Ur-Energy: As The ISR Production Ramp Continues, Contracted Deliveries Deferred Accordingly

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Ur-Energy (URE, URG) released its Q3/2026 operational results earlier this week, followed by an investor call held yesterday. The quarter was highlighted by a +26% y/y increase in the number of lbs captured (154,667 lbs) while the number of lbs drummed, increased by +18% y/y to reach 341,058 lbs, YTD. That said, while production optimization efforts are still on-going, the number of U3O8 lbs drummed (104,586 lbs) and shipped (75,087) during the quarter represent sequential decreases of -26% and -50% respectively.

Despite the sequential production decreases, we note that across both Lost Creek and Shirley Basin, operational improvements and infrastructure investments are being made in order to expand wellfield capacity.

Lost Creek - At the company's flagship asset, the company drummed 104,586 lbs U3O8 during the quarter, representing a decrease of 25.8% compared to the previous quarter. A sand filtration system was brought online in July at Lost Creek to increase flow rates while a new wastewater treatment facility is being constructed. The new facility is expected to be in operation in the second quarter of 2027 and is expected to fully optimize wastewater capacity. The temporary sand filtration system has been effective in decreasing fine particles from the wellfield and increasing flow rates and, since the end of the quarter, the company has implemented process and other measures to better manage wastewater while advancing the permanent facility to completion. Moreover, in order to increase average grades beyond production from the Q3, the company commenced well installations and wellfield construction in Mine Unit 5 (MU5) and submitted the regulatory approval package for the first phase of MU5. Approvals and the start of MU5 operations are expected next year.

Shirley Basin - Recall that the first shipment from the Shirley Basin mine to Lost Creek for processing occurred this past August. Though Shirley Basin is permitted as a second production and processing hub operation to maximize future optionality in the emerging Great Divide Basin uranium district, it is currently operated as a spoke of the Lost Creek hub to optimize capital efficiency. The company captured 25,330 lbs of U3O8 at Shirley Basin to build base in-circuit inventory during the second and third quarters of 2026, including 14,697 lbs during the third quarter. The company shipped 9,379 lbs from Shirley Basin to Lost Creek for processing during the quarter. To further the ramp up of production from the wellfield, the company expects to complete improvements to the wells in the first two header houses in the near term, and bring additional header houses online throughout Q4 of 2026 and 2027.

SALES & INVENTORY

During the quarter the company sold 190,000 lbs of U3O8 under contracts with a combination of fixed and market pricing. The average price during the quarter was $64.95 per lb for product sales revenues of $12.3M. Note that in order to maintain contract delivery commitments in line with ongoing production ramp up, the company proactively entered into transactions to defer deliveries of 150,000 lbs to 2027 and 150,000 lbs to 2029, and extended the maturity date of its outstanding 250,000 lb inventory loan from November 2026 to November 2027. For FU/2026, the company expects to sell a total of 700,000 lbs of U3O8 at an average price of ~$67.00 per lb for product sales revenues of ~$46.9M. At the end of the quarter, the company had 233,378 lbs of U3O8 of finished inventory at the conversion facility.

PRODUCTION AND ESTIMATES

Company-wide, Shirley Basin reaching full operational capacity adds another functioning ISR operation to Ur-Energy's portfolio. That said, owing to the challenging current ramp up period, we have trimmed our near term production estimates (2026-2028) for both Lost Creek and Shirley Basin. We do expect the ongoing wastewater optimization efforts and processing enhancements to make a meaningful impact starting next year.

CONCLUSION AND VALUATION

With sales agreements for 5.75M extending from 2026-2033 (eight agreements, featuring a mix of escalated fixed pricing and market-related pricing with floors and ceilings), the addition of a second meaningful operating mine will provide the company with the flexibility needed for the modified delivery schedule and for the potential signing of additional LT contracts.

The company ended the quarter with cash and equivalents totaling C$77.3M (representing ~20% of current mcap). While we maintain our $100 per lb LT uranium price, we have trimmed our near-term production estimates. Moreover, owing partly to sector compression, we have also trimmed our NAV8% valuation multiple, going from a multiple of 1.20x to 1.15x. As such, our 12-month price objective is reduced from $2.00 per share to C$1.70 per share (rounded). This new price objective represents 79% upside from the recent November 11 intra-day quote. Shares of Ur-Energy currently trade at a 0.62x NAV multiple. Shares of Ur-Energy currently trade at a 0.62x NAV multiple and at a healthy ~20% cash to market cap ratio.