Ur-Energy Inc (URG) 2008 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2008 Ur-Energy Inc. update conference call. My name is Karen, and I will be your coordinator for today.

(OPERATOR INSTRUCTIONS)

I would now like to turn the presentation over to your host for today's call, Mrs. Dani Wright, Manager, Investor/Public Relations. Please proceed.

Thank you, Karen. I'm going to start off our event here by reading our disclaimer. Statements contained in this presentation which are not historical factors are forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Factors that could cause such differences, without limiting the generality of the following include -- risks inherent in exploration activities; volatility and sensitivity to market prices for uranium; volatility and sensitivity to capital market fluctuations; the impact of exploration competition; the ability to raise funds through private or public equity financing; imprecision in resource and reserve estimates; environmental and safety risks, including increased regulatory burden, unexpected geological or hydrological conditions; a possible deterioration in political support for nuclear energy; changes in government regulations and policies, including trade laws and policies; demand for nuclear power; failure to obtain necessary permits and approvals from government authorities; weather and other natural phenomena; and other exploration developments, operating, financial market and regulatory risks.

Although Ur-Energy Inc. believes that the assumptions inherent in the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this release. Ur-Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

United States investors are advised that while the term inferred resources is not recognized and required by Canadian regulations, the SEC does not recognize that term. Investors are cautioned not to assume that all or any part of mineral deposits in this category will ever be converted into resources. Thank you. I will now turn over the event to Jeff Klenda, our Board Chairman and Director.

Great. Thank you, Dani, and again, ladies and gentlemen, welcome to our first quarter webcast. We are very pleased to bringing this to you again this quarter and we have a good deal of information to cover, so we're going to go ahead and dive right in.

I will be beginning on slide number three, but this is basically a format for what we will be covering here today. We've changed up a few things on the presentation, but this will give you a good overview. And one of the things that we're going to devote a couple of slides to this morning is going to be the market fundamentals.

We've had a lot of questions about this over the last few weeks and I think that there's a good deal of interest in the uranium space as to where we stand right now, what the supply-demand fundamentals look like and whether or not we still have a compelling story moving forward, so we're going to try and reinforce that for you this morning.

But overall, we believe that the market fundamentals have not only not deteriorated, they have in fact improved. One of the things that I continue to find a bit disconcerting is the fact that in the uranium space, both the pricing of the uranium equities and the market perception itself seems to consistently be set at the margins, and that margin, of course, is the spot marketplace.

What I believe is not widely or well understood is the fact that the spot marketplace comprises only 9% of the aggregate trading activity that takes place in uranium on an annual basis. And as a result of that, I believe it's given a great deal more importance than it probably should be in terms of assessing the valuation of these companies and what the prospects for the overall space are. But having said that, we will go into some of the other supply-demand fundamentals.

Again, those of us -- those of you out there that closely watch our story, you know that Ur-Energy is a very real company. If you follow the uranium space closely, you know that there are eight or ten players in the first tier of producers, followed by, maybe on a good day, 12 to 15 players in the second tier, of which we are one, and we purport to be a producer in the near term.

However, if you take close look at that second tier, what you begin to realize is that half the companies even in the second tier are little more than eight or ten guys working out of maybe home offices, but they're really not well-structured companies. We have now over 30 people in our Denver office. We are now up to, say, 14 people or 15 people -- that's something of a moving target these days -- in our Casper office, where we see most of our growth taking place.

But we are a very well-structured company and very well positioned to move forward as a near-term producer. We do expect to be in production next year in 2009, having filed our applications with both the NRC and the WDEQ, so we are moving through that review process currently and we expect to be in production -- or have our approvals by the second quarter of next year, in production by the second half of next year.

Finally, as a company, our strategy is to bring to the marketplace a new project coming into production roughly every two years to three years after our first project is in production, our Lost Creek project, and we have a very well-laid-out strategy for accomplishing that.

We'll move on to the next slide, slide number four. This is a slide that many of you have probably seen but we think that it was important. We took it out of the PowerPoint for a while, but we've now put it back in, because we think that it's something worth reinforcing. As you can see, if you take a look at the operable plants, we chose a time period in between September of '05 and August of 2007, and as you can see, there was actually a slight decline in terms of the operable plants.

However, whether you're looking at the plants under construction, the plants planned or the plants proposed, you can see that there is just a tremendous buildout that is projected over the years to come. And I think the bullet points down below do a very good job of illustrating our point in terms of the improvement of the overall market fundamentals.

You will notice that of the reactors that are detailed up there, they are currently operating in 31 countries. However, by 2030, that is projected to be 642 reactors that are going to be operating in 58 countries rather than the 31 countries that they're currently operating in.

In addition to that, there are currently 12 -- there are currently reactors under construction in 12 countries. And also, when it comes to the supply-demand fundamentals, in terms of just the pounds, we expect that there will be demand for in excess of 170 million pounds this year, in 2008, and that is projected to grow to 275 million pounds by 2020.

However, current production, current annual production, of only 110 million pounds still leaves us with a 60 million pound a year shortfall, and this is important to understand. And in fact, if you go all the way out to the year 2020, we'll see that even though we're projected to ramp up production to some 230 million pounds, it still represents a 45 million pound shortfall.

