NexGen Energy Ltd. Q4 FY2024 earnings call

• Secured first uranium sales contracts with U.S. utilities.
• Completed final Federal technical review and CNSC acceptance of final EIS for Rook I.
• Advanced the largest exploration program in the Athabasca Basin with the discovery of Patterson Corridor East (PCE) near Metis Arrow deposit.
• Made progress in construction readiness for Rook I, including procurement and local training programs.
• Received strong support from indigenous communities with fully-executed benefit agreements.
• Updated capital estimate reaffirming Rook I's industry-leading economics with rapid payback and low operating costs.

NexGen Energy's performance is centered around the uranium business. There is no traditional product segment breakdown with revenue contributions provided in detail. The company has made progress in securing uranium sales contracts, advancing exploration at Patterson Corridor East, and preparing for the Rook I project's construction with strong support from indigenous communities.

• Expect to secure full federal approvals including the Commission hearing, with plans to mobilize on approval and commence construction immediately thereafter.
• 2025 focus on securing full federal approvals, advancing engineering, procurement, and training.
• Exploration program planned for 43,000 meters costing CAD 15 million.
• Cash on hand supports a minimum of 18 months of post-approval construction activity for Rook I.

• Geopolitical uncertainties impacting uranium supply.
• Market liquidity constraints causing short-term price fluctuations.
• High barriers to entry in uranium exploration and mining.
• CNSC scheduling and resource constraints affecting permit timelines.

Q: Congrats on the recent acceptance of the final EIS. One of your peers recently announced notice of its Commission hearing date. How has that announcement informed your thinking around the time line for the hearing date? And then, maybe as a follow-up to that as well, are you still expecting it to be a 1-part hearing? Or is a -- or is a 2-part hearing a possibility? And then, does that decision ultimately lie with you? Or is it with the CNSC?

A: Sure. Thanks, Katie. Yes, look, it's great news. Denison has received their Commission hearing date. I think everyone can take note of that, and obviously is positive for when we expect to hear ours, the scheduling of that. We have been informed by the CNSC that it will be only a 1 part, and we are eagerly awaiting the announcement of that date. So clearly, the CNSC only has so much resources. And so, we're working with them to schedule that commission hearing date as early as possible. And the advocacy from all 4 local communities to the CNSC to ensure that, that happens as immediately as possible is extremely strong. So that is what we know, Katie, as we speak. And we have got everything filed and ready and ready to do that Commission hearing, even if it was scheduled for tomorrow. And then, on the subsequent conclusion of that Commission hearing process and approval, we'll literally be starting construction the following week. So yes, we are very much looking forward to the Commission responding and setting a date.

Q: Regan Burrows from Bell Potter. Follow-up on PCE assay results. Has there been sort of a delay in getting those results back? Or I guess, sort of further elaborating on what you said there, are we sort of to interpret that the strategy has shifted because of something within those results?

A: No. Look, we've already put out the scintillometer results from the 2024 program. And at this stage, the assays are less material. It's about discovering the extent of mineralization and looking for the high-grade hearts within that area of mineralization. Once we get into project delineation, where we're working towards establishing a resource, the assays then become very, very material. But it's just simply batching the results, [ sending them ] to the lab and getting them back. And those assays from 2024 will be released in the near future, and most likely along with the first phase of 2025 scintillometer results from PCE. So, no one -- yes, no need to look into the length of that. Yes, the lab does get backed up. But the priorities and that core in -- was just in the normal course. And those assays will be coming. But as I said, at this stage, focusing on the scintillometer results and the extent of mineralization, looking for those high-grade hearts is the focus.

Q: Craig Hutchison from TD Cowen. One of your objectives this year is to do negotiations. Just curious, what type of volumes you're looking to contract ahead of a potential approval next year?

A: Yes. Thanks, Craig. It's Travis here. We don't have -- I wouldn't say we have a set volume that we're targeting in any given year, frankly. We're in the stage of building relationships and remaining patient with our strategy and making sure that we, at the end of the day, maximize the value of every pound we produce. So that's the stage we're in. We are -- there's significant demand for our product, as evidenced by the premium pricing we indicated in December. That makes sense, given the premium and scarce nature of our product. So those discussions are ongoing and will continue throughout the year. I would expect to see some more contracts get announced this year for sure. But we're definitely not targeting X number of pounds in 2025 and X number of pounds in 2026. We will see how the market develops, how the negotiations go and remain patient, while we continue to build relationships along the way.

Q: Unknown Analyst from Ben Finegold. Questions about U.S. contracts and pricing. First, you mentioned the domestic deficit in the U.S. in particular and the fact that these initial contracts have been with U.S. utilities. So I was wondering how these contracts have changed at all since the new administration? And do you get the feeling from U.S. utilities that despite tariffs that Canadian uranium is kind of put in the same bucket as domestic pounds? The second question is around pricing. The recent [indiscernible] spoke about floors at $70 a pound. Is this, I guess, the same to you guys in your conversations at the moment?

A: Yes. Thanks for the question, Ben. With respect to the U.S. demand changing or anything, no. I think the biggest changes have come in previous years, frankly, when it became obvious that the supply risk to them, not out of Canada, but out of the Eastern countries, was becoming a big problem. The reality is, the U.S. utilities don't have a lot of alternatives. And particularly, when you look ahead to when we're going to be in production or could be in production at the latter part of this decade and into the 2030s and beyond, it's acute. And so, that deficit that Leigh mentioned can't be solved domestically in any material capacity at all. And so, there is an understanding that they have to rely on Canada, frankly. And I think, again, no impact in the discussions whatsoever. And we'll see what happens with tariffs and everything else, but the reality remains the same, which is that we're the northern neighbor and have supplied material uranium into that market for a very long time reliably. And with Arrow coming online, frankly, it's a huge help to reducing reliance on other jurisdictions. And with respect to our -- the pricing that we're receiving in our contracts, well, it's industry-leading, and it's substantially industry-leading in terms of leverage to the future price of uranium. So we are purely reflecting the mine's flexibility and very, very low cost to having maximum exposure to the return on every pound produced. And utilities are recognizing that. And the outlook is absolutely terrific for NexGen on that front, and we'll continue to keep that industry-leading exposure to the future price of uranium.

Q: Graham Yoshio Tanaka from Tanaka Capital Management. Can you hear me?

A: Loud and clear, Graham.

Q: Okay. I just was wondering to what extent the announcements on Denison and their approval process might delay the NexGen process? Or could your approval process and review process be started in parallel? Just wondering about timing.

A: Yes. [indiscernible] Graham, and good to speak with you. For everyone's knowledge, Graham has been a shareholder from just post listing back in 2013. Graham, I think the announcement of Denison's Commission hearing is more positive for NexGen. And again, congratulations to David and the team at Denison for meeting that milestone. Look, I can only convey what has been communicated to us from the CNSC that our file is a top priority. And I'm also aware there's been communications to the local communities that the setting of that date is imminent. Now, I'm aware the local communities have all requested the Commission hearing to be very early in 2025. Clearly, the CNSC has their own resourcing aspects, and we're respectful of that. So in summary, I would take the announcement of Denison's Commission hearing as an absolute positive that ours is imminent as well. When that is actually scheduled for which date, I don't know. We are waiting from the CNSC because I have no control over their resourcing.