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2012March 05, 2012Uranerz Energy Corporation Letter to ShareholdersDevelopment! Uranerz Energy Corporation is now building its first in-situ recovery ("ISR") uranium mine, called the Nichols Ranch ISR Uranium Project, in the Powder River Basin area of Wyoming, U.S.A. This is an exciting transition for the Company, on our way to becoming one of North America's next uranium producers. Our current focus is on the construction of the central processing plant and installation of the environmental monitor and production wells for ISR mining. Six drilling rigs have been engaged for well-field installation. The Nichols Ranch project will serve as a platform for development of the Company's other Powder River Basin projects.

ISR is a mining process that uses water wells to inject a "leaching solution" to dissolve uranium from sandstone uranium deposits; it is the generally accepted extraction technology used in the Powder River Basin area of Wyoming (ISR comprised 41% of world uranium production in 2010). Cameco and Uranium One, two of the largest ISR uranium mining companies in the world, are continuing to develop projects adjacent to Uranerz properties in the Powder River Basin.

Several key milestones were achieved by Uranerz during 2011, including:Construction has continued throughout the winter, and completion is expected in the second half of 2012. To date, activities on site have included:The Company believes that, notwithstanding the effects of the March 2011 tsunami in Japan, the long term fundamentals for nuclear energy remain strong. The demand for uranium far exceeds mined supply, and nuclear is regarded as a safe, clean and sustainable energy source. While some European countries have decided to phase out their nuclear programs, there are currently more nuclear reactors being built world-wide than are planned for decommissioning. Most of that demand for new nuclear power plants comes from emerging markets, especially in Asia, as the living standards and energy demands of their large populations increase, slowly catching up with per capita energy use in the United States and other developed economies.

The United States is the largest market in the world for uranium; it has the largest nuclear fleet of any country with 104 reactors. U.S. uranium mines produced four million pounds of U3O8 in 2011, but annual uranium consumption far exceeded that, at over 50 million pounds. Those market dynamics have allowed Uranerz to enter into two long-term uranium sales contracts; one with Exelon and the second with another of the largest nuclear utilities in the country for a portion of our planned production. These contracts include a mix of market-related and fixed-price contracts designed to let us benefit when prices rise and protect us when prices decline. They were negotiated in late 2008 and into 2009, when the long term price of uranium was between $65 and $70 per pound. These contracts will provide a solid base for future product sales growth as the Uranerz Powder River Basin projects are developed.

The Company controls a large strategic land position in the Pumpkin Buttes Uranium Mining District of the central Powder River Basin of Wyoming, where we are continuing exploration for resource growth while preparing permit applications for a third mining unit called Jane Dough.

Uranerz Energy Corporation is looking forward to producing uranium and generating revenues. We welcome you as shareholders to participate in the potential rewards of building a successful uranium company as we progress through this exciting transition for our Company. For more information, we encourage you to call us at 1-800-689-1659, send an email directly to us at investor@uranerz.com or visit our web site at www.uranerz.com. In closing, we would like to thank all our shareholders for their continued support and contribution towards building a successful uranium company.

Sincerely,


Dennis L. Higgs, B.Com.
Executive Chairman

Glenn Catchpole, M.S., P.Eng.
President, Chief Executive Officer


The central processing plant site with office and maintenance buildings under construction (picture taken mid-January, 2012).


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