So any way you want to look at it, the supply-demand fundamentals are still quite compelling, moving forward.

Moving on to the following slide, this is where we really see ourselves in terms of our niche in the marketplace. As you can see from the graph on the left, or the chart on the left, the United States, this year, in 2008, is projected to consume roughly 54 million pounds. We are the largest consumer of uranium in the world. However, despite the fact that production has grown by some 14 million pounds over 2007, the fact is is that we still only produce some 4.6 million pounds, or about 8.36% of the total consumption in the United States. This is our niche, and this will continue to be our niche moving forward.

And in fact, the slide on the right, or the graph on the right, more accurately, is one that Bill just added to the presentation, but it's one that we think illustrates the supply-demand fundamentals very, very well. If you'll take a look at that, you'll notice that the uncovered utility uranium requirements moving forward, beginning this year, there is a growing disconnect between the amount that the utilities will be requiring, both in the United States and outside of the United States, and that is something that is projected to only worsen as we move forward.

Now you may notice from that the U.S. utilities are covered in the blue section, whereas the non-U.S. utilities are covered in the red. And although the growth is expected -- or that gap is expected to widen more outside of the United States than it is in the United States, it's something that actually serves to exacerbate our situation here in the United States, considering that 92% of our consumption comes from outside of our borders. So what that translates into is increased competition for very dear supply.

Moving on, we are very pleased with the milestones that we hit in 2007. We had a very, very good year in 2007 and those of you who follow our story closely know that, at this time last year, we completed an $83 million financing, which was a bought-deal financing at C$4.75, which, by the way, is at the present time very safely invested. And we as a company, as a result of that financing, are in fact debt free.

But in the fourth quarter of last year, we succeeded in filing our Lost Creek application. This will be our first producer. Those applications were filed with both the Nuclear Regulatory Commission and also the Wyoming Department of Environmental Quality.

I will -- I'll leave it to Bill to go into the detail of the status of those applications, but in addition to that we very recently, and in fact just released last week was our in-house engineering assessment on the Lost Creek project, which detailed some of our projected production costs. Again, I'll leave that to Bill to go into more detail on that. But we finalized a very aggressive drill program last year, if you take a look at it in its aggregate we completed more than 200,000 linear feet of drilling, and that translated into more than 60,000 meters of linear drilling last year, which I don't know of another junior in the second tier that came anywhere close to that.

So we have continued to drill very, very aggressively and I don't mind saying that that is, in fact, part of our internal strategy to continue to add organic growth to our story.

We've also expanded the number of projects in our pipeline. We have greatly strengthened, or I should say Wayne Heili has greatly strengthened our engineering and production staff in Casper, Wyoming. And in addition to that, we have brought in key personnel that will perform now key functions for the Company in-house.

Moving forward, we've had a very, very active first quarter of 2008. You will notice on the following slide that when we get to our cash position, we very recently, two weeks ago, completed a $2.75 million flow-through financing to fund our Canadian projects, again, safely invested and we have no debt surrounding our Canadian projects.

But we also upgraded our Lost Creek application and was resubmitted just a couple of weeks ago and I'll leave it to Bill and Wayne to go into detail on that. But we also, again, completed our 43-101 preliminary assessment on the Lost Creek project.

Again, we continue to strengthen our staff. We did file for an AMEX listing in the second week of January of this year and we continue to trade comments back and forth with the AMEX, but we expect to have approval of our AMEX listing in the very near term, and we'll keep you posted on that.

Finally, for my segment, we'll cover off on the capital and the cash position of the Company, as you can see. We have just over 93 million shares total outstanding as a Company and on a fully diluted basis we are just at 101 million shares.

Our three-month average volume still is quite good at 540,000 shares per day. Ur-Energy has always been a very, very liquid trading stock. We are very pleased by that. A year ago that volume would have been 1.2 million shares a day. We've all been reeled back. However, even considering the pullback in the uranium space in general, we continue to trade very, very liquid as a security.

As you can see, our cash position is at about $77.5 million currently, and those of you who follow our story closely will notice that that actually represents an increase from the close of 2007 and that is due to the flow-through financing that was recently completed. However, we do have another $23 million that are available to the Company from the exercise of options, but more than half of those are not in the money, however. But it does represent a substantial amount of money that's available to the Company.

Finally, with respect to our distribution, we have in excess of 10,000 individual shareholders. We continue to be roughly 60% to 65% institutionally held and our largest, in fact, institutional shareholder holds about 14.5% of our stock. That is an institution out of London.

Our distribution continues to be quite good across geographic areas. In the United States, we completed a survey for our AMEX listing and we have roughly 37% of our shareholders in the United States, with the remaining 63% divided fairly evenly between Canada and Europe.

But we continued to be invested only in safe, short-term government instruments that are very liquid, so we have never considered it our mandate to chase rates. We instead view our mandate as continuing to advance our projects toward production, so we've never engaged in any fancy footwork, you might say, when it comes to securing rates on our capital.

Moving forward, I'm going to turn this over to Bill Boberg so that he can go over the more technical elements of our story at this point in time. And I think that there's a lot that we have to share with you. So, Bill, with that, I'll turn it over to you

Thanks a lot, Jeff. I appreciate that. Thanks to everyone for being on the call with us today to give you an opportunity to catch up on where we are with what's going on, particularly with the Lost Creek preliminary assessment that we completed on our Lost Creek project.

