SUPPLEMENTAL RISK FACTORS

If Ur-Energy Inc. (the “Registrant”) is characterized as a passive foreign investment company, its shareholders may be subject to 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 Registrant were treated as a PFIC for any taxable year in which a U.S. holder held the Registrant’s shares, certain adverse 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. As described below, the adverse tax consequences may be diminished if the U.S. holder of the shares of PFIC makes an election with respect to marketable PFIC shares to mark such shares to market each year taking the gain into account as ordinary income (a “mark-to-market” election), or makes a timely qualified electing fund (a “QEF” election), pursuant to which such shareholder must report on a current basis his or her shares of the PFIC’s ordinary earning and net capital gain for any taxable year in which the Registrant is a PFIC, whether or not the PFIC distributes those earnings.

              Mark-to-Market Election . In general, U.S. holders who hold, actually or constructively, marketable stock (as specifically defined in the rules and regulations promulgated under the Code) of a PFIC may annually elect to mark such stock to the market. If this election is made, the U.S. holder is taxed annually on the increase in value of the PFIC shares. This election generally is available only to U.S. investors in foreign companies that are regularly traded on a U.S. stock exchange (or on certain approved non-U.S. stock exchanges)

              QEF Election . In general, a U.S. holder who makes a timely QEF election with respect to a PFIC’s shares (generally, in the first taxable year in which the U.S. holder holds a PFIC’s shares) will be subject to current U.S. federal income tax on a current basis on a pro-rata share of the ordinary income and long-term net capital gain realized by the PFIC. Generally, shareholders do not make a QEF election unless they have sufficient information to determine their proportionate shares of a corporation’s net capital gain and ordinary earnings. We have not calculated these amounts for any shareholder and do not anticipate making these calculations in the foreseeable future.

              The determination of whether a corporation is a PFIC involves the application of complex tax rules. The Registrant has not made a conclusive determination as to whether it has been in prior tax years or is currently a PFIC. The Registrant 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 and for the current tax year. U.S. holders of Registrant’s shares are urged to consult their own tax advisors regarding the application of U.S. federal income tax rules.

The PFIC rules are very complicated, and you should consult your own financial advisor, legal counsel or accountant regarding the PFIC rules, including the advisability of and procedure for making a QEF election or a mark-to-market election, and how these rules may impact your U.S. federal income tax situation.

The Registrant may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses to the Registrant.

              The Registrant is a “foreign private issuer,” as such term is defined in Rule 405 under the U.S. Securities Act of 1933, as amended, and, therefore, it is not required to comply with all the periodic disclosure and current reporting requirements of the U.S. Securities Exchange Act of 1934, as amended, and related rules and regulations. In order for the Registrant 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 Registrant 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 Registrant 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 U.S. Securities and Exchange Commission (the “Commission”), which are more detailed and extensive than the forms available to a foreign private issuer. The Registrant may also be required to prepare its financial statements in accordance with U.S. generally accepted accounting principles. In addition, the Registrant 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 Registrant 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 Registrant to file resale registration statements with the Commission as a condition to any such financing.

As a Canadian company, it may be difficult to enforce civil liabilities against the Registrant or against certain of the Registrant’s directors and officers.

              The Registrant is incorporated under the federal laws of Canada. Some of its directors and officers are citizens or residents of countries other than the United States and certain of its assets and the assets of such persons are located outside of the United States. Consequently, it may be difficult for you to effect service of process within the United States upon the Registrant or its directors and officers or to realize in the United States upon judgments against such persons granted by courts of the United States based upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States. There is doubt as to the enforceability against the Registrant and against its non-U.S. resident directors and officers, in original actions in Canadian courts, of liabilities based upon the U.S. federal securities laws and as to the enforceability against the Registrant and against its non-U.S. resident directors and officers in Canadian courts of judgments of U.S. courts obtained in actions based upon the civil liability provisions of the U.S. federal securities laws. As a result, it may not be possible to enforce those actions against the Registrant or against certain of its directors and officers.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-X

APPOINTMENT OF AGENT FOR SERVICE OF PROCESS
AND UNDERTAKING

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          The Filer certifies that it has duly caused this power of attorney, consent, stipulation and agreement to be signed on its behalf by the undersigned, thereunto duly authorized, in Littleton, Colorado this 28th day of December, 2007.

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          This statement has been signed by the following persons in the capacities and on the dates indicated.

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PRELIMINARY NOTES

Date of Information

Unless otherwise indicated, all information contained in this Annual Information Form (“AIF”) of Ur-Energy Inc. (“Ur-Energy” or the “Company”) is as of March 21, 2007.

Financial Information

All financial information in this AIF is prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”).

Currency

All references in this annual information form to “dollars” or “$” are to Canadian dollars, unless otherwise indicated.

Forward-Looking Information

This AIF, including any documents incorporated by reference herein, contains certain “forward-looking statements”. All statements included in this AIF (other than statements of historical facts) which address activities, events or developments that management anticipates will or may occur in the future are forward-looking statements, including statements as to the following: future targets and estimates for production, 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, and other such matters. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “contemplate”, “target”, “believe”, “plan”, “estimate”, “expect”, and “intend” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. These statements are based upon certain assumptions and analyses made by management in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. However, whether actual results and developments will conform with management’s expectations is subject to a number of risks and uncertainties, including the considerations discussed under “Risk Factors” and elsewhere in this short form prospectus, in any documents incorporated by reference herein and in other documents filed from time to time by the Company with Canadian securities regulatory authorities, general economic, market or business conditions, the opportunities (or lack thereof) that may be presented to and pursued by management, competitive actions by other companies, changes in laws or regulations and other factors, many of which are beyond the Company’s control. These factors should not be construed as exhaustive and may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and there can be no assurance that the actual results or developments anticipated by management will be realized or, even if substantially realized, that they will have the expected results on the Company. All of the forward-looking statements made in this short form prospectus and any documents incorporated by reference herein are qualified by the foregoing cautionary statements. Such forward-looking statements are made as of the date of this short form prospectus, or in the case of documents incorporated by reference herein, as of the date of such document, and the Company expressly disclaims any obligation to update or revise any such forward-looking statements.

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Cautionary Note to U.S. Investors Concerning Resource Estimates

Resource estimates reported herein are made in accordance with definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum and incorporated into National Instrument 43-101 (“NI 43-101”). Estimates of uranium resources were prepared by or under the supervision of qualified persons who are identified in this document and other public filings. Ur-Energy reports its reserves and resources in accordance with NI 43-101, as required by Canadian securities regulatory authorities. For U.S. reporting purposes, Industry Guide 7 under the Securities Exchange Act of 1934 (as interpreted by Staff of the U.S. Securities and Exchange Commission) applies different standards in order to classify mineralization as a reserve. Accordingly, for US reporting purposes all mineral resources must be considered as mineralized material. Mineral resources are not mineral reserves and do not have demonstrated economic viability, but do have reasonable prospects for economic extraction. Measure and indicated mineral resources are sufficiently well defined to allow geological and grade continuity to be reasonably assumed and permit the application of technical and economic parameters in assessing the economic viability of the resources. Inferred resources are estimated on limited information not sufficient to verify geological and grade continuity or to allow technical and economic parameters to be applied. Inferred resources are too speculative geologically to have economic considerations applied to enable them to be categorized as mineral reserves. There is no certainty that mineral resources will be upgraded to mineral resources through continued exploration.

“ m ” means a metre.

“ U ” is the chemical symbol for uranium.

“ U ₃ O ₈ ” means triuranium octoxide or uranium.

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CORPORATE STRUCTURE

Name, Address and Incorporation

Ur-Energy Inc. (“Ur-Energy” or the “Company”) is a corporation continued under the Canada Business Corporations Act on August 8, 2006. The registered office and principal administrative office of the Company is located at 1128 Clapp Lane, P.O. Box 279, Manotick, Ontario K4M 1A3. The Company’s United States headquarters is at 10758 West Centennial Road, Suite 200, Ken Caryl Ranch (Littleton), Colorado, 80127.

Intercorporate Relationships

The Company 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 of properties 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. Ur-Energy USA has one wholly-owned subsidiary, NFU Wyoming, LLC (“NFU”), a company formed under the laws of the State of Wyoming to facilitate the Company’s acquisition of certain assets from New Frontiers Uranium, LLC. ISL has one wholly-owned subsidiary, ISL Wyoming Inc., a company incorporated under the laws of the State of Wyoming.

The principal direct and indirect subsidiaries of the Company and the jurisdictions in which they were incorporated or organized are set out below:

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GENERAL DEVELOPMENT OF THE BUSINESS

History

The Company was incorporated on March 22, 2004. The Company is a junior mining company focused on development of uranium production from properties in the United States and exploration for uranium deposits in both the United States and Canada. The Company’s uranium mineral properties are located in Wyoming, USA, South Dakota, USA and in the Northwest Territories and Nunavut, Canada.

The Company commenced operations with a focus on uranium properties in the Northwest Territories and Nunavut, Canada. In the fall of 2004, the Company began to acquire geologic data and properties in Wyoming, USA. The Company financed its projects and operations through a series of private placement financings during the period from September 2004 through March 2005.

The Company acquired all of the issued and outstanding shares of ISL under the terms of an October 19, 2004 acquisition agreement (the “Initial ISL Agreement”) between the Company and ISL. ISL is a junior exploration company which had engaged in uranium exploration in Wyoming. The Initial ISL Agreement were amended and restated by agreements finalized on April 19 and 21, 2005 (the “Amending ISL Agreements”). Data owned by ISL’s Wyoming subsidiary was the basis of the Company’s staking program for the Kaycee and Shamrock projects. Under the terms of the Initial ISL Agreement and the Amending ISL Agreements, the aggregate consideration paid to ISL shareholders for the acquisition of ISL was 4,350,000 common shares of the Company and 500,000 common share purchase warrants of the Company which were exercisable until December 1, 2006.

The acquisition of ISL included an extensive database of over 4,400 drill hole logs, geologic maps, cross sections and reports within the Kaycee area of the Powder River Basin, Wyoming as well as airborne geophysical reports for the Shamrock and Kaycee areas. In addition, the database included over 2,700 drill hole logs, maps, cross sections, reports, feasibility and engineering studies from Conoco’s 1969 through 1986 exploration program in the Southwest Powder River Basin area relating to the Allemand-Ross project.

Data owned by ISL and its subsidiary was the basis of the Company’s staking program for the Kaycee and Shamrock project. In late 2004, the Company staked 356 unpatented mineral claims at the Shamrock project. In early 2005, the Company staked 278 unpatented mineral claims in the Kaycee area of the Powder River Basin, Wyoming.

Under a Letter of Intent dated February 3, 2005 (“Dalco LOI”) entered into by the Company and Dalco Inc. (“Dalco”), the Company had an option to acquire seven unpatented mineral claims and land records for the property located in Township 27 North, Ranges 92 and 93 West, 6 ^th Meridian, Wyoming together with exploration records, drill log files and related data (collectively the “Radon Springs Property”). The Company paid Dalco US$25,000 on the signing of the Dalco LOI. Pursuant to the Dalco LOI, the Company issued 25,000 common shares to Dalco on June 3, 2005 to acquire a 25% interest in the Radon Springs Property.

After the 25% interest had been earned, the Dalco LOI was superseded by a formal agreement dated July 20, 2005 among the Company, Ur-Energy USA and Dalco. A further 25% interest in the Radon Springs Property was acquired in November 2005 by payment of US $50,000 and the issuance of 50,000 common shares and on December 3, 2006 by payment of US $100,000 and the issuance of 100,000 common shares. The final 25% interest (for a total of a 100% interest) is payable on or before December 3, 2007 by the payment of US$150,000 and the issuance of an additional 150,000 common shares; subject to Dalco retaining a production royalty of 3% of the total gross proceeds received by Ur-Energy USA from U ₃ O ₈  extracted by processing uranium ore from the seven mineral claims comprising the Radon Springs Property. The acquired Radon Spring Property included the historic exploration and development database of more than 2,200 drill hole logs and accompanying geologic maps, cross sections and reports.

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In February 2005 within the Great Divide Basin of Wyoming, the Company staked 224 new unpatented mineral claims adjacent to the Radon Springs Property.

The Company, through its wholly-owned subsidiary, Ur-Energy USA, acquired from New Frontiers Uranium, LLC (“New Frontiers”), a Colorado limited liability company, certain of the Wyoming properties comprising the Great Divide Basin and the Shirley Basin projects. Effective June 30, 2005, Ur-Energy USA entered into the Membership Interest Purchase Agreement (“MIPA”) with New Frontiers. Under the terms of the MIPA, the Company purchased from New Frontiers all of the issued and outstanding membership interests (the “Membership Interests”) in NFU Wyoming, LLC, a Wyoming limited liability company. NFU owned certain of the Wyoming properties comprising the Great Divide Basin and Shirley Basin projects which totaled 99 unpatented mineral claims and mineral leases on three state sections. Assets acquired from New Frontiers included extensively explored and drilled Lost Creek and Lost Soldier projects and development database including over 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 promissory note is payable in annual instalments of principal and interest of US $5,000,000 on the first, second and third anniversaries of the closing date, June 30, 2005, followed by a final payment consisting of all remaining principal plus interest falling due on the fourth anniversary of the closing date. In June 2006, the Company made the required first anniversary payment. The Company may elect to prepay the amount outstanding prior to the anniversary of the closing date with an adjustment in the interest due and payable. The Company has pledged its entire interest in NFU Wyoming LLC as collateral for amounts due under the promissory note.

Under the MIPA, the Company through NFU staked 211 new unpatented mineral claims for the Bootheel and Buckpoint projects within the Shirley Basin, Wyoming. Within the Great Divide Basin, Wyoming, the Company has staked 117 new unpatented mineral claims in the North Hadsell project area, 133 new unpatented mineral claims in the Lost Creek project area and 17 new unpatented mineral claims in the Lost Soldier project area.

On August 26, 2005, the Company purchased over 4,000 electric drill hole logs with geologic reports and maps related to the Lost Soldier project area from Power Resources, Inc. The Company paid US $400,000 with a 1% royalty on future production.

On November 29, 2005, the Company completed its initial public offering and commenced trading on the Toronto Stock Exchange. The initial public offering consisted of 8,000,000 common shares at a price of $1.25 per common share resulting in gross proceeds to the Company of $10,000,000. Ur-Energy engaged a syndicate of agents led by Raymond James Ltd., and including Canaccord Capital Corporation and Haywood Securities Inc., in respect of the offering.

On January 12, 2006, the Company announced that Mr. Robin Dow resigned as Chairman, Chief Executive Officer and as a director of the Company. Also Mr. Paul Pitman resigned as President of the Company and was appointed as Vice President, Canadian Exploration. Mr. W. William Boberg was appointed President and Acting Chief Executive Officer and a director of the Company. Mr. Jeffrey Klenda was appointed Chairman of the Board of Directors at that time. On May 29, 2006, the Company announced that Mr. W. William Boberg was confirmed as President and Chief Executive Officer of the Company.

On February 24, 2006, the Company announced that by mutual consent the Company and Patrician Diamonds Inc. (“Patrician”) had agreed to terminate the arrangements set forth in letter agreement between the parties

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and to unwind the transactions originally contemplated by the letter agreement regarding the Dismal Lake property in Nunavut that is held by Patrician. As a result of the unwinding of the transaction, Patrician refunded to Ur-Energy the $50,000 payment and returned the 100,000 common shares of the Company and the Company paid Patrician an amount of $37,448 representing the costs related to staking and geology work on the properties. All amounts were paid during the first quarter of 2006. Upon termination of the agreement, the Company recorded a write-off of deferred exploration costs for the property totaling $54,250.

