Is Ur-Energy (TSE:URE) Using Debt Sensibly?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Ur-Energy Inc. (TSE:URE) does carry debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.

What Is Ur-Energy's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Ur-Energy had US$15.9m of debt, an increase on none, over one year. But it also has US$57.6m in cash to offset that, meaning it has US$41.7m net cash.

How Healthy Is Ur-Energy's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Ur-Energy had liabilities of US$24.1m due within 12 months and liabilities of US$45.2m due beyond that. On the other hand, it had cash of US$57.6m and US$650.0k worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$11.0m.

Since publicly traded Ur-Energy shares are worth a total of US$499.7m, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. Despite its noteworthy liabilities, Ur-Energy boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Ur-Energy's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Check out our latest analysis for Ur-Energy

Over 12 months, Ur-Energy reported revenue of US$39m, which is a gain of 149%, although it did not report any earnings before interest and tax. So its pretty obvious shareholders are hoping for more growth!

So How Risky Is Ur-Energy?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months Ur-Energy lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through US$72m of cash and made a loss of US$60m. Given it only has net cash of US$41.7m, the company may need to raise more capital if it doesn't reach break-even soon. Importantly, Ur-Energy's revenue growth is hot to trot. While unprofitable companies can be risky, they can also grow hard and fast in those pre-profit years. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Be aware that Ur-Energy is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.