Ur-Energy Ships First Batch of Yellowcake

(Wyoming Business Report, December 4) – Soon after receiving a $34 million state bond loan, Casper-based Ur-Energy has shipped its first batch of yellowcake to a processing facility in Illinois.

From its Lost Creek in-situ uranium recovery project near Wamsuttter, the company trucked out 35,000 pounds of yellowcake yesterday, or about 44 steel drums that are mostly full. According to Wayne Heili, CEO of Ur-Energy, the yellowcake maxes out the drums’ weight capacity at 800 pounds before it even fills the drum.

“Uranium’s a heavy metal,” he said, indicating a full steel drum would weigh about 1,000 pounds.

From the Illinois processor, it will then be enriched to be sold to U.S. nuclear generators. Heili told the Business Report his contract with the end user prohibit him from divulging which plant will end up using the first batch of yellowcake, but said all of his several contracts will feed into the U.S. power grid. He later added that the country has 104 nuclear reactors that are controlled by fewer than 30 companies.

The first shipment came at a time of depressed spot uranium prices of around $36 per pound. At current spot prices, that would be the equivalent of about $1.26 million for the shipment. But competitor Cameco’s spokesman Ken Vaughn said in a September interview that at then-current prices of $34 per pound, uranium was getting less than half of what it was before the tsunami- and earthquake-caused Fukushima disaster that triggered a $500 million cleanup effort for contaminated water.

“We’re still optimistic about the long-term, but in the near-term there’s some challenges and it’s a depressed market,” Vaughn said at the time.

However, both Cameco and Ur-Energy posit that long-term contracts were negotiated at higher prices.

“We’ll realize better than spot prices for our deliveries,” he said. “The most visible is the spot market, but the contracts can be priced quite differently because they’re long-term commitments to fulfill deliveries.”

Still, Heili said the company only has between one-third and one-half of its total production committed to such contracts, meaning the remainder will be sold at spot prices that are far below record highs of above $130 in 2007. Yet even at the current, relatively low spot prices, Heili said production is profitable for Ur-Energy.

“These current levels do incentivize us to produce,” he said. “We’re lower than we’d like them to be, but they’re not too low.”

Full story here.