Excellent points here, my friends. Technically, even women who never have sex with a man can loose their virginity to another woman or even take it herself. Tearing the hymen to allow vaginal penetration regardless if performed by finger, phallic toy or penis of flesh and blood has the same effect on a woman, she is no longer a virgin. Otherwise, lesbians would remain virgins indefinitely... which is certainly NOT the case.
Also, you accurately point out the current method of procreation within the "Lust City", men are taken captive either as prisoners of war or those who merely wander too closely to the city and used for the purposes of procreation. I also get the impression that if there aren't sufficient breeding prisoners when the city has need of them, they will go on a literal "man hunt" and capture unwitting men, drug them to disguise their location, feed and keep them healthy through as many breeding sessions as needed, then they are returned to where they were found, totally unaware of where they were taken. So, not ALL of the women here are virgins by any stretch of the imagination. The adult women give each other sexual pleasure as well by lips, tongue, fingers and toys. The younger ones are still virgins until they reach a certain age of maturity and allowed by their leaders to participate in sexual activity. From what I gather in the dialogue, it is part of each young woman's right of passage to becoming a woman.
Adventure ever on, Phat