UNITED
STATES
  SECURITIES
AND EXCHANGE COMMISSION
  WASHINGTON,
D.C. 20549
   FORM
20-F
   (Mark
      One)
  £   
      REGISTRATION STATEMENT
      PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
      1934
  OR
  Q   
      ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For
      the fiscal year ended December 31,
2008
  OR
  £   
      TRANSITION REPORT PURSUANT
      TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  OR
  £   
      SHELL COMPANY REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 Date
      of event requiring this shell company
      report...................
   For the transition period from
___________________________to _______________________
   Commission
file number 001-33905
  UR-ENERGY
      INC.(Exact
      name of Registrant as specified in its charter)
                
                N/A
                (Translation
      of Registrant’s name into English)Canada(Jurisdiction
      of incorporation or organization)10758
      W. Centennial Road, Suite 200, Littleton, Colorado
80127(Address
      of principal executive offices)Roger Smith, (720) 981-4588,roger.smith@ur-energyusa.com, 10758 W. Centennial Road, Suite
      200, Littleton, Colorado 80127(Name,
      Telephone, E-mail and/or Facsimile number and Address of Corporation
      Contact Person)Securities
      registered or to be registered pursuant to Section 12(b) of the
      Act.
 
 Title
      of each class
              
              
              Name
      of each exchange on which registeredCommon
      Shares, no par value
              
              
              NYSE
      AmexSecurities
      registered or to be registered pursuant to Section 12(g) of the
      Act.None(Title
      of Class)
  Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act.
  None(Title
      of Class)
  Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual
report.
  93,243,607
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
  £ 
Yes            
Q 
No
  If this
report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
  £ 
Yes            
Q 
No
  Note –
Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
  Q 
Yes            
£ 
No
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
One):
  Large accelerated filer£Accelerated filer£Non-accelerated filerQ
  
 
  Indicate by check mark which basis of
accounting the registrant has used to prepare the financial statements included
in this filing:
  U.S. GAAP £                                International
Financial Reporting Standards as issuedOther Q
 By the International Accounting Standards Board  £
 
 If
“Other” has been checked in response to the previous question, indicate by check
mark which financial statement item the registrant has elected to
follow.
  QItem
17            £  Item
18
  If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
  £ 
Yes            
Q 
No
  (APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS)
  Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
  £ 
Yes            
£ 
No
  
 
 
 
  TABLE
OF CONTENTS
  PART
      IIntroductionForward-Looking
      InformationCautionary
      Note to U.S. Investors Concerning Resource EstimatesMetric/Imperial
      Conversion TableItem
      1. Identity of Directors, Senior Management and AdvisersItem
      2. Offer Statistics and Expected TimetableItem
      3. Key InformationA. Selected
      financial data.Currency
      and Exchange RatesB. Capitalization
      and indebtedness.C. Reasons for
      the offer and use of proceeds.D. Risk
      factors.Item
      4. Information on the Corporation.A.History and Development of
      the Corporation.B.Business
      overview.C.
      Organizational
      Structure.D.Property, plants and
      equipment.Item
      4A. Unresolved Staff Comments.Item
      5. Operating and Financial Review and Prospects.A. Operating
      results.B. Liquidity
      and capital resources.C. Research
      and development, patents and licenses, etc.D. Trend
      information.E. Off-balance
      sheet arrangements.F. Tabular
      disclosure of contractual obligations.Item
      6. Directors, Senior Management and Employees.A.
              Directors
      and senior management.B.
              Compensation.C.
              Board
      practices.D.
              Employees.E.
              Share
      ownership.Item
      7. Major Shareholders and Related Party TransactionsA.
              Major
      shareholders.B.
              Related
      party transactions.C.
              Interests
      of experts and counsel.Item
      8. Financial InformationA.
              Consolidated
      Statements and Other Financial Information.B.
              Significant
      Changes.Item
      9 The Offer and ListingA.
              Offer
      and listing details.B.
              Plan
      of distribution.C.
              Markets.D.
              Selling
      shareholders.E.
              Dilution.F.
              Expenses
      of the issue.Item
      10. Additional InformationA.
              Share
      capital.B.
              Memorandum
      and articles of association.C.
              Material
      contracts.D.
              Exchange
      controls.E.
              Taxation.F.
              Dividends
      and paying agents.G.
              Statement
      by experts.H.
              Documents
      on display.I.
              Subsidiary
      Information.Item
      11. Quantitative and Qualitative Disclosures About Market
    Risk(A)
      Quantitative information about market risk.(B)
      Qualitative information about market risk.Item
      12. Description of Securities Other than Equity SecuritiesPART
      IIItem
      13. Defaults, Dividend Arrearages and DelinquenciesItem
      14. Material Modifications to the Rights of Security Holders and Use of
      ProceedsItem
      15. Controls and ProceduresItem
      15. Controls and Procedures.Item
      15T. Controls and Procedures.Item
      16. [Reserved]Item
      16A. Audit Committee Financial Expert.Item
      16B. Code of Ethics.Item
      16C. Principal Accountant Fees and Services.Item
      16D. Exemptions from the Listing Standards for Audit
      Committees.Item
      16E. Purchases of Equity Securities by the Issuer and Affiliated
      Purchasers.Item
      16F. Change in Registrant’s Certifying Accountant.Item
      16G. Corporate Governance.PART
      IIIItem
      17. Financial Statements.Item
      18. Financial Statements.Item
      19. Exhibits.EXHIBIT
      INDEX
   
  PART
I
  Introduction
  Ur-Energy
Inc. is a corporation incorporated under the laws of Canada and is referred to
in this document, together with its subsidiaries, as "Ur-Energy" or the
"Corporation" or the “Company”.
  The
Corporation’s consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP") and are
presented in Canadian dollars unless otherwise indicated. All references in this
Annual Report on Form 20-F (Annual Information Form) to financial information
concerning the Corporation refer to such information in accordance with Canadian
GAAP and all dollar amounts in this Annual Report on Form 20-F (Annual
Information Form) are in Canadian dollars unless otherwise
indicated.
  In this document, cross-references
relevant to the information being requested may be provided. These
cross-references are provided for ease of reference only and are not meant to be
exclusionary to other relevant information in this document that may relate to
the disclosure in question.
  Forward-Looking
Information
  This
Annual Report on Form 20-F (Annual Information Form) contains "forward-looking
statements" within the meaning of applicable United States and Canadian
securities laws. Shareholders can identify these forward-looking statements by
the use of words such as "expect", "anticipate", "estimate", "believe", "may",
"potential", "intends", "plans" and other similar expressions or statements that
an action, event or result "may", "could" or "should" be taken, occur or be
achieved, or the negative thereof or other similar statements. These statements
are only predictions and involve known and unknown risks, uncertainties and
other factors which may cause the Corporation’s actual results, performance or
achievements, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by these
forward-looking statements. Such statements include, but are not limited to: (i)
the Corporation’s belief that it will have sufficient cash to fund its capital
requirements; (ii)receipt of (and related
timing of) a US Nuclear Regulatory Commission  Source Material
License, Wyoming Department of Environmental Quality  Permit and
License to Mine and other necessary permits related to Lost Creek; (iii) Lost
Creek and Lost Soldier will advance to production and the production timeline at
Lost Creek scheduled for late 2010; (iv) production rates,
timetables and methods at Lost Creek and Lost Soldier; (v) the Corporation’s
procurement plans and construction plans at Lost Creek; (vi) the licensing
process at Lost Soldier which efforts are expected to be streamlined; (vii) the
timing, the mine design planning and the preliminary assessment at Lost Soldier;
(viii) the completion and timing of various exploration programs and (ix) the
regulatory issues with the Thelon Basin Properties and related
exploration.  These other factors include, among others, the
following: future estimates for production, production start-up and operations
(including any difficulties with start up),  capital expenditures,
operating costs, mineral resources, recovery rates, grades and prices; business
strategies and measures to implement such strategies; competitive strengths;
estimated goals; expansion and growth of the business and operations; plans and
references to the Corporation’s future successes; the Corporation’s history of
operating losses and uncertainty of future profitability; the Corporation’s
status as an exploration and development stage Corporation; the Corporation’s
lack of mineral reserves; the hazards associated with mining construction and
production; compliance with environmental laws and regulations; risks associated
with obtaining permits in Canada and the United States; risks associated with
current variable economic conditions; the possible impact of future financings;
uncertainty regarding the pricing and collection of accounts; risks associated
with dependence on sales in foreign countries; the possibility for adverse
results in potential litigation; fluctuations in foreign exchange rates;
uncertainties associated with changes in government policy and regulation;
uncertainties associated with the Canadian Revenue Agency’s audit of any of the
Corporation’s cross border transactions; adverse changes in general business
conditions in any of the countries in which the Corporation does business;
changes in the Corporation’s size and structure; the effectiveness of the
Corporation’s management and its strategic relationships; risks associated with
the Corporation’s ability to attract and retain key personnel; uncertainties
regarding the Corporation’s need for additional capital; uncertainty regarding
the fluctuations of the Corporation’s quarterly results; uncertainties relating
to the Corporation’s status as a non-U.S. corporation;
 
 - 3
-
 
 uncertainties
related to the volatility of the Corporation’s shares price and trading volumes;
foreign currency exchange risks; ability to enforce civil liabilities under U.S.
securities laws outside the United States; ability to maintain the Corporation’s
listing on the NYSE Amex (the “NYSE Amex”) and Toronto Stock Exchange (the
“TSX”); risks associated with the Corporation’s possible status as a "passive
foreign investment Corporation" or a "controlled foreign corporation" under the
applicable provisions of the U.S. Internal Revenue Code of 1986, as amended;
risks associated with the Corporation’s investments and other risks and
uncertainties described under the heading “Risk Factors” of this Annual Report
on Form 20-F (Annual Information Form).
 
 Cautionary
Note to U.S. Investors - Resource and Reserve Estimates
 
 The terms
“mineral reserve,” “proven mineral reserve” and “probable mineral reserve” used
in the Corporation’s disclosure are Canadian mining terms that are defined in
accordance with National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”) under the guidelines set out in the Canadian Institute of
Mining, Metallurgy and Petroleum (the “CIM”) Best Practice Guidelines for the
Estimation of Mineral Resource and Mineral Reserves (the “CIM Standards”),
adopted by the CIM Council on November 23, 2003. These definitions differ from
the definitions in the United States Securities and Exchange Commission (the
“SEC”) Industry Guide 7 under the Securities Act of 1933, as amended (the
“Securities Act”). Under Industry Guide 7 standards, mineralization may not be
classified as a “reserve” unless the determination has made that the
mineralization could be economically and legally produced or extracted at the
time the reserve determination is made.  Under Industry Guide 7
standards, a “final” or “bankable” feasibility study is required to report
reserves, the three-year historical average price is used in any reserve or cash
flow analysis to designate reserves and the primary environmental analysis or
report must be filed with the appropriate governmental authority.
 
 The terms
“mineral resource,” “measured mineral resource,” “indicated mineral resource”
and “inferred mineral resource” used in the Corporation’s disclosure are
Canadian mining terms that are defined in accordance with NI 43-101 under the
guidelines set out in the CIM Standards; however, these terms are not defined
terms under Industry Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC.  Investors are
cautioned not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves.  “Inferred mineral
resources” have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic feasibility.  It cannot be assumed
that all or any part of an inferred mineral resource will ever be upgraded to a
higher category.  Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or pre-feasibility studies,
except in rare cases.  Investors are cautioned not to assume that all
or any part of an inferred mineral resource exists or is economically
mineable.
 
 Accordingly,
information contained in this report containing descriptions of the
Corporation’s mineral deposits may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure requirements
under the United States federal securities laws and the rules and regulations
thereunder.
 
 Metric/Imperial
Conversion Table
 
 The
imperial equivalents of the metric units of measurement used in this Annual
Report on Form 20-F (Annual Information Form) are as follows:
  Metric
      Unit
              
              Imperial
      Equivalentgram
              
              0.03215 troy
      ounceshectare
              
              2.4711
    acreskilogram
              
              2.2046223
      poundskilometer
              
              0.62139
    milesmeter
              
              3.2808
feettonne
              
              1.1023 short
      tons
  - 4
-
 Item
1. Identity of Directors, Senior Management and Advisers.
  Not
applicable.
  Item
2. Offer Statistics and Expected Timetable.
  Not
applicable.
  Item
3. Key Information.
  A.Selected financial
data.
   The
following table summarizes certain of the Corporation’s selected financial
information (stated in thousands of Canadian dollars) prepared in accordance
with Canadian GAAP. The information in the table was derived from the more
detailed financial statements for the period ended December 31, 2006 through the
fiscal year ended December 31, 2008, inclusive, and the related notes, and
should be read in conjunction with the financial statements and with the
information appearing under the headings "Item 5 – Operating and Financial
Review and Prospects" and "Item 18 – Financial
Statements". As discussed in Item 5, in December 2008, the Company
changed its policy for accounting for exploration and development
expenditures.  In prior years, the Company capitalized all direct
exploration and development expenditures.  Under its new policy,
exploration, evaluation and development expenditures, including annual
exploration license and maintenance fees, are charged to earnings as incurred
until the mineral property becomes commercially mineable. Management considers
that a mineral property will become commercially mineable when it can be legally
mined, as indicated by the receipt of key permits.  This change has
been applied retroactively and all comparative amounts in Management’s
Discussion and Analysis (“MD&A”) have been restated to give effect to this
change. Certain comparative figures have been reclassified to conform with the
presentation adopted for the current year.
   Historical
results are not necessarily indicative of results to be expected for any future
period. No dividends have been paid in any of the fiscal years ended December
31, 2006 through the fiscal year ended December 31, 2008.
  2008
              
              
              2007
              
              
              2006
              
              
              2005
              
              
              2004(In
      thousands of Canadian dollars)(As
      restated)
              
              
              (As
      restated)
              
              
              (As
      restated)
              
              
              (As
    restated)Results from
      operationsRevenue
              
              Nil
              
              
              Nil
              
              
              Nil
              
              
              Nil
              
              
              NilTotal
      expenses
              
              
              (25,968
              )
              
              
              (22,959
              )
              
              
              (12,396
              )
              
              
              (6,151
              )
              
              
              (3,406
              )Interest
      income
              
              
              2,494
              
              
              
              2,816
              
              
              
              630
              
              
              
              127
              
              
              
              11Foreign
      exchange gain (loss)
              
              
              5,656
              
              
              
              (806
              )
              
              
              (177
              )
              
              
              908
              
              
              
              (13
              )Other
      income (loss)
              
              
              (37
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Loss
      before income taxes
              
              
              (17,854
              )
              
              
              (20,949
              )
              
              
              (11,943
              )
              
              
              (5,116
              )
              
              
              (3,408
              )Recovery
      of future income taxes
              
              
              -
              
              
              
              429
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              (17,854
              )
              
              
              (20,520
              )
              
              
              (11,943
              )
              
              
              (5,116
              )
              
              
              (3,408
              )Net
      loss per share, basic and diluted
              
              
              (0.19
              )
              
              
              (0.24
              )
              
              
              (0.20
              )
              
              
              (0.15
              )
              
              
              (0.36
              )Financial
      positionTotal
      assets
              
              
              101,533
              
              
              
              110,931
              
              
              
              59,927
              
              
              
              38,000
              
              
              
              5,010Capital
      stock and additional paid-in capital
              
              
              157,118
              
              
              
              149,826
              
              
              
              64,137
              
              
              
              26,698
              
              
              
              7,224Accumulated
      deficit and accumulated other comprehensive loss
              
              
              (58,841
              )
              
              
              (40,987
              )
              
              
              (20,467
              )
              
              
              (8,524
              )
              
              
              (3,408
              )Net
      assets
              
              
              98,277
              
              
              
              108,839
              
              
              
              43,670
              
              
              
              18,175
              
              
              
              3,816Outstanding
      shares, in thousands
              
              
              93,244
              
              
              
              92,172
              
              
              
              73,475
              
              
              
              47,204
              
              
              
              23,644
  - 5
-
  Currency
and Exchange Rates
   The following table sets out the
exchange rates for currencies expressed in terms of equivalent Canadian dollars
for one U.S. dollar in effect at the end of the following periods, and the
average exchange rates:
  Year
      Ended December 31Canadian
      dollar
              
              2008
              
              
              2007
              
              
              2006
              
              
              2005
              
              
              2004End
      of period
              
              $
              1.22280
              
              
              $
              0.98200
              
              
              $
              1.16640
              
              
              $
              1.16600
              
              
              $
              1.20480Average
      for the period
              
              $
              1.06669
              
              
              $
              1.07440
              
              
              $
              1.13461
              
              
              $
              1.21173
              
              
              $
              1.30151
  
 Canadian
      dollar
              
              July
                2008
              
              
              August
                2008
              
              
              September
      2008
              
              
              October
      2008
              
              
              November
      2008
              
              
              December
      2008High
      for the month
              
              $
              1.02720
              
              
              $
              1.07270
              
              
              $
              1.08190
              
              
              $
              1.30130
              
              
              $
              1.2980
              
              
              $
              1.30050Low
      for the month
              
              $
              0.99730
              
              
              $
              1.02130
              
              
              $
              1.02960
              
              
              $
              1.0416
              
              
              $
              1.14600
              
              
              $
              1.18160
  Exchange
rates are the historical interbank foreign exchange rates for the appropriate
period as quoted by OANDA Corporation on its website www.oanda.com.  The
rate quoted by OANDA for the conversion of United States dollars into Canadian
dollars on March 18,2009
is CDN$1.27160 = US$1.00.
 
 B.Capitalization and
indebtedness.
  Not
applicable.
  C.Reasons for the offer and use of
proceeds.
  Not
applicable.
  D.Risk factors.
  The
Corporation operates in a dynamic and rapidly changing environment that involves
numerous risks and uncertainties. The risks described below should be considered
carefully when assessing an investment in the Corporation’s common
shares.  The occurrence of any of the following events could harm the
Corporation. If these events occur, the trading price of the Corporation’s
common shares could decline, and shareholders may lose part or even all of their
investment.
  The
Corporation faces numerous risks as an exploration and development stage
company.
  The
Corporation is engaged in the business of acquiring and exploring mineral
properties in the hope of locating economic deposits of minerals. The
Corporation’s property interests are in the exploration and development stage
only. Accordingly, there is little likelihood that the Corporation will realize
profits in the short term. Any profitability in the future from the
Corporation’s business will be dependent upon development of an economic deposit
of minerals and further exploration and development of other economic deposits
of minerals, each of which is subject to numerous risk factors. Further, there
can be no assurance, even when an economic deposit of minerals is located, that
any of the Corporation's property interests can be commercially mined. The
exploration and development of mineral deposits involve a high degree of
financial risk over a significant period of time which a combination of careful
evaluation, experience and knowledge of
  - 6
-
 
 management
may not eliminate. While discovery of additional ore-bearing structures may
result in substantial rewards, few properties which are explored are ultimately
developed into producing mines.  It is impossible to ensure that the
current exploration programs of the Corporation will result in profitable
commercial mining operations. The profitability of the Corporation's operations
will be, in part, directly related to the cost and success of its exploration
and development programs which may be affected by a number of factors.
Substantial expenditures are required to establish resources and reserves which
are sufficient to commercially mine some of the Corporation's properties and to
construct, complete and install mining and processing facilities in those
properties that are actually mined and developed.
  The
price of uranium is affected by demand.
  The price
of uranium fluctuates. The future direction of the price of uranium will depend
on numerous factors beyond the Corporation’s control including international,
economic and political trends, governmental regulations, expectations of
inflation, currency exchange fluctuations, interest rates, global or regional
consumption patterns, speculative activities and increased production due to new
extraction developments and improved extraction and production methods. The
effect of these factors on the price of uranium, and therefore on the economic
viability of the Corporation’s properties, cannot accurately be predicted. As
the Corporation is only at the exploration and development stage, it is not yet
possible for it to adopt specific strategies for controlling the impact of
fluctuations in the price of uranium.
  The
only market for uranium is nuclear power plants world wide, and there are a
limited number of customers.
  The
marketability of uranium and acceptance of uranium mining is subject to numerous
factors beyond the control of the Corporation. The price of uranium may
experience volatile and significant price movements over short periods of time.
Factors affecting the market and price include demand for nuclear power,
political and economic conditions in uranium mining, producing and consuming
countries, reprocessing of spent fuel and the re-enrichment of depleted uranium
tails or waste, sales of excess civilian and military inventories (including
from the dismantling of nuclear weapons) by governments and industry
participants, and production levels and costs of production in geographical
areas such as Russia, Africa and Australia.
  Deregulation
of the electrical utility industry and acceptance of nuclear energy affects the
demand for uranium.
  The
Corporation’s future prospects are tied directly to the electrical utility
industry worldwide. Deregulation of the utility industry, particularly in the
United States and Europe, is expected to affect the market for nuclear and other
fuels for years to come, and may result in a wide range of outcomes including
the expansion or the premature shutdown of nuclear
reactors.  Maintaining the demand for uranium at current levels and
future growth in demand will depend upon acceptance of the nuclear technology as
a means of generating electricity.  Lack of public acceptance of
nuclear technology would adversely affect the demand for nuclear power and
potentially increase the regulation of the nuclear power industry.
  The
Corporation’s share price is subject to significant fluctuations.
  The value
of the Corporation’s common shares could be subject to significant fluctuations
in response to variations in quarterly and yearly operating results, the success
of the Corporation's business strategy, competition, financial markets,
commodity prices or applicable regulations which may affect the business of the
Corporation and other factors.
  While the
Corporation has mineral resources, it currently does not have any mineral
reserves.  Calculations of
mineral resources and recovery are only estimates, and there can be no assurance
about the quantity and grade of minerals until reserves or resources are
actually mined.
  Until
reserves or resources are actually mined and processed, the quantity of reserves
or resources and grades must be considered as estimates only. In addition, the
quantity of reserves or resources may vary depending on
  - 7
-
 
 commodity
prices. Any material change in the quantity of resources, grade, or production
costs   may affect the economic viability of the Corporation’s
properties.
  The
Corporation is dependent on key personnel, contractors and service providers,
the loss of whom could harm the Corporation’s business.
  Shareholders
will be relying on the good faith, experience and judgment of the Corporation’s
management and advisors in supervising and providing for the effective
management of the business and the operations of the Corporation and in
selecting and developing new investment and expansion opportunities. The
Corporation may need to recruit additional qualified employees, contractors and
service providers to supplement existing management, the availability of which
cannot be assured. The Corporation will be dependent on a relatively small
number of key persons including specifically W. William Boberg, President and
Chief Executive Officer, Harold Backer, Executive Vice President, Geology &
Exploration and Wayne Heili, Vice President, Mining & Engineering, the loss
of any one of whom could have an adverse effect on the Corporation’s business
and operations.  The Corporation does not hold key man insurance in
respect of any of its executive officers.
  Mining
operations involve a high degree of risk and the results of exploration and
ultimate productions are highly uncertain.
  The
exploration for, and development of, mineral deposits involves significant risks
which a combination of careful evaluation, experience and knowledge may not
eliminate. While the discovery of an ore body may result in substantial rewards,
few properties which are explored are ultimately developed into producing mines.
Major expenses may be required to establish ore reserves, to develop
metallurgical processes and to construct mining and processing facilities at a
particular site. It is impossible to ensure that the current exploration and
development programs planned by the Corporation will result in a profitable
commercial operation.
  Whether a
mineral deposit will be commercially viable depends on a number of factors, some
of which are the particular attributes of the deposit, such as size, grade and
proximity to infrastructure, as well as uranium prices which are highly cyclical
and government regulations, including regulations relating to prices, taxes,
royalties, land tenure, land use, importing and exporting of uranium and
environmental protection. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in the Corporation
not receiving an adequate return on invested capital.
  Mining
operations generally involve a high degree of risk. The Corporation's operations
will be subject to all the hazards and risks normally encountered in the
exploration and development of uranium, including unusual and unexpected geology
formations, flooding and other conditions involved in the drilling and removal
of material, any of which could result in damage to, or destruction of, mines
and other producing facilities, damage to life or property, environmental damage
and possible legal liability.
  Permitting,
licensing and approval processes are required for the Corporation’s operations
and obtaining and maintaining these permits and licenses is subject to many
conditions which the Corporation may be unable to achieve.
  Many of
the operations of the Corporation require licenses and permits from various
governmental authorities. The Corporation believes it holds or is in the process
of obtaining all necessary licenses and permits to carry on the activities which
it is currently conducting under applicable laws and regulations. Such licenses
and permits are subject to changes in regulations and changes in various
operating circumstances. There can be no guarantee that the Corporation will be
able to obtain all necessary licenses and permits that may be required to
maintain its exploration and mining activities including constructing mines or
milling facilities and commencing operations of any of its exploration
properties. In addition, if the Corporation proceeds to production on any
exploration property, it must obtain and comply with permits and licenses which
may contain specific conditions concerning operating procedures, water use, the
discharge of various materials into or on land, air or water, waste disposal,
spills, environmental studies, abandonment and restoration plans and financial
assurances. There can be no assurance that the Corporation will be able to
obtain such permits and licenses or that it will be able to comply with any such
conditions.
 
 - 8
-
 
 The
Corporation’s operations are subject to many regulatory
requirements.
  The
Corporation's business is subject to various federal, state, provincial and
local laws governing prospecting and development, taxes, labor standards and
occupational health, mine and radiation safety, toxic substances, environmental
protection and other matters. Exploration and development are also subject to
various federal, state, provincial and local laws and regulations relating to
the protection of the environment. These laws impose high standards on the
mining industry to monitor the discharge of waste water and report the results
of such monitoring to regulatory authorities, to reduce or eliminate certain
effects on or into land, water or air, to progressively restore mine properties,
to manage hazardous wastes and materials and to reduce the risk of worker
accidents. A violation of these laws may result in the imposition of substantial
fines and other penalties and potentially expose the Corporation to
litigation.  There can be no assurance that the Corporation will be
able to meet all the regulatory requirements in a timely manner or without
significant expense or that the regulatory requirements will not change to delay
or prohibit the Corporation from proceeding with certain exploration and
development.
  Possible
Amendment to Mining law of 1872 may significantly impact the Corporation’s
ability to develop certain unpatented mining claims.
  Members
of the United States Congress have repeatedly introduced bills which would
supplant or alter the provisions of the United States Mining Law of 1872, as
amended. If enacted, such legislation could change the cost of holding
unpatented mining claims and could significantly impact the Corporation’s
ability to develop mineralized material on unpatented mining claims. Such bills
have proposed, among other things, to either eliminate or greatly limit the
right to a mineral patent and to impose a federal royalty on production from
unpatented mining claims. Although it is impossible to predict at this point
what any legislated royalties might be, enactment could adversely affect the
potential for development of such mining claims and the economics of existing
operating mines on federal unpatented mining claims. Passage of such legislation
could adversely affect the financial performance of the
Corporation.
  Competition
from larger or better capitalized companies may affect the Corporation’s share
prices and the Corporation’s ability to acquire properties.
  The
international uranium industry is highly competitive. The Corporation's
activities are directed toward the search, evaluation, acquisition and
development of uranium deposits. There is no certainty that the expenditures to
be made by the Corporation will result in discoveries of commercial quantities
of uranium deposits. There is aggressive competition within the mining industry
for the discovery and acquisition of properties considered to have commercial
potential. The Corporation will compete with other interests, many of which have
greater financial resources than it will have, for the opportunity to
participate in promising projects. Significant capital investment is required to
achieve commercial production from successful exploration and development
efforts.
  Nuclear
energy competes with other sources of energy, including oil, natural gas, coal
and hydro-electricity. These other energy sources are to some extent
interchangeable with nuclear energy, particularly over the longer term. Lower
prices of oil, natural gas, coal and hydro-electricity may result in lower
demand for uranium concentrate and uranium conversion services. Furthermore, the
growth of the uranium and nuclear power industry beyond its current level will
depend upon continued and increased acceptance of nuclear technology as a means
of generating electricity. Because of unique political, technological and
environmental factors that affect the nuclear industry, the industry is subject
to public opinion risks which could have an adverse impact on the demand for
nuclear power and increase the regulation of the nuclear power
industry.
  Uncertain
global economic conditions will affect the Corporation and its common share
price.
  Current
conditions in the domestic and global economies are uncertain. There continues
to be a high level of market instability and market volatility with
unpredictable and uncertain financial market projections. The impacts of a
global recession or depression, commodity price fluctuations, the availability
of capital and the acceptance of nuclear energy may have consequences on the
Corporation and its share price.  In addition, it could have
consequences on the nuclear industry’s ability to finance future construction of
nuclear generating facilities.  Global financial problems and lack of
confidence in the strength of global financial institutions have
 
 - 9
-
 
 created
many economic and political uncertainties that have impacted the global economy.
As a result, it is difficult to estimate the level of growth for the world
economy as a whole. It is even more difficult to estimate growth in various
parts of the world economy, including the markets in which the Corporation
participates. All components of the Corporation's budgeting and forecasting are
dependent on commodity prices and their fluctuations as well as political
acceptance and policy. The prevailing economic uncertainties render estimates of
future expenditures difficult.
  The
Corporation will need to obtain additional funding in the medium to long term in
order to implement the Corporation’s business plan, and the inability to obtain
it could cause the Corporation’s business plan to fail.
  Additional
funds will be required for future exploration and development. The source of
future funds available to the Corporation is through the sale of additional
equity capital, proceeds from the exercise of convertible equity instruments
outstanding or borrowing of funds. There is no assurance that such funding will
be available to the Corporation. Furthermore, even if such financing is
successfully completed, there can be no assurance that it will be obtained on
terms favorable to the Corporation or will provide the Corporation with
sufficient funds to meet its objectives, which may adversely affect the
Corporation's business and financial position. In addition, any future equity
financings by the Corporation may result in substantial dilution for existing
shareholders of the Corporation.
  The
Corporation lacks a history of earnings and dividend record.
  The
Corporation has no earnings or dividend record. It has not paid dividends on its
common shares since incorporation and does not anticipate doing so in the
foreseeable future. Payments of any dividends will be at the discretion of the
board of directors of the Corporation after taking into account many factors,
including the Corporation’s financial condition and current and anticipated cash
needs.
  The
impact of hedging activities may affect the Corporation’s
profitability.
  Although
the Corporation has no present intention to do so, it may hedge a portion of its
future uranium production to protect it against low uranium prices and/or to
satisfy covenants required to obtain project financings. Hedging activities are
intended to protect the Corporation from the fluctuations of the price of
uranium and to minimize the effect of declines in uranium prices on results of
operations for a period of time. Although hedging activities may protect a
company against low uranium prices, they may also limit the price that can be
realized on uranium that is subject to forward sales and call options where the
market price of uranium exceeds the uranium price in a forward sale or call
option contract.
  The
Corporation’s operations are subject to environmental risks and compliance with
environmental regulations which are increasing and costly.
  Environmental
legislation and regulation is evolving in a manner which will require stricter
standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects and a heightened
degree of responsibility for companies and their officers, directors and
employees. Compliance with environmental quality requirements and reclamation
laws imposed by federal, state, provincial, and local governmental authorities
may require significant capital outlays, materially affect the economics of a
given property, cause material changes or delays in intended activities, and
potentially expose the Corporation to litigation. These authorities may require
the Corporation to prepare and present data pertaining to the effect or impact
that any proposed exploration for or production of minerals may have upon the
environment. The requirements imposed by any such authorities may be costly,
time consuming, and may delay operations. Future legislation and regulations
designed to protect the environment, as well as future interpretations of
existing laws and regulations, may require substantial increases in costs for
equipment and operating costs and delays, interruptions, or a termination of
operations. The Corporation cannot accurately predict or estimate the impact of
any such future laws or regulations, or future interpretations of existing laws
and regulations, on the Corporation’s operations.  Historic mining
activities have occurred on and around certain of the Corporation’s properties.
If such historic activities have resulted in releases or threatened
releases
 
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-
 
 of
regulated substances to the environment, potential for liability may exist under
federal or state remediation statutes.
  The
Corporation’s title to certain properties may be uncertain.
  Although
the Corporation has obtained title opinions with respect to certain of its
properties and has taken reasonable measures to ensure proper title to its
properties, there is no guarantee that title to any of its properties will not
be challenged or impugned.  Third parties may have valid claims
underlying portions of the Corporation's interests.  The Corporation’s
mineral properties in the United States consist of leases to private mineral
rights, leases covering state lands and unpatented mining claims. Many of the
Corporation’s mining properties in the United States are unpatented mining
claims to which the Corporation has only possessory title. Because title to
unpatented mining claims is subject to inherent uncertainties, it is difficult
to determine conclusively ownership of such claims.  These
uncertainties relate to such things as sufficiency of mineral discovery, proper
posting and marking of boundaries and possible conflicts with other claims not
determinable from descriptions of record. The present status of the
Corporation’s unpatented mining claims located on public lands allows the
Corporation the exclusive right to mine and remove valuable minerals. The
Corporation is allowed to use the surface of the public lands solely for
purposes related to mining and processing the mineral-bearing ores. However,
legal ownership of the land remains with the United States. The Corporation
remains at risk that the mining claims may be forfeited either to the United
States or to rival private claimants due to failure to comply with statutory
requirements. The Corporation has taken or will take all curative measures to
ensure proper title to its properties where necessary and where
possible.
  The
Corporation may be subject to aboriginal land claims.
  Certain
properties in which the Corporation has an interest may be the subject of
aboriginal land claims.  As a result of these claims, the Corporation
may be significantly delayed on unable to pursue exploration and production
activities in respect of these properties or may have to expend considerable
management resources and funds to adequately meet the regulatory requirements to
pursue activities in respect of these properties.
  Some
hazards which the Corporation may face are uninsurable.
  The
Corporation currently carries insurance coverage for general liability,
directors’ and officers’ liability and other matters. The Corporation intends to
carry insurance to protect against certain risks in such amounts as it considers
adequate. The nature of the risks the Corporation faces in the conduct of its
operations is such that liabilities could exceed policy limits in any insurance
policy or could be excluded from coverage under an insurance policy. The
potential costs that could be associated with any liabilities not covered by
insurance or in excess of insurance coverage or compliance with applicable laws
and regulations may cause substantial delays and require significant capital
outlays, adversely affecting the Corporation’s business and financial
position.
  The
Corporation’s board of directors may face the possibility of conflicts of
interest with other resource companies with which they are
involved.
  Certain
directors of the Corporation also serve as directors and officers of other
companies involved in natural resource exploration, development and production.
Consequently, there exists the possibility that such directors will be in a
position of conflict of interest. Any decision made by such directors involving
the Corporation will be made in accordance with their duties and obligations to
deal fairly and in good faith with the Corporation and such other companies. In
addition, such directors will declare, and refrain from voting on, any matter in
which such directors may have a material interest.
  The
Corporation may have potential adverse U.S. Federal Income Tax
consequences.
  A
non-U.S. corporation generally will be considered a “passive foreign
investment company” (a “PFIC”) as such term in defined in the U.S. Internal
Revenue Code of 1986, as amended (the “Code”) for any taxable year if either (1)
at least 75% of its gross income is passive income or
(2) at least 50% of the value of its assets is attributable to assets that
produce or are held for the production of passive income.  If the
Corporation were treated as a PFIC for any taxable year in which a U.S. holder
held the Corporation’s shares, certain adverse
 
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-
 
 consequences
could apply, including a material increase in the amount of tax that the U.S.
holder would owe, an imposition of tax earlier than would otherwise be imposed,
interest charges and additional tax form filing requirements.
  The
determination of whether a corporation is a PFIC involves the application of
complex tax rules.  The Corporation has not made a conclusive
determination as to whether it has been in prior tax years or is currently a
PFIC.  The Corporation could have qualified as a PFIC for past tax
years and may qualify as a PFIC currently or in future tax
years.  However, no assurance can be given as to such status for prior
tax years, for the current tax year or future tax years.  U.S. holders
of Corporation’s shares are urged to consult their own tax advisors regarding
the application of U.S. income tax rules.
  The
Corporation may lose its status as a foreign private issuer.
  Ur-Energy
is a “foreign private issuer,” as such term is defined in Rule 405 under the
Securities Act, and, therefore, it is not required to comply with all the
periodic disclosure and current reporting requirements of the Exchange Act, and
related rules and regulations.  In order for the Corporation to
maintain its current status as a foreign private issuer, a majority of its
common shares must be either directly or indirectly owned of record by
non-residents of the U.S., as it does not currently satisfy any of the
additional requirements necessary to preserve this status.
  The
Corporation may in the future lose its foreign private issuer status if a
majority of its shares are owned of record by residents of the U.S. and it
continues to fail to meet the additional requirements necessary to avoid loss of
foreign private issuer status.  The regulatory and compliance costs to
the Corporation under U.S. securities laws as a U.S. domestic issuer may be
significantly more than the costs it incurs as a Canadian foreign private issuer
eligible to use the Multi-Jurisdictional Disclosure System
(“MJDS”).  If it is not a foreign private issuer, it would not be
eligible to use the MJDS or other foreign issuer forms and would be required to
file periodic and current reports and registration statements on U.S. domestic
issuer forms with the SEC, which are more detailed and extensive than the forms
required of a foreign private issuer.  The Corporation may also be
required to prepare its financial statements in accordance with U.S. generally
accepted accounting principles (“GAAP”). In addition, the Corporation may lose
the ability to rely upon exemptions from certain corporate governance
requirements on U.S. stock exchanges that are available to foreign private
issuers.  Further, if the Corporation engages in capital raising
activities through private placements after losing its foreign private issuer
status, there is a higher likelihood that investors may require the Corporation
to file resale registration statements with the SEC as a condition to any such
financing.
  Item 4. Information on the
Corporation.
  A.History and Development of the
Corporation.
  Ur-Energy
is a corporation continued under the Canada Business Corporations Acton August 8, 2006. The registered office of the Corporation is located at
40 Elgin Street, Suite 1400, Ottawa, Ontario, K1P 5K6. The Corporation’s head
office and United States headquarters is located at 10758 West Centennial Road,
Suite 200, Littleton, Colorado, 80127. The Corporation also has offices at 5880
Enterprise Drive, Suite 200, Casper, Wyoming 82609 and 341 Main Street North,
Suite 206, Brampton, Ontario L6X 3C7. The Corporation’s Littleton telephone
number is (720) 981-4588 and its facsimile number is (720) 981-5643. The
Corporation’s common shares are listed on the TSX under the symbol "URE" and on
the NYSE Amex under the symbol "URG".
  Incorporated
on March 22, 2004, Ur-Energy is a development stage junior mining company
engaged in the identification, acquisition, evaluation, exploration and
development of uranium mineral properties in Canada and the United States. The
Corporation’s current land portfolio includes 14 properties in Wyoming, USA: 10
are in the Great Divide Basin, two of which (the Lost Creek property and the
Lost Soldier property) contain defined resources that the Corporation expects to
advance to production. The Corporation’s other Wyoming projects include two
properties in the Shirley Basin, one of which is the Bootheel property. The
final Wyoming
 
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-
 
 property,
the Kaycee property, is located in the Powder River Basin. The Corporation also
has a property in Yuma County, Arizona, USA.
 
