Epstein-Research Blog | NexGen Energy’s Arrow Deposit, Just The Beginning? | Talkmarkets
Founder, Chairman, CEO, President, Treasurer, Analyst at Mockingjay, Inc.
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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. 


NexGen Energy’s Arrow Deposit, Just The Beginning?

Date: Monday, May 2, 2016 8:10 PM EDT

By Peter Epstein, CFA, MBA  epstein.peter4@gmail.com  http://EpsteinResearch.com 

Funded Into q2 2017, Management’s Plan? Go it Alone

There’s been talk about NexGen Energy [TSX-V: NXE] & [OTC: NXGEF] selling a minority stake to a strategic investor, 9.9% being a figure I hear mentioned. However, it’s my understanding that the Company is not actively seeking out investors. Sitting on about $33 million, NexGen is in the enviable position of not needing additional capital. It has cash for this year’s prolific drilling and funds for ongoing Pre-Feasibility Study, “PFS” level testing on the environmental, metallurgical, geotechnical & hydrogeological fronts. 

Screen Shot 2016-05-01 at 6.22.39 PM

I think most would agree that drilling flat out for the remainder of the year will, over time, deliver a very substantial increase in NexGen’s NI 43-101 compliant resource estimate. Including the recently announced spring drilling, the Company plans a total (some results already reported) of up to 100 new drill holes. NexGen’s prior 82 drill holes delivered 201.9 million Inferred pounds uranium.

Management believes that the Company is funded into q2 2017, so there’s no urgency to pursue the sale of a minority stake, unless under favorable terms. The Company needs neither the cash, nor the technical validation of the Arrow deposit.

Importantly, management is not overly concerned with what its 2h 2016 resource estimate might show. That’s because they’re already looking beyond that static snapshot, occurring at an arbitrary date. In the meantime, the quality of new drill targets continues to benefit from data obtained, each batch of assays informing subsequent drilling activity. The higher-grade areas continue to be better understood, allowing for more focus on them. The Company continues to report blockbuster intercepts from among the assays released this year.

Next year’s drill targets & understanding of Arrow more important than a static # of pounds

I think that the NI 43-101 compliant resource could grow to 300 million pounds, not necessarily in the Company’s 2h 2016, but …. after up to 100 new assays are plugged into the model. Still, more important will be, 1) the proportion of pounds potentially upgraded into the NI 43-101 “Indicated” category, 2) new interpretations of NexGen’s growing deposit and 3) the quality & location of new drill targets. There’s no looking backwards for a world-class deposit like Arrow. The following obligatory chart shows where we are on the popular EV(US$)/lb. spectrum. Share values have been discounted back 1 year at 12%.

Screen Shot 2016-05-01 at 10.09.26 AM

For those who believe there’s a lot of hype in the NexGen story, please focus on these facts. Think about what’s changed in just the past 4 months: 

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