NexGen ups uranium project cost estimate to $2.2 billion
NexGen Energy Ltd. [NXE-TSX, NYSE, NXG-ASX] has released updated economics for its Rook 1 project in Saskatchewan, including a revised capital cost estimate of $2.2 billion. However, the estimated mine life production capability of up to 30 million pounds of uranium annually is consistent with previous estimates, the company said.
The updated estimate includes an environmental plan that incorporates reclamation during operations, resulting in a “minimal” closure cost of $70 million.
NexGen is also envisaging average annual after-tax net cash flow (years one to five) of $1.93 billion (at US$95 a pound U308), and an average cash operating cost over the life of the mine of US$9.98 per pound ($13.86 Canadian).
NexGen shares were active on the news, easing 6.47% or 59.5 cents to $8.60. The shares currently trade in a 52-week range of $12.14 and $6.06.
NexGen is developing one of the world’s largest uranium deposits on its Rook 1 property. The company is backed by one of Asia’s wealthiest investors Li-Ka-shing. In June, 2016, CEF Capital Markets Ltd., an affiliate of the Hong Kong based conglomerate CK Hutchison Group, subscribed for US$60 million worth of convertible debentures in NexGen.
A feasibility study published in March 2021, envisaged a capital expenditure of $1.3 billion and an average cash operating cost over the life of the mine of $7.58 (Canadian) per pound. The company attributed its latest estimates to $310 million in direct and attributable inflationary increases since 2020, and approximately $590 million in increased capital expenditures from enhancements identified through advanced engineering and procurement activity since March 2021.
However, the company said the mine life production profile, including capability of up to 30 million pounds of uranium annually, is consistent with the feasibility study.
“NexGen’s updated CapEx, OpEx, and sustaining capital reflect the company’s focus on thorough planning and responsible financial management, ensuring that every aspect of the project aligns for the development of a truly world-class resources project,’’ said NexGen CEO Leigh Curyer.
Meanwhile, NexGen is progressing discussions with various prospective financing entities, including commercial lenders, export credit agencies, and alternative sources to secure financing for the project. The company said it is receiving interest in significant new sources of project financing which would fully satisfy the capital requirements for the project in combination with its current cash and liquid investments.
NexGen recently said that on June 21, 2024, the Canadian Nuclear Safety Commission (CNSC) concluded its 30-day completeness check on the company’s May 21, 2024 submission of responses to the remaining 49 technical review comments and revised Federal Environmental Impact Statement for the Rook 1 Project.
The technical review by the CNSC has now commenced through the Federal Indigenous Review Team, and upon confirmation that all technical review comments have been resolved after its prescribed 60-day review, the CNSC will then be able to deem that EIS final. It can then establish the Federal Commission hearing date.