 The
Corporation has three properties in the Northwest Territories, Canada, known as
Screech Lake, Eyeberry and Gravel Hill. The Corporation also has the Bugs
property in the Kivalliq region of the Baker Lake Basin in Nunavut, Canada and
has a royalty interest in two properties known as Dismal Lake West and Mountain
Lake in the western Kitikmeot region, Nunavut, Canada.
 
  Background
  The
Corporation, through its wholly-owned subsidiary, Ur-Energy USA, acquired
certain of the Wyoming properties comprising the Great Divide Basin and the
Shirley Basin projects, effective June 30, 2005, when Ur-Energy USA entered into
the Membership Interest Purchase Agreement (“MIPA”) with New Frontiers Uranium,
LLC (“New Frontiers”).  Under the terms of the MIPA, the Corporation
purchased from New Frontiers all of the issued and outstanding membership
interests (the “Membership Interests”) in the project.  Assets
acquired from New Frontiers include the extensively explored and drilled Lost
Creek and Lost Soldier Projects and development database including more than
10,000 electric well logs, over 100 geologic reports and over 1,000 geologic and
uranium maps covering large areas of Wyoming, Montana and South
Dakota.
  Under the
MIPA, Ur-Energy USA agreed to purchase and New Frontiers agreed to sell the
Membership Interests for an aggregate consideration of
US$20,000,000.  The total amount payable on closing was
US$5,000,000.  The balance of the acquisition cost was financed by way
of a promissory note payable to New Frontiers. The first US$5,000,000 payment
under the promissory note was made in June 2006 and on June 7, 2007, the
Corporation pre-paid the balance of the promissory note due to New Frontiers in
the amount of US$11,250,000 which allowed the Corporation to save approximately
US$3,750,000 in future interest charges.
  Since
2005, the exploration and development of Lost Creek has progressed, with the
Corporation commissioning an NI 43-101 Preliminary Assessment in 2008, which
establishes the economics of the Lost Creek Project.  Beginning in
2007, the Corporation has also proceeded with its applications for a Source
Material License from the US Nuclear Regulatory Commission (“NRC”) and a Permit
and License to Mine from the Wyoming Department of Environmental Quality
(“WDEQ”); the applications have been deemed complete by both agencies and the
technical review process is ongoing with both.    See also
“Item 4.B - Business Overview: Lost Creek Project.”
  Recent
Developments
  Corporate
  On
January 7, 2008, the Corporation filed a registration statement with the SEC on
Form 40-F to register its common shares under Section 12(b) of the Exchange
Act.
  On March
26, 2008, Ur-Energy completed a non-brokered private placement flow-through
financing of 1,000,000 common shares of the Corporation at a price of $2.75 for
aggregate gross proceeds of $2,750,000.  The financing enabled a 2008
summer exploration program for Ur-Energy’s Bugs Project in Nunavut, Canada
including further prospecting, radon surveys and a drilling program which was
completed in September 2008.
  On July
24, 2008, the Corporation’s common shares were listed on NYSE Amex (formerly
American Stock Exchange) under the symbol “URG”.
  On
November 7, 2008, the board of directors of the Corporation approved the
adoption of a Shareholder Rights Plan designed to encourage the fair and equal
treatment of shareholders in connection with any takeover bid for the
Corporation’s outstanding securities.  The Rights Plan was not adopted
by the Corporation’s board of directors in response to any specific proposal or
intention to acquire control of the Corporation.  Rights were issued
pursuant to the Rights Plan effective on November 7, 2008.  In
accordance with the TSX requirements,
 
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-
 
 the
Corporation will seek approval and ratification of the Rights Plan at its next
annual and special meeting of shareholders scheduled for April 28,
2009.
  Regulatory
  On
February 29, 2008, the Corporation voluntarily requested that its application to
the NRC for its Lost Creek Project be withdrawn to enable the Corporation to
include upgrades to its application.  The license application to the
NRC had been submitted on October 30, 2007.  Subsequent upgrades to
the project’s operational plan and other advances in the health physics
information and analysis prompted the Corporation to update its NRC license
application. The Corporation submitted its upgraded license application to the
NRC on March 24, 2008.
  On May
22, 2008, Ur-Energy received notice from the WDEQ that the agency had found the
Lost Creek Permit to Mine Application to be complete.  The Corporation
was authorized to proceed with formal public notice of the application, which
was completed in a timely manner. The WDEQ also initiated its technical review
of the Corporation’s application and the Corporation is in the process of
providing additional information requested by the WDEQ.
  On June
17, 2008, the Corporation announced that the NRC deemed the Corporation’s
application to construct and operate the Lost Creek ISR Project
acceptable.  The NRC indicated that it would commence a detailed
technical and environmental review of the Corporation’s application, for which
the Corporation continues in the process of providing additional information
requested as to both reviews.
  On
September 10, 2008, the Corporation provided an update to the Lost Creek Project
timeline based on recently released licensing guidance from the
NRC.  As a result of meetings between Ur-Energy and other Wyoming
near-term producers and NRC officials in early September, Ur-Energy revised its
expectation for the issuance of the Lost Creek Project’s NRC license from the
second quarter 2009 to the fourth quarter 2009.  First production from
the Lost Creek Project is now anticipated in the second half of
2010.
  Technical
  On April
2, 2008, the Corporation released the results of a Preliminary Assessment for
the Lost Creek Project.  The Preliminary Assessment was prepared by
Lyntek Incorporated in accordance with National Instrument 43-101 (“NI
43-101”).  The purpose of the report was to provide an independent
analysis of the potential economic viability of the mineral resources of the
Lost Creek Project.
  On June
19, 2008, the Corporation announced the commencement of the 2008 drilling
program at the Bootheel property in southern Wyoming.  The Bootheel
property, together with the Buck Point property, make up The Bootheel Project,
LLC, a venture in which Ur-Energy and Target Exploration and Mining Corporation
are members.  Target is the operator and is currently earning a 75%
interest in the project.
  On August
18, 2008, the Corporation announced the continued expansion of its technical
expertise by adding necessary personnel for the build up toward construction and
production.
  On
November 12, 2008, the Corporation announced that it had completed the 2008
drilling program which had commenced in May 2008 at its Lost Creek
Project.  Activities included the drilling of 459 drill holes which
included delineation drill holes, monitoring wells and exploration drill
holes.  In addition, the Corporation’s engineering staff continued its
evaluation of the Lost Soldier Project.
  Principal
Capital Expenditures and Divestitures
  During
the year ended December 31, 2006, the Corporation invested cash of $1.0 million
in mineral properties, bonding deposits and capital assets.  The
majority of these expenditures went toward mineral properties.  The
capital asset purchases were primarily for field equipment purchased to
facilitate the exploration and development work programs in
Wyoming.
 
 - 14
-
 
 During
the year ended December 31, 2007, the Corporation invested cash of $3.5 million
in mineral properties, bonding deposits and capital assets.  The
majority of these expenditures went toward mineral properties and bonding
deposits.  The capital asset purchases were primarily for field
vehicles and field equipment purchased to facilitate the exploration and
development work programs in Wyoming.
 
 During
the year ended December 31, 2008, the Corporation invested cash of $3.5 million
in mineral properties, bonding deposits, capital assets and design work on the
Lost Creek plant.  The majority of these expenditures went toward
bonding deposits and the purchase of capital assets.  The capital
asset purchases were primarily for field vehicles and field equipment purchased
to facilitate the exploration and development work programs in
Wyoming.
 
 No
significant capital expenditures are currently in progress.  Pursuant
to the Corporation’s revised policy, the Corporation is continuing to develop
the Lost Creek property and is incurring costs which are presently being charged
to expense as incurred.
  B.Business
overview.
  Lost Creek
Project
 
 The Lost
Creek uranium deposit is located in the Great Divide Basin, Wyoming. The deposit
is approximately three miles (4.8 kilometers) long and the mineralization occurs
in four main sandstone horizons between 315 feet (96 meters) and 700 feet (213
meters) in depth.
 
 As
identified in the June 2006 Technical Report on Lost Creek, NI 43-101
compliant resources are 9.8 million pounds of U3O8 at
0.058 percent as an indicated resource and an additional 1.1 million pounds
of U3O8 at
0.076 percent as an inferred resource.  During 2006, 17 cased
monitoring and pump test wells were completed on the property, and initial
testing was completed.
 
 The 2007
drilling program included 58 additional monitor and pump test wells,
two water wells and a total of 195 delineation drill holes. This program
enabled the Corporation to obtain additional baseline and hydrogeologic data
within the first mine unit area for engineering assessments; for the WDEQ Permit
to Mine application; for the NRC Source Material License application; and, for
the WDEQ Mine Unit #1 Permit application. In addition, six condemnation holes
were drilled to make certain the potential target plant location was not over
any part of the ore body.
 
 In
October 2007, the Corporation submitted its Application to the NRC for a Source
Material License for the Lost Creek project. This license is the first stage of
obtaining all necessary licenses and permits to enable the Corporation to
recover uranium via in situ recovery method at the Lost Creek project. The
collection and compilation of the extensive environmental background data for
the application was a two-year process. In February 2008, the Corporation
requested that the NRC application for its Lost Creek project be withdrawn to
enable the Corporation to include upgrades to its application with respect to
the project's operational plan and other advances in the health physics
information and analyses.  In March 2008, the Corporation re-submitted
the Source Material License application to the NRC.  In June 2008, the
NRC notified the Corporation it deemed the Lost Creek
application complete. The NRC thereafter commenced its detailed technical and
environmental review of the Corporation’s application.
 
 In 2007,
the Corporation also submitted the Lost Creek Mine Permit Application to the
WDEQ. Individual mine unit applications for each well field will be submitted to
cover each mine unit or well field that will be produced on the Lost Creek
project.  In May 2008, the Corporation received notice from the
WDEQ that the agency found the application to be complete, and authorized the
Corporation to proceed with formal Public Notice of the application, which was
subsequently timely completed by the Corporation.  The Lost Creek
Project Permit Area, as submitted to the WDEQ, comprises 4,220 acres(1,708 hectares) andconsists of 201
mining claims and one state mining lease.
 
 - 15
-
 
 Throughout
the latter part of 2008 and, to date, in 2009, the Corporation has been
responding to requests from both agencies for additional information, which is
part of the routine process toward completion of the technical and environmental
reviews of the applications.
 
 In
February 2008, an in-house economic analysis on the Lost Creek project was
completed by the Corporation’s engineering team. An independent technical report
under NI 43-101 was subsequently prepared by Lyntek Incorporated
(“Lyntek”).  The purpose of the report was to provide an independent
analysis and preliminary assessment of the potential economic viability of the
mineral resource of the Lost Creek project.  The resulting base case
in the preliminary assessment prepared by Lyntek returned a pre-tax internal
rate of return of 43.6% at a price of US$80 per pound U3O8, and
demonstrated that the project would be economic at prices above US$40 per pound
U3O8.
 
 In
September 2008, the Corporation announced an update to the Lost Creek permitting
and production timeline based on further licensing guidance from the
NRC.  Based upon an NRC release of updated guidance on its expected
publication of a final Generic Environmental Impact Statement for In-Situ Leach
Uranium Milling Facilities ("GEIS") in a July 28, 2008 Federal Register notice
(Vol.73, No. 145), the NRC revised its expected publication date from January
2009 to June 2009.
 
 In early
September 2008, the Corporation conducted meetings with senior officials of the
NRC to confirm how the revised GEIS completion date would affect the timing of
the issuance of licenses to presently pending applicants, including Lost
Creek.  As a result of the meetings, Ur-Energy revised its expectation
for the issuance of the Lost Creek's NRC license from second quarter 2009 to
fourth quarter 2009. First production from the Lost Creek project is now
anticipated to occur in the second half of 2010.
 
 The
exploration and development program for 2008 at Lost Creek was designed to
further delineate known resources, explore the permit area for additional
resources outside of the known areas, and to install the monitoring wells
required for the first mine unit.  The program included the following
activities:
 
 ·
              Drilling
      as follows:
 o
              300
      delineation holes within the proposed mine unit area to provide detailed
      definition of the extent of minable uranium
  resources.
 o
              99
      exploration holes were drilled to test for potential extensions of mineral
      trends.  Drill hole depths ranged from 600 to 1,000 feet (183 to
      305 meters).
 o
              48
      cased monitor and pump test wells were installed within and surrounding
      the first proposed mine unit.  These wells will be utilized for
      production monitoring.
 o
              Ten
      regional baseline wells were also installed at the request of the
      WDEQ.  The average well depth is approximately 450 feet (137
      meters).
 o
              Two
      water supply wells were drilled, cased and
  completed.
 ·
              The
      program employed seven contract drill rigs throughout much of the
      six-month drilling program.  Geophysical logging units were also
      contracted to provide measurements of down-hole equivalent uranium
      mineralization.  These were complemented by Ur-Energy’s Prompt
      Fission Neutron “PFN” logging truck, capable of providing down-hole
      chemical uranium measurements.
 ·
              Core
      samples from several holes were obtained.  Chemical uranium
      analyses of the core samples have been conducted, and will be used as
      referee and quality control measurements to be compared to the down-hole
      logging measurements of mineralization.  Leach testing will also
      be conducted on selected core samples.All wells were
      cased in accordance with WDEQ guidelines and regulations; plugging and
      permanent abandonment of all uranium exploration and delineation boreholes
      was completed.
 ·
              Surveys
      of soils and geotechnical borings were conducted to assist in the
      evaluation of plant and road facilities
design.
 
 Following
the 2008 drilling program, Ur-Energy personnel oversaw the drilling of a deep
test well at Lost Creek.  The well will be utilized to test the
stratigraphy and groundwater quality for purposes of permitting a future
disposal well(s) to support site operations.  The well reached a total
depth of 9,894 feet (3,016 meters), on December 17, 2008 and was then
cased.  Additional well data will be obtained in 2009 to support
the
 
 - 16
-
 
 Corporation’s
permitting activities.  Also during fourth quarter of 2008, the
Corporation completed the pump testing of the monitor wells associated with the
first mine unit.
 
 During
2008, the Corporation purchased and mobilized operational equipment,
including:  backhoes, a water truck, a forklift, light and heavy
trucks, trailers, offices, a hose reel, generators and cementers.  In
2009, the Corporation’s engineering staff, assisted by TREC Engineering, has
completed the detailed designs and specifications for all components of the Lost
Creek ISR Plant and Mine Unit # 1.  Requests for bids are being
prepared to be provided to vendors and contractors.  Procurement will
be ongoing throughout 2009.  Construction at the Lost Creek site will
begin upon receipt of the necessary permits.
 
 A royalty
on future production of 1.67% is in place with respect to 20 claims comprising a
small portion of the Lost Creek project.
 
 Technical
Report Summaries
  The
following are the executive summaries from the two technical reports completed
on the Lost Creek Project.  A Preliminary Assessment, completed in
2008 by John I. Kyle, P.E. and Douglas K. Maxwell, P.E. of Lyntek, is the more
recent NI 43-101 technical report and was prepared to provide an independent
analysis and preliminary assessment of the potential economic viability of the
mineral resource of the Lost Creek Project. In 2006, an NI 43-101 Technical
Report was prepared by C. Stewart Wallis, P.Geo, a consulting geologist
associated with Scott Wilson Roscoe Postle Associates Inc. (formerly, Roscoe
Postle Associates Inc. (“RPA”)).
 
 As noted
above, considerable development and changes have been made on the Lost Creek
property since these reports, particularly the initial Wallis report, were
produced.  Total drilling on the project to date by Ur-Energy is 746
holes for a total of 477,788 feet (145,630 meters).  Most of this
drilling, however, has been geared toward advancing the primary resource at the
Lost Creek deposit toward production.  For the most part, the detailed
drill holes (300 to 400 holes to delineate each mine unit at 100 foot spacing)
were drilled for mine unit design and layout purposes. These holes are closely
spaced for the mine unit planning and specifically not for the purpose of adding
resources.
 
 April
2008
  The
following is the Executive Summary extracted from the technical report dated
April 2, 2008 and titled “Preliminary Assessment for the Lost Creek Project,
Sweetwater County, Wyoming”, which was prepared for the Corporation in
accordance with NI 43-101 by Lyntek Incorporated (“Preliminary Assessment – Lost
Creek”).  The full Preliminary Assessment – Lost Creek can be viewed
under the Corporation’s profile on the SEDAR website at
www.sedar.com.
  EXECUTIVE
SUMMARY
  Lyntek
has generated a preliminary assessment or scoping study of the Lost Creek
uranium in situ recovery (ISR) project located in Sweetwater County,
Wyoming.  Lost Creek ISR, LLC a wholly owned subsidiary of Ur-Energy
USA Inc. controls the property and has evaluated the potential to place the
property in production through the use of an in-house economic
analysis.  Lyntek has reviewed the analysis and has made changes as
necessary to represent the project’s economics.  During this effort,
we reviewed several technical details regarding the project.
  Lyntek
has relied upon work conducted by an earlier NI 43-101 study that defined the
uranium resources (C. Stewart Wallis, 2006).  The Lost
Creek  resources are based on a minimum grade of 0.03 percent U3O8
and  a minimum grade thickness (GT) equal to or greater than 0.3 are
reported in the table below.
  
 Table
      1.1 Lost Creek Resources: C. Stewart Wallis, Rostle Postle Associates,
      Inc., June 15, 2006Reserve
                Classification
              Tons
                (Millions)
              Average Ore Zone
                Thickness (feet)
              Uranium Grade
                (Percent U3O8)
              PoundsU3O8
                (millions)Indicated
              8.5
              19.5
              0.058
              9.8Inferred
              0.7
              9.6
              0.076
              1.1
  - 17
-
  Indicated
Resources were defined by 200 feet spacing with the exception of a few sections
drilled off at 50 feet spacing.  Detailed drilling on closer spacing
(up to 50 feet) will be necessary prior to the final engineering designs and the
ISR mining of individual mine units during the life of the mine. Individual mine
units will be drilled out with hydrologic testing just prior to mining each mine
unit.  Detail drilling of the first mine unit planned is not completed
at this time. The size and shape of individual mine units may vary when detailed
drilling is carried out on each unit and the hydrologic characteristics of each
mine unit may vary from mine unit to mine unit.
  Since the
practice of ISR mining is to drill out individual mine units just prior to
mining each unit, this Preliminary Assessment report can only use indicated
mineral resources which are considered too speculative geologically to have
economic considerations applied to them to be categorized as Mineral Reserves. A
conservative approach to this preliminary assessment of the Lost Creek Project
has been employed by using an in-place indicated resource of 8.1 million pounds
of U3O8 defined by
a model of 6 individual mine units averaging 1.2 to 1.4 million pounds of U3O8.   Assuming
an 80 percent uranium recovery, it is projected that there will be 6.5 million
pounds of U3O8
produced.  The uranium mineralization is primarily located in the HJ
and the UKM sandstone horizons at average depths of 435 feet and 555 feet,
respectively.
  Lost
Creek ISR, LLC has conducted hydrologic studies through its contractor Petrotek
Engineering Corporation (October 2007) of the mineralized HJ sandstone
horizon.  These studies show that the sandstones appear to have
adequate hydrologic characteristics that will support ISR
operations.  In addition, it has been concluded that the shale layers
above and below the HJ ore zone will act as adequate geologic members to contain
the lixiviant within the desired production zone and prevent the migration of
the lixiviant to water bearing geologic zones above and below the target
mineralized zone.
  It is
important to note that there is an east-west scissor fault located down the axis
of a significant portion of the resources.  This fault will impact
mining operations. The hydrology studies also defined the scissor fault as a
tight zone which acts as a barrier to groundwater flow across the
fault.  In addition, there is a difference in ground water elevations
within the HJ structure as the fault line is crossed.  The water level
on the south side of the fault lies below the water level on the north side of
the fault.  Work in evaluating the UKM sandstone horizon has begun but
needs to be finalized to determine if it has suitable characteristics consistent
with the HJ horizon.
  Leach
studies have been conducted in 2005 and 2007.  The leach studies
conducted in 2005 used bottle roll tests on six one-foot core sections from five
drill holes.  The uranium grades within these six samples ranged from
a low of 0.040 to a high of 0.480.  With the application of 25 pore
volumes of lixiviant containing 2 grams/liter HCO3 and 500 milligrams/liter of
H2O2, the recoveries ranged from 59.4 to 92.8 percent.  Interestingly,
the high grade sample showed the lowest recovery and it is quite possible that
additional pore volumes of lixiviant would remove additional uranium as the last
pore volume contained 68 milligrams of uranium, so recovery would likely improve
to some degree on this high grade ore.  The next lowest recovery was
75.0 percent.  The 2007 leach study focused on a homogenized
production zone from one hole in the HJ horizon.  The goal of this
test group was to review a matrix of different chemistries in an effort to
determine the most appropriate lixiviate chemistry for the
project.  Results of the tests show an elevated bicarbonate
concentration may be required to maximize productivity at the
Project.  Natural groundwater with peroxide yielded a 20 percent
ultimate recovery while all lixiviants with a bicarbonate concentration greater
than 1.0 g/L averaged 88.6 percent ultimate recovery with a range of 84.1 to
93.3 percent.
  Project
economics have been developed assuming a 6000 gpm ISR processing plant producing
one million pounds of U3O8 per
year.  During the first two years, yellowcake slurry will be produced
while a dryer is being permitted and constructed so that afterwards dry
yellowcake can be produced.  The capital costs for plant equipment and
facilities also include capital costs for a larger plant that will accommodate
an additional one million pounds of U3O8 for
processing resin from other properties including those belonging to Ur-Energy
USA Inc.  However the operating costs and sales of this additional
yellowcake capacity have
 
 - 18
-
 
 not been
included in the economics analysis.  It is assumed that the additional
capital investment will present an un-quantified opportunity.
  In
Lyntek’s assessment of the economics for the project, we find that the project
will produce results that are quite robust.  The economic assessment
assumes contingencies of 20 percent for both capital and operating
costs.  Lyntek has used a price forecast of $80 as an indicator of
likely uranium prices in the future.  Per Nuclear Market Review, this
price is $15 below the current fixed price contract and $7 above the spot price
indicator of February 29, 2008.  Because of the volatility of uranium
prices, this price appears to be a reasonable price upon which the project’s
economics can be based.  To allow for the volatility of the uranium
price, we have assumed a price swing potential of $40 per pound of U3O8 and
developed additional economic cases upon those swings to allow stakeholders to
properly evaluate the potential economics of the project under possible price
conditions.  Because of the extreme difficulty in forecasting current
uranium prices, it is recommended that stakeholders pay particular attention to
the lower limit price forecast as a measure of evaluating risk for the
project.  In addition to assist with forecast issues, cost
sensitivities were also modeled to evaluate potential cost
variances.  The results of these economic analyses are shown in Table
1-2.
  Table
      1-2 Economic IndicatorsCase
              
              Revenue
                ($MM)
              
              
              Pre-tax
                IRR
      (%)
              
              
              NPV
      @ 10%
                ($MM)Case
      1 Base Case U3O8
      $80
              
              
              516.2
              
              
              
              43.6
              
              
              
              106.8Case
      2 U3O8
      $40
              
              
              258.1
              
              
              
              -1.9
              
              
              
              -23.2Case
      3 U3O8
      $120
              
              
              774.3
              
              
              
              73.8
              
              
              
              236.8Case
      4 U3O8 $80
      Operating Costs +20%
              
              
              516.2
              
              
              
              39.0
              
              
              
              90.6Case
      5 U3O8 $80
      Operating Costs – 20%
              
              
              516.2
              
              
              
              48.2
              
              
              
              122.9Case
      6 U3O8 $80
      Capital Costs +20%
              
              
              516.2
              
              
              
              36.7
              
              
              
              94.3Case
      7 U3O8 $80
      Capital Costs -20%
              
              
              516.2
              
              
              
              52.5
              
              
              
              119.3Case
      8 Worst Case U3O8 $40
      Op. & Cap. Costs + 20%
              
              
              258.1
              
              
              
              -7.6
              
              
              
              -51.7Case
      8 Best Case U3O8 $120
      Op. & Cap. Costs - 20%
              
              
              774.3
              
              
              
              90.0
              
              
              
              265.7
 (a)
This analysis is conducted upon operating and capital costs that include
contingencies of 20%, respectively.  The ranges cited above assume
that the operating and capital estimates, inclusive of contingencies, may range
in actuality by 20 percent.
  For the
life of the mine, the economic assessment estimates the average operating cost
at $19.46 per pound and, with a 20 percent contingency, 23.36 per pound of
U3O8.  The
capital cost for the plant is estimated at $30.0 million.  The
development of the property, inclusive of header houses, drilling,
environmental, engineering, and permitting is forecast at $23.9
million.  Contingencies of $8.6 million are added to provide a total
capital cost of $62.5 million to start the project in 2009.  Of this
amount, $5.5 million has already been spent to advance the project to the
current stage.  The bonding estimate, which is included in the cash
flow assessment, requires $5.5 million in spending up to the start of
production, of which $1 million has already been spent.  The allocated
purchase price of the property, which is included in the economics as sunk
capital, is $9 million.  The remaining expenditures to bring the
project into production, at this point in time is then, $61.5 million, including
contingencies.  Lyntek is of the opinion that these costs fairly
represent the expected capital and operating costs of the project.
  Based
upon this economic assessment, it is recommended that work continue upon this
project to further analyze the project, work to reduce risks, continue to permit
and plan to execute the project as it appears to be worthwhile to continue these
efforts.  It is recommended that more extensive hydrologic and leach
tests be conducted to better define these important
considerations.  Furthermore, there is no certainty that the results
projected in the Preliminary Assessment will be realized and actual results may
vary substantially.
  - 19
-
  June
2006
  The
following is the Executive Summary extracted from the technical report dated
June 15, 2006 and titled “Technical Report on the Lost Creek Property, Wyoming”,
which was prepared for the Corporation in accordance with NI 43-101 by C.
Stewart Wallis, P.Geo, a consulting geologist associated with Scott Wilson
Roscoe Postle Associates Inc. (formerly, Roscoe Postle Associates Inc.)
(“Technical Report – Lost Creek”).  The full Technical Report – Lost
Creek can be viewed under the Corporation’s profile on the SEDAR website at
www.sedar.com.
  EXECUTIVE
SUMMARY
  RPA was
retained by Ur-Energy to prepare an independent Technical Report on the Lost
Creek Project in the State of Wyoming, USA.
  The Lost
Creek Project consists of 184 unpatented lode claims and one state section lease
totaling 4,379 acres, 90 miles southwest of Casper, Wyoming. The property was
extensively drilled in the 1970s by Texasgulf Inc. (TG) and, more recently,
Ur-Energy has completed a program of data compilation and 10,420 ft. of
confirmation drilling.
  The
current resources at the Lost Creek Project as at May 30, 2006, based on a
minimum grade of 0.03% U3O8 and a
grade thickness (GT) equal to or greater than 0.3 are reported in Table
1-1.  RPA is of the opinion that the classification of resources as
stated meets the CIM definitions as adopted by the CIM Council on November 14,
2004, as required by National Instrument 43-101.
  Table
1-1 Lost Creek Resources – 2006
 Ur-Energy
Inc. – Lost Creek Project
  Classification
              
              Tons
                (Millions)
              
              
              Average
                Thickness
      (Ft.)
              
              
              Grade
                %
      U3O8
              
              
              Pounds
      U3O8
                (Millions)Indicated
              
              
              8.5
              
              
              
              19.5
              
              
              
              0.058
              
              
              
              9.8Inferred
              
              
              0.7
              
              
              
              9.6
              
              
              
              0.076
              
              
              
              1.1
 
  Preliminary
leach tests indicate that the mineralization is amenable to leaching with an
oxygenated lixiviant. The main mineralized horizons, which have an approximate
stratigraphic thickness in excess of 130 ft., are confined by impermeable
mudstones above and below the mineralization and, therefore, are considered to
be ideal for the use of in situ leaching (ISL) methodology.
  Ur-Energy
has proposed a US$2.975 million budget to advance the project during the year
ending June 2007. The proposed program includes the drilling of 17 wells in
order to carry out pump tests and water quality analysis, permitting, collection
of environmental data, and feasibility studies. Ur-Energy is planning to submit
an application for mine permits by mid 2007.
  RPA is of
the opinion that Ur-Energy should continue with the drilling, pump tests,
permitting and feasibility studies leading to a production
decision.
  TECHNICAL
SUMMARY
  The Lost
Creek Project is located 90 miles southwest of Casper, Wyoming, and 25 miles
south of Jeffrey City, which is located on U.S. Highway 287. The property is
readily accessible year round by an extensive system of gravel and dirt roads
extending from Jeffrey City.
  Climax
Amax Inc. acquired the property in 1968 and discovered low-grade mineralization
in the Battle Springs formation. TG acquired the property in 1976, optioned the
adjoining Conoco ground in 1978, and completed drilling with the discovery of
the continuation of the Main Mineral Trend (MMT) eastward from the Lost Creek
Project. Leach tests using bicarbonate lixiviant resulted in uranium extraction
ranging from 60% to 80%. TG dropped the project in 1983 due to economic
conditions.
 
 - 20
-
 
 From 1986
to 1988, Power Nuclear Corporation (PNC) Exploration of Japan acquired a 100%
interest in the project from Cherokee Exploration Inc., the then owner of the
property, and conducted geologic and in situ leach evaluations. In 2000 New
Frontiers Uranium LLC (NFU) acquired the property and the database from
PNC.
  About
3,000 rotary drill holes totaling some 1.36 million ft. have been completed on
or near the property, with the MMT being drilled off at 200 ft. centres with
some infill at closer spacing.
  There
have been a number of resource estimates completed by the various owners since
1978. In 1982, TG reported a total resource of 5.7 million lbs of contained
U3O8 in 4.6 Mt
at an average grade of 0.062% U3O8using a
polygonal method with varying cut-offs. These resources are historical in nature
and Ur-Energy is not treating the historical estimates as NI 43-101 defined
resources or reserves verified by a qualified person, and the historical
estimates should not be relied upon.
  Mineralization
is found at depths ranging from 150 ft. to 1,150 ft. in fluvial arkosic
sandstones of the Eocene Battle Spring Formation that dip from 3° northwest to
3° southwest. Thick-bedded (up to 50 ft. thick), medium- to coarse-grained
sandstones make up about 60% of the section at Lost Creek and host the uranium
deposits. Siltstone, shale, and claystone are interbedded with the sandstones.
The main zone of mineralization at Lost Creek strikes east-west for at least
four miles (half of which is well defined) and is up to 2,000 ft. wide, with
intercepts ranging from 350 ft. to 700 ft. deep. Mineralization is in the form
of fine-grained intergrowths of coffinite with pyrite, as coatings, fracture
fillings, and rimming voids. Grade ranges from 0.03% U3O8 to 0.20%
U3O8, with an
average of intercepts in the mineralized envelope of the MMT at 0.04% U3O8.  The
thickness of individual mineralized beds at Lost Creek locally ranges from 5 ft.
to 28 ft., and averages 16 ft. It appears that there are no high-grade
intercepts greater than 0.5% U3O8.
Generally, the deposit has uniformly low grade intercepts in thick mineralized
horizons, with continued alteration to the north.
  Ur-Energy
carried out a drill program totaling 10,420 ft. in 14 holes during October and
November 2005. Twelve holes were spotted within 5 ft. to 10 ft. of the
historical drill holes in order to verify mineralization intersected in those
older holes and to allow comparison of the mineralized intervals. One hole was
drilled between two historical holes 200 ft. apart in order to verify continuity
of the mineralization. The holes were surveyed with a down-hole geophysical
probe and selected intervals of core were sampled for chemical assays.
Measurements taken by the down-hole probe include gamma logs, self potential,
resistivity, and hole deviation. A total of 188 samples were chemically analyzed
at Energy Laboratories Inc. (Energy Labs) of Casper, Wyoming, using standard
industry analyses. Energy Labs has been carrying out uranium analysis for over
25 years and is considered to be a recognized laboratory.
  Ur-Energy
selected a total of six one-foot samples from the recent drilling to undergo
bottle roll leach tests. The work was carried out over an 80 hour period at
Energy Labs using a lixiviant of sodium bicarbonate and hydrogen peroxide.
Analysis of the leach solutions indicated leach efficiencies of 52% to 94%.
Tails analysis indicated an average U3O8 extraction
of 82.8%.
  AATA
International Inc., an environmental consultancy at Fort Collins, Colorado,
reports that, based on the experience of two permitted projects, approval of a
new greenfield ISL project could require three to four years after the decision
to proceed with a baseline data collection. Ur-Energy will fast-track the
project to shorten the timetable by one year by carrying out concurrent studies
wherever possible and being proactive with the agencies. The schedule is driven
by the collection of the environmental baseline data and project data. Ur-Energy
has commenced collection of the baseline data required, and permission has been
received from the Wyoming Department of Environmental Quality (WDEQ) for the
drilling of 17 wells to be used for pump tests that will commence in June. The
pump tests will provide information on water quality and permeability of the
sandstones relative to the horizontal and vertical flow. Wildlife,
meteorological, soil and vegetation surveys have commenced, and archaeological
and radiology surveys are scheduled for this summer.
  A total
of 576 holes were identified within the current property boundary. These holes
contained 628 mineralized intervals equal to or greater than 0.03% U3O8. The
majority of the data consisted of U3O8 grade
estimated from geophysical logs. Chemical assays were used where available (17
holes), representing approximately 4% of the intervals. GT values were
calculated for each hole, using a cut-off of 0.03% U3O8. All
intercepts below the water table contributed to the total thickness. A 0.3 GT
boundary
  
 - 21
-
 
 was used
to create polygons, from which the area was calculated. Nineteen (19) holes
within this boundary, but with a GT value of less than 0.3, were excluded from
the estimate.
  RPA
reviewed selective geophysical drill logs, compared the TG drill holes and
geophysical logs with the twins drilled by Ur-Energy, and considers the data
appropriate for use in a resource estimate.
  A cut-off
grade of 0.03% U3O8 and a GT
product equal to or greater than 0.3 were used to define the mineral resources.
This is based on a uranium price of US$40 per pound and estimated operating
costs of approximately US$20 per pound.
  Classification
of the resources was determined by a combination of grade continuity and drill
hole spacing, nominally 200 ft. centres for indicated resources, with the
exception of several section lines that have been drilled off at 50 ft. spacing
along the sections.
  
 Lost Soldier
Project
 
 The Lost
Soldier Project is located approximately 14 miles (22.5 kilometers) to the
northeast of the Lost Creek Project. The property has over 3,700 historical
drill holes defining 14 mineralized sandstone units. As identified in the July
2006 Technical Report on Lost Soldier, NI 43-101 compliant resources are 5.0
million pounds of U3O8 at 0.064%
as a measured resource, 7.2 million pounds of U3O8 at 0.065%
as an indicated resource and 1.8 million pounds of U3O8 at 0.055 %
as an inferred resource.  The Corporation maintains 143 lode mining
claims at Lost Soldier, totaling approximately 2,710 mineral
acres.  Of these 143 mining claims, 60 are new claims which were
staked in 2008 for mine engineering design purposes.  A royalty on
future production of 1%, which arises from a data purchase, is in place with
respect to certain claims within the project.
 
 All
environmental baseline studies were completed in 2007.  In January
2008, the Lost Soldier deposit was turned over to the Corporation’s engineering
staff for detailed engineering evaluation and study, which has been
ongoing.  Subsequently, in late 2008, members of the geology staff
have commenced in-depth studies which focus on detailed mapping of the
roll-front geology.  These studies will then be followed by detailed
mine design planning, and a preliminary assessment, all of which are expected to
proceed in 2009.
 
 In March
2008, the Corporation had requested a separate docket number and technical
assignment control number for the Lost Soldier project from the
NRC.  The Corporation has since determined it will submit the
applications to the NRC and WDEQ as amendments to the Lost Creek licenses, after
they are issued by those agencies.  It is anticipated that the Lost
Soldier licensing effort will be streamlined and more efficient as a satellite
facility to the Lost Creek project.
 
 Technical
Report
  The
following Executive Summary is extracted from the technical report dated July
10, 2006 and titled “Technical Report on the Lost Soldier Property, Wyoming”,
which was prepared for the Corporation in accordance with NI 43-101 by RPA (the
“Technical Report – Lost Soldier”).  The Technical Report – Lost
Soldier can be viewed under the Corporation’s profile on the SEDAR website at
www.sedar.com.
  EXECUTIVE
SUMMARY
  RPA was
retained by Ur-Energy, to prepare an independent Technical Report on the Lost
Soldier Project in the State of Wyoming, USA.
  The Lost
Soldier Project consists of 70 unpatented claims totaling 1,400 acres located in
Sweetwater County, 90 miles southwest of Casper, Wyoming. The property was
extensively drilled in the 1970s and more recently Ur-Energy has completed a
program of data compilation and continuation drilling.
  The
current resources at the Lost Soldier Project as at May 30, 2006, based on a
minimum grade of 0.03%  U3O8 and a
grade thickness (GT) equal to or greater than 0.3 are reported in Table 1-1. RPA
is of the opinion that the classification of resources as stated meets the CIM
definitions as adopted by the CIM Council on November 14, 2004 as required by
National Instrument 43-101.
 
 - 22
-
 
 Table
1-1 Lost Soldier Resources – 2006
 Ur-Energy
Inc. Lost Soldier Project
  Classification
              
              Tons
                (Millions)
              
              
              Average
                Thickness
      (Ft.)
              
