Nexgen Energy Ltd
TSX:NXE
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
7.2
12.42
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Nexgen Energy Ltd
Earnings Call Analysis
Q2-2024 Analysis
Nexgen Energy Ltd
NexGen Energy is positioned to advance its Rook I project significantly with the global demand for uranium on the rise, primarily driven by countries seeking stable, clean energy sources. Current global uranium supply is strained, with a deficit estimated to be 60 million pounds annually, which could grow to over 240 million pounds by 2040. The company's CEO, Leigh Curyer, highlights that the current supply challenges are further exacerbated by geopolitical factors and legislative issues affecting production costs in leading nations like Kazakhstan and Indonesia.
As of the end of Q2 2024, NexGen reported approximately CAD 570 million in cash. The company has raised CAD 346.5 million in the first half of the year and has a strategic budget of CAD 161 million for 2024. This budget covers various expenses, including exploration, permitting, and community programs. Additionally, site enhancements have been made, preparing for substantial construction pending the final federal permit. The Rook I project is on track to begin major construction upon approval, with a projected 40-month timeline to reach production.
The company has made notable strides in exploration, particularly with its recent discovery of the Patterson Corridor East (PCE), which exhibits broad mineralization characteristics similar to its Arrow deposit. Preliminary drilling results show that PCE could potentially exceed Arrow in terms of size and mineral quality, boasting ultra-high-grade intercepts exceeding 61,000 counts per second. Curyer expressed excitement over the validation of their theories, indicating a promising trajectory for further drilling and discovery at the site.
The economic outlook for the Rook I project has been adjusted, with an eye-popping net present value (NPV) of CAD 6.3 billion based on uranium prices of USD 95 per pound. This includes adjusted capital expenditure (CapEx) estimates rising to CAD 2.2 billion and operational expenditures (OpEx) projected at USD 998 per pound, impacted by inflation and design enhancements. Importantly, the mine's design incorporates innovative reclamation processes, which are projected to reduce closure costs significantly.
NexGen is exploring strategic contracting opportunities with utilities, emphasizing flexibility and market-related pricing in their agreements. They've noted a surge in interest from multiple new utility partners looking for uranium supply starting in 2028. This diversifies and strengthens their portfolio as the company prepares to negotiate these offtake agreements as they near federal approvals.
NexGen is not just focused on financial metrics; it is equally committed to environmental, social, and governance (ESG) standards. Their comprehensive sustainability report highlights ongoing efforts in community training programs and equitable workforce representation, reflecting the company’s dedication to local community engagement and development, particularly emphasizing indigenous participation.
Overall, NexGen stands at a pivotal juncture with its Rook I project. With crucial permits expected soon and robust economic indicators supporting its endeavors, the future looks bright for the company. Investors should remain attuned to developments regarding federal approvals, construction commencement, and ongoing exploration results, as these will significantly impact both valuation and growth potential in an increasingly competitive uranium market.
You don't have any saved screeners yet
Good morning, ladies and gentlemen, and welcome to the NexGen Energy's Q2 2024 Financial Results Conference Call. [Operator Instructions]. This call is being recorded on Thursday, August 8, 2024. I would now like to turn the conference over to Mr. Leigh Curyer, CEO and Director of NexGen Energy. Please go ahead.
Thank you, Calvin. Welcome, and thank you all for joining NexGen's Q2 2024 Update and Financial Results Call. I'm Leigh Curyer, Chief Executive Officer of NexGen Energy. Joining me is Travis MacPherson, Chief Commercial Officer; and Benjamin Salter, Chief Financial Officer.
We will be making forward-looking statements throughout the call, so please visit our website for any relevant disclaimers.
Since we last spoke in May, there have been exciting developments in advancing the Rook I project closer to production and actions within our industry that further underscore the need for a diversified and sustainable uranium supply chain, one that has more production capability and longevity in western jurisdictions, where there has been a tremendous underinvestment with the exception of the few in all of the aspects of the uranium industry for decades. The uranium market continues to be dynamic, with demand for stable electricity in every country worldwide, increasing whilst on the nuclear fuel supply side, current production continues to labor. With significant production challenges regarding limited supply input availability, skilled labor and simply mine lives nearing the end of their resource life.
During the quarter, additional factors arose exacerbating these already significant supply side challenges. Movements largely influenced by legislative impacts, including taxation, [indiscernible] in current largest producers at Kazakhstan which simply results in their in-country production costs becoming higher and additional geopolitical impacts such as Indonesia canceling mining leases. The focus on securing long-term supply in the face of these ongoing challenges continues to manifest amid the growing supply deficit. Which is currently estimated to be approximately 60 million pounds annually and growing to over 240 million pounds by 2040.
