Thank you for standing by. This is the conference operator. Welcome to the NexGen Energy first quarter 2026 results conference call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the speaker's remarks, there will be a question-and-answer session at the end. I would now like to turn the conference over to Mr. Leigh Curyer, Chief Executive Officer and Director with NexGen Energy Ltd.. Please go ahead, sir.
Thank you, Bessie. Good morning, thank you for joining NexGen's Q1 2026 financial results and investor conference call. My name is Leigh Curyer, I am the Chief Executive Officer. Today, I'm joined by Travis McPherson, Chief Commercial Officer, Benjamin Salter, Chief Financial Officer, introducing to our quarterly calls, considering we are now entering into construction of this globally significant Rook I project, Chris Copley, NexGen's Project Director, Engineering and Construction. During the call, I will highlight NexGen's milestone achievements over the first quarter of 2026, including the final federal approval for the Rook I project, provide an update on the 2025 site construction program, upcoming plans for the construction phase as we have already made the final investment decision.
Provide an update on some incredible drilling results released just this morning at our exciting PCE discovery, and speak to the NexGen strategy as we optimally advance towards production. At the conclusion of this presentation, we'll move to the Q&A portion of the call, where you'll have the opportunity to ask Travis, Ben, Chris, and myself any questions you may have. Throughout the course of today's call, we'll be making forward-looking statements, so please visit our website for all the relevant disclaimers. In just the first few months of 2026, this has already proved to be the defining period for NexGen, marked by significant milestones, none bigger than the optimal final approval of the Rook I project for construction.
Following NexGen's successful completion of the two-part Canadian Nuclear Safety Commission hearings on March 5, 2026, the CNSC then issued NexGen its license to prepare site and construct the Rook I project 14 business days after the conclusion of the part 2 hearing. The approval process and response speed was a testament to the strength of the technical submission, NexGen's early and transparent communication with regulators, and the deep genuine relationships established with local indigenous nations and stakeholders over the past 13 years. This approval represents one of the most comprehensive regulatory processes undertaken for a resource project globally and is the result of an unrelenting focus since 2013. I would also like to take the opportunity to congratulate Denison Mines and CEO David Cates in the approval of their Phoenix project.
We, NexGen, have moved with purpose and clarity to deliver a new standard for resources development. One where we encourage all stakeholders to expect better. NexGen's culture of innovation, open-mindedness, and continuous improvement have cultivated significantly better outcomes across the board for all stakeholders, and this will continue as we optimally progress through construction and into operation, where we'll be the most significant new entrant into the mining sector in a generation. Nearly two months into the Middle East disruption, the global energy system is not just absorbing a supply shock, it's being structurally reshaped by it. The effective closure of the Strait of Hormuz has exposed how vulnerable and interconnected the global energy system truly is, highlighting the risks of over-reliance on hydrocarbons, particularly in geopolitically vulnerable regions. Energy security is no longer being defined by access alone, but by resilience, the ability to withstand disruption.
That means nuclear, domestic generation growth and capacity, and critically reducing exposure to geopolitical choke points. Nations have been forced to reassess their energy strategies in real time, which has ultimately accelerated focus on nuclear power as a reliable, sovereign energy source. This is particularly true given the massive demand growth for power anticipated from electrification of transportation and industrial systems as well as data centers. These are new parts of the industrial landscape that are building new power generation for material electrical needs that are choosing systems that provide highly efficient, high output, reliable nuclear energy. Historically, oil shocks have acted as a catalyst for structural change in energy policy, and this recent conflict is already being described as the most significant energy shock in modern history.
With oil and gas still accounting for approximately 60% of global primary energy supply, a policy response prioritizing security, stability, and diversification is inevitable and has been transitioning following the impacts to energy supply chains due to the Ukraine war. The direction is clearer than ever. Nuclear energy is not optional in the energy mix. It is essential to delivering long-term energy security and with the betterment of industry and civilization. There are currently 79 reactors under construction, with operating capacity established within the next 5 years will total an additional 18% to the global nuclear electrical grid. This global shift is occurring at a time when high-quality, scalable uranium supply is scarce and depleting rapidly, placing a premium on projects with the jurisdiction, geology, and technical capability to deliver. Positioning Rook I's project as the most valuable and strategic resource globally.