On March 17, 2006, Ur-Energy and Energy Metals Corporation signed an agreement to complete a land swap enabling each company to consolidate its respective land positions in specific project areas in Wyoming. The parties determined that the consolidation of the property positions would create greater efficiencies in exploration and future mine planning. The Company traded its Shamrock properties and Chalk Hills properties for Energy Metals Corporation’s properties in the Bootheel project area. Pursuant to the agreement, the Company received Energy Metals’ 28 unpatented mining claims known as the TD group in Albany County, Wyoming. Energy Metals received the Company’s 356 unpatented “F” mining claims located in the southern Great Divide Basin in Carbon and Sweetwater Counties, Wyoming along with 2 unpatented “Rita” mining claims located in the Shirley Basin in Carbon County, Wyoming. Under the terms of the agreement, Energy Metals and the Company have granted one another a ½% royalty on future production of uranium from the properties.

On June 16, 2006, the Company entered into a data purchase agreement related to the Bootheel project area. The Company paid US$90,000 related to the acquisition of this data. The data acquired relates to historic drill hole geophysical logs, lithologic logs, drill hole maps and geologic cross sections. Under the terms of the agreement, the Company will provide the seller with a 1% royalty on future uranium and associated minerals produced from the property.

On March 24, 2006, Mr. Robert Boaz was appointed as a director of the Company.

In early June 2006, the Company announced results of two Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”) compliant resource estimations that disclose significantly increased resources on its Lost Creek and Lost Soldier properties from the relevant historic resources. In connection with these results, on July 26, 2006, the Company announced that it had filed updated technical reports prepared by C. Stewart Wallis, P. Geo., of Roscoe Postle Associates Inc. in accordance with NI 43-101 in respect of both its Lost Soldier and Lost Creek properties in the Great Divide Basin in Wyoming.

In June 2006, the Company also announced that the results of leach amenability studies on uranium core samples from the Lost Creek and Lost Soldier properties. These tests were performed by Energy Laboratories Inc. of Casper, Wyoming and will assist the Company in determining the possible in-situ leachability of the uranium bearing sandstone and the potential rate of recovery.

On June 19, 2006, the Company completed an acquisition of four claim groups in the Great Divide Basin of Wyoming, consisting of a total of 130 unpatented mining claims (approximately 2,700 acres) from John Wells of Wyoming. The Toby property contains an historic resource, not NI 43-101 compliant, of one million pounds of U ₃ O ₈ and the other properties have potential for future development. Consideration provided wascomprised of 250,000 common shares of the Company. Subsequently, on September 29, 2006, the Company acquired 82 additional unpatented mining claims from John Wells relating to these claim groups. Consideration for this acquisition was US $41,000. Under the terms of the agreements, the Company will provide the seller with a 2% royalty on future uranium production from the acquired properties and from a one-mile area of interest surrounding the properties. These new projects have been designated: (i) the Toby project comprised of 21 claims, located east of the Kennecott Sweetwater mill and originally drilled by the Union Oil subsidiary Minerals Exploration Company; (ii) the Arrow project comprised of 9 claims in the western Great Divide Basin; (iii) the UFO project comprised of 10 claims located south of the Company’s

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Lost Creek project; and (iv) the Eagles Nest project comprised of 172 claims (initial 90 plus subsequent 82 claims) located east of the Company’s Lost Creek project. In total these four claim blocks comprise approximately 4,400 acres. All four claim blocks are in areas of previous exploration drill programs for uranium conducted during the 1970s and early 1980s.

In July 2006, 36 new mineral claims were purchased by the Company to add to the Bootheel project in the Shirley Basin, Wyoming.

On July 10, 2006, the Company announced that it had made progress in its comprehensive program to advance engineering, permitting and mine feasibility at its Lost Creek and Lost Soldier properties. The Company also announced that the Wyoming Department of Environmental Quality approved permits for monitor well locations that will be used for data collection from both deposits. The Wyoming State Engineer’s office has approved permits for the installation of the wells for pump testing and water quality testing. Two drilling rigs commenced drilling and the installation of the wells at the Lost Soldier property. Collection of engineering and hydrologic baseline data from the wells has also commenced on both projects and will form part of the Company’s applications for permit to mine.

On July 31, 2006, the Company completed a definitive agreement with Triex Minerals Corporation (“Triex”) with respect to its Mountain Lake and West Dismal properties. The Mountain Lake property comprises 41 claims and the West Dismal property comprises 17 claims. Pursuant to the option agreement, Triex made a $25,000 cash payment upon execution of the agreement and was required to spend $200,000 on exploration of the properties by September 22, 2006. In order to exercise the option, and obtain a 100% interest, Triex must incur a further $500,000 in exploration spending by September 30, 2007. The Company will retain 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.

On August 2, 2006, the Company announced the closing of a non-brokered private placement of flow-through common shares. The financing comprised a total of 182,000 flow-through common shares at a price of $2.75 per share. Total gross proceeds to Ur-Energy were $500,500.

On August 30, 2006, the Company announced it had completed a common share bought deal. A syndicate of underwriters purchased, on a bought deal basis, 7,500,000 common shares of Ur-Energy, at a price of $2.20 per share, for gross proceeds of $16,500,000, and also exercised in full an over-allotment option to purchase an additional 1,022,727 common shares at the same price for additional proceeds of approximately $2,250,000. Total gross proceeds to Ur-Energy were $18,750,000.

On September 8, 2006 a Docket Number and a Technical Assignment Control Number were issued by the U.S. Nuclear Regulatory Commission for licensing actions for the Lost Creek and Lost Soldier projects.

On September 13, 2006, 15 additional lode claims were staked adjacent to the Lost Creek project for a total of 199 unpatented mineral claims.

On September 19, 2006, the Company announced the signing of an option agreement to acquire a uranium property located in Nunavut, Canada. The property covers an area of 10,870 hectares and encompasses several high-grade uranium occurrences. Known as the Bugs Property, it is situated in the Kivalliq region of Nunavut and was explored by Cominco Ltd. from 1976 to 1980. 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 issued to obtain an initial 12% interest in the property. On the first anniversary of the agreement 25,000 common shares are issuable for an additional 30% interest and on the second anniversary 50,000 common shares are issuable for a 58% interest. The vendor retains a 2% net smelter royalty which is subject to a buyout of 1% for $1.0 million.

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During October 2006, the Company acquired 79 State of South Dakota Mineral Leases containing approximately 46,363 acres in Harding County, northwest South Dakota for cash consideration of $158,431. A detailed geologic evaluation of the project area has commenced. Historic exploration drilling for uranium in this region has been very limited. A drilling program is tentatively planned for later 2007.

On December 14, 2006, the Company announced the closing of a flow-through common share private placement financing. The private placement comprised 500,000 common shares of the Company issued on a flow-through basis at a price of $5.00 per share for aggregate gross proceeds of $2,500,000. GMP Securities L.P. acted as agent in connection with the private placement.

On January 3, 2007, Gary Huber was appointed as a director of the Company.

On February 19, 2007, the Company appointed Wayne Heili as Vice President, Engineering. Mr. Heili will head up the Casper, Wyoming production office and engineering team. Mr. Heili will be responsible for directing the completion of the mining feasibility studies and the development of the Lost Creek and Lost Soldier projects.

BUSINESS OF UR-ENERGY

The Company is a junior mining company focused on development of uranium production from properties in the United States and exploration for uranium deposits in both the United States and Canada. Ur-Energy is aggressively completing mine planning, baseline studies and permitting activities to bring two uranium deposits in Wyoming into production which is expected to start in early 2009. The Company is also engaged in the identification, acquisition and exploration of uranium properties in Canada and exploration, and development of uranium projects in the United States. The Company’s operations comprise one reportable segment within two geographic areas.

In the United States, the Company has staked claims and/or leased lands in Wyoming and in South Dakota. In Wyoming, the Company controls eleven properties. Of those eleven properties, eight are in the Great Divide Basin, two of which (the Lost Soldier property and the Lost Creek property) 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 of which is the Bootheel property. The last of the Wyoming properties, the Kaycee property, is located in the Powder River Basin.

In 2007, exploration programs are planned for the Radon Springs, Eagles Nest and North Hadsell projects in the Great Divide Basin, Wyoming.

In South Dakota, the Company’s subsidiary NFU Wyoming, LLC was the successful bidder on 79 State of South Dakota Mineral Leases. These 79 Mineral Leases contain approximately 46,363 acres in Harding County, Northwest South Dakota. A detailed geologic evaluation of the project area is underway and a drilling program is tentatively planned for later 2007. Exploration drilling for uranium in this region has been very limited. An evaluation of Ur-Energy’s extensive historic database suggests potential for uranium discoveries in the region.

In Canada, the Company has staked claims in the Thelon Basin in the Northwest Territories and in the Hornby Basin in Nunavut. The Thelon Properties are comprised of three claim groups including the Screech Lake project. The Hornby Basin Properties are comprised of two claim groups: Mountain Lake and Dismal West. The Bugs Property is located in the Kivalliq region in Nunavut.

On July 31, 2006, the Company completed a definitive agreement with Triex Minerals Corporation with respect to its Mountain Lake and West Dismal properties. At Mountain Lake, Ur-Energy holds 41 claims covering about 38,545 hectares (95,242 acres) that adjoin 8 claims held by Triex. The Triex ground hosts the Mountain Lake Deposit, the largest uranium deposit found to date in the Hornby Bay Basin. Near the west end

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of Dismal Lakes, Ur-Energy’s Property comprises two groups of 17 mineral claims totaling approximately 13,920 hectares (34,400 acres). The claim groups cover part of an historic field of uranium mineralized boulders located 40 kilometres northwest of the Mountain Lake deposit.

The Company is actively pursuing future growth opportunities by evaluating the acquisition of exploration, development or production assets. The Company is currently engaged in discussions with respect to such possible opportunities. At any given time, discussions and activities can be in process on a number of initiatives, each at different stages of development. The Company currently does not have any binding agreements or binding commitments to enter into any such transaction. There is no assurance that any potential transaction will be successfully completed.

Other than as discussed in this AIF, the business of the Company and details of its mineral properties are disclosed in the Company’s public disclosure record and material explicitly incorporated by reference into this AIF. The Company commissioned Stewart Wallis (P. Geo) of Scott Wilson Roscoe Postle Associates Inc. (formerly, Roscoe Postle Associates Inc.) (“RPA”) to prepare technical reports which comply with the requirements imposed by National Instrument 43-101: “Standards of Disclosure for Mineral Projects”, for the Great Divide Basin project updated by additional technical reports on the Lost Soldier and Lost Creek projects, the Shirley Basin project, and the Kaycee and Shamrock projects, and D. Charlton (P. Geo) of Charlton Mining Exploration Inc. to prepare such technical reports for the Thelon Project and the Hornby Project.

United States - Wyoming

Ur-Energy’s key priority is to advance its two main Wyoming properties, the Lost Creek and Lost Soldier projects (located in the Great Divide Basin) to in situ recovery production. Achievement of this overall objective depends upon the successful completion of the various milestones. Successful completion of many of these milestones and their expected timing is dependent on the successful completion of earlier milestones. Delays or failure to complete earlier milestones would result in delays or failure to complete later milestones. The key milestones are as follows:

• completion of environmental and permitting studies (commenced in the third quarter 2005 and ongoing through 2007);
• completion of comprehensive and detailed geologic reports for Lost Creek and Lost Soldier projects to be used in the engineering studies (to be completed in the second quarter of 2007);
• completion of feasibility pump tests and related hydrology studies (commenced second quarter 2006 for expected completion in third quarter 2007);
• completion of engineering studies on the projects (commenced second quarter 2006 and ongoing through 2008);
• completion of toll-milling business arrangement for processing of ion-exchange resin from the projects (expected by later 2007);
• completion of mining pre-feasibility studies for Lost Creek project (expected by mid-2007) and final feasibility studies (expected by first quarter of 2008);
• completion of mining pre-feasibility studies for Lost Soldier (expected by fourth quarter of 2007) and final feasibility studies (expected by later 2008);
• completion of all baseline studies and environmental studies for Application for Permit to Mine for Lost Creek and Lost Soldier projects (expected second quarter 2007);
• completion of Application for Permit to Mine on Lost Creek and NRC License Applications (expected in the third quarter of 2007);
• completion of Application for Permit to Mine on Lost Soldier and NRC License Applications (expected in later 2008); and

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• commence installation of first production wellfields at Lost Creek project (expected fourth quarter 2008).

Lost Creek Property

The following is the 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 Company in accordance with NI 43-101 by RPA (“Technical Report – Lost Creek”), Section 4 to 19 of the Technical Report – Lost Creek are incorporated by reference in this AIF. The full Technical Report – Lost Creek can be viewed under the Company’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% U ₃ O ₈  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.

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 feasibilitystudies 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.

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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 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 U ₃ O ₈  in 4.6 Mt at an average grade of 0.062% U ₃ O ₈  using apolygonal 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% U ₃ O ₈  to 0.20% U ₃ O ₈ , with an average of intercepts in the mineralized envelope of the MMT at 0.04% U ₃ O ₈ . 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% U ₃ O ₈ . 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 U ₃ O ₈ 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% U ₃ O ₈ . 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% U ₃ O ₈ . All intercepts below the watertable contributed to the total thickness. A 0.3 GT boundary 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.

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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% U ₃ O ₈  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.

Since the completion of Technical Report - Lost Creek, the following activities have been undertaken and/or completed between September 2006 and March 2007:

• installation of 17 dual purpose pump test and monitoring wells;

• engineering study of potential plant sites and cost analysis of evaporation ponds and deep disposal wells performed by Lyntek, Inc.;

• completion by AATA International Inc. of 95% of the environmental baseline data collection for mine permitting purposes which includes meteorological, air quality, surface hydrology, radiology, soil surveys, archeology, wildlife studies, vegetation studies and socioeconomic studies;

• initiation of the engineering studies including wellfield layouts, hydraulic analysis and deep disposal well(s) by Petrotek Engineering Corporation;

• completion of baseline water quality sampling for three consecutive quarters from the monitoring wells;

• preparation of comprehensive and detailed internal geologic reports for engineering and environmental studies;

• aquifer test analysis report completed by Hydro-Engineering, LLC; and

• planning and permitting a three rig drilling program to start development work in April of 2007 with installation of 58 internal monitoring wells within the First Mine Unit and 70 delineation drill holes plus obtaining additional core samples for column leach tests and permeability tests.

Lost Soldier Property

The following is the Summary extracted from the technical report dated July 10, 2006 and titled “Technical Report on the Lost Soldier Property, Wyoming”, which was prepared for the Company in accordance with National Instrument 43-101 by RPA (the “Technical Report – Lost Soldier”). Sections 4 to 19 of the Technical Report- Lost Soldier are incorporated by reference in this AIF. The Technical Report – Lost Soldier can be viewed under the Company’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% U ₃ O ₈ 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.

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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 feasibilitystudies 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 Uranium LLC (NFU) 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 U ₃ O ₈

• Inferred: 7.3 million pounds of U ₃ O ₈

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.

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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% U ₃ O ₈  with an average of intercepts in the mineralized zone of 0.078% U ₃ O ₈ . 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 U ₃ O ₈ 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-Energyhas 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% U ₃ O ₈ of which 1,933 holes are used in the resource estimate. The majority of the data consist of U ₃ O ₈  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% U ₃ O ₈ . All intervals abovethe 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% U ₃ O ₈  and a grade thickness product (GT) equal to or greater than 0.3were 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 50 ft. centres for measured resources, 100 ft. centres for indicated and up to 200 ft. for inferred resources.

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Since the completion of Technical Report - Lost Soldier, the following activities have been undertaken and/or completed between September 2006 and March 2007:

• installation of 17 dual purpose pump test and monitoring wells;

• engineering study of potential plant sites and cost analysis of evaporation ponds and deep disposal wells performed by Lyntek, Inc.;

• completion by AATA International Inc. of 95% of the environmental baseline data collection for mine permitting purposes which includes meteorological, air quality, surface hydrology, radiology, soil surveys, archeology, wildlife studies, vegetation studies and socioeconomic studies;

• initiation of the engineering studies including deep disposal well(s) by Petrotek Engineering Corporation;

• initiation of selected engineering studies by Pincock, Allan & Holt;

• preparation of comprehensive and detailed internal geologic reports for engineering and environmental studies;

• hydrologic stress testing report completed by Leppert Associates; and

• baseline water quality sampling for three consecutive quarters from the monitoring wells.

