NexGen Energy Ltd. (NXE) Q1 2025 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the NexGen Energy First Quarter 2025 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Mr. Leigh Curyer, Chief Executive Officer and Director with NexGen Energy Limited. Please go ahead, sir.

Much appreciated, Kaitlyn. Thank you all for joining us today for NexGen's Q1 2025 financial results conference call. I am Leigh Curyer, Chief Executive Officer of NexGen Energy. And I'm joined today by my colleagues Travis McPherson, Chief Commercial Officer; and Benjamin Salter, Chief Financial Officer. Over the course of today's call, I will provide a brief update on the global uranium market landscape which has seen a continuation of historically unprecedented demand combined with sustained fragility of supply. Further, liquidity returning to the spot market in the latter part of the quarter, elevating spot at 11%. I'll also provide an overview of our key accomplishments during the first quarter of 2025. This includes our continued advancement through the regulatory process for our Rook I project as we prepare for the upcoming Canadian Safety Commission hearings later this year. In addition, an update on our exciting 2025 drilling program at Patterson Corridor East. The early results from our drilling program are simply excellent, including what is now recognized as the best ever discovery phase intercept in RK-25-232 on our land package as reported on March 24, 2025. It all adds up to NexGen's Rook I project on the cusp of final federal permitting and on completion, then immediately entering into construction. Followed by production at the time, the market for uranium is going to be intense for low-risk, stable production sources from sound jurisdictions. NexGen's Rook I project will return Canada back to being the world leader in the production of uranium, incorporating the most elite environmental, social and governance practices. In parallel, throughout all of this, further drilling at PCE, defining mineralization, which is exhibiting all the famous and unique high-grade solid technical setting attributes of its neighbor, Arrow, 3.5 kilometers to the west. At the conclusion of this presentation, we'll move to the Q&A to give you the opportunity to ask Travis, Ben and myself any questions you'd like to ask. Throughout the course of today's call, we will be making forward-looking statements. I invite you to visit our website for all the relevant disclaimers. As we begin, it's important to acknowledge the pivotal inflection point we're at. The uranium investment thesis has evolved from promise to reality with the key focus turning to execution and scarcity. What we have experienced in uranium equity since the start of the year is a real disconnect from the fundamentals. It's fair to say the noise around tariffs have reflected attention of key uranium market fundamentals materializing. With over 30 countries committed to tripling their nuclear energy capacity by 2050 and more than 60 reactors currently under construction globally. So, robustness and the sustainability of demand is at unprecedented levels for nuclear power. Canada has a leading role to play, particularly considering its Southern neighbor, the United States of America is realizing its security of supply for this key fuel requires substantial investment and projects required to come online now. The International Atomic Energy Agency's high case scenario predicts cumulative uranium requirements of approximately 7 billion through 2025. The vast majority of these requirements are currently undiscovered and unknown. A project like NexGen's Rook I is unprecedented in terms of the volume capability, the technical, environmental, social and economic performance. Yet our industry would need at least 10 of them over the next 25 years to meet the demand. The sheer scale of the structural deficit underscores the critical nature of the supply challenges facing the world and the scarce and strategic nature of NexGen's role. Italian market signal has emerged this quarter. Several producers have planned current pricing levels are insufficient and consequently deferred contract decisions while others have delayed final investment decisions on development projects. It is encouraging to see the new generation of uranium developers and to be producers joining NexGen and working collectively to ensure the sustainability of our industry through discipline and patience. This will lead to high uranium prices sustained in the long term, incorporating the real costs of delivering ethically sourced uranium to ensure reliable sustained supply. Pricing must strengthen significantly to incentivize the production growth across the globe, which is required to meet the current and future demand. Demand is resilient. And with the new tech players entering the space, our industry is primed for better outcomes than before, which is in the interest of all participants delivering energy to populations. Spot prices currently sit at approximately $71 a pound, having moved swiftly from the low 60s on relatively modest activity in an emerging carry trade opportunity, demonstrating the market's inherent sensitivity to even small changes in liquidity. Meanwhile, the term price has held firm, maintaining levels near $80 a pound. This resilience in long-term pricing sends a strong signal and historically serves as the leading indicator. The demand-centric fundamentals remain exceptionally robust despite short-term volatility. For NexGen, these developments reflect and validate our strategy. Our initial sales contracts reflect fundamental supply demand imbalance in the uranium market and importantly capture the economics in a rising price environment for our shareholders while providing unparalleled security and diversification of supply to our utility partners. NexGen remains extremely busy negotiating term deals with the industry, and this hasn't been impacted by elections, global trade tension and all the illiquidity in the spot market. It's recognition on NexGen's role in this market in the near future is well understood as evidenced by these ongoing contract