This next slide on the Lost Creek project itself, that really hasn't changed anything for several months because most of the work was done last year and I won't spend any time going into that, but move forward to the following slide on the Lost Creek preliminary assessment and we'll spend a little bit more time on that.

I think one of the things that's important to note on this is that the study was really based on a model that was developed on expected conditions in the project. This is because these type of projects are ones that we will not be developing actual reserves on, because by the time we get sufficient drilling in it to developing the reserve that we're already mining it and we're essentially done with the project very shortly after that.

So we will be developing the projects on resources and that's why this was done more as a model study, rather than as a reserve study. But the model was based on six mine units that would total 8.1 million pounds, as you had noticed that that's less than the 43-101 resources that had been defined on the project originally. That's primarily because it is a model that is based on the six mine unit.

It would be looking at considering a total production of 6.5 million pounds, which is an 80% recovery from the 8.1 million pounds that would be mined. And the base case financing, the base case economic numbers, I should say, actually include a 20% contingency that has been added to the quite conservative numbers that were originally used in developing this.

But from a summary of this, looking at the minimum life of mine, and that is the six-year model that is on this, it comes up where the greatest sensitivity is in the uranium pricing and the recovery efficiency. And of course we have no control over the uranium pricing and the recovery efficiency is something that we've been testing with our leach testing and we feel fairly confident that we should be in the 80% range. And we hope that, as we get into the project, that it will continue to show in that general area.

The economics of the uranium project is giving us the consideration that we will be economic at prices above $40 a pound. Total sales on this model would be at the $516.2 million, and this is considering it in $80 a pound. We would end up with operating costs at $23.36 per pound and would have capital costs -- of the total of the capital costs, we have to note that $5.5 million was already spent during 2007 in the work that we did last year. And we intend on spending around $17 million for 2008 in advancing the project.

With the projected cost of building a 2 million pound per year state-of-the-art in situ recovery plant is $30 million, and we had originally projected that it should be somewhere in the range of $35 million, and so even this $30 million, which includes the 20% contingency, we feel very good about the numbers that we have on that.

Then the additional projected cost of drilling, environmental work, engineering and so forth that will be needed to move the project forward total up to an additional $32.5 million that will need to be spent on the project to move it forward. What this model gives us is a net present value of 10% before tax of around $107 million, using the $80 per pound uranium price, whereas the internal rate of return before tax would be just a little shy of 44%.

So these are numbers that we feel very strongly about. The consultants that did the independent 43-101 study for us, Lyntek, here in Denver, indicated in their report that they felt that the economics on this project were coming out quite robust, so we feel very good with what we're dealing with on this.

Moving on to the next slide, this one just gives the preliminary in situ recovery mine plan that shows the six mine units that were defined for this particular model. Each mine unit would be something in the range of about 1.3 million pounds to 1.4 million pounds in each mine unit, the way it's defined in the model. And they would be developed with something in the range of about 150 patterns to 180 patterns in each mine unit, the way it would be developing.

Let's move on to the next slide. This is the operational schedule that had been defined for this particular model and as you can see in this, that we have defined our engineering -- the team has defined this as the sort of thing that would be with concurrent restoration that would be going on while we would be moving into the mining of the new mine units, that we would be immediately going into the restoration and reclamation on the mine units that were completed.

And what this allows us to do is to get the regulatory approval on the project within about two years to two and a half years after completion of mining and we would be able to recover the bond, have the bond released and roll that into one of the new mine units that would be going forward, so that we would be having the bonding moving forward, as we complete restoration and reclamation on each one of the mine units, concurrently with the mining as it moves forward.

Move on to the next slide, this is just a photograph that shows the area of the processing plant itself. We're just about three miles north of the Kennecott/Rio Tinto Sweetwater Mill, which is in an NRC-licensed facility on standby to the south of us. We have our initial plans on building the processing plant to produce up to 2 million pounds per year. And as we've been indicating for some time, that this plant would be built without a dryer to start with, and we would be having the slurry that would be produced toll milled by another operator and then we would add the dryer at a later time.

And this is the old slide that indicates the buildout costs are projected at $35 million, whereas our current study is saying that that would be done for $30 million, and at our production costs at less than 25, and, as we had indicated, our study indicates that we should be producing at something less than $24 a pound on that.

And move forward to the next slide, and this is our objectives for 2008 at Lost Creek. We will be drilling an additional 400-plus drill holes, reviewing additional delineation and exploration work in the vicinity of Lost Creek itself. We will be working toward developing the first mine unit and completing the design of the pattern area, designing, installing the monitor well ring and doing a pump testing of the monitor well ring.

We would be looking to complete the drilling of our disposal well and having it installed -- having our main access road and shop and power brought into the plant site so that we have that working.

In addition to that, there's a number of other advanced regulatory matters that we need to be moving forward with and part of that is the NRC application and the WDEQ applications themselves. We'll be answering various technical questions and making sure that we'll be taking care of the things that need to be answered to both of these agencies as they come up with additional requirements through the permitting phase to assure that we don't get stalled there. And we have [to be] preparing a BLM plan of operations, as well as some additional permitting work that's required.

