As Uranerz Energy (URZ-T, URZ-X) drives to put its part of Wyoming’s Powder River Basin into commercial production this year, it will likely have to top up its coffers.
The company’s year end results showed a loss of $14.5 million or 19¢ per share. Operating cash flow for the year came in at $13.7 million, or 18¢ per share, and it finished the year with $7 million in cash.
“We expect the company will need to raise additional funds in the immediate future by way of debt or equity,” Colin Healey, an analyst with Haywood Securities wrote in his recent report on the company. “We model a $15 million financing in early 2013.”
Last year’s financial results reveal a telling detail on the positive side. Uranerz has been tightening its belt as it gears up for production as last year’s loss came in 20% less than its loss for the year previous — largely thanks to cutting administrative expenses in half. Administrative costs came down to $6.3 million from the $13 million the year previous.
The company also restated the previous year’s financial statement to adjust its treatment of development costs, which had been capitalized rather than expensed. The adjustment merely means that the prior year will now show a greater accounting loss, but reported cashflows are unaffected.
“Despite the restating of previous year’s financials, there is no material impact to Uranerz at present,” Healey wrote.
Uranerz has National Instrument 43-101 compliant resource estimates for seven different properties in the Basin, but it is the Nichols Ranch project that will be the first to reach production as an in-situ recovery plant is currently under construction there.
Once it gets Nichols Ranch into production later this year, the aim is to use the facility to process uranium from five other satellite deposits such as Hank, Jane Dough, Reno Creek and West North Butte.
All told the company has outlined 15.7 million lbs of U308 in the measured and indicated category with an average grade of 0.103% U3O8. Nichols Ranch accounts for 2.949 million of those pounds and has an average grade of 0.114% U3O8.
The project has been licensed to produce up to 2 million lbs of U3O8 per year and Uranerz expects that all-in cash costs will come in at US$35 per lb.
Last year the company did extensive exploration at Powder River Basin, drilling 84 holes for 85,365 metres across a suite of properties. Uranerz is the dominant player in the Powder River Basin by claim size, followed by Cameco (CCO-T, CCJ-N) and Uranium One (UUU-T).
As for what this year holds for the company, beyond focusing on finishing construction at Nichols Ranch, it will also submit a mine application with the U.S. Nuclear Regulatory Commission for its Jane Dough property.
In Toronto on Apr. 1 the company’s shares were off 5% or 7¢ to $1.23 on 41,000 shares traded. Over the last 52-week period its share price has fluctuated between $1.12 and $2.58 and the company has 77.2 million shares outstanding, 88.4 million on a fully diluted basis.