              
              Grade
                %
      U3O8
              
              
              Pounds
      U3O8
                (Millions)Measured
              
              
              3.9
              
              
              
              21.1
              
              
              
              0.064
              
              
              
              5.0Indicated
              
              
              5.5
              
              
              
              17.1
              
              
              
              0.065
              
              
              
              7.2Total
      M+I
              
              
              9.4
              
              
              
              17.2
              
              
              
              0.065
              
              
              
              12.2Inferred
              
              
              1.6
              
              
              
              14.5
              
              
              
              0.055
              
              
              
              1.8
 
  Preliminary
leach tests indicate that the mineralization is amenable to leaching with an
oxygenated lixiviant. The main mineralized horizons consist of nine sand units
ranging from depths of 100 ft. to greater than 450 ft. below the surface and are
separated by impermeable mudstones and therefore are considered to be ideal for
the use of ISL methodology.
  Ur-Energy
has proposed a US$3.145 million budget to advance the project during the year
ending June 2007. The proposed program includes the drilling of 17 wells in
order to carry out pump tests and water quality analysis, permitting, collection
of environmental data and feasibility studies. Ur-Energy is planning to submit
an application for mine permits by mid 2007.
  RPA is of
the opinion that Ur-Energy should continue with the drilling, pump tests,
permitting and feasibility studies leading to a production
decision.
  TECHNICAL
SUMMARY
  The Lost
Soldier Project is readily accessible year round by three miles of gravel road
from Bairoil, which is approximately 90 miles southwest of Casper.
  In the
late 1960s, Kerr-McGee Corp. (Kermac) carried out reconnaissance exploration and
drilling that showed potential for low-grade mineralization in the Lost Soldier
area. Kermac continued drilling through May, 1974 but let the property expire in
1986. More than 5,900 exploration, development, and core holes, totaling over
3.3 million ft. have been drilled in the area, half of which were drilled on 50
ft. to 100 ft. spacing.
  Several
individuals restaked the property and from 1992 to 1994, Cameco Corporation
(Cameco) re-evaluated the property in 1993 and 1994. Cameco completed 28 holes
totaling 13,481 ft. including 911 ft. of coring in 19 holes to provide samples
for porosity and permeability tests. It is reported that there was excellent
permeability in the mineralized sands and low permeability in the confining
zones. The leach tests confirmed that the mineralization was amenable to
leaching with bicarbonate lixiviant.
  Cameco
transferred the property to its subsidiary Power Resources in January 1997 and
the property was returned to the original owners in 2000. In 2003, New Frontiers
) consolidated the 53 claim property.
  Effective
June 30, 2005, Ur-Energy entered into the Membership Interest Purchase Agreement
where under it agreed to purchase all of the issued and outstanding membership
interests in NFU for US$20 million as part of a package of properties that
includes an extensive database. Ur-Energy staked an additional 17 claims
adjoining the original property.
  There
have been a number of historic resource estimates completed by various owners of
the property with the most recent being Cameco, (1994) that reported the
following resources:
  • Demonstrated: 8.4 million pounds of
U3O8
  • Inferred: 7.3 million pounds of
U3O8
  The
resources stated above are historical in nature and Ur-Energy is not treating
the historical estimates as National Instrument 43-101 defined resources or
reserves verified by a qualified person and the historical estimates should not
be relied upon.
  
 - 23
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 The Lost
Soldier deposit occurs in the eastern part of the Great Divide Basin in arkosic
sandstones of the Eocene Battle Spring Formation. Pliocene pediment and gravel
deposits cover the sedimentary rocks and average four ft. thick. The Battle
Spring Formation is 900 ft. thick locally and dips 1.5° to 15° west reflecting
the Lost Soldier anticline. Mineralized intervals are found at depths ranging
from less than 75 ft. to 500 ft. with individual sandstone beds up to 120 ft.
thick containing uranium mineralization. Siltstone and mudstone intervals up to
30 ft. thick correlate across the area and separate the upper and lower
sandstones. Alteration in barren zones within the geochemical cell shows
limonite and hematite staining, kaolinization of feldspar, bleaching, and
greenish coloration by chlorite. The area has a static water table 30 ft. to 100
ft. deep, typically 70 ft. to 80 ft.
  Uranium
occurs as uraninite and coffinite, in roll fronts and in stacked tabular bodies
in arkosic sandstones. Some of the mineralization is also related to
post-mineral faulting and remobilization. Mineralization occurs in nine or more
sandstone horizons, generally 7 ft. to 16 ft. thick. An upper sandstone unit
about l00 ft. thick contains most of the uranium mineralization. Grade ranges
from 0.04% to 0.20% U3O8 with an
average of intercepts in the mineralized zone of 0.078% U3O8.  Several
mineralized fronts extend beyond the core area, providing possible extensions to
the deposit to the west-northwest and south.
  Ur-Energy
completed five rotary holes totaling 1,857 ft. during October and November 2005.
The holes were spotted within 5 ft. or 10 ft. of the historical holes in order
to verify mineralization intersected in these older holes and allow comparison
of the mineralized intervals. Century Geophysical Corp of Tulsa, Oklahoma
carried out downhole surveys which included gamma logs, self potential,
resistivity and deviation surveys for all the holes. Of the total footage, 197
ft. in five holes were cored and 97 one-foot or 0.5 foot samples were chemically
assayed at Energy Laboratories in Casper, Wyoming using a four-acid leach and
ICP analysis. Energy Labs has been carrying out uranium analysis for over 25
years and is considered to be a recognized laboratory.
  Ur-Energy
selected six one-foot samples from the recent drilling to undergo bottle roll
leach tests. The work was carried out over an 80 hour period at Energy Labs
using a lixiviant of sodium bicarbonate and hydrogen peroxide. Analysis of the
leach solutions indicated leach efficiencies of 53% to 94%. Tails analysis
indicated an average U3O8 extraction
of 65.2%.
  AATA
International Inc., an environmental consultancy at Fort Collins, Colorado,
reports that based on the experience of two permitted projects, approval of a
new greenfield ISL project could require three to four years after the decision
to proceed with a baseline data collection. Ur-Energy will fast-track the
project to shorten the timetable by one year by carrying out concurrent studies
wherever possible and being proactive with the agencies. The schedule is driven
by the collection of the environmental baseline data and project
data.  Ur-Energy has commenced collection of the baseline data
required, and permission has been received from the Wyoming Department of
Environmental Quality (WDEQ) for the drilling of 17 wells to be used for
monitoring wells and pump tests that will commence in June. The pump tests will
provide information on water quality and permeability of the sandstones relative
to the horizontal and vertical flow. Wildlife, meteorological, soil and
vegetation surveys have commenced and archaeological and radiology surveys are
scheduled for this summer.
  A total
of 3,760 holes within the current property boundary contain mineralized
intervals greater than 0.03% U3O8 of which
1,933 holes are used in the resource estimate. The majority of the data consist
of U3O8 grade
estimated from geophysical logs. Chemical assays are used where available
representing approximately 2% of the intervals. Grade thickness (GT) values were
then calculated for each hole, using a cut-off of 0.03% U3O8.  All
intervals above the cut-offs were summed to provide a total interval thickness
in each hole. Only intercepts deeper than 100 ft. contributed to the total
thickness. A 0.3 GT boundary was used to create polygons, for which the area was
measured. One hundred and fifty (150) holes within this GT boundary but with a
GT value below the cut-off of 0.3 were excluded from the resource
estimate.
  RPA
reviewed selective geophysical drill logs, compared the Cameco and Kermac drill
holes, chemical assays and geophysical logs with the twins drilled by Ur-Energy
and considers all of the drill hole data appropriate for use in a resource
estimate.
  A cut-off
grade of 0.03% U3O8and a
grade thickness product (GT) equal to or greater than 0.3 were used to define
the mineral resources. This is based on a uranium price of US$40 per pound and
estimated operating costs of approximately US$20 per pound.
  
 - 24
-
 
 Classification
of the resources was determined by a combination of grade continuity and drill
hole spacing, nominally 50 ft. centres for measured resources, 100 ft. centres
for indicated and up to 200 ft. for inferred resources.
  C.
Organizational
Structure.
  The
Corporation has three wholly-owned subsidiaries:  Ur-Energy USA Inc.
(“Ur-Energy USA”), a  company incorporated under the laws of the State
of Colorado for the acquisition and development of properties and, generally,
for operations in the United States;  ISL Resources Corporation
(“ISL”), a company incorporated under the laws of the Province of Ontario; and
CBM-Energy Inc. (“CBM”), a company incorporated under the laws of the Province
of Ontario, that is a shell company with no assets or liabilities other than
those related to its incorporation.
  ISL has
one wholly-owned subsidiary, ISL Wyoming, Inc., a company incorporated under the
laws of the State of Wyoming.
  Ur-Energy
USA has four wholly-owned subsidiaries: NFU Wyoming, LLC (“NFU”), a limited
liability company formed under the laws of the State of Wyoming to facilitate
the Corporation’s acquisition of certain property and assets and subsequently to
be the land holding and exploration branch of the companies; NFUR Bootheel, LLC,
a limited liability company formed under the laws of the State of Colorado to
facilitate the Corporation’s  participation in a limited liability
company venture agreement with Target Exploration & Mining Corp.; NFUR
Hauber, LLC, a limited liability company initially formed under the laws of the
State of Colorado to facilitate the Corporation’s  participation in an
exploration, mining and development agreement with Trigon Uranium Corporation
(following Trigon’s resignation from the entity formed, NFUR Hauber, LLC now is
the sole member of the limited liability company formed with Trigon in 2007);
and, Lost Creek ISR, LLC, a limited liability company formed under the laws of
the State of Wyoming to hold and operate the Corporation’s Lost Creek property
and assets.
  NFUR
Bootheel has one wholly-owned subsidiary:  The Bootheel Project, LLC,
a limited liability company formed under the laws of the State of Colorado to
hold the Corporation’s Bootheel project and the venture formed with Target
Exploration & Mining Corp.
  NFUR
Hauber has one wholly-owned subsidiary:  Hauber Project LLC, a limited
liability company formed under the laws of the State of Colorado to hold the
Corporation’s Hauber project and the venture initially formed with Trigon
Uranium Corporation.  NFUR Hauber, is and since August 1, 2008 has
been, the only member of Hauber, and is the current manager of the
company.
 
 - 25
-
 
 The
principal direct and indirect subsidiaries of the Corporation and the
jurisdictions in which they were incorporated or organized are set out
below:
  
   D.
Property, plants and
equipment.
  In
addition to Lost Creek and Lost Soldier, the Corporation has a number of other
properties in the United States and Canada.  The Corporation currently
maintains approximately 65,000 mineral acres of exploration lands in Wyoming;
and has approximately 62,000 hectares (153,000 acres) in exploration mineral
lands in Canada. Previously, as related to its projects in the United States,
the Corporation utilized rounded estimates of mining claim mineral acreage based
upon number of claims staked multiplied by an estimated standard claim size of
20.66 acres per claim.  Recently, the Corporation upgraded and converted
its land management system processes to begin calculating mining claim mineral
acreage primarily using mapping software which permits more accurate
approximations.  By way of example, mining claims normally are staked to
overlap on adjacent property to eliminate the possibility of gaps and can cover
an area larger than actually controlled; as well, claims deliberately may be
staked smaller than standard size to cover gaps.
 
 Due to
budget constraints imposed during fourth quarter 2008, and the focus on
progressing the Lost Creek Project to licensure and production, several cutbacks
were made to the exploration programs of the Corporation, including the drilling
programs at the North Hadsell and LC North projects. Also as a result of these
budgetary controls, the Corporation dropped exploration lands in South Dakota
containing over 72,000 acres prior to additional costs of retention being
incurred.
 
 In
addition to the land position of the Corporation, an in-house team of geologists
continues to evaluate the extensive well log and exploration database owned by
the Corporation for generating new exploration targets for the future, as well
as other possible value – through sale or venture opportunities – of the
database.
 
  Lost
Creek and Lost Soldier Projects
  See “Item
4.B – Business Overview” for detailed description and background of the Lost
Creek and Lost Soldier Projects.
  Other Wyoming
Properties
 
 - 26
-
 
 
 EN
Project
 
 The EN
project lies approximately five miles east-southeast of the Lost Creek project.
The primary goal of the 2007 drilling program was to investigate multiple
occurrences of significant uranium mineral intercepts detected at depth in an
abandoned oil and gas exploration hole drilled in 1979. A secondary goal was to
provide reconnaissance information regarding stratigraphic and alteration
characteristics of the Battle Spring Formation to supplement historic drilling
data from elsewhere within the property. Three rotary drill holes were completed
in 2007 for a total of 8,605 feet (2,623 meters). The results confirmed
mineralization in the target zone.  Although this planned drilling
program was insufficient to substantiate economic concentrations, multiple,
previously undetected, horizons of oxidation and trace mineralization were
identified in the new drill holes.   In 2008, exploration
drilling of 11,370 feet (3,468 meters) was completed at the EN project. In
January 2009, the Corporation completed an agreement reducing an existing
royalty on claims and an area of interest arising from transactions dating back
to 2006.  With regard to the EN Project, and three other areas, the
Corporation was able to eliminate the area of interest and to reduce the royalty
from two percent (2%) to one percent (1%) on certain specified mining
claims.  In a related transaction, the Corporation purchased 66 new claims
which have become a part of the EN Project, bringing that project to a total of
533 mining claims, together with one state mining lease.
  LC
North and LC South
 
 The
Corporation has expanded its land holdings in and around the Lost Creek Project,
and currently controls a total of 969 unpatented mining claims and one State of
Wyoming section for a total of approximately18,660 mineral acres
including the Lost Creek Permit Area, and two other adjacent areas now
designated LC North and LC South.  The primary goal of the initial
drilling program at LC North in 2007 was to investigate numerous occurrences of
uranium-bearing intercepts detected by historical exploration drilling by
previous operators in the 1970s; and to examine their relationships to the
mineralization to be mined at the Lost Creek project. Preliminary evaluation of
this historic drilling data indicated the potential for mineral trends in two
areas, informally referred to as the East and West areas. The 2007 drilling
program, originally planned for 50 exploration holes, was initiated in October
2007, but was halted in December 2007 to divert the drill rigs to activities at
the Lost Creek Project. To that point in time, 30 holes were drilled for a total
of 29,600 feet (9,022 meters). Drilling focused on the West area where 25 holes
were drilled; five holes were drilled in the East area. The results confirmed
mineralization occurring in multiple target horizons, many of which correlate
stratigraphically with mineral horizons in the Lost Creek trend. Drilling in
this area was at variable and wide spacing and did not allow confirmation of
mineral continuity or estimation of resources; the results indicate the
potential for extension of the Lost Creek mineral trends into the LC North
property, as well as the possibility of previously unidentified mineral
horizons.  Although the Corporation had anticipated additional
drilling at LC North in 2008, that exploration drilling was the subject of
budget cutbacks in September 2008.
 
 Bootheel
Project and Limited Liability Company with Target Exploration & Mining
Corp.
  On March
17, 2006, Ur-Energy and Energy Metals Corporation (“Energy Metals”) signed an
agreement to complete a land swap enabling each company to consolidate its
respective land positions in specific project areas in Wyoming.  The
companies determined that the consolidation of the property positions would
create greater efficiencies in exploration and future mine
planning.  The Corporation traded its Shamrock properties and Chalk
Hills properties for Energy Metals’ properties in the Bootheel project
area.  Pursuant to the agreement, the Corporation received Energy
Metals’ 28 unpatented mineral claims known as the TD group in Albany County,
Wyoming.  Energy Metals received the Corporation’s 356 unpatented “F”
mineral claims located in the southern Great Divide Basin in Carbon and
Sweetwater Counties, Wyoming along with two unpatented “Rita” mining claims
located in the Shirley Basin in Carbon County, Wyoming.  Under the
terms of the agreement, Energy Metals and the Corporation have granted one
another a 1⁄2% royalty on future production of uranium from the
properties.
  In July
2006, 36 new mineral claims were acquired by the Corporation to add to the
Bootheel project.
 
 - 27
-
 
 In 2007,
the Corporation completed the acquisition of a data package from Power Resources
Inc. ("PRI") pertinent to exploration and development in the Shirley Basin,
Wyoming for a total purchase price of US$180,000, which was paid in two equal
installments in 2006 and 2007. The data includes drill hole logs for more than
1,000 drill holes, historical resource reports, maps, drill summaries,
individual drill hole summaries, handwritten notes, and digital printouts from
such previous operators as Cherokee, Kerr McGee, Uradco (PP&L), and Mobil as
well as historical feasibility reports from Dames & Moore and Nuclear
Assurance.
  The
Corporation has made this data covering its Bootheel and Buck Point properties,
and certain other data, available to the venture with Target (below). The data
purchase agreement reserves a 1% royalty interest to PRI on uranium and
associated minerals and materials which may be produced from the Bootheel and
Buck Point properties.
 
 In 2007,
the Corporation entered into an agreement with Target Exploration & Mining
Corp. and its subsidiary ("Target"). Under the terms of the agreement, the
Corporation contributed its Bootheel and Buck Point properties to The Bootheel
Project, LLC (the “Bootheel Project”).  The properties cover an area
of known uranium occurrences. Target is earning into a 75% interest in the
Bootheel Project by spending US$3.0 million in exploration costs, and issuing
125,000 shares of its common stock to the Corporation, all within a four-year
earn-in period.  With the completion earlier in 2008 of agreements for
additional rights and leased lands, the total project covers a defined area of
approximately 8,524 gross and 7,895 net, mineral acres.  (The
statement of net mineral acres with regard to the Bootheel property arises as a
part of the 2008 agreements to which the lessor has a 75% mineral
interest.)  There are various royalties on future production within
the project area.
 
 Earlier
in 2008, Target timely issued its second installment of stock (25,000 shares)
and confirmed its completion of the first year’s required exploration
expenditures.  Also in 2008, Target completed a 50,000 foot (15,250
meter) drilling program on the Bootheel property. The purpose of the program was
to bring the historic resources in National Instrument 43-101 compliance. In
January 2009, Target announced that it had completed the acquisition of the
final historic data package in behalf of the Bootheel Project.  The
data package, purchased from Cameco Corp., comprises data from approximately
290,000 feet of drilling carried out by Cameco, Kerr McGee and Uradco. The data
acquired includes not only geological logs but also gamma logs containing
equivalent uranium (eU3O8), values.
This industry standard method of using eU3O8 indicates
the amount of uranium present as determined by measuring gamma radiation using a
down-hole probe.
 
 In
February 2009, Target issued 50,000 additional shares of its stock to the
Corporation to complete the stock-based earn-in obligations (third and fourth
installments) of the operating agreement of the Bootheel Project.
  Hauber
Project and Limited Liability Company with Trigon Uranium
Corporation
  In 2007,
the Corporation entered into agreements with Trigon Uranium Corporation and its
subsidiary ("Trigon"). Under the terms of the agreements, the Corporation
contributed its Hauber property to Hauber Project LLC (the “Hauber
Project”).  The Hauber Project is located in Crook County, Wyoming and
consists of 205 unpatented lode mining claims and one state uranium lease
totaling approximately 4,572 mineral acres.  Effective August 1, 2008,
Trigon tendered its resignation as a Member and the Manager of the Hauber
Project.  Transition of management of the Hauber Project back to the
Corporation has been completed.  Before Trigon's decision not to
proceed, it had contracted, as Manager of the Hauber Project, for several
outside geologic and hydrologic analytical projects which were completed and
submitted during the first half of 2008.  The consultants employed
abundant historic data to define the geologic setting and assess the potential
of the Hauber Project properties for the recovery of uranium through ISR mining
methods.  Further in-house analysis of these reports is
ongoing.
 
 Canadian
Properties and Interests
  The
Corporation has three properties in the Thelon Basin in northern
Canada:  Screech Lake (described immediately below), Eyeberry and
Gravel Hill.  Assessment work was conducted at Gravel Hill in 2008;
there are currently no plans for exploration work at Gravel Hill in
2009.   In the Baker Lake Basin, the Corporation has one project,
the Bugs property (described below).
 - 28
-
  The
Corporation also retains a 5% royalty interest in the Mountain Lake and Dismal
Lake West properties (together, comprising 58 claims) on which Triex Minerals
Corporation (“Triex”) is currently conducting exploration.  The
royalty interest arises from a 2006 agreement with Triex with respect to the two
properties.  Pursuant to the agreement, Triex obtained a 100% interest
in the properties in September 2007.  Triex retains the right to
purchase back one-half of the royalty for $5,000,000.
 
 Thelon
Basin Properties
  The
Thelon Basin Properties are grass roots projects which the Corporation believes
have potential for discovery of high-grade unconformity uranium deposits of the
Athabasca style. The claims are located on Crown Lands situated in the Thelon
Basin of the Northwest Territories. The Thelon Basin is host to the undeveloped
Kikkavik-Andrew Lake and End uranium deposits.  Of the three
properties the Corporation has in the Thelon Basin, the Screech Lake Project
remains the Corporation’s priority.
  Potential
high-grade uranium at the unconformity on the Screech Lake claim group is
indicated by high surface radon and radiogenic helium gases in soils and
radioactive groundwaters emitted by lake bottom springs.  Airborne
MEGATEM® surveys and ground electromagnetic surveys confirm a very low
resistivity zone underlying the anomalous surface conditions at and above the
unconformity contact. This strong basement electromagnetic conductor has been
interpreted to be due to clay alteration just above the
unconformity.  Various geophysical work has been conducted on the
property since 2005, as well as a ground exploration program which was completed
in 2006.
  Highly
anomalous radon concentrations and trends were identified.  The
coincidence of consistent high to extremely high radon with deep structure and
conductivity combine to make the North Screech radon trend the primary focus of
more advanced exploration on the Screech Lake project.
  In 2006,
an environmental screening study was completed on the Screech Lake project and
an application for a land use permit to conduct drill testing of the Screech
Lake anomalies was referred to the Mackenzie Valley Environmental Impact Review
Board (“Review Board”) for environmental assessment. In 2007, the environmental
assessment was completed and a report and recommendation from the Review Board
was issued. The Review Board recommended to the Minister of Indian and Northern
Affairs Canada (the “Minister”) that the Corporation’s  application to
conduct an exploratory drilling program at the Screech Lake property be rejected
due to local native community concerns.
  In
October 2007, the Corporation received notification that the Minister had
adopted the recommendation of the Review Board. As part of the decision, the
Minister did confirm that the decision does not affect the legal standing of the
Corporation’s Screech Lake mineral claims. Discussions with the Minister and
other interested parties led the Corporation to conclude that the rejection was
influenced, in part, by land claims issues between First Nations groups and the
Federal government, and to a lesser extent, environmental concerns related to
caribou migration routes and timing of a drill program.  In the
Corporation’s application for a land use permit, extensive mitigation measures
were proposed to ensure that the drilling program would have minimal short-term
environmental impact and no long-term effect.
  In 2008
the Corporation has continued ongoing discussions with First Nations groups and
Aboriginal-owned business corporations to secure an exploration agreement which
would allow the Corporation to proceed with re-filing of a drilling proposal and
application for land use permit.
  Bugs
Property, Baker Lake Basin
  In
September 2006, the Corporation entered into an option agreement to acquire the
Bugs property in Nunavut, Canada.  The Corporation has earned a 100%
interest in the property by issuing a total of 85,000 common shares to the
vendor.  The vendor retains a 2% net smelter royalty, of which 1% is
subject to a buyout for $1.0 million. The Bugs property initially consisted of
11 contiguous mineral claims in the Kivalliq region of the Baker Lake
Basin.  In 2008 the Corporation staked an additional eight mineral
claims, which together total approximately 45,000 acres (approximately 18,000
hectares).
 
 - 29
-
 
 In 2006,
a fixed wing aeromagnetic and radiometric survey was conducted on the entire
property. The data from this survey resulted in the selection of seven targets
based upon structural offset and dilation features in combination with magnetite
depletion. In 2007, one of the seven targets was examined; the remaining targets
were examined and prioritized during the 2008 summer program by radon sampling
techniques, prospecting and rock sampling. This work led to interpreted areas of
hydrothermal alteration, elevated radioactivity and high radon
flux.
 
 Six drill
holes were completed from late-August to mid-September of 2008, for a total of
2,905 feet (885 meters).    The program was terminated early
due to problems with drilling equipment.  Results of the program are
being evaluated by the Corporation. The Corporation incurred total exploration
and acquisition costs of approximately $2.0 million during the 2008
program.  As a part of this program, the Corporation utilized funds
from the flow-through financing it raised in March 2008.
  Item
4A. Unresolved Staff Comments.
   Not
applicable.
   Item
5. Operating and Financial Review and Prospects.
  MANAGEMENT’S
DISCUSSION AND ANALYSIS
 
 Introduction
 
 The
following provides management’s discussion and analysis of results of operations
and financial condition for the years ended December 31, 2008, 2007 and
2006.  Management’s Discussion and Analysis was prepared by Company
management and approved by the Board of Directors on March 18,
2009.  This discussion and analysis should be read in conjunction with
the Company’s audited consolidated financial statements for the years ended
December 31, 2008, 2007 and 2006.  All figures are presented in
Canadian dollars, unless otherwise noted, and are in accordance with Canadian
generally accepted accounting principles.
 
 In
December 2008, the Company changed its policy for accounting for exploration and
development expenditures.  In prior years, the Company capitalized all
direct exploration and development expenditures.  Under its new
policy, exploration, evaluation and development expenditures, including annual
exploration license and maintenance fees, are charged to earnings as incurred
until the mineral property becomes commercially mineable. Management considers
that a mineral property will become commercially mineable when it can be legally
mined, as indicated by the receipt of key permits.  This change has
been applied retroactively and all comparative amounts in this Management’s
Discussion and Analysis (“MD&A”) have been restated to give effect to this
change.  These changes are discussed more fully under the heading
“Changes in Accounting Policies Including Initial Adoption”.
 
 The
Company was incorporated on March 22, 2004 and completed its first year-end on
December 31, 2004.  The consolidated financial statements include all
of the assets, liabilities and expenses of the Company and its wholly-owned
subsidiaries Ur-Energy USA Inc.; NFU Wyoming, LLC; Lost Creek ISR, LLC; The
Bootheel Project, LLC; NFUR Bootheel, LLC; Hauber Project LLC; NFUR Hauber, LLC;
ISL Resources Corporation; ISL Wyoming, Inc.; and CBM-Energy Inc. All
inter-company balances and transactions have been eliminated upon consolidation.
Ur-Energy Inc. and its wholly-owned subsidiaries are collectively referred to
herein as the “Company”.
 
 Forward-Looking
Information
  This
Management’s Discussion and Analysis contains "forward-looking statements"
within the meaning of applicable United States and Canadian securities laws.
Shareholders can identify these forward-looking statements by the use of words
such as "expect", "anticipate", "estimate", "believe", "may", "potential",
"intends", "plans" and other similar expressions or statements that an action,
event or result "may", "could" or "should" be taken, occur or be achieved, or
the negative thereof or other similar statements. These statements
 - 30
-
  are only
predictions and involve known and unknown risks, uncertainties and other factors
which may cause the Company’s actual results, performance or achievements, or
industry results, to be materially different from any future results,
performance, or achievements expressed or implied by these forward-looking
statements. Such statements include, but are not limited to: (i) the Company’s
belief that it will have sufficient cash to fund its capital requirements;
(ii)receipt of
(and related timing of) a US Nuclear Regulatory Commission (“NRC”) Source
Material License, Wyoming Department of Environmental Quality (“WDEQ”) Permit
and License to Mine and other necessary permits related to Lost Creek; (iii)
Lost Creek and Lost Soldier will advance to production and the production
timeline at Lost Creek scheduled for late 2010; (iv) production rates,
timetables and methods at Lost Creek and Lost Soldier; (v) the Company’s
procurement plans and construction plans at Lost Creek; (vi) the licensing
process at Lost Soldier which efforts are expected to be streamlined; (vii) the
timing, the mine design planning and the preliminary assessment at Lost Soldier;
(viii) the completion and timing of various exploration programs and (ix) the
regulatory issues with the Thelon Basin Properties and related
exploration.  These other factors include, among others, the
following: future estimates for production, production start-up and operations
(including any difficulties with start up),  capital expenditures,
operating costs, mineral resources, recovery rates, grades and prices; business
strategies and measures to implement such strategies; competitive strengths;
estimated goals; expansion and growth of the business and operations; plans and
references to the Company’s future successes; the Company’s history of operating
losses and uncertainty of future profitability; the Company’s status as an
exploration and development stage company; the Company’s lack of mineral
reserves; the hazards associated with mining construction and production;
compliance with environmental laws and regulations; risks associated with
obtaining permits in Canada and the United States; risks associated with current
variable economic conditions; the possible impact of future financings;
uncertainty regarding the pricing and collection of accounts; risks associated
with dependence on sales in foreign countries; the possibility for adverse
results in potential litigation; fluctuations in foreign exchange rates;
uncertainties associated with changes in government policy and regulation;
uncertainties associated with the Canadian Revenue Agency’s audit of any of the
Company’s cross border transactions; adverse changes in general business
conditions in any of the countries in which the Company does business; changes
in the Company’s size and structure; the effectiveness of the Company’s
management and its strategic relationships; risks associated with the Company’s
ability to attract and retain key personnel; uncertainties regarding the
Company’s need for additional capital; uncertainty regarding the fluctuations of
the Company’s quarterly results; uncertainties relating to the Company’s status
as a non-U.S. corporation; uncertainties related to the volatility of the
Company’s shares price and trading volumes; foreign currency exchange risks;
ability to enforce civil liabilities under U.S. securities laws outside the
United States; ability to maintain the Company’s listing on the NYSE Amex (the
“NYSE Amex”) and Toronto Stock Exchange (the “TSX”); risks associated with the
Company’s possible status as a "passive foreign investment company" or a
"controlled foreign corporation" under the applicable provisions of the U.S.
Internal Revenue Code of 1986, as amended; risks associated with the Company’s
investments and other risks and uncertainties described under the heading “Risk
Factors” of the Company’s Annual Report on Form 20-F (Annual Information Form)
dated March 18, 2009 which is filed on SEDAR at www.sedar.com and
with the US Securities and Exchange Commission at www.sec.gov.
 
 Nature
of Operations and Description of Business
 
 The
Company is a development stage junior mining company engaged in the
identification, acquisition, evaluation, exploration and development of uranium
mineral properties in Canada and the United States. The Company has not yet
determined whether its properties contain mineral reserves. The recoverability
of amounts recorded for mineral properties is dependent upon the discovery of
economically recoverable resources, the ability of the Company to obtain the
necessary financing to complete the development of these properties and upon
attaining future profitable production from the properties or sufficient
proceeds from disposition of the properties.  The Company is currently
in the process of permitting its Lost Creek property.  As identified
in the June 2006 Technical Report on Lost Creek, National Instrument 43-101
compliant resources are 9.8 million
 
 - 31
-
 
 pounds of
U3O8 at 0.058
percent as an indicated resource and an additional 1.1 million pounds of U3O8 at 0.076
percent as an inferred resource.
 
 The
Company is focused on uranium exploration in the following areas: (i) Wyoming,
USA where the Company has fourteen properties.  Of those fourteen
properties, ten are in the Great Divide Basin, two of which (Lost Creek and Lost
Soldier) contain defined resources that the Company expects to advance to
production.  The Company’s other Wyoming projects include two
properties in the Shirley Basin, one property in the Greater Black Hills, and
one property in the Powder River Basin; (ii) Arizona, USA where the Company has
acquired a property in Yuma County; (iii) the Thelon Basin, Northwest
Territories, Canada, where it has three properties; and (iv) Baker Lake Basin,
Nunavut, Canada, where it has one property.
 
 Selected
Information
 
 The
following table contains selected financial information as at December 31, 2008
and December 31, 2007.
 
 As
      at
                December
      31,
                2008
                $
              
              
              As
      at
                December
      31,
                2007
                $
                (As
      restated)Total
      assets
              
              
              101,533,965
              
              
              
              110,931,322Liabilities
              
              
              3,256,634
              
              
              
              2,092,296Net
      assets
              
              
              98,277,331
              
              
              
              108,839,026
  Capital
      stock and contributed surplus
              
              
              157,118,019
              
              
              
              149,826,129Deficit
              
              
              (58,840,688
              )
              
              
              (40,987,103
              )Shareholders’
      equity
              
              
              98,277,331
              
              
              
              108,839,026
 
 The
following table contains selected financial information for the years ended
December 31, 2008, 2007 and 2006 and cumulative information from inception of
the Company on March 22, 2004 to December 31, 2008.
 
 Year
      Ended
                December
      31,
                2008
                $
              
              
              Year
      Ended
                December
      31,
                2007
                $
                (As
      restated)
              
              
              Year
      Ended
                December
      31,
                2006
                $
                (As
      restated)
              
              
              Cumulative
                from
      March
                22,
      2004 to
                December
      31,
                2008
                $
                (As
      restated)Revenue
              
              Nil
              
              
              Nil
              
              
              Nil
              
              
              NilTotal
      expenses(1)
              
              
              (25,967,711
              )
              
              
              (22,959,356
              )
              
              
              (12,395,814
              )
              
              
              (70,879,783
              )Interest
      income
              
              
              2,494,445
              
              
              
              2,816,398
              
              
              
              629,724
              
              
              
              6,078,439Foreign
      exchange gain (loss)
              
              
              5,656,319
              
              
              
              (806,420
              )
              
              
              (177,141
              )
              
              
              5,568,239Other
      income (loss)
              
              
              (36,638
              )
              
              
              -
              
              
              
              -
              
              
              
              (36,638
              )Loss
      before income taxes
              
              
              (17,853,585
              )
              
              
              (20,949,378
              )
              
              
              (11,943,231
              )
              
              
              (59,269,743
              )Recovery
      (loss) of future income taxes
              
              
              -
              
              
              
              429,055
              
              
              
              -
              
              
              
              429,055Net
      loss for the period
              
              
              (17,853,585
              )
              
              
              (20,520,323
              )
              
              
              (11,943,231
              )
              
              
              (58,840,688
              )
 
 (1)
      Stock based compensation included in total expenses
              
              
              (4,567,206
              )
              
              
              (6,138,922
              )
              
              
              (3,505,517
              )
              
              
              (14,762,197
              )Loss
      per common share:
                Basic
      and diluted
              
              
              (0.19)
              
              
              
              (0.24)
              
              
              
              (0.20)Cash
      dividends per common share
              
              
              Nil
              
              
              
              Nil
              
              
              
              Nil
  - 32
-
 The
Company has not generated any revenue from its operating activities from
inception to date.  The Company’s expenses include costs for general
and administrative expense, exploration and evaluation costs, development
expense and write-off of mineral property costs.  The Company has
recorded significant stock-based compensation costs which were included in total
expenses. Acquisition costs of mineral properties are
capitalized.  Exploration, evaluation and development expenditures,
including annual maintenance and lease fees, are charged to earnings as incurred
until the mineral property becomes commercially mineable.
 
 No cash
dividends have been paid by the Company.  The Company has no present
intention of paying cash dividends on its common shares as it anticipates that
all presently available funds will be invested to finance new and existing
exploration and development activities.
 
 Overall
Performance and Results of Operations
 
 From
inception to December 31, 2008, the Company has raised total cash proceeds from
the issuance of common shares and warrants and from the exercise of warrants,
compensation options and stock options of $141.2 million.  As at
December 31, 2008, the Company held cash and cash equivalents, and short-term
investments of $65.0 million.  The Company's cash resources are
invested with major banks in bankers' acceptances, guaranteed investment
certificates, certificates of deposit, and money market accounts. The Company
has made significant investments in mineral properties and exploration,
evaluation and development expenditures.
 
 Mineral
Properties
 
 During
the year ended December 31, 2008, the Company expended cash of $0.9 million
(2007 – $1.4 million) on mineral property costs.  The most significant
component of these costs is staking and claim costs associated with the
acquisition of the mineral properties primarily located in the United
States.  The Company’s mineral properties are located in Wyoming, USA,
Arizona, USA, Northwest Territories, Canada, and Nunavut, Canada.
 
 Revised
Method of Acreage Calculation
 
 Previously,
as related to its projects in the United States, the Company utilized rounded
estimates of mining claim mineral acreage based upon number of claims staked
multiplied by an estimated standard claim size of 20.66 acres per claim. 
Recently, the Company upgraded and converted its land management system
processes to begin calculating mining claim mineral acreage primarily using
mapping software which permits more accurate approximations.  By way of
example, mining claims normally are staked to overlap on adjacent property to
eliminate the possibility of gaps and can cover an area larger than actually
controlled; as well, claims deliberately may be staked smaller than standard
size to cover gaps.
 
 Wyoming,
USA Properties
 
 Lost Creek
Project
  The Lost
Creek uranium deposit is located in the Great Divide Basin, Wyoming. The deposit
is approximately three miles (4.8 kilometers) long and the mineralization occurs
in four main sandstone horizons between 315 feet (96 meters) and 700 feet (213
meters) in depth.
 
 As
identified in the June 2006 Technical Report on Lost Creek, National Instrument
43-101 (“NI 43-101”) compliant resources are 9.8 million pounds of U3O8 at
0.058 percent as an indicated resource and an additional
  - 33
-
 
 1.1
million pounds of U3O8 at
0.076 percent as an inferred resource.  During 2006, 17 cased monitoring
and pump test wells were completed on the property, and initial testing was
completed.
  The 2007
drilling program included 58 additional monitor and pump test wells,
two water wells and a total of 195 delineation drill holes. This program
enabled the Company to obtain additional baseline and hydrogeologic data within
the first mine unit area for engineering assessments; for the State of Wyoming
Department of Environmental Quality ("WDEQ") Permit to Mine application; for the
US Nuclear Regulatory Commission ("NRC") Source Material License application;
and, for the WDEQ Mine Unit #1 Permit application. In addition, six condemnation
holes were drilled to make certain the potential target plant location was not
over any part of the ore body.
 
 In
October 2007, the Company submitted its Application to the NRC for a Source
Material License for the Lost Creek project. This license is the first stage of
obtaining all necessary licenses and permits to enable the Company to recover
uranium via in situ recovery method at the Lost Creek project. The collection
and compilation of the extensive environmental background data for the
application was a two-year process. In February 2008, the Company requested that
the NRC application for its Lost Creek project be withdrawn to enable the
Company to include upgrades to its application with respect to the project's
operational plan and other advances in the health physics information and
analyses.  In March 2008, the Company re-submitted the Source Material
License application to the NRC.  In June 2008, the NRC notified the
Company it deemed
the Lost Creek application complete. The NRC thereafter commenced its detailed
technical and environmental review of the Company’s
application.
 
 In 2007,
the Company also submitted the Lost Creek Mine Permit Application to the WDEQ.
Individual mine unit applications for each well field will be submitted to cover
each mine unit or well field that will be produced on the Lost Creek
project.  In May 2008, the Company received notice from the
WDEQ that the agency found the application to be complete and authorized the
Company to proceed with formal Public Notice of the application, which was
subsequently completed on a timely basis by the Company.
 
 Throughout
the latter part of 2008 and, to date, in 2009, the Company has been responding
to requests from both agencies for additional information, which is part of the
routine process toward completion of the technical and environmental reviews of
the applications.
 