negotiations. The policy landscape continues to evolve in favor of nuclear energy and secure supply chains, particularly noteworthy is the anticipated executive order from the United States to expedite nuclear project development through the Department of Defense and the Department of Energy. This initiative recognizes the convergence of National and NSG Security has been the same in today's electrified world. Baseload power attracts business investment, supports industrial growth and enables advanced technological development in critical areas like artificial intelligence. Similarly, Europe has recently announced plans to legislate the phaseout of Russian nuclear supplier from its energy ecosystem beginning 2027. This decisive shift away from Russian dependency opens substantial opportunities for Western suppliers and reinforces the premium place on ethical, environmentally responsible production from politically stable jurisdictions. Further, only yesterday, Germany has signaled a major positive shift back towards nuclear energy. This decision has major positive implications on EU energy policy. Together with Belgium, repealing nuclear phaseout laws, opening the door to new nuclear investment, and the list goes on of additional positive major macro news involving nuclear. It simply reflects the reality of power employments, not only the provision of power, but the reliable, environmentally sensibly sourced to support populations and economies. In exchange, Rook I with its industry-leading environmental profile, technical simplicity, long mine life and location in Saskatchewan, Canada will benefit tremendously from this recalibration of the global supply chain. Q1 2025 has seen significant company milestones. The Canadian Nuclear Safety Commission scheduling our two public hearing dates for the Rook I project set for November 19, 2025, and February 9 to 13, 2026, and we are ready today to present Canada's largest uranium development project to the world. The commission to finalize project approval for the benefit of our shareholders and indigenous nation partners, the province of Saskatchewan, Canada and the planet. These hearing dates provide clarity on the time line and allow us to strategically optimize our construction schedule, advanced procurement initiatives and detailed engineering work and implement our construction hiring plan with precision, positioning us to maximize efficiency once we transition from permitting to construction execution. We're almost done monitoring Canada's evolving regulatory landscape with its increased focus on streamlining approvals for projects of national significance, and that had provincial approval. That is NexGen. Newly elected Canadian Prime Minister, Mark Carney has stated, one and done, which is extremely positive and recognize the opportunity Canada has but also his willingness to sensibly streamline the rigorous approval process to actually deliver Canada's economic trade and energy security interests. Turning to Patterson Corridor East, a region that continues to exceed and indeed, redefine our expectations. In 2025, we launched our most extensive drill program at PCE to date, a 43,000 meter exploration campaign, one of the largest in the Athabasca Basin in this year. The goal is clear, to follow up on the exceptional mineralization encountered to date and better understand the scale and continuity of what is shaping up to be a significant discovery, which exhibits all of those unique attributes of the mighty Arrow deposit. On March 24, 2025, we reported what is now the best ever discovery phase intercept across any NexGen property. Drill hole RK-25-232 intersected 3.9 meters of off scale greater than 61,000 counts per second, uranium mineralization within a broader 13.8 meter zone. For additional holes, all at least 50 meters apart from this intercept, return the same intense ultra-high-grade mineralization. The high-grade zones have now doubled in size since our last update, measuring 210 meters along strike and 335 meters vertically, and it remains open in all directions. These are extraordinary results, particularly given that PCE is still in its discovery phase. For comparison, intercepts of this caliber at Arrow didn't emerge until much later during the targeted resource definition phase. I'd like to remind everyone that NexGen holds the most significant land position, over 190 hectares in Saskatchewan Southwest Athabasca Basin, which is widely considered to be the future of uranium production in the West. PCE is located just 3.5 km east of the world-class Arrow deposit which positions us to significantly expand our resource base in the coming years and positively impact the communities where we operate for many generations to come. NexGen is exceptionally well capitalized. We hold approximately CAD435 million in cash, enough to fund the start of construction activities for the next 12 to 18 months. In addition, we have over $1.6 billion in expressions of interest from leading banks and export credit agencies to form the base of our project funding. Like any Tier 1 project, we are navigating many financial options to optimize the funding of this project. In terms of timing, we remain focused on year-end of this -- for year-end 2025 for determining the best financing page that provides certainty of capital, enables us to maintain our marketing strategy and maximizing exposure to the prevailing prices in the future and enables us to maintain our production output flexibility. At the same time, demand for our future production has never been stronger. Offtake negotiations are continuous with a diverse group of counterparties all over the world. We expect to announce additional agreements this year, further bolstering our market position as we move into construction and production. With federal approval approaching, the integrated project team are in place. All procurement and detailed engineering is in place, ready to commence construction with a robust balance sheet. We are ready and exceptionally well positioned to advance into the next phase of development. With that, I would now like to open the floor to questions.

