Two uranium projects in Saskatchewan’s Athabasca basin moved closer to construction this week, with NexGen Energy (TSX: NXE; NYSE: NXE; ASX: NXG) reporting strong interest from lenders in funding its $1.3-billion project and Fission Uranium (TSX: FCU; US-OTC: FCUUF) submitting an application for construction of a new mine and mill only 3 km away.
On Monday, NexGen said financial institutions have expressed interest in lending it more than US$1 billion to build its Rook I uranium project. The non-binding expressions of interest from unnamed commercial lenders and export credit agencies are in the form of available debt for Rook I, subject to financing terms and conditions, due diligence and documentation.
The company expects to finalize financing in the fourth quarter.
Its feasibility-stage Rook I underground project hosts the high-grade Arrow deposit and sits on the southwestern edge of the Athabasca basin.
Fission Uranium’s Patterson Lake South project, Saskatchewan. Credit: Fission Uranium
“Strong interest from lenders and other financing parties for the development of Rook I demonstrates NexGen’s delivery of a sustainable, clean energy legacy that will benefit our valued stakeholders and all of Canada,” said CEO Leigh Curyer, in the release. “The receipt of these expressions of interest are a clear de-risking step demonstrating lender confidence in the economics of the Rook I project, the uranium market fundamentals incorporating the project and the elite ESG manner NexGen is delivering in the development of the project.”
NexGen says the financing talks are in line with its 2023 project development schedule, which includes the start of early construction works at Rook in the first half of the year, and the completion of front-end engineering design, detailed engineering, and final licencing by the third quarter. Production is targeted to start in 2027.
The Vancouver-based company also plans 22,500 metres of drilling with three rigs planned for this year, to follow up on positive drilling results from 2022.
Rook hosts probable mineral reserves of 4.5 million tonnes grading 2.37% U3O8, for 239.6 million lb. of contained U3O8, according to a feasibility study published in 2021.
Measured and indicated resources at Rook total 3.7 million tonnes grading 3.1% U3O8 for 256.7 million lb. contained uranium oxide.
The project would produce 29 million lb. of U3O8 annually for the first five years over a 10.7-year mine life. Its capex is estimated at $1.3 billion, with operating costs of US$5.69 per lb., what NexGen calls “among the lowest in the industry.”
In a research note on Monday, Canaccord Genuity analyst Katie Lachapelle wrote that the capex would likely be higher now due to inflationary pressure.
And given the tier 1 quality of Arrow, and its short projected payback period of less than 12 months, she wasn’t surprised lenders are interested in financing it. According to her model, 65% of project capex will be funded through debt. The finalizing of project permits and a formal financing agreement would be two “significant near-term potential catalysts” for NexGen.
The news from NexGen also comes as the uranium spot price sits at US$53.85 per lb. U3O8, up about 6% since Apr. 19 and the first significant move this year after it was stuck at around US$50 per lb. U3O8 in the first three months of 2023, Lachapelle noted. The current price is also the first move above US$53 per lb. since May 2022.
NexGen shares rose by 2.6% in early morning trading in Toronto to reach $5.41 apiece, before easing down to $5.18 by late afternoon. Its shares have traded in a 52-week window of $4.43 and $6.82. The company has a market capitalization of $2.5 billion.
CNSC application submitted
Meanwhile, Fission Uranium confirmed that it has submitted an application to the Canadian Nuclear Safety Commission (CNSC) for a licence to build a uranium mine and mill facility at its Patterson Lake South (PLS) underground project,.
In the release last Thursday, Fission said its environmental assessment for PLS continues on schedule with community engagement, baseline assessment reporting and data compilation.
“Our development path to production is progressing on schedule and, at the same time, the fundamentals for uranium continue to strengthen in line with the global reactor construction boom,” said Fission president and CEO Ross McElroy.
Fission also announced progress with its front-end engineering design for PLS, including the collection of data from 772.6 metres of drilling to confirm feasibility-level assessment, geophysical surveys and Hydrogeological holes to inform future underground mine planning.
The 310.4-sq.-km PLS project hosts the high-grade Triple R deposit, which contains probable reserves of 3 million tonnes of uranium grading 1.41% U3O8 for 93.7 million lbs. of contained metal, according to the feasibility study for PLS that was published in January.
PLS would have an after-tax internal rate of return of 27.2% and an after-tax net-present value of $1.2 billion at an 8% discount, for average unit operating costs of less than US$10 per lb. of U3O8.
The study estimates a three-year construction period for the project, starting in 2026, with production slated for 2029. Its mine life is 10 years.
Fission shares were down almost 5% in Toronto on Monday and traded at 60¢, in a 52-week window of 54¢ and $1. It has a market cap of $430.1 million.
Be the first to comment on "NexGen, Fission power ahead at Rook I, PLS uranium projects"