 In
February 2008, an in-house economic analysis on the Lost Creek project was
completed by the Company’s engineering team. An independent technical report
under NI 43-101 was subsequently prepared by Lyntek Inc.  The purpose
of the report was to provide an independent analysis and preliminary assessment
of the potential economic viability of the mineral resource of the Lost Creek
project.  The resulting base case in the preliminary assessment
prepared by Lyntek returned a pre-tax internal rate of return of 43.6% at a
price of US$80 per pound U3O8, and
demonstrated that the project would be economic at prices above US$40 per pound
U3O8.
 
 In
September 2008, the Company announced an update to the Lost Creek permitting and
production timeline based on further licensing guidance from the
NRC.  Based upon an NRC release of updated guidance on its expected
publication of a final Generic Environmental Impact Statement for In-Situ Leach
Uranium Milling Facilities ("GEIS") in a July 28, 2008 Federal Register notice
(Vol.73, No. 145), the NRC revised its expected publication date from January
2009 to June 2009.
 
 In early
September 2008, the Company conducted meetings with senior officials of the NRC
to confirm how the revised GEIS completion date would affect the timing of the
issuance of licenses to presently pending applicants, including Lost
Creek.  As a result of the meetings, Ur-Energy revised its expectation
for the ssuance
of the Lost Creek's NRC license from second quarter 2009 to fourth quarter 2009.
First production from the Lost Creek project is now anticipated to occur in the
second half of 2010.


The
exploration and development program for 2008 at Lost Creek was designed to
further delineate known resources, explore the permit area for additional
resources outside of the known areas, and to install the monitoring wells
required for the first mine unit.  The program included the following
activities:
 
 ·
              Drilling
      as follows:




- 34
-
  o
              300
      delineation holes within the proposed mine unit area to provide detailed
      definition of the extent of minable uranium
  resources.
 o
              99
      exploration holes were drilled to test for potential extensions of mineral
      trends.  Drill hole depths ranged from 600 to 1,000 feet (183 to
      305 meters).
 o
              48
      cased monitor and pump test wells were installed within and surrounding
      the first proposed mine unit.  These wells will be utilized for
      production monitoring.
 o
              Ten
      regional baseline wells were also installed at the request of the
      WDEQ.  The average well depth is approximately 450 feet (137
      meters).
 o
              Two
      water supply wells were drilled, cased and
  completed.
 ·
              The
      program employed seven contract drill rigs throughout much of the
      six-month drilling program.  Geophysical logging units were also
      contracted to provide measurements of down-hole equivalent uranium
      mineralization.  These were complemented by Ur-Energy’s Prompt
      Fission Neutron “PFN” logging truck, capable of providing down-hole
      chemical uranium measurements.
 ·
              Core
      samples from several holes were obtained.  Chemical uranium
      analyses of the core samples have been conducted, and will be used as
      referee and quality control measurements to be compared to the down-hole
      logging measurements of mineralization.  Leach testing will also
      be conducted on selected core samples.All wells were
      cased in accordance with WDEQ guidelines and regulations; plugging and
      permanent abandonment of all uranium exploration and delineation boreholes
      was completed.
 ·
              Surveys
      of soils and geotechnical borings were conducted to assist in the
      evaluation of plant and road facilities
design.
 
 Following
the 2008 drilling program, Ur-Energy personnel oversaw the drilling of a deep
test well at Lost Creek. The well will be utilized to test the stratigraphy and
groundwater quality for purposes of permitting future disposal well(s) to
support site operations.  The well reached a total depth of 9,894 feet
(3,016 meters), on December 17, 2008 and was then cased.  Additional well
data will be obtained in 2009 to support the Company’s permitting activities.
Also during fourth quarter of 2008, the Company completed the pump testing of
the monitor wells associated with the first mine unit.
 
 During
2008, the Company purchased and mobilized operational equipment,
including:  backhoes, a water truck, a forklift, light and heavy
trucks, trailers, offices, a hose reel, generators and cementers.  In
2009, the Company’s engineering staff, assisted by TREC Engineering, has
completed the detailed designs and specifications for all components of the Lost
Creek ISR Plant and Mine Unit # 1.  Requests for bids are being
prepared to be provided to vendors and contractors.  Procurement will
be ongoing throughout 2009.  Construction at the Lost Creek site will
begin upon receipt of the necessary permits.
 
 A royalty
on future production of 1.67% is in place with respect to 20 claims comprising a
small portion of the Lost Creek project.
 
 Lost Soldier
Project
 
 The Lost
Soldier project is located approximately 14 miles (22.5 kilometers) to the
northeast of the Lost Creek project. The property has over 3,700 historical
drill holes defining 14 mineralized sandstone units. As identified in the July
2006 Technical Report on Lost Soldier, NI 43-101 compliant resources are 5.0
million pounds of U3O8 at 0.064%
as a measured resource, 7.2 million pounds of U3O8 at 0.065%
as an indicated resource and 1.8 million pounds of U3O8 at 0.055%
as an inferred resource.  The Company maintains 143 lode mining claims
at Lost Soldier, totaling approximately 2,710 mineral acres.  Of these
143 mining claims at Lost Soldier, 60 new claims
were staked in 2008 for mine engineering design purposes.  A royalty
on future production of 1%, which arises from a data purchase, is in place with
respect to certain claims within the project.
 All
environmental baseline studies were completed in 2007.  In January
2008, the Lost Soldier deposit was turned over to the Company’s engineering
staff for detailed engineering evaluation and study, which has been
ongoing.  Subsequently, in late 2008, members of the geology staff
have commenced in-depth studies which focus on detailed mapping of the
roll-front geology.  These studies will then be followed by detailed
mine design planning, and a preliminary assessment, all of which are expected to
proceed in 2009.
 
 - 35
-
  In March
2008, the Company had requested a separate docket number and technical
assignment control number for the Lost Soldier project from the
NRC.  The Company has since determined it will submit the applications
to the NRC and WDEQ as amendments to the Lost Creek licenses, after they are
issued by those agencies.  It is anticipated that the Lost Soldier
licensing effort will be streamlined and more efficient as a satellite facility
to the Lost Creek project.
 
 Other Wyoming
Properties
 
 In 2008,
exploration drilling of 11,370 feet (3,468 meters) was completed at the EN
project. In January 2009, the Company completed an agreement reducing an
existing royalty on claims and an area of interest arising from transactions
dating back to 2006.  With regard to the EN project, and three other areas,
the Company was able to eliminate the area of interest and to reduce the royalty
from two percent (2%) to one percent (1%) on certain specified mining
claims.  In a related transaction, the Company purchased 66 new claims
which have become a part of the EN project, bringing that project to a total of
533 mining claims, together with one state mining lease.
 
 Also in
2008, additional exploration data was obtained by completing over 746 miles
(1,200 kilometers) of airborne geophysical surveys in
Wyoming.  The Company put other drilling programs, including for the
LC North and North Hadsell projects, on hold in order to advance the development
of the Lost Creek project. Also as a result of budgetary controls, the Company
dropped exploration lands in South Dakota containing over 72,000 acres prior to
additional costs of retention being incurred.  As of the end of 2008,
the Company maintains approximately 65,000 mineral acres in
Wyoming.  During 2008 and into 2009, an in-house team of geologists
has continued to evaluate the extensive well log and exploration database owned
by the Company for generating new exploration targets.
 
 In 2007,
the Company completed the acquisition of a data package from Power Resources
Inc. ("PRI") pertinent to exploration and development on its Bootheel and Buck
Point properties, in the Shirley Basin, Wyoming, for a total purchase price of
US$180,000, which was paid in two equal installments in 2006 and 2007. The data
includes drill hole logs for more than 1,000 drill holes, historical resource
reports, maps, drill summaries, individual drill hole summaries, handwritten
notes, and digital printouts from such previous operators as Cherokee, Kerr
McGee, Uradco (PP&L), and Mobil as well as historical feasibility reports
from Dames & Moore and Nuclear Assurance.
 
 In 2007,
the Company entered into an agreement with Target Exploration & Mining Corp.
and its subsidiary ("Target"). Under the terms of the agreement, the Company
contributed its Bootheel and Buck Point properties to The Bootheel Project, LLC
(the “Bootheel Project”).  The properties cover an area of known
uranium occurrences within the Shirley Basin. Target is earning into a 75%
interest in the Bootheel Project by spending US$3.0 million in exploration
costs, and issuing 125,000 shares of its common stock to the Company, all within
a four-year earn-in period.    With the completion earlier
in 2008 of agreements for additional rights and leased lands, the total project
covers defined areas of approximately 8,524 gross, and 7,895 net, mineral acres.
(The statement of net mineral acres with regard to the Bootheel property arises
as a part of the 2008 agreements to which the lessor has a 75% mineral
interest.)
 
 Target
timely issued its second installment of stock (25,000 shares) and confirmed its
completion of the first year’s required exploration expenditures.  In
2008, Target also completed a 50,000 foot (15,250 meter) drilling program on the
Bootheel property of the Project. The purpose of the program was to bring the
historic resources in  NI 43-101 compliance. In January 2009, Target
announced that it had completed the acquisition of the final historic
data package in behalf of the Bootheel Project.  The data package,
purchased from Cameco Corp., comprises data from approximately 290,000 feet of
drilling carried out by Cameco, Kerr McGee and Uradco. The data acquired
includes not only geological logs but also gamma logs containing equivalent
uranium (eU3O8), values.
This industry standard method of using eU3O8 indicates
the amount of uranium present as determined by measuring gamma radiation using a
down-hole probe.
 The
Company has made the data it acquired earlier from PRI covering the Bootheel and
Buck Point properties (see discussion above), and certain other data, available
to the Bootheel Project.  PRI retained a royalty of 1% on future
production of uranium and associated minerals from certain lands in the Bootheel
Project.
 
 - 36
-
 
 In
February 2009, Target issued 50,000 additional shares of its stock to the
Company to complete the stock-based earn-in obligations (third and fourth
installments) of the operating agreement of the Bootheel
Project.
 
 In 2007,
the Company entered into agreements with Trigon Uranium Corporation and its
subsidiary ("Trigon"). Under the terms of the agreements, the Company
contributed its Hauber property to Hauber Project LLC (the “Hauber
Project”).  The Hauber Project is located in Crook County, Wyoming and
consists of 205 unpatented lode mining claims and one state uranium lease
totaling approximately  4,570 mineral acres.
 
 Effective
August 1, 2008, Trigon tendered its resignation as a Member and the Manager of
the Hauber Project.  Transition of management of the Hauber Project
back to the Company has been completed.  Before Trigon's decision not
to proceed, it had contracted, as Manager of Hauber Project, for several outside
geologic and hydrologic analytical projects, which were completed and submitted
during the first half of 2008.  The consultants employed abundant
historic data to define the geologic setting and assess the potential of the
Hauber Project properties for the recovery of uranium through ISR mining
methods.  Further in-house analysis of these reports is
underway.
 
 Canadian
Properties and Interests
 
 Screech Lake Property,
Thelon Basin
 
 In 2006,
an environmental screening study was completed on the Screech Lake project and
an application for a land use permit to conduct drill testing of the Screech
Lake anomalies was referred to the Mackenzie Valley Environmental Impact Review
Board (“Review Board”) for environmental assessment. In 2007, the environmental
assessment was completed and a report and recommendation from the Review Board
was issued. The Review Board recommended to the Minister of Indian and Northern
Affairs Canada (the “Minister”) that the Company’s application to conduct an
exploratory drilling program at the Screech Lake property be rejected due to
local native community concerns.
 
 In
October 2007, the Company received notification that the Minister had adopted
the recommendation of the Review Board. As part of the decision, the Minister
did confirm that the decision does not affect the legal standing of the
Company’s Screech Lake mineral claims. Discussions with the Minister and other
interested parties led the Company to conclude that the rejection was
influenced, in part, by land claims issues between First Nations groups and the
Federal government, and to a lesser extent, environmental concerns related to
caribou migration routes and timing of a drill program.  In the
Company’s application for a land use permit, extensive mitigation measures were
proposed to ensure that the drilling program would have minimal short-term
environmental impact and no long-term effect.
 
 Throughout
2008, the Company continued its ongoing discussions with First Nations groups
and Aboriginal-owned business corporations to secure an exploration agreement
which would allow the Company to proceed with re-filing of a drilling proposal
and application for land use permit.
 
 Bugs Property, Baker Lake
Basin
 
 In
September 2006, the Company entered into an option agreement to acquire the Bugs
property in Nunavut, Canada.  The Company has earned a 100% interest
in the property by issuing a total of 85,000 common shares to the
vendor.  The vendor retains a 2% net smelter royalty, of which 1% is
subject to a buyout for $1.0 million. The Bugs
property initially consisted of 11 contiguous mineral claims in the Kivalliq
region of the Baker Lake Basin.  In 2008 the Company staked an
additional eight mineral claims, which together total approximately 45,000 acres
(approximately 18,000 hectares).
 In 2006,
a fixed wing aeromagnetic and radiometric survey was conducted on the entire
property. The data from this survey resulted in the selection of seven targets
based upon structural offset and dilation features in combination with magnetite
depletion. In 2007, one of the seven targets was examined; the remaining targets
were examined and prioritized during the 2008 summer program by radon sampling
techniques, prospecting
 
 - 37
-
 
 and
rock sampling. This work led to interpreted areas of hydrothermal alteration,
elevated radioactivity and high radon flux.
 
 Six drill
holes were completed from late August to mid September of 2008, for a total of
2,905 feet (885 meters).    The program was terminated early
due to problems with drilling equipment.  Results of the program are
being evaluated by the Company. The Company incurred total exploration and
acquisition costs of approximately $2.0 million during the 2008
program.  As a part of this program, the Company utilized funds from
the flow-through financing it raised in March 2008.  See Financing Transactions,below.
 
 Other Canadian
Interests
 
 In 2006,
the Company completed a definitive agreement with Triex Minerals Corporation
(“Triex”) with respect to the Mountain Lake and Dismal Lake West properties
(together, comprising 58 claims).  Pursuant to the option agreement,
Triex obtained a 100% interest in the properties in September
2007.  The Company retains a 5% net smelter return royalty interest in
the properties with Triex having the right to purchase one-half of the royalty
for $5,000,000.
 
 2008
Expenses Compared to 2007
 
 Total
expenses for the year ended December 31, 2008 were $26.0 million as compared to
$23.0 million in 2007.  Total expenses include general and
administrative expense, exploration and evaluation expense, development expense
and write-off of mineral property costs.
 
 Overall,
2008 total expenses increased $3.0 million as compared to 2007.  The
increase in total expenses was primarily due to increased expenditures on the
Company’s exploration and development projects, the continued expansion of the
Littleton, Colorado and Casper, Wyoming offices, and increases in non-cash
amortization of capital assets and write-off expenses.  The increase
in total expenses was partially offset by a decrease in non-cash stock based
compensation expense.
 
 Exploration,
evaluation and development expenditures increased $3.1 million in 2008,
primarily due to the transition of the Company’s Lost Creek property from the
evaluation stage to the development stage.  During 2008, the Company
spent approximately $1.9 million in evaluation activities and $8.8 million in
development activities related to the Lost Creek property, which were expensed
in accordance with the Company’s revised accounting
policies.  Additionally, the Company incurred significant expenditures
on other exploration and evaluation properties including the Bugs property in
Canada and the Lost Soldier property in the United States.
 
 General
and administrative expense relates primarily to the Company’s administration,
finance, investor relations, land and legal functions in Littleton,
Colorado.  During 2008, the Company continued to expand the Casper,
Wyoming office.  The Company strengthened key staffing areas adding
eight positions primarily aimed at enhancing operating expertise at the Casper
office.  Accordingly, the Denver and Casper offices were also expanded
to accommodate and support the staffing additions.
 
 During
the year, the Company recorded significant non-cash stock based compensation
expenses related to stock options.  In September 2008, the Company
gave the holders of options with an exercise price of $4.75 or higher the
opportunity to voluntarily return all or a portion of these options to the
Company by September 30, 2008 without any promise or guarantee that the option
holders will receive any further options.  Options for 2,490,000
shares with a weighted exercise price of $4.82 were returned to the
Company.  Previously unrecognized stock based compensation cost of
$2.2 million was recognized at the cancellation date.  Including the
above, for 2008, stock based compensation expenses of $4.6 million (2007 –
$6.1 million) were included in total expenses.  These non-cash
expenses represent approximately 18% of total expenses (2007 –
27%).
 During
the third quarter of 2008, the Company relinquished leases associated with the
Harding and Fall River projects in South Dakota and wrote-off the approximately
$0.3 million in costs related to these projects.
 
 - 38
-
 
 Other
income and expenses
 
 The
Company's cash resources are invested with major banks in bankers' acceptances,
guaranteed investment certificates, certificates of deposit, and money market
accounts.  During the year ended December 31, 2008, the Company earned
interest income on these investments of $2.5 million, as compared to $2.8
million in 2007.  After the May 2007 bought deal financing and the
March 2008 private placement, the Company’s average cash resources increased
significantly.  However, the Company does not generate any revenue
from operating activities and its average cash resources, and the resulting
interest income, have declined since the two financings were
completed.
 
 During
the year ended December 31, 2008, the Company recorded a net foreign exchange
gain of $5.7 million as compared to a $0.8 million loss during the same
period in 2007.  This 2008 net foreign exchange gain arose primarily
due to cash balances held in U.S. dollar accounts as the U.S. dollar
strengthened relative to the Canadian dollar during the period, while in 2007
the U.S. dollar declined in value relative to the Canadian dollar.
 
 Income
Taxes
 
 In 2008,
the Company recorded operating losses in both Canada and the United
States.  Management has concluded that it is not yet more likely than
not that these losses, and prior years’ loss carryforwards and other tax assets
will be realized, and therefore the Company has recorded a full valuation
allowance against these amounts.
 
 In 2007,
the Company also recorded losses in both jurisdictions against which full
valuation allowances were applied, except in respect of the Company’s ISL
subsidiary.  The Company acquired ISL in 2004 and recorded a future
tax liability upon the acquisition related to the difference between
management’s estimate of the tax basis and the fair value assigned to the assets
acquired.  In 2007, management filed tax returns for ISL for the
pre-acquisition period and established additional tax basis for the ISL assets
and consequently recorded a reduction in the future tax liability related to
these assets.
 
 Loss
Per Common Share
 
 Both
basic and diluted loss per common share for the year ended December 31, 2008
were $0.19 (2007 – $0.24).  The diluted loss per common share is equal
to the basic loss per common share due to the anti-dilutive effect of all
convertible securities outstanding given that net losses were
experienced.
 
 2007
Expenses Compared to 2006
 
 Total
expenses for the year ended December 31, 2007 were $23.0 million as compared to
$12.4 million in 2006.  Total expenses include general and
administrative expense, exploration and evaluation expense, development expense
and write-off of mineral property costs.
 
 General
and administrative expenses were $1.8 million higher than in
2006.  The majority of the increase in general and administrative
expense was due to stock option related charges as discussed
below.  The balance of increased general and administrative costs
related primarily to expansion of the Littleton, Colorado office and related
staff costs for finance, legal and support personnel.
  During
the year ended December 31, 2007, the Company recorded significant non-cash
stock based compensation charges related to stock options. In total, expenses
recorded related to stock options were $6.1 million as compared to $3.5 million
in 2006. These non-cash charges to expense represent approximately 27% of total
expenses (2006 – 28%).
 
 Exploration
and evaluation expense increased significantly during 2007 as the Company
rapidly advanced its Lost Creek and Lost Soldier properties in
Wyoming.   During 2007, the Company spent approximately US$8.5
million for exploration activities on these two properties.  The
Company also spent significant amounts on other exploration properties including
the Screech Lake in Canada.
 
 - 39
-
  During
the fourth quarter of 2007, Company management decided not to proceed with
funding of any additional exploration of the Titan R-Seven and Rook I
properties.  Accordingly, the Company wrote off approximately $34,000
in related mineral property costs.
 
 Other
income and expenses
 
 The
Company's cash resources are invested with major banks in bankers' acceptances,
guaranteed investment certificates, certificates of deposit, and money market
accounts. During the year ended December 31, 2007, the Company earned interest
income on these investments of $2.8 million (2006 - $0.6
million).  Interest income was significantly higher in the third and
fourth quarters of 2007 as the proceeds of the bought deal financing were
invested from early May through to the end of the year.
 
 During
the year ended December 31, 2007, the Company recorded a net foreign exchange
loss of $0.8 million (2006 - $0.2 million).  This net foreign
exchange loss arose primarily due to cash balances held in U.S. currency as the
Canadian dollar strengthened relative to the U.S. dollar during the period from
September to November 2007.  During the first and second quarters of
2007, the Company experienced gains on the U.S. dollar denominated New Frontiers
obligation.  The obligation was fully repaid during the second quarter
of 2007.
 
 Loss
Per Common Share
 
 Both
basic and diluted loss per common share for the year ended December 31, 2007
were $0.24 (2006 – $0.20).  For the years ended December 31, 2007 and
2006, diluted loss per common share is equal to the basic loss per common share
due to the anti-dilutive effect of all convertible securities outstanding given
that net losses were experienced.
 
 
 Liquidity
and Capital Resources
 
 As at
December 31, 2008, the Company had cash and cash equivalents, and short-term
investments of $65.0 million, a decrease of $11.3 million from the December 31,
2007 balance of $76.3 million.  The Company's cash resources are
invested with major banks in Canada and United States in guaranteed investment
certificates, certificates of deposit, bankers' acceptances, and money market
accounts.  During the year ended December 31, 2008, the Company used
$10.5 million to fund operating activities, spent $3.5 million on investing
activities, and generated $2.7 million from financing activities.
 
 During
the year ended December 31, 2008, the Company invested cash of $3.5 million in
mineral properties, bonding deposits, capital assets and design work on the Lost
Creek plant.  The majority of these expenditures went toward bonding
deposits and the purchase of capital assets.  The capital asset
purchases were primarily for field vehicles and field equipment purchased to
facilitate the exploration and development work programs in
Wyoming.
 
 On March
25, 2008, the Company completed a non-brokered private placement of
1,000,000 flow-through commons shares at $2.75 per share raising gross
proceeds of $2.8 million.  Total direct share issue costs were $0.1
million.  During the year ended December 31, 2008, the Company
realized cash proceeds of $0.1 million from the exercise of previously issued
stock options.  In September 2008, the Company gave the holders of
options with an exercise price of $4.75 or higher the opportunity to voluntarily
return all or a portion of these options to the Company by September 30, 2008
without any promise or guarantee that the option holders will receive any
further options.  Options for 2,490,000 shares with a weighted exercise
price of $4.82 were returned to the Company.  Therefore, as at
December 31, 2008, the Company had outstanding a total of 6,228,700 stock
options with a weighted-average exercise price of $1.95 per option.
 
 - 40
-
  The
Company has financed its operations from its inception primarily through the
issuance of equity securities and has no sources of cash flow from
operations.  The Company will not generate any cash flow from
operations until it is successful in commencing production from its
properties.
  The
Company has established a corporate credit card facility with a U.S. bank. This
facility has an aggregate borrowing limit of US$250,000 and is used for
corporate travel and incidental expenses.  The Company has provided a
letter of credit and a guaranteed investment certificate in the amount of
$287,500 as collateral for this facility.
  Financing
Transactions
  The
Company completed a non-brokered private placement of 1,000,000 flow-through
common shares at $2.75 per share on March 25, 2008 and raised gross proceeds of
$2.8 million.  Total direct share issue costs were $0.1
million.
  On
November 7, 2008 the Company’s board of directors approved the adoption of a
shareholder rights plan (the “Rights Plan”) designed to encourage the fair and
equal treatment of shareholders in connection with any take-over bid for the
Company's outstanding securities.  The Rights Plan is intended to
provide the Company’s board of directors with adequate time to assess a
take-over bid, to consider alternatives to a take-over bid as a means of
maximizing shareholder value, to allow competing bids to emerge, and to provide
the Company’s shareholders with adequate time to properly assess a take-over bid
without undue pressure.
  Although
the Rights Plan took effect immediately, in accordance with the TSX
requirements, the Company will seek approval and ratification by its
shareholders at the next annual and special meeting of shareholders on April 28,
2009.  If the Rights Plan is not ratified, the Rights Plan and all of
the Rights outstanding will terminate.
  Outstanding
Share Data
  Information
with respect to outstanding common shares, warrants, compensation options and
stock options as at December 31, 2008 and December 31, 2007 is as
follows:
  December
      31,
                2008
              
              
              December
      31,
                2007Common
      shares
              
              
              93,243,607
              
              
              
              92,171,607Warrants
              
              
              -
              
              
              
              -Compensation
      options
              
              
              -
              
              
              
              -Stock
      options
              
              
              6,228,700
              
              
              
              8,010,700Fully
      diluted shares outstanding
              
              
              99,472,307
              
              
              
              100,182,307
  Off-Balance
Sheet Arrangements
  The
Company has not entered into any material off-balance sheet arrangements such as
guarantee contracts, contingent interests in assets transferred to
unconsolidated entities, derivative instrument obligations, or with respect to
any obligations under a variable interest entity arrangement.
  Financial
Instruments and Other Instruments
  The
Company’s financial instruments consist of cash and cash equivalents, short-term
investments, amounts receivable, bonding and other deposits and accounts
payable.  The Company is exposed to risks related to changes in
foreign currency exchange rates, interest rates and management of cash and cash
equivalents and short term investments.
 
 - 41
-
  Credit
risk
  Financial
instruments that potentially subject the Company to concentrations of credit
risk consist of cash and cash equivalents, short term investments and bonding
deposits.  The Company’s cash equivalents and short term investments
include Canadian dollar and US dollar denominated guaranteed investment
certificates and certificates of deposits.  They bear interest at
annual rates ranging from 0.75% to 3.25% and mature at various dates up to April
30, 2009.  These instruments are maintained in financial institutions
in Canada and the United States.  Of the amount held on deposit,
approximately $0.4 million is covered by either the Canada Deposit Insurance
Corporation or the Federal Deposit Insurance Corporation, leaving approximately
$64.6 million at risk should the financial institutions with which these amounts
are invested cease trading.  As at December 31, 2008, the Company does
not consider any of its financial assets to be impaired.
  Liquidity
risk
  Liquidity
risk is the risk that the Company will not be able to meet its financial
obligations as they fall due.
  The
Company manages liquidity risk through regular cash flow forecasting of cash
requirements to fund exploration and development projects and operating
costs.
  As at
December 31, 2008 the Company’s liabilities consisted of trade accounts payable
of $2,265,058, all of which are due within normal trade terms of generally 30 to
60 days.
  Market
risk
  Market
risk is the risk to the Company of adverse financial impact due to changes in
the fair value or future cash flows of financial instruments as a result of
fluctuations in interest rates and foreign currency exchange
rates.  Market risk arises as a result of the Company incurring a
significant portion of its expenditures and a significant portion of its cash
equivalents and short term investments in United States dollars, and holding
cash equivalents and short term investments which earn interest.
  Interest
rate risk
 Financial
instruments that expose the Company to interest rate risk are its cash
equivalents and short term investments. The Company’s objectives for managing
its cash and cash equivalents are to ensure sufficient funds are maintained on
hand at all times to meet day to day requirements and to place any amounts which
are considered in excess of day to day requirements on short-term deposit with
the Company's banks so that they earn interest. When placing amounts of cash and
cash equivalents on short-term deposit, the Company only uses high quality
commercial banks and ensures that access to the amounts placed can generally be
obtained on short notice.
  Currency
risk
 The
Company incurs expenses and expenditures in Canada and the United States and is
exposed to risk from changes in foreign currency rates. In addition, the Company
holds financial assets and liabilities in Canadian and US dollars. The Company
does not utilize any financial instruments or cash management policies to
mitigate the risks arising from changes in foreign currency rates.
  At
December 31, 2008 the Company had cash and cash equivalents, short term
investments and bonding deposits of approximately US$26.5 million (US$18.4
million as at December 31, 2007) and had accounts payable of US$1.7 million
(US$1.2 million as at December 31, 2007) which were denominated in  US
dollars.
  Sensitivity
analysis
  The Company has
completed a sensitivity analysis to estimate the impact that a change in foreign
exchange rates would have on the net loss of the Company, based on the Company’s
US$ denominated assets and liabilities at year end. This sensitivity analysis
assumes that changes in market interest rates do not cause a change in foreign
exchange rates.  This sensitivity analysis shows that a change of +/-
10% in US$ foreign exchange rate would have a +/- $3.0 million impact on net
loss for the year ended December 31, 2008.  This
  - 42
-
 
 impact is
primarily as a result of the Company having year end cash and investment
balances denominated in US dollars and US dollar denominated trade accounts
payables.  The financial position of the Company may vary at the time
that a change in exchange rates occurs causing the impact on the Company’s
results to differ from that shown above.
  The
Company has also completed a sensitivity analysis to estimate the impact that a
change in interest rates would have on the net loss of the Company. This
sensitivity analysis assumes that changes in market foreign exchange rates do
not cause a change in interest rates.  This sensitivity analysis shows
that a change of +/- 100 basis points in interest rate would have a +/- $0.6
million impact on net loss for the year ended December 31, 2008.  This
impact is primarily as a result of the Company having cash and short-term
investments invested in interest bearing accounts.  The financial
position of the Company may vary at the time that a change in interest rates
occurs causing the impact on the Company’s results to differ from that shown
above.
  Transactions
with Related Parties
 
 During
the years ended December 31, 2008 and 2007, the Company did not participate in
any material transactions with any related parties.
 
 Proposed
Transactions and Listing Application Approval
 
 As is
typical of the mineral exploration and development industry, the Company is
continually reviewing potential merger, acquisition, investment and venture
transactions and opportunities that could enhance shareholder
value.  Timely disclosure of such transactions is made as soon as
reportable events arise.
 
 In
January 2008, the Company filed documentation with the United States Securities
and Exchange Commission on Form 40-F to register the common shares of the
Company and filed an application to list the common shares with the American
Stock Exchange, LLC (“AMEX”).  The application was subject to review
by the AMEX, and on July 18, 2008, the AMEX approved for listing the common
shares of the Company.  Trading of the common shares of the Company on
the AMEX (now the NYSE Amex) commenced on July 24, 2008 under the symbol
“URG”.
 
 Critical
Accounting Policies and Estimates
 
 Mineral
Properties
 
 Acquisition
costs of mineral properties are capitalized. When production is attained, these
costs will be amortized on the unit-of-production method based upon the
estimated recoverable resource of the mineral property.
 
 The
Company assesses the possibility of impairment in the net carrying value of its
mineral properties when events or circumstances indicate that the carrying
amounts of the asset or asset group may not be
recoverable.   Given the current disruption and uncertainty in
the global economy, and the decrease in the Company’s share price over the last
year, management reviewed all of its significant mineral properties for
potential impairment.
 
 For the
Company’s Lost Creek and Lost Soldier properties, management calculated the
estimated undiscounted future net cash flows relating to these properties as a
single asset group as the Company expects to mine the Lost Soldier property as a
satellite facility, licensed through an amendment to the Lost Creek permits, and
using the Lost
Creek plant.  Management calculated the future net cash flows using
estimated future prices, indicated resources, and estimated operating, capital
and reclamation costs.
 The
Company’s estimates of indicated resources depend upon geological interpretation
and statistical inferences drawn from drilling and sampling
analysis.  The operating, capital and reclamation costs are based upon
similar production plants and current capital budgets for the project. The
uranium prices used are based on current long term contract prices and external
consensus prices which for uranium vary between US$50 and
 
 - 43
-
 
 US$70 per
pound.  By their very nature there can be no assurance that these
estimates will actually be reflected in future construction or operation at the
projects.
  Management’s
estimate of the undiscounted cash flows related to these mineral properties
exceed their carrying value, therefore management concluded that the assets
passed step 1 of the asset impairment test prescribed under generally accepted
accounting principles, and therefore no write-down of these assets was recorded.
Management’s estimates of mineral prices, mineral resources, foreign exchange,
production levels and operating capital and reclamation costs are subject to
risk and uncertainties that may affect the determination of the recoverability
of the long-lived asset. It is possible that material changes could occur that
may adversely affect management’s estimates.
  For the
Company’s other properties, reliable cash flow forecasts cannot be made at this
time.  Management therefore tested these for impairment by comparing
their carrying values to their estimated fair value based on non-NI 43-101
compliant resource estimates of indicated resources and a value of US$2 per
pound in the ground.  Management also considered the results of
current exploration activities on the properties and future exploration plans
and expenditures by both the Company and, in the case of the Bootheel Project,
Target, to assess whether these were inconsistent with other indicators of fair
value.  Based on the above, management concluded that the fair value
of these properties exceeded the carrying amount and no impairment charges were
recorded.
  Stock
Based Compensation
  The
Company is required to record all equity instruments including warrants,
compensation options and stock options at fair value in the financial
statements. Management utilizes the Black-Scholes model to calculate the fair
value of these equity instruments at the time they are issued.  Use of
the Black-Scholes model requires management to make estimates regarding the
expected volatility of the Company’s stock over the future life of the equity
instrument, the estimate of the expected life of the equity instrument, the
expected volatility of the Company’s common shares, and the number of options
that are expected to be forfeited.  Determination of these estimates
requires significant judgment and requires management to formulate estimates of
future events based on a limited history of actual results and by comparison to
other companies in the uranium exploration and development segment.
  Changes
in Accounting Policies Including Initial Adoption
  Exploration
and Development Expenditures
  In
December 2008, the Company changed its policy for accounting for exploration and
development expenditures.  In prior years, the Company capitalized all
direct exploration and development expenditures.  Under its new policy,
exploration, evaluation and development expenditures, including annual
exploration license and maintenance fees, are charged to earnings as incurred
until the mineral property becomes commercially mineable.
  Management
considers that a mineral property will become commercially mineable when it can
be legally mined, as indicated by the receipt of key
permits.  Development expenditures incurred subsequent to the receipt
of key permits will be capitalized and amortized on the unit-of-production
method based upon the estimated recoverable resource of the mineral
property.  Management believes that this treatment provides a more
relevant and reliable depiction of the Company’s asset base and more
appropriately aligns the Company’s policies with those of comparable companies
in the mining industry at a similar stage.
  The
Company has accounted for this change in accounting policy on a retroactive
basis.  Balance sheet amounts as at December 31, 2007 were restated as
follows: deferred exploration expenditures were reduced by $26.4 million, future
income taxes liabilities were reduced by $0.7 million, share capital increased
by $2.2 million and the accumulated deficit increased by
$27.9 million.  The comparative operating results for the year
ended December 31, 2007 and 2006 were also restated as
follows:  expenses increased by $11.4 million and
$6.4 million, recovery of future income taxes decreased by
$2.1 million and $0.5 million, net loss increased by
$13.5 million and $6.9 million, and loss per common share increased by
$0.16 and $0.11, respectively.  The
 
 - 44
-
 
 cumulative
operating results for the period from March 22, 2004 to December 31, 2007 were
restated as follows:  expenses increased by $24.9 million,
recovery of future income taxes decreased by $3.0 million, and net loss
increased by $27.9 million.
  The
Company will continue to capitalize the acquisition costs of mineral properties
and capital assets.
 
 New Accounting
Standards
 
 On
January 1, 2008, the Company adopted the following Canadian Institute of
Chartered Accountants (“CICA”) Handbook Sections:
 
 ·
              Section
      3862, Financial Instruments – Disclosures, and Section 3863, Financial
      Instruments – Presentation.  These new disclosure standards
      increase the Company’s disclosure regarding the nature and risk associated
      with financial instruments and how those risks are managed.  The
      new presentation standard carries forward the former presentation
      requirements.
 ·
              Section
      1535, Capital Disclosures.  This new standard requires the
      Company to disclose its objectives, policies and processes for managing
      its capital structure.
 ·
              Section
      1400, General Standards on Financial Statement
      Presentation.  This standard requires management to assess at
      each balance sheet date and, if necessary, disclose any uncertainty
      surrounding the ability of the Company to continue as a going
      concern.  The adoption of this standard had no impact on the
      Company’s disclosures in these interim financial
    statements.
 
 Disclosure
Controls and Procedures
 
 The Chief
Executive Officer and Chief Financial Officer of the Company evaluated the
effectiveness of the Company’s disclosure controls and procedures (as defined in
the rules of the Canadian Securities Administrators) and concluded that the
Company’s disclosure controls and procedures were effective as of December 31,
2008.
 
 Internal
Controls over Financial Reporting
 
 No
changes have occurred in the Company’s internal control over financial reporting
during the most recent interim period that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting (“ICFR”).  The Chief Executive Office and Chief
Financial Officer of the Company evaluated the effectiveness of the Company’s
ICFR and, based upon this assessment, concluded that the Company’s internal
control over financial reporting was effective as of December 31,
2008.
 
 International
Financial Reporting Standards
 
 In
February 2008, the Canadian Accounting Standards Board ("AcSB") announced that
the requirement for publicly-accountable companies to adopt International
Financial Reporting Standards (“IFRS”), will be effective for interim and annual
financial statements relating to fiscal years beginning on or after January 1,
2011.  The transition date of January 1, 2011 will require the restatement
for comparative purposes of amounts reported by the Company for the year ended
December 31, 2010.
  During
2008, the Company scheduled an IFRS diagnostic study to assess the impact of the
transition to IRFS on the Company’s accounting policies and to establish a
project plan to implement IFRS.  Following this initial diagnostic
step, which will be conducted during 2009, the Company will proceed to make a
determination of the impact of transition to IFRS on its financial statements
and systems, if any.
 
 Risks
and Uncertainties
 
 The
Company is subject to a number of risks and uncertainties due to the nature of
its business and the present stage of development of its
business.  Investment in the natural resource industry in general, and
the exploration and development sector in particular, involves a great deal of
risk and uncertainty.  Current and potential investors should give
special consideration to the risk factors involved.  These factors are
discussed more fully
 
 - 45
-
 
 in our
Annual Report on Form 20-F (Annual Information Form) dated March 18, 2009 which
is filed on SEDAR at www.sedar.com or on the U.S. Securities and Exchange
Commission’s website at www.sec.gov.
 