In addition, we'll be doing more engineering work on the project with having things to do with the process plant and the well fields itself, so there's quite a bit that our engineering team will be doing and moving forward on Lost Creek itself for 2008.

Move forward to the next slide, and this is Lost Soldier. I won't spend much time on this because this slide hasn't changed in several months. The main thing on this is that we have turned this over to our engineering team and they're working on continuing to develop it at this time.

Move on to the next slide, and these are the objectives for Lost Soldier for 2008, and on this, we completed our baseline studies by this time last year. It's just that some studies are ongoing and we're maintaining those as we continue to work on developing the additional data in the areas that we need to continue to acquire quarterly data on, like meteorology and groundwater data. And that's just maintaining that data, so we have that in good condition for putting it into our permit applications as we move forward.

We're continuing our engineering studies on this for both in situ recovery and open-pit production and we will be this year doing additional aquifer testing and leaks testing on this particular project, while we look at plant and process design and the potential for in situ recovery in the project itself.

We will look to be completing an economic analysis on the project similar to that that we completed on the Lost Creek project, as well as addressing additional operational and capital requirements on the project. We are planning on having our permit applications that will be developed through this year and probably at the beginning of next year to get them prepared for submittal as soon as we can.

And these are applications that take a long time to get completed and get done properly, and many of the things that we're doing right now with our applications in our dealings with the NRC and the WDEQ in Lost Creek will be applied to the Lost Soldier application to assure that we have it as complete as possible for moving forward on it.

Move forward to the next slide. As far as our exploration in 2008, we've got plans spending about $6.5 million on U.S. exploration, and the primary objective of this is for the development of additional resources in the general vicinity of Lost Creek. But we do have exploration programs in both Wyoming and Arizona that we'll be doing geologic work on. We plan on drilling 137 drill holes for about 140,000 feet during this year, as well as doing some airborne and ground geophysical surveys and geochemical work and geologic mapping on various of our projects.

Our objective also continues to be one to create value from our historic databases that we have and we're continuing to do all we can to create what value we can from that, whether it's the generation of new exploration targets or creating additional value and working with other operators who have need of data in our database.

And our third objective is to evaluate strategic opportunities for joint ventures, potential mergers and acquisitions of various projects within the United States and anywhere, actually. Moving on to the next slide, this is our Canadian exploration program. Primarily what we're going to be doing is doing project work this year on our Bugs project in the Baker Lake Basin.

We acquired the additional financing, the flow-through financing that we did just a couple of weeks ago to advance this project and give us the funds for doing the drilling. We've lined up the drill rig and have things set up for being able to manage this project. We'll be doing some additional geologic field work and sampling and geochemistry on the project, as well, in advancing it.

And, as you recall from some of the earlier things that we had announced on this, that this is a project that has some very interesting considerations with about three different styles of uranium mineralization. And we will be drilling on some of these this year to better understand them.

As far as our Screech Lake project in Thelon Basin, we're pleased to report that the Canadian government has gone through a number of things that has settled some of the land withdrawal claims between federal government and the Akaitcho First Nations group. And what that does is it opens the way for exploration agreements to continue and to be better developed in the area.

And we are in the process of working toward developing a partnership with the Akaitcho First Nations and we will be reapplying for a land use permit in anticipation of 2009 drilling, for moving it forward. Move on to the next slide.

This just reiterates our long-term production strategy, that our goal is that we would like to be able to move new projects into production every two to three years and moving projects from early-stage exploration to more advanced-stage exploration and to development into production are the sort of things that we're gearing ourselves toward.

Move on to the next slide, as far as moving toward a re-rating of the Company's stock. These are things that we've been working toward since we became a public company and developing the various aspects of things that we say we're planning on completing and then completing them.

We're very open, very transparent on what we're doing, having our quarterly webcast, as we're doing right now, as Jeff likes to say that we're one of the few companies that does this and, if we stumble, we are going to stumble publicly, because we are very transparent with what we're doing.

But we will be going through a variety of things through the remainder of this year and we will be keeping you fully appraised of the various things that are going on as we move forward. And with that, I think I would open it up for questions.

(OPERATOR INSTRUCTIONS)

Your first question comes from the line of Adam Schatzker from RBC Capital Markets. Please proceed.

Hi, there. It's Adam Schatzker here. Just a few quick questions. These are basically off the back of your technical report, and thanks for getting that to us. The first -- I'm just going to list the questions and then you guys can answer them. The first one is regarding the fault that you mentioned, a scissor fault. Can you just comment on how that might affect the development of the project?

The other is regarding the resin. You've chosen a Purolite resin as opposed to the Dow resin, which seems from my perspective to be more or less an industry standard. I'm wondering if there's any difference between them other than the price. Does it work as well in a basic system as it does in acidic? And what is its availability in the U.S.?

And the last one is in the technical report, where you list the taxes that are applicable, you list severance and ad valorem taxes, and I'm just wondering if there are state and federal taxes that we should be taking into account here as well. That's my list. Thanks.

Thanks, Adam. I appreciate that. Yes. I think for the first two questions, let's go to Wayne Heili, our Vice President of Mining and Engineering to discuss the scissor fault and the choice of the resin.

Good morning, Adam. The scissor fault has been tested by our hydrological tests and from those we've been able to determine that the fault is relatively good in the characteristic of sealing.

