Ur-Energy Inc (URG) 2008 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Third Quarter 2008 UR Energy Earnings Conference Call.

At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference.

(Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference, Mr. Paul Goss, General Counsel. Please proceed.

Thank you. And thank you all for joining us for the Third Quarter 2008 project update webcast presentation today. The webcast is assessable through our website www.ur-energy.com on the home page and under the investor's page.

We are required to draw to the attention of all of our listeners the legal disclaimers contained in the presentation at slides two and three which apply equally to our oral presentation this morning. Therefore, you will find legal disclaimers with regards to forward-looking statements, risk factors and projections, as well as other cautionary notes to U.S. 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 information form filed March 28, 2008 on SEDAR and as a part of our filings on EDGAR in the United States.

I now turn the webcast presentation over to our Board Chairman Jeff Klenda.

Good. Thank you, Paul, and good morning ladies and gentlemen. Once again welcome to our third quarter update. It's hard to believe that we are now going on two years of conducting these in the form of a quarterly webcast, but we're happy to have you with us.

I'm going to begin on what will be our slide number four which is our Company's mission statement. And I'll leave it to you to read the entire mission statement, but I would like to emphasize the first sentence and that is that our primary objective is to move our Lost Creek uranium project into production in 2010 with the funds that are currently on hand.

And I think that that needs to be stressed in light of the -- what's going on in the marketplace and the paralysis that currently is taking place in both the capital and the credit markets out there. It's a very, very difficult environment for anybody needing to raise capital.

And what we're going to try and do is that we're going to try wherever possible in this presentation to talk about our Company and what our plans are in light of that larger crisis and what we are specifically planning to do to get through it and I think this is something critical for virtually every company out there.

We'll go ahead and begin. Our takeaway points and something that will serve as a bit of a format for this presentation can be found on slide number five and we'll emphasize the fact that throughout this presentation that in fact we are a real company. Our staff -- our quality staff of personnel continues to grow of course under the direction of Bill Boberg, our CEO, and our staff in Wyoming as well.

But we're very proud of that team, also the fact that we expect to be in production by the second half of next year, 2010 and that we of course maintain a longer term production type line of projects that we intend to continue to advance toward their development as well.

I think that probably the single most important aspect of our status currently is the fact that we do have at the end of the third quarter CAD66 million on hand. The Company has no debt and that cash is currently in very safe investments. We have never considered it our mandate to chase rates. And given this environment, that cash on hand is very, very important.

I would direct your attention also to the fifth bullet point which has been added for this webcast and that is that at the end of the third quarter we put in place budgetary constraints that were intended as you would expect to conserve our cash so as to see the Company through to its first production.

Now I want to emphasize with respect to the budgetary constraints that have been undertaken that we continue to have our staff focus on our other projects. They are being advanced by our staff. However, what's being cut back dramatically are the capital expenditures attendant to those projects. Our objective is to remain focused on our first production next year.

Moving forward we're only going to spend a couple of slides on this, but we would like to make a couple of comments about the larger environment that we find ourselves in -- first in the United States. Those of you who have been shareholders for a long time recall that one of the things that we have emphasized on an ongoing basis is the fact that here in the United States we only produce about 8% of the uranium that's actually consumed in this country being the largest consumer of uranium in the world. Last year that number came in at about just under 4.6 million pounds.

Now this is a slide that was recently provided to us by the EIA and you will notice that it has a quarterly breakdown of production year by year going back into 1996 and for this year thus far 2008 we are just a bit above 2.8 million pounds. If we have just a tremendous fourth quarter, we're going to in my view be fortunate to get to 4 million pounds this year which will be a considerable reduction from where we were last year. In fact, according to the EIA, we have experienced thus far nine month over nine month 2007 to 2008 roughly a 15% drop in uranium production.

That does not bode well for U.S. supply and as a matter of fact also in this report it was detailed that there are only seven current producers in the United States and we learned earlier this week that three of those ISR production properties will be taken offline by the first quarter of 2009. So the environment is tightening. It's not getting better.

Moving forward to the macro environment world-wide, this slide comes to us from our friends at Cameco and you can see here that during the next ten years there will be nearly a -- we will -- there will be nearly 25% more uranium production required to meet demand than can be produced from existing mines and in fact those of you who pay attention to the uranium space know that in general most of the large producers in fact have been guiding lower. There are a few bright spots out there, but nonetheless Cameco projects that by 2017 there will be a supply deficit of about 450 million pounds and there's no question in anybody's mind that more production is needed on a world wide basis.

In 2008 thus far we've had a very good year. It's been a very busy year for our staff here at UR Energy. We completed our in-house economic analysis. We also submitted an upgraded NRC Source Materials License Application for our Lost Creek project.

At the end of the first quarter, beginning of the second quarter, we completed a very small flow through financing to cover our Canadian projects. We raised $2.75 million in that flow through financing.

Further we obtained an NI 43-101 preliminary assessment for Lost Creek and of course that data is available on our website. The Lost Creek, Wyoming -- with regard to Lost Creek, the Wyoming Department of Environment Quality received our permit and license to mine applications and they were deemed complete by that agency. Also the NRC Source Materials License was deemed complete by the -- for Lost Creek as well.

