to the legal disclaimers contained in this morning's slide presentation, which apply equally to our oral presentation today. At Slide 2, you will find legal disclaimers with regard to forward-looking statements, risk factors and projections as well as other cautionary notes to investors. We ask that you read and consider these disclaimers carefully before investing in our shares. As well, risk factors inherent in forward-looking statements and projections are set forth and discussed in the company's annual report on Form 10-K filed on March 6, 2024, with the US Securities and Exchange on EDGAR and with the securities regulatory authorities in Canada on SEDAR+. I would now like to introduce and turn the webcast presentation over to our Chairman and CEO, John Cash.
John Cash: Thank you, Penne, appreciate that. And good morning, everyone. It's a beautiful day here in Casper, Wyoming, where we're presenting from, and it's been a very busy second quarter. So we're excited to be reporting on the results of the company and what's going on at Lost Creek and at Shirley Basin. Also a lot going on in the nuclear energy space. It seems like the tailwinds continue to be behind us and just a lots to report there and to discuss on. So in the presentation today, we'll cover off on just a few things. So we'll talk about the status of our projects, including our recent equity raise and catalyst towards the market. But before we jump into all that, I'm going to turn it over to Roger Smith, our CFO, and he'll do -- hit the highlights really on the earnings that we reported out in second quarter. So, Roger, if you'll pick that up, and then I'll take back over and go through the slide presentation.
Roger Smith: Very good, John. Thank you. Good morning, everyone, and thank you for being with us. I'll start with some discussion about production and inventory. During the quarter, we drummed 64,170 pounds as compared to 39,229 pounds in Q1. This represents an increase of about 64%. We delivered two shipments in the quarter, which totaled 70,390 pounds as compared to one shipment in Q1 of 35,445 pounds. After sales of 75,000 pounds during the quarter, our ending inventory at conversion facility was 74,625 pounds on June 30. As expected, the cost per pound at the conversion facility increased during the first six months of the year, going from $28 at the end of 2023 to $39 at the end of Q1 and then to $48 at the end of Q2. Keep in mind that the beginning $28 per pound inventory was established years ago from production in 2019 and earlier. Those pounds were held in inventory and used to cover our 2023 sales deliveries. We did not have any shipments to the conversion facility in 2023 because the cost per pound sold in 2023 was $28 per pound. You'll recall that our first ramp-up shipment to the conversion facility was in February of this year and not unexpectedly, it came into the conversion facility at a higher cost per pound shipped of about $53 per pound, which increased the average cost per pound at the conversion facility to $39 at the end of Q1. Our Q2 deliveries came into the conversion facility at about $51 per pound, which increased the average cost per pound at the conversion facility to $48. I'm pleased to note that the cost per pound shipped to the conversion facility did decrease from $53 in Q1 to $51 in Q2. Although the decrease was small, I believe we turned a corner during the quarter. And as plant production continues to increase, we expect the cost per pound shipped to the conversion facility to decrease further. For an indication of our expected costs of production at full capacity, I encourage you to refer to tables 2, 3 and 9 in the March 4, 2024, Lost Creek technical report summary, which can be found on our website. I'll talk a little bit about cash now. We ended the first six months of 2024 was $61.3 million, which was up $1.6 million from December. During the first six months of 2024, we received $4.6 million in sales proceeds and $1.1 million of interest income. We also received $37.2 million from the exercise of warrants and stock options and proceeds from ATM sales. We used $5.7 million of the funds for the first quarter loan payment in January and the loan payoff in March. We also used $1.9 million for capital expenditures and $2.0 million for a reclamation bond increase. We spent about $5.8 million on production costs. As I've noted before, production activities include wellfield operations, plant operations, site administration and product distribution. In other words, the cost to capture, drum and ship uranium to the conversion facility are included in our production costs. Our total cost -- excuse me, our total cash cost per pound drummed, including ad valorem and severance taxes decreased in each of the last two quarters, going from $69 per pound in Q1 to $48 per pound in Q2. This brings our year-to-date average cash cost per pound drummed down to about $56 per pound. As I mentioned before, as our production increases, we expect our production cost per pound to continue to decrease. We spent $26 million on operating costs during the quarter. Operating costs include exploration, evaluation, development and corporate overhead costs. Development costs accounted for about $21 million of the $26 million in operating costs. Approximately $4 million was related to the completion of a deep disposal well that was largely completed in Q1. About $16 million was for the development of the wellfield at Lost Creek. Wellfield development includes all of the costs in advance of wellfield operations, such as drilling and drill-related costs, header house construction costs and infrastructure costs. These costs are incurred in advance of production and are expensed as incurred. Just over $1 million was for the development of the Shirley Basin mine. We are now beginning to incur costs related to the development and construction of the Shirley Basin mine. Construction and purchase costs related to the assets of the mine to be capitalized. But like Lost Creek, wellfield development costs incurred in advance of production will be expensed when incurred. Turning to sales. I'll close with a few comments. Sales are projected to be 570,000 pounds in 2024. Our first 2024 sale was in April for 75,000 pounds, and we had our second sale of 100,000 pounds on August 8. The remaining 2024 sales will take place later this year. We expect to realize revenues of $33.1 million at a price of about $58 per pound sold. The 2024 sales deliveries are into base escalated contracts that were negotiated in 2022 when the long-term price was between $43 and $52 per pound. These contracts enabled us to make the decision to ramp up operations at Lost Creek. Together with the additional contracts we've put into place, the contracts enabled us to also make the decision to construct and develop our second mine at Shirley Basin. Next year, we currently expect to deliver 730,000 pounds into these contracts. And thank you, everyone, and now back to you, John.