At this point in time, we don't anticipate it having much impact at all on our production. We could put mine units on either side of the fault or even crossing the fault, with the proper design. So the fault itself because of its nature and sealing not causing a lot of leakage across it is actually not a big issue in our minds, technically.

The second question you had was resin, and the Purolite versus Dow, the Purolite is available. It has been proven to work. The technical study utilized Purolite, but really the Dow is also -- it's not like we've made a final decision here. In fact, I think the Purolite is available at a better price and that's why it was utilized in this study. But I don't foresee any technical issues with the Purolite resin.

And then item number three on taxes -- the state and federal taxes are fully considered in the study. That's where you have your severance taxes and the taxes that are presented. I hope that answered your questions.

I guess just two really quick follow-ups. What would the price difference be if you went on a per-pound basis with the Dow resin, if you know that off the top of your head. And just really quick on the taxes, sorry to hound this one, it just says that there's 1.7% of revenue and 3.2% of revenue in the technical report. I'm just wondering, normally there's some sort of a profit tax that hits on a state and federal basis. That's why I asked the question.

Right, I don't think I could answer your first question on the resin straight up. Purolite is a better-priced product, but when you're looking at the overall capital in this project, resin has a hand in it but it's not going to be anything that overwhelms the project.

If we went to Dow resin, I don't think there would be any real serious consequence to the economics of this project.

Okay.

And I would have to spend a little more time to answer your question on taxes.

Okay, we can do that another time.

Adam, Harold Backer is here with us as well, and I think he can answer the question on the taxes.

Yes, Adam, the federal taxes will be around 35% and the state of Wyoming does not have a tax on businesses. It's not a state -- it's not an income tax on either personal or businesses. There is a severance tax in the state and an ad valorem tax on mining and on uranium mining, and the county gets a large share of this for helping development of additional county roads and infrastructure and so forth like that.

The total tax between the county and the state, if you take all deductions and so forth, it comes out to roughly about 4.9% gross of the sales price, in that range. Does that help answer your question?

It does, yes. That's fine. And just in the technical report there's no mention of federal tax. That's why. Thanks very much.

Great, thank you, Adam.

Thanks, Adam.

Your next question comes from the line of David Talbot with Dundee Securities. Please proceed.

Good morning, guys. How are you today?

Good.

Good morning, David.

Good. Sorry to harp on the taxes here again, but from just looking at the statement on the back of the report, it looks like the federal taxes are around 35%, but that, I guess, does not include the 1.7% or the 3.2% severance or valorem taxes. Those are buried within the operating costs? Is that where it is calculated?

I'd have to go back and look at the cash flow. They were taken into consideration and they are part of the cash flow. As you understand, those taxes are operating costs that are deducted from the federal taxes.

Yes. Okay, so when we run the model, we can just run those very similar to NSRs.

Yes, yes.

And run the taxes normally after that. Okay, as far as the royalty of 1.67%, does the royalty cover all of the production over the entire life of the project?

No. It just -- it covers 20 claims out there. Part of the mineralization cost is those 20 claims. The total deposit -- or the total permitted area is 201 claims, so it'll cover a very small percent -- or a small percent of the production.

Okay. You don't have an idea of how much, 10%, 20%?

Well, we haven't. Since that area hasn't been drilled out, we have no idea of knowing exactly what percent we'll be.

Okay, okay. And then what permits do you still require for to start prepping the first mine unit?

I'll let Wayne talk about that.

I'm going to give it right to John Cash, who's our Regulatory Affairs Manager.

There are a number of permits that will be required before we can begin installation of the first mine unit. The first one would be the NRC --

Hey, John, could you get closer to the speaker? You're not coming through very well.

One moment. He's walking around.

The first one that we would be working toward here, that's actually already been submitted, would be the NRC license application. The second one would be the state permit to mine. Those would be the two major permits that we're working with, and then there are a number of other smaller permits that we're working toward.

For example, we are working toward our development plan with Sweetwater County and there are a number of smaller permits with state engineers' office that we will be working toward -- air quality, the class III UIC permit application would be another fairly significant permit that we're working toward. And I suppose the final significant one would be the class I UIC permit. The UIC permit applications for both class I and class III are both handled by the Wyoming Department of Environmental Quality.

Okay, so essentially, to put in the well ring, the monitor well ring, you need all the necessary permits anyway to mine it. So okay.

Right, yes.

Okay, I guess -- and back to another technical question. I guess, could you provide a little bit more color on why you're using about 80% uranium recovery, or expecting 80% and why Lyntek thinks about 85% would be reasonable for this project?

We're utilizing 80% and that's the basis of our bottle roll tests that we conducted last year. We've demonstrated that we can do 80%. Could you tell me where you found the 85% in the Lyntek report?

Yes, I think it's right back in the conclusions. Bear with me, I'm running through this thing.

Because the overall -- the Lyntek report I believe was based on 80% recovery of the 8.1 million pounds, or producing 6.5 million pounds.

I've got the April 2, page 17, item 19, second point is overall recovery of uranium in the range of 85% seems reasonable -- appears reasonable. So I was just questioning that, because that's different than before.

I'm sorry, David, I think that statement indicates that Lyntek believes that 85% is reasonable, but for the assumptions of recovery in the study, they used 80%.

