RE:RAYMOND JAMES COMMENTS TODAY With a bit of formatting.
Copied from a post on the NXE bb (h/t letsgetready)
Barn-Burner Hole 62 Sets up Arrow for World-Beating Resource
Recommendation
NexGen released assays results from a single hole, 62, drilled at Arrow in Saskatchewan. While preliminary scintillometer readings suggested 62 would be strong, assay confirm it as the richest hole drilled at Arrow to date and one of the most prolific ever in the world of uranium. The result bolsters the potential for the maiden 43-101 resource estimate due out as early as March, which we believe will rank Arrow as the largest undeveloped high-grade project globally, as well as the likelihood of an eventual takeout bid.
Analysis
Assay Highlights. Hole 62, the last of the summer 2015 program, returned a continuously mineralized interval of 78.0 m grading 10.0% U3O8, including a stronger section of 12.9 m of 38.3%. For reference, 10.0% equates to an in-situ rock value of over US$7,600/t at the spot uranium price of US$35/lb, or 7.1 oz/t gold. Only McArthur Compares. The continuous grade-thickness (GT) of 787 %-m easily ranks 62 as the best hole of the project, beating even the incredible hole 44b, which returned 655 %-m, as well as besting anything ever observed at Wheeler River, Roughrider or Cigar Lake three of the most prolific deposits in the world. Only McArthur River regularly returned GTs of similar magnitude to Arrow. In fact, we understand McArthur only had six holes drilled from surface with GTs over 100 %- m, while Arrow already has 19, the bulk of which are widely-spaced. Any comparison to McArthur bodes extremely well for Arrows potential McArthur has nearly 700 Mlbs in aggregate historic production plus resources today, is the worlds largest mine and the crown jewel of Cameco, a C$6.5 bln market cap company.
Resource Expectations. If one assumes a 25 m radius (50 m diameter) of influence what resource engineers at SRK are said to be allowing for the Inferred category at Arrow a hole like 62 running 70 m of 10% U3O8 on paper adds a mind-numbingly high ~95 Mlbs of contained uranium. And 62 is not just a one-hole wonder, rather, it represents just one of seven world-class holes, all with GTs well over 300 %-m, defining the A2 Sub-zone over a 203 m strike length. Accordingly, we believe the 125 Mlbs which supports our valuation today is very conservative and we would not be surprised to see the maiden 43-101 estimate range between 150 and 200 Mlbs in contained metal at average grades well over 1% U3O8 (depending on cut-off). The Sub-zone will comprise the majority of the resource as a very high-grade core, is still wide open for expansion and is the focus of the on-going 30,000 m winter drill campaign.
Valuation. Assuming a 150 Mlbs resource, NXE trades at US$0.85/lb today, or US$0.64/lb assuming 200 Mlbs. This is highly attractive relative to its closest peer, FCU and the nearby Triple R deposit, at US$1.70/lb (based on 105.5 Mlbs resources).