VANCOUVER, July 31, 2017 /PRNewswire/ - NexGen Energy
Ltd. ("NexGen" or the "Company") (TSX:NXE,
NYSE:NXE) is pleased to announce the positive results of its
independent maiden Preliminary Economic Assessment ("PEA")
of the basement-hosted Arrow Deposit, located on the Company's 100%
owned Rook I project in Saskatchewan's Athabasca Basin.
The maiden PEA was completed by Roscoe Postle Associates Inc.
("RPA"), and is based on the mineral resource estimate
announced by the Company in March
2017 (with an effective date of December 20, 2016) that comprised an Indicated
Mineral Resource of 179.5 M lb of U3O8 contained in 1.18 M tonnes
grading 6.88% U3O8, and an Inferred Mineral Resource of 122.1 M lb
of U3O8 contained in 4.25 M tonnes grading 1.30% U3O8. The PEA does
not include the results of the Company's winter or summer 2017
drill programs which will total over 66,000 m of additional
drilling.
Table 1 – Summary of Arrow Deposit Preliminary Economic
Assessment
PEA Financial
Highlights
|
After-Tax Net Present
Value (NPV8%)
|
CAD $3.49
Billion
|
After-Tax Internal
Rate of Return (IRR)
|
56.7%
|
After-Tax Cash
Payback
|
1.1
Years
|
Pre-production
Capital Costs (CAPEX)
|
CAD $1.19
Billion
|
Average Annual
Production (Years 1-5)
|
27.6 M lbs
U3O8
|
Average Annual
Production (Life of Mine)
|
18.5 M lbs
U3O8
|
Mine Life
|
14.4
Years
|
Average Unit
Operating Cost (Years 1-5)
|
CAD $5.53 (US
$4.42)/lb U3O8
|
Average Unit
Operating Cost (Life of Mine)
|
CAD $8.37 (US
$6.70)/lb U3O8
|
Uranium Price
Assumption
|
USD $50/lb
U3O8
|
Saskatchewan
Royalties (Life of Mine)
|
CAD $2.98
Billion
|
Exchange Rate CAD$1 =
USD$0.80
Leigh Curyer, Chief Executive Officer, commented: "The Arrow
Deposit is one of the most strategically significant and
economically powerful mineral projects I am aware of across any
resource commodity. Yet, it is still in it's infancy in terms of
ultimate resource size given the openness of mineralization and new
discoveries in close proximity to Arrow highlighted in our recent
drilling results. This PEA highlights Arrow's unique technical
setting, grade and characteristics of mineralization, resulting in
it hosting the potential to be a leading source of mined uranium in
the world with a relatively low capital and operating cost per lb
over the life of the mine. Importantly, the project is located in
Saskatchewan – regarded by the
Fraser Institute in 2016 as the most attractive mining jurisdiction
in the world for investment. With CAD$200
million in the treasury, NexGen is well financed to continue
to expand and optimize economically this generational mineral
resource."
Table 2 – Summary of Arrow PEA Production Profile
|
Unit
|
Years
1-5
|
Years
1-10
|
LOM
|
Recovered
Production
|
Total
Tonnes
|
kt
|
2,502
|
5,050
|
7,310
|
Average Annual
Tonnes
|
ktpa
|
501
|
505
|
487
|
Tonnes per Day
Processed
|
tpd
|
1,430
|
1,445
|
1,448
|
Average Annual Grade
U3O8
|
%
|
2.62
|
2.14
|
1.73
|
Total Pounds
U3O8
|
'000 lbs
U3O8
|
137,955
|
227,713
|
267,203
|
Average Annual Pounds
U3O8
|
'000 lbs
U3O8
|
27,591
|
22,771
|
18,549
|
Unit Operating
Cost per Tonne
|
Underground
Mining
|
C$ / t
proc
|
129
|
128
|
132
|
Processing
|
C$ / t
proc
|
112
|
112
|
111
|
Surface &
GA
|
C$ / t
proc
|
64
|
63
|
63
|
Total Operating
Cost
|
C$ / t
proc
|
305
|
303
|
306
|
Unit Operating
Cost
|
C$ / lb
U3O8
|
5.53
(US $4.42)
|
6.73 (US
$5.39)
|
8.37
(US $6.70)
|
Operating
Margin
|
%
|
90.4
|
88.3
|
85.5
|
Table 3 – PEA Sensitivity to Uranium Price
Uranium Price ($
USD/lb U3O8)
|
After-Tax
NPV1,2
|
After-Tax
IRR
|
After-Tax Cash Pay
Back1,2
|
$80/lb
U3O8
|
CAD $6.45
Billion
|
82.3%
|
0.7 Years
|
$60/lb
U3O8
|
CAD $4.48
Billion
|
65.9%
|
0.9 Years
|
$50/lb
U3O8
|
CAD $3.49
Billion
|
56.7%
|
1.1
Years
|
$40/lb
U3O8
|
CAD $2.49
Billion
|
46.2%
|
1.4 Years
|
$30/lb
U3O8
|
CAD $1.50
Billion
|
34.1%
|
1.9 Years
|
$25/lb
U3O8
|
CAD $1.00
Billion
|
27.0%
|
2.4 Years
|
Notes:
1. Based on an 8%
Discount Rate.
