The urine is purified in the same way as mains water (water supplied by the public water supply system) is purified, with the sugar molecules removed and added to the mash stock to accelerate the whisky's fermentation process.
The original idea came from an (unverified) story a man heard about a pharmaceutical company that supposedly set up a factory next to an old people's home and would swap cushions and soft toys for the residents' urine. They'd then process the urine to remove the chemicals that had passed straight through the dilapidated endocrine systems of the patients, which could then be put straight back into new medicine.
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Source: Wired
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