ARROW EIS PERMITTING NEARING CONCLUSION
THE TD COWEN INSIGHT
We have updated estimates to reflect NexGen's Q3 financials reported last week along with recent corporate developments discussed on today's conference call. Most importantly, in our view, the EA process at Arrow appears to be approaching a conclusion, with the expectation that project licensing and sanctioning could occur sometime in mid-2025, which would be a significant milestone for NexGen.
Impact: NEUTRAL
Arrow Environmental Assessment (EA) process approaching a conclusion — Management continues to work closely with the Canadian Nuclear Safety Commission's (CNSC) Federal- Indigenous Review Team (FIRT) to resolve the outstanding Information Requests (IR's) in order to complete the EIS Technical Review stage. Management was reluctant to provide the total number of IRs still outstanding on its call given the ongoing nature of the process, but did comment that according to the CNSC the process is nearing a conclusion.
Next steps — The next update from the CNSC is scheduled for November 20. Our understanding is that if all the IRs are accepted, the EIS would be finalized and the process would move to the 'EA Decision' stage before reaching a final EA approval in a CNSC hearing. Management noted on its conference call that it expects to conclude the EA and licensing under one CNSC hearing. Our best estimate is that the hearing and permitting concludes towards mid-next year.
First production from Arrow expected in 2029 – We have pushed out our start-up assumption for Arrow from H2/2028 to H1/2029, based on the assumption for a project sanctioning in the second half of next year and management's guide for a 40-month build (3.5 years). The change had a modestly negative impact on our NAV, but had no impact on our overall investment thesis for Arrow or the company.
In parallel with the permitting work, management remains active on several fronts including greenfield exploration at Paterson Corridor East (see page 5), financing and offtake. On the financing front management noted that it continues to receive strong expressions of interest on project financing. In past calls, management noted that the company has had expressions of interest totaling US$1.4bln in debt financing. With respect to offtake, management noted that they are advancing multiple offtake contract negotiations with various utilities, and they are not seeing any decline in interest despite the pullback in spot pricing since the start of the year. We expect announcements on financing and offtake contracts will likely coincide with the conclusion of the permitting process.