[Operator Instructions] Our first question is from Ralph Profiti with Stifel. Please go ahead.

Good day. Thanks, operator. Leigh, I'd like to ask a question on more detailed progress towards procurement of equipment and long lead items. Are you happy with where you are in the queue? And are your suppliers talking about general inflationary pressures or delivery schedules that may be at risk? Or are these conversations in line with expectations?

Thanks, Ralph. Look, we have a very detailed construction execution plan, which is down to the day once we have approval. And so one of the benefits of -- round about benefit of the commission hearing date being set for November 2025 and February 2026 is that it does allow us to plan exceptionally well that procurement process with respect to the key inputs, particularly around the first 12 to 18 months of construction. As I speak, that is well in hand. And it is a significant focus of the executive team's time is on that execution plan. And as I speak, I'm very comfortable where that's heading. In terms of pricing, look, the industry broadly is always under pricing pressure. We're not excluded from that. But we are maintaining what we expect things to cost as we've previously forecasted. And that's also been supported by due diligence by a number of the debt and equity providers that have been running a process on our project. The good thing about the Rook I Arrow project is that the economics are extraordinarily robust. So if there is CPI pressure, it won't be as material as you would see in a marginal project. Further, with the payback period being so short, approximately 13 months at current prices, the impact of any CPI increase on the financeability of the project will also be immaterial. So, it's something you're quite right, Ralph. It is an aspect we place a lot of attention on and planning. And it's -- as we speak, we're in shape, and I continue to be -- I wouldn't see any changes in that either going forward, considering the amount of detailed planning that's gone into the construction execution schedule.

Great. Thanks for that answer, Leigh. And a separate question, as greater attention turns to exploration, just wondering how you're balancing the desire to turn around the mineral resource estimate inaugural one for PCE and basically what the drills are telling you, which is the longer you take, the more potential is, just wondering how you're balancing those two aspects of potential versus delivering an MRE?

Yeah, sure. So firstly, it's the exploration group. And so this doesn't, at any way, dilute the attention on the final federal permitting or the execution schedule. But with respect to the exploration group, I must stress, PCE is still in a definition like what are we dealing with stage. I don't see us turning to delineation, resource definition and drilling activities. As we speak at the earliest, that would be 2026. They're still -- it's still open in every direction. It's looking better than what Arrow did at the same stage of drilling. And as we all know, Arrow expanded considerably once we take into the high-grade sub-domain. So it's very, very early in the stages. We're under no -- we don't see if there's pressure. We have a very well-thought-out exploration approach where we look to define what is the area of mineralization first, where we tag into a high-grade sub-domain, we then focus a little more weighting of the drill bits towards that because the consequence of intersecting that high-grade intense mineralization does have an extremely material impact on the resource definition. Once we get a sense that we've got both of those understood, that's when we'll then shift that attention to that -- like a measurement in terms of volume and grade, but not beforehand. And I don't see us being anywhere near that stage at that as we speak. And look, that's exciting news for everyone. It's way too early to determine just exactly what we're dealing with that PCE because it's exhibiting just incredible similar characteristics to what Arrow is.