John Cash: Thank you, Roger. I appreciate you going over the numbers. I know our analysts really appreciate that, and I will answer a lot of the questions that they have. So taking a look at the slide deck. Again, just a few things we want to cover off on and keep our shareholders apprised of. First off, as Penne indicated, we like to go through the disclaimer and point out that we do encourage you guys to take a look at the risks involved with uranium mining and with the company, with the industry before you make an investing decision and, of course, be familiar with the disclaimer here as well as in our other public filings. So for those of you familiar with Ur-Energy, you know that we have two flagship properties, Lost Creek, which has been in production since 2013, and Shirley Basin, which is fully permitted and for which we expect to have construction completed in late 2025. I'm not going to go through this slide in detail. Many of you are already familiar with it, but it provides a great summary of existing and near-term production. If you're unfamiliar with Ur-Energy, I encourage you to check out our corporate presentation on our website at urenergy.com. Our website also contains a page with our most recent technical reports for Lost Creek and Shirley Basin that were filed with the SEC in March of this year. We plan on adding a sustainability cap to our website in the near future as well to increase the visibility of our governance and sustainability practices. Our drill rig count continues to grow. I believe we are at the beginning of the end of the drill rig supply crunch. I will speak more about this in a subsequent slide, but now we have 15 drill rigs working company-wide and expect to bring on additional rigs soon. Now turning to Lost Creek. We continue to bring new header houses on in Mine Unit 2, and we are now consistently bringing a new header house on about every 30 days. As we maintain the schedule, flow rates will continue to increase. We are able to keep the schedule due to the spacing we are maintaining between drilling and construction, which is being aided by the growing number of drill rigs at the site. Up until a couple of months ago, our construction and drilling crews were getting in each other's way due to limited spacing. As I mentioned previously, we now have 15 drill rigs running company wide. 13 of the rigs are at Lost Creek and two are at Shirley Basin. Once the rigs complete the monitor well at Shirley Basin in September, they will redeploy back to Lost Creek. We are also in advanced contracting discussions for four additional rigs. The head grade continues to be excellent at Lost Creek, averaging 73.5 milligrams per liter in July, and is exceeding the average we assumed in our technical report summary. Our focus is turning more to the processing plant to ensure we capture all the pounds being brought in from the wellfield. We are focused on training and maintenance to improve efficiency. In our Q2 disclosure, we guided to the lower end of our 550,000 to 650,000 pounds of production for 2024, and we will continue to review production status. We inserted a photo of monitor well installations, so you can see the terrain at Shirley Basin. This photo is looking north toward the Laramie range, which is the source of the settlement that the ore body or the mineralization is hosted in. It's a beautiful site. Shirley Basin already has electric power, and we have installed a short spur between the existing substation and the location for the satellite plant. The substation will require substantial upgrades due to its age. The existing southern access route was graveled, an improvement made to the drainage so we can access the site year-round. We expect to begin construction of the satellite plant in the spring of 2025 and to be finished by late 2025. While installing the monitor wells, we have continued to encounter very good uranium grade consistent with those described in the Shirley Basin technical report summary. In fact, we have encountered several mineralized zones with grades in excess of 0.3 weight percent and GT is greater than 2.5. The average grade of the measured and indicated resource is 0.23 weight percent. There are no inferred resources at Shirley Basin due to the high density of drilling. So at this point, we have 120 monitor wells drilled and cased, and we expect to finish completion of those later this year. We'll follow that up with aquifer testing as well as baseline chemistry. And as I mentioned earlier, we plan to commence construction early 2025, probably Q2, and finish construction by the end of next year. In July, we completed an underwritten public offering that grossed approximately $69 million before underwriting discounts, commissions and other expenses. The proceeds will fund continued ramp-up at Lost Creek, support development and construction at Shirley Basin and be available for possible acquisitions or other strategic transactions. Further details are provided in the filings for the offering. Since one of the stated use of funds was acquisition, I would like to take a few minutes to talk about how we perform assessments for possible acquisitions or other business ventures and our related due diligence. Our experienced production team consisting of engineers, geologists, regulatory and land specialists, attorneys and accountants performs a multifaceted exhaustive analysis of all data we can access, including environmental liabilities, environmental surety, quality of mineralization, capital cost, operating cost, permitting timelines, permitting risk, land tenure, royalties, synergies with our existing operations and many others. We take the cumulative data and generate NPV, IRR and ROI calculations. Based on those calculations, we