NexGen Energy (TSX, NYSE: NXE; ASX: NXG) is to start construction this summer of its Rook uranium mine in northern Saskatchewan, the largest development-stage uranium deposit in Canada.
The C$2.2-billion capex build plan for Rook I comes on the same day the Canadian Nuclear Safety Commission (CNSC) approved NexGen’s environmental assessment and construction licence on Thursday, and just weeks after the regulator’s two-part hearing process concluded. Located in the uranium-rich Athabasca basin’s southwest, Rook I is about 900 km northwest of Regina.
“The approval [points to] Saskatchewan being a Tier I jurisdiction where assets can be discovered, delineated, and permitted within a stable regulatory framework,” SCP Research Finance analyst Justin Chan said in a note on Friday.
‘Tier one asset’
“Not only is Rook I in a tier one mining asset, we think having a permitted mill in the Western Athabasca is a strategic asset for NexGen and for Canada given the geological potential shown with more than 500 million lbs between Arrow and Paladin Energy’s Triple-R [deposit].”
In addition, Chan said NexGen’s high-grade Patterson Corridor East target, about 3.5 km east of its main Arrow deposit, could host more than 100 million lb. of uranium oxide (U3O8).
“We see multi-decade tier I potential for Rook I,” he said.
The approval follows one of the most rigorous regulatory processes conducted for a resource project in the world, NexGen CEO and founder Leigh Curyer said in a release.
“This milestone is the result of the NexGen team’s steadfast and unrelenting focus over 12 years understanding and delivering our objectives honestly and incorporating a culture of excellence,” he said.
Top uranium producer
Rook I, anchored by the high-grade Arrow deposit, could produce almost 30 million lb. of U3O8 per year over the first half of its 11-year life, according to a feasibility study published in 2021.
That capacity would make it the top uranium mine by output in North America, ahead of Cameco’s (TSX: CCO; NYSE: CCJ) producing McArthur River and Cigar Lake mines in Saskatchewan.
NexGen’s construction milestone also coincides with other developments for uranium players in the province over the past several weeks.
Denison Mines (TSX: DML) last week announced the start of construction of its Phoenix mine, Canada’s first in-situ recovery operation for the nuclear fuel. Last month, Paladin Energy (TSX, ASX: PDN; US-OTC: PALAF) received environmental impact statement approval from the Saskatchewan for its Patterson Lake South project.
All three projects would rank in the top five largest operations in the Athabasca basin by reserve size if they become producing mines.
$6.3B value
NexGen shares fell 3% to $16.77 apiece on Thursday afternoon in Toronto amid a broad market decline, valuing the company at $10.1 billion. The stock has traded in a 12-month range of $5.59 to $18.91.
In a uranium spot price case of $95 per lb., Rook I has a net present value (at an 8% discount) of $6.32 billion and an internal rate of return of 45%. The Arrow deposit hosts probable reserves of 4.57 million tonnes grading 2.37% U3O8 for 240 million lb. of U3O8.
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