Canada – Northwest Territories and Nunavut

Hornby Basin Properties

The Hornby Basin Properties are grass roots project in the Proterozoic Hornby Basin, which straddles the Nunavut/Northwest Territories boundaries east of Great Bear Lake. The project area is associated with significant radiometric anomalies and a high-grade boulder train. One of the two claim groups encompasses Triex Minerals’ Mountain Lake project which hosts the PEC uranium deposit containing an inferred uranium resource of 8.2 million pounds grading 0.23% U ₃ O ₈ .

Thelon Properties

The Thelon Basin Properties are grass roots projects located on crown land which the Company believes have potential for discovery of high-grade unconformity uranium deposits of the Athabasca style. The claims are situated in the Thelon Basin located in the Northwest Territories. The Thelon Basin is host to the undeveloped Kikkavik-Andrew Lake and End deposits which contain a reported historical resource of 130 million pounds of uranium at an average grade of 0.38% U ₃ O ₈ .

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 in 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 is interpreted to be due to clay alteration just above the unconformity. In July 2006, an environmental screening study was completed on the Screech Lake Project. Current work plans include further surface radon sampling, additional ground geophysical surveys and drilling.

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In September 2006, an application for a land use permit to conduct drill testing of Screech Lake anomalies was referred to the Mackenzie Valley Environmental Impact Review Board for environmental assessment. This assessment was completed on February 28, 2007 and a report from the Review Board is anticipated in April 2007.

The following is the Summary extracted from the technical report dated January 31, 2005 updated October 20, 2005 and titled “Technical Report on Gravel Hill, Screech and Eyeberry Properties together comprising the Thelon Project located in Northwest Territories, Canada”, which was prepared for the Company in accordance with National Instrument 43-101 by John D. Charlton, P. Geo (the “Technical Report – Thelon Property”). Sections 3 to 9 and 15 of the Technical Report- Thelon Property are incorporated by reference in this AIF. The Technical Report – Thelon Property can be viewed under the Company’s profile on the SEDAR website at www.sedar.com.

EXECUTIVE SUMMARY

John D. Charlton was retained by Ur-Energy Inc. to prepare a technical report on the three (3) properties comprising the Thelon Project: the Gravel Hill, Screech, and Eyeberry Properties. The purpose of this report is to provide an evaluation of the exploration potential of these properties and to recommend an exploration program in consequence. The three properties are located in the eastern part of the Northwest Territories, Canada. The southernmost Gravel Hill Property is comprised of twenty (20) contiguous claims covering a total surface area of 50,617 acres. The Screech Property is comprised of twenty (20) contiguous claims covering a total surface area of 53,058.75 acres. The northernmost Eyeberry Property is comprised of thirty-two (32) contiguous claims covering a total surface area of 62,435.55 acres. Ur-Energy holds the undivided 100% mineral rights to the Thelon Project properties.

A land use permit is required to conduct specified types of exploration work. In the case of the Thelon Project these include camp setup and drilling. Application is made through the Mackenzie Valley Land and Water Board (MVLWB) who are responsible for the review and approval process for each permit application. As a result of an objection from the Lutsel K’e Dene First Nation, the MVLWB referred the Screech Property land use application to the Mackenzie Valley Environmental Impact Review Board (MVEIRB) for environmental assessment (EA). As of June 22, 2005, Ur-Energy Inc. has withdrawn the application for a land use permit at Screech. Ur-Energy fully intends to re-apply for a land use permit at Screech later in 2005, following consultations with the Lutsel K’e Dene. During the period prior to the receipt of a land use permit, the Screech Property exploration program can proceed up to, but not including, the drilling phase.

The Thelon Project properties are located in a remote area accessible only by float or ski-equipped fixed wing aircraft or by helicopter. Yellowknife is generally the most practical base from which to operate. The properties lie along the southwestern rim of the Thelon Basin in a region historically referred to as the southeastern barrenlands. The region is subject to an Arctic climate. The most effective working period is from mid-June to mid-September. Regional geophysical coverage is provided by GSC aeromagnetic survey maps and by regional-scale NATGAM radioactivity maps. Historic mineral exploration activities in this region have focused on uranium. Urangesellschaft Canada Ltd. (UG) was responsible for all significant historical exploration work on the Thelon Project properties. UG completed regional geochemical surveys over the southwestern Thelon Basin in the mid- 1970’s. The results from these formed the basis for subsequent ground acquisition and follow-up exploration. All of the UG work pertaining directly to the Thelon Project properties was done over the period 1975-83. No further exploration was done on any of them until the current program in 2004.

On the Gravel Hill Property UG follow-up exploration included more detailed geochemical sampling, a limited airborne spectrometry survey, ground mapping and prospecting, and a UG airborne system survey. Additionally, limited gravity and resistivity surveys, and trenching were done on uranium showing areas. During the summer of 1979 nine (9) diamond drill holes totaling 1,040 m were completed on the B&B and # 2 Showings.

A narrow, 1.5 km long, east-west trending lake, dubbed « Screech Lake » was found to be the source of the highest radon-in-water anomaly located during the UG regional surveys. Consequently, the entire area was flown with the UG airborne system. Detailed overburden sampling, follow-up lake and stream sediment sampling, prospecting and ground geophysical surveys were completed in the Screech Lake area. Underwater spectrometer and scintillometer surveys were done, followed by helium surveys. Several lake-bottom springs emanating cold, milky, radioactive

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waters were found and sampled. In 1979 one vertical hole was drilled to 459 m depth. It failed to reach the unconformity.

Follow-up of the geochemical and UG airborne system coverage revealed significant anomalous areas that UG staked to the north of Eyeberry Lake. Mapping and prospecting led to more detailed geophysical surveys and to trenching on two different parts of the current property. Two uranium showings were trenched, sampled and drilled in the southern part of the Eyeberry Property.

The three Thelon Project properties lie within and adjacent to the southwestern portion of the Thelon Basin. This arcuate basin is comprised primarily of fine to medium grained sandstone with minor conglomerate deposited in Paleohelikian time. It covers a large area of the western Churchill Structural Province. The lithological variation and their facies inter-relationships are remarkably comparable to those in the Athabasca Basin. The basal conglomerates and sandstones of both basins were deposited upon a deeply paleoweathered surface.

Large areas of the central and northeastern Thelon Formation are underlain by Pitz Formation continental felsic volcanics and by coeval, flourite-bearing, rapakivi granites. Along the northwestern, western, and southern margin of the Thelon Basin granitoid gneisses of unknown ages and metasediment-dominated belts have been delineated. The granitization of supracrustal rocks and the intrusion of syn- and post- (anorogenic) tectonic granite intrusions during and after the Hudsonian orogeny represent a major uranium metallogenetic episode throughout the Churchill Province.

Long-lived, crustal-scale high strain zones, following the dominant northeast structural grain, are defining, fundamental features of the western Churchill Province. Uranium deposits and occurrences in the northeastern Thelon Basin are associated, both regionally and locally, with northeast-trending basement structures. Similarlythe major uranium deposits in the eastern Athabasca district lie along an extensively reworked, northeast-trending, Archean-Paleoproterozoic terrane.

The oldest rocks on the Gravel Hill property are Archean-aged strongly to moderately foliated granitic gneisses and massive to weakly foliated granitic rocks. Narrow, undeformed trachyte dykes and lenses intrude the basement rocks. The radioactive Muskeg Lake Granite covers the eastern third of the property. Thelon Formation sandstones occupy the northwestern portion of the property.

No outcrops are known to occur on the Screech Property. Practically the entire area of the property, except the extreme western edge, appears to be underlain by Thelon Formation sandstone. Basement geology at Screech is inferred from the adjacent Boomerang Property to the southwest, and from aeromagnetics. A wide, northeast trending band of metasediments, containing a graphitic metapelitic component, is interpreted to traverse the property. Predominant basement structural trends strike NESW and NW-SE across this area.

Thelon sandstones cover a continuous slice of the eastern Eyeberry Property along the Thelon Game Sanctuary boundary, as well as almost the entire southern third of the property. A northeast-striking contact, defined by mapping and by magnetic interpretation, separates a gneissic terrane dominated by metavolcanics in the southeast from one dominated by metasediments in the northwest. Two outliers of Thelon Formation sandstone, as well as exposures of possible Pitz Formation rhyolites and of regolith occur in the northern portion of Eyeberry.

The deposit type targeted by the Thelon Project is the unconformity-related uranium deposit. Known Proterozoic unconformity-type uranium deposits in the Athabasca Basin are subdivided into two sub-types based upon their positon relative to the unconformity (fracture-bounded or clay bound) or, according to ore mineralogy (monometallic or polymetallic). Deposits of the monometallic sub-type usually occur in fractured metasedimentary basement rocks. Polymetallic (U-Ni-Co-As) deposits occur immediately at the unconformity. In the southwestern Thelon Basin, the Boomerang Prospect is classed as a polymetallic uranium prospect. In the northeastern Thelon Basin, Cameco’s large Kiggavik uranium deposit belongs to the monometallic or fault-bounded sub-type.

The diagenetic-hydrothermal model is the most widely supported unconformity-related uranium deposit genetic model. This model implicates a pre-existing uranium rich subprovince formed as a result of granitic magmatism. Uranium from these sources may then have been concentrated within Paleoproterozoic sediments, which were subsequently folded and metamorphosed. Uranium from these sources was eroded from the deeply paleoweathered terrane and redeposited in the overlying siliciclastic sequences.

The resultant thick and regionally extensive basinal siliciclastics underwent diagenesis, peaking. Hot, saline and metal-rich diagenetic fluids moved laterally and downward. Fluids may have migrated laterally along horizontal aquitards within the Thelon Formation. Encountering the hydrogeological barrier at the basement unconformity,

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they spread laterally along it. Uranium and other metals deposition was structurally controlled by the unconformity, faults and fractures, and lithologically controlled by graphitic metapelites in the basement and by altered and porous sediments above the unconformity. Some of this uranium was subsequently remobilized and redeposited in subsequent hydrothermal episodes.

At the Screech Property radon, radium, and uranium anomalies from UG geochemical surveys show an ENE alignment, forming a wide anomalous corridor or zone largely corresponding with the basement metasediments. The underwater springs feeding into Screech Lake are highly anomalous in helium, radon, and uranium contents. The waters of the lake are highly ionized. Helium-in-soil anomalies show a NE-SW alignment contiguous to the lake. The 2004 exploration program by Ur-Energy Inc. on the Thelon Project consisted entirely of a combined high-resolution time-domain helicopter electro-magnetic (THEM system of McPhar Geophysics Ltd.) and concurrent airborne magnetic survey. Force majeure was declared after covering a small portion of the Screech Property due mainly to very poor weather conditions and the survey was not completed. This electromagnetic system appears not to be suitable for detecting conductors beneath the sandstone thicknesses present on the Screech Property.

The Boomerang Prospect, found as a result of Hudson’s Bay Oil and Gas (HBOG) and UG exploration efforts, lies 12 km southwest of the Screech Property on adjacent mining leases currently held by Uravan Minerals Inc. In 1983 UG diamond drill hole BL-83-21 intersected 22.4 g/t Au, 12.3 g/t Ag, and 5,003 ppm U ₃ O ₈ over 0.5m in strongly altered sandstone at the unconformity contact here. Subsequent UG drill results, and 1998 drilling by Uravan, confirmed the Boomerang Prospect to be a polymetallic unconfomitytype uranium deposit occurring in close association with basement graphitic horizons and faulting.

The basement lithologic and structural elements key to localizing uranium mineralization appear to be continuous from the Boomerang Prospect northeastward onto the Screech Property. The conductive graphitic horizons within the metapelites were the key to the discovery of the Boomerang Prospect. These are detectable using time domain electromagnetic techniques. The Screech Lake area and the contiguous portion of the Screech Property toward the southwest to the property boundary warrant a concerted exploration effort directed at the discovery of an unconformity-related uranium deposit.

On the Gravel Hill Property, the northern anomaly band stretches from the northern part of the Muskeg Lake Granite and westward, continuing south of Gravel Hill Lake beneath Thelon sandstones. The northern anomaly band received little exploration attention from UG. It is comprised of a series of geochemical anomalies, a bedrock-hosted radioactive occurrence and radioactive boulders. Gravel Hill merits a specific exploration effort directed at the discovery of unconformity-related uranium mineralization along the northern anomaly band.

On the Eyeberry Property, several scattered geochemical anomalies of merit occur in the sparsely sampled sandstones east of the Thelon River. In contrast to the well prospected terrane to the west, the Thelon terrane, encompassing these anomalies in the southeast, merits a specific exploration effort.

A two-phase exploration program is proposed for the Thelon Project. The first phase consists of the completion of a MEGATEM survey to provide full coverage of the Screech Property, as well as MEGATEM surveys of selected areas of the Gravel Hill and Eyeberry properties. Additionally, it should include detailed ground electromagnetic coverage of the Screech Lake portion of the Screech Property in preparation for Phase II diamond drilling. Phase I work would best be completed prior to break-up.

Recommended Phase II work consists of 3,400 m of exploratory diamond drilling and subsequent down-hole surveys to test Screech Property basement geophysical features. It also includes ground geophysical coverage of the southwestern part of the Screech Property. Phase II work would best be completed during the winter months. Estimated exploration costs are $900,000 for proposed Phase I, and $2,400,000 for proposed Phase II.

Since the completion of the Technical Report – Thelon Property, certain components of the recommended work program have been undertaken and/or completed as follows:

In mid 2005, Aurora Geosciences Ltd. completed a ground PROTEM 57 electromagnetic survey and ground magnetic and VLF surveys over the Screech Property and Fugro Airborne Surveys completed a MegaTEM airborne electromagnetic and magnetic survey over the entire Screech Property. In addition, the Company completed an EIC (electret ion chamber) radon sampling and prospecting exploration program on the Screech

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Property. Condor Consulting completed a processing and analysis of the MegaTEM survey data for the Screech Property in April 2006.

In mid 2006, Aurora Geosciences Ltd. completed further ground PROTEM 57, magnetic, and VLF-EM surveys, extending the review of the Screech Property southward and eastward including the southeast anomaly. A ground exploration program was also completed, the principal components of which, were ground radon flux monitor (RFM) surveys and ground radon-in-air (RIA) surveys utilizing field-adapted electret ion chamber (EIC) radon measurement technologies. 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 Property.

The Company contracted Golder Associates (“Golder”) to facilitate the land use permit application process and to complete an environmental benchmark study at the Screech Property. Following community consultations with the Lutsel K’e Dene and the Fort Resolution Dene, the company and Golder re-applied for a Land Use Permit on July 13, 2006. In August 2006, Golder completed the benchmark environmental study and the Company conducted a community site visit to the Screech Property with representatives of Lutsel K’e. During September 2006, the land use permit application was referred to the MVEIRB for environmental assessment. In January 2007, MVEIRB held hearings on the Screech Project at Lutsel K’e. The environmental assessment was completed on February 28, 2007 and a report from the MVEIRB is anticipated in April 2007. During the period prior to the receipt of a land use permit, the Screech Property exploration program can proceed up to, but not including, the drilling phase.

The Company anticipates that upon receipt of the Land Use Permit, that it will commence a Phase II work program which will include 3,400 m of exploratory diamond drilling and subsequent down-hole surveys to test selected high priority targets. Additionally, a ground geophysical coverage of the southwestern part of the Screech Property will be conducted.

Bugs Property

On September 7, 2006, the Company entered into an option agreement to acquire the Bugs property in Nunavut, Canada. The Bugs property consists of 11 contiguous mineral claims in the Kivalliq region of Nunavut. 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 issued to obtain an initial 12% interest in the property. On the first anniversary of the agreement 25,000 common shares are issuable for an additional 30% interest and on the second anniversary 50,000 common shares are issuable for a 58% interest. The vendor retains a 2% net smelter royalty which is subject to a buyout of 1% for $1.0 million.