Long-term prices for uranium over the quarter continued to rise as demand continues to outpace supply and investment in the sector is nowhere near the run rate to ensure long-term supply stability. Particularly as governments continue to reinforce their clean energy commitments as energy security concerns grow materially with the advent of energy-hungry data centers. The sector continues to receive a steady stream of positive news, reinforcing that the global resurgence in nuclear energy to march, it has never been stronger and is simply growing.
In the United States, milestones include the Vogtle 4 reactor entering commercial operation steps to boost advanced reactors, the Department of Energy's USD 3.4 billion requests for proposals to stockpile low enriched uranium to provide a backup supplier to replace Russian imports. And the bipartisan support to enhance the U.S. and its allied partners' capacity to enrich, convert, mine uranium in order to sustain the required nuclear power generation in the U.S.
Other notable developments include the U.S. Senate passing the Advance Act and multiple initiatives to restart and extend the life of existing nuclear plants, including welcome turn around at Three Mile Island, the Palisades and Indian point. Additionally, Canada announced the construction of its first small modular reactor in Saskatchewan, home of the Rook I project and continues to make further investments in small modular reactor research while developing new nuclear engineering hubs.
Furthermore, we've seen signs that both Australia and Italy are contemplating lifting the bans of nuclear power and several European countries, including France, Poland and the U.K. are currently expanding their nuclear capabilities. South Korea, Japan and India are also ramping up their nuclear energy programs, while other nations Turkey, Saudi Arabia and the Philippines are exploring new nuclear project objectives.
It's a remarkable global effort in the expansion and procurement of clean baseload power, while simultaneously decarbonizing energy generation. We're seeing significant activity in the market, particularly from the U.S. and European utilities aiming to reduce reliance on Russian suppliers and the revocation of uranium mining licenses in Niger and also ERA's Jabiluka mine, increasing the uncertainty of future suppliers. These actions further highlight the critical demand for uranium source from politically stable and sustainable regions such as Saskatchewan, the U.S. and Australia. Also supporting the growing need for uranium and a stable supply of nuclear energy, representative the Google, Microsoft, OpenAI and Meta continue to advocate for nuclear power sources to help meet the growing demand for low-carbon energy to power AI and the data centers.
Both U.S. Democratic and Republican leaders have recently advocated the U.S. would rely heavily on nuclear power to meet the electrical demand growth from these data centers. As the critical need for new uranium suppliers grows, we are advancing our Rook I project optimally and are in the final stages of federal approvals, having received both the acceptance of our federal license application as well as full provincial environmental assessment approval in September and November 2023, respectively.
On June 21, 2024, the Canadian Nuclear Safety Commission concluded their 30-day completeness check of our May 2021 submission, which include responses to the remaining 49 aspects. Technical review of this submission is now nearing completion. And we look forward to the CNSC confirming that all aspects are accepted, the EIS being deemed final and the CNSC promptly setting the date for the federal commission hearing. The commission hearing date and subsequent commission decision, representing the final stages of full approvals. The project is strongly supported by indigenous nation partners who have advocated many times publicly and directly with this project to be approved immediately. The project squarely fits with all of the government of Canada's targets with respect to critical minerals, indigenous engagement and decarbonization, and will be instrumental to building Canada's place as the leading supplier of the cleanest baseload fuel source known to mankind.
We are ready to commence wholesale construction activities immediately upon receipt of those federal or final federal approvals, and we'll be in production of approximately 40 months, 40 months thereafter, bring online what is capable of being the world's largest uranium mine and one capable of generating in excess of CAD 2 billion annually in free cash flow at current uranium prices.
We've made significant progress with the Rook I project this year. Procurement of critical path items are tracking well, including the temporary freeze plant which are now complete, in storage and ready for shipment to site. Both the shaft infrastructure partner and hoist partner have been identified and with final contractual terms being concluded, the team is ready to mobilize as soon as final permits are received. The remaining procurement plan for 2024 is consistent of previous communications and is predicated on optimizing the time of -- timing of financial commitments based on a combination of risk reduction, optimization of the projects critical path and capital spend efficiency to maintain a ready state to commence construction upon receipt of requisite final federal approvals. We've completed enhanced site infrastructure on and around the site in preparation for full construction to commence upon final federal approval.