 Other
Information
 
 Other
information relating to the Company may be found on the SEDAR website at
www.sedar.com or on the U.S. Securities and Exchange Commission’s website at
www.sec.gov.
  Item
6. Directors, Senior Management and Employees.
  A.
Directors and Senior Management
  Set out
below are the names, committee memberships (as at the date hereof),
municipalities of residence, principal occupations and periods of service of the
directors and executive officers of the Corporation.
  Name
              
              Position
      with Corporation and Principal
                Occupation
      Within the Past Five Years
              
              Period
      of Service as a
                DirectorJeffrey
      T. Klenda
                Golden,
      Colorado
              
              Chair
      and Executive Director
              
              August
      2004 – presentW.
      William Boberg
                Morrison,
      Colorado
              
              President,
      Chief Executive Officer and Director
              
              January
      2006 – presentJames
      M. Franklin(2)
                Ottawa,
      Ontario
              
              Director,
      Consulting Geologist / Adjunct Professor of Geology Queen’s University,
                Laurentian
      University and University of Ottawa
              
              March
      2004 – presentPaul
      Macdonell (1)(2)(3)(4)
                Mississauga,
      Ontario
              
              Director
                Senior
      Mediator, Government of Canada
              
              March
      2004 – presentRobert
      Boaz (1)(2)(3)
                Mississauga,
      Ontario
              
              Director
                Mining
      Company Executive
              
              March
      2006 – presentThomas
      Parker (1)(2)(3)
                Kalispell,
      Montana
              
              Director
                Mining
      Company Executive
              
              July
      2007 – present
 __________
 (1)
              Member
      of the Audit Committee.
 (2)
              Member
      of the Compensation Committee.  James Franklin was an ex officio
      member of the Compensation Committee from July 2007 to January 28,
      2008.
 (3)
              Member
      of the Corporate Governance and Nominating
  Committee.
 (4)
              Mr.
      Macdonell was a former director of Wedge Energy International Inc.
      (“Wedge”) .  Wedge was subject to a Management Cease Trade Order
      imposed by the Ontario Securities Commission (“OSC”) on May 31, 2007 for
      the late filing of Wedge’s financial statements for the period ended March
      31, 2007.  The Order was lifted by the OSC on August 14,
      2007.
 
 The
following sets out additional information with respect to the education,
experience and employment history of each of the directors and officers referred
to above during the past five years.
  
 - 46
-
  Jeffrey T. Klenda, 52,
      B.A.
                Chair & Executive
      Director
 Mr.
Klenda graduated from the University of Colorado in 1980 and began his career as
a stockbroker specializing in venture capital offerings. Prior to joining the
Corporation in 2004 as a director, he worked as a Certified Financial Planner
and was a member of the International Board of Standards and
Practices.  In 1988, he started Klenda Financial Services, an
independent financial services company providing investment advisory services to
high-end individual and corporate clients as well as providing venture capital
to corporations seeking entry to the U.S. securities markets. In the same year
Mr. Klenda formed Independent Brokers of America, Inc., a national marketing
organization. He also served as President of Security First Financial, a company
he founded to provide consultation to individuals and corporations seeking
investment management and early stage funding. Mr. Klenda became the Chair of
the Board of Directors and Executive Director of the Corporation in January
2006.  Mr. Klenda is currently a director and chair of the board of
directors of Aura Silver Resources Inc.
  W. William (Bill)
      Boberg,69,M.Sc., P
      Geo
                President, Chief Executive
      Officer &
Director
  Mr.
Boberg is the Corporation’s President and Chief Executive Officer and a director
(since January 2006).  Previously, Mr. Boberg was the Corporation’s
senior U.S. geologist and VP U.S. Operations (September 2004 to January 2006).
Before his initial involvement with the Corporation in 2004, he was a consulting
geologist having over 35 years experience investigating, assessing and
developing a wide variety of mineral resources in a broad variety of geologic
environments in western North America, South America and
Africa.  Companies that Mr. Boberg has worked for include Gulf
Minerals, Hecla Mining, Anaconda, Continental Oil Minerals Department, Wold
Nuclear, Kennecott, Western Mining, Canyon Resources and Africa Mineral Resource
Specialists.  Mr. Boberg has over twenty years experience exploring
for uranium in the continental US. He discovered the Moore Ranch Uranium
Deposit, the Ruby Ranch Uranium Deposit as well as several smaller deposits in
Wyoming's Powder River Basin.  He received his Bachelor’s Degree in
Geology from Montana State University and his Master’s Degree in Geology from
the University of Colorado.  He is a registered Wyoming Professional
Geologist and fellow of the Society of Economic Geologists.  He is a
member of the Society for Mining, Metallurgy & Exploration Inc., American
Institute of Professional Geologists (for which he is a certified geologist),
the Denver Regional Exploration Society and the American Association of
Petroleum Geologists.  Mr. Boberg is also a director for Aura Silver
Resources Inc. (since June 2008).
  James M. Franklin, 66,
      Ph. D., FRSC, P.
      Geo
                Director & Chair of the
      Technical
Committee
  Dr.
Franklin has over 40 years experience as a geologist. He is a Fellow of the
Royal Society of Canada. Since January 1998, he has been an Adjunct Professor at
Queen’s University, since 2001, at Laurentian University and since 2006 at the
University of Ottawa. He is a past President of the Geological Association of
Canada and of the Society of Economic Geologists. He retired as Chief
Geoscientist, Earth Sciences Sector, the Geological Survey of Canada in 1998.
Since that time, he has been a consulting geologist and is currently a director
of Aura Silver Resources Inc. (since October 2003), RJK Exploration Ltd. (since
July 2001) and Spider Resources Ltd. (since July 2006).
  Paul Macdonell, 56,
      Diploma Public
      Admin.
                Director & Chair of
      Compensation Committee
  Mr.
Macdonell is a Senior Mediator, Federal Mediation and Conciliation Service for
the Government of Canada. Previously Mr. Macdonell was employed since 1976 by
the Amalgamated Transit Union, serving as President of the Union from 1996 to
2000 and Financial Secretary 1991 to 1995.  Mr. Macdonell was
Municipal Councillor of the City of Cumberland from 1978 to 1988 and was on the
City’s budget committee during that time. He graduated (diploma) at University
of Western Ontario in Public Administration and completed programs at University
of Waterloo (Economic Development Certificate), The George Meany Centre in
Washington (Labour Studies) and Harvard University (Program on Negotiations).
  Robert Boaz,57,M. Economics, Hon.
      BA
                Director & Chair of the
      Corporate Governance
                  and Nominating
      Committee
  Mr. Boaz
has 18 years in the investment banking business after a career in the power and
natural gas industry, working in management positions for Ontario Hydro,
Saskatchewan Power and Consumers Gas.  He has held senior management
positions in a number of firms in the investment industry with direct
responsibilities related to research, portfolio management, institutional sales
and investment banking.  From 2004 to March 2006, Mr. Boaz was
Managing Director Investment Banking with Raymond James Ltd. in
Toronto.  From 2000 to 2004 Mr. Boaz was Vice President and Head of
Research and in-house portfolio strategist for Dundee Securities
Corporation.  Mr. Boaz is the President, Chief Executive Officer and a
director of Aura Silver Resources Inc., a director of AuEx Ventures Inc. and
chair of the board of directors and audit committee of Solex Resources
Corp.
 
 - 47
-
  Thomas Parker, 66, M.Sc.,
    P.E.
                Director & Chair of the
      Audit Committee
  Mr.
Parker has worked extensively in senior management positions in the mining
industry for the past 43 years.  Mr. Parker is a mining engineer
graduate from South Dakota School of Mines, with a Master’s Degree in Mineral
Engineering Management from Penn State. Mr. Parker is President and CEO of US
Silver Corporation before which he was President and CEO of Gold Crest Mines,
Inc., a Spokane-based gold exploration company. Prior to Gold Crest, he was the
President and CEO of High Plains Uranium, Inc. a junior uranium mining company
acquired by Energy Metals in January 2007. Mr. Parker also spent 10 years as
Executive Vice President of Anderson and Schwab, a management consulting firm.
Prior to Anderson and Schwab, Mr. Parker held many executive management
positions with, including Costain Minerals Corporation, ARCO, Kerr McGee Coal
Corporation and Conoco.  He also has worked in the potash, limestone,
talc, coal and molybdenum industries and has extensive experience in Niger,
France and Venezuela.
  Roger L. Smith, 51,
      CPA, MBA
                Chief Financial Officer and
      Vice President,
                  Finance, IT and
      Administration
  Mr. Smith
has 25 years of mining and manufacturing experience including finance,
accounting, IT, ERP and systems implementations, mergers, acquisitions, audit,
tax and public and private reporting in international
environments.  Mr. Smith joined Ur-Energy in May 2007 after having
served as Vice President, Finance for Luzenac America, Inc., as subsidiary of
Rio Tinto PLC and Director of Financial Planning and Analysis for Rio Tinto
Minerals, a division of Rio Tinto PLC from September 2000 to May
2007.  Mr. Smith has also held such positions as Vice President
Finance, Corporate Controller, Accounting Manager, Internal Auditor with
companies such as Vista Gold Corporation, Westmont Gold Inc. and Homestake
Mining Corporation.  He has a Masters of Business Administration and
Bachelor of Arts in Accounting from Western State College, Gunnison,
Colorado.
  Harold A. Backer, 67,
      B.Sc.
                Executive Vice President,
      Geology &
Exploration
  Mr.
Backer is the Corporation’s Executive Vice President, Geology & Exploration.
He has over 40 years experience in the mining industry participating in major
exploration programs in the commodities of gold, uranium, copper, and phosphate.
In exploration, he has worked for Kalium Chemicals, Chevron Resources and as
Senior VP Exploration for Goldbelt Resources. As a Consulting Economic
Geologist, he has participated in numerous pre-feasibility mining studies (open
pit and underground projects) as a team leader and in a management position on
projects in North America and in the countries of the former Soviet
Union.  Mr. Backer joined Ur-Energy more than four years ago and has
assumed various responsibilities as an officer before becoming Executive VP of
Geology & Exploration.
  Paul W. Pitman, 61,
      B.Sc. Hon. Geo.,
      P. Geo
                Vice President, Canadian
      Exploration
  Mr.
Pitman has over 40 years experience as an exploration geologist. He began his
career with Gulf Minerals as a project geologist at the Rabbit Lake,
Saskatchewan discovery in 1969, followed by work in the late 1970s -1980s as a
senior geologist for BP Minerals exploring for uranium across Canada. Mr. Pitman
was President of Ur-Energy from its inception up to January 2006.
  Wayne W. Heili, 43,
      B.Sc.
                Vice President, Mining &
      Engineering
  Mr. Heili
is the Corporation’s Vice President, Mining & Engineering.  He has
had a career spanning more than 20 years providing engineering, construction,
operations and technical support in the uranium mining industry. He spent 16
years in various operations level positions with Total Minerals and Cogema
Mining at their properties in Wyoming and Texas. He was Operations Manager of
Cogema’s Wyoming in-situ recovery projects from 1998 to 2004. Since then, Mr.
Heili acted as a consultant for such companies as High Plains Uranium, Energy
Metals and Behre Dolbear. His experience includes conventional and ISR uranium
processing facility operations. Mr. Heili received a Bachelor of Science in
Metallurgical Engineering from Michigan Technological University, with an
emphasis in mineral processing.
 
 - 48
-
  Paul G. Goss,66, JD, MBA
                General Counsel &
      Corporate Secretary
  Mr. Goss
has over 25 years of diverse transactional experience in complex business, real
estate and natural resources transactions, including more than five years with a
national-practice firm.  In addition to his transactional experience,
he has represented clients in commercial litigation, arbitration and mediation,
involving mining, oil and gas, real estate, corporate law securities and
environmental law. He served in the capacities of President and General Counsel
of Polaris Coal Company from 1990 through 2001, when it was sold to Massey
Energy Company. He obtained his Juris Doctor, cum laude from the University
of Denver College of Law.  He also obtained a Master of Business
Administration from Indiana State University.
  As at
March 18, 2009, the directors and executive officers of the Corporation, as a
group, beneficially own, directly or indirectly, or exercised control or
direction over 1,461,584 common shares, representing approximately 1.56% of the
Corporation’s outstanding common shares. The information as to securities
beneficially owned or over which control or direction is exercised is not within
the knowledge of the Corporation and has been furnished by the directors and
executive officers individually.
   B.
Compensation.
  Compensation
of Executive Officers
  The
following table sets forth the summary information concerning compensation paid
to or earned during the financial years ended December 31, 2006, 2007 and 2008
by the Corporation’s Chief Executive Officer and Chief Financial Officer and the
three highest paid executive officers, who were serving as executive officers at
December 31, 2008 (collectively, the “Named Executive Officers”).
   Summary Compensation Table (13)
  Name
      and principal position
              Year(6)
              Salary
                  ($)
              Share-based
                  awards
                  ($)
              Option-based
                  awards
                  ($)
              Non-equity
      incentive plan
                  compensation
                  ($)
              Pension
                  value
                  ($)
              All
      other
                  compensation
                  ($)
              Total
                  compensation
                  ($)Annual
                  incentive
                  plans
              Long-term
                  incentive
                  plansW. William Boberg(1)
      (14)
                President,
      Chief Executive Officer and Director
              2008
                2007
                2006
              $255,843
                $247,250
                Nil
              Nil
              $68,000(7)
                $980,000
                $508,00012)
              Nil
              Nil
              Nil
              Nil
                Nil
                $290,613
              $323,843
                $1,227,250
                $798,613Roger L. Smith(2)
      (14)
                Chief
      Financial Officer and Vice President, Finance, IT &
      Administration
              2008
                2007
                2006
              $239,853
                $142,010
                Nil
              Nil
              $34,000
      (8)
                $724,500
                Nil
              Nil
              Nil
              Nil
              Nil
                Nil
                Nil
              $273,853
                $866,510
                NilHarold A. Backer(3)
      (14)
                Executive
      Vice President, Geology & Exploration
              2008
                2007
                2006
              $213,203
                $148,350
                Nil
              Nil
              $51,000(9)
                $367,500
                $254,000
              Nil
              Nil
              Nil
              Nil
                Nil
                Nil
              $264,203
                $515,850
                $254,000
  - 49
-
 Name
      and principal position
                Year(6)
                Salary
                    ($)
                Share-based
                    awards
                    ($)
                Option-based
                    awards
                    ($)
                Non-equity
      incentive plan
                    compensation
                    ($)
                Pension
                    value
                    ($)
                All
      other
                    compensation
                    ($)
                Total
                    compensation
                    ($)Annual
                    incentive
                    plans
                Long-term
                    incentive
                    plans
 Wayne W. Heili(4)
      (14)
                Vice
      President, Mining & Engineering
              2008
                2007
                2006
              $223,863
                $169,091
                Nil
              Nil
              $34,000
      (10)
                $1,780,000
                Nil
              Nil
              Nil
              Nil
              Nil
                Nil
                Nil
              $257,863
                $1,949,091
                NilJeffrey T. Klenda(5)
      (14)
                Chair
      and Executive Director
              2008
                2007
                2006
              $204,675
                $176,300
                Nil
              Nil
              $68,000
      (11)
                $490,000
                $508,000
              Nil
              Nil
              Nil
              Nil
                Nil
                $124,000
              $272,675
                $666,300
                $632,000
 _________
 (1)
              Mr.
      Boberg was a consultant to the Corporation from September 21, 2004 to
      December 31, 2006.  Mr. Boberg entered into an employment
      agreement with the Corporation dated January 1, 2007.  Mr.
      Boberg was confirmed as President and Chief Executive Officer on May 29,
      2006 after having been appointed President, Acting Chief Executive Officer
      and a Director on January 11, 2006.  Previously, from September
      2004 to January 11, 2006, Mr. Boberg had been a consultant and Vice
      President, US Operations of the
Corporation.
 (2)
              Roger
      Smith joined the Corporation in May 2007 and was appointed to the position
      of Chief Financial Officer.  In August 2007, Mr. Smith was
      further appointed as Vice President, Finance, IT &
      Administration.
 (3)
              Mr.
      Backer was a consultant to the Corporation from May 2005 to December 31,
      2006.  Mr. Backer entered into an employment agreement with the
      Corporation on January 1, 2007.
 (4)
              Mr.
      Heili joined the Corporation in February 2007 and was appointed to the
      position of Vice President, Mining & Engineering.  Until
      April 23, 2007, Mr. Heili worked for the Corporation on a part time basis
      for a reduced salary while finalizing certain personal
      matters.
 (5)
              Mr.
      Klenda became a director of the Corporation in August 2004 and Chair of
      the Board of Directors and Executive Director in January
      2006.  Mr. Klenda was a consultant to the Corporation from
      August 2004 to December 31, 2006.  Mr. Klenda entered into an
      employment agreement with the Corporation on January 1,
    2007.
 (6)
              All
      executive officers of the Corporation who were with the Corporation prior
      to January 1, 2007 were consultants to the
  Corporation.
 (7)
              In
      2008, Mr. Boberg received options for 80,000 Common Shares on May 8, 2008
      at a price of $1.65 per share.  These options expire on May 8,
      2013. In 2007, Mr Boberg received options for 400,000 Common Shares on May
      22, 2007, at a
      price of $4.75.  These options were to expire on May 15,
      2012.  In 2006, Mr. Boberg received options for 400,000 Common
      Shares on April 21, 2006 at a price of $2.35 per share.  These
      options expire on April 21, 2011.  On September 30, 2008, Mr.
      Boberg voluntarily forfeited options for 400,000 Common Shares which were
      granted on May 22, 2007 at a price of $4.75 per share and these options
      were subsequently cancelled by the
  Corporation.
  (8)
              In
      2008, Mr. Smith received options for 40,000 Common Shares on May 8, 2008
      at a price of $1.65 per share. These options expire on May 8,
      2013.  In 2007, Mr. Smith received options for 225,000 Common
      Shares on May 22, 2007 at a price of $4.75 per share.  These
      options were to expire on May 15, 2012.  Mr. Smith also received
      options for 112,500 Common Shares on August 9, 2007 at a price of
      $3.00.  These options expire on August 9, 2012. On September 30,
      2008, Mr. Smith voluntarily forfeited options for 225,000 Common Shares at
      a price of $4.75 per share which were granted on May 22, 2007 and these
      options were subsequently cancelled by the
  Corporation.
 (9)
              In
      2008, Mr. Backer received options for 60,000 Common Shares on May 8, 2008
      at a price of $1.65 per share.  These options expire on May 8,
      2013.  In 2007, Mr. Backer received options for 150,000 Common
      Shares on May 22, 2007 at a price of $4.75 per share.  These
      options were to expire on May 15, 2012.  In 2006, Mr. Backer
      received options for 200,000 Common Shares on April 21, 2006 at a price of
      $2.35 per share.  These options expire on April 21,
      2011.  On September 30, 2008, Mr. Backer voluntarily forfeited
      options for 150,000 Common Shares at a price of $4.75 per share which were
      granted on May 22, 2007 and these options were subsequently cancelled by
      the Corporation.
 (10)
              In
      2008, Mr. Heili received options for 40,000 Common Shares on May 8, 2008
      at a price of $1.65 per share.  These options expire on May 8,
      2013. In 2007, Mr. Heili received options for 600,000 Common Shares,
      subject to certain performance milestones, on February 19, 2007 at a price
      of $5.03 per share.  These options were to expire on February
      15, 2012.  Mr. Heili also received options for 100,000 Common
      Shares on August 9, 2007 at a price of $3.00 per share.  These
      options expire on August 9, 2012.   On September 30, 2008,
      Mr. Heili voluntarily forfeited options for 600,000 Common Shares at a
      price of $5.03 per share which were granted on February 19, 2007 and these
      options were subsequently cancelled by the
  Corporation.
 (11)
              In
      2008, Mr. Klenda received options for 80,000 Common Shares on May 8, 2008,
      at a price of $1.65 per share.  These options expire on May 8,
      2013.  In 2007, Mr. Klenda received options for 200,000 Common
      Shares on May 22, 2007 at a price of $4.75 per share.  These
      options were to expire on May 15, 2012.  In 2006, Mr. Klenda
      received options for 400,000 Common Shares on April 21, 2006 at a price of
      $2.35 per share.  These options were to expire on April 21,
      2011.  On September 30, 2008, Mr. Klenda voluntarily forfeited
      options for 200,000 Common Shares at a price of $4.75 per share which were
      granted on May 22, 2007 and these options were subsequently cancelled by
      the Corporation.
 (12)
              Mr.
      Boberg received an additional 300,000 Common Shares in 2006, at a price of
      $1.89 per share, as a performance bonus for services rendered to the
      Corporation.
 (13)
              United
      States dollar figures have been converted to Canadian dollar figures at
      the average exchange rate for 2008 of US$1.00 =CDN$1.06601429 as posted by
      the Bank of Canada.
 (14)
              Subject
      to shareholder approval of the RSU Plan at the annual and special meeting
      of shareholders on April 28, 2009, RSU awards were granted on February 9,
      2009 as follows:  Mr. Boberg (107,143 shares); Mr. Smith (72,321
      shares); Mr. Backer (64,286 shares); Mr. Heili (101,250 shares) and Mr.
      Klenda (68,571 shares).
 
 - 50
-
 The
following table sets forth information concerning option-based and share-based
awards granted by the Corporation to each of the Named Executive Officers during
the financial year ended December 31, 2008.
  Option
Grants During the Financial Year Ended December 31, 2008
  Name
              Option-based
      Awards
              Share-based
      AwardsNumber
      of
                  securities
                  underlying
                  unexercised
                  options
                  (#)
              Option
                  exercise
      price
                  ($)
              Option
                  expiration
      date
              Value
      of
                  unexercised
                  in-the-money
                  options
                  ($)
              Number
      of shares
                  or
      units of shares
                  that
      have not vested
                  (#)
              Market
      or payout
                  value
      of share-based
                  awards
      that
                  have
      not vested
                  ($)W.
      William Boberg
              80,000
              $1.65
              May
      8, 2013
              -0-
              Nil
              NilRoger
      L. Smith
              40,000
              $1.65
              May
      8, 2013
              -0-
              Nil
              NilHarold
      A. Backer
              60,000
              $1.65
              May
      8, 2013
              -0-
              Nil
              NilWayne
      W. Heili
              40,000
              $1.65
              May
      8, 2013
              -0-
              Nil
              NilJeffrey
      T. Klenda
              80,000
              $1.65
              May
      8, 2013
              -0-
              Nil
              Nil
  The
following table sets forth information concerning the value vested or earned in
respect of incentive plan awards during the financial year ended December 31,
2008 by each of the Named Executive Officers.
  Incentive
Plan Awards – Value Vested or Earned During the
 Financial
Year Ended December 31, 2008
  Name
              Option-based
      awards –
                  Value
      vested during the year
                  ($)
              Share-based
      awards –
                  Value
      vested during the year
                  ($)
              Non-equity
      incentive
                  plan
      compensation –
                  Value
      earned during the year
                  ($)W.
      William Boberg
              960
              Nil
              NilRoger
      L. Smith
              480
              Nil
              NilHarold
      A. Backer
              720
              Nil
              NilWayne
      W. Heili
              480
              Nil
              NilJeffrey
      T. Klenda
              960
              Nil
              Nil
  - 51
-
  Employment
Contracts
  The
Corporation entered into an employment agreement with Mr. W. William Boberg
dated January 1, 2007, as amended.  Mr. Boberg is entitled to a salary
of US$240,000 per year and a discretionary bonus to be set by the Board of
Directors.  Mr. Boberg is entitled to receive stock option grants
under the terms and conditions of the Option Plan and as determined by the Board
of Directors.  In the event that the Corporation terminates the
employment agreement with Mr. Boberg for non-causal reasons, Mr. Boberg will be
entitled to a lump sum payment equivalent to two years base
salary.  In the event of a change of control of the Corporation, Mr.
Boberg may be entitled to a lump sum payment equivalent to two years base
salary.  Mr. Boberg is subject to non-competition and non-solicitation
restrictions for a period of one year upon termination of the employment
agreement.
  The
Corporation entered into an employment agreement with Mr. Roger Smith dated May
15, 2007, as amended.  Mr. Smith is entitled to a salary of US$225,000
per year and a discretionary bonus to be set up by the Board of
Directors.  Mr. Smith is entitled to receive stock option grants under
the terms and conditions of the Option Plan and as determined by the Board of
Directors.  In the event that the Corporation terminates the
employment agreement with Mr. Smith for non-causal reasons, Mr. Smith will be
entitled to a lump sum payment equivalent to two years base
salary.  In the event of a change of control of the Corporation, Mr.
Smith may be entitled to a lump sum payment equivalent to two years base
salary.  Mr. Smith is subject to non-competition and non-solicitation
restrictions for a period of one year upon termination of the employment
agreement.
  The
Corporation entered into an employment agreement with Mr. Harold Backer dated
January 1, 2007, as amended.  Mr. Backer is entitled to a salary of
US$200,000 per year and a discretionary bonus to be set by the Board of
Directors of the Corporation.  Mr. Backer is entitled to receive stock
option grants under the terms and conditions of the Option Plan and as
determined by the Board of Directors.  In the event the Corporation
terminates the employment agreement with Mr. Backer for non-causal reasons, Mr.
Backer will be entitled to a lump sum payment equivalent to two years base
salary.  In the event of change of control of the Corporation, Mr.
Backer may be entitled to a lump sum payment equivalent to two years base
salary.  Mr. Backer is subject to non-competition and non-solicitation
restrictions for a period of one year upon termination of the employment
agreement.
  The
Corporation entered into an employment agreement with Mr. Wayne Heili dated
February 19, 2007, as amended.Mr. Heili is entitled to
a salary of US$210,000 per year and a discretionary bonus to be set by the Board
of Directors of the Corporation.  Mr. Heili is entitled to receive
stock option grants under the terms and conditions of the Option Plan and as
determined by the Board of Directors.  In the event the Corporation
terminates the employment agreement with Mr. Heili for non-causal reasons, Mr.
Heili will be entitled to a lump sum payment equivalent to two years base
salary.  In the event of change of control of the Corporation, Mr.
Heili may be entitled to a lump sum payment equivalent to two years base
salary.  Mr. Heili is subject to non-competition
and non-solicitation restrictions for a period of one year upon termination of
the employment agreement.
 The
Corporation entered into an employment agreement with Mr. Jeffrey Klenda dated
January 1, 2007, as amended.  Mr. Klenda is entitled to a salary of
US$192,000 per year and a discretionary bonus to be set by the Board of
Directors.  Mr. Klenda is entitled to receive stock option grants
under the terms and conditions of the Option Plan and as determined by the Board
of Directors.  In the event that the Corporation terminates the
employment agreement with Mr. Klenda for non-causal reasons, Mr. Klenda will be
entitled to a lump sum payment equivalent to two years base
salary.  In the event of a change of control of the Corporation, Mr.
Klenda may be entitled to a lump sum payment equivalent to two years base
salary.  Mr. Klenda is subject to non-solicitation restrictions for a
period of one year upon termination of the employment agreement.
  On
December 31, 2008, all the executive employment agreements were amended to
insert necessary provisions for compliance with Section 409A provision of the
Internal Revenue Code of 1986, as amended, including the timing of payments or
deferred compensation in the event of a change of control or termination from
the Corporation.
 
 - 52
-
  Compensation
of Directors
  The
Compensation Committee and the Board of Directors has instituted compensation
arrangements for non-management directors.  Commencing in the second
quarter of 2007, each non-management director receives a quarterly amount of
$3,000 and for each meeting that the director attends in person $1,000 and by
telephone $500.  Newly appointed directors are each eligible to
receive an initial grant of options in the discretion of the Board of Directors.
Non-management directors are also eligible to receive grants of options at the
discretion of the Board of Directors.
  In
addition to other compensation received by directors of the Corporation, it was
determined by the Compensation Committee and the Board of Directors that
non-management directors participating on ad hoc or special committees
of the Board of Directors, which may be constituted from time to time, would be
entitled to additional director fees, to be determined in accordance with
additional duties and requirements requested of those individuals from time to
time.  In respect of the Ad Hoc Committee on Screech Lake, it was
determined that non-management directors would receive fees of $1,000 per day
spent in respect of the Ad Hoc Committee activities except in the event that
such non-management director is already under a consulting agreement with the
Corporation.
  Non-Management
Director Compensation for the Financial Year Ended December 31,
2008
  Name
              Fees
      earned
                  ($)
              Share-based
                  awards
                  ($)
              Option-based
                  awards
                  ($)
              Non-equity
                  incentive
      plan
                  compensation
                  ($)
              Pension
                  value
                  ($)
              All
      other
                  compensation
                  ($)
              Total
                  ($)Paul
      Macdonell (3)
              $20,000
              Nil
              $34,000
              Nil
              Nil
              Nil
              $54,000James
      Franklin (3)
              Nil
              Nil
              $34,000
              Nil
              Nil
              $43,891(1)
              $77,891Robert
      Boaz (3)
              $21,000
              Nil
              $34,000
              Nil
              Nil
              $58,500
      (2)
              $113,500Thomas
      Parker (3)
              $20,751
              Nil
              $34,000
              Nil
              Nil
              Nil
              $54,751
  (1) Dr.
Franklin has a consulting agreement with the Corporation and invoices the
Corporation on an hourly basis for consulting projects on which he is
involved.
  (2) Mr.
Boaz has received additional per diem fees as a director for his work on the Ad
Hoc Committee on Screech Lake.
  (3)
Subject to shareholder approval of the RSU Plan at the annual and special meeting of
shareholders on April 28, 2009,RSU awards were
granted on February 9, 2009 to each of Messrs. Macdonell, Boaz and Parker, and
Dr. Franklin in the amount of 12,857 shares.
  
 In
December 2008, the Compensation Committee reviewed the director compensation and
recommended changes to the director compensation scheme which was adopted by the
Compensation Committee and the Board of Directors in January
2009.  Commencing in 2009, each non-management director will receive a
base retainer in cash of US$18,000 and will be eligible to receive grants of
options and RSU awards at the discretion of the Board of
Directors.  In addition, the Compensation Committee and Board of
Directors adopted a resolution requiring mandatory ownership of the
non-management directors to encourage the alignment of interests between the
Corporation and its shareholders.  Non-management directors are
required to invest an amount equal to the non-management director’s annual
retainer in shares or securities exercisable into shares on or before the latest
of (i) December 31, 2013, or (ii) the fifth anniversary of the non-management
director’s election or appointment.  The retainer amount will be
calculated using the amount of the annual retainer at the latest of (i) January
1, 2009, or (ii) the date of the non-management director’s election or
appointment.
 
 - 53
-
 
 C.
Board
practices.
  Director
Term
  The term
of office for each director is from the date of the meeting at which he or she
is elected until the next annual meeting of shareholders of the Corporation or
until his or her successor is elected or appointed, unless his or her office is
vacated before that time in accordance with the by-laws of the
Corporation.  None of the non-management directors has a service
contract with the Corporation.  One of the non-management directors,
James Franklin, has a consulting agreement with the Corporation.
  Audit
Committee
  The Audit
Committee assists the Board of Directors in carrying out its responsibilities
relating to corporate accounting and financial reporting practices. The duties
and responsibilities of the Audit Committee include the following:
  ·
              reviewing
      for recommendation to the Board of Directors for its approval the
      principal documents comprising the Corporation’s continuous disclosure
      record, including interim and annual financial statements and management’s
      discussion and analysis;
  ·
              recommending
      to the Board of Directors a firm of independent auditors for appointment
      by the shareholders and reporting to the Board of Directors on the fees
      and expenses of such auditors.  The Audit Committee has the
      authority and responsibility to select, evaluate and if necessary replace
      the independent auditor.  The Audit Committee has the authority
      to approve all audit engagement fees and terms and the Audit Committee, or
      a member of the Audit Committee, must review and pre-approve any non-audit
      services provided to the Corporation by the Corporation’s independent
      auditor and consider the impact on the independence of the
      auditor;
  ·
              reviewing
      periodic reports from the Chief Financial
  Officer;
  ·
              discussing
      with management and the independent auditor, as appropriate, any audit
      problems or difficulties and management’s response;
  and
  ·
              establishing
      procedures for the receipt, retention and treatment of complaints
      regarding accounting, internal accounting controls or auditing
      matters.
  The Audit
Committee maintains direct communication during the year with the Corporation’s
independent auditor and the Corporation’s officers responsible for accounting
and financial matters.
  All of
the members of the Audit Committee, Messrs. Macdonell, Boaz and Parker, are
independent directors pursuant to National Instrument 52-110 Audit
Committees (“NI 52-110”) and the listing standards of the NYSE Amex. Each
of the members is financially literate as defined in NI 52-110.  The
Audit Committee has designated Robert Boaz as a “audit committee financial
expert” as that term is defined as currently defined by the rules of the SEC
regulating these disclosures.  The members of the Audit Committee
during 2008, and currently, are Thomas Parker (Chair, commencing May 2008),
Robert Boaz and Paul Macdonell (Chair, January to May 2008).  The
education and experience of each member of the Audit Committee that is relevant
to the performance of his or her responsibilities as an Audit Committee member
is set out under the Heading “Item 6 – Directors, Senior Management and
Employees”.
  Report of the Audit
Committee
  During
2008, the Audit Committee met five times.  The activities of the Audit
Committee over the past year included the following:
 
 - 54
-
  ·
              reviewing
      annual financial statements of the Corporation and management’s discussion
      and analysis prior to filing with the regulatory
    authorities;
  ·
              reviewing
      the quarterly interim financial statements of the Corporation and
      management’s discussion and analysis prior to filing with regulatory
      authorities;
  ·
              reviewing
      periodic reports from the Chief Financial
  Officer;
  ·
              reviewing
      applicable Canadian corporate disclosure reporting and control processes,
      including Chief Executive Officer and Chief Financial Officer
      certification;
  ·
              reviewing
      Audit Committee governance practices to ensure its terms of reference
      incorporate all regulatory requirements;
and
  ·
              reviewing
      the engagement letter with the independent auditors and annual audit fees
      prior to approval by the Board of Directors, as well as pre-approving
      non-audit services and their cost prior to
  commencement.
  The Audit
Committee has reviewed and discussed with management and the independent
auditors the Consolidated Financial Statements of the Corporation as at December
31, 2008 and Management’s Discussion and Analysis. Based on that review and on
the report of the independent auditor of the Corporation, the Audit Committee
recommended to the Board of Directors that such Financial Statements and
Management’s Discussion and Analysis be approved and filed with Canadian
regulatory authorities.
  The Audit
Committee reviews its charter on a yearly basis.  A copy of the
Amended and Restated Audit Committee Charter adopted on August 7, 2008 is
attached as an appendix to this Annual Report on Form 20-F (Annual Information
Form).
  Compensation
Committee
  The
Compensation Committee assists the Board of Directors in carrying out its
responsibilities relating to personnel matters, including performance,
compensation and succession.  The Compensation Committee has prepared
terms of reference which include annual objectives against which to assess
members of management including the President and Chief Executive Officer,
reviewing and making recommendations to the Board of Directors with respect to
employee and consultant compensation arrangements including stock options and
management succession planning.  The Compensation Committee reviews
its charter on a yearly basis.
  The
Compensation Committee met seven times in 2008.  Portions of meetings
are conducted without management present, including for the purpose of
specifically discussing the compensation of the President and Chief Executive
Officer.  The members of the Committee during 2008, and currently, are
Paul Macdonell  (Chair),
Thomas Parker and Robert Boaz.  All the members of the Compensation
Committee are independent pursuant to NI 52-110 and the listing standards of the
NYSE Amex.  James Franklin was an ex officio member of the
Compensation Committee from July 2007 to January 28, 2008.  As part
of the Compensation Committee’s ongoing review of compensation of executive
officers and directors of the Corporation, the Compensation Committee hired the
consulting firm of 3XCD Inc. to conduct a review of the Corporation’s current
compensation model and to recommend changes including the implementation of
short term and long term incentives for executive officers and employees within
the Corporation.
  - 55
-
  D.Employees.
  As of
March 18, 2009, the Corporation had 45 regular, full time
employees.  Approximately, 24 employees are located at the
Corporation’s offices in Littleton, Colorado and 21 employees are located at the
Corporation’s offices in Casper, Wyoming.
  Employment category
              
              2008
              
              
              2007
              
              
              2006Administration
              
              
              16
              
              
              
              15
              
              
              
              -Exploration
              
              
              12
              
              
              
              12
              
              
              
              -Engineering
      and field
              
              
              18
              
              
              
              11
              
              
              
              -Consulting
      and temporary
              
              
              1
              
              
              
              1
              
              
              
              20Total
              
              
              47
              
              
              
              39
              
              
              
              20
 
 Through
much of 2006, the Corporation did not have any employees, however approximately
20 consultants and temporary employees were utilized during the
year.
  E.Share
ownership.
  The
following table sets forth information concerning the beneficial ownership of
the Corporation’s outstanding common shares by the executive officers and
directors of the Corporation, and by all directors and executive officers as a
group, as at March 18, 2009.
  Amount
      and Nature of Beneficial Ownership (1)Options
      Exercisable by
                
                
                PercentageName
                
                Shares
                
                
                May
      17, 2009
                
                
                of
      Class (2)W.
      William Boberg (3)
                
                
                550,000
                
                
                
                643,200
                
                
                
                1.26
                %Roger
      Smith
                
                
                5,359
                
                
                
                134,100
                
                
                
                *Harold
      Backer
                
                
                0
                
                
                
                432,400
                
                
                
                *Wayne
      Heili
                
                
                5,000
                
                
                
                146,600
                
                
                
                *Jeffrey
      T. Klenda (4)
                
                
                777,225
                
                
                
                843,200
                
                
                
                1.71
                %Paul
      G. Goss
                
                
                0
                
                
                
                121,600
                
                
                
                *Paul
      Macdonell (5)
                
                
                20,000
                
                
                
                221,600
                
                
                
                *James
      M. Franklin (6)
                
                
                100,000
                
                
                
                371,600
                
                
                
                *Robert
      Boaz
                
                
                0
                
                
                
                421,600
                
                
                
                *Thomas
      Parker
                
                
                4,000
                
                
                
                221,600
                
                
                
                *All
      Directors andExecutive
      Officersas
      a group (10 Persons)
                
                
                1,461,584
                
                
                
                3,557,500
                
                
                
                5.15
                %
 *
                Represents
      less than 1% of the Corporation’s outstanding
  shares.
 - 56
-
  (1)
              For
      purposes of this table, beneficial ownership has been determined in
      accordance with the provisions of Rule 13d-3 of the Exchange Act under
      which, in general, a person is deemed to be the beneficial owner of a
      security if he has or shares the power to vote or direct the voting of the
      security or the power to dispose of or direct the disposition of the
      security, or if he has the right to acquire beneficial ownership of the
      security within sixty days.
 (2)
              Based
      on 93,893,607 shares outstanding as of March 18,
  2009.
 (3)
              Includes
      53,125 shares Mr. Boberg holds jointly with his
  spouse.
 (4)
              Includes
      677,225 shares Mr. Klenda holds jointly with his
  spouse.
 (5)
              Does
      not include 20,000 shares held in Mr. Macdonell’s spouse's
      name.  Mr. Macdonell disclaims beneficial ownership of such
      shares.
 (6)
              Mr.
      Franklin holds these shares jointly with his
  spouse.
 