High-grade uranium mineralization was discovered south of Nowleye Lake in the summer of 1976 during a geological reconnaissance/prospecting program carried out by Cominco Ltd. Cominco staked the (Bugs) property and completed exploration work programs on it over the ensuing four years. This work included prospecting, geological mapping, sampling, local ground magnetic and VLF-EM surveys, local track-etch radon surveys, and borehole drilling. Cominco also completed petrologic, rock geochemical, autoradiographic, and age dating studies on suites of Bugs rocks. During the summer of 1979 a total of 1,998 metres of drilling in 23 holes was completed on four separate showing areas on the Bugs Property. Three types of uranium mineralization are recognized on the Bugs Property.

A fixed wing airborne radiometric and magnetic survey was completed over the entirety of the Bugs Property by TundraAir Inc. in September 2006 and the information obtained from the survey is being utilized for the 2007 work program.

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Competitive Conditions

There is aggressive competition within the uranium mining industry for the discovery and acquisition of properties with commercial potential. Many of Ur-Energy’s competitors in this area have greater financial resources than Ur-Energy.

Nuclear energy competes with other sources of energy including oil, natural gas, coal and hydro electricity, many of which do not have the political, technological and environmental factors affecting the nuclear industry. Lower prices for oil, natural gas and hydro electricity particularly may result in lower demand for uranium concentrates.

The uranium industry itself is both highly competitive and highly concentrated. A small number of mining companies account for approximately 80% of the world’s uranium production. Management of the Company nevertheless believes that there are market niches where smaller low cost producers could be successful. See “Risk Factors”.

Uranium Market Overview

Nuclear power generation using uranium fuel has provided over 16% of the world’s electricity; equal to that of natural gas but far in excess of that generated using oil at 10%. Coal, however, remains the leader at 40% with hydro electricity being half of that at 20%. As of December 2006, there were 435 nuclear reactors operating globally producing 368,246 Mwe of power. There are 28 reactors under construction, 64 planned and more than 158 have now been proposed globally. The World Nuclear Association (WNA) has projected various growth scenarios that include an upper case scenario where global nuclear generating capacity could grow as high as 740,200 Mwe, a 102% increase over 2005 output from the equivalent of 462 new reactors by 2030.

Uranium Demand and Supply

Over the past two decades, uranium consumption has exceeded mine supply by a wide margin. Demand for uranium has been increasing steadily over the past several decades, from 56 million pounds in 1980 to approximately 180 million pounds in 2006. The 435 reactors currently operating require approximately 180 million pounds of U ₃ O ₈  equivalent. Of that total, 110 million pounds is supplied by primary production with the balance being made up from secondary sources. Cameco Corporation, one of the world’s largest uranium producers, estimates that the annual demand could reach 217 million pounds by 2015. New mine production is ultimately required to meet demand.

Uranium supply to utilities is highly competitive and operates by suppliers making individual and undisclosed contracts with each utility. Primary mine production accounts for the majority of traded uranium but secondary supplies from decommissioning of nuclear weapons (HEU) and re-enriched depleted uranium from reactor fuels and uranium tails are significant, but currently represent less than 10% of supply. Recent developments in reactor requirements suggest, however, that with high uranium costs, utilities will order lower tails assays with enrichment services contracts and hence, may lower consumption in the range of 10 to 20%.

Uranium Prices

As of March 19, 2007, the spot price of uranium was reported to be US$91.00 per pound, with the long-term contract price at US$85.00 per pound. There are several factors thought to be driving the present increase in the price of uranium. The primary factor is the anticipated increase in world demand for energy over the next 20 years. The demand for U ₃ O ₈ is directly linked to demand for electricity generated by nuclear power plants.

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A second, but important factor, affecting future pricing of uranium is that supply of U ₃ O ₈  from production and other sources is not expected to close the demand gap in time, perhaps leaving some utilities short of uranium. This supply deficit is predicted as early as 2012. Since 1985, world uranium production has fallen short of utility uranium consumption. Increasingly, the link between clean air and nuclear power will likely be a major factor influencing continued use of nuclear generated electricity over that of coal, oil and gas fired plants. Many European countries have stated that new nuclear construction will be necessary to reduce “greenhouse gas emissions”.

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RISK FACTORS

The following are the principal risk factors relating to Ur-Energy and its business:

Exploration and Development Stage Company

The Company is engaged in the business of acquiring and exploring mineral properties in the hope of locating economic deposits of minerals. The Company’s property interests are in the exploration and development stage only and are without a known body of commercial ore. Accordingly, there is little likelihood that the Company will realize any profits in the short to medium term. Any profitability in the future from the Company’s business will be dependent upon locating an economic deposit of minerals, which itself is subject to numerous risk factors. Further, there can be no assurance, even if an economic deposit of minerals is located, that any of the Company'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 even a combination of careful evaluation, experience and knowledge of 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. Major expenses may be required to establish reserves by drilling and to construct mining and processing facilities at a particular site. It is impossible to ensure that the current exploration programs of the Company will result in profitable commercial mining operations. The profitability of the Company's operations will be, in part, directly related to the cost and success of its exploration programs which may be affected by a number of factors. Substantial expenditures are required to establish reserves which are sufficient to commercially mine some of the Company's properties and to construct, complete and install mining and processing facilities in those properties that are actually mined and developed.

Uranium Prices

The price of uranium fluctuates. The future direction of the price of uranium will depend on numerous factors beyond the Company’s control including international, economic and political trends, 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 Company’s properties, cannot accurately be predicted. As the Company is only at the exploration stage, it is not yet possible for it to adopt specific strategies for controlling the impact of fluctuations in the price of uranium.

Uranium Market Factors

The marketability of uranium is subject to numerous factors beyond the control of the Company. The price of uranium may experience volatile and significant price movements over short periods of time. Factors impacting price include demand for nuclear power, political and economic conditions in uranium 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 countries such as Russia, Africa and Australia.

No Current Mineral Reserves

Calculations of mineral resources and metal recovery are only estimates, and there can be no assurance about the quantity and grade of minerals until reserves or resources are actually mined. While we have mineral resources, we currently do not have any mineral reserves. 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,

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the quantity of reserves or resources may vary depending on commodity prices. Any material change in the quantity of resources, grade or stripping ratio may affect the economic viability of our properties.

Management; Dependence on Key Personnel, Contractors and Service Providers

Shareholders will be relying on the good faith, experience and judgment of the Company’s management and advisors in supervising and providing for the effective management of the business and the operations of the Company and in selecting and developing new investment and expansion opportunities. The Company may need to recruit additional qualified employees, contractors and service providers to supplement existing management. The Company will be dependent on a relatively small number of key persons, the loss of any one of whom could have an adverse effect on the Company’s business and operations.

Industry Conditions

The exploration for and development of mineral deposits involves significant risks which even 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 Company 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 Company not receiving an adequate return on invested capital.

Mining operations generally involve a high degree of risk. The Company'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, rock bursts, cave-ins, 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.

Value of the Common Shares

The value of the Company’s common shares could be subject to significant fluctuations in response to variations in quarterly and yearly operating results, the success of the Company's business strategy, competition or other applicable regulations which may affect the business of the Company and other factors. These fluctuations may affect the value of the Company’s common shares.

Competition

The international uranium industry is highly competitive. The Company's activities are directed towards the search, evaluation and development of uranium deposits. There is no certainty that the expenditures to be made by the Company 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 Company 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 efforts.

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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.

Additional Funding

Additional funds will be required for future exploration and development. The source of future funds available to the Company 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 Company. Furthermore, even if such financing is successfully completed, there can be no assurance that it will be obtained on terms favourable to the Company or will provide the Company with sufficient funds to meet its objectives, which may adversely affect the Company's business and financial position. In addition, any future equity financings by the Company may result in substantial dilution for existing shareholders of the Company.

Lack of Earnings and Dividend Record

The Company 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 Company after taking into account many factors, including our financial condition and current and anticipated cash needs.

The Impact of Hedging Activities on Profitability

Although the Company 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 Company 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.

Environmental Risk and Compliance with Environmental Regulations Which are Increasing and Costly

Environmental legislation 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 our intended activities, and expose us to litigation. These authorities may require us 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 equipment and operating costs and delays, interruptions, or a

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termination of operations. We cannot accurately predict or estimate the impact of any such future laws or regulations, or future interpretations of existing laws and regulations, on our operations. Historic mining activities have occurred on certain of our properties. If such historic activities have resulted in releases or threatened releases of regulated substances to the environment, potential for liability may exist under federal or state remediation statutes.

Title to Property Can be Uncertain

Although the Company 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 Company's interests. Our mineral properties in the United States consist of private mineral rights, leases covering state and private lands, leases of patented mining claims, and unpatented mining claims. Many of our mining properties in the United States are unpatented mining claims to which we have 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. Since a substantial portion of all mineral exploration, development and mining in the United States now occurs on unpatented mining claims, this uncertainty is inherent in the mining industry. The present status of our unpatented mining claims located on public lands allows us the exclusive right to mine and remove valuable minerals, such as precious and base metals. We also are allowed to use the surface of the land solely for purposes related to mining and processing the mineral-bearing ores. However, legal ownership of the land remains with the United States. We remain 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 Company has or will take all curative measures to ensure proper title to its properties where necessary and where possible.

Land Claims

At the present time, none of the properties in which the Company has an interest or an option to acquire an interest is the subject of an aboriginal land claim. No assurance can be provided that the Company’s properties may not be the subject of such claims in the future.

Uninsured Hazards

The Company currently carries insurance coverage for general liability, directors’ and officers’ liability and other matters. The Company intends to carry insurance to protect against certain risks in such amounts as it considers adequate. The nature of the risks the Company 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 Company’s business and financial position.

Conflicts of Interest

Certain directors of the Company 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 Company will be made in accordance with their duties and obligations to deal fairly and in good faith with the

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Company 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.

Permits, Licences and Approvals

The operations of the Company may require licences and permits from various governmental authorities. The Company believes it holds or is in the process of obtaining all necessary licences and permits to carry on the activities which it is currently conducting under applicable laws and regulations. Such licences and permits are subject to changes in regulations and in various operating circumstances. There can be no guarantee that the Company will be able to obtain all necessary licences 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 their exploration properties. In addition, if the Company proceeds to production on any exploration property, it must obtain and comply with permits and licences 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 Company will be able to obtain such permits and licences or that it will be able to comply with any such conditions.

Regulatory Matters

The Company's business is subject to various federal, state, provincial and local laws governing prospecting and development, taxes, labour standards and occupational health, mine 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 rehabilitate 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. There can be no assurance that the Company 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 prohibit the Company from proceeding with certain exploration and development.

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. If enacted, such legislation could change the cost of holding unpatented mining claims and could significantly impact our 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 our financial performance.

Deregulation of the Electrical Utility Industry

The Company’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.

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DIVIDENDS

As of the date hereof, the Company has not paid any dividends on its outstanding common shares and has no current intention to declare dividends on its common shares in the foreseeable future. Any decision to pay dividends on its common shares in the future will be dependent upon the financial requirements of the Company to finance future growth, the general financial condition of the Company and other factors which the board of directors of the Company may consider appropriate in the circumstances.

CAPITAL STRUCTURE OF THE COMPANY

The authorized capital of the Company consists of an unlimited number of common shares and an unlimited number of Class A Preference Shares. As of March 21, 2007, 73,949,874 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 Company. The holders of common shares are also entitled to dividends, if and when declared by the directors of the Company and the distribution of the residual assets of the Company in the event of a liquidation, dissolution or winding up of the Company.

The Company’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.

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ESCROWED SECURITIES

The following table sets out the number and percentage of securities of the Company held by Mr. Jeffrey Klenda and Mr. Robin Dow, former director, Chairman and Chief Executive Officer of the Company (the “Escrowed Individuals”) and their respective spouses which are subject to escrow pursuant to National Policy 46-201 - Escrow for Initial Public Offerings (“NI 46-201”).

NI 46-201 Escrow

Pursuant to the escrow agreement (the “Escrow Agreement”) dated as of November 17, 2005 between the Company, Equity Transfer Services Inc. (the “Escrow Agent”) and the Escrowed Individuals and their respective spouses, the Escrowed Individuals and their respective spouses agreed to deposit in escrow their common shares and warrants exercisable for common shares (the “Escrowed Securities”) with the Escrow Agent.

As an established issuer, the securities in escrow will be released under the 18 month schedule applicable to established issuers. Securities held by Escrowed Individuals and their spouses are released from escrow in equal tranches at six month intervals over 18 months (that is 25% of each Escrowed Individual’s holdings being released in each tranche with 25% of each Escrowed Individual’s holdings being exempt from the escrow provisions). The final tranche of securities will be released in May 2007.

Pursuant to the terms of the Escrow Agreement, the securities held in escrow may not be transferred or otherwise dealt with during the term of the Agreement unless the transfers or dealings within escrow are: (i) transfers to continuing or, upon their appointment, incoming directors and senior officers of the Company or of a material operating subsidiary, with approval of the board of directors; (ii) transfers to an RRSP or similar trusted plan provided that the only beneficiaries are the transferor or the transferor’s spouse or children; (iii) transfers upon bankruptcy to the trustee in bankruptcy; and (iv) pledges to a financial institution as collateral for a bona fide loan, provided that upon a realization the securities remain subject to escrow. Tenders of escrowed securities to a take-over bid are permitted provided that, if the tenderer is an Escrowed Individual of the successor company upon completion of the take-over bid, securities received in exchange for tendered escrowed securities are substituted in escrow on the basis of the successor company’s escrow classification.

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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 Company 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 Company.

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.

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Mr. Klenda graduated from the University of Colorado in 1980 and began his career as a stockbroker specializing in venture capital offerings. He has been a Certified Financial Planner (CFP) since 1985 and is a member of the International Board of Standards and Practices for Certified Financial Planners (IBCFP). In 1988, he started Klenda Financial Services, Inc., 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 he formed Independent Brokers of America, Inc. (IBA). IBA was a national marketing organization providing securities and insurance products to independent investment advisors throughout the U.S. Mr. Klenda is 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 is currently CEO, Chairman and a director of Aura Silver Resources Inc. (director since August 2004, CEO and Chairman since February 2006). Mr. Klenda became a director of the Company in August 2004 and Chairman of the Board in January 2006.

Mr. Boberg is the Company’s President and Chief Executive Officer and a director (since January 2006). Previously, Mr. Boberg was the Company’s senior US geologist and VP U.S. Operations (September 2004 to January 2006). Prior to his involvement with the Company, Mr. Boberg was a consulting geologist having over 40 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. Mr. Boberg has over eighteen years experience exploring for uranium in the continental US. He has worked for Continental Oil Company, World Nuclear, Kennecott Exploration Inc., Western Mining Corporation, Canyon Resources Corporation and Patrician Gold. He discovered the Ruby Ranch and the Moore Ranch uranium deposit as well as several smaller deposits in Wyoming's Powder River Basin. He has his Masters degree in Geology from the University of Colorado. He is a registered Wyoming Professional Geologist.

Dr. Franklin has over 37 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 and, since 2001, at Laurentian University. 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 Phoenix Matachewan Mines Inc. (since September 2000), Patrician Diamonds Inc. (since January 1998), Aura Silver Resources Inc. (since October 2003) and RJK Exploration Ltd. (since July 2001).

Mr. Craigie has over 35 years experience as a mineral exploration geologist. His career began in 1970, working on uranium projects in central and northern Canada. From 1978 until 1984, he managed the eastern Canadian exploration office of BP Minerals and from 1984 until 1992 he was in charge of diamond exploration for the Selection Trust Division of BP Resources. Since 1992, he has been a consulting geologist working extensively for diamond, gold, base metal and uranium explorers in Canada, USA, Africa and Asia. He is currently President of Patrician Diamonds Inc. (since November 2004), and Vice President, Exploration and a director of Aura Silver Resources Inc. (since October 2003).

Mr. Pitman has over 35 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 1970s -

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1980s as a senior geologist for BP Minerals exploring for uranium across Canada. He and Eric Craigie formed Hornby Bay Resources, a lead explorer in the Hornby Bay Basin for unconformity uranium deposits. Mr. Pitman is President and a director of Aura Silver Resources Inc. (since October 2003). He was also the Secretary of Nuinsco Resources Ltd. from September 2003 to February 2005 and was Vice-President of Patrician Diamonds Inc. from 1998 to September 2006. Mr. Pitman was President of the Company from its inception up to January 2006.