Last week, we provided updated feasibility study economic estimates for the Rook I project. The updated estimates place Rook I as one of the world's elite resource projects economically whilst delivering elite environmental performance throughout its life cycle and on closure, alongside industry-leading local community aspects and outcomes, incorporating USD 95 a pound. The NPV of the project increased to CAD 6.3 billion, and the payback period remained consistent at approximately 12 months. Whilst incorporating CapEx adjustments to CAD 2.2 billion or USD 1.58 billion and an OpEx increase to USD 998 per pound related to inflation and enhanced environmental performance. This is supported by advancing from 18% as per the feasibility study to 45% through the completion of front end and engineering design. As guided, this increase includes approximately CAD 320 million due to inflation and approximately CAD 590 million for design enhancements, improving the efficiency, operating flexibility and operability of the mine.
The mine life from a production profile are entirely consistent with the 2021 feasibility study. Importantly and uniquely, included in the cost for the project, our reclamation liabilities being encouraged throughout the mine life. This total is approximately CAD 900 million and will lead the project with the full estimate on closure of CAD 70 million which is a fraction of that of other projects in Canada where liability is significant and at the time, multiple decades taken to reclamate such was the case at Cluff Lake. This aspect is one of the many elite design and industry innovative approaches the company is committed to investigate and subsequently materialize. This approach will be applied throughout its operational phase with further advancements in technology and innovation with the objective of having as few persons underground as achievable through the use of remote sensing and operation technology which delivers optimal operation and safety performance.
NexGen is going further in mining safety and production efficiency than has ever been seen before. Further, this updated cost reflects the advanced stage of the project with the site enhancements over the first half of 2024 incorporating a doubling of the accommodation support for exploration and development activities and road maintenance in readiness for heavy haulage transportation on the successful receipt of federal approvals. This has been achieved side-by-side with our local community partners who are currently contributing in the direct to own partnership to 82% of Rook I site services and commerce. Rook I is ready to begin major construction upon receipt of final approvals with identification engagement of the industry experts in shaft thinking, infrastructure, underground development in place. Early-stage construction aspects are fully engineered and designed.
The team continues to work towards further optimization such as enhanced recoveries, energy initiatives through kinetic heat recovery and increased automation of material handling and processes.
To exploration, in March, we announced a new greenfield discovery on Patterson Corridor East, PCE, 3.5 kilometers East of Arrow on our 100% owned SW2 Rook I property. We continue to build on these positive results with this morning announcing very exciting preliminary summer drilling results. To date, 8 of 12 summer drill holes intersected mineralization, which is indicating a large mineralized footprint with remarkable continuity. Referencing figures one and two in this morning's news release, the footprint of PCE is currently larger than Arrows at the same stage of meters drilled. With the geological setting indicating a tremendously prospective basement-hosted system with many geological similarities to Arrow.
In the first 15 holes at Arrow, mineralization was defined over 550 meters vertical extent, 500-meter strike length and 150 meters width. PCE already exhibits broader vertical and strike lengths of 600 meters and -- 600 meters and 540 meters, respectively, with the width currently of 75 meters. Further, there is the presence of intense mineralization greater than 61,000 counts per second, which is the ultra-high grade mineralization in four holes at PCE. Whereas at Arrow at the same stage, we have not intersected that until AR 14, 15, the 15 cold drilled. Which then led to the vectoring and discovery of the A2 high-grade heart, which represents approximately 180 million pounds at just under 20% of average grade. When you consider the combination of these broad spaced holes at PCE and the similarities to Arrow, the growth potential here is obvious. The drilling program at PCE is now specifically targeting two aspects. Continued broad space drilling to define the extent of mineralization and two, vectoring into the ultra high-grade zones within the area of mineralization. Discoveries of the caliber of Arrow will take their own path in terms of time and extent of drilling to fully define a world-class ore body. PCE is now commencing its path, showing all the characteristics of Arrow at the same stage. PCE validates the continued prospectivity of the NexGen land package is incredibly immense and underpins the Southwest section of the Athabasca Basin as the future of Canada's uranium industry's growth from the latter part of this decade and throughout the balance of this century.
Our summer drilling program is likely to be extended into the winter, incorporating a short break during the change of seasons and more information regarding this will be disseminated once approved. We look forward to answering any questions the audience may have at the conclusion of this report on these exciting results. We are also progressing negotiations with the utilities, and we'll advance this post the WNA in London this September. On the back of the uranium purchase NexGen undertook, multiple new utilities have approached NexGen seeking uranium supply from 2028 and beyond as well as there has been a material increase in the project from a variety of financiers. The current and future scarcity of uranium in the market cannot be understated and hence, why we remain steadfast in our contracting approach on maximizing leverage to future prices. We will only contract on terms that reflect the sustainable price to encourage and promote a more diversified Western World mine supply platform. This assess price being substantially higher than the current uranium prices when considering the economics and permitting hurdles on Western World advanced development projects.