In late August of this year we began trading on what was then the American Stock Exchange. As most of you know the consolidation with the New York -- well it is our understanding has now been completed and our stock now trades under the symbol URG on what is now part of the New York Stock Exchange Alternext Exchange platform.

We have continued to increase our base of technical personnel as we move toward production and we -- but we -- we did because of information that came out of the Nuclear Regulatory Commission, and Bill will detail this, that we have adjusted our production timeline and our exploration efforts in deference to the revised GEIS completion date out of the NRC.

As just mentioned we have revised our budget in accordance to current market conditions and that is something that we will continue to monitor closely.

And finally Friday of last week we announced the adoption of a Shareholder Rights Plan. We felt that this was an appropriate move at this point in time and that's something that we will be happy to discuss in the question and answer segment of this call.

One of the things that you will notice is not in the 2008 corporate events and it is that we have not initiated any form of a stock buy back. We have been asked about this a number of times. The simple fact is that we are not able to engage in a stock buy back under Toronto stock exchange rules and again this is something that if you choose to discuss this in the -- in the question and answer period we'll be happy to deal with that as well.

Moving forward to the share capital and cash position. As you can, the number of shares outstanding roughly remains the same at just over 93 million shares. The stock options have been reduced to a bit over six million shares on a fully diluted basis. We have just over 99 million shares outstanding.

On an average basis we now have seen our share of volume increase quite dramatically. We are trading in excess of 900,000 shares a day between the Alternext Exchange and the Toronto stock exchange. The fact is we're seeing our flow turnover quite quickly in this environment so while we normally provide a bit of a -- of an update on how our shares are distributed out there in the marketplace, it's kind of a moving target these days, a little harder to tell.

Finally our cash position as you can see at the end of the third quarter was just under $66 million -- or CAD66 million. That's been subject to quite a bit of fluctuation with currency conversion as the Canadian dollar and the United States dollar continue to fluctuate, but suffice it to say that we are well financed moving forward.

At this point in time, I will go ahead and turn the call over to our President and CEO Bill Boberg. Bill?

Okay. Thanks a lot, Jeff. I appreciate it. And thanks to everybody for joining us on this call. We're very pleased to have you with us and we'll be very happy to answer any questions you may have as we move forward.

Just as far as the key things that have been accomplished during this -- this year and particularly the last quarter, we completed 459 holes during this year. We have completed our drill program at Lost Creek and our exploration programs at this point in time. We have a total of 123 monitor pump test wells that are now installed, a number of which were installed during this particular -- this past quarter.

Things have been moving forward very well on Lost Creek. Our team up in Casper has been doing a lot of work on being able to move the project forward and to continue to develop it in a timely manner.

Some of the highlights for this year -- that the drilling that was done. Again we completed the 459 drill holes for 303,000 feet. Of those, 300 of those were delineation drill holes within the proposed Mine Unit #1 so that we could completely delineate Mine Unit #1 and have it ready to be able to move forward. That included putting in 46 monitor wells and two pump test wells for the first mine unit for completing its definition.

In addition we added ten additional regional baseline monitoring wells to -- at the request of the Wyoming Department of Environmental Quality in their review of our application that they thought they'd like to have some more regional baseline testing done and we agreed and have installed those. As you can see on this slide it does define some of the better holes that we have drilled in the -- in the Mine Unit #1 and better getting it defined for moving forward.

From an exploration standpoint we drilled 99 drill holes to test for potential extensions of mineral trends in the Lost Creek area. We drilled almost 92,000 feet on that, drill depths generally from 600 feet to 1,200 feet depth in that testing.

We did identify a number of areas for extending the main mineral trend to the south, as well as other areas that we see that we can extend the various zones that we are concerned with developing mineralization within.

Now one of the things that was particularly encouraging during this time is that we identified a completely new roll front system at around 850 feet in a strategraphic horizon that we had not tested yet and in that particular one we got 9.5 feet of about .14% and that was tested with our PFN tool that we have operating at this point in time.

As far as the preparation of Mine Unit #1, we have completed the design of the pattern area. We are in the process of designing for the installation of the monitor and the pump test wells. The monitor and the pump test wells have been installed and pump testing is going forward right now.

In addition in the Lost Creek area, from a regulatory standpoint, the NRC License Application has been deemed complete and we have -- we're currently working on the request for additional information that we received from the NRC at this time. This is all within the normal process of how these work.

The WDEQ Permit Application -- technical review is ongoing and we have been responding to requests for additional information from that agency as well throughout this period of time. Again this is the normal process as to how these work.

The BLM Plan of Operations -- we're looking at completing it for a 2008 drilling operation and for the potential of getting clearance for a certain amount of construction that may be possible during the next year.

The Wellfield Injection Wells Permit is in discussion with regulators as is the Deep Disposal Well UIC Permit.

From a detailed engineering standpoint the process plant engineering contract has been left with TREC Engineering and they are just about complete with the preliminary design and construction plans, the specifications that we expect to be receiving very shortly.

And preparation is being made for scheduling major capital acquisitions at a time when it makes sense for us to do those from a standpoint of when we will be able to actually begin construction.

The well fields have been going through additional detailed study to define where the various well fields will be beyond Well Field #1. Completing the detailed geologic evaluations and individual mine units are being designed and laid out for future drilling and defining them.