The reality is current mine supply is under stress in maintaining current production levels, let alone growing current production. Further, the economic consequence is that the current production is becoming increasingly higher in cost as mines head into the latter years of their useful lives. To underpin this reality, one just needs to review the last 10 years. Uranium prices have risen from CAD 17 a pound to CAD 100 a pound, and there has effectively been no new material supply response. That's because it isn't purely a uranium price challenge. It's far broader, incorporating discovery challenge, permitting challenge, CapEx challenge. It requires significantly elevated uranium prices over a significant amount of time to begin to solve this challenge. For NexGen, the supply-demand backdrop and limited market buffer continues to reinforce our marketing strategy.
One that can be summarized as maximizing the value of every pound produced by maximizing the leverage to future uranium prices. Our strategy is being received by the market well as it undeniably benefits all partner participants by ensuring a more transparent and liquid market is developed, and that both suppliers and consumers are able to respond to market changes with certainty to underpin the billions of CAD currently being deployed on a scale never witnessed before into nuclear energy infrastructure. As the company most exposed to the future prices of uranium globally, NexGen will be able to maximize value in this highly constructed backdrop of structural supply deficits. Our strategy and structuring offtake agreements to optimize the return on every pound produced has not been commonplace amongst producers over the past years and decades.
It's pleasing to see this NexGen approach is now being reflected more broadly amongst industry participants and can only act in the best interest of all participants for a sustainable and successful industry. With respect to our contracting activities, we continue to advance on multiple offtake discussions with utilities across the U.S., Europe, and Asia-Pacific. We expect to formalize additional agreements through 2026 with an unrelenting commitment to maintaining our leverage to future uranium prices whilst providing customers access to an incredibly strategic supply source. As the structural supply deficit widens, the window to make meaningful new discoveries is now. Our unparalleled ability to deliver new high-quality supply will play a critical role in meeting the world's future energy needs. Our winter drill program at Patterson Corridor East, PCE, continues to deliver highly encouraging results, further highlighting both the scale and growth potential of PCE.
We've increased the vertical extent of the high-grade subdomain by 33% to 550 meters vertical, with a growing strike length of over 200 meters, reinforcing the size of the system. Recent drilling continues to demonstrate strong continuity of high-grade mineralization across multiple holes with wide intercepts and clear extension at depth. Importantly, the system remains open for further expansion. In parallel, we are also seeing early indications of a separate parallel trend, highlighting the potential for multiple zones of mineralization within the broader PCE system. With only 30% of the 42,000 meter drilling program completed for 2026, a significant summer drilling program is about to commence in late May. We see substantial opportunity for further growth of the system.
Advancing this drill program methodically and responsibly today is how we ensure we are ready to be a reliable Western supplier for many decades to come. As construction activity for the Rook I project commences, our exploration team remains laser focused on further defining and expanding this exciting discovery, as well as the peripheral work on the 190,000 hectares of prime land position with an additional 3,500 meter program at SW-Three and geophysics on SW-One to identify new opportunities for growth. On construction, with approvals now secured, the company is set to commence full-scale construction of the Rook I project this coming Northern Hemisphere summer. Advancing long-term economic benefits, skilled employment, sustainable regional growth, and reinforcing Canada's leadership in nuclear energy.
It's great to see our Rook I project being recognized as a key pillar in the federal government's nuclear objectives for Canada. The team, procurement, engineering, vendors, contractors, and capital are all in place. This readiness is underpinned by the deliberate assembly of a highly experienced team with deep expertise in hard rock mining, aligned with the unique basin rock setting of the deposit, and complemented by strong uranium processing capability and experience in the Athabasca Basin. Since founding the company in 2021, NexGen has built around elite standards. Elite standards in planning, discipline, accountability. It is these ingrained standards, combined with a highly experienced project team representing more than 2,900 years of combined global experience across underground mining, uranium milling, and major project execution that positions NexGen to deliver construction with the same consistency and rigor that has defined NexGen to date.