I'd like to take the opportunity to highlight and remind the audience profitable uranium projects in the Western World are straight up scarce. Those currently in production are either making raise in returns and in some cases, losses, and those proposed to face the toughest development and permitting challenges in the entire resources sector. NexGen being at the conclusion of the permitting process as the most recent and first-hand experience of what is involved, it can not simply be assumed and history will support us on this that all stated uranium development projects will move into production as forecasted or possibly at all. A significant component of permitting success is dependent on multiple factors: economic, technical, environmental, skilled and experienced labor, stakeholder engagement, all facets which have to be met prior to a single pound being produced. There are currently less than a handful of projects located in Canada, the U.S. and Australia capable of reaching production within 5 years from now and at the current prices.
To the financial section. As for the financial statements and disclosures released just prior. At the end of the second quarter ending 30th of June 2024, NexGen has approximately CAD 570 million in cash, having raised CAD 346.5 million during the first half of 2024 and CAD 340 million in uranium on our balance sheet. CAD 161 million is budgeted spend for the full year 2024 covering site program, engineering, procurement of long lead time items project development costs, exploration, permitting, community programs and training. Cash G&A for the quarter was CAD 11.03 million, inclusive of some of the one-off costs associated with the capital raising proceeds of CAD 346.5 million. Full year 2024 G&A forecast to represent less than 1/5 of those total expenditures for the year in supporting a workforce approaching 100 persons and up to another 50 consultants and service providers engaged across all activities totaling CAD 161 million. All focused in reading that is for final approval and subsequent commencement of construction and once in operation, generating over CAD 2 billion free cash flow.
As we work to advance the Rook I project, we maintain high standards for our sustainability practices and corporate governance. In May, we released an annual sustainability report. The report marks the fourth year and NexGen has reported the company's robust environmental, social and governance profile and is in accordance with Global Reporting Initiative, GRI. Highlights include: expanded training and education programs, launching groundbreaking unprecedented partnerships in local industry, education institutions and communities to offer trade training and certification for the creation of a strong and thriving workforce in the local community adjacent to the Rook I project. These programs resulted in more than 300 students and community members participating throughout 2023, of which 39% were female and 99% indigenous. We anticipate approximately 400 participants for our 2024 programs and expect 100% of the participants to be indigenous.
Diverse top-tier talent, we've fostered a diversed, safe work environment where everyone is treated with respect. Our commitment to community development training is exemplified by 80% of site employees in 2023 being local community members residing in the local priority area. Furthermore, in comparison to industry standards, let's say, 16% female employees, 34% of NexGen personnel are female in 2023. And with Susannah Pierce joining our Board, women now represent 30% of our directors. Local careers and procurement through the four benefit agreements with our nation partners mechanisms are in place to ensure procurement opportunities are communicated transparently and well in advance will allow for maximum local supply chain participation. With the result being 82% of procurement for [indiscernible] site going through our nation partners. The key to this positive outcome is the continuation and growth of training initiatives for local priority area community members. And that is something the company is incredibly proud of. Our dedicated team, along with our valued indigenous partners, shareholders, government and regulatory partners should all be credited with how we are working collectively through the approvals, all in the service of bringing the largest single-source uranium deposit to production this decade.
As we look forward -- as we look to the second half of 2024, our focus is on finalizing the federal permitting process to advance the Rook I project that is poised to have a positive impact on both the economy, the environment, local communities and generating generational benefits. With current mine supplier having never been more fragile and the growing deficit, we're acquiring more than five Rook I size projects to be found, permitted, finance and construct over the next 20 years. We'll continue to lead the industry with our innovative approach and steadfast dedication to excellence in all aspects of mine development. Now let's transition into the Q&A, and I look forward to all the questions that the audience may have. Over to you moderator.
[Operator Instructions] Your first question comes from the line of Andrew Wong of RBC Dominion Securities.
So, Leigh, I was curious, like what are your thoughts on how the Patterson Lake area should be developed in the future? I mean it's pretty clear that there's a lot of uranium in the area, it's very high to prospective. You have the PLS project just come across the lake from Rook I. So does it make sense to develop these areas separately? Or could they be developed together to share infrastructure and capital to maybe more efficient.
