Investors have rewarded British Columbia uranium developer NexGen by pushing its Toronto-listed equity up by nearly 14% on Monday, following the release of the prefeasibility study (PFS) results and a mineral resource update of the Arrow deposit in the Athabasca basin in Saskatchewan.
The PFS delivered a “substantial improvement” to the 2017 preliminary economic assessment (PEA) with a 64% increase in average yearly after-tax net cash flow, CEO Leigh Curyer said in a news release announcing the study results.
The PFS incorporated only the indicated mineral resource of Arrow, which reduced its mine life, but increased the average grade, while maintaining a consistent capital expenditure and lowered yearly operating expenses.
The PFS envisions an underground mine that will operate for nine years, rather than the previously estimated 15 years at a lower mining rate of 1 039 t/d, compared with 1 448 t/d considered in the PEA.
The focus on the indicated mineral resource increased the average grade from 1.73% U3O8 to 3.09% U3O8, lifting production to 25.4-million pounds a year, from 18.5-million pounds a year.
The initial capital costs increased by 5% to C$1.25-billion owing to the introduction of the provincial sales tax (PST). Excluding the PST, initial capital costs were about 0.5% lower than the PEA.
Operating expenses fell by 31% to C$5.81/lb.
The project’s net present value, at an 8% discount, increased to C$3.7-billion, from $3.49-billion, while the internal rate of return remained unchanged at 56.8%,
NexGen increased the indicated mineral resource of Arrow from 179.5-million pounds of U3O8 contained in 1.18-million tonnes, grading 6.88%, in the March 2017 mineral resource estimate, to 256.6-million pounds of U3O8 contained in 2.89-million tonnes, grading 4.03% U3O8.
The company said that it would expedite Arrow to feasibility study stage and that it would initiate a Stage 2 drilling programme of 125 000 m in December.
NexGen’s stock closed 13.73% higher at C$3.23 a share.