We have advanced Rook I with a clear focus on disciplined execution, drilling over 400,000 meters safely at an industry-leading cost efficiency, while investing approximately CAD 748 million to date at Rook I. Throughout this period, we've consistently delivered meeting our commitments, maintaining strict cost control, and meeting key milestones. That track record is the standard we carry into construction. Importantly, construction readiness is well advanced. Key elements are in place, including capital paths procurement activities for the initial 2 years, including the shaft sinking contractor secured and engaged and the freeze plant ready for delivery to site. Our CAD 100 million exploration site infrastructure program, initiated in 2025, inclusive of accommodation expansion to over 600 beds, road upgrades to enable more safe and efficient traffic flow, and the airstrip is on budget, schedule, and fully meeting the scope.
This is a direct reflection on how we execute over the next four years. CAD 2.2 billion in CapEx spend to build our project is made up of a number of CAD 5 million-CAD 100 million scopes. We are executing the next phase successfully and early. Our approach is highly structured with clear accountability and daily oversight across every aspect of the build with a view on operational efficiency. We will be hosting an investor update call in the near future to transparently present each phase of construction pathway with registration details to follow in May. We have strong financial flexibility supported by a cash position of over CAD 1 billion at the end of Q1.
We continue to access a range of highly accretive financing options and are assessing these with discipline, ensuring we select the optimal path while preserving our current strength and flexibility. The world is changing fast, and the role of energy is being redefined in real time. What was once a transition led by climate ambition is now driven by security, reliability and execution. The Middle East disruption has reinforced this shift, exposing the fragility of global energy systems and accelerating the move towards stable, domestically controlled nuclear power. At the same time, electrification, AI, and industrial growth are driving unprecedented demand for reliable baseload energy, positioning nuclear at the center of the next phase of global development. As a result, uranium is no longer a cyclical commodity.
It is a strategically critical resource, and the market is approaching a tipping point where sustained demand and constrained supply will define the years ahead. NexGen's industry-leading leverage to future uranium prices optimized by our contracting strategy, combined with our uncontracted uranium resource, which totals currently 340 million pounds, makes NexGen the best positioned company in the uranium sector to maximize returns and value for our investors. Thank you, and I look forward to updating you on our progress throughout this transformative year. Now I'll open the Q-call to questions.
The first question today comes from Anthony Tagliri with Canaccord. Please go ahead.
Good morning. Thanks, guys, for taking my questions. Maybe just on long-term contracting. You know, you guys have mentioned wanting to remain flexible. What does the right level of contracting look like then for NexGen? You know, are the pricing terms you're seeing out there currently in terms of floors and ceilings, you know, attractive enough to incentivize you guys to layer in materially more contracts? Would you rather see, or do you think you'll see better pricing terms moving forward?
Yeah, I'll start the question there, Anthony, and then hand over to Travis. Our, this is developing very, very quickly, the market and recent market commentary by, you know, another industry participant, was very clear with respect to the way pricing is heading, well above CAD 100 a pound, and they're seeing that now in their negotiations. That's very similar to our experience as well, one which we kicked off over 18 months ago. With respect to NexGen, our overriding principle is to maintain absolute exposure to future prices at the time of delivery. Now, future prices at the time of delivery are often a combination of spot floors and ceilings. I also would like to make the point that it's not a uniform approach. It's horses for courses.
Various utilities have different preferences for structures of contracts. Some are happy for all spot, some are happy for floors and ceilings. They are in the, you know, the floors are, you can typically think of them as at or near spot with the ceiling approximately double that of what the floor is and escalated. Some are happy with no floor and a very high ceiling. Now we have a combination of all of those with the four contracts that we currently have. It's to the tune of 10 million pounds in total over the first five years. We currently have 28 million pounds uncontracted per year going forward over those five years and then 30 million pounds thereafter.
We will take a very staged approach. We're not going to have an approach where we fix where we want a certain percentage in in under contract and a certain percentage available for realization at that particular point in time. I guess to answer your question the best is, yeah, we are. We do have contracts in place. We are negotiating further contracts, which will be a combination of those structures. The overall principle, though, we'll maintain our industry-leading position of realizing the like, the optimal pricing achievable at the time of delivery, which is very heavily tied to prices at the time of delivery. You know, it's just common sense when you've got a project in a premium jurisdiction.