  Ur-Energy
Inc. Stock Option Plan 2005
  The
Corporation adopted the Ur-Energy Inc. Stock Option Plan 2005, as amended (the
“Option Plan”), in order to advance the interests of the Corporation by
providing directors, officers, employees and consultants with a financial
incentive tied to the long-term financial performance of the Corporation and
continued service or employment with the Corporation.
  A total
of 10% of the Corporation’s issued and outstanding Common Shares are reserved
for issuance pursuant to the Option Plan. As noted under the heading “Restricted
Share Unit (RSU) Plan” the Board of Directors adopted an RSU Plan on February 5,
2009 and granted certain awards under the RSU Plan subject to shareholder
approval at a meeting of shareholders to be held on April 28,
2009.  The numbers set forth in this paragraph assume the adoption of
the RSU Plan and the award of those RSU grants.  As at March 18, 2009,
this represented 9,324,300 Common Shares.  Of these, 8,264,356
(representing 8.8% of the currently outstanding Common Shares) are issuable upon
the exercise of currently outstanding options and RSU grants and 1,059,944
Common Shares (representing 1.1% of the currently outstanding Common Shares) are
available for future option or RSU grants. The number of shares reserved is
subject to adjustment if the Common Shares are subdivided, consolidated,
converted or reclassified or the number of Common Shares varies as a result of a
stock dividend or an increase or a reduction in the share capital of the
Corporation.  If the RSU Plan is adopted at the shareholder meeting to
be held by the Corporation, 10% of the issued and outstanding shares will be
allocated in the aggregate for the Option Plan and RSU Plan.  The
Corporation expects going forward that approximately 80% of the shares will be
allocated to the Option Plan and 20% to the RSU Plan.  See heading
“Restricted Share Unit (RSU) Plan” for more details on the RSU
Plan.
  Under the
Option Plan, options may be granted to all directors, officers, employees and
consultants of the Corporation. The maximum number of Common Shares that may be
reserved for issuance to any one person under the Option Plan is 5% of the
number of Common Shares outstanding at the time of reservation.  The
exercise price for Common Shares subject to an option is determined by the Board
of Directors at the time of grant and may not be less than the market price of
the Common Shares at the time the option is granted. Options are generally
exercisable as to 10% immediately on the date of grant; with an additional 22%
becoming exercisable four and one-half months after the date of grant; 22%
becoming exercisable nine months after the date of grant; 22% thirteen and
one-half months after the date of grant; and, the balance of 24% eighteen months
after the date of grant, subject to the right of the Board of Directors to
determine at the time of a particular grant that such options will become
exercisable on different dates. An option may be for a term of up to five years
and may not be assigned.
  
 - 57
-
 
 Options
granted under the Option Plan are subject to early termination under certain
circumstances, including (i) one year after the death of the option holder, (ii)
three months after the option holder’s resignation or dismissal without cause as
an employee, or (iii) immediately upon the option holder’s dismissal for cause
as an employee. In each case, only options exercisable at the time of the event
which gave rise to such early termination may be exercised by the option holder
during such period.  The Option Plan also provides that on a change of
control all options under the Option Plan vest immediately and are immediately
exercisable.  On November 8, 2007, the Board amended the Option Plan
to allow the CEO the ability to grant options for up to an aggregate 100,000
Common Shares between Board meetings to non-executive employees and
consultants.  All such grants must be reported to the Board at the
next meeting.  This amendment did not require shareholder
approval.
  The
Option Plan and the terms of any outstanding option may be amended at any time
by the Board of Directors subject to any required regulatory or shareholder
approvals, provided that where such an amendment would prejudice the rights of
an option holder under any outstanding option, the consent of the option holder
is required to be obtained.
  Restricted
Share Unit (RSU) Plan
  The Board
of Directors adopted the RSU Plan on February 5, 2009 upon the approval of the
Toronto Stock Exchange but subject to shareholder approval at the Corporation’s
meeting of shareholders to be held on April 28, 2009.  The Corporation
adopted the RSU Plan as part of the Corporation’s overall stock-based
compensation plan.  The RSU Plan allows participants to earn actual
common shares of the Corporation over time, rather than options that give
participants the right to purchase stock at a set price.
  The
Corporation continues to have the Option Plan, more fully described under the
heading “Ur-Energy Inc. Stock Option Plan 2005”.  Combined the Option
Plan and, if approved, the RSU Plan will provide that the maximum number of
Common Shares available for issuance in the aggregate under both plans is equal
to 10% of the number of Common Shares outstanding at the time of
grant.  The Corporation on a going forward basis expects to allocate
approximately 80% of the number of Common Shares eligible for grant to the
Option Plan, currently, 7,459,440 shares and approximately 20% of the number of
Common Shares eligible for grant to the RSU Plan, currently, 1,864,860
shares.
  The rules
of the Toronto Stock Exchange provide that an issuer must have approved by its
securityholders every three years after the institution of a plan which does not
have a fixed maximum number of securities issuable thereunder, which is the case
of the combined Option Plan and RSU Plan of the Corporation, which provides that
the maximum number of Common Shares available for issuance in the aggregate
under both plans is equal to 10% of the number of Common Shares outstanding at
the time of grant.  The RSU Plan will need to be approved by
shareholders at a meeting of shareholders by 2012.
  The RSU
Plan is a plan which includes directors, executive officers and employees of the
Corporation.  The Board of Directors has appointed the Compensation
Committee to approve which persons are entitled to participate in the RSU Plan
and the number of RSUs to be awarded to each participant.  RSUs
awarded to participants are credited to an account that is established on their
behalf and maintained in accordance with the RSU Plan.  Each RSU
awarded conditionally entitles the participant to the delivery of one common
share (or cash in lieu of such share) upon attainment of the RSU vesting
period.  RSUs awarded to participants vest in accordance with the
terms of the RSU Plan.  All RSUs awarded vest over a two year period,
50% of the RSUs awarded to each participant vesting on the first anniversary of
the date of grant and 50% vesting on the second anniversary of the date of
grant.  On voluntary termination of employment, or resignation of a
director from the Board of Directors, all unvested RSUs are forfeited.
Additional details of the RSU Plan are outlined below and a copy of the full RSU
Plan is attached to the Corporation’s Proxy Management Circular filed on SEDAR
at www.sedar.com and
with the SEC at www.sec.gov:
  · the RSU Plan provides for
the Corporation to redeem Restricted Share Units for cash or Common Shares from
treasury to satisfy all or any portion of the RSU awards;
  · the maximum number of
Common Shares available for issuance under both the RSU Plan and the Option Plan
is 10% of the issued and outstanding shares and remains at the same level as
currently been approved (i.e. there will be NO increase in the maximum number of
Common Shares available for issuance under the Option Plan and RSU
Plan)
  - 58
-
 · in the event of a Change
of Control (as defined in the RSU Plan) the Corporation shall redeem 100% of the
Restricted Share Units granted to participants
  · in the event of an
involuntary termination of an employee of the Corporation, other than for cause,
or a director who is not re-elected the Corporation shall redeem the Restricted
Share Units for cash
  In
February 2009, the Corporation awarded a total of 1,017,828 RSUs to
approximately 49 directors, executive officers and employees, however, all RSU
awards are subject to the approval of the RSU Plan by
shareholders.  In the event that shareholders do not approve the RSU
Plan, such grants will cease to exist.
  The Board
of Directors is of the view that it is in the best interests of the Corporation
to adopt the RSU Plan, which will continue to enable the Board of Directors to
grant options to directors, officers, employees or consultants of the
Corporation and its subsidiaries as a means of attracting highly qualified
directors, executive officers and employees who will be motivated towards the
success of the Corporation and to encourage share ownership in the Corporation
by directors, executive officers and employees who work on behalf of the
Corporation.  In addition, the RSU Plan also will assist in providing
directors and executive officers with equity ownership in the Corporation which
will align their interests with those of the shareholders.
   Item
7. Major Shareholders and Related Party Transactions.
   A.Major
shareholders.
  As of
March 18, 2008, to the knowledge of the directors and senior officers of the
Corporation, the following persons beneficially own, directly or indirectly, or
exercise control or direction over more than 5% of the Common
Shares:
  Name
      of Holder
              Number
      of Common Shares
                of
      the Corporation
              Percentage
      of Issued and
                Outstanding
      Common
                Shares
      of the CorporationBlackRock,
      Inc(1).
              11,326,450
      Common Shares
              12.1%FMR
      LLC(2)
              7,827,700
      common shares
              8.3%
 
  (1) On
behalf of its investment advisory subsidiaries: BlackRock Investment Management,
LLC,  BlackRock (Channel Islands) Ltd., and BlackRock Investment
Management UK Ltd.  As reported by BlackRock, Inc. on Form 13G dated
January 13, 2009 filed with the SEC.
  (2) On
behalf of Fidelity Canada Disciplined Equity Fund, Pyramis Global Advisors, LLC,
Edward C. Johnson 3d and the members of the family of Edward C. Johnson
3d.  As reported by FMR LLC on Form 13G dated February 12, 2009 filed
with the SEC.
  As of
October 30, 2008, there were 20 registered holders of Ur-Energy’s 93,243,607
outstanding common shares, of which 34,425,481 were held in the United
States
 The
Corporation is not aware of any arrangements the operation of which may at a
subsequent date result in a change in control of the Corporation.  To
the knowledge of the Corporation, it is not directly or indirectly owned or
controlled by another corporation, by any government or by any natural or legal
person severally or jointly.
  - 59
-
 B.
Related party
transactions.
  Other
than employment agreements with executive officers, stock option grants
described elsewhere in this report or as otherwise disclosed in this report, the
Corporation is not aware of any related party transactions occurring or being
made, or any loans made by the Corporation or any of its subsidiaries to
relatedparties,
since January 1, 2008.
  Not
applicable.
  C.
Interests of experts and
counsel.
  Not
applicable.
  Item
8. Financial Information.
  See Item
17.
  Item
9. The Offer and Listing.
  A.Offer and listing
details.
  Ur-Energy’s
common shares are listed and traded in Canada on the TSX since November 29, 2005
and in the United States on the NYSE Amex since July 24, 2008.  The
following table sets forth the price range per share and trading volume for the
common shares:
  TSX
(C$)
  Common
      SharesAverage
      Daily Volume
              High
              Low2005(Nov.
      29 to Dec 31)
              887,164
              1.14
              0.782006
              742,382
              4.70
              0.952007
              778,284
              5.45
              2.172008
              476,618
              3.60
              0.342007First
      Quarter
              811,247
              5.45
              3.69Second
      Quarter
              983,906
              5.20
              3.85Third
      Quarter
              616,945
              4.69
              2.17Fourth
      Quarter
              506,281
              4.31
              2.812008First
      Quarter
              518,629
              3.60
              1.76Second
      Quarter
              375,258
              2.41
              1.37Third
      Quarter
              303,468
              2.42
              0.57Fourth
      Quarter
              711,392
              0.79
              0.342008September
              455,086
              1.59
              0.57October
              1,013,605
              0.69
              0.34November
              656,220
              0.79
              0.43December
              447,333
              0.73
              0.48
   - 60
-
 2009January
              339,038
              0.93
              0.70February
              175,511
              0.76
              0.61March
      1 to 18
              118,392
              0.71
              0.61
 
 NYSE
Amex (US$)
 
 Common
      SharesAverage
      Daily Volume
              High
              Low2008(July 25 to Dec 31)
              173,018
              1.96
              0.282008Third
      Quarter (July 25 to Sept 30)
              95,479
              1.96
              0.55Fourth
      Quarter
              229,961
              0.75
              0.282008September
              158,776
              1.43
              0.55October
              337,983
              0.65
              0.28November
              212,574
              0.75
              0.35December
              132,045
              0.59
              0.382009January
              111,835
              0.77
              0.56February
              102,589
              0.60
              0.49March
      1 to 18
              67,423
              0.56
              0.46
 
 On March
18, 2009, the closing price of the Common Shares was $0.63 on the TSX and
US$0.50 on the NYSE Amex.  The registrar and transfer agent for the
Common Shares is Equity Transfer & Trust Corporation, Toronto, Ontario and
the co-registrar and transfer agent is Registrar and Transfer Corporation, New
York, New York.
  B.
Plan of distribution.
  Not
applicable.
  C.
Markets.
  The
Corporation’s common shares are listed on the TSX under the symbol "URE" and on
the NYSE Amex under the symbol "URG".
  D.
Selling
shareholders.
  Not
applicable.
  - 61
-
  E.
Dilution.
  Not
applicable.
  F.
Expenses of the
issue.
  Not
applicable.
  Item
10. Additional Information.
  A.Share
capital.
  Not
applicable.
  B.
Memorandum and articles of
association.
  The
Corporation’s articles of continuance do not place any restrictions on the
Corporation’s objects and purposes.  The authorized capital of the
Corporation consists of an unlimited number of common shares and an unlimited
number of Class A Preference Shares.  As of March 18, 2009, 93,893,607
common shares are issued and outstanding and no preferred shares are issued and
outstanding.  The holders of the common shares are entitled to one
vote per share at all meetings of the shareholders of the
Corporation.  The holders of common shares are also entitled to
dividends, if and when declared by the directors of the Corporation and the
distribution of the residual assets of the Corporation in the event of a
liquidation, dissolution or winding up of the Corporation.The Corporation's common
shares do not have pre-emptive rights to purchase additional
shares.
  The
Corporation’s Class A Preference Shares are issuable by the directors in one or
more series and the directors have the right and obligation to fix the number of
shares in, and determine the designation, rights, privileges, restrictions and
conditions attaching to the shares of each series.  The rights of the
holders of common shares will be subject to, and may be adversely affected by,
the rights of the holders of any Class A Preference Shares that may be issued in
the future.  The Class A Preference Shares, may, at the discretion of
the Board of Directors, be entitled to a preference over the common shares and
any other shares ranking junior to the Class A Preference Shares with respect to
the payment of dividends and distribution of assets in the event of liquidation,
dissolution or winding up.
  Certain
Powers of Directors
  The Canada Business Corporations
Act  (the "CBCA") requires that every director who is a
party to a material contract or transaction or a proposed material contract or
transaction with a corporation, or who is a director or officer of, or has a
material interest in, any person who is a party to a material contract or
transaction or a proposed material contract or
transaction with the corporation, shall disclose in writing to the corporation
or request to have entered in the minutes of the meetings of directors the
nature and extent of his or her interest, and shall refrain from voting in
respect of the material contract or transaction or proposed material contract or
transaction unless the contract or transaction is: (a) one relating
primarily to his or her remuneration as a director,
officer, employee or agent of the corporation or an affiliate; (b) one for
indemnity of or insurance for directors as contemplated under the CBCA; or
(c) one with an affiliate. However, a director who is prohibited by the
CBCA from voting on a material contract or proposed material contract may be
counted in determining whether a quorum is present for the purpose of the
resolution, if the director disclosed his or her interest in accordance with the
CBCA and the contract or transaction was reasonable and fair to the corporation
at the time it was approved.
  The
directors may, by resolution, amend or repeal any by-laws that regulate the
business or affairs of the Corporation. The CBCA requires the directors to
submit any such amendment or repeal to the Corporation’s shareholders at the
next meeting of shareholders, and the shareholders may confirm, reject or amend
the amendment or repeal.
  - 62
-
  Directors'
Share Ownership
  In
December 2008, the Compensation Committee reviewed the director compensation and
recommended changes to the director compensation scheme which was adopted by the
Compensation Committee and the Board of Directors in January
2009.  Each non-management director will receive a base retainer in
cash of US$18,000 and will be eligible to receive grants of options and RSU
awards at the discretion of the Board of Directors.  In addition, the
Compensation Committee and Board of Directors adopted a resolution requiring
mandatory ownership of the non-management directors to encourage the alignment
of interests between the Corporation and its
shareholders.  Non-management directors are required to invest an
amount equal to the non-management director’s annual retainer in shares or
securities exercisable into shares on or before the latest of (i) December 31,
2013, or (ii) the fifth anniversary of the non-management director’s election or
appointment.  The retainer amount will be calculated using the amount
of the annual retainer at the latest of (i) January 1, 2009, or (ii) the date of
the non-management director’s election or appointment.
  See “Item
6.B – Compensation – Compensation of Directors”.
  Meetings
of Shareholders
  The CBCA
requires the Corporation to call an annual shareholders' meeting within 15
months after holding the last preceding annual meeting but not later than six
months after the end of the Corporation’s preceding financial year and permits
the Corporation to call a special shareholders' meeting at any time. In
addition, in accordance with the CBCA, the holders of not less than 5% of the
Corporation’s shares carrying the right to vote at a meeting sought to be held
may requisition the Corporation’s directors to call a special shareholders'
meeting for the purposes stated in the requisition. The Corporation is required
to mail a notice of meeting and management
information circular to registered shareholders not less than 21 days and not
more than 60 days prior to the date of any annual or special shareholders'
meeting. These materials also are filed with Canadian securities regulatory
authorities and the SEC. The Corporation's by-laws provide that a quorum of two
shareholders in person or represented by proxy holding or representing by proxy
not less than 10% of the Corporation's issued shares carrying the right to vote
at the meeting is required to transact business at a shareholders' meeting.
Shareholders, and their duly appointed proxies and corporate representatives, as
well as the Corporation's auditors, are entitled to be admitted to the
Corporation's annual and special shareholders' meetings.
  Disclosure
of Share Ownership
  The Securities Act (Ontario)
provides that a person or company that beneficially owns, directly or
indirectly, voting securities of an issuer or that exercises control or
direction over voting securities of an issuer or a combination of both, carrying
more than 10% of the voting rights attached to all the issuer's outstanding
voting securities (an "insider") must, within 10 days of becoming an
insider, file a report in the required form effective the date on which the
person became an insider, disclosing any direct or indirect beneficial ownership
of, or control or direction over, securities of the reporting issuer. The Securities Act (Ontario) also
provides for the
  
 - 63
-
  filing of
a report by an insider of a reporting issuer who acquires or transfers
securities of the issuer. This report must be filed within 10 days after
the end of the month in which the acquisition or transfer
takes place.
  The Securities Act (Ontario) also
provides that a person or company that acquires (whether or not by way of a
take-over bid, issuer bid or offer to acquire) beneficial ownership of voting or
equity securities or securities convertible into voting or equity securities of
a reporting issuer that, together with previously held securities brings the
total holdings of such holder to 10% or more of the outstanding securities of
that class, must (a) issue and file forthwith a news release containing the
prescribed information and (b) file a report within two business days
containing the same information set out in the news release. The acquiring
person or company must also issue a press release and file a report each
time it acquires an additional 2% or more of the outstanding securities of the
same class and every time there is a "material change" to the contents of the
news release and report previously issued and filed.
  The rules
in the United States governing the ownership threshold above which
shareholder ownership must be disclosed are more stringent than those discussed
above. Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") imposes reporting requirements on persons who acquire
beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) of more than 5% of a class of an
equity security registered under Section 12 of the Exchange Act. In
general, such persons must file, within 10 days after such acquisition, a
report of beneficial ownership with the SEC containing the information
prescribed by the regulations under Section 13 of the Exchange Act. This
information is also required to be sent to the issuer of the securities and to
each exchange where the securities are traded.
  C.
Material
contracts.
  The only
contractentered
into by the Corporation for each of the fiscal years ending December 31, 2007
and 2008 which was material and entered into outside the ordinary course of
business:
  1.
              Underwriting
      Agreement dated April 23, 2007 between the Corporation, GMP Securities
      L.P., Raymond James Ltd., Cormark Securities Ltd. and Canaccord Capital
      Corporation (collectively, the “Underwriters”).  Pursuant to the
      Underwriting Agreement, the Underwriters offered to purchase from the
      Corporation, and the Corporation agreed to issue and sell to the
      Underwriters, 17,431,000 common shares of the Corporation.  The
      associated bought deal financing was completed on May 10,
      2007.
  D.Exchange
controls.
  There is
no law, governmental decree or regulation in Canada that restricts the export or
import of capital or affects the remittance of dividends, interest or other
payments to a non-resident holder of common shares other than withholding tax
requirements. Any such remittances to United States residents are subject to
withholding tax. See “Taxation.”  There is no limitation imposed by
the laws of Canada or by the charter or other constituent documents of the
Corporation on the right of a non-resident to hold or vote the common shares,
other than as provided in the Investment Canada Act.
 
 The
following discussion summarizes the principal features of the Investment Canada
Act for a non-resident who proposes to acquire the common shares. The Investment
Canada Act generally prohibits implementation of a reviewable investment by an
individual, government or agency thereof, corporation, partnership, trust or
joint venture (each an “entity”) that is not a “Canadian” as defined in the
Investment Canada Act (a “non-Canadian”), unless after review, the minister
responsible for the Investment Canada Act is satisfied that the investment is
likely to be of net benefit to Canada.  Certain Government of Canada
uranium policies may be material in respect of such a review.
 
 An
investment in the common shares by a non-Canadian other than a “WTO Investor”
(as that term is defined by the Investment Canada Act, and which term includes
entities which are nationals of or are controlled by nationals of member states
of the World Trade Organization) when the Corporation was not controlled by a
WTO Investor, would be reviewable under the Investment Canada Act if it was an
investment to acquire control of the Corporation and the value of the assets of
the Corporation, as determined in accordance with the
 
 - 64
-
 
 regulations
promulgated under the Investment Canada Act, was $5 million or
more.  An investment in the common shares by a WTO Investor, or by a
non-Canadian when the Corporation was controlled by a WTO Investor, would be
reviewable under the Investment Canada Act if it was an investment to acquire
control of the Corporation and the value of the assets of the Corporation, as
determined in accordance with the regulations promulgated under the Investment
Canada Act was not less than a specified amount, which for 2009 was any amount
in excess of $312 million.  Amendments to the Investment Canada Act
are expected to come into force in the course of 2009 that will change the
financial threshold that will trigger a review.  These amendments will
make an acquisition of control reviewable if the enterprise value (which term is
to be defined in regulations not yet in force) of the Corporation exceeds $5
million (in respect of a non-WTO Investor transaction) or $600 million (in
respect of a WTO Investor transaction), as the case may be (which amount will
increase in subsequent years).
 
 A
non-Canadian would acquire control of the Corporation for the purposes of the
Investment Canada Act if the non-Canadian acquired a majority of the common
shares. The acquisition of one third or more, but less than a majority of the
common shares would be presumed to be an acquisition of control of the
Corporation unless it could be established that, on the acquisition, the
Corporation was not controlled in fact by the acquirer through the ownership of
the common shares.
 
 A
completed or proposed acquisition of common shares of the Corporation (whether
or not control is acquired) may also be reviewable if the Minister of Industry,
after consultation with the Minister of Public Safety and Emergency
Preparedness, considers that the investment could be injurious to national
security and the Canadian federal cabinet makes an order for the review of the
investment.  Furthermore, to the extent that the investor has not
implemented the proposed acquisition of common shares of the Corporation and the
Minister of Industry has reasonable grounds to believe that the investment could
be injurious to national security, the investor may not implement the
acquisition without clearance if the minister sends a notice to the investor
that an order for the review of the investment may be made.
 
 Certain
transactions relating to the common shares may be exempt from the Investment
Canada Act, including: (a) an acquisition of the common shares by a person in
the ordinary course of that person’s business as a trader or dealer in
securities; (b) an acquisition of control of the Corporation in connection with
the realization of security granted for a loan or other financial assistance and
not for a purpose related to the provisions of the Investment Canada Act; and
(c) an acquisition of control of the Corporation by reason of an amalgamation,
merger, consolidation or corporate reorganization following which the ultimate
direct or indirect control in fact of the Corporation, through the ownership of
the common shares, remained unchanged.
  E.
Taxation.
  Canadian Federal Income Tax
Considerations
 
 The
following is a summary of the principal Canadian federal income tax consequences
generally applicable to the holding and disposition of common shares in the
capital of the Corporation by a person who is a resident of the United States
(and not resident in Canada for purposes of the Income Tax Act (Canada) (the
“Tax Act”) and the Canada-United States Income Tax Convention, 1980, as amended
(the “Treaty”)), who is entitled to the benefit of the Treaty, who holds common
shares solely as capital property and does not use or hold a common share in
carrying on business in Canada(a “US Holder”).  Generally the common
shares will be considered to be capital property to a US Holder provided the
holder does not hold the common shares in the course of carrying on a business
of trading in securities and has not acquired them in one or more transactions
considered to be an adventure in the nature of trade.  Special rules,
which are not discussed herein, may apply to a holder of common shares who is a
non-resident insurer which carries on business in Canada and
elsewhere.
 
 This
summary is based on the current provisions of the Tax Act and the regulations
thereunder (the “Regulations”), the Treaty, all specific proposals to amend the
Tax Act, the Regulations and the Treaty publicly announced by the Minister of
Finance (Canada) prior to the date hereof (the “Proposals”) and the
administrative practices and assessing policies of the of Canada Revenue Agency
published in writing by it prior to the date hereof.
  This
summary is not exhaustive of all possible Canadian federal income tax
considerations and except for the Proposals, does not take into account or
anticipate any changes in the law or practice, whether by judicial,
governmental, or legislative decision or action, nor does it take into account
any provincial, territorial or foreign (including without limitation, any US)
tax law or treaty, which may differ significantly from those discussed herein.
It is assumed that all Proposals will be enacted substantially as proposed and
that there is no other relevant change in any governing law or practice,
although no assurance can be given in these respects. Each US Holder is advised
to obtain tax and legal advice applicable to such US Holder’s particular
circumstances.
 
 - 65
-
 
 Dividends
 Dividends
on common shares paid or credited by the Corporation to a US Holder will be
subject to Canadian withholding tax at the rate of 25% of the gross amount of
the dividends. In general, the Treaty reduces the rate of withholding with
respect to dividends paid to a US Holder to 15% of the gross amount of the
dividend.  If the US Holder is a company that owns at least 10% of the
voting stock of the Corporation and beneficially owns the dividend, the rate of
withholding tax is reduced to 5% under the Treaty.  Further, under the
Treaty dividends paid to certain religious, scientific, literary, educational or
charitable organizations and certain pension organizations that are resident in,
and generally exempt from tax in the United States, are generally exempt from
Canadian withholding tax.  The Corporation is required to withhold the
applicable tax from the dividend payable to the US Holder, and to remit the tax
to the Receiver General of Canada for the account of the US Holder.
 
 Disposition
of Common Shares
 A US
Holder will not be subject to tax under the Tax Act on any capital gain realized
on an actual or deemed disposition of a common share, provided the common shares
are not “taxable Canadian property” to the US Holder.  The common
shares will not be taxable Canadian property to a US Holder with respect to a
particular disposition unless at any time in the 60 month period preceding the
disposition the US Holder, persons with whom the US Holder does not deal at
arm’s length or the US Holder together with such persons owned 25% or more of
the common shares (or any other class or series of shares of the
Corporation).  Further, the Treaty may exempt a US Holder from tax
imposed under the Tax Act on capital gains arising on the disposition of common
shares.
 
 United States Federal Income
Tax Considerations
 
 TO
ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, PROSPECTIVE INVESTORS
ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS
PROSPECTUS IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED
UPON, BY INVESTORS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED
UNDER THE CODE; (B) SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE
PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C)
PROSPECTIVE INVESTORS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES
FROM AN INDEPENDENT TAX ADVISOR.
 
 The
following summary describes certain material U.S. federal income tax
considerations generally applicable to U.S. Holders (as defined below) with
respect to the ownership and disposition of the Corporation’s common shares
offered hereunder.  It addresses only U.S. Holders that hold the
Corporation’s common shares as capital assets within the meaning of Section 1221
of the Internal Revenue Code of 1986, as amended (the “Code”) (generally, assets
held for investment purposes).  The following summary does not purport
to be a complete analysis of all of the potential U.S. federal income tax
considerations that may be relevant to particular U.S. Holders in light of their
particular circumstances, nor does it deal with persons that are subject to
special tax rules, such as brokers, dealers in securities or currencies,
financial institutions, mutual funds, insurance companies, tax-exempt entities,
qualified retirement plans, U.S. Holders that own stock constituting 10% or more
of the Corporation’s voting power (whether such stock is directly, indirectly or
constructively owned), regulated investment companies, common trust funds, U.S.
Holders subject to the alternative minimum tax, U.S. Holders holding the
Corporation’s common shares as part of a straddle, hedge or conversion
transaction or as part of a synthetic security or other integrated transaction,
traders in securities that elect to use a mark-to market
method of accounting for their securities holdings, U.S. Holders that have a
“functional currency” other than the U.S. dollar, U.S. expatriates, and persons
that acquired the Corporation’s common shares in a compensation
transaction.  In addition, this summary does not address persons that
hold an interest in a partnership or other pass-through entity that holds the
Corporation’s common shares, or tax considerations arising under the laws of any
state, local or non-U.S. jurisdiction or other U.S. federal tax considerations
(e.g., estate or gift tax) other than those pertaining to the income
tax.
 - 66
-
  The
following is based on the Code, Treasury regulations promulgated thereunder
(“Treasury Regulations”), and administrative rulings and court decisions, in
each case as in effect on the date hereof, all of which are subject to change,
possibly with retroactive effect.
 
 As used
herein, the term “U.S. Holder” means a beneficial owner of the Corporation’s
common shares that is (i) a citizen or individual resident of the U.S., (ii) a
corporation (or an entity classified as a corporation for U.S. federal income
tax purposes) created or organized in or under the laws of the U.S. or any
political subdivision thereof, (iii) an estate, the income of which is subject
to U.S. federal income taxation regardless of its source, or (iv) a trust if (A)
a U.S. court is able to exercise primary supervision over its administration and
one or more U.S. persons, within the meaning of Section 7701(a)(30) of the Code,
have authority to control all of its substantial decisions or (B) it has
properly elected under applicable Treasury Regulations to be treated as a U.S.
person.
 
 The tax
treatment of a partner in a partnership (or other entity classified as a
partnership for U.S. federal income tax purposes) may depend on both the
partner’s and the partnership’s status and the activities of such
partnership.  Partnerships that are beneficial owners of the
Corporation’s common shares, and partners in such partnerships, should consult
their own tax advisors regarding the U.S. federal, state, local and non-U.S. tax
considerations applicable to them with respect to the ownership and disposition
of the Corporation’s common shares.
 
 
 This
summary is of a general nature only.  It is not intended to
constitute, and should not be construed to constitute, legal or tax advice to
any particular U.S. Holder.  U.S. Holders should consult their own tax
advisors as to the tax considerations applicable to them in their particular
circumstances.
 
 Ownership
and Disposition of the Corporation’s Common Shares
 
 Distributions.  Subject
to the discussion below under “Certain United States Federal Income Tax
Considerations — Passive Foreign Investment Company Rules” and under “Certain
United States Federal Income Tax Considerations – Controlled Foreign
Corporations,” distributions made with respect to the Corporation’s common
shares (including any Canadian taxes withheld from such distributions) generally
will be included in the gross income of a U.S. Holder as dividend income to the
extent of the Corporation’s current and accumulated earnings and profits, as
determined under U.S. federal income tax principles.  So long as the
Corporation is not a passive foreign investment company (see discussion under
“Certain United States Federal Income Tax Considerations – Passive Foreign
Investment Company” below), the Corporation is expected to be eligible for the
benefits of a comprehensive income tax treaty with the U.S., so that dividends
paid by the Corporation to non-corporate U.S. Holders are generally expected to
be eligible for the reduced rate of U.S. federal income tax available with
respect to certain dividends received in taxable years beginning before January
1, 2011.  Note, however, that if the Corporation is a PFIC, for the
taxable year during which the Corporation pays a dividend or for the preceding
year, the reduced rates described in the preceding sentence will not
apply.  A corporate U.S. Holder will not be entitled to a dividends
received deduction that is otherwise generally available upon the receipt of
dividends distributed by U.S. corporations.
 
 Distributions
in excess of the Corporation’s current and accumulated earnings and profits, if
made with respect to the Corporation’s common shares, will be treated as a
return of capital to the extent of the U.S. Holder’s adjusted tax basis in such
common shares, and thereafter as capital gain.
 
 If any
dividends are paid in Canadian dollars, the amount includible in gross income
will be the U.S. dollar value of such dividend, calculated by reference to the
exchange rate in effect on the date of actual or constructive receipt of the
payment, regardless of whether the payment is actually converted into U.S.
dollars.  If any Canadian dollars actually or constructively received
by a U.S. Holder are later converted into U.S. dollars, such U.S. Holder may
recognize gain or loss on the conversion, which will be treated as ordinary gain
or loss.  Such gain or loss generally will be treated as gain or loss
from sources within the U.S. for U.S. foreign tax credit purposes.
 
 - 67
-
  A U.S.
Holder may be entitled to deduct or claim a credit for Canadian withholding
taxes, subject to applicable limitations in the Code.  Dividends paid
on the Corporation’s common shares will be treated as income from sources
outside the U.S. and generally will be “passive category income” for U.S.
foreign tax credit limitation purposes.  The rules governing the
foreign tax credit are complex and the availability of the credit is subject to
limitations.  U.S. Holders should consult their own tax advisors
regarding the availability of the foreign tax credit in their particular
circumstances.
 
 Dispositions.  Subject
to the discussion below under “Certain United States Federal Income Tax
Considerations — Passive Foreign Investment Company Rules” and “Certain United
States Federal Income Tax Considerations – Controlled Foreign Corporations,”
upon the sale, exchange or other taxable disposition of the Corporation’s common
shares, a U.S. Holder generally will recognize capital gain or loss equal to the
difference between (i) the amount of cash and the fair market value of any other
property received upon the sale, exchange or other taxable disposition and (ii)
the U.S. Holder’s adjusted tax basis in such common shares.  Capital
gain or loss recognized upon a sale, exchange or other taxable disposition of
the Corporation’s common shares will generally be long-term capital gain or loss
if the U.S. Holder’s holding period with respect to such common shares disposed
of is more than one year at the time of the sale, exchange or other taxable
disposition.  The deductibility of capital loss is subject to
limitations.
 
 Passive
Foreign Investment Company Rules
 
 Certain
adverse U.S. federal income tax rules generally apply to a U.S. person that owns
or disposes of stock in a non-U.S. corporation that is treated as a passive
foreign investment company (a “PFIC”).  In general, a non-U.S.
corporation will be treated as a PFIC for any taxable year during which, after
applying relevant look-through rules with respect to the income and assets of
subsidiaries, either (i) 75% or more of the non-U.S. corporation’s gross income
is passive income, or (ii) 50% or more of the average value of the non-U.S.
corporation’s assets produce or are held for the production of passive
income.  For these purposes, passive income generally includes
dividends, interest, certain rents and royalties, and the excess of gains over
losses from certain commodities transactions, including transaction involving
oil and gas.  However, gains and losses from commodities transactions
generally are excluded from the definition of passive income if (i) such gains
or losses are derived by a non-U.S. corporation in the active conduct of a
commodity business, and (ii) “substantially all” of such corporation’s business
is as an active producer, processor, merchant or handler of commodities of like
kind (the “active commodities business exclusion”).
 
 The
Corporation has not made a determination as to its PFIC status for the current
or any past taxable years.  PFIC classification is factual in nature,
generally cannot be determined until the close of the taxable year in question,
and is determined annually.  Thus, there can be no assurance that the
Corporation is not a PFIC for the current taxable year, has not been for any
past taxable years or will not be a PFIC for any future taxable
years.
 
 The
following U.S. federal income tax consequences generally will apply to a U.S.
Holder of the Corporation’s common shares if the Corporation is treated as a
PFIC:
 
 Distributions.  Distributions
made by the Corporation with respect to its common shares, to the extent such
distributions are treated as “excess distributions” pursuant to Section 1291 of
the Code, must be allocated ratably to each day of the U.S. Holder’s holding
period for such common shares.  The amounts allocated to the taxable
year during which the distribution is made, and to any taxable years in such
U.S. Holder’s holding period which are prior to the first taxable year in which
the Corporation is treated as a PFIC, are included in such U.S. Holder’s gross
income as ordinary income for the taxable year of the
distribution.  The amount allocated to each other taxable year is
taxed as ordinary income in the taxable year of the distribution at the highest
tax rate in effect for the U.S. Holder in that other taxable year and is subject
to an interest charge at the rate applicable to underpayments of
tax.  Any distribution made by the Corporation that does not
constitute an excess
distribution would be treated in the manner described under “Certain United
States Federal Income Tax Considerations — Ownership and Disposition of the
Corporation’s Common Shares — Distributions,” above. 
 Dispositions.  The
entire amount of any gain realized upon the U.S. Holder’s disposition of the
Corporation’s common shares generally will be treated as an excess distribution
made in the taxable year during which such disposition occurs, with the
consequences described above.
 
 - 68
-
  Elections.  In
general, the adverse U.S. federal income tax consequences of holding stock of a
PFIC described above may be mitigated if a U.S. shareholder of the PFIC is able
to, and timely makes, a valid qualified electing fund (“QEF”) election with
respect to the PFIC or a valid mark-to-market election with respect to the stock
of the PFIC.
 
 U.S.
Holders should consult their own tax advisors as to the tax consequences of
owning and disposing of stock in a PFIC, including the availability of any
elections that may mitigate the adverse U.S. federal income tax consequences of
holding stock of a PFIC.
 
 CertainControlled
Foreign Corporation Rules
 
 If more
than 50% of the total voting power or the total value of the Corporation’s
outstanding shares is owned, directly or indirectly, by citizens or residents of
the U.S., U.S. partnerships or corporations, or U.S. estates or trusts (as
defined by Section 7701(a)(30) of the Code), each of which own, directly or
indirectly, 10% or more of the total voting power of the Corporation’s
outstanding shares (each a “10% Shareholder”), the Corporation could be treated
as a “Controlled Foreign Corporation” (“CFC”) under Section 957 of the
Code.
 
 The
Corporation’s classification as a CFC would effect many complex results,
including that under Section 1248 of the Code, gain from the disposition of the
Corporation’s common stock by a U.S. Holder that is or was a 10% Shareholder at
any time during the five-year period ending with the disposition will be treated
as a dividend to the extent of the Corporation’s earnings and profits
attributable to the common shares sold or exchanged.
 
 If the
Corporation is classified as both a PFIC and a CFC, the Corporation generally
will not be treated as a PFIC with respect to 10% Shareholders.
 
 The
Corporation has made no determination as to whether it currently meets or has
met the definition of a CFC, and there can be no assurance that it will not be
considered a CFC for the current or any future taxable year.
 
