Spincos Coming Soon? Interesting excerpt from the $NXE MD&A (h/t @255Conquest):
Speculating we will see multiple spincos. Eastern Athabasca (IsoEnergy?); Bow + Cannon (NXE Energy SW1?); and the rest of non-Arrow SW package (NXE Energy SW3?).
$NXE could also eventually spinout the royalty vehicle. My hope is that $NXE will retain a royalty on all the properties being spun out... including, at some point, a fat, sliding-scale royalty on Arrow.
To quote someone very smart:
"I like the idea of a sliding scale royalty, combined with a pre-production royalty. The pre-production royalty funds sg&a of NXE 2.0 while at the same time provides and incentive for Cameco or Rio to get Arrow into production sooner. Sliding scale royalty is awesome if you are bullish on uranium as a higher uranium price brings not only a higher price on the commodity itself, but a higher percentage participation.... all good. Outstanding idea...
Following the sale of the Eleonore property to Goldcorp, it was almost impossible to buy Virginia stock as long-term value guys kept sucking up the stock. Same thing here. Why own Cameco when you can own a royalty, especially a sliding scale one."
It would appear from the way the subsidiaries are created, the royalty will not be rolled into an exploreco. Instead, the royalty co will be stand alone. Leigh has the opportunity to create a royalty powerhouse.
While there is virtually no competition for pure-play Uranium royalties (Laramide has a fat, sliding-scale royalty on a sh!+ty asset, same with Altius and AngloPacific), Leigh's merchant banking vehicle need not focus on just Uranium. The subsidiary is being named "NXE ENERGY Royalties", afterall. Perhaps with cashflows, both pre-production/advanced minimum payment and from production, Leigh could also buy royalties on Lithium deposits. No competition there either.
Just speculating out loud.