Moving on to Lost Soldier and this is on slide 13, there's -- we have done no additional drilling at Lost Soldier this week. The main things that have been going on at Lost Soldier this week going on to slide 14 is that we have been continuing the environmental data collection. Once we started it on the project these are things that will be ongoing throughout the life of the project.

We've been continuing the engineering and geologic studies. We reentered some of the old holes that were used from some of the earlier testing, looked at those to determine where they were actually placed. We've determined that there may be better places in the deposit to put test wells. We're doing detailed geologic evaluations to determine that at this point in time along with detailed engineering studies to get a better handle on what's going on with Lost Soldier.

Lost Soldier does tend to be somewhat more complex than Lost Creek and it does require a bit more effort for us to properly understand and get it to the position that we could actually be in a position of designing the preliminary plant process design as we move forward on it and completing the preliminary assessment which we hope to complete sometime next year.

We will be addressing the complete operations and capital requirements as part of the preliminary assessment that will be done during 2009. And we will be completing the preparation of the license and permit applications for both the NRC and WDEQ in 2009 and get them submitted as well.

As far as additional U.S. exploration, our primary objective has been to develop additional resources. We drilled 12 holes on our EN plains. We did define additional roll fronts and mineralization on these -- with these holes that we drilled. We have flow on more than 746 miles of airborne geophysical surveys.

We terminated our drilling at Eagles Nest and the drilling program that had been originally been planned for Lost Creek North and North Hadsell in advance just primarily so that we'd be in a position to advance Lost Creek in the manner that we feel is necessary for us to move our production project forward. It's not that we don't feel these projects have potential. It's just that we feel that our funds at this point in time are better spent in advancing our Lost Creek project and we are continuing to work on these projects and we do continue to maintain more than 67,000 acres of property in the U.S.

On our other objectives -- just to create value from our large historic database. And we still have our in-house geologic team researching the data to define new exploration targets as well as evaluating for potential sale to competitors or venture opportunities where we have data on their properties.

One additional one that we've always been looking at is to evaluate strategic opportunities. One point here is that the current market does open a lot of opportunities and we are evaluating many opportunities but any opportunity that we would pursue please be assured that they will be things that will be very additive to the Company and will enable the Company to grow.

Then from our objective of our advancing of our venture projects, our two venture projects -- the Bootheel Project and the Hauber Project -- that on the Bootheel Project Target Mining & Exploration has been operating that as the manager and they've increased the defined area within the project to over 10,000 acres and they've completed 93 drill holes during this year and have done a very, very good job of better defining the resources which they intend to be moving forward to 43-101 category through the winter months as they are evaluating the drilling that they did through this year.

On the Hauber Project, our partner on that Trigon has resigned as manager. It has been returned to the UR Energy operational management and we are continuing to evaluate the geologic and hydrologic work that had been completed under the management of -- of Trigon.

Moving on to Canada, as Jeff mentioned earlier, we did complete the financing earlier this year to have the funds to advance work on the Bugs Project. We did complete the work that we'd planned on the Bugs Project for 2008. We did detailed geologic mapping prospecting and geochemical sampling. We drilled -- completed a drill program of six holes for a little bit less than 3,000 feet of drilling. We are currently awaiting the core assay results on these and we're not in a position to say anything about this project until we get the results of the core assays back.

On Screech Lake we've had very little joy so far in advancing our discussions with the First Nations. We've had very cordial discussions with them and have very cordial relations with them at this time. Getting to the point of completing an agreement has not happened yet and we are hopeful that that will happen within the next several months and we can get that moved forward.

As far as what we are looking at in moving forward in the future, some of the future objectives that we're looking at that are necessary to complete for the Company include the completion of the pump test for the Lost Creek mine unit which is necessary for completing the mine unit application. That will be done within the next few months and those applications -- that application will be submitted.

The -- we're looking to get the land use permit for Screech Lake, getting the approval next year for the BLM Plan of Operations, completing a preliminary assessment for Lost Soldier, and submitting the Lost Soldier applications to the NRC and the Wyoming Department of Environmental Quality.

We are looking forward to obtaining our Lost Creek source material license from the NRC sometime in the last half of next year and the permit and license to mine from the WDEQ we hope to receive sometime in the first half of next year. As far as obtaining the mining permit for Lost Creek Mining Unit #1, that's something that our understanding is that that's a matter of a few months application. Once we have submitted the application we should be receiving that permit within a matter of a few months.

We will -- are in the process of working on permitting and installing a deep disposal well for Lost Creek. We will be constructing a Lost Creek processing plant and the operational infrastructure prior to putting Lost Creek into mining. And the drilling and installation of the Lost Creek Mine Unit #1 has to follow the reception received so far application or permit from the Nuclear Regulatory Commission. And then our primary objective that we have is to start production at Lost Creek as soon as possible.

And with that, we'll open it up to questions.

(Operator Instructions). And your first question comes from the line of [Peter Adamack] of RBC Capital Markets.

Hi, gentlemen, it's actually Adam Schatzker here. I used Peter's code, sorry about that.

Hi, Adam.

Hi, Adam.

First question is given the volatility in the Canadian dollar and the fact that it seems as though your cash is held in Canadian dollars but your CapEx will be in U.S. are you looking at moving that cash into U.S. dollars to make sure you can make your CapEx?