Thanks very much, Leigh. I appreciate those answers.

Thanks, Ralph.

The next question is from Julio Mondragon with BMO Capital Markets. Please go ahead.

Hi, good morning, Leigh. Julio here. So just the first question is related to your plans for Rook I development for this year. So, the budget on potential activities, well, as you await the hearing date later this year and early 2026.

Yeah. If I've understood the question, Julio, yeah, the hearing date, we're ready right now, as we speak. If we had approvals as we speak, we would be already in construction. We've had a very clear definition around what we're building and how we're going to build it since 2017, and we've been refining it ever since. So, this project has had an extraordinary amount of time and focus on executing it well. When you add into that, the fact that it's very simple technically relative to other mines around the world, it's an extremely confident basement rock. It's actually a very small physical footprint and a very small mine. We'll be removing about 1.5 double deck of buses of ore a day. That is tiny for a mine. And then we have the very clean metallurgy, so the processing plant itself in a relative sense is a more straightforward, simplified version of what we've seen in other parts of the world. That all bodes well for once we have the approval to execute well. And from a company perspective and mindset, and as everyone knows, we're very, very diligent on risk analysis. We are looking forward to construction because of the amount of time and energy that we've put into it over the last -- it's almost eight years. And we have the team in place, and we have the execution schedule down to the day. So, we can't wait to be in that position, and we expect so in early 2026 at the conclusion of the federal permitting process with the CNSC.

Thank you. So just to understand a little bit more in the near-term, what will be your development activities for 2025 and what will be the budget -- potential budget for these activities if I may ask?

Yeah. So, look, we're all focused on exploration in 2026 and -- sorry, in 2025 and we maintain that site on an exploration basis to support the regional drilling activities and maintaining that in an environmentally elite manner. So once we have CAD435 million in the treasury as we speak, we have also liquid assets of around another CAD300 million on top of that. Once we're in construction, that's when you'll see an acceleration of the budget. But as we speak, we are well funded well into the back end of 2026 to meet all of our general and administrative expenses, maintaining the site in readiness for construction as well and supporting exploration activities.

Perfect. Thank you very much. So, if I may ask one more question, how are your contracting discussions with utilities going at the moment? If we can have more detail on that? Thank you.

Sure. I might just hand over to Travis on that one.

Yeah, perfect. Travis here, and thanks for the question. Yeah, as Leigh alluded to in his remarks at the beginning here, contracting discussions have been very, very robust, ongoing lots of them, and you can expect to see more contracts get signed and announced shortly and throughout the year. I think general context and color around it, is definitely a growing awareness of the acute nature of the supply deficit and particularly later this decade and into the 2030s when Arrow is going to be producing. People are very -- utilities, in particular, are very, very concerned about that period of time and rightfully so. So that obviously positions NexGen well and very uniquely. And the utilities are also understanding that not all uranium is created equal and buying uranium from us represents a different value proposition to them than buying uranium from an incumbent producer because it's not -- an incumbent producer isn't offering them net new diversification and new supply sources, whereas support for our mine and all the other emerging developers offers them that. And so there's a recognition of that, which is very supportive to ours, and I'm sure other developers’ initiatives. So yeah, very, very good and robust and more to come on that front.

Perfect. Thank you very much, Travis and Leigh. Thanks.

The next question is from Andrew Wong with RBC Capital Markets. Please go ahead.

Hi, thanks for taking my questions. Maybe just on contracting again, can you just talk a little bit terms of the contracts that are being discussed? For NexGen, my understanding, you guys would prefer more spot-related market exposure? Is that where we can expect to see your upcoming contract settlements? Are the utilities agreeing to that? Just any sense on if there are any floors or ceilings that are being discussed, what's those levels are today?