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. Mr. Macdonell is the chair of the Audit Committee for Phoenix Matachewan Mines Inc. and Patrician Diamonds Inc. He has been a director of Patrician Diamonds Inc. since 1996, of Phoenix Matachewan Mines Inc. since September 2000 and of Aura Silver Resources Inc. from October 2003 to September 2006.

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 a director of Aura Silver Resources Inc., AuEx Ventures Inc. and Chair of Solex Resources Corp.

Mr. Huber is a mining company executive with over 30 years of diversified natural resource experience. Gary was a founder of Canyon Resources Corporation, currently a gold company which was initially formed for the purpose of uranium exploration in the western United States. During the period from 1979 to 2006 he held various positions with Canyon including: Director, Chief Financial Officer, and Vice President-Finance. He was also President and CEO of Canyon’s industrial minerals subsidiary which operated and sold functional fillers and specialty products from two processing facilities and three mines. Prior responsibilities in the 1970’s have included uranium property acquisition, exploration and production activities for Energy Reserves Group in the central Colorado Plateau area. Presently, Gary is the Director of IRC Capital Group, an investment arm of International Royalty Corporation. Gary holds a Ph.D. from the Colorado School of Mines.

Mr. McNeice currently acts as a financial consultant to emerging private and junior public companies. Previously, from 1990 to 2003, he had thirteen years of public accounting experience with PricewaterhouseCoopers LLP where he specialized in servicing private and public technology and life science companies. Mr. McNeice is both a Chartered Accountant and a Certified Public Accountant (Illinois) and holds an Honours Bachelor of Commerce degree. He is also Chief Financial Officer of Patrician Diamonds Inc., Phoenix Matachewan Mines Inc. and Aura Silver Resources Inc. (all since September, 2004).

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Mr. Backer is the Company’s Vice President, U.S. Operations. He has his BS degree in Geology from Colorado State University and did his graduate studies in geology at New Mexico Institute of Mining and Technology, and received a Certificate of Financial Management from the University of Denver. He has over 38 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 Ltd., Chevron Resources Company and as Sr. VP Exploration for Goldbelt Resources Ltd. 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. Heili is the Company’s Vice President, Engineering. His has had a career spanning more than 19 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 (ISR) projects from January 1998 until February 2004. Since then, Mr. Heili acted as a consultant for such companies as High Plains Uranium, Inc., Energy Metals Corporation and Behre Dolbear as well as owned and managed an independent franchise location of a major water treatment company. His experience includes conventional and ISR uranium processing facility operations. Mr. Heili received a Bachelor of Science degree in Metallurgical Engineering from Michigan Technological University, with a mineral processing emphasis.

As at March 21, 2007, the directors and executive officers of the Company, as a group, beneficially own, directly or indirectly, or exercised control or direction over 1,750,000 common shares, representing approximately 2.4% of the Company’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 Company and has been furnished by the directors and executive officers individually.

None of the directors or officers of the Company is, or has been within the prior ten years, a director or officer of any other issuer that, while that person was acting in that capacity, was the subject of a cease trade or similar order or an order that denied the issue access to any statutory exemptions under Canadian securities legislation for a period of more than 30 consecutive days or was declared bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangements or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that company.

None of the directors or officers of the Company has been subject to any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority or has entered into a settlement agreement with a Canadian securities regulatory authority or been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

None of the directors of officers of the Company has, during the ten prior years, become bankrupt, made a proposal under any legislation related to bankruptcy or insolvency or has been subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver, receiver-manager or trustee appointed to hold the assets of the director or officer.

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AUDIT COMMITTEE

Audit Committee Mandate

The text of the Audit Committee terms of reference, adopted on March 24, 2006, by the Company’s Board of Directors is attached hereto as Schedule “A”.

Composition of the Audit Committee

As of January 4, 2007, the Audit Committee of the Company was composed of the following three members: Paul Macdonell, Chair, Robert Boaz and Gary Huber. Prior to Mr. Huber becoming a member of the Audit Committee, James Franklin was a member of the Audit Committee.

The Board of Directors believes that the composition of the Audit Committee reflects financial literacy and expertise. Currently, Paul Macdonell, Robert Boaz and Gary Huber have been determined by the Board to be “independent” and “financially literate” as such terms are defined under Canadian securities laws and stock exchange rules. The Board has made these determinations based on the education as well as breadth and depth of experience of each member of the Committee. The following is a brief summary of the education and experience of each member of the Committee that is relevant to the performance of his or her responsibilities as an Audit Committee member:

Paul Macdonell , B. Public Admin.

Mr. Macdonell is a Senior Mediator, Federal Mediation and Conciliation Services 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 of the Union from 1991 to 1995. Mr. Macdonell was Municipal Councillor for the City of Cumberland from 1978 to 1988 and was on the City’s budget committee from 1978 to 1988. Mr. Macdonell holds bachelor degree in Public Administration, University of Western Ontario and a Certificate in Economic Development, University of Waterloo.

Robert Boaz, M. Economics, Hon. BA

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. Mr. Boaz holds a masters degree in Economics, York University and an honours bachelor degree from McMaster University.

Gary Huber , Ph.D

Mr. Huber is a mining company executive with over 30 years of diversified natural resource experience. Gary was a founder of Canyon Resources Corporation, currently a gold company which was initially formed for the purpose of uranium exploration in the western United States. During the period from 1979 to 2006 he held various positions with Canyon including: Director, Chief Financial Officer, and Vice President-Finance. He was also President and CEO of Canyon’s industrial minerals subsidiary which operated and sold functional fillers and specialty products from two processing facilities and three mines. Prior responsibilities in the 1970’s have included uranium property acquisition, exploration and production activities for Energy Reserves Group in the central Colorado Plateau area. Presently, Gary is the Director of IRC Capital Group, an investment arm of International Royalty Corporation. Gary holds a Ph.D. from the Colorado School of Mines.

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Reliance on Certain Exemptions

The Company has relied on the exemption in Section 3.2 (Initial Public Offerings) in Multilateral Instrument 52-110. At the time of the Company’s initial public offering, the Company had only one independent director on its Audit Committee, Paul Macdonell. In March 2006, the Company appointed another independent director Robert Boaz who was also appointed to the Audit Committee. The Company appointed a third independent director, Gary Huber, to the Audit Committee in January 2007.

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.

External Auditor Service Fees

Audit Fees

Audit fees of $60,000 related to the audit of the consolidated financial statements for the period from January 1, 2006 to December 31, 2006 were paid in 2007 and audit fees of $32,500 for the period from January 1, 2005 to December 31, 2005 were paid in 2006.

Audit-Related Fees

Audit-related fees of $41,565 for services related to financing activities for the period January 1, 2006 to December 31, 2006 were paid in 2007 and audit-related fees of $67,500 for the period January 1, 2005 to December 31, 2005 were paid in 2006 for services related to the Company’s initial public offering.

Tax Fees

There were fees of $71,967 for tax services for the fiscal year ended December 31, 2006 and there were no fees for tax services for the fiscal year ended December 31, 2005.

All Other Fees

There were no other fees incurred for the fiscal year ended December 31, 2006 or the fiscal year ended December 31, 2005.

CONFLICTS OF INTEREST

Certain of the Company’s directors and officers also serve as directors and officers of one or more of Aura Silver Resources Inc., Phoenix Matachewan Mines Inc. and Patrician Diamonds Inc. Each of which are TSX Venture Exchange listed companies. Such directors and officers are also in many cases shareholders of one or more of the foregoing companies. While there is a potential for conflicts of interest to arise in such situations, that potential is minimized because of the nature of each company. Phoenix Matachewan Mines Inc. is in the business of gold and precious metal exploration in Canada and the United States. Patrician explores for diamonds in Canada and Aura Silver Resources Inc. is in the silver and gold exploration business in Canada, Mexico and the United States.

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INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

None of the directors or officers of the Company or any shareholder holding 10% or more of the outstanding common shares, or any associate or affiliate of any of the foregoing, has had any material interest, direct or indirect, in any material transaction since the incorporation of the Company or in any proposed transaction which has or may materially affect the Company.

The former Chairman and CEO and director of the Corporation, Mr. Robin Dow owns 50% of the issued and outstanding shares in the capital of Cornerstone Capital Corporation (“Cornerstone”). Pursuant to an agreement between the Company and Cornerstone, which has been terminated, the Company had agreed to reimburse Cornerstone for up to $500 per month in expenses incurred by Cornerstone for office services, if as or when such funds were available.

Certain of the directors and/or officers of the Company are also directors and/or officers of other natural resource companies. See “Conflicts of Interests”. Consequently, there exists the possibility for such directors and/or officers to be a position of conflict. Any decision made by any of such directors and/or officers of the Company will be made in accordance with their duties and obligations to deal fairly and in good faith with the Company and such other companies. In addition, at meetings of the board of directors of the Company, any director with an interest in a matter being considered will declare such interest and refrain from voting on such matter.

TRANSFER AGENT AND REGISTRAR

Equity Transfer & Trust Company is the Company’s registrar and transfer agent. The register of the transfers of the common shares of the Company are located at 120 Adelaide St W, Suite 420, Toronto, Ontario M5H 4C3.

MATERIAL CONTRACTS

Except for contracts entered into in the ordinary course of business, the only contracts entered into by the Company for the fiscal year ending December 31, 2006 which are material or entered into before the fiscal year ending December 31, 2006 but are still in effect are the following:

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INTERESTS OF EXPERTS

As of March 21, 2007, none of the directors, officers, principals and associates of Scott Wilson Roscoe Postle Associates Inc. (formerly Roscoe Postle Associates Inc.), the author of the Company’s technical reports under National Instrument 43-101 for the Great Divide Basin Project, the Shirley Basin Project, and the Kaycee and Shamrock Projects, the Technical Report –Lost Creek and Technical Report – Lost Soldier own beneficially, directly or indirectly, or exercise any control over, any of the outstanding common shares of the Company.

As of March 21, 2007, J. D. Charlton, P. Geo., of Charlton Mining Exploration Inc., the author of the Company’s technical reports under National Instrument 43-101 for the Hornby Project and the Technical Report – Thelon Property beneficially holds 10,000 common shares received as partial consideration for the Bugs Property and options for 24,000 common shares of the Company. As of March 21, 2007, the shares and the options, if exercised for common shares, represent less than 0.1% of the issued and outstanding common

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shares of the Company. Mr. Charlton was granted these options on November 17, 2005 and entered into an acquisition agreement with the Company in September 2006, each after preparation of his technical reports.

ADDITIONAL INFORMATION

Additional information relating to the Company may be found on SEDAR at www.sedar.com.

Upon request to the Corporate Secretary of the Company at the Company’s registered office, 1128 Clapp Lane, P.O. Box 279, Manotick, Ontario K4M 1A3, the Company will provide any person with a copy of:

A copy of any of these documents may be obtained without charge at any time when a preliminary short form prospectus has been filed in respect of a distribution of any securities of the Company or any securities of the Company are in the course of a distribution pursuant to a short form prospectus. At any other time, any document referred to in (a) to (c) above may be obtained by security holders of the Company without charge and by any other person upon payment of a reasonable charge.

Additional information including directors’ and executive officers’ remuneration and indebtedness, principal holders of the Company’s securities and options to purchase securities, where applicable, is contained in the management information circular prepared by the Company in connection with its annual and special meeting of shareholders to be held on May 18, 2007. Additional financial information is provided in the Company’s consolidated financial statements and management’s discussion and analysis for the year ended December 31, 2006.

SCHEDULE “A”

UR-ENERGY INC.

AUDIT COMMITTEE – TERMS OF REFERENCE

The purpose of the Audit Committee shall be to assist the Board in its oversight of the integrity of the financial statements of the Company, of the Company’s compliance with legal and regulatory requirements, of the independence and qualification of the independent auditors, and of the performance of the Company’s internal audit function and independent auditors.

CH AIR

The Board appoints or re-appoints the Chair of the Committee annually when it completes the appointments for all Board committee members following the Annual General Meeting of shareholders. In selecting the Chair, the Board takes into consideration those directors who bring background skills and experience relevant to financial statement review and analysis. The Chair shall also be “financially literate” as such term is defined under applicable Canadian regulatory requirements.

The Chair shall provide leadership to Committee members in fulfilling the mandate set out in these terms of reference. He or she shall work with the Chief Executive Officer and the Chairman of the Board, liaising with the Secretary, in planning Committee meetings and agendas. The Chair of the Committee reports to the Board on behalf of the Committee on the matters and issues covered or determined at each Committee meeting.

RESPONSIBILIT IES

In assisting the Board in fulfilling its responsibilities relating to the Company's corporate accounting and reporting practices the Audit Committee shall:

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The Committee shall hold in camera sessions without members of management as frequently as is determined necessary by the Committee members.

The Committee shall have authority to retain such outside counsel, experts and other advisors as the Committee may deem appropriate in its sole discretion. The Committee shall have sole authority to approve related fees and retention terms.

The Committee shall meet separately with the Company’s independent auditors at least on an annual basis and more often as is determined necessary by the Committee members.

The Committee shall review at least annually the adequacy of this charter and recommend any proposed changes to the Board for approval.

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Introduction

The following provides management’s discussion and analysis of results of operations and financial condition for the years ended December 31, 2006 and 2005. Management’s Discussion and Analysis was prepared by Company management and approved by the Board of Directors on March 21, 2007.

This discussion and analysis should be read in conjunction with the Company’s audited annual consolidated financial statements for the year ended December 31, 2006 and 2005. The Company was incorporated on March 22, 2004 and completed its first year-end on December 31, 2004. All figures are presented in Canadian dollars, unless otherwise noted, and are in accordance with Canadian generally accepted accounting principles. 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 (“NFU”), ISL Resources Corporation (“ISL”), 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 Statements

This Management Discussion and Analysis may contain or refer to certain forward-looking statements relating to expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward-looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “intend”, “estimate”, “may” and “will” or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements reflect management’s current beliefs and are based on information currently available to management. Forward-looking information may include reserve and resource estimates, estimates of future production, unit costs, costs of capital projects and timing of commencement of operations, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, those listed in the “Risk Factors” section of the Company’s Annual Information Form dated March 21, 2007 which is filed on SEDAR, failure to establish estimated resources and reserves, the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects, the failure to obtain sufficient funding for operating, capital and exploration or development requirements and other factors. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results. Potential shareholders and prospective investors should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Potential shareholders and prospective investors are also cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and

specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.

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 determined whether its properties contain mineral reserves that are economically recoverable. The recoverability of amounts recorded for mineral exploration properties and deferred exploration expenditures is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of these reserves and upon attaining future profitable production from the properties or sufficient proceeds from disposition of the properties.

The Company is focused on uranium exploration in the following areas: (i) Wyoming, USA where the Company has eleven properties. Of those eleven properties, eight are in the Great Divide Basin, two of which (the Lost Soldier property and the Lost Creek property) 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 of which is the Bootheel property. The last of the Wyoming properties, the Kaycee property, is located in the Powder River Basin; (ii) South Dakota, USA where the Company has acquired certain mineral leases in Harding County, known as the Harding property; (iii) the Thelon Basin, Northwest Territories in northern Canada where it has three properties known as Screech Lake, Eyeberry and Gravel Hill; (iv) Hornby Bay, Nunavut in northern Canada where it has two properties known as Dismal Lake West and Mountain Lake; and, (v) the Bugs property in the Kivalliq region of Nunavut, Canada.

Selected Annual Information

The following table contains selected annual financial information for the years ended December 31, 2006 and 2005; the period from March 22, 2004 to December 31, 2004 and cumulative information from inception of the Company on March 22, 2004 to December 31, 2006.

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The Company has not generated any revenue from its operating activities from inception to date. The Company’s expenses include costs for management fees, promotion, regulatory authority and transfer agent fees, professional fees, general and administrative costs, general exploration expense, write-off of deferred exploration expenditures and amortization of capital assets. The Company has recorded significant stock based compensation costs which are included in management fees, promotion and general and administrative costs or capitalized as a component

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of deferred exploration expenditures. Costs directly related to exploration projects are initially capitalized as either mineral exploration property costs or deferred exploration expenditures.