And secondly, on the CapEx, are you seeing any changes to the CapEx as you sort of go and reprice some of the things that you looked at when you did the original scope and study just given that the price of everything seems to be moderating somewhat in the mining world?

Hi, Adam, and thanks for that question. This is Roger Smith and I'm the CFO of the corporation. I'll take the first part of that question. We've actually moved a significant portion of our cash into U.S. currencies and we did so conveniently before the volatility of the Canadian exchange rate especially recently. So we currently have in the neighborhood of $30 million in U.S. We bought down enough money to fund our activities in the U.S. for at least the next 12 month period. Bill?

Yes, Adam, and this is Bill. On the re-looking at the capital in our initial evaluations of the capital requirements that we had had, we -- we were looking at them very conservative -- very conservatively to start with as you're well aware. And they are also saddled with an additional 20% contingency on top of that. We have not gone through with the ideal of trying to whittle those numbers down.

What we're looking at is the ideal that with -- what we're dealing with and looking at the current numbers that we have, can we actually move ourselves to production in late 2010 with what we have. And that has been our budget exercise that we went through, and we determined that yes, we can do that.

And if we can get some benefit over the next few years because of the falling back of the prices of some of these things that had been increasing dramatically at the time when we had originally done that, that will be that much more of an advantage to us.

Okay. And if I may, just two more questions. Given of course that I guess most of the cash that you have would be going towards the Lost Creek project, can we expect the timing of the Lost Soldier development to be any different than we had before?

Primarily we're still looking at Lost Soldier as something that would probably come in -- I've been saying for a long time now -- somewhere in the range of at least a year to probably two years after Lost Creek. And at this point in time I don't think I'm ready to change that way of looking at it. We're still viewing Lost Soldier as our number two project and it is one that in our budgeting that we've done to get Lost Creek into production in 2010 we have included moving Lost Soldier forward in concert with it.

Okay. And the last question sort of from I guess the 30,000 foot level, on an M&A front you mentioned that you're probably looking at things yourself. I'm wondering though have you been approached as a target for M&A or is that something you would entertain?

Adam, I think that there will, by definition, be a lot of consolidation in our space moving forward. I think that's kind of taken as a given by anybody that's in this space. We have not at this time seen any activity along that front. There's nothing that we would comment other than to say that in this environment I would fully expect that consolidation is coming to this space and I think it will characterize it as we move through 2009.

And what would you like your role to be in that consolidation?

Well every time we say we're going out and acquire assets it gets us in a bit of trouble so we -- we're simply kind of -- we're looking at the market from 30,000 feet ourselves to a certain extent and we see -- candidly we seem some desperation developing out there.

I think that there are companies that are experiencing a lot of distress that have some good projects and if we're doing a good job for our shareholders we have to be paying attention. So there is nothing specific in the offing at the present time but if we see opportunities out there we're going to try our best to take advantage of them. I don't know if you have anything to add to that, Bill?

No, I don't. No, I just agree completely with Jeff that we're paying a lot of attention to what's going on in the market right now and looking at potential opportunities that as they may arise and with the ideal that if these are things that could be good for our shareholders, good for the Company we will definitely look at them.

Would you look for instance at a mill that might be fully licensed that might be for sale in your region?

We -- as I said I think we would look at anything that looks like it would make sense for us.

Okay. Thank you very much.

Thanks, Adam.

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

Good morning.

Hi, David.

Hi, David.

How are you doing? I'm trying to figure out what is the CapEx for getting the first project into production?

Bill, do you want to take a whack at that? David, we have as I mentioned just recently revised our budgets. We did that at the end of the third quarter and we had our Board in town again last week. That number has changed quite a bit very recently here. I don't have that in front of me. Bill, you might have a better handle on it.

I don't have it in front of me either. A fair bit of what we had been looking at spending we actually did spend. It was toward drilling projects, you know defining the first well field, getting things moved along that way.

The -- the plant in first Wellfield construction as I recall was somewhere in the $30 million range, looking at an additional $30 million to $32 million of additional requirements for moving things forward. We've got $62 million left, a portion of that -- some of that -- $5 million of that had been spent last year and a fair bit has already been spent this year, at least another $5 million has been spent this year.

So -- but as far as being very specific about your answer, the fellow who can answer that more -- more directly are both Wayne Heili, our Vice President of Engineering & Mining, and Harold Backer, our Executive Vice President, are both out on a trip right now and were -- they're not assessable to us lend their expertise to more properly answering your question.

So it sounds like about $15 million, $10 million or less and is that -- then how much in addition to that is there in overhead burned in other project outlay?

Those capital costs include quite a bit of our overhead costs in terms of labor and benefits on top of that that are charged into the capital of the project. But there's not a tremendous amount of overhead on top of that to be absorbed by the Company.

Okay. And could you give me some ideal -- a little comparison to the 850 foot roll front versus the one that's your immediate target? I think you're at 450 feet on the first one, I can't remember.

The HJ zone generally has an average depth of about 450 feet. Our KKM horizon is below that, would be having an average depth more in the 550 foot range and these as individual stratographic horizons generally have average depths to close to that throughout the Lost Creek project.

Finding an additional apparently fairly strongly mineralized front at 850 feet deep is very encouraging. It's the sort of thing that is going to require you know several hundred to over 1,000 holes to properly define as a front to add the proper resources to the operation. It's the sort of thing that we've done as we move forward.