determine an offer price that is commensurate with the desired profitability. If a project can't yield an acceptable ROI, we don't proceed. As I have stated many times, our objective with M&A is to bring quality projects into the Ur-Energy portfolio. We are a pounds in the can story, not a pounds in the ground story. Similarly, we are prioritizing the analysis of our existing general projects. We are considering exploration at Lost Creek, LC East and other projects in the Great Divide Basin and Wyoming, including our Lost Soldier project. We have renewed analysis and geologic review of Lost Soldier and other Wyoming projects, which we expect to complete in the first half of 2025. Although we focus our conversation on Lost Creek and Shirley Basin because they are and they will be the source of our near-term revenue, investors shouldn't forget that we hold a large land position within the prolific Great Divide Basin, including Lost Soldier, North Hadsell and the Arrow projects. We have a lot of room for exploration as each of these projects has known uranium mineralization or are in highly prospective areas. The standard market position details are provided here. Please note that as of August 6, we had $121.3 million of cash with no debt. Also note in the chart that last week, there was a nice spike in our share price due to Kazatomprom's announcement that they expect a 17% decline in production in 2025 due to supply chain issues and construction delays. Turning to catalyst for the price of uranium in our share price. First, the Department of Energy has two active request for proposals, RFPs, outstanding to acquire both High Assay Low Enriched and Low Enriched Uranium, again HALEU and LEU, respectively. Both RFPs stated a preference for domestic feedstock and processing. We expect the desired quantities of enrichment will require in excess of 1.5 million pounds of U3O8 per year with uranium deliveries beginning in the late 2020s. We have significant uncontracted capacity for those years and have let DOE and potential bidders know we stand ready to fill at least part of the necessary yellow cake to feed into the process. We expect the RFP process to be drawn out with an unknown end date, but we will keep you informed as the process evolves. Looking at the global mine supply, the picture isn't getting any better. Despite uranium prices remaining relatively high for an extended period, beyond the challenges mentioned on the slide, technical risk remains high as several companies attempt to bring mines with technical risk online. Some will likely succeed and others will likely fail. We expect some will need even higher pricing than $80 per pound to maintain profitability for their mines. Keep in mind that with time and regardless of mine commodity, the quality of ore bodies is generally in decline, and this requires higher pricing and better technologies to maintain profitability. We believe the risk of a bifurcated East versus West nuclear supply chain is growing as the number of East leaning executive managers as Kazatomprom appears to be increasing and the new excise past seems to punish Western JV partners. If bifurcation continues, ultimately, the majority of Kazakh production could go East and not West. It is unclear how the West will backfill such a supply gap if it were to occur. This is all speculative, but bears watching as the implications could be significant. We continue to see significant growth in the build-out of both conventional and small modular reactors globally. This includes life extensions for additional US reactors and serious discussions regarding the restart of others, such as Palisades and Three Mile Island. Who would have thought just two years ago, a restart of Three Mile Island would be on the table. Finally, on this slide, if you track the nuclear industry closely, you will have seen numerous news articles on the immense emerging electric demand for big data, bitcoin mining and AI, for example, and their desire to get carbon-free baseload power from nuclear utilities. Goldman Sachs has estimated that by 2030, global data center demand will grow by 160% and could account for 8% of total electricity demand in the US. The use of nuclear power by big data isn't just a prediction. It's already happening in a meaningful way. For example, Talend is already selling significant power to big data, and we expect the demand to continue growing. Each of these catalysts has the potential to have long-term impacts on supply and demand fundamentals, and we expect the price of uranium to stay strong for many years. In conclusion, we are well cashed up with strong revenue locked in for the next several years based on our contract book. We have considerable room to continue contracting, and we'll be looking for opportunities that are increasingly market related. Although the uranium trade has been slow over the summer, we expect volumes to increase after the early September WNA meeting in London. Over the coming months, we will continue to increase production at Lost Creek and build out Shirley Basin while taking steps to further reduce our operating costs and increase profitability. We have our staff and drill rigs and are looking forward to a productive second half of 2024. With that, that concludes the slide presentation. But just like to put up our contact information, if during the Q&A session I don't get to your question, please feel free to reach out to me, be glad to pick that up with anybody at any time we possibly can. We have had a lot of questions come in that have been submitted electronically. So give me just half a second, I'll jump to those and begin going through those. And please be aware that you can still submit questions, and we'll try to get to those as time allows.