Yeah. Thanks, Andrew. It's Travis again. We obviously can't talk about specific terms. What I would say is that what we disclosed in December for those initial 5 million pounds of contracts where we outlined kind of what the sensitivities look like and stuff that's in line with what we're assessing going forward and our focus on maximizing the exposure to the future prevailing price of uranium. Spot price of uranium at the time we deliver uranium is -- it remains consistent and definitely willingness of utilities and our standing of utilities, generally speaking, to our desire for that and how it benefits both us and them actually in the sense that our philosophy overall is not just one where it only benefits us, it benefits utilities and that you don't get into a post-Fukushima world again, where producers are oversupplying a market to way, way too long because they have floor prices that incentivize them to breakeven and contractually obligate them to continue to produce. Our philosophy and our strategy around marketing eliminates that because we shorten the duration of the contracts and tie them to the price at the time. And therefore, if something changes in the future, the industry can adjust or at least we can in these contracts. So that understanding is there, and yes, they're open to that as we demonstrated in December with the disclosure.

Yeah. And, Andrew, I'll just add to the fact that, yes, utilities don't do the same contract with -- to Travis' earlier point, utilities don't do the same contract for all producers or advanced developers. The contracts do reflect the unique nature of our respective projects. Now, our strategy merely reflects the technical aspects, economic aspects and environmental aspects of our project. We're in confident basement rock. We can ramp production up, we can ramp production down, given market conditions. And that is to the benefit of the producers, but also the utilities who are procuring the offtake. So I know there's a bit of commentary out there that it only works this way, and that's the way it's always worked. But this mine -- there's never been a mine like this in terms of technical certainty, economics and environmental performance. And our contracting strategy merely reflects those attributes. And that is what has been appreciated by the utilities that we have already contracted with and we'll contract with in the near-term.

That’s a lot of great color. Thank you. With the federal election, I'm curious how has that impacted your discussions with the governmental on approvals? Have you had any discussions with the new government since the election? And is there any flex around those public hearing dates?

Look, the good thing about those dates that are now bookends, and we know and they're in place. Look, I've been incredibly encouraged by Mark Carney's comments with respect to one and done for major energy projects in Canada. And if that transpires into a more efficient regulatory process where a project that has provincial approval won't require a subsequent federal approval, I think that's in the interest of all current but also future uranium projects that are going into production. Look, there is aspects of having two regulatory both the provincial and federal. There is overlap and between the two, that's not in anyone's interest. And so look, I've been very impressed with Mark Carney's commitment to streamlining the process. And Canada playing to its strengths and getting these energy projects up and running now. So if it does transpire into that, I'll be very, very pleased to present that. Certainly, the Premier of Saskatchewan, Scott Moe has been very public with the receptor, what he would like to see with respect to the federal government's approach to projects such as ours. Yeah, let's wait and see. Look, November will be just around the corner. No doubt about that. And we are in the final stages as we speak.

Great. Thank you very much.

[Operator Instructions] Our next question is from Craig Hutchison with TD Cowen. Please go ahead.

Hi, good morning, guys. Thanks for taking my question. Just a question. You mentioned at the onset that you're looking to find out the best financing package by year end. Are you guys still entertaining a strategic investor at the asset level at this point?

Yeah. I’ll -- Travis, he can answer that.

Yeah. Thanks, Leigh. Yeah, Craig, short answer, yes, we are. As we have talked about in the past, it's very targeted select group that we have been engaging with some over the last two years, some in detail over the last year. And yeah, it still remains one of the many options that we have at hand. In terms of timing, everyone involved on that process, on the prepayment process, on the debt process are all lining up for the timing around year-end of this year as we noticed.

Okay. So that would come before the permits probably?

Yeah. potentially. But obviously, the permits are very dependent on including that financing aspect.

And just on the contracting, I mean, do you guys have a sort of set volume or rough volume that you want to have contracted before you make the final investment decision?