 The
CFC rules are very complicated, and U.S. Holders should consult their own
financial advisor, legal counsel or accountant regarding the CFC rules and how
these rules may impact their U.S. federal income tax situation.
 
 Information
Reporting and Backup Withholding Tax
 
 If
certain information reporting requirements are not met, a U.S. Holder may be
subject to backup withholding tax (currently imposed at a rate of 28%) on the
distributions made with respect to the Corporation’s common shares or proceeds
received on the disposition of the Corporation’s common
shares.  Backup withholding tax is not an additional tax.  A
U.S. Holder subject to the backup withholding tax rules will be allowed a credit
of the amount withheld against such U.S. Holder’s U.S. federal income tax
liability and, if backup withholding tax results in an overpayment of U.S.
federal income tax, such U.S. Holder may be entitled to a refund, provided that
the requisite information is correctly furnished to the Internal Revenue Service
in a timely manner.  U.S. Holders should consult their own tax
advisors as to the information reporting and backup withholding tax
rules.
 
 THE ABOVE
SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX
CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE
OWNERSHIP
 
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-
 
 AND
DISPOSITION OF the Corporation’s COMMON SHARES.  U.S. HOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM
IN THEIR PARTICULAR CIRCUMSTANCES.
  F.
Dividends and paying
agents.
  Not
applicable.
  G.
Statement by
experts.
  Not
applicable.
  H.
Documents on
display.
  Public
documents are available for inspection at the Corporation’s head offices located
at 10758 W. Centennial Road, Suite 200, Littleton, Colorado 80127, and, for
certain documents, on the Internet at www.sedar.com and at
www.sec.gov.
  The
Corporation is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, to the extent
required of Canadian companies, files periodic reports and other information
with the SEC. All such reports and information may be read and copied at the
public reference facilities listed below. The Corporation intends to give its
shareholders annual reports containing audited financial statements and a report
thereon from its independent chartered accountants and quarterly reports for the
first three quarters of each fiscal year containing unaudited interim financial
information.
  Statements
made in this Annual Report on Form 20-F (Annual Information Form) about the
contents of contracts or other documents are not necessarily complete and
shareholders are referred to the copy of such contracts or other documents filed
as exhibits to this annual report.
  The
Corporation’s SEC filings, and the exhibits thereto, are available for
inspection and copying at the public reference facilities maintained by the SEC
in Judiciary Plaza, Room 1580, 100 F Street N.W., Washington, D.C., 20549.
Copies of these filings may be obtained from these offices after the payment of
prescribed fees. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. These filings are also available on the SEC’s
website at www.sec.gov.
  The
Corporation will also provide its shareholders with proxy statements prepared
according to Canadian law. As a Canadian company, the Corporation is exempt from
the Exchange Act rules regarding the furnishing and content of proxy statements
to shareholders and is also exempt from the short-swing profit recovery and
disclosure regime of Section 16 of the Exchange Act.
  I.Subsidiary
Information.
  Not
applicable.
  Item
11. Quantitative and Qualitative Disclosures About Market Risk.
  The
Corporation is engaged in the acquisition and development of uranium projects
and related activities including exploration, evaluation, development,
engineering, permitting, and the preparation of related economical analysis. The
value of the Corporation’s properties is related to uranium price and changes in
the price of uranium could affect its ability to generate revenue from its
portfolio of uranium projects.
  Uranium
prices may fluctuate widely from time to time and are affected by numerous
factors, including the following: expectations with respect to the rate of
inflation, exchange rates, interest rates, global and regional political and
economic circumstances and governmental policies, including those with respect
to uranium production and nuclear energy. The demand for, and supply of, uranium
affect uranium prices, but not necessarily in the same manner as demand and
supply affect the prices of other commodities. The supply of uranium consists of
a combination of new mine production and existing stocks of uranium held by
governments, and public and private organizations. The demand for uranium is
primarily derived from nuclear energy production. Uranium cannot be readily sold
in commodities markets and its market value cannot be predicted for any
particular time.
 
 - 70
-
 Because
the Corporation has several exploration operations in North America and Canada,
it is subject to foreign currency fluctuations. The Corporation holds financial
assets and liabilities in Canadian and US dollars.  The Corporation
does not engage in currency hedging to offset any risk of currency
fluctuations.
 
 As of
December 31, 2008, the company had neither debt outstanding, nor any investment
in debt instruments other than highly liquid short-term
investments.
  Item
12. Description of Securities Other than Equity Securities.
   Not
applicable.
   PART
II
   Item
13. Defaults, Dividend Arrearages and Delinquencies.
   None.
   Item
14. Material Modifications to the Rights of Security Holders and Use of
Proceeds.
  Not
applicable.
  Item
15. Controls and Procedures.
   Disclosure
Controls and Procedures
   As of
December 31, 2008, the Corporation carried out an evaluation, under the
supervision and with the participation of its principal executive officer and
principal financial officer, of the effectiveness of the design and operation of
the Corporation’s disclosure controls and procedures (as defined in Rule
13a-15(e) of the Exchange Act). Based on this evaluation, the Corporation’s
principal executive officer and principal financial officer have concluded that
as of December 31, 2008, the Corporation’s disclosure controls and procedures
were effective to ensure that information required to be disclosed in the
Corporation’s periodic reports filed or submitted under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
by the SEC’s rules and forms, and accumulated and communicated to the
Corporation’s management, including the principal executive officer and
principal financial officer, to allow timely decisions regarding required
disclosure.
  This
Annual Report on Form 20-F (Annual Information Form) does not include a report
of management’s assessment regarding internal control over financial reporting
or an attestation report of the Corporation’s registered public accounting firm
due to a transition period established by rules of the SEC for newly public
companies.
 
 Changes
in Internal Control Over Financial Reporting
  During
the period covered by this Annual Report on Form 20-F (Annual Information Form),
no changes occurred in the Corporation’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially
affect, the Corporation’s internal control over financial
reporting.
  - 71
-
  Item
15T. Controls and Procedures.
   Not
Applicable.
   Item
16. [Reserved]
   Item
16A. Audit Committee Financial Expert.
  The Audit
Committee has determined that Robert Boaz is the Corporation’s “audit committee
financial expert,” as defined in the rules promulgated by the SEC.
 
 See “Item
6.B – Board Practices – Audit Committee” for more detailed information on the
responsibilities and activities of the Audit Committee.
 
 For
biographical information on each member of the Audit Committee, see “Item 6 –
Directors, Senior Management and Employees.”
  Item
16B. Code of Ethics.
  The
Corporation adopted a written Code of Business Conduct and Ethics (the “Code”)
on August 9, 2007 and amended and restated the Code on January 29, 2008 in
advance of filing its registration statement on Form 40-F with the
SEC. The
Corporation further amended the Code on August 7, 2008. All
directors, officers and employees of the Corporation are expected to be familiar
with the Code and to adhere to those principles and procedures set forth in the
Code that apply to them.  The Corporate Governance and Nominating
Committee oversees the implementation of the Code and compliance with various
regulatory requirements.  The Code is available at the Corporation’s
website at www.ur-energy.com.
  Item
16C. Principal Accountant Fees and Services.
  Audit
Fees
  Audit
fees of $90,000 related to the audit of the consolidated financial statements
for the period from January 1, 2008 to December 31, 2008 were paid in 2009 and
audit fees of $75,000 for the period from January 1, 2007 to December 31, 2007
were paid in 2008.
  Audit-Related
Fees
  Audit-related
fees of $82,300 were billed for services relating to the period January 1, 2008
to December 31, 2008, of which $69,700 was paid in
2009.  Audit-related fees of $168,135 were billed for services
rendered for the fiscal year ended December 31, 2007. These fees were for
services in connection with financing activities, quarterly reviews of the
consolidated financial statements and work in connection with the Corporation’s
initial SEC filings and related American Stock Exchange listing
application.
  Tax
Fees
  Fees for
the preparation of the annual tax returns and other related tax services of
$18,760 and $37,221 were accrued and paid in the years ended December 31, 2008
and 2007, respectively.
  All
Other Fees
  There
were other consulting fees of $97,152 incurred for the fiscal year ended
December 31, 2008 that were paid in 2009.  There were no such fees
incurred for the fiscal year ended December 31, 2007.
  All the
above fees were pre-approved by the Audit Committee.
  - 72
-
 Pre-Approval Policies and
Procedures
  The Audit
Committee has instituted a policy to pre-approve audit and non-audit
services.  The Chair of the Audit Committee is given limited delegated
authority from time to time by the Committee to pre-approve permitted non-audit
services.  The Audit Committee also considers on a continuing basis
whether the provision of non-audit services is compatible with maintaining the
independence of the external auditor.
  When
engaging the external auditor for permissible non-audit services (audit-related
services, tax services,
 and all
other services), pre-approval is obtained prior to the commencement of the
services.
   Item
16D. Exemptions from the Listing Standards for Audit Committees.
  Not
applicable.
  Item
16E. Purchases of Equity Securities by the Issuer and Affiliated
Purchasers.
   Ur-Energy
did not make any purchases of equity securities since January 1,
2008.
  Item
16F. Change in Registrant’s Certifying Accountant.
 
 Not
applicable.
 
 Item
16G. Corporate Governance.
 
 NYSE
Amex Corporate Governance Matters
 
 The
Corporation’s common shares are listed on NYSE Amex. Section 110 of the NYSE
Amex Company Guide permits the NYSE Amex to consider the laws, customs and
practices of the foreign issuer’s country of domicile in relaxing certain NYSE
Amex listing criteria, and to grant exemptions from NYSE Amex listing criteria
based on these considerations. A Corporation seeking relief under these
provisions is required to provide written certification from independent local
counsel that the non-complying practice is not prohibited by home country law. A
description of the significant ways in which the Corporation’s governance
practices differ from those followed by domestic companies pursuant to NYSE Amex
standards is as follows:
 
 ·
              Shareholder Meeting Quorum
      Requirement: The NYSE Amex minimum quorum requirement for a
      shareholder meeting is one-third of the outstanding common shares. In
      addition, a Corporation listed on NYSE Amex is required to state its
      quorum requirement in its bylaws. The Corporation’s quorum requirement as
      set forth in its bylaws is 10% of the issued and outstanding common shares
      entitled to vote at a meeting of shareholders whether present in person or
      represented by proxy.
 
 ·
              Proxy Delivery
      Requirement: NYSE Amex requires the solicitation of proxies and
      delivery of proxy statements for all shareholder meetings, and requires
      that these proxies shall be solicited pursuant to a proxy statement that
      conforms to SEC proxy rules. The Corporation is a “foreign private issuer”
      as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the
      Securities Act and the equity securities of the Corporation are
      accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b),
      14(c) and 14(f) of the Exchange Act. The Corporation solicits proxies in
      accordance with applicable rules and regulations in
      Canada.
  ·
              Shareholder Approval
      Requirement: The Corporation will follow the Canadian securities
      regulatory authorities and Toronto Stock Exchange rules for shareholder
      approval of new issuances of its common shares. Following securities and
      exchange rules, shareholder approval is required for certain issuances of
      shares that: (i) materially affect control of the Corporation; or
      (ii) provide consideration to insiders in aggregate of 10% or greater
      of the market capitalization of the listed issuer and have not been
      negotiated at arm’s length.  Shareholder approval is also
      required, pursuant to Toronto Stock Exchange rules, in the case of most
      private placements: (x) for an aggregate number of listed securities
      issuable greater than 25% of the number of securities of the listed issuer
      which are outstanding, on a non-diluted basis, prior to the date of
      closing of the transaction if the price per security is less than the
      market price; or (y) that during any six month period are to insiders
      for listed securities or options, rights or other entitlements to listed
      securities greater than 10% of the number of securities of the listed
      issuer which are outstanding, on a non-diluted basis, prior to the date of
      the closing of the first private placement to an insider during the six
      month period.
 
 - 73
-
 The
      foregoing are consistent with the laws, customs and practices in
      Canada.
 
 In
addition, the Corporation may from time-to-time seek relief from NYSE Amex
corporate governance requirements on specific transactions under Section 110 of
the NYSE Amex Company Guide by providing written certification from independent
local counsel that the non-complying practice is not prohibited by the
Corporation’s home country law.
 
 
  PART
III
   Item
17. Financial Statements.
   See the
attached financial statements.
   A.Consolidated Statements and Other
Financial Information.
   B.
Significant
Changes.
  None.
  Item
18. Financial Statements.
   Not
applicable.
   Item
19. Exhibits.
   The list
of exhibits is included following the signature page hereto.
  - 74
-
  Ur-Energy
Inc.
 (a
Development Stage Company)
 
 Audited
Consolidated Financial Statements
 
 December
31, 2008
 
 (expressed
in Canadian dollars)
 
 
 
 
 
  
 Auditors’
Report
 To
the Shareholders of Ur-Energy Inc.
 
 We have
audited the consolidated balance sheets of Ur-Energy Inc.as at December
31, 2008 and 2007 and the consolidated statements of operations, comprehensive
loss and deficit and cash flows for the three year then ended December 31, 2008,
2007 and 2006 and the cumulative period from March 22, 2004 to December 31, 2008
.. These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
 
 We
conducted our audits in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
 
 In our
opinion, these consolidated financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2008 and 2007
and the results of its operations and its cash flows for the years ended
December 31, 2008, 2007 and 2006 and the cumulative period from March 22, 2004
to December 31, 2008 in accordance with Canadian generally accepted accounting
principles.
 
 
 
 Chartered
Accountants
 Vancouver,
British Columbia
 
 
 
 Page
1
 
 Ur-Energy
Inc.
 (a
Development Stage Company)
 Consolidated
Balance Sheets
 
 (expressed
in Canadian dollars)
 
 
 December
      31,
                2008
              
              
              December
      31,
                2007$
              
              
              
              $(as
      restated –
                see
      Note 2)AssetsCurrent
      assetsCash
      and cash equivalents (note 12)
              
              
              25,799,735
              
              
              
              26,312,757Short-term
      investments
              
              
              39,174,200
              
              
              
              49,999,021Marketable
      securities
              
              
              7,500
              
              
              
              37,000Amounts
      receivable
              
              
              132,710
              
              
              
              876,374Prepaid
      expenses
              
              
              77,777
              
              
              
              61,48865,191,922
              
              
              
              77,286,640Bonding and other deposits(note 3)
              
              
              2,578,825
              
              
              
              1,508,576Mineral properties(note
      4)
              
              
              31,808,821
              
              
              
              31,232,372Capital assets(note
      5)
              
              
              1,631,304
              
              
              
              903,734Construction in progress(note 6)
              
              
              323,093
              
              
              
              -36,342,043
              
              
              
              33,644,682101,533,965
              
              
              
              110,931,322Liabilities
      and shareholders’ equityCurrent
      liabilitiesAccounts
      payable and accrued liabilities
              
              
              2,265,058
              
              
              
              1,432,624Future income tax liability(note 7)
              
              
              478,000
              
              
              
              478,000Asset retirement obligation(note 8)
              
              
              513,576
              
              
              
              181,6723,256,634
              
              
              
              2,092,296Shareholders’ equity
      (note 9)Capital
      stock
              
              
              144,396,460
              
              
              
              141,623,534Contributed
      surplus
              
              
              12,721,559
              
              
              
              8,202,595Deficit
              
              
              (58,840,688
              )
              
              
              (40,987,103
              )98,277,331
              
              
              
              108,839,026101,533,965
              
              
              
              110,931,322
 
 The accompanying notes are an integral
part of these consolidated financial statements
 
 Approved
by the Board of Directors
  (signed)  /s/
      Jeffery T. Klenda Director
                
                
                (signed)   /s/
      Thomas Parker Director
  Page
2
 Ur-Energy
Inc.
 (a
Development Stage Company)
 Consolidated
Statements of Operations, Comprehensive Loss and Deficit
 
 (expressed
in Canadian dollars)
 
 
 Year
                ended
                December
      31,
                2008
              
              
              Year
                ended
                December
      31,
                2007
              
              
              Year
                ended
                December
      31,
                2006
              
              
              Cumulative
                From
                March
      22,
                2004
      to
                December
      31,
                2008$
              
              
              
              $
              
              
              
              $
              
              
              
              $(as
      restated –
                see
      Note 2)
              
              
              (as
      restated –
                see
      Note 2)
              
              
              (as
      restated –
                see
      Note 2)ExpensesGeneral
      and administrative
              
              
              6,904,564
              
              
              
              7,305,315
              
              
              
              5,540,691
              
              
              
              21,923,049Exploration
      and evaluation
              
              
              9,922,798
              
              
              
              15,654,041
              
              
              
              6,821,291
              
              
              
              39,782,553Development
      expense
              
              
              8,854,536
              
              
              
              -
              
              
              
              -
              
              
              
              8,854,536Write-off
      of mineral properties
              
              
              285,813
              
              
              
              -
              
              
              
              33,832
              
              
              
              319,645(25,967,711
              )
              
              
              (22,959,356
              )
              
              
              (12,395,814
              )
              
              
              (70,879,783
              )Interest
      income
              
              
              2,494,445
              
              
              
              2,816,398
              
              
              
              629,724
              
              
              
              6,078,439Foreign
      exchange gain (loss)
              
              
              5,656,319
              
              
              
              (806,420
              )
              
              
              (177,141
              )
              
              
              5,568,239Other
      income (loss)
              
              
              (36,638
              )
              
              
              -
              
              
              
              -
              
              
              
              (36,638
              )8,114,126
              
              
              
              2,009,978
              
              
              
              452,583
              
              
              
              11,610,040Loss
      before income taxes
              
              
              (17,853,585
              )
              
              
              (20,949,378
              )
              
              
              (11,943,231
              )
              
              
              (59,269,743
              )Recovery
      of future income taxes (note 10)
              
              
              -
              
              
              
              429,055
              
              
              
              -
              
              
              
              429,055Net
      loss and comprehensive loss for the period
              
              
              (17,853,585
              )
              
              
              (20,520,323
              )
              
              
              (11,943,231
              )
              
              
              (58,840,688
              )Deficit
      - Beginning of periodAs
      previously reported
              
              
              (13,080,150
              )
              
              
              (6,018,383
              )
              
              
              (957,857
              )
              
              
              -Change
      in policy for accounting for exploration and development costs (note
      2)
              
              
              (27,906,953
              )
              
              
              (14,448,397
              )
              
              
              (7,565,692
              )
              
              
              -As
      restated
              
              
              (40,987,103
              )
              
              
              (20,466,780
              )
              
              
              (8,523,549
              )
              
              
              -Deficit
      - End of period
              
              
              (58,840,688
              )
              
              
              (40,987,103
              )
              
              
              (20,466,780
              )
              
              
              (58,840,688
              )Loss
      per common share, basic and diluted
              
              
              (0.19
              )
              
              
              (0.24
              )
              
              
              (0.20
              )Weighted
      average number of shares outstanding,basic
      and diluted
              
              
              92,996,339
              
              
              
              85,564,480
              
              
              
              59,463,626
 
 The accompanying notes are an integral
part of these consolidated financial statements
 
 Page
3
 
 Ur-Energy
Inc.
 (a
Development Stage Company)
 Consolidated
Statements of Cash Flow
 
 (expressed
in Canadian dollars)
 
 Year
                ended
                December
      31,
                2008
              
              
              Year
                ended
                December
      31,
                2007
              
              
              Year
                ended
                December
      31,
                2006
              
              
              Cumulative
                From
                March
      22,
                2004
      to
                December
      31,
                2008$
              
              
              
              $
              
              
              
              $
              
              
              
              $(as
      restated –
                see
      Note 2)
              
              
              (as
      restated –
                see
      Note 2)
              
              
              (as
      restated –
                see
      Note 2)Cash
      provided by (used in)Operating
      activitiesNet
      loss for the period
              
              
              (17,853,585
              )
              
              
              (20,520,323
              )
              
              
              (11,943,231
              )
              
              
              (58,840,688
              )Items
      not affecting cash:Stock
      based compensation
              
              
              4,567,206
              
              
              
              6,138,922
              
              
              
              3,505,517
              
              
              
              14,762,197Amortization
      of capital assets
              
              
              515,138
              
              
              
              76,069
              
              
              
              34,857
              
              
              
              626,064Provision
      for reclamation
              
              
              331,904
              
              
              
              181,672
              
              
              
              -
              
              
              
              513,576Write-off
      of mineral properties
              
              
              285,813
              
              
              
              -
              
              
              
              33,832
              
              
              
              319,645Foreign
      exchange gain
              
              
              -
              
              
              
              (1,176,340
              )
              
              
              (178,749
              )
              
              
              (2,297,981
              )Gain
      on sale of assets
              
              
              (5,361
              )
              
              
              -
              
              
              
              -
              
              
              
              (5,361
              )Non-cash
      exploration costs (credits)
              
              
              -
              
              
              
              (87,389
              )
              
              
              146,470
              
              
              
              2,726,280Other
      loss (income)
              
              
              51,998
              
              
              
              (37,000
              )
              
              
              -
              
              
              
              14,998Future
      income taxes
              
              
              -
              
              
              
              (429,055
              )
              
              
              -
              
              
              
              (429,055
              )Change
      in non-cash working capital items:Amounts
      receivable
              
              
              743,664
              
              
              
              (795,998
              )
              
              
              70,706
              
              
              
              (132,710
              )Prepaid
      expenses
              
              
              (16,289
              )
              
              
              86,755
              
              
              
              (49,543
              )
              
              
              (77,777
              )Accounts
      payable and accrued liabilities
              
              
              832,434
              
              
              
              796,375
              
              
              
              277,125
              
              
              
              2,265,058(10,547,078
              )
              
              
              (15,766,312
              )
              
              
              (8,103,016
              )
              
              
              (40,555,754
              )Investing
      activitiesMineral
      properties
              
              
              (874,762
              )
              
              
              (1,400,202
              )
              
              
              (787,529
              )
              
              
              (10,460,812
              )Construction
      in progress
              
              
              (323,093
              )
              
              
              -
              
              
              
              -
              
              
              
              (323,093
              )Purchase
      of short- term investments
              
              
              (65,828,987
              )
              
              
              (49,999,021
              )
              
              
              (3,000,000
              )
              
              
              (128,658,008
              )Sale
      of short-term investments
              
              
              76,643,808
              
              
              
              -
              
              
              
              12,840,000
              
              
              
              89,483,808Increase
      in bonding and other deposits
              
              
              (1,070,249
              )
              
              
              (1,342,425
              )
              
              
              (46,053
              )
              
              
              (2,578,825
              )Proceeds
      from sale of assets
              
              
              26,344
              
              
              
              -
              
              
              
              -
              
              
              
              26,344Purchase
      of capital assets
              
              
              (1,263,691
              )
              
              
              (784,895
              )
              
              
              (187,173
              )
              
              
              (2,235,759
              )7,309,370
              
              
              
              (53,526,543
              )
              
              
              8,819,245
              
              
              
              (54,746,345
              )Financing
      ActivitiesIssuance
      of common shares and warrants
              
              
              2,750,000
              
              
              
              77,744,735
              
              
              
              20,351,499
              
              
              
              122,668,053Share
      issue costs
              
              
              (115,314
              )
              
              
              (246,119
              )
              
              
              (288,800
              )
              
              
              (2,569,025
              )Proceeds
      from exercise of warrants, compensation options and stock
      options
              
              
              90,000
              
              
              
              1,334,547
              
              
              
              12,733,749
              
              
              
              18,567,931Payment
      of New Frontiers obligation
              
              
              -
              
              
              
              (11,955,375
              )
              
              
              (5,609,750
              )
              
              
              (17,565,125
              )2,724,686
              
              
              
              66,877,788
              
              
              
              27,186,698
              
              
              
              121,101,834Net
      change in cash and cash equivalents
              
              
              (513,022
              )
              
              
              (2,415,067
              )
              
              
              27,902,927
              
              
              
              25,799,735Cash
      and cash equivalents - Beginning of period
              
              
              26,312,757
              
              
              
              28,727,824
              
              
              
              824,897
              
              
              
              -Cash
      and cash equivalents- End of period
              
              
              25,799,735
              
              
              
              26,312,757
              
              
              
              28,727,824
              
              
              
              25,799,735
 
 The accompanying notes are an integral
part of these consolidated financial statements
 
 Page
4
 
 1.
              Nature
      of operations
 
 Ur-Energy
Inc. (the "Company") is a development stage junior mining company engaged in the
identification, acquisition, evaluation, exploration and development of uranium
mineral properties in Canada and the United States.  The Company has
not determined whether the properties contain mineral reserves.  The
recoverability of amounts recorded for mineral properties is dependent upon the
discovery of economically recoverable resources, the ability of the Company to
obtain the necessary financing to develop the properties and upon attaining
future profitable production from the properties or sufficient proceeds from
disposition of the properties.  The Company is currently in the
process of permitting its Lost Creek property.  As identified in the
June 2006 Technical Report on Lost Creek, National Instrument 43-101 compliant
resource are 9.8 million pounds of U3O8 at 0.058
percent as an indicated resource and an additional 1.1 million pounds of U3O8 at 0.076
percent as an inferred resource.
 
 2.
              Significant
      accounting policies
 
 Basis
of presentation
 
 Ur-Energy
Inc. was incorporated on March 22, 2004 under the laws of the Province of
Ontario.  The Company continued under the Canada Business Corporation
Act on August 7, 2006.  These financial statements have been prepared
by management in accordance with accounting principles generally accepted in
Canada and include all of the assets, liabilities and expenses of the Company
and its wholly-owned subsidiaries Ur-Energy USA Inc., NFU Wyoming, LLC, Lost
Creek ISR, LLC, The Bootheel Project, LLC, NFUR Bootheel, LLC, Hauber Project
LLC, NFUR Hauber, LLC, ISL Resources Corporation, ISL Wyoming, Inc. and
CBM-Energy Inc.  All inter-company balances and transactions have been
eliminated upon consolidation. Ur-Energy Inc. and its wholly-owned subsidiaries
are collectively referred to herein as the “Company”.
 
 Use
of estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods. The
most significant estimates management makes in the preparation of these
financial statements relate to potential impairment in the carrying value of the
Company’s mineral properties and the fair value of stock based
compensation.  Actual results could differ from those
estimates.
 
 Cash
and cash equivalents
 
 Cash
equivalents are investments in guaranteed investment certificates, certificates
of deposit and money market accounts which have a term to maturity at the time
of purchase of ninety days or less and which are readily convertible into
cash.
 
 Short-term
investments
 
 Short-term
investments are comprised of guaranteed investment certificates and certificates
of deposit which have a term to maturity at the time of purchase in excess of
ninety days and less than one year.  These investments are readily
convertible into cash.
 
 Bonding
deposits
 
 Bonding
deposits are provided to support reclamation obligations on United States
properties.  Deposit amounts are invested in certificates of deposit
held at United States financial institutions.
 
 Mineral
properties
 
 Acquisition
costs of mineral properties are capitalized. When production is attained, these
costs will be amortized on the unit-of-production method based upon estimated
recoverable resource of the mineral property.  If properties are
abandoned or sold, they are written off. If properties are considered to be
impaired in value, the costs of the properties are written down to their
estimated fair value at that time.
 
 Exploration
accounting policy change
 
 Page
5
 
 In
December 2008, the Company changed its policy for accounting for exploration and
development expenditures.  In prior years, the Company capitalized all
direct exploration and development expenditures.  Under its new policy,
exploration, evaluation and development expenditures, including annual
exploration license and maintenance fees, are charged to earnings as incurred
until the mineral property becomes commercially mineable.
 
 Management
considers that a mineral property will become commercially mineable when it can
be legally mined, as indicated by the receipt of key
permits.  Development expenditures incurred subsequent to the receipt
of key permits will be capitalized and amortized on the unit-of-production
method based upon the estimated recoverable resource of the mineral
property.  Management believes that this treatment provides a more
relevant and reliable depiction of the Company’s asset base and more
appropriately aligns the Company’s policies with those of comparable companies
in the mining industry at a similar stage.
 
 The
Company has accounted for this change in accounting policy on a retroactive
basis.  Balance sheet amounts as at December 31, 2007 were restated as
follows: deferred exploration expenditures were reduced by $26.4 million, future
income taxes liabilities were reduced by $0.7 million, share capital increased
by $2.2 million and the accumulated deficit increased by
$27.9 million.  The comparative operating results for the year
ended December 31, 2007 and 2006 were also restated as
follows:  expenses increased by $11.4 million and
$6.4 million, recovery of future income taxes decreased by
$2.1 million and $0.5 million, net loss increased by
$13.5 million and $6.9 million, and loss per common share increased by
$0.16 and $0.11, respectively.  The cumulative operating results for
the period from March 22, 2004 to December 31, 2007 were restated as
follows:  expenses increased by $24.9 million, recovery of future
income taxes decreased by $3.0 million, and net loss increased by
$27.9 million.
 
 The
Company will continue to capitalize the acquisition costs of mineral properties
and capital assets.
 
 Capital
assets and construction in progress
 
 Capital
assets are initially recorded at cost and are then amortized using the declining
balance method at the following annual rates:  computers at 30%,
software at 50%, office furniture at 20%, field vehicles at 30%, and field
equipment at 30%.
 
 Financing
costs
 
 Financing
costs, including interest, are capitalized when they arise from indebtedness
incurred, directly or indirectly, to finance mineral property acquisitions or
construction activities on properties that are not yet subject to depreciation
or depletion. Once commercial production is achieved, financing costs are
charged against earnings.
 
 Impairment
of long-lived assets
 
 The
Company assesses the possibility of impairment in the net carrying value of its
long-lived assets when events or circumstances indicate that the carrying
amounts of the asset or asset group may not be recoverable. Management
calculates the estimated undiscounted future net cash flows relating to the
asset or asset group using estimated future prices, recoverable indicated
resources and other mineral resources, and operating, capital and reclamation
costs. When the carrying value of an asset exceeds the related undiscounted cash
flows, the asset is written down to its estimated fair value, which is
determined using discounted future cash flows or other measures of fair value.
Management’s estimates of mineral prices, mineral resources, foreign exchange,
production levels and operating capital and reclamation costs are subject to
risk and uncertainties that may affect the determination of the recoverability
of the long-lived asset. It is possible that material changes could occur that
may adversely affect management’s estimates.
 
 Asset
retirement obligation
 
 An asset
retirement obligation is a legal obligation associated with the retirement of
tangible long-lived assets that the Company is required to
settle.  The Company recognizes the fair value of a liability for an
asset retirement obligation in the period in which it is incurred when a
reasonable estimate of fair value can be made.  Accretion charges to
the asset retirement obligation are charged to the related exploration or
development project.
 
 Stock-based
compensation
 
 All
stock-based compensation payments made to employees and non-employees are
accounted for in the financial statements. Stock-based compensation cost is
measured at the grant date based on the fair value of the reward and is
recognized over the related service period.  Stock-based compensation
cost is charged to general and
 
 Page
6
 
 administrative
expense, or exploration, evaluation and development projects on the same bases
as other compensation costs.
 
 Flow-through
shares
 
 The
Company has financed a portion of its Canadian exploration and development
activities through the issuance of flow-through shares.  Under the
terms of the flow-through share agreements, the tax benefits of the related
expenditures are renounced to subscribers.  To recognize the foregone
tax benefits to the Company, the carrying value of the shares issued is reduced
by the tax effect of the tax benefits renounced to
subscribers.  Recognition of the foregone tax benefit is recorded at
the time of the renouncement provided there is reasonable assurance that the
expenditures will be incurred.
 
 Foreign
currency translation
 
 The
functional currency of the Company is the Canadian dollar.  Monetary
assets and liabilities denominated in currencies other than the Canadian dollar
are translated using the exchange rate in effect at the balance sheet
date.  Non-monetary assets and liabilities denominated in foreign
currencies are translated at rates of exchange in effect when the assets were
acquired or obligations incurred.  Expenses are translated at exchange
rates in effect at the date the transaction is entered
into.  Translation gains or losses are included in the determination
of income or loss in the statement of operations in the period in which they
arise.
 
 Income
taxes
 
 The
Company accounts for income taxes under the asset and liability method which
requires the recognition of future income tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and tax bases of assets and liabilities.  The Company provides
a valuation allowance on net future tax assets unless it is more likely than not
that such assets will be realized.
 
 Loss
per common share
 
 Basic
loss per common share is calculated based upon the weighted average number of
common shares outstanding during the period.  The diluted loss per
common share, which is calculated using the treasury stock method, is equal to
the basic loss per common share due to the anti-dilutive effect of stock options
and share purchase warrants outstanding.
 
 Classification
of financial instruments
 
 The
Company’s financial instruments consist of cash and cash equivalents, short-term
investments, amounts receivable, bonding and other deposits and accounts payable
and accrued liabilities.  The Company has made the following
classifications for these financial instruments:
 
 ·
              Cash
      and cash equivalents are classified as “held for trading” and are measured
      at fair value at the end of each period with any resulting gains and
      losses recognized in operations
 ·
              Short
      term investments are classified as “held-to-maturity” and carried at cost
      plus accrued interest using the effective interest rate method, with
      interest income and exchange gains and losses included in
      operations
 ·
              Marketable
      securities are classified as “held for trading” and are measured at fair
      value at the end of each period with any resulting gains and losses
      recognized in operations
 ·
              Amounts
      receivable, bonding and other deposits are classified as “Loans and
      receivables” and are recorded at amortized cost.  Interest
      income is recorded using the effective interest rate method and is
      included in income for the period.
 ·
              Accounts
      payable and accrued liabilities are classified as “Other financial
      liabilities” and are measured at amortized
cost
 
 Adoption
of new accounting pronouncements
 
 On
January 1, 2008, the Company adopted the following Canadian Institute of
Chartered Accountants (“CICA”) Handbook Sections:
 
 ·
              Section
      3862, Financial Instruments – Disclosures, and Section 3863, Financial
      Instruments – Presentation.  These new disclosure standards
      increase the Company’s disclosure regarding the
  nature
 
 Page
7
 
 and
      risk associated with financial instruments and how those risks are managed
      (see Note 12.  The new presentation standard carries forward the
      former presentation requirements.
 ·
              Section
      1535, Capital Disclosures.  This new standard requires the
      Company to disclose its objectives; policies and processes for managing
      its capital structure (see Note
15).
 ·
              Section
      1400, General Standards on Financial Statement
      Presentation.  This standard requires management to assess at
      each balance sheet date and, if necessary, disclose any uncertainty
      surrounding the ability of the Company to continue as a going
      concern.  The adoption of this standard had no impact on the
      Company’s disclosures in these financial
  statements.
 
 Comparative
figures
 
 Certain
comparative figures have been reclassified to conform with the presentation
adopted for the current year.
 
 Future
accounting pronouncements
 
 Sections
3064 – Goodwill and Intangible Assets
 
 The CICA
issued the new Handbook Section 3064, “Goodwill and Intangible Assets”, which
will replace Section 3062, “Goodwill and Intangible Assets”. The new standard
establishes revised standards for the recognition, measurement, presentation and
disclosure of goodwill and intangible assets. The new standard also provides
guidance for the treatment of preproduction and start-up costs and requires that
these costs be expensed as incurred. The new standard applies to the Company’s
annual and interim financial statements beginning January 1,
2009.  The Company does not expect the adoption of these changes to
have a material impact on its consolidated financial statements.
 
 Convergence
with International Financial Reporting Standards
 
 In
January 2006, Canada’s Accounting Standards Board (“AcSB”) ratified a strategic
plan calling for the evolution and convergence of Canadian GAAP with IFRS, after
a specified transition period, by publically accountable enterprises in Canada.
The AcSB has more recently confirmed January 1, 2011 as the date IFRS will
replace current Canadian GAAP standards and interpretations entities like the
Company. As a result, the Company will be required to prepare its consolidated
financial statements in accordance with IFRS for interim and annual financial
statements beginning January 1, 2011. The transition date of January 1, 2011
will require the restatement, for comparative purposes, of amounts reported by
the Company for the year ended December 31, 2010.
 
 The
Company is currently developing an implementation plan and assessing the impacts
of the conversion on the consolidated financial statements and disclosures of
the Company.
 
 Sections
1582, 1601 & 1602 – Business combinations, consolidated financial statements
and non-controlling interests
 
 These
sections replace the former CICA 1581, Business Combinations and CICA 1600,
Consolidated Financial Statements and establish a new section for accounting for
a non-controlling interest in a subsidiary. These sections provide the Canadian
equivalent to IFRS 3, Business Combinations (January 2008) and IAS 27,
Consolidated and Separate Financial Statements (January 2008). CICA 1582 applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual report reporting period beginning on or
after January 1, 2011. CICA 1601 and CICA 1602 apply to interim and annual
consolidated financial statements relating to years beginning on/after January
1, 2011.
 
 3.
              Bonding
      and other deposits
 
 Bonding
and other deposits include $2,556,815 (December 31, 2007 – $1,397,607) of
reclamation bonds deposited with United States financial institutions as
collateral to cover potential costs of reclamation related to properties. Once
the reclamation is complete, the bonding deposits will be returned to the
Company.
 
 4.
              Mineral
      properties
  Canada
              
              
              
              USA
              
              
              
              TotalCanadian
                Properties
              
              
              
              Lost
      Creek/
                Lost
      Soldier
              
              
              
              Other
                US
                PropertiesMineral properties:
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $
  Page
8
 Balance
                December
      31, 2006
              
              
              251,219
              
              
              
              25,450,803
              
              
              
              4,950,383
              
              
              
              30,652,405Acquisition
      costs
              
              
              243,000
              
              
              
              0
              
              
              
              703,918
              
              
              
              946,918Staking
      and claim costs
              
              
              41,351
              
              
              
              226,028
              
              
              
              936,950
              
              
              
              1,204,329Interest
      capitalized
              
              
              -
              
              
              
              407,951
              
              
              
              36,925
              
              
              
              444,876Reduction
      in interest
                capitalized
              
              
              -
              
              
              
              (1,848,815
              )
              
              
              (167,341
              )
              
              
              (2,016,156
              )Balance
                December
      31, 2007
              
              
              535,570
              
              
              
              24,235,967
              
              
              
              6,460,835
              
              
              
              31,232,372Acquisition
      costs
              
              
              -
              
              
              
              3,593
              
              
              
              (11,341
              )
              
              
              (7,748
              )Staking
      and claim costs
              
              
              80,944
              
              
              
              75,777
              
              
              
              587,640
              
              
              
              744,361Labor
      costs
              
              
              -
              
              
              
              1,375
              
              
              
              69,826
              
              
              
              71,201Outside
      service costs
              
              
              646
              
              
              
              -
              
              
              
              4,298
              
              
              
              4,944Other
      costs
              
              
              -
              
              
              
              4
              
              
              
              49,500
              
              
              
              49,504Write-off
              
              
              -
              
              
              
              -
              
              
              
              (285,813
              )
              
              
              (285,813
              )Balance
                December
      31, 2008
              
              
              617,160
              
              
              
              24,316,716
              
              
              
              6,874,945
              
              
              
              31,808,821
 
 Canada
 
 The
Company's Canadian properties include Screech Lake, which is located in the
Thelon Basin, Northwest Territories and Bugs, which is located in the Kivalliq
region of the Baker Lake Basin, Nunavut.
 