Let's face it, Athabasca Basin is the best jurisdiction globally for a uranium project with very high certainty of production and a very low economic cost per pound. It's our job to maximize return to shareholders, and you do that by having a perspective of optimizing the return on every single pound produced. I can't predict where the price is going to be precisely by a certain date. I am extremely confident that the price is going well above CAD 100 a pound in the short term. I don't see any material production coming online globally. I wanna make the point, NexGen 30 million pounds will only be replacing what's coming or what is forecasted to come offline between now and 2030.
Our view is, which is based on technical and financial fact, is that the uranium price is going significantly higher. You know, we had that perspective 5 years ago, we've proven to be right. We didn't lock in contracts that may have seemed attractive at the time, but are now underwater relative to the spot price today. It's proven to be right, and that's our view going forward. I can't give you a precise percentage of under contract or and still available to sell. The important takeaway is we will maintain our position as being the world's most levered uranium company to the future price of uranium. Travis, have I missed anything there?
No, I just really emphasize exactly that, you know, patience has paid NexGen in this market, and we don't see that slowing down. Being patient while still, you know, when contracts make sense for us to sign, we'll sign them with aligned counterparties. We're not in a rush, and there's no necessity to do any more contracts by a certain date or a certain % by a certain date. Patience continues to pay us, and we'll continue to, you know, recognize what we have, how scarce it is, and particularly going forward, so that we can absolutely maximize the returns for everyone involved.
Great. Thanks, guys. That's very clear. Maybe just as a follow-up on project financing. I'm sure there's a lot of things happening in the background. Obviously with a strong treasury, you aren't necessarily hard pressed to come to a conclusion there. Maybe some color would be great. You know, how have things progressed, structures that maybe you guys have looked at and, you know, maybe when we could see something finalized there.
Travis?
Sure. Yeah, thanks, Leigh. Yeah, I mean, again, going back to the quality of what we're talking about here and all the points Leigh made, I mean, there's a lot of options for us and very, very attractive and creative options. As you point out, you know, with over CAD 1 billion, you know, that's kind of half the CapEx on the balance sheet as we speak. There is no rush or urgency, and the market is developing quickly, and we have a lot of key milestones upcoming, including obviously commencing construction, but also, you know, a lot of exciting events along the path. We're not in a rush. In terms of options, you know, I'd say nothing's materially changed from what we've previously discussed. Prepayments on product, that's obviously a big focus.
You know, all the project finance and convertibles and all the other things that we've talked about are obviously options for us. You know, we have a very, you know, what do you wanna call it? Champagne problems, I guess, in the sense we have so many options, all of which are very, very attractive. We're still evaluating and going through, doing our due diligence and counterparties involved and structures involved, making sure that we, you know, capture where the market is going and, NexGen's placing it. You know, if we lock in a financing that's reflective of what's going on today, it's not gonna look great in, in a few years' time. We have to also maintain, you know, our exposure to the future.
Yeah. We won't be cute about it. We'll do it, you know, with, you know, well ahead of time and at a time that makes sense for us. You know, it worked so far that, you know, we could have secured financing 2 years ago for the CapEx, but, you know, it would've been at a lower spot price at the time and on not as sound terms. As I said, our position's at the spot price is rising. A higher spot price means the cost of capital comes down, and that's our responsibility to shareholders. You know, we're not gonna run the treasury to zero.
We've always proven a very strong track record in raising funds optimally in the market at the time and in the least dilutive fashion. That's gonna continue and you'll see news of that in due course.
Great. Thanks for that. I will pass it on.
The next question comes from Ralph Profiti with Stifel. Please go ahead.
Thanks, operator. Good morning, and thanks for taking my questions. Leigh, of the 29,000 meters this summer, you know, what does the pipeline look like? Because it's going to be significantly bigger than the winter program. Where are you prioritizing between the high-grade sub-domains, some of these parallel structures? You know, is there any discussion to changing the strategy as the picture evolves? Where are the earliest results gonna come from?
Good morning, Ralph, and great question, which is always evolving. You can think of those meters as, you know, 3 quarters of them are focused purely on PCE looking for extensions, but not just in the footprint at PCE, but those high-grade sub-domains. They are still materializing. You know, as I speak with PCE, there's no project other than Arrow or no deposit other than Arrow that demonstrates such strong continuity, high-grade broadness in competent basement rock in the basement other than Arrow. That like PCE is replicating all of those amazing features of Arrow. It's still forming, and we're still trying to get an understanding of its entire extent, both the footprint but also those high-grade sub-domains within it.