Yeah, Craig. No, we don't have that. Some of the options will require some level of offtake being in place, but it won't be in place to commence construction. If the debt is, an example, there's a portion of it that requires some volumes to be demonstrated, then as we talked about before, they don't need price hedging, in that sense they don't use -- the lenders don't care what pricing mechanism is utilized. But there'll need to be some volumes there, but those are needed until the first part of those won't be needed to tell you to actually start to draw down the debt, which won't be until early in 2027 at a minimum. So -- and then others, it's not part of the discussion. So, there is no volume that we need to get to start construction. As we've said, we're ready to go. If we got approval tomorrow, we're in construction immediately. So yeah, in a good position there. And then even longer term, we don't really have the -- because we get asked this sometimes like what's the split of term contracts or whatever. Long term, we don't have a set percentage that we want. We've always maintained our ability to leverage the production output flexibility that the mine has, and then the biggest determinant really is just the alignment between ourselves and the counterparty that we're dealing with. Our counterparties that we're dealing with, with respect to what the future of the uranium supply and demand looks like. And if there's alignment then we can get there on a contract. If there's no alignment, then that's when we're patient. And we've been patient the whole time, and that's clearly benefited us materially to do that, and we'll continue to do that.

Okay, great. Maybe one last question for me. Just back to PCE. I think the expectation was assays were released in April. Would it take a bit longer than expected? Or are you guys just waiting to batch those results with some new ones?

No. The lab has been very, very busy with given the volume of what's gone through, they will -- we're expecting them, imminently, Craig. And when we release, we always provide materiality context around it. So yeah, there's no doubt, 232 will have its own news release, given its materiality which will most likely be separate from the assay results from the drilling that occurred in 2024. I just would emphasize again, like, we are still in the very early stages of getting a grasp on the scope of PCE, but it's looking extremely strong if you provide relativity to Arrow at the same level of drilling.

Great. Good luck, guys. Thanks.

The next question is from Brian MacArthur with Raymond James. Please go ahead.

Good morning, and thank you for taking my question. A little bit back to what Ralph was talking about. When you get approval, let's just say we get it February next year, I mean, are you going to be able to do anything to move the whole construction timeframe up? If you can maybe just go through how you see it developing going forward on the timeline and where the critical path is to production once you do get your permits.

Yeah. Thanks, Brian. Look, the shaft is, effectively, the longest lead time item. Requires the greatest amount of preparation as well. As for the feasibility study that we updated in August of 2024, it is a four-year construction process. It's preferable to start either as you're coming out of the winter, which is around the time that we expect the conclusion of this CNSC hearing process. So I think everyone should adjust that from the commencement construction, which is subject to CNSC finalizing the process, it is a 48-month process from that date. So I don't want to -- there's not -- in terms of accelerating that 48 months, there's nothing really material. It's going to be 48 months.

Great. Thanks. I think that’s how I understood it too. On the converse, just to be sure, there's nothing because it's delayed back to Ralph's question that you've lost stuff in the queues, is there anything that would make it longer than 48 months that you can see right now just because of the timing of the way things have worked out.

No, it's actually the opposite, this -- the delay in the hearings allows us to really refine the execution schedule for key imports even further out than what we otherwise would have. So, everyone -- that's a reduction in execution risk once we start construction due to this delay in the hearings to November of '25 and February of 2026. So, it's actually from the execution perspective, when you do commence, it's actually a little positive.

Great. Thanks. And maybe just one more thing to make sure I fully understand this. My understanding was a lot of the sourcing was in Canada for what you need as well. Is that right? So really, there's not a whole lot of risk in the supply chain going forward? Is that a fair comment?

That's fair. And we will prioritize and optimize the opportunities for Canada first and foremost. There is some specialization of certain items of equipment with respect to the shaft and the mill, but nothing really material in that sense that Canada will be prioritized. And I will say that, that prioritization does, as everyone knows, with respect to our focus on local communities, it will start in the local communities and expand out from there.

Great. Thanks very much, Leigh. That’s very clear.

Thanks, Brian.

This concludes the question-and-answer session. I'd like to turn the conference back over to Mr. Curyer for any closing remarks.

Thank you, Kaitlyn. Yes, as always, we really appreciate everyone's ongoing interest and support for NexGen. As I alluded to in the earlier part of the call, we are on the cusp of final federal permitting approval. The market and the fundamentals for nuclear energy are improving almost on a daily basis with all of the news that is coming out. And NexGen is ready to deliver its role in returning Canada to being the number one producer of this incredibly important fuel that powers the economies and the population's homes right around the world. With that, I thank everyone for their time and attention. And as always, if any additional questions arise, please don't hesitate to reach out to Monica, Stacey, Travis or myself. Thank you.

This brings to close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.