Ur-Energy Inc. announced that it has signed a multi-year sales agreement with a leading U.S. nuclear utility to supply uranium produced from a project owned and operated by the Company's U.S. subsidiaries, including Lost Creek. Completing this supply agreement marks the first step of Ur-Energy's strategic product marketing plan by which the Company intends to commit a portion of its future uranium production into term sales agreements with U.S. based nuclear utilities. This initial agreement calls for the annual delivery of a base amount of 200,000 pounds of uranium concentrates over a six-year period beginning in the second half of 2023.
Sales prices are anticipated to be profitable on a Company-wide, all-in cost basis and are escalated annually from the initial pricing in 2023. Ur-Energy believes this agreement reflects the U.S. utilities desire to support domestic uranium production from a proven producer. Pursuant to the Company's request, the sales agreement is conditioned on Ur-Energy securing additional contractual commitments to support a development decision.
Ur-Energy is in ongoing discussions with other domestic utilities with the objective of layering in sufficient additional term offtake contracts to incentivize a full ramp up of production at Lost Creek. In addition to its efforts to secure contracts with utilities, Ur-Energy has recently submitted a bid proposal to the U.S. Department of Energy ("DOE") in response to DOE's solicitation for the purchase of up to one million pounds of domestically produced uranium to implement the Uranium Reserve Program. Ur-Energy maintains approximately 324,000 pounds of U.S. produced and housed inventory that is ready to sell to the U.S. government to help establish the Uranium Reserve or to supplement early deliveries of uranium to utility customers.
The licensed annual capacity of the operating Lost Creek Mine is 2.2 million pounds U3O8. A total of 2.2 million pounds can be processed in the plant, of which up to 1.2 million pounds can be produced from the surrounding wellfields. Since beginning production in 2013, the Lost Creek Mine has produced 2.7 million pounds of U3O8 and currently continues production at a reduced level.
A drilling and wellfield construction program, initiated at Lost Creek in Fourth Quarter 2021, is progressing with the objective of expediting production ramp up and facilitating ability to deliver into offtake agreements.