Okay, excellent. Thank you. Just, I guess, one more question, what sort of uranium marketing or sort of long-term contracting strategy do you foresee getting into in the next couple of years.

Dave, this is Bill. We have been -- started initial discussions already with some utility companies to get our name in front of them and make sure they know who we are. We've already started to receive requests for bids to fill various portions of some of their contracts that they would like to have.

We have felt for some time that we're not quite ready to market yet. We would like to see that we're closer to permitting and get ourselves closer to, actually, the receipt of the permit before we would be putting ourselves in a position of doing that. We've kind of set ourselves at the end of this year as kind of the timing that we would be looking at toward getting more serious toward actual marketing and seeing then about what we'd have, because at that point in time, I think we'd have a lot better feel from our engineering standpoint of what would be going on, as well as the likelihood of the timing of receipt of our permit.

So we've pretty well decided that we wanted to be very conservative in this approach and make sure that we knew better where we were before we do that.

Okay, great. Okay, thank you very much.

Thanks, Dave.

Thanks, Dave.

Your next question comes from the line of Toni Wallis with Canaccord Capital. Please proceed.

Hello, Toni.

Hello, can you hear me now?

We can.

Okay. I'd like to thank you all for getting us this report out in a very timely fashion, and actually, two of my three questions have already been answered, which were the taxes and the contracting for sales. So the third question I have is actually an exploration and development question.

On slide 19, you talk about having a new project in production every two years to three years, your two near-term projects being Lost Creek for 2009, Lost Soldier for 2010. I'm wondering out of the next two, Bootheel and Radon Springs, which one you see as being your third project for the following sort of three-year period?

Bill Boberg Yes, actually, at this point in time, Toni, I think it's still too early for that. And some of these may actually be ones that would be closer in to the plants, as we're planning on developing greater resources around the plant itself. As far as being able to say -- and as far as Lost Soldier, we don't see it really any earlier than 2011 that we would be -- from that sort of timing.

But as far as what project we see coming on beyond that, at this point in time, it's still too early to say. We're looking at several things, and I kind of like a year and a half ago when we were working Lost Soldier and Lost Creek side by side, we really felt that Lost Soldier was going to come on first and decided after we got moving along that Lost Creek made more sense at that time. So I think it's far too early for us to speculate on which one we would expect to be number three.

Okay, so that being said then, from what you said on the call, the expanded drilling around Lost Creek would be probably an enhancement of what's going on currently at Lost Creek and therefore expanded resources there.

Yes, absolutely. We've expanded the property position around Lost Creek very significantly this last year.

Yes.

And we have a number of things that we're going to be doing on an exploration basis around the Lost Creek project itself. And it could be that that's where more of the additional things that would be coming on in the future would be coming from.

Thank you.

You're very welcome, Toni.

Thanks, Toni.

Your next question comes from the line of David Snow with Energy Equities. Please proceed.

Yes, hi. I was trying to hear what you said about Thelon Basin for '09. Did you say you were going to develop another partnership or something, and can you give us some more update and color on that?

Yes, Dave. We have no intention of entering into a partnership on the Thelon Basin on [street slate]. Our intent is that -- and you're probably looking at it with the idea that the discussions with the First Nations in Canada will probably require that, in order for us to get a license, that we need to negotiate some deal directly with the First Nations, as well as having our claims as federal claims within the province.

So that's probably what you're thinking of, but no, there will be no partnership there and we're looking to be able to complete everything so that we can get our land use permit in and approved and have the ability to drill in 2009.

So the -- would you have to -- when you say deal with the First Nation, would you be giving them an economic stake in it, or what?

At this point in time, who knows? This is the sort of thing that we're in early discussions and where we end up is where we're going to end up.

Okay, great, thank you very much.

Thank you, Dave.

Thanks, Dave.

Your next question comes from the line of [Brian Hodgeman], private investor. Please proceed.

Hello. Looking at that recent preliminary assessment, it appears that you'll need about US$60 million going forward to bring first production on from Lost Creek. Is that about right?

That's correct.

I'm just wondering, you have roughly $75 million in cash in the bank still, why you felt you needed to do that private placement at C$2.75 a share?

Actually, we made the decision to go ahead and do a flowed-through financing for a very simple purpose. We were able to complete the financing at C$2.75, so the financing was 1 million shares at C$2.75.

The alternative was to take the money out of the cash that we have on reserve presently. And we felt that the hard dollars are really something that's at a premium right now. You may or may not be aware of the fact that financing has become much more challenging over the course of the last six months to nine months. And in fact, many of our competitors that would like to refinance themselves in the marketplace have not been able to do that.

And we felt that it would be less impact on the Company to go ahead and do a flow through at a large premium to where we were trading. In fact, at that time, we were trading at roughly $2 a share. And so we felt very good about the premium that that represented.

So in our view, it simply became a question of which was a better use of our capital, to use hard dollars, which we need for the U.S. projects which are core to what we're doing, or raise a small amount of flow through for our Canadian exploration projects, and we chose the latter.

I'm sure I can appreciate the premium at the time, but at the first of the year the stock was trading at $3.50 a share.

Well, unfortunately they wouldn't let us base our financing on where we were trading at the beginning of the year.