A - John Cash: So, leading off, the first question is actually from one of our analysts. States production through the first half of the year has totaled 109,000 pounds, indicating that you will need to see a pretty steep the ramp-up to hit the low end of full year guidance. If you can, provide some color on how this is going so far in Q3, flow rates grades, drying capacity, et cetera? I appreciate the question. And during the presentation, we attempted to answer this question at least in part. The wellfield is running very well. Head grades, I would say, are exceptional. So that is going very well. As we've added drill rigs, that's given us more spacing between our construction crew and our drilling crew. Before that, they were kind of tripping over each other, in each other's way. Imagine trying to drill out a mine area while putting in lateral lines around pits, around header houses, it just got too congested. So with the increase in the number of rigs that's allowed us to separate those two crews out, so we have good spacing, and we can work much more effectively, but that's leading itself to us being able to put a new header house on about every 30 to 35 days in that order of magnitude. So that's helping a lot with our flow. And again, head grade is exceptional. We are turning our attention now more and more to the plan to improve efficiencies there through maintenance and through training of our crew. We do, by and large, have our staff hired now. And so things are definitely moving in the right direction. Not without hiccups. We still have hiccups here and there, but we are making some good strides moving forward. One of the things that many of you have heard me say and I'll continue to say is we're not seeing any technical issues in the ground of any consequence. Any of the challenges we face are on surface and are typically related simply to getting our manpower trained up and finding efficiencies. Lost Creek over the years has proven that it can produce at least 750,000 to 800,000 pounds a year. We're very confident we can get there, return to that. Those are numbers from 2015 and exceed that, especially with the head grade that we've been seeing. So hopefully, that answers that question. The second question is, in the discussion provided as part of your recent equity raise, you indicated that URG is currently bidding on an acquisition opportunity on a significant asset in the US. And the question goes on to ask about the timing of that. So we really can't comment much on M&A. We felt like we needed to indicate that as a possible use of funds during the equity raise. But beyond that, we really can't comment on it. Other than to say that when we have something definitive to report, we'll report it. And right now, there is nothing definitive to report. So I can't really speak to that at this point. Sorry about that, but that's just simply the nature of M&A. Next question is from an investor. It says given the current sales outlook and available cash, will Ur-Energy need additional public offerings in the foreseeable future? And the answer to that is no. We believe we've got the cash we need moving forward. However, if there is opportunity in the M&A front, depending on its nature, that may require additional funding. But hopefully, during the presentation, I made it very clear that if we embark on an acquisition, it will only be something that's truly accretive and something that adds to the Ur-Energy story through a quality asset, not something that we just have to hold and spend money on and talk about that we only make acquisition if it's something we believe we can put into production. So [indiscernible] M&A, we don't see a need for any additional equity raises in the foreseeable future. And I believe that answers the second part of the question as well as to what would cause Ur-Energy to do an equity raise? Again, that would be in the near term that would be -- have to be related to M&A. So we have a couple of questions next that are very similar to each other, asking about volatility in the market, why our share price is doing, what it's doing? A number of factors, obviously. I mean, I talked about some of the catalysts. I think all of you have seen recently, just a few days ago, the announcement that Kazatomprom made about how their production next year will be about 17% lower, and that caused equities to improve across the board, not just ours, but everyone. So that introduced some volatility. Similarly, you see press releases from other global miners like Cameco that have affected equities across the board. So when one of the larger producers puts out a press release, the market watches, and typically across the board, there is a reaction, either positive or negative. And of course, I can't ignore the equity raise we did. That affects share price as well. We bounced back somewhat from that, but we do have a little ways to go on that. I would say as well that, obviously, uranium price affects the equities and Ur-Energy's share price. And we've seen some volatility in the uranium price. The spot market, in particular, has been very, very poorly traded over the summer. That's not unusual. It's pretty common to have what we refer to as the summer doldrums in the spot market, and that's led to some weakness. Again, not unusual. But I think what we'll see as we go into the fall, we get past the WNA meeting in London in early September. I think we'll begin to see the market find a bottom and strengthen, both in the spot and in the long-term. That meeting in London, a lot of the fuel buyers from the utilities, they go there, they talk with a lot of people, the miners, they talk with other utilities, they get a better sense of where the market is and where people think it's