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NexGen Energy (NXG) $11.51

This week, NXG posted a 1Q24 loss of $34.6m, compared to a loss of $9.1m in 1Q23. A relatively high number for a pre-production company, but it includes a non-cash $17m mark-to-market loss on convertible debentures. Also, in the quarter, NexGen announced a potential new discovery about 3.5km from its existing Arrow deposit. Subsequent to the quarter, NXG purchased 2.7Mlb of uranium for US$250m from MMCap using the issuance of US$250m in convertible debentures at a 9% coupon. The market sold the stock after the purchase due to the expensive funding structure, the timing post a recent capital raise, the price paid for the uranium (US$93/lb), plus the lack of understanding of the strategic intent – on a call this week management discussed the purchase in the context of providing a derisking buffer to provide security to potential utility offtake partners.

  • Dual-listed NXG upsized its recent capital raise, which was priced at $12.40, due to popular demand. It’s cheaper today following the uranium purchase mentioned above.

NexGen also continues to progress with Canadian Federal Government approvals for their Rook I project and is responding to 49 questions from the regulatory body. Approval is hoped for by Christmas. We would characterise NXT as the most leveraged play on the Uranium theme.

  • We like NXG but prefer PDN and SLX in the space
MM is bullish towards NXG
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NexGen Energy (NXG)
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