Yes. That's a good question. And look, with respect, I can only really answer for ourselves, we are very focused, as you know, having discovered this project in February of 2014, and it clearly looks like we're on to another magnificent discovery. This area is going to be the future growth of Canada's uranium industry. Look, we are obviously clearly advanced in our project. We are looking forward to the federal approvals. And we've built this or rather designed this project to service ore from nearby deposits as well, obviously, clearly subject to subsequent approval. Federal permitting and provincial permitting aspects. How it's optimally done or accessing ore from other projects coming into our mine site, remains to be seen. There's clearly some synergies for those other deposits to access the Rook I mill. And at the appropriate time, those discussions will be had and if concluded, we'll go through that. But we're focused on our Arrow deposit first. Obviously, mineralization that is in and around Arrow. And everyone is aware that arrow is open at depth as well on the basis that PCE shapes into something similar to Arrow. Well, we're going to be very busy for many, many decades, just focus on our own work. So yes, it's a good question, Andrew. We as I said, I can only really answer it from our perspective based on what we have in the company's portfolio as we speak.
Okay. That's all fair. Maybe just switching a little bit on the strategy around selling and marketing uranium. I think you've been pretty clear that you have plans to sell through contracts that may be a shorter duration and give you 100% market-related pricing. And I'm just curious, as you have more conversations with potential utility customers and others in the industry? Has that evolved over time? And if there's anything that's changed?
Just to clarify that -- sorry, Travis.
Go ahead, Leigh.
Yes, I might start and then hand over to Travis. But what would be -- just to clarify what we have said and is on public record, we will sell under contract with pricing mechanisms to be heavily weighted to market prices at the time of delivery. And that is what we are pursuing, and that will be a transition over a period of time. And I can say the number of inbound calls that we have as a company from utilities looking to undertake, offtake agreements with us from 2028 and beyond, while we've had our busiest year yet. And what is very pleasing to us is that it's new utilities over and above that we've had conversations with in the past. So -- our strategy is on track, and we're getting a very good sound board from the utilities with respect to that strategy. Travis?
Yes. I might just add that the discussions with the utilities are progressing well. Lots and lots of interest, I would say, growing interest globally. As Leigh mentioned earlier, it will be focused of the second half of the year post the WNA kind of after the summer break, although we are busy in the summer actually on this front, which is a bit unique in our experience, the summer tends to be a slower time but continues to progress on NexGen front with these utilities. And as we mentioned, we're not seeing any material concerns or anything. It's part of a transition part of negotiations that I think are -- and then all the macro tailwinds that Leigh talked about, they're all playing in favor of this -- of us being able to optimize every pound that we produce dependent on how many pounds we produce. And I think that is being recognized.
Your next question comes from the line of Katie Lachapelle of Canaccord Genuity Group.
Congrats again on today's exploration update. I was just wondering if you could comment further on M&A. Clearly, you're in a position now where you could push forward and build Arrow yourself but you are nearing the end of the federal approval process, and that does seem like a key trigger for a potential acquisition if someone did have interest in Arrow. So I know you're probably restricted what you can say, but any further color in terms of any interest that you are seeing in Arrow specifically.
Yes. Katie. Yes, I mentioned on -- during the transcript that we've had increased interest from various sources of financiers. Look, the -- given the nature of the project, it's clearly on the radar of anyone who's in the production of energy fuel and clearly on the radar of anyone who's been mining, the big majors out there have all been very open about transitioning their portfolios towards heavier weighting to clean energy metals with strong ESG profiles in politically stable jurisdictions. NexGen ticks all of those boxes very, very strongly. The permit though, we got the first provincial permit in over 20 years. Subsequently, there hadn't been one in over 20 years federally. So it's a very big gate for NexGen to walk through, and it's approaching quickly.
So I think it's fair to say that the interest or their preparedness to act may elevate post-federal approval. But as I've always said, we always approach this project on the basis that -- and you've seen that in the feasibility study. We will be the ones closing the mine down, well that is if we are still alive. But -- and so we continue on that process on a daily approach of optimizing this project in every aspect, and we'll continue to do so. But to answer your question, yes, there is an increase in interest. But how that eventually ways, we will see.
Your next question comes from the line of Craig Hutchison of TD Securities.
