In an Dec. 11 research note, Talbot wrote that NexGen Energy Ltd. (NXE:TSX; NXE:NYSE.MKT) had announced the findings from 21 holes of summer infill drilling at Arrow and among them were "the best assay results to date from the A3 shear."
A highlight hole, AR-17-147c3, showed 3.7% over 60 meters (60m), including 6.51% over 33m and 17.68% over 6m between depths of 597m and 657.5m. Generally, the A3 shear results "fall within," "confirm" and expand "slightly" the high-grade resource area, noted Talbot. "While somewhat expected, these results should help increase resource confidence from Inferred to Indicated upon the next resource estimate."
Drilling was successful, too, in filling some of the mineralization gaps to the southwest and northeast, Talbot said. "Mineralization isn't quite as strong in these areas, but zones remain relatively wide, suggesting ample hydrothermal fluid flow," he added. Further, the A3 shear remains open at depth.
Modest resource increases like these only minimally affect NexGen's stock, Talbot pointed out, because the Arrow deposit has a "+300 million pound U3O8 deposit already defined."
What has impacted the company's share price, asserted Talbot, is the recent upswing in the uranium price on the news that Kazakhstan will cut production by 20% between 2018 and 2020. The boosted uranium price, in turn, has caused the stocks of uranium firms like NexGen, "larger market cap names with longer time horizons," to increase. "We believe this trend will continue as NexGen becomes one of the sector's go-to names," said Talbot, adding that the company's market cap has surpassed $1.1 billion.
Eight Capital has a Buy rating and a CA$6.10 per share target price on NexGen Energy. The stock is trading now around $3.51/share.