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 available funds will be invested to finance new and existing exploration and development activities and to satisfying the New Frontiers obligation.

The Company was incorporated on March 22, 2004 and commenced activity during the second quarter of 2004. Cash based expenses have increased in each quarter as we have grown our Company. Our spending on promotion, professional fees and general and administrative costs has grown in each quarter. General growth in costs has been driven by our acquisition of uranium property assets in Wyoming and by increased Company promotion activities. The Company commenced recording significant charges related to stock option compensation in the fourth quarter of 2005 amounting to $263,336. During calendar 2006, the Company recorded total expenses of $1,491,179 related to stock option charges across the four quarters. During the second quarter of 2006, the Company recorded a value of $567,000 related to common shares provided as a performance bonus to the President and CEO of the Company.

The Company has recorded significant non-cash foreign exchange gains and losses with respect to the promissory note payable to New Frontiers Uranium LLC (“New Frontiers”) which is a monetary liability denominated in United States dollars (“New Frontiers obligation”). A non-cash gain of $861,000 was recorded in the third quarter of 2005 as the Canadian dollar

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strengthened considerably relative to the United States dollar during that quarter. This gain was recorded in income and resulted in the Company reporting net income for the third quarter of 2005. An unrealized gain of $758,596 was recorded in the second quarter of 2006 and an unrealized loss of $649,788 was recorded during the fourth quarter of 2006. The Company will continue to experience gains and losses on this obligation with future changes in the United States / Canada foreign exchange rate.

Commencing in the fourth quarter of 2004, the Company began to recognize a non-cash future income tax recovery related to accumulating tax losses in Canada. The Company is able to recognize such a recovery quarterly given that the Company has accumulated future income tax credits that it is able to offset for accounting purposes. These future income tax credits arose on the ISL Resources Corporation asset acquisition in the fourth quarter of 2004 and as a result of flow-through share tax benefits renounced during the fourth quarters of 2006, 2005 and 2004.

Overall Performance and Results of Operations

The Company has advanced its plans rapidly from incorporation on March 22, 2004 to date. From inception to December 31, 2006, the Company has raised total net cash proceeds from the issuance of common shares and warrants and from the exercise of warrants, compensation options and stock options of $57.1 million. As at December 31, 2006, the Company held cash and cash equivalents of $28.7 million and had made significant investments in mineral exploration properties and exploration expenditures.

Mineral Exploration Properties and Deferred Exploration Expenditures

During the year ended December 31, 2006, the Company expended cash of $6,397,279 (2005 - $7,137,529) on mineral exploration property costs. A significant component of these costs, being $5,609,750 (US $5,000,000) (2005 - $6,085,332 / US $5,000,000) related to the first anniversary payment of the New Frontiers obligation during June of 2006 and to the Company’s initial payment upon acquisition of NFU Wyoming LLC during June of 2005. Excluding the New Frontiers payment, other property costs consisted primarily of claim renewal and claim staking costs with respect to the Wyoming properties of $377,602 and the acquisition of South Dakota mineral leases with respect to the Harding project of $158,431. During the year ended December 31, 2005, the Company expended cash of $979,777 on staking and the acquisition of state mining leases related to its Wyoming properties.

In connection with the acquisition of NFU, the Company initially recorded a total property asset of $24,515,832. Consideration provided for the asset acquisition comprised the initial cash payment of $6,085,332, with the balance being financed with a promissory note payable to New Frontiers. Since incurring this obligation, the Company has capitalized a total of $3,004,389 in non-cash interest cost to the acquired Wyoming property assets.

During the year ended December 31, 2006, the Company capitalized exploration expenditures totaling approximately $6.4 million. During 2006, the majority of spending was on development of the Lost Soldier and Lost Creek projects. In total, $4,356,110 or 68% was spent related to geology, environmental permitting, engineering hydrology and drilling with respect to development of the Lost Soldier and Lost Creek projects in Wyoming. In addition, a total of $1,573,649 or 25% was spent on geology, geophysics, geochemistry and environmental permitting primarily for the Company’s Screech Lake project in the Thelon Basin.

During the year ended December 31, 2005, the Company expended cash of $3,792,336 on

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exploration. Of that total approximately 57% focused on our Wyoming properties, 33% on our Thelon Basin projects and 10% on our Hornby Bay projects. A detailed discussion of spending by property is provided below.

Wyoming Properties

New Frontiers Projects

On March 6, 2005, the Company entered into a letter of intent with New Frontiers (the “New Frontiers LOI”). The Company completed its due diligence requirements under the New Frontiers LOI during June of 2005 and entered into the Membership Interest Purchase Agreement (“MIPA”) effective June 30, 2005 with New Frontiers Uranium LLC.

Under the terms of the MIPA the Company acquired a 100% interest in NFU which holds the majority of the Company’s Wyoming property assets, including the Lost Creek and Lost Soldier projects in the Great Divide Basin, for total consideration of $24,515,832 (US $20,000,000). In late June of 2006, the Company made the required first anniversary payment under the MIPA. Additional payments are due on the second, third and fourth anniversary dates of the closing date.

Upon acquisition at June 30, 2005, NFU controlled 99 claims plus three State of Wyoming leases covering five separate project areas. Since that time, additional unpatented mining claims have been staked or acquired in the Great Divide Basin and Shirley Basin as follows: Lost Creek (155), Lost Soldier (19) and North Hadsell (117), Bootheel (168) and Buck Point (107). During the third quarter of 2005, the Company initiated the permitting process to develop the Lost Creek and Lost Soldier projects as mines. From its initiation to December 31, 2006, the Company has incurred a total of $1,620,827 with respect to environmental permitting and consulting costs and in engineering hydrology costs related to these two projects. During the fourth quarter of 2006 permitting and hydrology costs were $564,373. During the 2006 field season, AATA International Inc. completed extensive baseline data collection surveys within the 9.1 square mile (2,363 hectare) area of both the Lost Creek and Lost Soldier projects. This work consisted of examining soils and vegetation, archaeological examinations and wetland area, wildlife, threatened and endangered species, and aquatic ecology surveys. Currently, AATA is finalizing background radiological gamma surveys for both properties.

During October 2005, the Company commenced in-fill drilling and analytical studies on the Lost Creek and Lost Soldier projects in order to verify the results of historic work. At Lost Creek, this confirmation drilling program consisted of 12 holes totaling 9,600 feet (2,926 meters). At Lost Soldier, this confirmation drilling consisted of 5 holes totaling 1,957 feet (596 meters). Drilling costs during the fourth quarter of 2005 with respect to both programs totaled $186,607.

During August 2005, the Company entered into a data purchase agreement related to its Lost Soldier project. The data acquired consisted of historic drill hole geophysical logs, lithology logs, drill hole maps and geologic cross sections. Total consideration paid for these geologic data was $475,960 (US $400,000). Under the terms of the data purchase agreement, the Company provided the seller a 1% royalty on future uranium and associated minerals produced from the related properties.

In early June 2006, the Company announced results of two Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”) compliant resource estimations that disclose significantly increased resources on its Lost Creek and Lost Soldier projects from the relevant historic resources. In connection with these results, on July 26, 2006, the Company announced

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that it had filed updated technical reports prepared by C. Stewart Wallis, P. Geo., of Roscoe Postle Associates in accordance with NI 43-101 in respect of both its Lost Soldier and Lost Creek projects. Total report preparation costs during 2006 were $25,480.

On April 6, 2006, the Company announced it had entered into an agreement with Energy Metals Corporation (“Energy Metals”) to complete a land swap enabling the Company and Energy Metals to consolidate their respective land positions in specific project areas of Wyoming. The Company traded its Shamrock and Chalk Hills projects to Energy Metals for Energy Metals’ holdings in the Bootheel project area. Pursuant to the agreement, the Company received Energy Metals’ 28 unpatented mining claims known as the TD group in Albany County, Wyoming. Energy Metals received the Company’s 356 unpatented “F” mining claims located in the southern Great Divide Basin in Carbon and Sweetwater Counties, Wyoming along with 2 unpatented “Rita” mining claims located in the Shirley Basin in Carbon County, Wyoming. Under the terms of the agreement, Energy Metals and the Company have granted one another a ½% royalty on future production of uranium from the properties. The fair value of these properties is not reliably determinable; therefore, the accumulated historic costs of the Shamrock and Chalk Hills projects have been recorded as the accounting basis of the Bootheel property received. Historic property costs related to the Shamrock and Chalk Hills projects was $332,090 and deferred exploration costs with respect to the projects was $91,980.

On June 16, 2006, the Company entered into a data purchase agreement related to the Bootheel project area. The Company paid $99,209 (US $90,000) related to the acquisition of this data. The data acquired relates to historic drill hole geophysical logs, lithologic logs, drill hole maps and geologic cross sections. Under the terms of the agreement, the Company will provide the seller with a 1% royalty on future uranium and associated minerals produced from the property.

During the year ended December 31, 2006, the Company expended $1,904,086 (2005 - $879,767) on geology work for its Lost Creek and Lost Soldier projects. This geology work has followed from work conducted during 2005 which included detailed geologic evaluation on the specific projects that have major resource potential and internal calculations of resources were completed. Detailed stratigraphic and sedimentological studies as well as the evaluation of the uranium mineralization using the drill hole data base were initiated and are ongoing to better define the nature of the deposits on these two major resource properties. Because the historic data was developed prior to the common use of computers, the Company has put significant effort into converting the exploration data into digital data to enable more efficient exploration of the project areas.

During the year ended December 31, 2006, the Company incurred drilling and related costs of $1,006,087 (2005 - $186,607) with respect to the Lost Creek and Lost Soldier projects. During 2006, thirty-four wells, seventeen on each project, were drilled for subsurface water quality, baseline and pump test studies. Pump tests began in late October 2006.

During 2007, the Company anticipates that development costs with respect to permitting, engineering hydrology and technical operational costs, particularly for its Lost Creek and Lost Soldier projects, will continue to be significant as the Company continues its efforts to move these projects toward production. In addition, exploration programs are planned for the North Hadsell project in the Great Divide Basin in order to add additional resources to the anticipated production pipeline from the Lost Creek and Lost Soldier projects.

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Radon Springs Project

On February 3, 2005, the Company entered into a letter of intent with Dalco, Inc. (the “Dalco LOI”). Under the terms of the Dalco LOI, the Company had an option to acquire seven unpatented mineral claims, land and exploration records, and other data related to the Radon Springs project in the Great Divide Basin in Wyoming (collectively the “Radon Springs Property”) in a staged acquisition. The Company paid Dalco US $25,000 upon signing the Dalco LOI and acquired the first 25% interest in the Radon Springs Property by issuing 25,000 common shares on June 3, 2005.

On July 20, 2005, the Company and Dalco concluded a definitive agreement (the “Dalco Agreement”). Under the terms of the Dalco Agreement, the Company increased its interest in the Radon Springs Property to 50% by providing an additional US $50,000 and 50,000 common shares during November 2005. The Company increased its interest to 75% by providing an additional US $100,000 and 100,000 common shares in November 2006. The Company has the right to acquire the final 25% interest by providing an additional US $150,000 and 150,000 common shares on or before December 3, 2007, subject to Dalco retaining a production royalty of 3% on the total gross proceeds received by the Company on the sale of U ₃ O ₈ (“Yellowcake”) extracted from uranium ores located on the seven mineral claims acquired. The Company has the exclusive right to manage and operate the Radon Springs Property and is responsible for 100% of the exploration and development expenditures and land holding costs on the Radon Springs Property.

During the due diligence period and up to September 2005, the Company was active in staking of various mining claims related to the Radon Springs project and conducting geology work and related analysis on the data base relating to prior exploration activity on the Radon Springs Property.

The Company acquired seven unpatented mining claims in total from Dalco that covered the majority of the historic mineralized area. The Company has staked directly an additional block of 224 unpatented mining claims to solidify its holdings within the project area, including some additional adjacent areas, for a total land holding of approximately 4,800 acres. In total, the Company has expended a total of $280,726 on staking and land recording costs for the Radon Springs project.

As part of the Dalco acquisition, the Company acquired the historic exploration and development database of more than 2,200 drill holes and accompanying drill logs, maps, cross sections, and miscellaneous data. During the year ended December 31, 2005, detailed stratigraphic and sedimentological evaluations and evaluation of the uranium mineralization were conducted utilizing the drill hole data base for in-house geologic studies. Because the historic data were developed prior to the common use of computers, the Company has put significant effort into converting the exploration data into digital form to enable more efficient exploration of the project.

An exploration program is planned for the Radon Springs project in the Great Divide Basin in order to add additional resources to the anticipated production pipeline from the Lost Creek and Lost Soldier projects.

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Kaycee and Shamrock Projects

The Company's Wyoming properties included the Kaycee and Shamrock projects. As noted above, on April 6, 2006, the Company announced it had entered into an agreement with Energy Metals to complete a land swap enabling the Company and Energy Metals to consolidate their respective land positions in specific project areas of Wyoming. The Company traded its Shamrock and Chalk Hills projects to Energy Metals for its holdings in the Bootheel project area. Under the terms of the agreement, Energy Metals and the Company have granted one another a ½% royalty on future production of uranium from the properties.

On October 19, 2004, the Company acquired ISL Resources Corporation, a Canadian company with a wholly-owned Wyoming subsidiary, ISL Wyoming Inc. The fair value of identifiable net assets acquired in the acquisition of $2,520,972 was allocated to exploration and drill data relating to Wyoming projects including the Kaycee and Shamrock projects. Subsequent to the acquisition, the Company initiated geology work on the acquired data and commenced staking of various claim groups.

During the year ended December 31, 2005, the Company conducted ongoing geology and data analysis work. Additionally, a NI 43-101 report confirming the relevance of historic resources was initiated on the Kaycee and Shamrock Projects and was completed in April 2005.

At Kaycee, the Company has staked a total of 282 unpatented mining claims for a total of approximately 5,800 acres while at Shamrock the Company had staked a total of 356 unpatented mining claims for a total of approximately 7,400 acres. As part of the acquisition of these projects the Company acquired a database for Kaycee that includes data from over 4,400 drill holes as well as 1998 airborne geophysical surveys covering both the Kaycee and Shamrock Projects. During the year ended December 31, 2005, detailed stratigraphic and sedimentological evaluations and also evaluation of the uranium mineralization were initiated on the Kaycee Project along with work to tie the subsurface data to the airborne geophysical survey. At Shamrock, field visits to study the outcrop were completed and a drill hole database of 33 drill holes plus map data were acquired. Evaluation of these data was ongoing up to the time of the property swap with Energy Metals. A majority of work on the projects to date has involved the conversion of old analog exploration data to modern digital form.

Assets acquired from ISL also included an extensive database of over 2,700 drill hole logs, geologic maps, cross sections, reports, feasibility and engineering studies for the Allemand-Ross project in the Southwest Powder River Basin area. During 2006, this database was converted to a digital format and is now being evaluated for its economic potential. In addition, the database acquired from ISL also included a variety of miscellaneous data from several states which has yet to be evaluated.

Toby, Arrow, UFO and Eagles Nest Projects

On June 19, 2006, the Company completed an acquisition of four claim groups in the Great Divide Basin of Wyoming, consisting of a total of 130 unpatented mining claims (approximately 2,700 acres) from John Wells of Wyoming. Subsequently, on September 29, 2006, the Company acquired 82 additional unpatented mining claims from John Wells relating to these claim groups. In total these four claim blocks comprise approximately 4,400 acres. All four claim blocks are in areas of previous exploration drill programs for uranium conducted during the 1970s and early 1980s.

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The initial acquisition of 130 unpatented mining claims was purchased for an aggregate consideration of 250,000 common shares of the Company which were valued at $515,000. The additional 82 unpatented mining claims were acquired for cash consideration of US $41,000. Under the terms of the agreements, the Company will provide the seller with a 2% royalty on future uranium production from the acquired properties and from a one-mile area of interest surrounding the properties.