Just on the CapEx increase for Arrow, CAD 2.2 billion, does that include any early works? Or is that separate? And I think you mentioned in your opening remarks about CAD 161 million budget for this year. Just any kind of context in terms of whether that includes early works. And then maybe just as a follow-up, the CAD 590 million of increased CapEx and enhancements, can you just provide some more color in terms of what those enhancements are?
Yes. I'll start the first part of that, Craig. The CAD 161 million only includes items that we're permitted to do currently. So it's -- and then on top of that, there's things such as long lead time items that we've ordered and paid deposits on that we have yet to take delivery of and won't take delivery until the final federal approvals.
Yes. And then with respect to what makes up that in CAD 590 million increase. I would say it's certainly spread across a number of things. It's not like we saw big chunky things go up by a lot. Actually, the shaft sinking as an example, which is clearly a critical path and very vital for the project's success didn't actually see immaterial increasing cost at all. So it was really spread out over things like increasing, as Leigh said, I would kind of categorize them as flexibility options and then contractability operability improvements. So with respect to flexibility, increasing the size of the skip from 15 to 20 tonnes, helps with reliability, obviously, but also flexibility, similarly with the power plant size up to give us that increased flexibility, things that relate to the reliability and operability would be increasing the processing equipment size which improves the plant availability and other things like that. But it's really spread out across a number of things, which really I would say, is a result of taking the project from 18%, up to over 45% and going through that whole process as well as, I think, being sincere, the whole time of actually being the ones that are going to construct and operate it when you have that mindset, I think you pay attention to all of these little details to make sure that you get it right.
Okay. So if and when you guys get the permit, I guess there will be some additional early work still to be done, I guess, that's outside that CAD 161 million budget?
We will get the permit, Craig. So in terms of when that is the question, but we will get the permit.
Yes. And just in terms of the early works, like basically, we're ready to start the shaft sinking process the minute we get our permits. That is where we're at. We've got -- yes, the site is ready to start that once at the requisite final federal approvals to do so.
Got you. And then just on the contracting, you gus said, you obviously -- ramp up the discussions here around WNA. Is there a certain percentage of contracts that you'd like to have in place before you guys get your permits? Or are you kind of flexible in that front.
We have...
Sorry, Travis.
Sorry, go ahead, Leigh.
Yes. Obviously, that's a function of the project financing and the debt component, et cetera. We won't be looking to contract all of the production, clearly not. And that will evolve as we get closer to that first year's production, you'll see an increase in the percentage of volume contracted as we get closer and closer to the start date and that first year of production.
Yes. And Craig, from a financing perspective, there's no kind of timeline related to the receipt of permits or anything. There will be some tied to first drawdown and then project completion, but those are obviously far and far in the future from now. So we do have time, as Leigh mentioned, to optimize -- let the market develop for one thing, which is definitely played in our favor over the last few years in terms of waiting to sign contracts and then being able to get that balance right in the structuring of the...
Okay. Great. Maybe one last question for me guys, just on the financing. Just any updates in terms of the expresses of interest, kind of the dollar amount you guys are hearing now, obviously, given the increase in the CapEx for Arrow.
Yes, Craig, no issues on capacity. That's certainly the case. There's obviously been some challenges in the mining industry, but in fact, those have actually played into our favor because it's really highlighted to these lenders, and this has been communicated directly to us, just how rare an opportunity to lend and put money to work on a project of this quality in this jurisdiction, et cetera. So yes, the interest is very, very robust, very strong and growing, growing both in terms of new parties levels of interest, but also existing parties increasing their level of interest. So yes, we're not concerned on the capacity and availability of capital for this project at all.
Your next question comes from the line of Gordon Lawson of Paradigm Capital.
On the drill results, so my understanding of the [ 10 ] kilometers that or reading of 10,000 roughly equates to a 1% grade uranium, and this tapers off such the reading of around 60,000 gets you a range of between 30% and 40%. Is that in line with your estimates?
It varies depending on the deposit. But if -- Yes, it's a reasonable assertion or assumption if you -- or correlation, if you'd like to make it. We always released the assays subsequently. And so that correlation factor gets more accurate over time and every deposit is different.
Yes. Fair enough. Next question is on the remaining permitting and construction process. I mean it can be a volatile timeline. I understand that, but what's your best estimate for timing of the first production and duration of ramp-up at this point?
It would be 40 months, 40, post the federal approval, and we are expecting end of this month, early next reply from the CNSC with respect to those 49 aspects. They will then determine the timing of those final approvals. And from there, it will be 40 months [indiscernible] contraction. So I'm respecting the CNSC's timeline. We have fulfilled all of the answers for those remaining 49 aspects. We look forward to the reply at the end of this month, early next and its conclusion. So I'll allow you to determine how quickly they may reciprocate and add 40 months to that.