Given that, the majority of those meters are going to be directed at those 2 objectives. The third is looking for those parallel zones of mineralization to PCE. Now, those who are very familiar with the story and our exploration history know that we're incredibly structured around our exploration. We don't spray holes anywhere. Every hole has to have enormous amount of merit. It goes through a very rigorous process of evaluation before it's drilled, right up towards myself and the board. As you get results, it can change the weighting to, all right, we're going to put some emphasis in understanding the high-grade sub-domain within the area of mineralization because if you hit 1 of those high-grade holes, it's incredibly material to the overall resource calculation.
You know, similar to what Travis said around the financing, it is a fantastic challenge to have, as to where do you put those holes. Every hole, though, I can tell you, is going to be very, very productive in advancing our understanding of PCE. I think at a minimum, whilst we don't have a resource estimate on it, officially, you know, given the economics at Arrow and once you've sunk all the capital at Arrow, these PCE pounds would be classed, I believe it's reasonable to say, a most likely economic, and improving by the day. You know, playing devil's advocate, if we didn't even have Arrow when we made this discovery, it would be the hottest news on the planet in the uranium space as we speak.
I think You know, it is a bit unfair to PCE because it exists only three and a half kilometers away, and it's probably taken a bit of its limelight. I'd just encourage everyone to really. We release the results today, and we've got more assays coming and another 29,000 meters. You know, this is an incredibly exciting story in resources, full stop. Right alongside the construction of what is currently the world's most globally significant uranium resource going into production in four years from now.
Yeah. Thanks. I appreciate that. You know, as a follow-up, Leigh, you know, without front-running the larger scheduling update that's coming, I do appreciate having Chris on the call. What's the latest thinking around the schedule and the timing around the surface freezing strategy, right? How does that look like in the early stages of construction, starting in those first few months?
Yeah, I can give a high level and then hand over to Chris. Look, I'd remind everyone, we're going to have details imminently around a very detailed webinar around the construction. We're going to be introducing the team right up to Ivan Mullany, who is our Director, with enormous amount of world-class mining project construction experience, and go through the stages of construction and be very transparent around what that looks like so people can make their own assessment of progress. I'm very much looking forward to myself and the team presenting that, most likely sometime in June.
Holistically from the moment we we start construction officially, there's you start the freezing processes around 6 months of freezing whilst you're adding to the surface infrastructure in order to commence sinking. Sinking through the overburden will be 6 to 9 months until you're into the basement rock. Once you're in the basement rock, I don't wanna take too much of the profile away from this webinar we're about to do, I'll give you a preview. Once you're into that basement rock, which will have occurred 6 to 9 months after the commencement of shaft preparation, the risk around cost and schedule variability goes down to near on zero due to the competency of the rock.
It's not going to be a 4-year risk assessment. The most riskiest part is the overburden, and it's going to be determined before the end of year 2 and once we're in the basement rock. Everyone should very much, you know, dial in on that aspect of it. Now having said that, whilst I say it's the most risky part of the construction, the overall risk profile of our project is very, very low risk for a mining project. We've been planning this for over 7 years. We have the team in place. We've been reviewing those plans for 7 years. We know exactly what each member of the team and of our contractor team is doing on every single day over the next 4 years.
We have a management system in place which gives us real-time assessment of any variable and allows us to take action accordingly. It's as I said, I very much look forward to this presentation, which you'll hear a lot more from Chris in June. Everyone will have a very transparent analysis of what that construction program looks like, what's entailed, and the way we're approaching it. It's an incredibly exciting time for everyone involved. Chris, would you like to Anything you'd like to add that I may have overlooked?
I think you covered it, Leigh. Like, the freezing is obviously a key element of achieving the sinking and a focus of the team right now in so far as starting the site development this summer and preparing for ground freezing by early next year. Participants are reminded that the freeze plants themselves have already been ordered and are stored offsite, ready to be deployed, as well as the sinking is being engaged and active in the project. We are well on our way to achieving the schedule that will be laid out further in the June call.
Great. Thank you for that preview.
The next question comes from George Eadie with UBS. Please go ahead.