2. Based on a 0.80
USD / 1.00 CAD Exchange Rate.
|
Figure 1 – Arrow Undiscounted Cumulative
After-Tax Cash Flow
Production Summary
The PEA envisions a production profile supported by conventional
long-hole stope mining averaging 1,448 tonnes per day at an average
head grade of 1.73% U3O8 over the life of mine. It is envisaged
that mine production will be fed into a conventional uranium
processing plant where uranium recovery is projected to be 96.0%
over the life of mine.
It is envisaged that cemented paste fill tailings will be used,
where tailings are constituted into a paste, mixed with
approximately 5% cement and delivered back underground. The
cemented paste fill tailings will be used to backfill stopes and
the excess will be placed in a, purpose built, Underground Tailings
Storage Facility (see Figure 3 below). Among many other
benefits, this tailings management process is expected to
significantly reduce the surface footprint of the project.
The positive results of the PEA are a function of a conventional
long-hole stope mine plan conceivably extracting compact
near-vertical high-grade uranium mineralization localized in
competent crystalline basement rocks. Arrow is considered an
optimal deposit for long-hole stope mining because it is comprised
of stacked high-grade veins with strong continuity on strike, dip
and vertical extent. Additionally, there are natural pillars
due to the spacing between the mineralized A1 through A4 shears.
Due to the geometry of the Arrow deposit, approximately 93% of the
mineral resource was converted into mineable resources. The
positive results of the PEA are further supported by a high process
recovery rate (96.0%), due to simple mineralogy and low deleterious
elements.
Figure 2 – Arrow Annual Production and Grade
Profile
Figure 3 – Long Section View of Conceptual
Arrow Deposit Mine Infrastructure
Capital Costs
The capital costs (CAPEX) for the contemplated underground mine,
process plant and supporting infrastructure at Arrow are estimated
at CAD $1.66 billion including
initial capital costs of CAD $1.19
billion. The initial capital cost includes a
contingency of 25% or CAD $237
million. RPA estimated the capital costs based on input and
consultation with leading expert service providers who have
experience in construction projects and cost estimation both in the
Athabasca Basin and globally. The
CAPEX is summarized below in Table 4.
Table 4 – Summary Breakdown of Capital Cost Estimates
Capital Costs ($
CAD Millions)
|
Initial
|
Sustaining
|
Total
|
Mine
|
$324
|
$205
|
$529
|
Process Plant &
Infrastructure & Indirect Costs
|
$627
|
$199
|
$826
|
Decommissioning
|
-
|
$64
|
$64
|
Contingency
|
$237
|
-
|
$237
|
Total Capital
Costs
|
$1,188
|
$468
|
$1,656
|
Operating Costs
The operating cost estimate (OPEX) is based on a shaft accessed
underground mine with a conventional longitudinal and transverse
long-hole stope mining method, conventional processing facility and
underground placement of cemented paste tailings. The OPEX is
summarized below in Table 5, and the total cash costs and average
production from the Arrow deposit over the first five years is
compared to current global producers of uranium in Figure 4 and
other select underground global producers across commodities in
Figure 5.
Table 5 – Unit Operating Cost Estimates
Operating
Costs
|
$ CAD/lb
U3O8
|
Mining
|
$3.61
|
Mineral
Processing
|
$3.03
|
General and
Administration
|
$1.73
|
Total Operating
Costs
|
$8.37
|
Figure 4 – Total Cash Costs and Annual
Production Compared Globally
Notes to Figure 4:
- Adapted from SNL Metals and Mining.