I can understand that. As a shareholder, though, I don't consider C$2.75 a very fair price for this Company, either.

Yes, we would certainly be inclined to agree with you.

Going back to mentioning about a re-rating in our share price, I can appreciate your desire to be conservative in forward selling and forward selling any materials, but don't you think that that would really help solidify the image of the Company as a legitimate near-term producer?

I think that you're probably right on that. I know Bill and I have felt all along that having some amount of our near-term production forward sold is going to be a benefit. One of the things that I think that we didn't make clear when we covered off on that is that I think it comes down to something as simple as we don't want to make promises that we can't keep. And Bill and I have felt that way from the very outset. And while certainly market perception is important, I think that right now we're more concerned with being able to continue to do everything we say we're going to do in the marketplace and this kind of falls under that heading.

Now, one of the things that you should also understand is that when we met with a number of the utilities last fall, we did this at the NEI conference in New Orleans. And the utilities are surprisingly straightforward in the way they approach their forward needs. They'll lay out a timeframe, say, 2010 to 2014 and say I need X number of pounds each year during that period of time. And they're very accommodating in terms of the contracts they'll entertain. They can include floors, ceilings, a combination of spot and term, various durations of the contracts. There are actually a lot of moving parts in those contracts.

And for us, what we came away from -- we came away from those meetings feeling that entering into an offtake arrangement with one of the utilities is absolutely not a challenge. We can do that, I think, any time we care to do it. It really became more a function of us moving further through the review process with the NRC and knowing that any promises we made in the marketplace we could in fact keep.

Okay, on that respect, do you foresee selling most of the material into term contracts or relying more on --

I think, honestly, if you would have asked us that question six months ago, we would have said we were going to retain 50% for the spot market and probably sold forward 50% in term. Now obviously, given the current market conditions, we would probably lead toward a heavier waiting in the term marketplace at $95 a pound, frankly.

Okay, but you don't foresee any forward selling, at least not until the end of this year?

Probably not until the end of this year, Brian. We -- I don't really think so. There are things that are going on in the uranium market that still has it relatively volatile, particularly on the spot side. And I think our sense is that a lot of that will probably shake out to this year and we'll have a lot better feel about the overall market later on this year. And so, we're not in any real hurry to get a market contract.

And, Brian, let me make one other comment with respect to the overall market conditions out there. When we weighed the alternatives for financing our Canadian exploration projects and we decided to move forward with the flow-through, keep in mind that one of the things that we believe is taking place out there, there have been a number of uranium companies who have attempted to do refinancings over the course of, say, the last five months, six months.

A number of those financings were subsequently pulled off the table and there's a great deal of difficulty right now in that financing marketplace. In fact, I believe that the other shoe to drop in the uranium space in over, say, the next six months to a year is that quickly the marketplace is separating the sheep from the goats in this space.

And I think that there's an awful lot of unfunded capital requirements that characterizes most of the players in the uranium space. In fact, I think you can count on one hand the number of companies that I would classify as even being adequately financed, forget about well financed.

And so one of the things that we're very, very aware of is that we're going to make our dollars last. We're going into production. We believe that's our mandate. And we felt that going out and -- to extend another million shares at C$2.75 was, in our view, a price we were willing to pay for the piece of mind that our strong cash balance provides to us.

Okay, but I imagine you don't expect any placements going forward. I can't imagine you think that's --

We don't. At this point in time, one of the things I don't mind telling you. There was a pitched battle in the first quarter over our budgets moving forward. We slashed them to the bone. We --but one of the things that I think is also important is that we truly intend to keep organic growth in our story.

And so when you take a look at our pipeline to production, one of the things that should be remembered is that those projects that are in our exploration tier are really projects that are more advanced than most other companies hold. They're backed by solid data and we know what we have there. They are not pure greenfields exploration projects.

And so we do feel that we have a strong pipeline to production on a number of levels. And so our primary focus right now is making sure that the money that we successfully raised last year in 2007 takes us through to first production and so, I guess, I suppose that was a longwinded way of saying no, we don't anticipate any future financings at this time.

Okay, and these exploration projects that you're working on, do you foresee those as potentially ISL projects?

Actually, we view ourselves as a uranium mining company. We don't view ourselves strictly as a uranium in situ mining company. That said, that we're gearing where probably the majority of things that we're working toward would be with the consideration of in situ.

But there are a number of projects and potential projects that we think are quite exciting that would not be in situ projects but would be sufficient to stand on their own on a conventional basis if we're able to prove them up correctly. So we don't -- we're not limiting ourselves to strictly ISR in looking at exploration projects.

Okay, just one more question. So the capacity of the plant will be 2 million pounds annually?

That's the plan, is to have it at 2 million pounds, which would be -- which would enable us then to have that capacity for additional projects of our own in the vicinity, as well as the ability to potentially do toll milling for other operators in the same vicinity.

And have you had any discussion with other operators for toll milling?

Not at this time.

No.

No. And -- but you're still projecting about 1 million pounds, yourself, from Lost Creek in 2010? Is that right?

That's our consideration at this time.

Okay, thank you very much.

Thank you, Brian.

Thanks, Brian.

(OPERATOR INSTRUCTIONS)

And your next question comes from the line of Bart Jaworski with Raymond James Ltd. Please proceed.