But having a front at 850 feet is -- is a very comfortable depth for in situ mining because in Smith Ranch up at the Powder River Basin they're mining at in the 800 to 1,000 foot range now, and Kazakhstan they're mining as deep as 1,800 feet. So just the fact that we've defined a new front is very significant to us but it will be years before we're able to define that.

That .13% grade is -- how is that compared with your upper two zones?

It's -- well we have got -- received grades similar to that in our upper two zones but for the first hole into that is quite encouraging and we would be very interested as we go further along in developing that to get more holes into the deposit that exist there itself with the ideal of seeing if it can maintain a bit higher grade because that would be encouraging to us.

I should have it in front of me, but what's the average grade for your two upper zones that you're looking at?

Average grade at Lost Creek is .058%.

Oh, so you've only got one hole down to the deeper zone?

We -- right now we've got one hole in it. Yes.

Well that's a terrific first hole.

Yes, it is.

I'll let somebody else ask some questions.

Great. Thank you, David.

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

Hi, guys. How are you doing today?

Good. Good morning, David.

Hi, David.

Just I guess to continue on this new rural front system, is this in a new location or is this directly below the other two zones that you're currently drilling on?

It is not directly below the other zones but it is within the permit area and it's the -- and it's conceivable that the front could extend below areas that we have defined, but we don't have the drilling below them at this point in time to define that.

Okay. In which direction is it? Is this towards the south where the extension of the mineralization is going?

That's pretty much what -- yes, I would say you could probably say that. It is toward the southern portion. We did more drilling toward the southern area than we did to the north.

Okay, thanks. As far as deep disposal well -- were initially you planning on drilling two of these right now and you've just scaled back to one? Or am I just mistaken?

No, we had only -- we had only intended on one. We -- we had not considered two. We were always looking at the ideal that we'd be putting in one deep disposal well out there and we're doing the testing and the work on that right now.

Okay. And with that cash conservation, the name of the game, and maybe looking at potential CapEx cut back, you know you guys are focusing on Lost Creek production for 2010. Is there any portion of that plant that you might to be able to differ until you actually need additional capacity for Lost Soldier? Or it is just you know easy enough to go and build now?

That's one of the things that we'll be looking at as we get to the point of actually designing construction. As I mentioned earlier, our engineers, TREC Engineering, has just completed the preliminary design and specifications and the detailed work that they will be presenting within I believe the next week to our engineering staff in Casper. And we'll be going through a detailed review with that and having a far better handle on what these are and then working out the schedule of when that would make sense to build that.

The thing is that the -- an in situ plant is one that is not necessarily all that expensive in itself and many of the things we have to have in it we have to have in it. And having the capacity of two million pounds versus one million pounds may not be adding all that much individually from a -- to increase it to that level than it would to just be putting it in as a one million pound plant.

Now these sort of things we want to -- we will be looking at very carefully as we go over the approval of the construction design and the costs and all that and just seeing what -- what makes sense for us and moving forward.

Okay. Thanks for that. And then just finally any -- any update on your drying and packaging options. You know I understand you still need an outlook for that for perhaps maybe just one year with the delay?

Yes, we -- there's still several options that are open to us along that line. We have an agreement in everything but writing right now with one party. So it's just a matter of trying to decide whether it's something that makes sense for us to -- to move forward with.

We are not in a real hurry on that right now because we have plenty of time ahead of us and there's a lot of changes that can take place in the environment over the next two years.

Right. Okay. Thank you very much.

Thanks, Dave.

Your next question comes from the line of [Eric Ziontsurb] of Canaccord Adams.

Hi, gentlemen. Yes, that's [Eric Zontsurb].

Hi, Eric.

A couple of questions. I hope you're all doing well. On the preliminary economic assessment for Lost Soldier you mentioned some time next year, could you at least point us into first half or second half for next year?

We're leaving that fairly open right now, Eric, primarily because the -- with the demand of Lost Creek on the very same staff in Casper that are needed to do the work on Lost Soldier as well. And it's a matter of the planning and getting things worked out there so that we can get that planned and worked out as best we can.

We had originally hoped that we would be doing that in the first half of the year. I'm not willing to say that at this point in time particularly with our potential production coming out of Lost Creek being pushed off nearly another year by the NRC GEIS requirements now.

So it -- it -- it's taken a little bit of the heat off on trying to get some of these things done and it gives our -- our engineering staff a little bit more time to try and catch their breath and make sure that they're doing everything the way that they feel is the best way for them to do it.

Understood. Okay. It may have been my hearing or something, but I kind of got the impression from what you -- what you said that with the WEQ permit and license in place you might be able to start construction of plant and infrastructure in advance of getting the NRC permit and license? Is that correct?

There is currently discussions going on within the NRC and between industry and NRC on getting a proper definition of what construction can be done prior to the receipt of a license. As you may well be aware that the construction of a nuclear power plant enables the utility company to essentially complete the construction of the power plant prior to getting the license -- that is not allowed at this point in time for in situ operations and it's something that the NRC recognizes is inconsistent and we're currently working with -- with them and to get a better definition of what is allowed.

And we're hopeful that some time within the next several months to mid-year next year that we will have that as a clear definition and we'll know what could be possible and it could be possible that on receipt of a state license (inaudible) that we will be able to do things that we hadn't considered we could do before.

