Epstein-Research Blog | Even After Run, NexGen Energy Ltd. Shares Have Big Upside Potential | Talkmarkets - Page 2
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In 2011 Peter Epstein, CFA, left a $3 billion hedge fund where he was a senior natural resources analyst to help increase awareness of a number of natural resource companies in which he's invested in. 

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Even After Run, NexGen Energy Ltd. Shares Have Big Upside Potential

Date: Thursday, March 24, 2016 4:31 PM EST

++ This year’s aggressive drill programs could produce another blockbuster outcome. NexGen clearly has a world-class technical team. 82 holes got us 202 million Inferred lbs., how much might 80 more find? 25-50-75 million lbs.? Why not 100-125-150 million? Especially with winter drilling already delivering very promising results. [March 8th PRMarch 15th PR]

++ Key attributes that make Arrow a spectacular deposit might be obscured in the shadows of Cameco’s uranium mines. Arrow is entirely land-based (no resource under the Patterson Lake) and basement-hosted (very easy to mine). Avoidance of mineralization in the sandstone could, (if the deposit is developed), make Arrow far less technically challenging, easier to permit and less costly to build and operate than Cameco’s sandstone-hosted McArthur River & Cigar Lake, which require sophisticated and costly, ongoing ground freezing techniques.

++ The possibility of a large takeout premium may not be on investor’s radar. One need not turn to Rio Tinto’s 2011 takeout of Hathor Exploration Ltd. at a valuation of about US$11/lb. for inspiration. Why not use US$5 – US$6/lb., for one of the best NI 43-101 compliant resources on the planet?

Screen-Shot-2016-03-18-at-3.35.11-PM

++ The value to an acquirer of a monumental, globally significant, strategic asset, situated in the most desirable jurisdiction in the World, cannot be overstated. New entrants to the Athabasca could hardly do better than to pick off the gem of the Basin.

The usual suspects BHP, Areva, Rio Tinto & Cameco are no doubt monitoring NexGen’s progress very closely, but they are not alone. Others like China’s CGN Uranium Resources Co., Ltd. Japan’s Sumitomo Corp., South Korea’s Kansai Electric Power (“KEPCO”) and Russia’s Rosatom could be interested. In my opinion, a number of Sovereign Wealth & Private Equity funds would want to kick the tires as well. 

That still leaves State owned or sponsored Chinese & Russian enterprises. Nor would approaches by companies like POSCO or Teck Resources surprise me. Teck’s market cap has more than tripled off its 52-week low. Presumably there are a number of E&P / Oil Sands giants contemplating investment alternatives. 

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