These new projects have been designated: (i) the Toby project comprised of 21 claims, located east of the Kennecott Sweetwater mill and originally drilled by the Union Oil subsidiary Minerals Exploration Company; (ii) the Arrow project comprised of 9 claims in the western Great Divide Basin; (iii) the UFO project comprised of 10 claims located south of the Company’s Lost Creek project; and (iv) the Eagles Nest project comprised of 172 claims (initial 90 plus subsequent 82 claims) located east of the Company’s Lost Creek project.

An exploration program is planned for the Eagles Nest project in the Great Divide Basin in order to add additional resources to the anticipated production pipeline from the Lost Creek and Lost Soldier projects.

South Dakota Property

Harding Project

During October 2006, the Company acquired 79 State of South Dakota Mineral Leases containing approximately 46,363 acres in Harding County, northwest South Dakota for cash consideration of $158,431. A detailed geologic evaluation of the project area has commenced. Historic exploration drilling for uranium in this region has been very limited. A drilling program is tentatively planned for later 2007.

Canadian Properties

Thelon Basin Properties

The Company's Thelon Basin properties include the Screech Lake, Eyeberry and Gravel Hill properties located in the Northwest Territories, Canada and consisted of 72 claims which the Company staked during the period ended December 31, 2004. During November 2005, an additional 4 claims were staked for the Screech Lake claim group to cover airborne electromagnetic targets identified. During the third quarter of 2006, the Company allowed 9 claims relating to the Eyeberry project to lapse. Total claims for the Thelon properties presently total 67.

During 2005, a NI 43-101 report was completed on the Thelon claim groups by J.D. Charlton (P. Geo). Also during this period, a contract geophysical field crew conducted time domain electromagnetic (PROTEM), magnetic, and VLF-EM surveys. In April of 2005, the Company contracted Fugro Airborne Surveys Corp. to fly a major airborne electro-magnetic survey (MEGATEM) for the Thelon Basin projects that cost a total of $433,200. In late July of 2005, flying related to this survey was completed. Total costs for geophysics on the Thelon Basin projects were $782,791 during 2005.

During August of 2005, a field program was initiated consisting of prospecting and a soil and water radon survey over the anomalous parts of Screech Lake. Previous work performed by

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Urangesellschaft during the period from 1975 to 1979 had indicated very high radon and helium in and around Screech Lake. Anomalous contents of both gases are indicators of the presence of buried uranium mineralization. This field work was completed during the third quarter of 2005. Total costs for these geochemical surveys were $250,866.

During the year ended December 31, 2006 the Company incurred costs of $437,335 with respect to additional ground geophysics for the Screech Lake property and $406,827 of geochemistry costs with respect to additional radon survey work. Ground geophysics fieldwork was completed during the second quarter and radon survey work was completed during the third quarter. Additionally, the Company incurred ongoing geology costs of $395,409. In July 2006, an environmental screening study was completed on the Screech Lake Project. In September 2006, 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 for environmental assessment. This assessment was completed on February 28, 2007 and a report from the Review Board is anticipated in April 2007. During the year ended December 31, 2006 environmental permitting and related costs totaled $334,078. The land use permit is required in order to commence drilling on the Screech Lake property which is anticipated during the 2007 field season. Current work plans include further surface radon sampling, additional ground geophysical surveys and drilling which are budgeted at $2.0 million for 2007.

Hornby Bay Properties

The Company's Hornby Bay properties include the West Dismal Lake and Mountain Lake claim groups located in Nunavut, Canada and consist of a total of 58 claims.

On May 24, 2005, the Company announced it had entered into a letter of intent with Patrician Diamonds Inc. (“Patrician”), a TSX Venture Exchange listed company that is a related company. Under the terms of the letter of intent, the Company was to earn an 80% interest in the uranium rights in Patrician’s property at Dismal Lake, Nunavut, by paying Patrician $50,000 to cover property staking costs, 400,000 common shares of the Company (with 100,000 common shares due upon signing a formal agreement, 100,000 common shares due on the first anniversary date and 200,000 common shares due on the second anniversary date) and by spending $1 million in exploration over three years. Additionally, under the terms of the agreement, Patrician was to obtain the right to potential diamond opportunities on the Company’s Dismal Lake claim groups. Patrician was to earn up to an 80% interest in the diamond potential of those claims by spending $1 million on exploration over three years. During August 2005, the Company paid $50,000 for staking cost reimbursement and provided 100,000 common shares.

The Company and Patrician Diamonds Inc. subsequently agreed by mutual consent to terminate the arrangement for the Dismal Lake property. Pursuant to the terms of the cancellation agreement, as at December 31, 2005, the Company had reflected the return of 100,000 common shares and had accrued an amount receivable for $50,000 with respect to the staking reimbursement. The Company was obligated to reimburse Patrician for actual costs incurred of $37,448. All amounts were paid during the first quarter. Upon termination of the agreement, the Company recorded a write-off of deferred exploration costs for the property totalling $54,250.

A field visit was conducted in the fall of 2004 on both claim groups to verify the claim staking and to prospect an area known to have radioactive boulders near Dismal Lake.

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During the year ended December 31, 2005, a NI 43-101 report was prepared by J. D. Charlton covering the Hornby claim groups. In April of 2005, the Company contracted for airborne GEOTEM electromagnetic and magnetic surveys, with Fugro Airborne Surveys Limited, for the Hornby Bay properties, which were completed during June of 2005. These surveys cost a total of $352,837 and are included in geophysics for the Hornby Bay properties. The surveys succeeded in locating one strong and three weaker bedrock source anomalies on the Dismal West property. A field examination of the conductors and magnetic anomalies was carried out during September 2005.

On July 31, 2006, the Company completed a definitive agreement with Triex Minerals Corporation (“Triex”) with respect to its Mountain Lake and West Dismal properties. The Mountain Lake property comprises 41 claims and the West Dismal property comprises 17 claims. Pursuant to the option agreement, Triex made a $25,000 cash payment upon execution of the agreement and was required to spend $200,000 on exploration of the properties by September 22, 2006. In order to exercise the option to obtain a 100% interest in the properties, Triex must incur a further $500,000 in exploration spending by September 30, 2007. The Company will retain 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.

Bugs Property

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 issued to obtain an initial 12% interest in the property. These common shares were valued at $29,000. On the first anniversary of the agreement 25,000 common shares are issuable for an additional 30% interest and on the second anniversary 50,000 common shares are issuable for a 58% interest. The vendor retains a 2% net smelter royalty which is subject to a buyout of 1% for $1.0 million. The Bugs property consists of 11 contiguous mineral claims in the Kivalliq region of Nunavut. Following acquisition of the Bugs property, the Company contracted for an airborne magnetic and radiometric survey which was conducted by Tundra Airborne Surveys. Costs for this survey totaled $28,133. For the 2007 field season, the Company has budgeted approximately $500,000 for mapping, prospecting and radon sampling with respect to the Bugs property.

Expenses

Total expenses for the year ended December 31, 2006 were $6,027,109 (2005 - $2,038,099). Total expenses include management fees (including contractor share charges) provided to the Company’s former Chairman and Chief Executive Officer of $323,500; costs incurred with respect to Company promotion of $584,931; regulatory authority and transfer agent fees of $96,699; professional fees relating to legal, accounting, audit, taxation and investment banking services of $923,875; general and administrative costs relating to Company finance, administration and each of the corporate offices including stock based compensation for stock options and contractor shares of $3,576,829; general exploration expenses of $433,206; a write-off of deferred exploration during the fourth quarter of $53,212; and amortization of capital assets of $34,857.

For the year ended December 31, 2006, the Company recorded significant non-cash stock based compensation charges related to contractor shares, stock options and with respect to a common share performance bonus provided to the President and Chief Executive Officer of the Company.

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In total, expenses recorded related to these stock based incentives were $2,648,533 (2005 - $406,852). These non-cash charges to expense represent approximately 44% of total expenses and approximately 52% of net loss for the year in 2006. Significant components of this total include $248,000 recorded in management fee expense related to contractor shares provided to the former Chairman and Chief Executive Officer of the Company and $567,000 recorded in general and administrative expense relating to the performance bonus of 300,000 common shares awarded to the existing President and CEO of the Company which were fully vested at grant. Additionally, a total expense of $1,491,179 was charged to expense for stock options provided to directors, officers and contractors of the Company.

During the third quarter of 2006, vesting of the balance of 613,679 common shares issuable under service contracts with officers, directors and contractors of the Company were accelerated. Total expense related to contractor shares for 2006 was $590,354. Presently, the Company does not have any ongoing contracts whereby shares are issuable for service.

During the first quarter, on January 12, 2006, the Company announced that its former Chairman and CEO and its President had both resigned with the former President assuming the role of Vice President, Canadian Exploration. In connection with arrangements with the former Chairman and CEO, the Company agreed to make the unvested balance of 400,000 contractor shares held immediately available. The balance of unvested contractor shares of the Company’s former President totaling 246,154 were made immediately available. As a result, during the first quarter of 2006, $289,846 of the total stock based compensation charges relate to these arrangements with the former Chairman and CEO and the former President.

In general, expenses in all categories have increased when comparing the year ended December 31, 2006 to 2005. The primary reasons for this include: increased promotion costs related to attendance at industry conferences and related travel; increased regulatory fees associated with our public company listing and related regulatory costs; increased professional fees related to legal, accounting, taxation and investment banking for public company compliance and general corporate matters; increased general administrative costs relating to our Denver, Colorado office and to general corporate finance and administrative costs; increased general exploration costs as we continue to pursue various new prospects for the Company; and, significantly increased stock based compensation charges.

During the fourth quarter of 2006, the Company recorded a write-off of deferred exploration expenditures of $53,212 related to the abandonment of a project in the Thelon project group. During 2005, the Company recorded a write-off of deferred exploration of $54,250 related to the termination of the Dismal Lake option with Patrician Diamonds Inc. Future write-offs are possible depending on the outcome of ongoing exploration activities.

The Company will continue to incur significant charges related to stock based compensation as the fair value of its stock options granted is expensed over their 18 month vesting period. As at December 31, 2006, the total fair value of stock options, related to options outstanding as at December 31, 2006, to be recorded over the coming five quarters is approximately $1.6 million. Charges to record the fair value of stock options give rise to both expenses and amounts capitalized to projects as deferred exploration.

Loss before Income Taxes, Recovery of Future Income Taxes and Net Loss

The Company invests cash and cash equivalents in liquid guaranteed investment certificates and 30 day short-term investments with a Canadian chartered bank. During 2006, these investments

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have earned rates of return, varying with the size of the investment and the term, which ranged from 2.4% to 4.2% per annum. During the year ended December 31, 2006, the Company earned interest income on these investments of $629,724 (2005 - $126,685).

During the year ended December 31, 2006, the Company recorded a net foreign exchange loss of $177,141. This includes an unrealized net gain of $178,749 related to the New Frontiers obligation. During the third and fourth quarters of 2005, the Company recorded an unrealized foreign exchange gain totaling $942,892 related to the New Frontiers obligation. The promissory note due to New Frontiers was issued on June 30, 2005 and is denominated in US dollars. The Company will continue to record foreign exchange gains or losses on this US denominated debt in income.

For the year ended December 31, 2006, the Company recorded a non-cash future income tax recovery of $514,000 (2005 - $277,000) related to net operating losses arising during the year in Canada. The recognition of this tax asset partially offset the balance of future tax liability that has arisen as a result of the Company’s renouncement of flow-through share tax benefits and as a result of the Company’s ISL Resources Corporation asset acquisition. Both the renouncement of flow-through share tax benefits and the ISL Resources Corporation asset acquisition result in the Company having exploration assets recorded at accounting values that exceed their tax values. As at December 31, 2006 this has given rise to a net long-term future income tax liability totaling $2,188,000 (2005 - $1,455,500).

Loss Per Common Share

Both basic and diluted loss per common share for the year ended December 31, 2006 were $0.09. (2005 – $0.02) . For the year ended December 31, 2006 and 2005, 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, 2006, the Company had cash and cash equivalents of $28,727,824 and working capital of $22,488,294. The next annual payment of the New Frontiers obligation is due before June 30, 2007 and totals $5,831,900 (US $5,000,000). The Company can elect to repay the New Frontiers obligation in full and avoid additional interest charges. Full repayment prior to to June 30, 2007 would total US $11,250,000.

On December 14, 2006, the Company completed a private placement of 500,000 flow-through common shares raising gross cash proceeds of $2,500,000. On August 30, 2006, the Company completed a bought deal financing raising net cash proceeds of $17,299,454. On August 2, 2006, the Company completed a private placement of flow-through common shares raising cash proceeds of $500,500.

During the year ended December 31, 2006, the Company realized cash proceeds from the exercise of previously issued warrants, compensation options and stock options totaling $12,733,749. During the same period, the Company invested cash of $5,902,872 in mineral exploration properties and deferred exploration expenditures; made an annual payment of the New Frontiers obligation of $5,609,750; and, used $2,987,673 in operations.

As at December 31, 2006, substantially all of the previously outstanding warrants and compensation options had been exercised with a total of 162,876 warrants and 110,346

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compensation options outstanding. Upon exercise these would provide maximum proceeds to the Company of $333,383. Subsequent to year end, 156,209 warrants were exercised and 6,667 warrants expired unexercised. During January and February 2007, a total of 54,613 compensation options were exercised.

As at December 31, 2006, the Company had outstanding a total of 5,406,000 stock options with exercise prices ranging from $1.25 to $2.75. Upon exercise, these in-the-money stock options would provide maximum cash proceeds of $9,144,500 to the Company.

During the year ended December 31, 2005, the Company raised net cash of $14,307,895 related to the sale of common shares and warrants (including our IPO) and realized proceeds of $4,409,635 from the exercise of warrants and compensation options. During 2005, the Company invested cash of $10,929,865 in mineral exploration properties and deferred exploration expenditures and used $1,703,145 in operations.

The Company has financed its operations from inception, to date, primarily through the issuance of equity securities and has no sources of cash flow from operations. On June 30, 2005, the Company concluded the MIPA with New Frontiers and has financed the balance of the purchase price by way of a promissory note. The Company’s existing cash resources may not be sufficient to fund its planned exploration and development programs, payments due under the terms of the New Frontiers promissory note and other corporate costs over the coming year. The Company remains dependent on raising additional financing through the issuance of equity securities in secondary offerings and from the proceeds of outstanding convertible securities in order to fund future requirements of existing and new exploration and development projects, to service required payments of the New Frontiers promissory note and for other general corporate costs.

The Company’s planned exploration scoping and pre-feasibility expenditures for existing projects require significant capital resources. Exploration data analysis is ongoing and will be completed in conjunction with field verification continuing into 2007. Environmental, permitting and engineering studies for the Lost Soldier and Lost Creek projects were initiated during the fourth quarter of 2005 and are presently projected to be completed by April 2007. Environmental permitting and environmental costs totaled $1,098,124 during 2006 and engineering hydrology totaled $347,813. These environmental and permitting studies have included hydrogeological modeling, regional hydrology studies and preliminary engineering of the ISL plant, wellfields and infrastructure requirements. Drilling costs totaled $1,006,087 during 2006 and included drilling of wells for pump tests and monitoring, geophysical logging, water analysis, bonding, plugging of abandoned wells and other drilling expenses.

In Canada, for the Screech Lake property, ground geophysics and assessments were initiated during the 2005 season with additional ground geophysics and assessments completed during the spring and summer field season of 2006. Geophysics costs during 2006 totaled $437,335. Additional radon surveys were completed in the third quarter of 2006 resulting in geochemistry costs of $406,827. Permitting and related processes to allow for drilling on the Screech Lake project are ongoing and cost $334,078 during 2006.

The Company optioned its Hornby Bay projects to Triex in April 2006. Under the terms of the option agreement, Triex was required to spend $200,000 on exploration before September 22, 2006 and a further $500,000 by September 30, 2007.

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The Company’s contractual obligations are summarized as follows:

Notes:

(1) The Company is obligated under the terms of a promissory note with New Frontiers Uranium LLC to make minimum annual payments of US $5,000,000, including interest, on the second, third and fourth anniversary of the closing. The Company can prepay the balance due and avoid or reduce interest charges.
(2) The Company is committed to an operating lease for office premises in Denver, Colorado. This operating lease has a term extending to January 2008.

