TD NexGen Energy Ltd.
(NXE-T) C$10.25
Federal Licensing/Permits Remain the Key Focus for 2024
Event
We have updated our estimates to reflect NexGen's Q4/23 financial results.
Management plans to host a conference call on Monday, March 11, at 8:30 am ET
(1-888-664-6392).
Impact: NEUTRAL
Balance sheet bolstered by ATM financings — NexGen ended 2023 with
$279mm of working capital including cash of $291mm. Total cash expenditures in
the fourth quarter remained elevated and the company has now incurred $47mm
in pre-commitment early works at Arrow ($28mm in Q3/23) against an original
budget of $94.5mm. A total of $176mm was raised through their ATM in 2023
along with a further $28mm through the exercise of its options. Subsequent
to year-end, 13mm shares was issued under their ATM for gross proceeds of
$135.0mm.
Progress continues on federal permitting — On February 12, the Federal
and Indigenous Review Team (FIRT) completed their technical review of the
responses to information requests (IRs) submitted by NexGen. To date, FIRT
has accepted 171 out of 274 IRs. NexGen is currently developing responses
to the remaining 103 IRs, and once complete, the responses will be submitted
to the CNSC, along with a revised Federal EIS. The end goal is to obtain a
Uranium Mine and Mill Licence from the CNSC following the establishment of
a Commission Hearing date anticipated for later this year. In the interim, the
company is transitioning from FEED to detailed engineering and continues to
conduct site confirmation and process plant optimization studies.
Model update — In addition to updating our estimates to reflect the company's
financial position, we have rolled forward our model to 2024 from 2023YE. We
have also increased our initial capex assumption for Arrow to $1.65bln (previously
$1.6bln) and pushed out our initial start-up to mid-2028 from early 2028 based on
the assumption the company will receive its federal permits late this year followed
by a 40-month build.
TD Investment Conclusion
We are maintaining our $13.00 target price and SPECULATIVE BUY rating. We
believe that NexGen stands to benefit from the positive outlook for uranium prices
and the nuclear sector in general, which we believe is in the best position in more
than 15 years.