The Energy Report - Thu, Jun 15, 2017

Stepout Drilling Reveals Uranium Expansion Opportunity in Athabasca Basin Deposit

Winter drilling in the Athasbasca Basin has revealed significant mineralization and off-scale radioactivity, as well as the opportunity for mineral resource expansion, and analysts now await the preliminary economic assessment that is expected shortly.


NexGen Energy Ltd. (NXE:TSX; NXE:NYSE.MKT) released on June 7 the radioactivity results for the final 16 holes of its winter drill program at the Arrow deposit at its Rook I property in the Athabasca Basin in Canada.

David Talbot, an analyst with Eight Capital, in a June 7 report, wrote, "winter 2017 drilling has ended on a high note as Arrow Deposit is expanded upon scintillometer results from the final 16 holes of the winter 2017 drilling program at Arrow Deposit, Rook I property. While not as spectacular as the potentially new zone of massive to semi-massive pitchblende intercept on A3 Shear announced in late April, systematic drilling of broad and high grade U3O8 mineralization on each of the A1 to A5 Shears should continue to help further expand resources. Furthermore, another zone located 300m to the SW of Arrow presents additional upside potential."

"Winter drilling in the SW and NW gaps was highly successful, returning both high grades and broad intervals of mineralization, both inside and beyond current resource areas. They will be [the] focus of summer drilling. Growth of Arrow should continue, particularly in the SW gap between the main Arrow deposit and the 180m SW deposit," Talbot stated.

The Eight Capital analyst also noted that the preliminary economic assessment (PEA) "due in coming months should help investors value this stock. 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."

Eight Capital maintains a Buy rating on NexGen and has a target price of CA$5.30 per share. The stock is currently trading at around CA$2.97.

Analyst Rob Chang of Cantor Fitzgerald expressed a similar view, writing on June 7 that the "latest set of drill results continue to show growth in the potential mineable resource envelope at Arrow. However, we expect most attention will be paid to the upcoming maiden Preliminary Economic Assessment, which is expected by the end of June/early July."

Chang noted that NexGen has "$57M cash on hand which will likely be able to sustain over 2 full years of exploration drilling."

Cantor Fitzgerald currently has rated NexGen a Buy and has set a target price of $5.20 per share.

Garrett Ainsworth, NexGen's vice president of exploration and development, commented: "Drilling in the southwest and northwest gaps of the Arrow Deposit has been highly successful by returning both broad intervals of mineralization incorporating high grade zones. The southwest and northeast gaps will be targeted in the summer 2017 program to ensure that mineralization in these zones are optimally incorporated into future Arrow resource grade shells. Exploration drilling at a prospective ground 3D resistivity anomaly located 300 m southeast of the Arrow Deposit has returned elevated radioactivity and visible uranium mineralization and will be a priority target of future programs."

Leigh Curyer, NexGen's CEO, commented: "Exploration in winter has delivered discovering new zones of mineralization inside and outside of the area of previously known mineralization. . .our maiden PEA is scheduled to be completed in the coming months providing a basis to rank Arrow on a global scale to other producing and advance development uranium projects."

1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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