- Arrow production and costs based on PEA results.
- All other data based on 2016 modelled costs and production from
SNL Metals and Mining. NexGen makes no representations as to the
reliability of this information.
- SNL estimates costs and production for approximately 70% of
uranium operations.
- Costs include operational costs.
- Costs exclude sustaining capital costs, taxes, profit-based
royalties, depreciation, and corporate costs.
- The cost curve does not consider secondary supplies of
U3O8.
Figure 5 – Total Unit Operating Costs Per Tonne Costs
Compared Globally
Notes to Figure 5:
- Unit operating costs are the sum of site-based mining,
processing, and general and administration.
- All of the comparable projects are underground mines with
production rates ranging from nominally 1,000 tpd to 6,000
tpd.
- The majority of data points are mines that are considered to be
in remote areas.
- Data is based on a variety of sources, including SNL Metals and
Mining, and publicly available information. NexGen makes no
representations as to the reliability of this information.
The PEA is preliminary in nature and includes inferred
mineral resources that are too speculative geologically to have
economic considerations applied to them that would enable them to
be categorized as mineral reserves. There is no certainty
that PEA results will be realized. Mineral resources that are not
mineral reserves do not have demonstrated economic
viability.
Conference Call & Webinar:
NexGen will host a conference call and accompanying live webinar
today, Monday July 31, 2017 at
8:15 a.m. Eastern Standard Time.
NexGen will discuss the results of the PEA before opening the
call to questions from participants. To join the call please
dial (647) 427- 7450 (Local/International) or (888)
231-8191 (North America Toll Free) and an operator will put the
call through. An accompanying live webcast and slides are available
at the following
link https://event.on24.com/wcc/r/1473876/9E04D006580642EEF7C22DCE3E35143A.
A recorded version of the proceedings will be available on our
website (www.nexgenenergy.ca) shortly after the call. The playback
numbers are (416) 849-0833 (Local/International) or (855) 859-2056
(North America Toll Free) (Playback Passcode 60229327) and
available until October 30, 2017.
About NexGen
NexGen is a British Columbia
corporation with a focus on the acquisition, exploration and
development of Canadian uranium projects. NexGen has a highly
experienced team of uranium industry professionals with a
successful track record in the discovery of uranium deposits and in
developing projects through discovery to production.
NexGen owns a portfolio of prospective uranium exploration
assets in the Athabasca Basin,
Saskatchewan, Canada, including a
100% interest in Rook I, location of the Arrow Discovery in
February 2014 and Bow Discovery in
March 2015 and the Harpoon discovery
in August 2016. The Arrow deposit's
updated mineral resource estimate with an effective date of
December 20, 2016 was released in
March 2017, and comprised 179.5 M lbs
U3O8 contained in 1.18 M tonnes grading 6.88% U3O8 in the Indicated
Mineral Resource category and an additional 122.1 M lbs U3O8
contained in 4.25 M tonnes grading 1.30% U3O8 in the Inferred
Mineral Resource category.
Technical Disclosure
The scientific and technical information in this news release
with respect to the PEA has been reviewed and approved by
David Robson, P.Eng., M.B.A., and
Jason Cox, P.Eng. of RPA, each of
whom is an independent "qualified person" under National Instrument
43-101 – Standards of Disclosure for Mineral Projects
("NI-43-101"). All other scientific and technical
information in this news release has been approved by Mr.
Garrett Ainsworth, P.Geo., Vice
President – Exploration & Development for NexGen. Mr.
Ainsworth is a qualified person for the purposes of NI 43-101 and
has verified the sampling, analytical, and test data underlying the
information or opinions contained herein by reviewing original data
certificates and monitoring all of the data collection
protocols.
Technical Reports
The mineral resource estimate referred to herein was announced
by the Company on March
6th, 2017, and has an effective date of
December 20, 2016. For details
of the Rook I Project including the quality assurance program and
quality control measures applied and key assumptions, parameters
and methods used to estimate the mineral resource set forth herein
please refer to the technical report entitled "Technical Report on
the Rook 1 Property, Saskatchewan,
Canada" dated effective March 31,
2017 (the "Rook 1 Technical Report"). The Rook I
Technical Report is available on NexGen's issuer profile on SEDAR
at www.sedar.com.