Got you. Okay, great.

But we have to wait for that to happen.

Understood. My final thing is actually a comment rather than a question and that is that clearly your share prices is responding in some cases some to doubt on the part of the market as to whether or not you have sufficient financial resources to get into production. You've mentioned to us today a couple of times that you've reviewed the budget and you've got a good handle and a lot of confidence in that. I think it would be helpful if you were to make a complete release on what your new anticipated CapEx might be and the timeline for spending that. I think that would go a long way to helping your share price.

You know it may very well, Eric. There -- there is some elements of that -- that seem to change fairly rapidly. For example we guided to the market a year that in 2008 we would be ordering long lead time items and now we've found that in some cases the lead times on some of those capital expenses have shortened and so it's -- it's been a great advantage to us. We can now delay those capital expenditures and preserve our cash as long as possible and so we intend to take full advantage of that.

As far as giving any further guidance to the market, we'll kick that around and decide what -- how much more we want to guide, but I think that our -- how much greater detail we would provide to the marketplace. But I think that we feel quite comfortable that -- that we can through to production based on the cash that we have on hand and of course I certainly appreciate the market's doubts. It seems as though there is a little more than doubt out there in the marketplace at this point in time.

But at least we're doing it with nearly $70 million in the bank and that's something that not many of our peers can say. So I actually feel quite good about the position we're in and we hope that the marketplace will come around to our way of thinking.

Okay. Thanks again for your guidance today.

All right. Thanks, Eric.

Thank you, Eric.

Your next question comes from the line of Duncan McKeen of Macquarie Capital.

Hi, guys, and good morning. I just wanted to ask a couple of questions. A lot of mine have been answered by the way -- I got towards the back of the line up.

But in terms of your cash, if I could just pick it apart a little bit. Roger, you mentioned that $30 million -- do you mean $30 million U.S. or is that CAN30 million Canadian converted over to U.S.?

In September when the exchange rate was about 1.06 we moved $25 million U.S. dollars out of our Canadian banks and into our U.S. banks. We already had a fair amount of money in U.S. dollars down here. So at the end of September we had $32.7 million in U.S. dollar funds in our banks either in our cash accounts, our cash equivalent accounts or in our bonding accounts.

Okay. The balance would have been Canadian dollars then?

Correct.

Okay. Out of the Canadian dollars I guess you have how much specifically allocated to flow through -- flow through exploration?

Well, earlier in the year we raised $2.7 million that was available for flow through funding. But I don't have the final figures yet because all of the invoices aren't in, we've spent a substantial amount of that. But there will be some left that we have to spend in the next -- next year.

Okay. So $2.7 mil. Okay, got it. And then just, guys, in terms of exploration expenditure I notice -- okay -- so on hold this North Lost Creek -- North Hadsell, Eagles Nest. With those on hold can you give us any guidance as to what exploration expenditure might look like '09, '10?

It's going to look very small.

Yes, okay.

We -- we're just tightening our belt to get us into production.

Okay.

And, Duncan, I guess it would be fair to say that we -- we tend to look at this as you know every company that's out there of course I think they spent more freely over the last couple of years and it's been a pretty good time from that standpoint, a time that's not often enjoyed in the mining space. So the capital has been flowing and it's been a pretty good time to go out and pursue pretty much whatever you want to as a company.

We -- again I reemphasize that we continue to keep our personnel busy advancing these projects and because we're -- we're not necessarily spending a lot of capital does not mean that we're sitting still. We will continue to advance the projects -- that is a high priority for us.

And candidly, at least from my view, I would stress to the marketplace that cutting back to the extent that we have is something that we believe is necessary in this market environment. If I -- if I had my druthers I'd continue to go out there and we -- we'd like to explore heavily -- we'd like to be doing a lot more things. But to a certain extent that's going to be dictated by market conditions. So if things free up a bit and we feel better about the capital and credit markets out there, we'll be more aggressive.

Okay.

Also along that line, saying that it's going to be small doesn't mean that it's not going to exist. We do have and have in our revised budget through 2010 an exploration budget included there. It is that it is just significantly smaller than our last couple years, but it does keep several projects going that we feel are important to keep going.

Okay. Okay. So I mean we're going to continue to see then drill results from for example this new roll front system you've identified down at 850 feet?

I would expect that there will be some results coming in from that -- that's something that's hard to pass up.

Yes, no kidding. Okay. In terms of -- in terms of the Bugs property, are your intentions there to just use up what's left of the $2.7 million in flow through for that property and then would you consider putting that one on hold as well?

That's open as far as where we would use any funds that are left right now. If it turns out that it would be Bugs, it'll be Bugs. If not, we would be looking to put it somewhere else.

Okay. Okay. That's all I've got, guys. Like I said I had about three or four other ones but the other guys asked them before I did. So I appreciate it. Thanks very much.

Thanks, Duncan.

Thanks, Duncan.

Your next question comes from the line of [Orrin McLusky] of [Equity Value Ventures].

Hi. So what will your cash burn be for Q4?

Hold on a second. I'm not sure because -- the problem with that question, Orrin, we have some fairly hefty accruals of September 30th. I think -- just a second -- yes, about $1.3 million and the bulk of those relate to drilling activity on the Lost Creek property during the third quarter. So we'll relieve those liabilities during the quarter and then we don't have much in other activity but there was some residual activity in October.