Yeah. Good day, Leigh and team. Thanks for the call today. Just back to PCE. Do we still think about this as likely accessed underground via Arrow and going up the Rook I shaft and infrastructure? I guess secondly there, what is the permitting status of PCE? Can you just remind me and talk through the steps, given it's different ore, but potentially using the other infrastructure?
Yeah. Good day, George. As we speak, I would say that is a very real possibility based on what we know of all the technical facts. PCE is contained in the same basement rock as Arrow, only three and a half kilometers away.
Conceptually, you would run a tunnel from the underground engineering workings of Arrow, over to PCE, and access it. The ore would come up through the same production shaft as what you see at, as designed for Arrow. Having said that, PCE is outside the boundary for the approved license and construction of the Rook I project. Having said that, everything we've seen to date is that it's the same mineralization, it's the same ore body. There's been an incredible mineralizing event on Rook I, and I don't think we've remotely discovered or defined the true extent of uranium mineralization.
For those who have been on the story for since 2013 will know that we found Arrow with the only the 21st drill hole on the property, but the very first drill hole within a 4.5 km radius. You know, we are discovering mineralization way better than, you know, the odds are in mineral exploration. We've clearly got an incredibly good approach to exploration, but, you know, are we that good that we find the world's best, you know, with the first drill hole within a 4.5 km radius in the middle of nowhere? I don't think we are that good.
To say there's additional mineralization there, I think is, you know, anyone who's looked at the geological setting, everyone would concur there's a lot more to yet to be discovered and defined. If you're thinking about a scenario of increasing the production at PCE, that would be subject to an amendment in the permitting with respect to the exploitation of PCE. Having said that, given, you know, it's the same mineralization, it's only 3.5 km away. You know, the mineralization at Patterson Lake South is the, we suspect, based on all the facts that have been reported on it's the same mineralizing event as well, and that's 7.5 km away.
It wouldn't be the same process as what NexGen went through right from the beginning. All of that environmental data analysis over a 10-year period is still incredibly valid and will be valid during operations. I would say the process of getting access or approval, and this is a forward-looking statement, would be relatively certain, but again, subject to the rigorous oversight of the CNSC and the Ministry of Environment in Saskatchewan, which we fully embrace.
Yep. Yeah. Okay. No, that makes a lot of sense. Thanks for that, Leigh. Just last one, sorry. Just thinking timelines for the rest of the year. We've got the webinar probably in June, as you said, and I think in the past you've said more contracts will be released by year-end or sorry, by 2026 year. Is that right? Is it or is the financing package more of a-
Yeah.
2027 story given commentary before?
No, I think, it's either going to be in 2026 or early 2027, the financing package. Additional contracts, they will be released as we secure them on the terms that we're happy with and that of the utility as well. We have the official commencement of construction this summer. We're just coordinating a number of, you know, VIP attendances who have expressed very strong interest in attending the opening ribbon cutting ceremony. That involves government, community chiefs, community leaders, shareholders, industry representatives as well. You're going to see a lot of activity at site. It's gonna be an absolute hive of activity.
With the airstrip, we'll be also facilitating a number of site visits as well. With the airstrip, the logistics of entry and exit to the site safely has been significantly elevated. Yeah, incredibly busy year, one that we've been preparing for for over seven years now. Keep watching this space and all along with PCE results which, you know, they haven't disappointed yet. They've been incredible and every indication is that that is going to continue.
Great. Thanks for the color. Thanks, team.
The next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.
Yeah, good morning. Leigh and Travis, I was hoping you could give us some color on how you're thinking in terms of potentially flexing material with respect to volume at the mine. I mean, your asset will be the single largest or could be the single largest producer in the world. That's a lot of material to come on in the early years. Can you remind us of sort of how you're thinking about your philosophy with respect to volume versus price here, and whether we could see the Arrow run at lower rates if there's a negative price reaction in the market?
I'll start, Horace, then hand over to Travis. Simply, the project is capable of 30 million pounds per annum produced at 1,300 tons per day. That's one of the world's tiniest underground mines, hard rock underground mines. Hence, we have a very low cost of, if we were to produce 30 million pounds, basically an expense of CAD 350 million a year. We would produce and store if we were not satisfied that we're getting a fair price for our production. We can do that because we have a very low cost base of producing 30 million pounds per annum, as opposed to dialing back production and, you know, having to terminate a number of staff. We're not going to do that.