Your next question comes from the line of Alex Terentiew of Ventum Financial.
Exciting times ahead, definitely for NexGen here. So I just wanted to touch base again just on the permits there. I mean, and the timings Leigh made it very clear, obviously, that you do expect that permit. So can you just clarify for me? I mean, based on your best understanding of the process. Can you kind of lay out for me here timings of approvals? And effectively, when you expect that the first shovel to kind of break ground. As you said, that technical review should finish this month, and then there's other processes that have to happen afterwards. But I just want to get a better understanding of what those are and how long they could take so that when that shovel breaks ground? And the second point to that is how do your financing plans factor into this. I mean, obviously, once that permit is in hand then I expect some sort of financing to be announced or -- anyway, I just wanted to see how you're financing expectations factor into the approval process.
Yes. So we are waiting on the federal government, the CNSC to come back to us with their views on our responses to the 49 aspects that were remaining. And we submitted that back on May 21. We are expecting a response at the end of this month, early next with respect to those 49 aspects, we're very, very confident with what we have submitted. And on the basis that they are all accepted, the EIS will be then deemed final and complete by the federal government. You've got to remember, we've already received our provincial permit and it's the same EIS, and we have all four communities formerly have endorsed and support the project. The federal government will then set a commission hearing date. Now that is at their discretion. And -- but there is -- given the circumstances and the strong support from all key stakeholders, and the importance of this project, as they've stated to their critical minerals strategy, I would expect that commission hearing date to be issued very shortly after the EIS being deemed final the earliest EIS can be deemed final I estimate end of September, but it will be subject on satisfactory resolution of those remaining 49 aspects.
On the commission hearing date, it's legislated that project be approved within 60 business days following that commission hearing date. Now a couple of aspects. Historically, every project that's been deemed final, [ the year is ] final has gone to a commission hearing date and has been approved. From that final approval, it will be 40 months. But I'm not going to -- with respect to the CNSC I'm going to respect them coming back to us once they are satisfied. And that will be determined by the CNSC. So I wish I could be more quantitative for you in that respect. But I think I've given you Board parameters enough to know that we expect the project to be in production prior to the end of this decade with all things being equal and assessed objectively. With respect to the financing, like within the debt one that we -- or the debt process that we're running, it's still subject to receipt of federal approval. And you'll spend the equity first in any event. So you will see the complete financing package, most likely post federal approval with respect to the timing of that being secured.
Okay. All right. Then that sounds good. And just -- if I just kind of do some simple math here, end of September approvals, commission hearing date then max 60 business days after that to get -- to have that set. So I mean, realistically, I guess, Q1 2025, some point in that quarter, we could see construction officially start. Does that roughly makes sense?
I'll refer to you as you interpret what I said.
Your next question comes from the line of Brian MacArthur of Raymond James.
Sorry, can we just go back to the CAD 161 million you talked about spending this year. I have two questions. One, is any of all of that included in the new CAD 2.2 billion capital estimate? And two, you've spent CAD 58 million as I look at the financial SOFR. Can I assume that the rest of that CAD 100 million is spent in the last 6 months of the year? Or is part of that, as you said, subject to permits and things like that. If you can just go over that again, I'm just trying to figure out the exact cash flows here, please.
Yes. You're right, Brian, on both fronts. So some of that CAD 161 million is for the full year. We have already spent CAD 50-odd million of that in the first 6 months. And some of those items are to plant and equipment, deposits on plant equipment and like the freeze plant, et cetera, and deposits on hoists, et cetera. that we won't take delivery of until we have approval. So the only activity that you're seeing at site are fully approved activities. But of that CAD 161 million, some are plant equipment for when we will -- which would be part of that CapEx.
Okay. That's clear. Second question, you talked about the NPV of over CAD 6 billion at USD 95 uranium. Can I -- as I understand it, there's going to be no updated filings for all these new economics. But did you sort of assume in that, that value was a T minus three like we did before, i.e. that value, you'd assume sort of 3 years of construction. Again, I just want to make sure because obviously, this generates so much cash that time value a year here or there makes a big difference. Is that correct when you did that calculation?
That's correct. Yes, on the same basis like-for-like as the FS.