going. And then after that meeting then, they make decisions on fuel buying. So we do expect to see additional activity after the WNA meeting in London that's coming up soon. We will be there. We've got a full slate of meetings. We're meeting with most utilities from the US and a number of European utilities. That's a great time to get together, very cost effectively with everyone since everyone is there. So that's always a great meeting to attend. Let's see. Okay, a few other questions that we've had come in. This is an interesting question. I fielded this question numerous times in the last two months. But essentially, the question is which presidential candidate would be better for the US nuclear industry? And that's not an easy one to answer. I can kind of maybe cover off on what the Biden-Harris administration has done to impact the nuclear industry and counter that with what the Trump administration did for the nuclear industry. But really, a lot's been done here in the last two or three years by Congress in a very -- in sometimes unanimous manner between Democrats and Republicans to support the industry, and those bills have been passed by the Biden administration -- Biden-Harris administration. So things like the Inflation Reduction Act, which was a tremendous boon to the nuclear utilities. The ADVANCE Act and the ban on Russian material have all been passed on our -- in place and been passed with great numbers and great support. So all of that was done under the Biden-Harris administration. So I think you would continue to see strong support if Harris wins the election. Likewise, we saw good support from Trump when he was President for the nuclear industry as well. And he did a Blue-Ribbon Commission on imports of uranium and he was very supportive of us. Taking a look not so much at energy generation, but if we look at the front-end of the fuel cycle at mining, there are some differences there that are probably notable, specifically the Biden-Harris administration. They did take uranium off of the critical minerals list. The Trump administration had put uranium on the critical minerals list. So I think we've probably seen stronger support from the Trump administration for the mining industry, not just uranium, but for the mining industry as a whole. So -- but do I think there's going to be a remarkable difference between the two? I don't. I think the differences are probably around the edge. I love talking politics. And I probably don't want to pick winners and losers here on this call. But if any of our shareholders want to pick up the phone and give me a call, I'd be glad to talk about that in further detail and provide some additional thoughts on that and talk about the pros and cons. Next question is, how do you plan to grow the company over the next few years? A great question. Definitely something that we ponder on a daily basis, how we grow the company. We've talked at great length today already about M&A. So I won't focus on that too much right now other than to say it is important to us. We are constantly looking for the right opportunities with M&A. We will continue to be disciplined, though, when it comes to M&A. Let me turn to exploration. We have been thinking more and more about exploration. As we indicated in the presentation, we are now taking a very hard look at some of our other projects such as Lost Soldier. We may also do some exploration at North Hadsell, at Arrow, a couple of other projects that we hold. We also have tremendous opportunity at Lost Creek and at LC East. A lot of the historic drilling that occurred on those properties and Lost Soldier as well was targeting conventional mining, so open pit or underground mining. And in Wyoming, when you consider where the water table is, it gets pretty difficult to get below about 350 feet, 400 feet with conventional mining techniques because you just have too much water inflow and it becomes difficult to manage. So although the old-time geologists knew that there were deeper resources, they were really just never explored for because they just -- they thought we're looking for conventional assets, we're not going to go that deep. So as a result, those deeper roll fronts are very poorly explored. And so we believe we've got a lot of opportunity at a number of those projects in the Great Divide Basin to explore roll fronts that we know are there that are maybe 400 feet to 1,100 feet in depth and would encourage you, if you're interested to know more about that, to take a look at our tech reports that we put out as attachments to our annual report in March of this year. They include tremendous information. One of my favorite maps in that report, I can't remember the number, maybe a figure 12, but it shows our roll fronts. And you can see that a lot of those roll fronts are open ended. They've not been drilled out. So that is a really interesting map if you guys are interested in opportunity there. But getting back to the question, how do we grow the company? It's through greenfield exploration, it's through brownfield exploration and it's through M&A. Okay, next question deals with supply chain issues. And I suspect this question was precipitated because of the issues that Kazatomprom is having with sulfuric acid that the investor wanted to know about that. What issues are we facing? So we are largely overcoming supply chain issues. There -- we have not encountered anything that is slowing production or is getting in the way, in particular at Lost Creek. I would say, though, that we are still having to order between 12 and 18 months in advance to stay ahead of things. We are seeing some of the issues soften and get back to more normal. Other issues have not resolved themselves. And in particular, instrumentation -- industrial instrumentation, things like flow meters, pressure meters, things like that, they still have a very long lead and anything dealing with electrical equipment, so motor control centers and transformers. So again, at Lost Creek, we're doing great there. We're well ahead of things. Switching gears to Shirley Basin. We are not seeing any challenges there yet, a great concern. But we are going to have to be well ahead of the game in ordering, especially our onetime capital purchases for the build-out of the infrastructure at the satellite plant. So any electrical equipment for the substation that we need to upgrade motor control centers that would serve the satellite plant, we need to be well ahead of the curve on that. Our engineering team is aware, and we're very deep into the design on that, and so we'll have to keep an eye on it. But I would say on supply chain, if there's anything that keeps me awake at night, it's on electrical equipment. The same question here from the investor asked about manpower and specifically about Shirley Basin. We've been very open about the struggles with manpower at Lost Creek, although I believe we've largely overcome those. Shirley Basin is a bit of a different beast compared to Lost Creek. Lost Creek is more remote. It's further from a large population and the road access is not as good. So when we look to hire at Shirley Basin, it's a lot closer to Casper, Wyoming, which is by many of your terms, it's a relatively small area. We've only got about 55,000 or 60,000 people in Casper, but it's a much larger workforce here than what we are drawing from for Lost Creek. I would also say that it's closer to town, it's a one-hour drive from Casper. And as importantly, the quality of the road, we are on a paved highway, almost all the way to Shirley Basin. And now we have a good all-season road installed all the way into the in-situ projects. So I think all of those things, when they're added together, is going to make hiring at Shirley Basin much, much easier. And finally, I would say Shirley Basin is a very well-known entity. A lot of people have worked there over the years, probably nearly 1,000 people worked at the mines that were the conventional mines when they were up and running. So as people have learned that we're bringing Shirley Basin back into production, I get a lot of inbounds, a lot of excitement about that. So I think that's going to help with hiring as well. So going to the next one, Ur-Energy hasn't announced any new sales contracts recently. Are utilities issuing RFPs and is Ur-Energy responding? Yes, utilities are still issuing RFPs. Maybe a little bit at a reduced rate compared to maybe late last year or early this year. Again, we're kind of in the summer doldrums right now. But yeah, we are still receiving RFPs. We selectively respond to those based on the quantities they're asking for and the timing. We keep all of that in mind as well as diversity of the contract book. We don't want to put all of our eggs in one basket, for example. So we are responding. As I indicated in the presentation though, we've changed tactic just a bit. We are looking for increasing our exposure to market-related contracts with floors and ceilings. Those are certainly available out there. And so we'll continue to respond to RFPs. But again, we're trying to get more and more market exposure, so we have exposure to that blue sky. Next question. You commented about current rig count in the presentation. Are the rigs you have and are planning to bring online adequate for the development needs at Shirley Basin? We're getting a good ways into that. So I can't say yes, we've got enough rigs to handle everything, but we are a long ways into it now. I would say going forward, and Steve can jump in and correct me if he wants to. But I would say we're getting close to the total we would need for both projects. But timing is important here. Most of the rigs for Shirley Basin, we won't need until probably the second quarter of next year. So those additional roughly four, five, six rigs we would want to bring on, we don't really need those for another quite a few months. And I think we've got some good line of sight on that. So we are seeing that issue soften for us. And it's because our current drillers, they're bringing on more rigs, they're getting new drillers trained up, bringing more steel out to the site, there's growing confidence in the uranium industry. So I don't want to say we're at the end of the issue there with supply chain on drill rigs, but I believe we are beginning to see the end of that. I'm hopeful that by middle of next year, this issue will be in our rearview mirror, not just for us, but for all of the producers here in the Mountain West. So, Steve, I don't know if you want to comment any further on that give you an opportunity to jump in and I can take a quick drink.
Steve Hatten: Yeah. John, I'll give you a chance to get a drink of water. We are certainly pleased with how the market has responded for drilling equipment. It has been a slow road, but I think it's gained a lot of momentum, and we're seeing all that iron that's been sitting around for a while and a new version of drillers coming back to the market for us. We are preparing. We have had our couple of rigs out at Shirley and we'll finish that up mid-September, so we can start doing hydrologic testing. And we really plan in the early spring to start our production drilling in earnest at Shirley Basin. And we have significant interest for the rig count that we have there. Whatever we do get on contract earlier, we'll try and put to use for, as John said, any other opportunities that may present themselves. So back to you, John. Hopefully, you got a chance to get a drink.