A new technical report in respect of the PEA, that will
supersede the Rook 1 Technical Report, will be filed on SEDAR
(www.sedar.com) and EDGAR (www.sec.gov/edgar.shtml) within 45 days
of this news release.
SEC Standards
Estimates of mineralization and other technical information
included or referenced in this news release have been prepared in
accordance with NI 43-101. The definitions of proven and probable
mineral reserves used in NI 43-101 differ from the definitions in
SEC Industry Guide 7. Under SEC Industry Guide 7 standards, a
"final" or "bankable" feasibility study is required to report
reserves, the three-year historical average price is used in any
reserve or cash flow analysis to designate reserves and the primary
environmental analysis or report must be filed with the appropriate
governmental authority. As a result, the reserves reported by the
Company in accordance with NI 43-101 may not qualify as "reserves"
under SEC standards. In addition, the terms "mineral resource",
"measured mineral resource", "indicated mineral resource" and
"inferred mineral resource" are defined in and required to be
disclosed by NI 43-101; however, these terms are not defined terms
under SEC Industry Guide 7 and normally are not permitted to be
used in reports and registration statements filed with the SEC.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability. Investors are cautioned not to
assume that any part or all of the mineral deposits in these
categories will ever be converted into reserves. "Inferred mineral
resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Under Canadian securities laws, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Additionally,
disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian securities laws; however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measurements. Accordingly,
information contained or referenced in this news release containing
descriptions of the Company's mineral deposits may not be
comparable to similar information made public by U.S. companies
subject to the reporting and disclosure requirements of
United States federal securities
laws and the rules and regulations thereunder.
Forward-Looking Information
The information contained herein contains "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and "forward-looking
information" within the meaning of applicable Canadian securities
legislation. "Forward-looking information" includes, but is
not limited to, statements with respect to the activities, events
or developments that the Company expects or anticipates will or may
occur in the future, including, without limitation, the completion
of the technical report in support of the PEA. Generally, but not
always, forward-looking information and statements can be
identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", or "believes" or the negative connotation
thereof or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might"
or "will be taken", "occur" or "be achieved" or the
negative connotation thereof.
Forward-looking information and statements are based on the
then current expectations, beliefs, assumptions, estimates and
forecasts about NexGen's business and the industry and markets in
which it operates. Forward-looking information and statements are
made based upon numerous assumptions, including among others, that
the proposed transaction will be completed, the results of planned
exploration activities are as anticipated, the price of uranium,
the cost of planned exploration activities, that financing will be
available if and when needed and on reasonable terms, that third
party contractors, equipment, supplies and governmental and other
approvals required to conduct NexGen's planned exploration
activities will be available on reasonable terms and in a timely
manner and that general business and economic conditions will not
change in a material adverse manner. Although the assumptions made
by the Company in providing forward looking information or making
forward looking statements are considered reasonable by management
at the time, there can be no assurance that such assumptions will
prove to be accurate.
Forward-looking information and statements also involve known
and unknown risks and uncertainties and other factors, which may
cause actual results, performances and achievements of NexGen to
differ materially from any projections of results, performances and
achievements of NexGen expressed or implied by such forward-looking
information or statements, including, among others, negative
operating cash flow and dependence on third party financing,
uncertainty of the availability of additional financing, the risk
that pending assay results will not confirm previously announced
preliminary results, imprecision of mineral resource estimates, the
appeal of alternate sources of energy and sustained low uranium
prices, aboriginal title and consultation issues, exploration
risks, reliance upon key management and other personnel,
deficiencies in the Company's title to its properties, uninsurable
risks, failure to manage conflicts of interest, failure to obtain
or maintain required permits and licenses, changes in laws,
regulations and policy, competition for resources and financing and
other factors discussed or referred to in the Company's Annual
Information Form dated March 31, 2017
under "Risk Factors".
Although the Company has attempted to identify important
factors that could cause actual results to differ materially from
those contained in the forward-looking information or implied by
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended.
There can be no assurance that forward-looking information
and statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated,
estimated or intended. Accordingly, readers should not place undue
reliance on forward-looking statements or information. The Company
undertakes no obligation to update or reissue forward-looking
information as a result of new information or events except as
required by applicable securities laws.
Non-IFRS Measures
This news release refers to cash cost and certain other
non-IFRS measures. These measurements have no standardized meaning
under IFRS and may not be comparable to similar measures presented
by other companies. These measurements are intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS.
SOURCE NexGen Energy Ltd.