First of all, every market indicator we have seen, and as I said, we're very technically and financially fact-based, and we've been proven to be correct as to where this uranium price is going. On top of that, the amount of inbound calls that we have with respect to the volumes that we have under negotiation for offtake, I am certain we'll be producing at 30 million pounds per annum from the very first year of production. We will continue that, and as I said, it's not really a question as to whether the market's there. If it is not at a price that we deem appropriate, we will produce and store. I wanna be very clear on that because I think there's been some other market participants that have insinuated that 30 million pounds would just be hitting the spot market.
We've never said that. It's completely incorrect, and I've been very, very clear with our approach, and I would just encourage everyone to focus on what we are saying because everything we've said since 2011, we have done. Going into construction and production, we will continue to do everything we've said we will do and be very transparent about it. There's no tricks. Nothing. This industry is very simple. You need to be able to produce uranium at X and sell it for a price well beyond X, and that gap needs to be able to pay back the CapEx. Our gap between X and the current price of CAD 85 is paying back the entire CapEx within 11 months. Very simple economic equation at NexGen.
We're becoming a top 10 world mining company based on after-tax cash flow at 30 million pounds per year at the current spot price. That is our strategy, and we actually feel that the spot price is gonna be significantly higher when we are actually in production. We're seeing the level of demand certainly supporting that. That is our approach on it, and it will always be our approach, and we look forward to executing it.
Thanks for the color.
The next question comes from Craig Hutchison with TD Cowen. Please go ahead.
Hi, good morning, guys. I just wanted to circle back on the shaft question there. I think you mentioned, Leigh, in your opening remarks that you guys have awarded the shaft contract. Can you just confirm if that's correct? If you have, is that contract based on a fixed price or are you guys managing yourself?
Yes, we have awarded that contract, and I'll hand over to Travis as the Chief Commercial Officer.
Sure
who has been the quarterback on that contract structure.
Thanks, Leigh, thanks for the question, Craig. The short answer is no. The shaft sinking contract will not be a fixed price contract. Realistically, that's not really a model that actually makes sense for a contract like a shaft sink. What we've done without getting into obviously commercial details, we've aligned, you know, the risk of shaft sinking, which again, to Leigh's earlier point, in our case, is actually quite low. There are obviously some uncertainties there. What we've done is kind of a risk, a pay and gain model. There's bonuses and incentives for, you know, safety, performance, schedule, and budget, as well as, you know, paying in the event that those things don't go accordingly.
In that sense, you know, ourselves and our shaft sinking partner as well as, you know. The important, I think, nuance here is that we have a essentially a self-performed shaft sinking team in-house at NexGen. That's not only been across obviously the technical requirements and our own assessment of what it will take to successfully complete the shaft sink, both in terms of scope, schedule, and budget, but also in terms of what are the best models for, you know, aligning incentives, 'cause really that's all we need to do. It's a so again, the short answer is it's a pay and gain contract with a lot of great synergies between, you know, the shaft sinker ourselves and the broader team.
We're extremely excited about, you know, who we've got partnering with us, our own team's assessment, and the model in terms of the contractual model that we've employed here.
Okay, perfect.
We, we-
Sorry.
Sorry. Craig Hutchison, with respect to the cost and the feasibility study, the contract that we have in place, there's very strong alignment which shows to the actual cost as what was presented in the August feasibility study, which shows that, you know, our feasibility studies have always been very conservative in nature. They were always done on the basis that NexGen was building this ourselves and operating the project as well. These were always, even from the very first scoping study through to the definitive feasibility study, the whole principle of these studies have been to inform us on the design and cost as NexGen being the builder and the operator of the mine.
There's really good evidence there with that Travis has outlined with respect to the shaft sinking and the underground engineering of very close synergy between what's being presented and now what's being executed.
Okay, That was essentially my next question. I know with the construction update in June, I was just wondering if you guys were planning to have a CapEx update with that number or sounds like you guys are pretty comfortable with the number you already have given the market.
Yeah, we've seen nothing to date. Yeah, obviously labor changes, you know, the impact on the price of diesel would have an impact. As I said, we have the conservative nature of the CAD 2.2 billion was clearly evident in August of 2024. Everything we've done to date, we are still in that CAD 2.2 billion dollar range. If that changes materially and changes our ability to finance the project, we'll be the first to be transparently inform the market of that. As I said, what we've seen to date, everything is intact from a materiality perspective.