Good morning, guys, or good afternoon and thanks for having the call. I just have a few follow-ups or a few questions here. Of that $6.4 million you're going to spend in the U.S. on exploration, how much of that is going to be directly in and around Lost Creek and Lost Soldier for '08?

Over 60%.

Okay, so is it fair to say that you have become a little bit more aggressive now that you've done the bulk of the economic work and permitting work? You can focus a little bit more effort on the exploration side and sort of expanding that end of things?

Yes, well, two aspects to that, Bart. One is that we've got the engineering team to be moving things forward from an engineering standpoint and it does free up the rest of our team that basically were kind of bogged down in trying to move the project forward themselves early on.

So to answer your question, yes, but it's not just strictly because of having our application and our preliminary assessment done. We've just got our team more better rounded to be able to handle both aspects of it at this point in time.

Okay, and sort of that ties into the sort of projected production drop-off in the [PEA]. Beyond 2013, it's sort of grouped into three years or four years at the end there. Can you just say how sharply the drop-off is from 1 million pounds beyond 2013?

Well, I think part of the thing is just remembering that we're talking about a model and the model is very specifically based on the six mine units and, as you get further along in the model that you don't have additional mine units coming on, and that's the whole point of the model itself. And that's why it's important to keep in mind that we're building the plant with the idea that it will be in existence for longer than that and that we would not be in a position of decommissioning the plant at the end of that period of time. We would be continuing operations and adding new mine units, either within the vicinity or having things within the Great Divide Basin that we would have the additional projects that would be moving into.

So it's a little skewed, the model, along that line in that it's strictly the model for the six mine units and it does not consider the potential of the other things that we would expect to be having come on.

Okay, fair enough. And so, along that line, what is the deadline for -- or if you have one, for the preliminary economic assessment for Lost Soldier? Do you have that in mind right now?

We have not defined a timeline for that yet. Our engineering team has been so involved in Lost Creek and getting it taken care of that they've really just started on Lost Soldier and they have not defined their timeline for what they expect to see of it at this point in time.

But some time, would it be fair to say, early to mid next year? Would that be a rough ballpark?

I would think, yes.

Okay. All right. And then, just last question, how strongly do you feel on the open pitting at Lost Soldier versus ISL, or what proportion do you see of each mine style on that project?

I'd say we're still working on that and trying to decide which sort of things make sense because there are some places where, if we put an open pit in, that it could have an effect on in situ that might be below the bit. And so there's a lot of engineering and a lot of different considerations that we need to put into that to really understand what makes the best sense for optimizing this project. So there's still a lot of engineering yet to be done on that.

But, in your mind, is open pitting happening for sure or is it still --

Open pitting is not happening for sure. It's a real consideration.

Okay.

But no, it's not happening for sure.

Yes.

Bart, the other thing that I think is important to remember when it comes to Lost Soldier is that this is a resource that Cameco carried at 27 million pounds on their -- the most recent AIF where they add this project. And when we defined our 43-101-compliant resource there, we only defined those resources that were below the water table sufficiently to lend themselves to ISR production.

And when we had the Pincock Allen & Holt study done very recently, it was only to better define the near-surface resource that we had that had been excluded from the 43-101 report. So I don't want there to be any further misconception about whether or not this is an ISR or an open-pit project. I'm not sure how that has gone as far afield as it has, but the reality is is that this is an ISR project and we're simply trying to better define what we have near surface.

Yes. Okay, that's great. Thank you very much.

Thank you, Bart.

There are no additional questions at this time. I would now like to turn your presentation over to your host for closing remarks. There is one more question. One more. There is a follow-up from the line of David Snow with Energy Equities. Please proceed.

Hi. As long as the question had been asked about Lost Soldier, there was a step-out that was quite long, half a mile, on Lost Creek and had good ore. Have you followed up on the aerial extent around that, or is that what you're going to do with this $6.4 million in '08?

Yes, that's what we're doing is following up on the step out. We have indications of mineralization branching out, both on the property at Lost Creek and onto our adjacent properties at Lost Creek and we have a very active drilling program to follow some of these new areas up and see if they will amount to additional resources for our future productions.

So you didn't follow that up in '07 and now it's going to happen in this year?

Some of that, yes, it will.

Okay, well how about there was possibility of more to the northeast or prospectively the west, is that -- have you done any of that exploration yet?

We were only able to get 29 holes in last year, over half of them hit mineralization, that were to the north and we're still pursuing that and we have an aggressive program this year to follow all these areas up as best we can within our budgets and our availability of drill rates.

Great, thank you very much.

Thanks, Dave.

Thanks, Dave.

(OPERATOR INSTRUCTIONS)

I think we've pretty much run into our time limitation. We try to keep this at generally an hour, but, ladies and gentlemen, thank you very much for your attendance today. We will continue to hold our quarterly webcasts and we're very pleased with our progress. We had a great first quarter and we intend to have a great second quarter as well. Bill, any closing comments?

No, I'd just thank you all for being with us today and as Jeff said, that we will continue this on a quarterly basis and any time that we have anything to tell you, that we will be getting it out to you.

We are always available for conference calls, so if you have any further questions, please feel free to contact us directly. With that, we'll close this out and again, thank you for your attendance.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.