So there's likely to be a bit more there but other than that our program at Lost Creek ended. We ended the 2008 program and I don't anticipate much more spending other than the usual expenditures for our corporate overhead.

All right. So the CapEx side you're saying is probably under a couple of million?

Yes.

Okay. Because I notice it jumped probably for accruals it was a big item in the third quarter $5.5 million. It was a pretty big jump over the steady rate.

I'm not quite sure what you're talking about.

I'm just looking at deferred E&D expenditures for Q3 '08 --

Oh .

Yes.

Yes. Well that was the -- those weren't accrued those were actually incurred expenditures during the third quarter. At the end of the quarter we still have some accrued expenditures, you know invoices we've accrued but have not yet paid.

Okay. And what is your 40-101 measured and indicated figure? And when was it last updated?

We did our 43-101 reports on Lost Creek and Lost Soldier I believe they were published at SEDAR in 2006.

May of '06?

May or June of '06, somewhere in that timeframe. They are -- the specifics of those reports are listed on the two slides in this presentation that have to do with both Lost Creek and Lost Soldier. The total 43-101 on Lost Creek is around 11 million pounds. The total 43-101 on Lost Soldier is around 14 million pounds.

Okay. And when does that get updated again?

We haven't really been as concerned about updating resources or adding resources because we could have taken two tacks on what we're doing.

We could have gone into our deposit and gone at it with the ideal of what can we do to expand our resources and concentrate on our drilling on that.

Or we could've taken the tack that we did take of what do we need to do to advance these to production, to complete delineation of individual well field #1 to be able to move it forward, do a certain amount of exploration work to be able to define new areas that we want to move toward.

And when -- when we're in this position we chose the latter, that we want to move ourselves toward production and we know that we have resource there and we'll be developing it as we develop each additional well field. It's just that the amount of drilling that needs to be done -- we had seven drill rigs working out there this year. We'd have probably had to have 12 rigs working there year around to be able to do what we're doing as well as attempting to define resource and we'd be burning up money a lot quicker.

Our main consideration is getting ourselves into production and doing it as efficiently as we can. So our concern has not been to define resource. And you will find with our type of deposit we will never convert our resources to reserves. We'll be mining them before we attempt to even put them in a category we would consider to be reserves. So that the strict definitions of reserves and resources are the sort of thing that fall into a bit of a gray area when you start dealing with in situ mining and the type of work that we're doing.

I see. Thank you.

You're very welcome.

You're welcome.

Your next question comes from the line of [Robert Tung] of Hedgehog Capital.

Hi, how are you guys?

Yes, good.

Good morning.

I apologize. I missed the last part of the prepared remarks. Can you go through the timeline again regarding permitting for the Lost Creek, both on the NRC level and the WDEQ?

Okay. For both the NRC and the WDEQ both licenses are -- have been deemed complete by both agencies. They're both well into the technical review period to the point where we have received the request for additional information that are a common part of the process and we are in the process of answering those -- those requests at this point in time.

The -- the timing on completing those is -- is a bit uncertain at this point. Some of those like from the NRC we just received, we've been very active for probably well over a month now with the WDEQ request for additional information. So we're -- one of the things now that has -- has occurred with these license applications is that the NRC made the decision that rather than pursuing them individually and having individual site specific environmental impact statements completed on them that they would lump them all now under the new generic environmental impact statement -- the GEIS.

And the GEIS process they had originally defined as being completed in January of 2009 and they extended that completion time now to June of 2009. And it was that process that caused our -- our timeline to be extended. It had nothing to do with our application or anything in the review of our application. It was strictly the internal process and the way that the NRC decided to handle all three of the license applications that they currently have pending right now.

So that -- those of the sort of things -- so they complete their technical review and they have them done basically for all of those applications. They're just going to sit on them then until they complete the GEIS and wait for it to be completed before they would go about issuing the license. They have issued a contract to an environmental firm to complete the environmental assessments that are required for this.

Our understanding has been that the NRC environmental review board has been actively reviewing all of the licenses that they have in hand for the -- for the environmental assessment. They have now hired a contractor to turn that over to and -- and again, if -- if those are all completed prior to June of 2009, they're just going to sit on them until the GEIS is completed before they will issue a license.

Okay, so if the GEIS is completed in June of '09 -- I'm sorry, when were you expecting to get the NRC approval and --

We would expect --

-- would the WDEQ wait for that, too?

-- that assuming -- assuming that the GEIS is completed in June, we would anticipate very likely that our license would be issued probably in October. And the -- and that's -- that's the thing that is creating great discomfort for us because October is just immediately prior to the Wyoming winter which essentially precludes construction.

You know if we had the ability to construct prior to the receipt of the license we would probably be able to get into production earlier. But those are things that are all in the works at this point in time.

Okay. And then on the -- for the WDEQ approvals?

The WDEQ approval is moving along well and we would expect to be getting the WDEQ license very likely some time next spring.

So before the GEIS is complete?

Yes. Yes. It is not tied to the GEIS. It has nothing to do with the GEIS.

Okay, great. Thanks.

Thank you.

You bet. Thanks, Robert.

