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."
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Disclosures from Eight Capital, NexGen Energy Ltd., Comment, June 7, 2017
Conflicts of Interest: Eight Capital has written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research and other businesses. The compensation of each Research Analyst/Associate involved in the preparation of this research report is based competitively upon several criteria, including performance assessment criteria, the quality of research and the value of the services they provide to clients of Eight Capital. The Research Analyst compensation pool includes revenues from several sources, including sales, trading and investment banking. Research analysts and associates do not receive compensation based upon revenues from specific investment banking transactions.
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Research Analyst Certification: Each Research Analyst and/or Associate who is involved in the preparation of this research report hereby certifies that:
• the views and recommendations expressed herein accurately reflect his/her personal views about any and all of the securities or issuers that are the subject matter of this research report;
• his/her compensation is not and will not be directly related to the specific recommendations or views expressed by the Research Analyst in this research report;
• they have not affected a trade in a security of any class of the issuer whether directly or indirectly through derivatives within the 30-day period prior to the publication of this research report;
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Cantor Fitzgerald, NexGen Energy Ltd., Comment, June 7, 2017
Disclosures from April 27. Facts may have changed.
Potential conflicts of interest
The author of this report is compensated based in part on the overall revenues of CFCC, a portion of which are generated by investment banking activities. Cantor may have had, or seek to have, an investment banking relationship with companies mentioned in this report. CFCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. Although CFCC makes every effort possible to avoid conflicts of interest, readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.
CFCC has provided investment banking services or received investment banking related compensation from NexGen Energy within the past 12 months.
The analysts responsible for this research report do not have, either directly or indirectly, a long or short position in the shares or options of NexGen Energy.
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