John Cash: Yeah. I did. Thanks, Steve. I appreciate that little break. But yeah, Steve, is spot on. There is no shortage of opportunities. So we are not worried about bringing on too many rigs because we have so many opportunities for us, both in greenfield and brownfield exploration. So we can deploy rigs to that at any moment. The next question is somewhat of a repeat of a previous one, but it's a little bit more specific with regard to supply chain and ramp-up of production at Shirley Basin are asking if we're seeing any issues that will delay the schedule to bring Shirley into production? And at this point, the answer is no. We're not seeing any supply chain issues that would infringe on our schedule of being complete with construction late in 2025 and bringing it on production very shortly thereafter. Just would comment, we are regulated at Shirley Basin like at Lost Creek by the Uranium Recovery Program. Once construction is completed at a new facility, the Uranium Recovery Program requires you to go through a preoperational inspection before they allow the facility to be turned on. Our experience is that, that inspection will typically take about a week, maybe a little over a week to complete. That is an on-site inspection. That includes quizzing of our employees and a review of equipment. It also is a review of our paperwork, administrative, standard operating procedures. The agency would also probably take a few more days to complete their desktop review out of Cheyenne. So probably about a two-week process to get through that review. If there are any concerns, they would ask us to address those. They may come back out and inspect again. So two, maybe three-week timeline between completion of work on construction to get that inspection complete before we would have the opportunity to turn the facility on. So it's not as if we can just simply turn it on the day we get construction complete, we would still need that final sign-off by the Uranium Recovery Program. We have been through that process before. It's not new and novel to us, so we do have experience there getting through that process. So a couple of other questions that have come in. We have -- or, why have gains in U3O8 spot pricing slowed in 2024 relative to 2023? Great question. I'm not sure exactly why it has plateaued. I, again, would go back to these last few months, why has it plateaued and maybe even softened a little bit over the summer. I think it's really been a reflection that the spot market has traded very slowly. And I think that will pick back up as we go into the fall. But I would point out, though, keep in mind that these prices we are seeing right now are still dramatically higher than what we saw even 1.5 years, two years ago, three years ago when we were beginning to sign contracts, and they're well in the money for us going forward. So would we like to see the prices a little higher? Yes, absolutely, we would. And I had a slide in the presentation about catalyst. And I think we're going to continue to see upward pressure in the spot and the term market as things continue to evolve. Interestingly, I think as far as mine supply over the next six to 12 months, I think a lot of the new stories and the restarts, we're going to learn a lot about them, not just Lost Creek, but other companies as well. There's a lot of restart out there. And some of them are going to work, some are not. But I suspect that overall, we're going to see less production than what some predict, and that will put additional pressure on the market. So stay tuned. We'll see how that plays out. Next question I have is the cadence of remaining shipments in the second half of 2024. Roger earlier, he laid out the demand for the remainder of this year to fill our contract book. We've already made 100 -- and Roger or Steve, you can correct me if I'm wrong, but we've already delivered 175,000 pounds of the 570,000 pounds required this year. So if you take the delta of that, we typically ship about 35,000 pounds of U3O8 per shipment. And if you evenly space that throughout the rest of the year, that's the approximate cadence we'll be on. We do have a shipment schedule for early next month. Another truckload will be going out, and they should be going out routinely thereafter for the remainder of the year. So Steve or Roger, do you have any further comments on the cadence of shipments through the second half of 2024?
Steve Hatten: No, not really, John. I think you nailed it right on the head. As you said, our refinements in plant operations really affect that as much as anything. And we have brought staff on, training continues on, but our folks are really doing well, and we are routinely sending trucks out the door, which is -- it's great dealing with ConverDyn again and getting those folks, they are going through some of the same challenges and getting ramped back up, but we're all working towards of meeting those shipments on a routine basis for the rest of this year.
John Cash: All right. Thanks, Steve. I appreciate that. I've got one more question here that's a little bit redundant deals with deliveries for the rest of the year in RFPs. I think we've answered that. Next question I have is, what is Ur-Energy's perspective on fuel production for SMRs? My understanding is that LEU is the only USA producer of HALEU for SMRs. How will that impact sales of uranium feedstock? Great question. It's been about a year ago now that the NEI did a survey of its members and asked how many SMRs they planned on building between now and then in 2050? And the number was around 300. We're continuing to see a lot of excitement around SMRs in the US and around the world. It takes a little bit of time to get them permitted, licensed, constructed and up and running, but we're seeing very meaningful movement in that direction. And that fuel for those has to be bought two or three years in advance. So we expect we're going to be seeing increasing demand for fuel by the SMRs here in the not-too-distant future, including the reactor here in Wyoming that's being built by Bill Gates' company, Terra Power. They are actively doing ground clearing now in Kemmerer, Wyoming, which is not too far from our Lost Creek site. So the demand will not be huge for the first couple of three years, but we do expect it to grow to a material amount in the not-too-distant future. At this point, we don't have any enrichers in the US that are producing HALEU. So the investor is correct in his assessment here. However Urenco is ready and willing to build out the back-end of their plant to take their existing LEU, run it through additional centrifuges to produce HALEU. They have the technology. It is the exact same technology to produce LEU. You simply run it through this