VANCOUVER (miningweekly.com) – Uranium explorer NexGen Energy has successfully closed a $110-million financing with Hong Kong-based CEF Holdings (CEF) and affiliates of its shareholders, comprising $50-million in common shares and a $60-million principal amount of unsecured convertible debentures.
Under the terms of the financing, NexGen issued 24.15-million shares at C$2.70 each, which is US$2.07 at an exchange rate of 1.3060, per placement share.
The new debentures carry a 7.5% coupon over a five-year term and are convertible at the holder's option into common shares of the company, at a conversion price of $2.69 a common share.
Two-thirds of the interest (equal to 5% a year) is payable in cash. One-third of the interest (equal to 2.5% a year) is payable in common shares issuable at a price equal to the 20-day volume-weighted average trading price of NexGen stock on the exchange, on which it has the greatest trading volume ending three trading days before the interest payment due date.
From June 21, 2020 onwards, NexGen has the option, at any time that the 20-day volume-weighted average trading price of the company’s TSX-listed stock exceeds 130% of the conversion price, to redeem the new debentures at par plus accrued interest.
Including the proceeds from the financing, NexGen now has cash reserves of about C$200-million, which will be used to fund the continuing exploration and development of the company's SW2 properties (which includes the Rook 1 project), in Saskatchewan’s emerging south-western Athabasca basin, and for general corporate purposes.
The company and CEF have agreed that, for as long as CEF holds at least 15% of the outstanding equities of NexGen, CEF has the right to nominate one director to the board. CEF's initial nominee is CEF CEO and chairperson Warren Gilman, who has been appointed to the board with immediate effect.
CEF is 50% owned by CK Hutchison Holdings and 50% by the Canadian Imperial Bank of Commerce. CK Hutchison Holdings is the publicly listed flagship company of the CK Hutchison group of companies, the Hong Kong-based multinational conglomerate with a combined market capitalisation of more than $100-billion.
NexGen's 100%-owned Rook I project hosts the high-grade Arrow deposit, which has a compliant indicated mineral resource estimate of 179.5-million uranium oxide (U3O8) contained within 1.18-million tonnes grading 6.88% U3O8, including a high-grade core of 164.9-million pounds of U3O8 contained within 400 000 t grading 18.84% U3O8.