Okay. Great. Just to be clear. And then the third question, obviously, very interesting exploration results. Technically, the way you worded at this now is you can produce up to 30 million-pound under the new economic study. But just to be clear, in the permitting is your capped at 30 million pounds? Or is it a cap per tonne per day? I guess where I'm going with this is, obviously, before you if you start to be very successful in PC, you can extend the mine life a lot and therefore, you may even have a strong market. Maybe you want to produce more than 30 million pounds in the early years. Would you be able to do that technically under the permit? Or are you actually capped at 30 million pounds, because obviously, if you can extend the mine life a lot with PC, it changes maybe what you want to do in a strong market.
Yes. I think, Brian, you need to look at that on the -- obviously, there's permitting battery limits. There is flex in that in the design of what we've put forward. But I wouldn't say it's material flex. Any material change to the project would require a subsequent permitting amendment. So I think you should think of any new discovery as adding mine life at that 30 million pound per annum capability.
Your next question comes from the line of Roland Vetter.
Could you please explain how you will structure contracts with utilities, for example, if you contract a specific year and there would be delays which are possible. There could be material financial impact on you. So how do you deal this uncertainty when you precisely will produce?
Yes, we're not going to sign any contracts pre-permits that would have any kind of financial impacts if there are delays because they'll actually be tied to the start of commercial production, which will have a series of tests around defining it. But that's how you mitigate that. And the company certainly will not put itself in a position nor is it the expectation of utilities, frankly, at this stage to be put in that position of financial burden in the event that there's any kind of timing uncertainty, which to Leigh's earlier point on permitting, there is some that exists right now because we aren't in total control of this final aspect of the permitting process.
Okay. But if you, for example, buying the contracts to start of commercial operation, it could also mean the utility doesn't precise in more deal to get the volume? Is this correct?
Yes, correct.
Okay. And the second question, if I understood correctly, you said that you expect production before the end of this decade. Could you be a bit more precise because I think in the interview in spring, you mentioned that it could be beginning of '28. There was a press out even not too long ago, which you mentioned more '29. Could you narrow a little bit down the year? When do you think that you can really produce on an outscale?
Yes. Well, I can only comment to what we have said, whether a press article suggested something else. Yes, I can't really comment. But I want to be very, very clear that we have given the best guidance possible with respect to timing with all things being equal and based on our expectation and substance of our replies to the remaining 49 aspects. And I'm being very respectful of the CNSC, they're the regulator, and they will make the determination ultimately. All things going according to plan. And as we expect, we expect the EIS will be deemed final imminently at the end of this review period, which concludes the end of this month, early next. And obviously, there will be some dialogue -- and how long that takes? I don't -- I can't be more specific. It will depend on the responses from the CNSC, but we're in the final stages. And all aspects are very, very important and need to be resolved from that moment. It will be 40 months as per the feasibility study in terms of getting into production. So I'd love -- I look forward to the day we can be very, very specific. And that day is coming, but respecting the permitting process. And just to add to your earlier question, as we get close, as we want to get that permit, where we've got greater visibility on timing, which means the ability to enter into contracts increases. And then as we get through the construction period and about to approach that start date, you'll naturally see an increase in the amount of volume of our production that will be agreed under offtakes. So yes, that is the approach that we're taking. And the best guidance I can give you based on what I know today.
[Operator Instructions]. There are no further questions at this time. I'd now like to turn the call back over to Leigh Curyer for final closing remarks. Please go ahead.
Yes. Thank you, Calvin, and thank you, everyone, for listening in today. Incredibly exciting time for the company, the dual process of being in the final stages of federal approval respecting the CNSC's process. And at the same time, has lightning striked twice with respect to mineralization on the Rook I property. It's -- as everyone is aware, Arrow is a geological phenom, and we found it very, very early in our drilling on the Rook I property, the 21st drill hole, but it was actually the first drill hole within a 4.5 kilometer radius. We and everyone involved with that program did an amazing job. But I always -- we always felt do we find the only motherload so early on the 320,000 hectare exploration portfolio. Probability was that we only found one of the number. And what we're seeing in the very early stages of PC is incredibly exciting and right next door to it's probably is most analogous comparable. And to get the high-grade intercepts the ultra-high grade greater than 61,000 CPS in four of the holes over large distances. Incredibly exciting because when you consider how to intercept those so frequently over such large distances, we have all the ingredients of another phenomenal discovery. Time will tell and this deposit will go down in same path, but we have all the characteristics of another significant mineralized zone. And we look forward to those drill rigs turning going forward. So thank you, everyone, for your time and interest. And as always, myself, Travis, Monica, Stacey and the team are available to answer any questions that you may have. Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.