Financing Transactions

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. These funds will be utilized to fund 2007 exploration spending for the Screech Lake and Bugs projects.

On August 30, 2006, the Company completed a bought deal financing with a syndicate of underwriters led by GMP Securities LP and including Dundee Securities Corp. and Raymond James Ltd. The bought deal financing resulted in the issuance of a total of 8,522,727 common shares of the Company at a purchase price of $2.20 per common share for gross proceeds of $18,750,000. These total figures include the underwriters' over-allotment option for 1,022,727 common shares which was exercised in full on August 30, 2006.

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. The proceeds of this offering were used primarily to fund the balance of the 2006 exploration program for the Screech Lake property.

During the year ended December 31, 2006, a total of 13,483,134 common shares were issued pursuant to the exercise of warrants; a total of 1,337,904 common shares were issued pursuant to the exercise of compensation options and 106,500 common shares for the exercise of stock options. Total cash proceeds from these exercises were $12,733,749.

During the year ended December 31, 2006, the Company renounced flow-through share tax benefits relating to a total of $3,461,750 raised through the issuance of flow-through common shares. The tax effect of $1,246,500 has been recorded as a reduction of capital stock during the year.

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2005 issuances

On November 29, 2005, the Company completed its initial public offering pursuant to its final prospectus dated November 17, 2005. The Company issued 8,000,000 common shares at a price of $ 1.25 per share. The net proceeds to the Company were $8,572,451 after deducting all issue costs. Issue costs included a cash commission paid to the agents of $750,000 as well as direct legal, accounting, printing and other costs. As additional compensation in connection with the offering, the Company granted the agents non-assignable compensation options, exercisable for 24 months following the closing of the offering, to purchase that number of common shares equal to 10% of the number of common shares issued pursuant to the offering. Canaccord Capital Corporation received a corporate finance fee of 60,000 common shares, being the number of common shares equal to $75,000 at the initial offering price.

During the first quarter of 2005, the Company sold by way of private placement, additional common share units and flow-through common shares for gross proceeds totalling $5,980,687. A total of 6,020,208 common share units were sold for gross proceeds of $5,418,187. Each unit consisted of a common share and one common share purchase warrant exercisable at $1.20 per share until March 1, 2007. Of the gross proceeds, $1,685,658 was allocated to these warrants. Additionally, the Company sold 625,000 flow-through common shares for gross proceeds of $562,500.

During the year ended December 31, 2005, a total of 6,609,150 common shares were issued pursuant to the exercise of warrants and 1,040,263 common shares were issued pursuant to the exercise of compensation options. Total cash proceeds from these exercises were $4,409,635.

During the year ended December 31, 2005, the Company renounced flow-through share tax benefits relating to a total of $873,750 raised through the issuance of flow-through common shares. The tax effect of $315,000 has been recorded as a reduction of capital stock during the year.

Acquisition of NFU Wyoming LLC

Effective June 30, 2005, the Company concluded its acquisition of NFU Wyoming LLC. Under the terms of the purchase agreement, the Company acquired a 100% membership interest in NFU that holds the majority of the Company’s Wyoming property assets, for total consideration of US $20,000,000.

The Company is obligated to make minimum annual payments of US $5,000,000, including interest, on the second, third and fourth anniversary of the closing. The Company can prepay the balance due and avoid or reduce interest charges. The Company has pledged its entire interest in NFU Wyoming LLC as collateral for amounts due under the promissory note. Potential payments are summarized as follows:

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The purchase price of CDN $24,515,832 was allocated entirely to mineral exploration property assets in Wyoming. Interest on the New Frontiers obligation is recorded utilizing the effective rate method. Under the effective rate method, interest charges are recorded over the term of the obligation that are sufficient to accrete the face value of the original principal to the balance due including interest at maturity. The effective interest rate is 12.04% . Accrued interest accumulated from acquisition to December 31, 2006 totals $3,049,695 (US $2,614,666) and has been capitalized to Wyoming mineral property assets. During the third and fourth quarters of 2005, the Company recorded an unrealized foreign exchange gain related to the New Frontiers obligation that totals $942,892. During the year ended December 31, 2006, a net unrealized foreign exchange gain of $178,749 was recorded related to the obligation.

Historic financial statements relating to this acquisition were not available. In the periods prior to the Company’s acquisition, the assets were held by various of the New Frontiers principals and certain related entities either personally or in corporations. Combined financial statements of these entities are not available and all financial information required to create such financial statements is not available to the Company. Additionally, since the assets acquired were accumulated over a significant number of years and at times when different market conditions prevailed, management believes that the prior historic costs of most of the assets are not meaningful presently.

Acquisition of ISL Resources Corporation

The Company acquired all of the issued and outstanding shares of ISL Resources Corporation (“ISL”) under the terms of an October 19, 2004 acquisition agreement (the “Initial ISL Agreement”). ISL Resources Corporation was a junior exploration company which had engaged in uranium exploration in the State of Wyoming in the United States. ISL was incorporated on February 27, 1998 under the laws of the Province of Ontario and has a wholly-owned Wyoming subsidiary, ISL Wyoming Inc. After completion of the Company’s due diligence requirements, the amount of consideration and certain other terms and conditions of the Initial ISL Agreement were amended and restated by agreements finalized on April 19 and 21, 2005 (the “Amending ISL Agreements”).

Under the terms of the Initial ISL Agreement and the Amending ISL Agreements, the consideration provided for the acquisition was comprised of 4,350,000 common shares and

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500,000 common share purchase warrants having an exercise price per share of $0.75 and expiring on December 1, 2006. The common shares were recorded at a value of $1,522,500 and the warrants were recorded at a value of $75,000. The acquisition has been accounted for as an asset purchase reflecting the impact of the Amending ISL Agreements.

The purchase price of $1,597,500 was allocated to the identifiable tangible and intangible assets acquired based on their fair market value. Exploration and drill data acquired with respect to the Wyoming properties was assigned a value of $2,520,972, net current liabilities of $15,972 and future income tax liability of $907,500. Given that the asset acquisition was transacted as a share-for-share exchange, the Company has a tax basis in the acquired assets that is significantly lower than the fair value of the share consideration provided. Generally accepted accounting principles require that the net assets acquired be recorded at their pre-tax fair value. This resulted in the Company recording a future tax liability of $907,500.

Historic financial statements of ISL Resources Corporation are not available. ISL was inactive from 2001 up until the Company acquired ISL. Financial statements were not prepared for these inactive periods. The historic cost of ISL’s retained assets, comprised of the exploration and drill data acquired by the Company, had a negligible book value. ISL incurred only negligible general and administrative costs during the inactive period from 2001 through to 2004. Management believes that, if historic financial statements of ISL were available they would not provide additional meaningful information.

Stock options

Subsequent to year end on January 3, 2007, the Company granted 200,000 stock options to a new director of the Company. These stock options are exercisable at $4.08 per share and expire January 1, 2012. On February 19, 2007, the Company granted 600,000 stock options to a new Vice President, Mining. These stock options are exercisable at $5.03 per share and expire February 15, 2012.

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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, amounts receivable, accounts payable and the New Frontiers obligation. Unless otherwise noted, except for the New Frontiers obligation, it is management's opinion that the Company is not exposed to significant interest, currency or credit risk arising from these financial instruments. The fair value of these financial instruments, except for the New Frontiers obligation, approximates their carrying value due to their short-term maturity or capacity of prompt liquidation.

The New Frontiers obligation is denominated in United States dollars. The Company is exposed to foreign exchange risk on this liability. The Company has not entered into any foreign exchange contract to mitigate this risk. As at December 31, 2006, management believes that the fair value of the New Frontiers obligation approximates its carrying value as the liability is recorded at the present value of its set future cash payments utilizing the effective interest rate method.

Transactions with Related Parties

On May 24, 2005, the Company announced it had entered into a letter of intent with Patrician Diamonds Inc., a TSX Venture Exchange listed company that is a related company. At the time of entering into the transaction, each of the directors and officers of Patrician also acted as directors and officers of the Company. During February 2006, the Company and Patrician mutually agreed to cancel this arrangement and unwind the transaction.

Proposed Transactions

As is typical of the mineral exploration and development industry, the Company is continually reviewing potential merger, acquisition, investment and joint venture transactions and opportunities that could enhance shareholder value. Presently no specific transactions have advanced beyond an early evaluation stage.

Critical Accounting Policies and Estimates

Acquisition costs of mineral exploration properties together with direct exploration and development expenditures are capitalized. When production is attained, these costs will be amortized. If properties are abandoned they are written off at that time. If properties are considered to be impaired in value, the costs of the properties and related deferred expenditures will be written down to their estimated fair value at that time. Management uses its best estimates for determining the fair value of mineral properties based on expenditures incurred, the results of any exploration conducted, prevailing market conditions and future plans for the projects.

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-

20

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 estimate the expected volatility of the Company’s stock over the future life of the equity instrument and to estimate the expected life of the equity instrument. 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

The Company did not change or adopt any new accounting policies during the financial year ended December 31, 2006.

In January 2005, the Canadian Institute of Chartered Accountants issued Handbook Sections 3855 “Financial Instruments – Recognition and Measurement”, 1530 “Comprehensive Income” and 3865 “Hedges”. These new standards apply to fiscal years commencing on or after October 1, 2006. The Company is currently assessing the impact, if any, these standards will have on the Company’s financial reporting.

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, 2006 and in respect of the 2006 year end reporting period.

Internal Controls

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.

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 in our Annual Information Form dated March 21, 2007 which is filed on SEDAR.

Other Information

Other information relating to the Company may be found on the SEDAR website at www.SEDAR.com .

21

Corporate Information

Directors and Officers

Jeffrey T. Klenda, B.A., CFP – Chairman and Director
W. William Boberg, M. Sc., P. Geo. – President, CEO and Director
Harold Backer, B. Sc. – Vice President, US Operations
Wayne Heili, B. Sc. – Vice President, Mining
Eric Craigie, B. Sc. – Senior Vice-President, Exploration and Director
Paul W. Pitman, B. Sc. Hon. Geo., P. Geo. – VP, Canadian Exploration and Director
James M. Franklin, PhD, FRSC, P. Geo. – Chief Scientist and Director
Paul Macdonell, B. Public Admin. – Director, Audit and Compensation Committee Chair
Robert Boaz, M. Econ., Hons. BA – Director
Gary Huber, PhD – Director
John McNeice, B. Comm., CA, CPA – Chief Financial Officer and Corporate Secretary

Corporate Offices

United States Headquarters:
10758 West Centennial Road, Suite 200
Ken Caryl Ranch (Littleton), Colorado 80127
Phone: (720) 981-4588

Canadian Exploration Office:
341 Main Street North, Suite 206
Brampton, Ontario L6X 3C7
Phone: (905) 456-5436

Registered and Principal Administrative Office:
1128 Clapp Lane, PO Box 279
Manotick (Ottawa), Ontario K4M 1A3
Phone: (613) 692-7704

Web Site
www.ur-energy.com

Trading Symbol
TSX: URE

Independent Auditor
PricewaterhouseCoopers LLP, Ottawa

Corporate Legal Counsel
McCarthy Tetrault, Ottawa

Corporate Banker
Royal Bank of Canada, Ottawa

Transfer Agent
Equity Transfer Services Inc., Toronto

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Form 52-109F1 - Certification of Annual Filings

I, John McNeice, of Ur-Energy Inc. as Chief Financial Officer, certify that:

Date: March 30, 2007

(signed) “John McNeice”
_______________________
John McNeice
Chief Financial Officer

Form 52-109F1 - Certification of Annual Filings

I, W. William Boberg, of Ur-Energy Inc. as President & Chief Executive Officer, certify that:

Date: March 30, 2007

(signed) “W. William Boberg”
_______________________
W. William Boberg
President & Chief Executive Officer

Ur-Energy Inc.
(a Development Stage Company)

Consolidated Financial Statements
December 31, 2006 and 2005

(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, 2006 and 2005 and the consolidated statements of operations and deficit and cash flows for the years then ended and for the cumulative period from March 22, 2004 to December 31, 2006. 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. 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, 2006 and 2005 and the results of its operations and its cash flows for the years then ended and the cumulative period from March 22, 2004 to December 31, 2006 in accordance with Canadian generally accepted accounting principles.

/s/ PricewaterhouseCoopers LLP

Chartered Accountants, Licensed Public Accountants
March 21, 2007, except for Note 15 which is as at December 28, 2007

Comments By Auditors for U.S. Readers on Canadian – U.S. Reporting Differences

In the United States, reporting standards for auditors require the addition of an explanatory paragraph following the opinion paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in note 1 to the consolidated financial statements. Our report to the shareholders dated March 21, 2007 is expressed in accordance with Canadian reporting standards which do not permit a reference to such conditions and events in the auditors’ report when they are adequately disclosed in the financial statements.

/s/ PricewaterhouseCoopers LLP

Chartered Accountants, Licensed Public Accountants
March 21, 2007, except for Note 15 which is as at December 28, 2007

1

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board of Directors

(2)

The accompanying notes are an integral part of these consolidated financial statements

(3)

The accompanying notes are an integral part of these consolidated financial statements.

(4)

(expressed in Canadian dollars)

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 that are economically recoverable. The recoverability of amounts recorded for mineral exploration properties and deferred exploration expenditures is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of these reserves and upon attaining future profitable production from the properties or sufficient proceeds from disposition of the properties.

Going concern

These consolidated financial statements have been prepared using generally accepted accounting principles applicable to a going concern which assumes that the Company will be able to continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.

Several conditions cast substantial doubt on the validity of this assumption. From inception to date, the Company has incurred losses from operations, has had negative cash flow from operating activities and has invested an aggregate cash amount of $23.2 million in mineral properties and exploration. As at December 31, 2006, the Company had cash and cash equivalents totalling $28.7 million, but the Company also has a significant exploration and development program requiring ongoing investments in its uranium exploration and development properties and expenditures for seeking and evaluating additional properties. Additionally, the Company is obligated to make payments under a promissory note related to the acquisition of certain of its Wyoming, USA properties. As at December 31, 2006, the balance of the New Frontiers obligation is $14.7 million (US $12.6 million). Ultimately, the Company's ability to continue as a going concern is dependent on raising additional financing, development of its properties and the generation of profits from operations in the future.

While management has been successful in obtaining sufficient funding for its operating, capital, development and exploration requirements from the inception of the Company to date, there is, however, no assurance that additional future funding will be available to the Company, or that, when it is required, it will be available on terms which are acceptable to management.

These financial statements do not reflect any adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classification that would be necessary if the going concern assumption were not appropriate and such adjustments could be material.

(5)

(expressed in Canadian dollars)

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, 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. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents include investments 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 include investments which have a term to maturity at the time of purchase in excess of ninety days. These investments are readily convertible into cash.

Capital assets

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%.

(6)

(expressed in Canadian dollars)

Mineral exploration property and deferred exploration expenditures

Acquisition costs of mineral exploration properties together with direct exploration and development expenditures are capitalized. The interest cost of debt directly attributable to the financing of mineral property acquisitions is capitalized during the exploration and development period. When production is attained, these costs will be amortized. If properties are abandoned or sold, they are written off. If properties are considered to be impaired in value, the costs of the properties and related deferred expenditures are written down to their estimated fair value at that time. Expenditures of a general reconnaissance nature are expensed to general exploration in the statement of operations and deficit.

Stock-based compensation

All stock-based payments made to employees and non-employees are accounted for in the financial statements. Compensation cost is measured at the grant date based on the fair value of the reward and compensation expense is recognized over the related service period. Compensation cost recorded related to contractor shares and stock options is charged to expense or is capitalized to deferred exploration expenditures when related to direct exploration activities.

Flow-through shares

The Company has financed a portion of its 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 that 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 when it is more likely than not that such assets will not be realized.

(7)

(expressed in Canadian dollars)

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.

Bonding and other deposits include $107,832 (2005 – $120,098) 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.