QUICK TAKE: COMPANY UPDATE
CASHED-UP AFTER ANOTHER EQUITY RAISE AS CONSTRUCTION AT ARROW APPROACHES
THE TD COWEN INSIGHT
NexGen announced a $180mm equity offering in Australia this morning. We had expected the company to raise ~$168mm across the balance of 2024 (inclusive of the $130mm raised earlier this year). With the offering priced at a ~4% discount to yesterday's closing price on the TSX, we expect modest pressure on the shares in today's trading.
Impact: SLIGHTLY NEGATIVE
Equity raise in Australia — This morning, NexGen announced the company has entered into a placement agreement for an offering of 16,129,032 common shares marketed to Australian investors at a price of $11.11/sh. (~4% discount to yesterday's closing price) for gross proceeds of ~$180mm. The offering is expected to close on or about May 15, 2024.
$180mm remaining on ATM — As a result of the offering, the company has amended its December 2023-renewed $500mm ATM program to $315mm. Earlier this year, ~13mm shares were issued through the ATM for gross proceeds of ~$135mm. ~$180mm remains on the company's ATM after adjusting for the equity raises year-to-date. As at February 7, the company reported it had $410mm in cash.
TD Assumptions — We had modeled $168mm in equity raised during 2024 (inclusive of the $135mm already issued) and a further $262mm in 2025 as the company approaches the commencement of construction at Arrow (~40-month build). We forecast total capex of $1.65bln through 2027 with initial spending of $83mm in Q4/24 and initial production in mid-2028.
Next steps at Arrow — The company remains engaged in the federal permitting process (Figure 1) — on February 12, the Federal and Indigenous Review Team (FIRT) completed their technical review of the responses to information requests (IRs) submitted by NexGen. As of the company's most recent update in mid-March, CEO Leigh Curyer, noted that they have 48 remaining IRs to address to the federal regulator, CNSC, and the company expects to answer these IRs in the coming weeks. The end goal is to obtain a Uranium Mine and Mill License from the CNSC following the establishment of a Commission Hearing date anticipated for later this year.