 United
States
 
 Lost
Creek and Lost Soldier
 
 On June
30, 2005, the Company entered into definitive agreements with New Frontiers
Uranium LLC, a Colorado limited liability company (the “New Frontiers LOI”) to
acquire certain Wyoming properties (the “New Frontiers
Agreements”).  Under the terms of the New Frontiers Agreements, the
Company acquired a 100% interest in NFU Wyoming LLC which holds the majority of
the Company's Wyoming properties, including the Lost Creek and Lost Soldier
projects, for total consideration of $24,515,832 (US$20,000,000).  A
royalty on future production of 1.67% is in place with respect to 20 claims
comprising a portion of the Lost Creek project claims.
 
 Page
9
  Other
US Properties
 
 The
Company’s other US properties include EN, RS, and Bootheel and Buck Point, which
are located in Wyoming.
 
 During
June 2007, the Company entered into an Exploration, Development and Mine
Operating Agreement with Target Exploration & Mining Corporation and its
subsidiary ("Target").  Under the terms of the agreement, the Company,
through its wholly-owned subsidiary, NFUR Bootheel, LLC, contributed its
Bootheel and Buck Point properties to The Bootheel Project, LLC.  The
projects cover an area of known uranium occurrences in Albany County, Wyoming in
the Shirley Basin.  The Bootheel and Buck Point properties contributed
by the Company are comprised of certain mining claims and two state leases. The
Company will make any data covering its Bootheel and Buck Point properties, and
certain other data, available to the venture with Target.  Target will
contribute US$3 million in exploration expenditures and issue a total of
125,000 common shares of Target to the Company over a four year period in order
to earn a 75% interest in The Bootheel Project, LLC.  Minimum
exploration expenditures of US$750,000 are required in each year during the four
year earn-in period. Target is the operator of the Bootheel
Project.
 
 Impairment
testing
 
 Given the
current disruption and uncertainty in the global economy, and the decrease in
the Company’s share price over the last year, management reviewed all of its
significant mineral properties for potential impairment as at December 31,
2008.
 
 For the
Company’s Lost Creek and Lost Soldier properties, management calculated the
estimated undiscounted future net cash flows relating to these properties as a
single asset group as the Company expects to mine the Lost Soldier property as a
satellite facility, licensed through an amendment to the Lost Creek permits, and
using the Lost Creek plant.  Management calculated the future net cash
flows using estimated future prices, indicated resources, and estimated
operating, capital and reclamation costs.
 
 The
Company’s estimates of indicated resources depend upon geological interpretation
and statistical inferences drawn from drilling and sampling
analysis.  The operating, capital and reclamation costs are based upon
similar production plants and current capital budgets for the project. The
uranium prices used are based on current long term contract prices and external
consensus prices which for uranium vary between US$50 and US$70 per
pound.  By their very nature there can be no assurance that these
estimates will actually be reflected in future construction or operation at the
projects.
 
 Management’s
estimate of the undiscounted cash flows related to these mineral properties
exceed their carrying value, therefore management concluded that the assets
passed step 1 of the asset impairment test prescribed under generally accepted
accounting principles, and therefore no write-down of these assets was recorded.
Management’s estimates of mineral prices, mineral resources, foreign exchange,
production levels and operating capital and reclamation costs are subject to
risk and uncertainties that may affect the determination of the recoverability
of the long-lived asset. It is possible that material changes could occur that
may adversely affect management’s estimates.
 
 For the
Company’s other properties, reliable cash flow forecasts cannot be made at this
time.  Management therefore tested these for impairment by comparing
their carrying values to their estimated fair value based on non-NI 43-101
compliant resource estimates of indicated resources and a value of US$2 per
pound in the ground.  Management also considered the results of
current exploration activities on the properties and future exploration plans
and expenditures by both the Company and its development partners to assess
whether these were inconsistent with other indicators of fair
value.  Based on the above, management concluded that the fair value
of these properties exceeded the carrying amount and no impairment charges were
recorded.
 
 Page
10
  5.
              Capital
      assets
 
 December
      31, 2008
              
              December
      31, 2007
 
 Capital
      assets:
              Cost
                $
              Accumulated
                Amortization
                $
              Net
      Book
                Value
                $
              
              Cost
                $
              Accumulated
                Amortization
                $
              Net
      Book
                Value
                $
 
 Light
      vehicles
              656,184
              215,238
              440,946
              
              301,057
              86,011
              215,046Heavy
      mobile equipment
              424,559
              103,903
              320,656
              
              -
              -
              -Machinery
      and equipment
              780,085
              232,390
              547,695
              
              456,247
              54,532
              401,715Furniture
      and fixtures
              189,987
              48,829
              141,158
              
              124,217
              21,456
              102,761Computer
      equipment
              178,633
              66,672
              111,961
              
              135,865
              28,988
              106,877Software
              125,411
              56,523
              68,888
              
              95,870
              18,535
              77,3352,354,859
              723,555
              1,631,304
              
              1,113,256
              209,522
              903,734
 
 6.
              Construction
      in progress
 
 
 USA
              
              Total
 
 Construction
      in progress:
              
              
              
              
              
              Lost
      Creek
                $
              $
 
 Balance
                December
      31, 2007
              
              
              
              
              
              -
              -Plant
      design costs
              
              
              
              
              
              323,093
              323,093Balance
                December
      31, 2008
              
              
              
              
              
              323,093
              323,093
 
 7.
              Deferred
      tax asset and future income tax
liability
 
 Significant
components of the Company’s future income tax assets and liabilities are as
follows:
 
 Year
                ended
                December
      31,
                2008
              
              
              Year
                ended
                December
      31,
                2007$
              
              
              
              $(As
      restated –
                see
      Note 2)Future
      income tax assetsDeferred
      tax assets
              
              
              18,104,000
              
              
              
              8,494,000Net
      operating loss carry forwards
              
              
              2,389,000
              
              
              
              3,403,000Less:  valuation
      allowance
              
              
              (20,493,000
              )
              
              
              (11,897,000
              )-
              
              
              
              -Future
      income tax liabilitiesAsset
      basis differences
              
              
              (478,000
              )
              
              
              (478,000
              )Net
      deferred tax asset (future income tax liability)
              
              
              (478,000
              )
              
              
              (478,000
              )
 
 Income
      tax loss carry forwardsCanadian
      federal (expiring 2008 – 2028)
              
              
              8,559,000Ontario
      provincial (expiring 2008 – 2028)
              
              
              8,204,000United
      States federal (expiring (2015 – 2028)
              
              
              5,900,000
 
 Page
11
  8.
              Asset
      retirement obligation
 
 The
Company has recorded $513,576 for asset retirement obligations (December 31,
2007 – $181,672) which represents an estimate of costs that would be incurred to
remediate the exploration and development properties.  The retirement
obligations recorded relate entirely to exploration and development drill holes
on the Company's Wyoming properties.
 
 9.
              Shareholders’
      equity and capital stock
 
 Authorized
 
 The
Company is authorized to issue an unlimited number of common shares and an
unlimited number of Class A preference shares with the rights, privileges and
restrictions as determined by the Board of Directors at the time of
issuance.
 
 No class
A preference shares have been issued
 
 Capital
      Stock
              
              
              Contributed
              
              
              Accumulated
              
              
              Shareholders’Shares
                #
              
              
              Amount
                $
              
              
              Surplus
                $
              
              
              Deficit
                $
              
              
              Equity
                $(As
      restated –
                see
      Note 2)
              
              
              (As
      restated –
                see
      Note 2)Balance,
      December 31, 2005
              
              
              47,204,040
              
              
              
              23,173,625
              
              
              
              1,093,086
              
              
              
              (8,523,549
              )
              
              
              15,743,162Common
      shares issues for cash, net of issue costs
              
              
              9,204,727
              
              
              
              20,062,699
              
              
              
              -
              
              
              
              -
              
              
              
              20,062,699Exercise
      of warrants
              
              
              13,483,134
              
              
              
              13,701,383
              
              
              
              4,350
              
              
              
              -
              
              
              
              13,705,733Exercise
      of compensation options
              
              
              1,337,904
              
              
              
              1,975,223
              
              
              
              (694,436
              )
              
              
              -
              
              
              
              1,280,787Exercise
      of stock options
              
              
              106,500
              
              
              
              206,152
              
              
              
              (72,822
              )
              
              
              -
              
              
              
              133,330Non-cash
      stock compensation
              
              
              -
              
              
              
              -
              
              
              
              2,348,163
              
              
              
              -
              
              
              
              2,348,163Common
      shares issued for properties
              
              
              360,000
              
              
              
              990,000
              
              
              
              -
              
              
              
              -
              
              
              
              990,000Common
      shares issued for services
              
              
              1,778,747
              
              
              
              1,303,824
              
              
              
              -
              
              
              
              -
              
              
              
              1,303,824Net
      loss and comprehensive loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (11,943,231
              )
              
              
              (11,943,231
              )Balance,
      December 31, 2006
              
              
              73,475,052
              
              
              
              61,412,906
              
              
              
              2,678,341
              
              
              
              (20,466,780
              )
              
              
              43,624,467Common
      shares issues for cash, net of issue costs
              
              
              17,431,000
              
              
              
              77,503,307
              
              
              
              -
              
              
              
              -
              
              
              
              77,503,307Exercise
      of warrants
              
              
              156,209
              
              
              
              229,154
              
              
              
              (72,341
              )
              
              
              -
              
              
              
              156,813Exercise
      of compensation options
              
              
              110,346
              
              
              
              212,139
              
              
              
              -
              
              
              
              -
              
              
              
              212,139Exercise
      of stock options
              
              
              774,000
              
              
              
              1,553,528
              
              
              
              (542,327
              )
              
              
              -
              
              
              
              1,011,201Non-cash
      stock compensation
              
              
              -
              
              
              
              -
              
              
              
              6,138,922
              
              
              
              -
              
              
              
              6,138,922Common
      shares issued for properties
              
              
              225,000
              
              
              
              712,500
              
              
              
              -
              
              
              
              -
              
              
              
              712,500Net
      loss and comprehensive loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (20,520,323
              )
              
              
              (20,520,323
              )Balance,
      December 31, 2007
              
              
              92,171,607
              
              
              
              141,623,534
              
              
              
              8,202,595
              
              
              
              (40,987,103
              )
              
              
              108,839,026Common
      shares issued for cash, net of issue costs
              
              
              1,000,000
              
              
              
              2,634,686
              
              
              
              -
              
              
              
              -
              
              
              
              2,634,686Exercise
      of stock options
              
              
              72,000
              
              
              
              138,240
              
              
              
              (48,240
              )
              
              
              -
              
              
              
              90,000Non-cash
      stock compensation
              
              
              -
              
              
              
              -
              
              
              
              4,567,204
              
              
              
              -
              
              
              
              4,567,204Net
      loss and comprehensive loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (17,853,585
              )
              
              
              (17,853,585
              )Balance,
      December 31, 2008
              
              
              93,243,607
              
              
              
              144,396,460
              
              
              
              12,721,559
              
              
              
              (58,840,688
              )
              
              
              98,277,331
 
 2006
issuances
 
 On
December 14, 2006, the Company completed a private placement of 500,000
flow-through common shares at a purchase price of $5.00 per share for gross
proceeds of $2,500,000. On August 30, 2006, the Company completed a bought deal
financing for the issuance of a total of 8,522,727 common shares at a purchase
price of $2.20 per common share for gross proceeds of $18,750,000.
 
 On August
2, 2006, the Company completed a private placement of 182,000 flow-through
common shares at a purchase price of $2.75 per share for gross proceeds of
$500,500.
 
 Page
12
 
 On June
19, 2006, the Company completed an acquisition of claim groups in the Great
Divide Basin of Wyoming. The Company purchased the properties for an aggregate
consideration of 250,000 common shares which were valued at
$515,000.
 
 On
September 7, 2006, the Company entered into an option agreement to acquire the
Bugs property in Nunuvat, Canada. The Company can earn a 100% interest in the
property by issuing a total of 85,000 common shares to the vendor over a two
year period. Upon signing, 10,000 common shares were issuable. These common
shares were valued at $29,000.
 
 In
November 2006, the Company issued 100,000 common shares pursuant to the terms of
the Dalco Agreement in connection with the Company's Radon Springs Project in
Wyoming. These common shares were valued at $446,000.
 
 A total
of 1,778,747 common shares were issued for services to directors, officers and
contractors of the Company.
 
 2007
issuances
 
 On May
10, 2007, the Company completed a bought deal financing for the issuance of
17,431,000 common shares at a price of $4.75 per share for gross proceeds of
$82,797,250.  Total direct share issue costs, including the
underwriters' commissions were $5,293,943.
 
 During
September 2007, the Company issued 25,000 common shares with respect to the
option agreement to acquire the Bugs property.  These common shares
were valued at $71,500.  During December 2007, the Company issued the
final installment of 50,000 common shares to complete its acquisition of a 100%
interest in the Bugs property.  These common shares were valued at
$171,500.
 
 In
September 2007, the Company issued 150,000 common shares pursuant to the terms
of the Dalco Agreement to complete its 100% earn-in with respect to the
Company's Radon Springs Project in Wyoming.  These common shares were
valued at $469,500.
 
 2008
issuances
 
 On March
25, 2008, the Company completed a non-brokered private placement of 1,000,000
flow-through common shares at $2.75 per share raising gross proceeds of
$2,750,000.  Total direct share issues costs were
$115,314.
 
 Director,
officer and contractor shares for service
 
 The
Company approved the potential issuance of a total of 2,760,000 common shares to
directors and officers of the Company and contractors to the Company to
compensate for services provided to the Company under various service contracts.
The Company issued a total of 1,478,747 common shares valued at $736,824 with
respect to these service contracts during the year ended December 31,
2006.
 
 On May
24, 2006, the Company issued a total of 300,000 common shares for service to the
President and Chief Executive Officer of the Company as a performance bonus. The
issuance of these common shares was approved by the Company's shareholders on
May 17, 2006. These common shares were fully vested upon issuance and were
valued at $567,000.
 
 Stock options
 
 On
November 17, 2005, the Company’s Board of Directors approved the adoption of the
Company's stock option plan (the “Plan”).  Eligible participants under
the Plan include directors, officers and employees of the Company and
consultants to the Company.  Under the terms of the Plan, options
generally vest with Plan participants as follows: 10% at the date of grant; 22%
four and one-half months after grant; 22% nine months after grant; 22% thirteen
and one-half months after grant; and, the balance of 24% eighteen months after
the date of grant.
 
 In
September 2008, the Company gave the holders of options with an exercise price
of C$4.75 or higher the opportunity to voluntarily return all or a portion of
these options to the Company by September 30, 2008 without any promise or
guarantee that the option holders will receive any further
options.  Options for 2,490,000 shares with a weighted exercise price
of $4.82 were returned to the Company.  Previously unrecognized stock
based compensation cost of $2.2 million was recognized at the cancellation
date.
 
 Page
13
  Activity
with respect to stock options is summarized as follows:
 Number
              
              
              Weighted-
                averageexercise
                price
                $Outstanding,
      December 31, 2005
              
              
              4,375,000
              
              
              
              1.25Granted
              
              
              2,035,000
              
              
              
              2.42Exercised
              
              
              (106,500
              )
              
              
              1.25Forfeited
              
              
              (897,500
              )
              
              
              1.25Outstanding,
      December 31, 2006
              
              
              5,406,000
              
              
              
              1.69Granted
              
              
              3,667,500
              
              
              
              4.44Exercised
              
              
              (774,000
              )
              
              
              1.31Forfeited
              
              
              (288,800
              )
              
              
              4.29Outstanding,
      December 31, 2007
              
              
              8,010,700
              
              
              
              2.89Granted
              
              
              1,075,000
              
              
              
              1.66Exercised
              
              
              (72,000
              )
              
              
              1.25Forfeited
              
              
              (295,000
              )
              
              
              2.50Voluntarily
      returned
              
              
              (2,490,000
              )
              
              
              4.82Outstanding,
      December 31, 2008
              
              
              6,228,700
              
              
              
              1.95
 
 As at
December 31, 2008, outstanding stock options are as follows:
 
 Options
      outstanding
              
              Options
      exercisable
 
 Exercise
      price
                $
              Number
      of
                options
              Weighted-
                average
                remaining
                contractual
                life
      (years)
              Number
      of
                options
              Weighted-
                average
                remaining
                contractual
                life
      (years)
              Expiry1.65
              11,200
              0.2
              11,200
              0.2
              March
      31, 20091.25
              2,440,800
              1.9
              2,440,800
              1.9
              November,
      17, 20102.01
              75,000
              2.2
              75,000
              2.2
              March
      25, 20112.35
              1,450,000
              2.3
              1,450,000
              2.3
              April
      21, 20112.75
              399,200
              2.7
              399,200
              2.7
              September
      26, 20114.75
              45,000
              3.4
              45,000
              3.4
              May
      15, 20123.67
              200,000
              3.5
              152,000
              3.5
              July
      15, 20123.00
              437,500
              3.6
              332,500
              3.6
              August
      9, 20123.16
              50,000
              3.7
              50,000
              3.7
              September
      17, 20122.98
              50,000
              3.8
              38,000
              3.8
              October
      5, 20124.07
              30,000
              3.9
              22,800
              3.9
              November
      7, 20122.11
              25,000
              4.2
              13,500
              4.2
              March
      19, 20131.65
              990,000
              4.4
              316,800
              4.4
              May
      8, 20131.72
              25,000
              4.6
              8,000
              4.6
              August
      6, 20131.95
              6,228,700
              2.7
              5,354,800
              2.4
 
 During
the year ended December 31, 2008, the Company recorded a total of $4,567,206
related to stock option compensation (2007 - $6,138,922).  This amount
is included in shareholders’ equity as contributed surplus and is recorded as an
expense.  The fair value of options granted during 2008 and 2007 was
determined using the Black-Scholes option pricing model with the following
assumptions:
 
 2008
              
              
              2007
              
              
              2006Expected
      option life (years)
              
              
              4.0
              
              
              
              4.0
              
              
              
              3.5
      – 4.0Expected
      volatility
              
              
              65
              %
              
              
              63%
      – 67
              %
              
              
              67%
      – 72
              %Risk-free
      interest rate
              
              
              3.0%
      - 3.4
              %
              
              
              3.9%
      – 4.6
              %
              
              
              4.0%
      – 4.2
              %Expected
      dividend rate
              
              nil
              
              
              nil
              
              
              nil
  Page
14
 10.
              Recovery
      of future income taxes
 
 A
reconciliation of the combined Canadian federal and provincial income tax rate
with the Company's effective tax rate is as follows:
 
 Year
                ended
                December
      31,
                2008
              
              
              Year
                ended
                December
      31,
                2007
              
              
              Year
                ended
                December
      31,
                2006$
              
              
              
              $
              
              
              
              $(As
      restated –
                see
      Note 2)
              
              
              (As
      restated –
                see
      Note 2)Canadian
      earnings (loss)
              
              
              (3,596,937
              )
              
              
              (5,736,500
              )
              
              
              (4,604,079
              )United
      States loss
              
              
              (14,256,648
              )
              
              
              (15,212,878
              )
              
              
              (7,339,152
              )Loss
      before income taxes
              
              
              (17,853,585
              )
              
              
              (20,949,378
              )
              
              
              (11,943,231
              )Statutory
      rate
              
              
              33.5
              %
              
              
              36.0
              %
              
              
              36.0
              %Expected
      recovery of income tax
              
              
              (5,980,951
              )
              
              
              (7,541,776
              )
              
              
              (4,299,563
              )Effect
      of foreign tax rate differences
              
              
              (731,366
              )
              
              
              (400,099
              )
              
              
              (193,020
              )Non-deductible
      amounts
              
              
              1,530,012
              
              
              
              1,367,320
              
              
              
              45,828Effect
      of change in enacted future tax rates
              
              
              (43,662
              )
              
              
              390,200
              
              
              
              254,512Effect
      of change in foreign exchange rates
              
              
              (3,370,258
              )
              
              
              1,620,332
              
              
              
              (9,827
              )ISL
      change in basis
              
              
              -
              
              
              
              (430,119
              )
              
              
              -Change
      in valuation allowance
              
              
              8,596,225
              
              
              
              4,565,087
              
              
              
              4,202,070Recovery
      of future income taxes
              
              
              -
              
              
              
              (429,055
              )
              
              
              -
 
 11.
              Supplemental
      cash flow information
 
 Year
                ended
                December
      31,
                2008
              
              
              Year
                ended
                December
      31,
                2007
              
              
              Year
                ended
                December
      31,
                2006$
              
              
              
              $
              
              
              
              $Cash
      paid during the year for:Income
      taxes, net of refunds received
              
              
              -
              
              
              
              -
              
              
              
              -Interest,
      net of capitalized interest
              
              
              -
              
              
              
              -
              
              
              
              -Non-cash
      financing and investing activities:Common
      shares issued for properties
              
              
              -
              
              
              
              712,500
              
              
              
              990,000Common
      shares and stock options provided for services
              
              
              -
              
              
              
              -
              
              
              
              1,003,645Interest
      capitalization on New Frontiers obligation
              
              
              -
              
              
              
              -
              
              
              
              1,933,645
 
 
 Page
15
 
 
 12.
              Financial
      instruments
 
 The
Company’s financial instruments consist of cash and cash equivalents, short-term
investments, amounts receivable, bonding and other deposits and accounts
payable.  The Company is exposed to risks related to changes in
foreign currency exchange rates, interest rates and management of cash and cash
equivalents and short term investments.
 
 Cash
      and cash equivalents
              
              As
      at
                December
      31,
                2008
              
              
              As
      at
                December
      31,
                2007$
              
              
              
              $Cash
      on deposit at banks
              
              
              392,170
              
              
              
              215,272Guaranteed
      investment certificates
              
              
              9,087,500
              
              
              
              9,687,500Certificates
      of deposit
              
              
              15,288,183
              
              
              
              13,748,140Money
      market
              
              
              1,031,882
              
              
              
              2,661,84525,799,735
              
              
              
              26,312,757
 
 Credit
risk
 
 Financial
instruments that potentially subject the Company to concentrations of credit
risk consist of cash and cash equivalents, short term investments and bonding
deposits.  The Company’s cash equivalents and short-term investments
consist of Canadian dollar and US dollar denominated guaranteed investment
certificates and certificates of deposits.  They bear interest at
annual rates ranging from 0.75% to 3.25% and mature at various dates up to
October 12, 2009.  These instruments are maintained at financial
institutions in Canada and the United States.  Of the amount held on
deposit, approximately $0.4 million is covered by either the Canada Deposit
Insurance Corporation or the Federal Deposit Insurance Corporation, leaving
approximately $64.6 million at risk should the financial institutions with which
these amounts are invested cease trading.  As at December 31, 2008,
the Company does not consider any of its financial assets to be
impaired.
 
 Liquidity
risk
 
 Liquidity
risk is the risk that the Company will not be able to meet its financial
obligations as they fall due.
 The
Company manages liquidity risk through regular cash flow forecasting of cash
requirements to fund exploration and development projects and operating
costs.
 
 As at
December 31, 2008 the Company’s liabilities consisted of trade accounts payable
of $2,265,058, all of which are due within normal trade terms of generally 30 to
60 days.
 
 Market
risk
 
 Market
risk is the risk to the Company of adverse financial impact due to changes in
the fair value or future cash flows of financial instruments as a result of
fluctuations in interest rates and foreign currency exchange
rates.  Market risk arises as a result of the Company incurring a
significant portion of its expenditures and a significant portion of its cash
equivalents and short-term investments in United States dollars, and holding
cash equivalents and short term investments which earn interest.
 
 Interest
rate risk
 Financial
instruments that expose the Company to interest rate risk are its cash
equivalents and short term investments. The Company’s objectives for managing
its cash and cash equivalents are to ensure sufficient funds are maintained on
hand at all times to meet day to day requirements and to place any amounts which
are considered in excess of day to day requirements on short-term deposit with
the Company's banks so that they earn interest. When placing amounts of cash and
cash equivalents on short-term deposit, the Company only uses high quality
commercial banks and ensures that access to the amounts placed can generally be
obtained on short-notice.
 
 Currency
risk
 The
Company incurs expenses and expenditures in Canada and the United States and is
exposed to risk from changes in foreign currency rates. In addition, the Company
holds financial assets and liabilities in Canadian and US dollars. The Company
does not utilize any financial instruments or cash management policies to
mitigate the risks arising from changes in foreign currency rates.
 
 Page
16
 
 At
December 31, 2008 the Company had cash and cash equivalents, short term
investments and bonding deposits of approximately US$26.5 million (US$18.4
million as at December 31, 2007) and had accounts payable of US$1.7 million
(US$1.2 million as at December 31, 2007) which were denominated in  US
dollars.
 
 Sensitivity
analysis
 
 The
Company has completed a sensitivity analysis to estimate the impact that a
change in foreign exchange rates would have on the net loss of the Company,
based on the Company’s net US$ denominated assets and liabilities at year end.
This sensitivity analysis assumes that changes in market interest rates do not
cause a change in foreign exchange rates.  This sensitivity analysis
shows that a change of +/- 10% in US$ foreign exchange rate would have a +/-
$3.0 million impact on net loss for the year ended December 31,
2008.  This impact is primarily as a result of the Company having
yearend cash and investment balances denominated in US dollars and US dollar
denominated trade accounts payables.  The financial position of the
Company may vary at the time that a change in exchange rates occurs causing the
impact on the Company’s results to differ from that shown above.
 
 The
Company has also completed a sensitivity analysis to estimate the impact that a
change in interest rates would have on the net loss of the Company. This
sensitivity analysis assumes that changes in market foreign exchange rates do
not cause a change in interest rates.  This sensitivity analysis shows
that a change of +/- 100 basis points in interest rate would have a +/- $0.6
million impact on net loss for the year ended December 31, 2008.  This
impact is primarily as a result of the Company having cash and short-term
investments invested in interest bearing accounts.  The financial
position of the Company may vary at the time that a change in interest rates
occurs causing the impact on the Company’s results to differ from that shown
above.
 
 13.
              Segmented
      information
 
 The
Company’s operations comprise one reportable segment being the exploration and
development of uranium resource properties.  The Company operates in
Canada and the United States.  Capital assets segmented by geographic
area are as follows:
 
 December
      31, 2008
 
 Canada
                $
              
              
              United
      States
                $
              
              
              Total
                $Bonding
      and other deposits
              
              
              -
              
              
              
              2,578,825
              
              
              
              2,578,825Mineral
      properties
              
              
              617,160
              
              
              
              31,191,661
              
              
              
              31,808,821Capital
      assets
              
              
              7,847
              
              
              
              1,623,457
              
              
              
              1,631,304Construction
      in progress
              
              
              -
              
              
              
              323,093
              
              
              
              323,093
 
 
 December
      31, 2007
 
 Canada
                $
              
              
              United
      States
                $
              
              
              Total
                $Bonding
      and other deposits
              
              
              -
              
              
              
              1,508,576
              
              
              
              1,508,576Mineral
      properties
              
              
              535,570
              
              
              
              30,696,802
              
              
              
              31,232,372Capital
      assets
              
              
              10,288
              
              
              
              893,446
              
              
              
              903,734Construction
      in progress
              
              
              -
              
              
              
              -
              
              
              
              -
 
 
 Page
17
  14.
              Commitments
 
 Under the
terms of operating leases for office premises in Littleton, Colorado and in
Casper, Wyoming the Company is committed to minimum annual lease payments as
follows:
 
 Year
                ended
                December
      31
              
              Amount
                $2009
              
              
              337,4562010
              
              
              190,2712011
              
              
              176,8332012
              
              
              117,8882013
      and thereafter
              
              
              -
 
 15.
              Capital
      structure
 
 The
Company’s capital structure is comprised of Shareholders’
Equity.  When managing its capital structure, the Company’s objectives
are to i) preserve the Company’s access to capital markets and its ability to
meet its financial obligations, and ii) finance its exploration and development
activities.
 
 The
Company monitors its capital structure using future forecasts of cash flows,
particularly those related to its exploration and development
programs.
 
 The
Company manages its capital structure and makes adjustments to it to maintain
flexibility while achieving the objectives stated above.  To manage
the capital structure, the Company may adjust its exploration and development
programs, operating expenditure plans, or issue new shares.  The
Company’s capital management objectives have remained unchanged over the periods
presented.
 
 The
Company is not subject to any externally imposed capital
requirements.
 
 16.
              Differences
      between Canadian and United States generally accepted accounting
      principles
 
 The
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles (“Canadian GAAP”), which differ in
certain material respects from those principles that the Company would have
followed had its consolidated financial statements been prepared in accordance
with United States generally accepted accounting principles (“US
GAAP”).  Had the Company followed US GAAP, certain items on the
consolidated balance sheets, consolidated statements of operations and deficit,
and consolidated statements of cash flow would have been reported as
follows:
 
 Page
18
  Consolidated
      balance sheets
              
              As
      at
                December
      31,
                2008
              
              
              As
      at
                December
      31,
                2007$
              
              
              
              $Total
      assetsTotal
      assets under Canadian GAAP
              
              
              101,533,965
              
              
              
              110,931,322Adjustments made under US
      GAAP:Settlement of New Frontiers
      obligation (a)
              
              
              -
              
              
              
              2,016,156Total assets under US
      GAAP
              
              
              101,533,965
              
              
              
              112,947,478Total
      liabilitiesTotal
      liabilities under Canadian GAAP
              
              
              3,256,634
              
              
              
              2,092,296Adjustments made under US
      GAAP:Flow-through
      share premium liability (b)
              
              
              830,000
              
              
              
              -Deferred
      tax adjustment (c)
              
              
              
              
              
              
              (478,000
              )Total liabilities under US
      GAAP
              
              
              4,086,634
              
              
              
              1,614,296Total
      shareholders’ equityTotal
      shareholders’ equity under Canadian GAAP
              
              
              98,277,331
              
              
              
              108,839,026Adjustments made under US
      GAAP:Gain on settlement of New
      Frontiers obligations (a)
              
              
              -
              
              
              
              2,016,156Flow-through share premium
      liability (b)
              
              
              (830,000
              )
              
              
              -Deferred tax adjustment
      (c)
              
              
              -
              
              
              
              478,000Total shareholders’ equity
      under US GAAP
              
              
              97,447,331
              
              
              
              111,333,182
 
 
 Consolidated
      statements of operations and comprehensive loss
              
              Year
                ended
                December
      31,
                2008
              
              
              Year
                ended
                December
      31,
                2007
              
              
              Year
                ended
                December
      31,
                2006$
              
              
              
              $
              
              
              
              $Net
      lossNet
      loss under Canadian GAAP
              
              
              (17,853,585
              )
              
              
              (20,520,323
              )
              
              
              (11,943,231
              )Adjustments made under US
      GAAP:Gain on settlement of New
      Frontiers obligation (a)
              
              
              -
              
              
              
              2,016,156
              
              
              
              -Flow-through shares
      (b)
              
              
              -
              
              
              
              (370,000
              )
              
              
              519,500Net loss under US GAAP, being
      comprehensive loss
              
              
              (17,853,585
              )
              
              
              (18,874,167
              )
              
              
              (11,423,731
              )Basic and diluted loss per
      share under US GAAP
              
              
              (0.19
              )
              
              
              (0.22
              )
              
              
              (0.19
              )
 
 
 Page
19
  Consolidated
      statements of cash flow
              
              Year
                ended
                December
      31,
                2008
              
              
              Year
                ended
                December
      31,
                2007
              
              
              Year
                ended
                December
      31,
                2006$
              
              
              
              $
              
              
              
              $Operating
      activitiesCash
      flows used in operating activities under Canadian & US
      GAAP
              
              
              (10,547,078
              )
              
              
              (15,766,312
              )
              
              
              (8,103,016
              )Investing
      activitiesCash
      flows used in provided by (used in )investing activities under Canadian
      GAAP
              
              
              7,309,370
              
              
              
              (53,526,543
              )
              
              
              8,819,245Adjustments made under US
      GAAP:Flow-through cash categorized
      as restricted cash (b)
              
              
              (848,607
              )
              
              
              (2,653,315
              )
              
              
              2,274,251Cash
      flows used in operating activities under US GAAP
              
              
              6,460,763
              
              
              
              (56,179,858
              )
              
              
              11,093,496
 
 (a)
Settlement of New Frontiers obligation
 
 Under US
GAAP, early extinguishment of the New Frontiers debt obligation would have
resulted in a gain recorded in income related to the accrued interest not
payable upon settlement.
 
 (b)
Flow-through shares
 
 Under
Canadian income tax legislation, a company is permitted to issue shares whereby
the company agrees to incur qualifying expenditures and renounce the related
income tax deductions to the investors. Under Canadian GAAP, the Company has
recorded the full amount of the proceeds received on issuance as capital
stock.  Upon renouncing the income tax deductions, capital stock is
reduced by the amount of the future income tax liability
recognized.
 
 For US
GAAP, the proceeds on issuance of the flow-through shares are allocated between
the offering of the shares and the sale of the tax benefit when the shares are
issued.  The premium paid by the investor in excess of the fair value
of non flow-through shares is recognized as a liability at the time the shares
are issued and the fair value of non flow-through shares is recorded as capital
stock.  Upon renouncing the income tax deductions, the premium
liability is re-characterized as deferred income taxes and the difference
between the full deferred income tax liability related to the renounced tax
deductions and the premium previously recognized is recorded as an income tax
expense.
 
 Also,
notwithstanding whether there is a specific requirement to segregate the funds,
the flow-through funds which were unexpended at the consolidated balance sheet
dates are considered to be restricted and are not considered to be cash and cash
equivalents under US GAAP. As at December 31, 2008, there was $848,607 (December
31, 2007 - $nil) in unexpended flow-through cash funds.
 
 (c)
Deferred tax asset
 
 The tax
basis related to an asset acquired in 2004 when the Company acquired all of the
issued and outstanding shares of ISL Resources Corporation was subsequently
adjusted in 2007.
 
 (d)
Impact of recent United States accounting pronouncements
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
157”).  SFAS 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
This statement does not require any new fair value measurements in accounting
pronouncements where fair value is already the relevant measurement attribute.
In November 2007, FASB agreed to a one-year deferral associated with the
effective date for nonfinancial assets and liabilities that are recognized or
disclosed at
 
 Page
20
 
 fair
value on a nonrecurring basis.  The Company adopted the applicable
portions SFAS 157 effective January 1, 2008.  Adoption did not result
in a material impact on the consolidated financial statements. The Company is
currently assessing the deferred portion of the pronouncement.
 
 In
February 2007, the  FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities—Including an amendment of FASB
Statement No. 115” ("SFAS 159”),  which became effective for fiscal
years beginning after November 15, 2007.  SFAS 159 permits companies
to choose to measure many financial instruments and certain other items at fair
value on a per instrument basis, with changes in fair value recognized in
earnings each reporting period. This will enable some companies to reduce
volatility in reported earnings caused by measuring related assets and
liabilities differently.  SFAS 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between companies
that choose different measurement attributes for similar types of assets and
liabilities. . The Corporation adopted SFAS 159 on January 1, 2008 and chose not
to elect the fair value option for its financial assets and liabilities that had
not previously been carried at fair value.
 
 In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS
141(R)”), which applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date.  SFAS 141(R) establishes principles and requirements
for how the acquirer: i) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed and any noncontrolling
interest in the acquiree; ii) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase; and iii) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business
combination.
 
 In
December 2007, FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statement, - an amendment of ARB No. 51”, (“SFAS
160”) which changes the accounting and reporting for minority interests.
Minority interests will be recharacterized as noncontrolling interests and will
be reported as a component of equity separate from the parent’s equity, and
purchases or sales of equity interests that do not result in a change in control
will be accounted for as equity transactions. In addition, net income
attributable to the noncontrolling interest will be included in consolidated net
income on the face of the income statement and, upon a loss of control, the
interest sold, as well as any interest retained, will be recorded at fair value
with any gain or loss recognized in earnings. SFAS No. 160 is effective for the
Corporation beginning January 1, 2009 and will apply prospectively, except for
the presentation and disclosure requirements, which will apply
retrospectively.
  In May
2008, FASB issued SFAS No. 162 "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of
generally accepted accounting principles in the United States. SFAS 162 is
effective sixty days following the SEC's approval of PCAOB amendments to AU
Section 411, "The Meaning of
'Present fairly in conformity with generally accepted accounting
principles'". The Company is currently evaluating the potential impact,
if any, of the adoption of SFAS 162 on its consolidated financial
statements.
 
  Page
21
  SIGNATURES
   The
Registrant hereby certifies that it meets all of the requirements for filing on
this Annual Report on Form 20-F (Annual information Form) and that it has duly
caused and authorized the undersigned to sign this annual report on its
behalf.
  UR-ENERGY
      INC.Per:
      /s/ W. William BobergW.
      William BobergPresident
      and Chief Executive OfficerDate:
      March 27, 2009
 ANNUAL
REPORT ON FORM 20-F (ANNUAL INFORMATION FORM)
 for
the year ended December 31, 2008
  EXHIBIT
INDEX
  ExhibitNo.
      Item
                Description
      of Exhibit1.1
                Articles
      of Continuance of the Corporation1.2
                Amended
      Bylaws of the Corporation4.1
                Underwriting
      Agreement dated April 23, 2007 between the Corporation, GMP Securities
      L.P., Raymond James Ltd., Cormark Securities Ltd. and Canaccord Capital
      Corporation8.1
                List
      of Subsidiaries of the Corporation12.1
                Section 302 Certification byW. William
      Boberg, Chief
      Executive Officer dated March 27, 2009.12.2
                Section 302 Certification by
      Roger Smith, Chief Financial Officer, dated March 27,
      2009.13.1
                Section 906 Certification by W.
      William Boberg, Chief Executive Officer dated March 27,
      2009.13.2
                Section 906 Certification by
      Roger Smith, Chief Financial Officer dated March 27,
      2009.99.1
                Amended
      and Restated Audit Committee Charter of the Corporation99.2
                Consent
      of PriceWaterhouseCoopers LLP99.3
                Consent
      of Douglas K. Maxwell99.4
                Consent
      of John I. Kyle99.5
                Consent
      of C. Stewart Wallis