NexGen stock rises on $250m uranium purchase deal

Aerial view of NexGen Energy’s Rook 1 project in Saskatchewan, Canada. Image from NexGen Energy.

Shares of NexGen Energy (TSX: NXE) (NYSE: NXE) rose on Thursday after the uranium developer inked an agreement with MMCap International for the procurement of 2.7 million pounds of uranium concentrate.

The deal is valued at $250 million, based on the five-day average spot price.

NexGen traded 4.6% higher at C$11.00 at 12 pm EDT. The company has a market capitalization of C$5.9 billion ($4.3bn).

NexGen will issue $250 million in debentures to MMCap in exchange for the uranium concentrate. The debentures are convertible into about 23 million common shares of NexGen, equating to 4.3% of the company’s outstanding share capital.

This purchase, according to NexGen CEO Leigh Curyer, represents a “strong opportunity for the company to bolster its marketing discussions and optimizes the optionality of project financing structures under evaluation.”

It comes at a time when available physical uranium is extremely tight and expected to continue to be scarce given the long-term supply deficit, Curyer noted.

NexGen’s main development focus is the Rook I project in the Athabasca Basin, a world-leading source of uranium production. The project hosts the Arrow discovery from 2014, considered to be the largest development-stage uranium deposit in Canada.

In November 2023, the company obtained environmental approval for the proposed mine, making it the first approved greenfield uranium development in 20 years. Permitting to construct the underground mine and mill is underway.

The project is expected to produce 21.7 million lb. of uranium oxide annually over 11 years from the Arrow deposit, according to a 2021 feasibility study. Last month, the company said it had found a new deposit 3.5 km east of Arrow.