additional centrifuges to continue to grow that enrichment. And so they are willing to do that. And literally, I was on a call Wednesday of last week, Urenco expressed their interest in providing HALEU to US and global reactors. So it is a bit of a bottleneck right now because that production line has not been ramped up by Urenco, but they do have the capacity to do that, and I think they are going to be moving toward that in the not-too-distant future. So hopefully, that's responsive to the question to your... Okay, question regarding company valuation says. Hi, John, ex cash of $125 million, the market is valuing Lost Creek and Shirley Basin less than $300 million, which makes URG the cheapest asset globally for produced pounds. Comment on that, please? Yeah. Thanks, Mike. I appreciate that question. You're spot on. I think we are probably undervalued right now compared to our peers. I think the market loses sight, producible pounds versus pounds in the ground, that is a matter that I'm trying constantly to address. If you look at our projects that we tout, they are producible projects, and we're bringing -- they are in production -- we're bringing them in production in the near-term or in the midterm. So I think the investing community needs to recognize that. There should be less valuation given on pounds in the ground if they are not economic. And if you take a look at us, the pounds we have, the pounds we have in our tech reports, we give full-blown economic discussions of those and the market needs to appreciate that more. We've got some strong contracts in place that should add value to the company. At the same time, we have tremendous remaining capacity left for production at Lost Creek and at Shirley Basin to have exposure to increasing market prices. And as I indicated earlier, we are looking for contracts that are increasingly market-related with strong floors and ceilings. We've had some good discussions with utilities about that structure, and they are willing to sign contracts of that nature. So I think as additional RFPs come out, we'll be able to round out our contract book and protect the company with great revenues and at the same time, maintain that exposure to a great uranium prices going forward. So -- but yeah, Mike, we've got some work to do in that regard. We are undervalued. I think it's a great time to be investing in Ur-Energy as we ramp-up increasing production at Lost Creek and in the not-so-distant future at Shirley Basin. So forgive me here, I'm going to have to toggle back and forth on e-mails to get the inbounds. All right. Next one is from one of our analysts. Can you provide some color on what you're seeing with longer-term contracts with your utility customers? Yeah, I can provide a little color there. I have to be careful not to say too much for obvious reasons. Certainly, it is now a seller's market, not a buyer's market. I would say that RFPs now in contracting opportunities, we're seeing less and less flex being insisted on by the buyer, by the utilities. So we don't see that as much. We don't see as much of a request for optionality at the end of the contract. For an example, a three-year extension at the buyer's option, we don't see that so much anymore. And we're seeing less and less comments in RFPs are insistence on base price with escalation. I think most of the utilities recognize now that the mining companies, they need that exposure to the market, they insist on that, the shareholders insist on that. So they're much more willing to accept a contract that is linked into the market, spot price, sometimes with floor and ceiling. So we're moving in that direction. So -- but in generally, it's much more a seller's market today than a buyer's market. Been a little quiet over the summer. But again, we expect that to pick up going into next year. There is a lot of unfilled demand as you get out into '28, '29, '30, and of course, it just continues to grow thereafter. But we are approaching the time right now where those utilities that don't have coverage in those years that they're coming into the market. So we do expect a lot of RFPs late this year, early next year to begin filling the book for those years. So hopefully, that's responsive. Now the related question from the same analyst. What do you see with pricing, especially as it pertains to longer-term contracts? And what are you seeing regarding premiums for lower risk origins for your material? Thanks. I can't get into the numbers that we're discussing with utilities, and I don't want to tip my hand there. But is there a preference for more diversity to move away from Eastern supply and begin to bring in an increasing amount of Western supply? Absolutely. We routinely hear from US utilities and from European utilities that they have an increasing desire for that diversity, and they are willing to pay a bit of a premium for those Western pounds. So companies like ourselves and Cameco, we certainly benefit from that desire to have Western diversity. We are beginning to see more and more interest in our carbon emissions. And more and more companies have goals to purchase uranium from companies that have low carbon emissions, and they're willing to pay a bit of a premium for that as well. So one of the reasons we are going to be posting a sustainability page on our website is so that we can begin to kind of show what our emissions are. As an in-situ miner, I would say, on average, our emissions are considerably lower than the conventional miners, and our numbers bear that out. So yeah, it's not just Western supply. It's increasingly what is your CO2 emission on a per pound basis of U3O8 generated. Not a big deal, but we have discovered that we are sequestering a bit of CO2 in the geologic formation as we mine with CO2 and O2, those two gases. We're not recovering all of that CO2. It's getting locked up likely within the interstitial portions of the phyllosilicate clays, and so we are actually taking a little bit of CO2 and leaving it in the ground as being captured there for the long term. So that's something that's interesting, a bit of a novelty for the Lost Creek project. So with that, let me see if I've got anything else. We are at 10 o'clock, and I believe I've answered most, if not all of the questions. If I didn't get to your question, if I've missed it somehow, we still have my contact information up there, please feel free to shoot me an e-mail. I tend to be very responsive to inquiries or I sure try to be, and be glad to pick up the conversation. So thank you all for your time. We'll return the rest of the day to you and enjoy the rest of the summer. We'll talk again in the third quarter.
Operator: Thank you very much. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