(Operator Instructions)

Your next question is a follow up question from the line of David Snow.

You may have just answered it, but you said the NRC requirements have pushed one of the projects off a year. Was that Lost Soldier?

It was Lost Creek, David.

Lost Creek. Okay.

The current license that the NRC has in hand that they were originally had told us that they were going to be doing as a site specific environmental impact statement that then they backed off and decided that every license application that they have in hand right now is going to fall under the generic environmental impact statement.

And therefore we -- by falling under that it -- it put our potential receipt of that license from say the end of the first quarter / early second quarter next year off into the fourth quarter of next year. And put us in a position where we have the inability to construction through the winter and therefore it essentially cost us a whole year.

Okay. And I'm wondering -- you mentioned there were three licenses. Those are all year licenses to them?

They are not our licenses, no. Uranium #1 has a license in for more [ranch] and [Uronix] has a license in for the [Hank] and [Nichols] properties.

Okay. I see. Now on the conference call Cameco said that they were stretching out their ISR schedules because of regulatory delays and [ramming]. Is this probably what was affecting them, too?

I had not heard that they were being affected by -- by the GEIS but I think if they had a new application that they were putting in I would expect that it would be, yes.

Okay. And in terms of an update on the market, can you give us any pithy remarks?

I don't know if we'd go right to pithy, but --

Any kind of hope or -- I picked up the $48 nobody cares.

It's been real soft lately, there's no question about it. There's too many -- too many players that got in that needed liquidity and they were willing to sell off at whatever price they could get for it just to get the liquidity. Just kind of like with our share price I believe. And it -- it has affected the entire market that way.

And hopefully the majority of those folks that were desperate for cash have sold the uranium that they had at whatever price they could and it will enable the spot price to start coming back up again and that we all believe with the basic fundamentals of the uranium market it will come back. It's just exactly what the timing is I don't know.

I've heard that China has increased its expected amounts of capacity to be operating to something like 70,000 megawatts by 2020 -- have you heard that?

Yes, we have.

We have but it came out the end of last week, I believe?

Yes, it did.

Does that sound credible?

Yes, it did. I think anything the Chinese say they're going to plan on building is probably credible. They -- they're pretty incredible in their way of being able to mobilize and make things happen.

Yes, we -- we have said for some time that viewing the U.S. marketplace only by itself is something of a mistake and I think it's going to be misleading. We think that the demand from outside of the United States is going to have a far greater impact in the next few years than -- than what we're doing here internally.

We probably won't be characterized by nearly as much build out as other parts of the world and the fact is that -- like you mentioned -- with China they're building much more quickly than we are in most other areas and eventually we believe that demand is going to be felt in a very profound way.

And then I just wondered -- you kind of mentioned in your prepared remarks production in the second half '09 and then official '10, I guess the wiggle room there is if you can get some early construction allowance?

Yes, our guidance is for second half 2010 at this point in time and I think yes, your take away from that is correct. Any -- any assistance or any help we can get in terms of our ability to pre-construct is certainly going to be helpful to us.

And then just one last one -- [Halber] is that -- did the partner run out of money or run out of prospects?

They -- well our partner made the decision that the phosphate business was more attractive than the uranium business and changed their market focus out of uranium to phosphate.

So it wasn't a matter of disappointing results?

No.

Okay. Thank you very much.

You're very welcome.

Thank you, David.

I see we have a question that has come online through the email and this is a question from [Marian Graham]. Do you anticipate any permitting delays due to environmental objection or activism by interest groups?

At this point in time, no, we do not anticipate that. Wyoming has been a very positive place to operate in. We have been for a long time working very closely with all the communities in the region of our Lost Creek project and having discussions with -- with the public, discussions with the County Commissioners, discussions with any responsible parties within the area, and at this point in time we have had nothing but 100% support of the work that we're doing.

That doesn't mean that there might not be someone coming from the outside trying to stir up some problems, but in Wyoming my suspicion is they're going to run into difficulty if they attempt to do that.

Are there any other questions?

You have a follow up question from the line of Duncan McKeen.

Thanks very much. Guys, I just thought of one thing I forgot to ask. On the -- with the Boothill property in terms of target, do you know what their timing is in terms of release of a 43-101 and have they offered any potential guidance on -- on the size of the resource that they're trying to define?

Well, Duncan, we -- we know internally what it is that gearing toward but there's -- and I think that they have made statements in their press releases as far as historic resources that have been defined by other parties. What they're hoping to end up with on the 43-101 we have no guidance from them as to where they expect to be and I think if we did we couldn't tell you right now anyway.

Yes. I understand. Okay. Do you have any ideal of the timing in terms of release?

I don't. No, Duncan. Sorry.

Okay. Thanks, guys.

You bet, Duncan.

Thanks, Duncan.

And you have no further questions.

Wonderful. Once again, ladies and gentlemen, thank you very much. I hope that you will continue to find value in these -- in these quarterly updates. We will continue to hold ourselves to a high level of -- of transparency and in this marketplace, of course, we're all finding it very challenging right now but we feel very good about our positioning moving forward and we will look forward to our next quarterly update that we will hold in probably early February, I would imagine. So again, thank you all for your -- for your attendance and we'll talk to you next quarter.

Thanks for your participation in today's conference. This concludes the presentation. And you may now disconnect.