NexGen Energy Ltd. (NXE:TSX; NXGEF:OTCQX) released results from 18 holes from its winter drill program at the Rook I property in Canada's Athabasca Basin in Saskatchewan. According to the company, hole AR-17-136c2 is marked by "dense accumulations of massive to semi-massive pitchblende mineralization and is the strongest zone of mineralization encountered in the A3 shear to date. This newly discovered area is open to the northeast."
Garrett Ainsworth, NexGen's vice-president of exploration and development, stated, "Drilling has been very successful in significantly expanding mineralization at Arrow on several fronts. The discovery of massive to semi-massive pitchblende mineralization encountered in hole AR-17-136c2 in the A3 shear looks identical to that found in the A2 Sub-Zone."
The A2 shear zone also shows expansion. Step-out drilling 200 meters northeast of existing drilling has intersected "39.0 m of total composite mineralization including 1.65 m of total composite off-scale radioactivity." A drill hole 255 meters northeast has intersected "18.5 m of total composite mineralization including 1.6 m of total composite off-scale radioactivity."
On the A2 shear, Ainsworth said, "Further step outs into the northeast gap of the A2 shear have returned additional high grade intervals, where we expect mineralization to continue further northeast and down-dip to drill hole AR-15-50. Scissor drill holes stepping out and within the A2 and A3 High Grade Domains continues to exceed our expectations."
Rob Chang, an analyst with Cantor Fitzgerald, wrote on April 18 that "successful drilling has expanded the mineralization at Arrow on several fronts. Today's results highlight the expansion potential as northeast step-out drilling in the A2, A3, and A4 shears have encountered varying degrees of uranium mineralization. We reiterate our Buy recommendation and $5.15/share target price."
Chang also noted that the "2017 winter drill program targeting 35,000m using seven drill rigs is ongoing. A Preliminary Economic Assessment for Arrow is expected for Q3/17. NexGen Energy currently has $58M cash on hand which will likely be able to sustain over 2 full years of exploration drilling."
David Talbot of Eight Capital noted that the drill results showed the A2 and A4 trends "hosted several drill holes with thick intercepts, strong and off-scale (>10,000 cps) radioactivity and therefore potential for high grade uranium mineralization."
Talbot also noted that "management had expected to have only one high grade subzone at Arrow (A2). This provides a huge opportunity given sparse drill spacing on A3 Shear. Hitting anything that looks remotely like the A2 Shear Subzone is very significant."
Eight Capital has a Buy recommendation on NexGen and a share price target of CA$5.30.
Talbot concluded that "Arrow is a world-class deposit; the 3rd largest in the Athabasca Basin and may even overtake Cigar Lake this year pending continued positive drill results. . .an initial PEA is due in July-August and investors eagerly await its economics."
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Additional disclosures about the sources cited in this article
Cantor Fitzgerald, April 18, 2017 Comment, NexGen Energy Ltd.; Disclosures as of Mar. 6, 2017, Report. Facts may have changed.
Potential conflicts of interest
The author of this report is compensated based in part on the overall revenues of CFCC, a portion of which are generated by investment banking activities. Cantor may have had, or seek to have, an investment banking relationship with companies mentioned in this report. CFCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. Although CFCC makes every effort possible to avoid conflicts of interest, readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.
CFCC has provided investment banking services or received investment banking related compensation from NexGen Energy within the past 12 months.
The analysts responsible for this research report do not have, either directly or indirectly, a long or short position in the shares or options of NexGen Energy.
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Analyst certification: The research analyst whose name appears on this report hereby certifies that the opinions and recommendations expressed herein accurately reflect his personal views about the securities, issuers or industries discussed herein.
Eight Capital, NexGen Energy Ltd., Comment, April 18, 2017
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