NexGen tops 300M lb uranium at Arrow in Athabasca

VANCOUVER — NexGen Energy (TSX: NXE; US-OTC: NXGEF) has pushed the resource at its wholly owned Rook I property in Saskatchewan’s Athabasca basin, past the 300 million lb. contained U₃O₈ mark in its latest update.

Rook I’s basement-hosted Arrow discovery now contains 1.2 million indicated tonnes grading 6.9% U₃O₈ for 180 million lb. and 4.3 million inferred tonnes at 1.3% U₃O₈ for 122.1 million pounds. The upgrade marks an 89% inferred-to-indicated conversion rate based on a maiden resource released early last year.

The Rook I uranium project in the southwest of Saskatchewan’s Athabasca basin. Credit: NexGen Energy.

The Arrow deposit is highlighted by the A2 zone, which hosts 400,000 indicated tonnes averaging 18.8% U₃O₈ for 165 million contained pounds. Doubling the lower cut-off grade to 0.5% U₃O₈ drops the indicated and inferred resources by only 5%.

NexGen is fast-tracking work at Arrow, including a $14-million first-quarter 2017 drill program with seven drill rigs and a minimum 35,000 metres.

“Twelve months ago on this day we released the maiden resource at Arrow, which ranked it as the single largest, undeveloped uranium deposit in the Athabasca at the time,” CEO Leigh Curyer said during a conference call.

Workers at a drill site at NexGen Energy’s Arrow uranium project in northern Saskatchewan. Credit: Nexgen Energy.

“We’ve expanded the resource in terms of grade, confidence and size. We’ve seen the high-grade A2 zone expand and established the strong continuity of mineralization at Arrow. A high-grade domain in the A3 zone is in the early stages of definition, but it’s the largest shear by volume.”

Arrow is hosted entirely within basement rocks, and comprises five parallel-stacked, sub-vertical mineralized lenses that hit the sub-Athabasca unconformity 105 metres below surface. The resource extends 970 metres below surface, with the A2 and A3 shears hosting higher-grade, thicker and more continuous mineralization.

NexGen CEO Leigh Curyer. Credit: NexGen Energy.

NexGen’s vice-president of exploration and development Garrett Ainsworth noted that the deposit’s footprint has grown, with multiple shears and zones being defined. There are also several large untested targets at Arrow, including to the southwest and northeast along strike.

Drill results released in February represented mineralization intersected in untested areas outside the maiden A2 and A3 resource grade shells, including some of the most “intense mineralization” found in the A3 shear to date.

“When you consider the strong technical characteristics at Arrow, including strong metallurgical results, it suggests the potential to be one of the most economically powerful resource assets in the world, when in production,” Curyer said.

“We’ve got more than enough defined pounds in the indicated and inferred categories to commence economic studies. We’ve conducted engineering work to form the basis of a prefeasibility study by early 2018. We’re considering a PEA in the near future based on this updated resource, however, to give the market some direction on the economic potential at [Arrow].”

Drill rigs at NexGen Energy’s Rook 1 uranium project in the southwest Athabasca basin in Saskatchewan. Credit: NexGen Energy.

NexGen had $65 million in its treasury at press time, which it says should provide 18 months of funding for exploration and development.

The company’s shares have traded in a 52-week range of $1.27 to $4.45, and closed at $3.38 per share at press time. There are 306.4 million shares outstanding for a $1.1-billion market capitalization.

Haywood Securities analyst Colin Healey has a “buy” recommendation on NexGen, along with a $6-per-share price target. He wrote on March 6 that the updated resource “very much meets … expectations,” and that “the A2 sub-zone now shows it could easily support a decade of mining at extremely high grades and low tonnages, potentially setting the stage for the lowest decile cash costs from a future mine.”