My last question, just back on PCE. You guys mentioned it's probably getting lost in the limelight of Arrow. Just any thoughts around a timing for a maiden resource to just put more focus on that project?
I don't see one, as we speak in 2026.
Okay.
You know, we're doing an internal assessment around that at the moment, Craig. If that is to change, again, we'll be first to inform the market. I think that's reasonably expected sometime in 2027. Obviously heavily subject to the next 29,000 meters over the summer period.
Understood. Okay. I appreciate the answers, guys. Thanks.
Thanks, Craig.
The next question comes from Alexander Pearce with BMO Capital Markets. Please go ahead.
Good morning, all. Just building on the PCE questions you've had so far, obviously you've had great success with the exploration for that deposit. It's based on your, you know, the comments you just made, it's probably reasonable to assume you're gonna be drilling out and working on this thing for the next couple of years. Is it possible to give us an idea of how much you expect to spend, let's say, over the next sort of 12-24 months, given what you know about the project so far?
PCE, another 30,000 meters or 29,000, approximately CAD 10 million. You know, price of diesel would impact that, maybe a little higher from a drilling cost. It's a sizable program in the Athabasca Basin for 2026. I would just like to make the point, Alexander, our geological team operates independently from the construction team, so there would be, there's no distraction whatsoever on the construction as a result of the exciting results coming from PCE. From this moment on for the balance of 2026, about CAD 10 million will be is budgeted for the remaining PCE drilling.
Great. Thanks, Lee.
Thanks, Alex.
The next question comes from Brian MacArthur with Raymond James. Please go ahead.
Good morning, and thank you for taking my question. It relates to PCE as well, and a lot of my question's been answered, but maybe philosophically, an even bigger question for PCE and how strategic this may be going forward. When you talk to utilities about signing contracts, do you think they're willing to give you value for it yet? It really goes to this. I mean, you've got, as Orc said, a bunch of 5 years, very high production. You've talked about extending it, but saying we got into an environment like 15 years ago when people weren't signing 10 or 20-year contracts, someone might say to you, "You don't have that long of a reserve life." Is there anyone out there who's willing to sort of pay for that yet? Can you use that in your negotiating tactics going forward? Thank you.
I might-
Yes.
Just start the answer.
Okay.
Hand over to Travis. First of all, I don't think there's another project out there with a longer resource life than NexGen as we speak. I can't see that changing anytime soon, particularly with PCE. I don't really see us being limited, Brian, if I've understood your question, with respect to the demand for longevity of reliable supply. There's a lot of the current producers whose mines are going to be expended in the 2030 decade, early in the 2030 decade. We've seen from Kazatomprom, they've been very, very clear with their production profile come 2029, 2030, it significantly reduces quickly. I don't actually see, you know, any inhibitor on demand from a utility looking for a secure long life offtake contract.
We are really front and center if that is their requirement. I would also say, not so much PCE, but I think with I would put it down to receiving the permit, which took everyone by a very pleasant surprise, being 14 days after the conclusion of the part two hearing. The amount of inbounds has come up since the granting of the permit. I think that's been also a factor as well with the utility demand. Travis?
Yeah. I would just reiterate similar points we're not having any issue with demand. We're just not executing ones over the quarter. That's by NexGen's choosing. There's tons of demand, so we don't really need any, there's no outstanding questions from utilities around should we try to get contracts from NexGen? Everyone wants contracts with NexGen. It's really our determination as to whether they make sense for us at this point in time. Yeah, to Leigh's point, there's not once has it come up in any contract negotiation or discussion or otherwise about the reserve life or resource life of Arrow.
Like everyone understands what we're talking about, which is a generational projects coming online at a time where everything else is basically coming offline.
I would also suspect Denison then would be in a similar position with the approval of their project as well that the number of inbound calls to Denison would have increased as well. Because NexGen can't solve all the utilities' supply requirements on its own. That's even if the current producers were able to maintain current production levels, which I would say is less likely than more likely. You know, we don't wish anyone any ill will, but there's evidence right across the globe around production issues, sulfuric acid supply issues into Kazakhstan. You know, the list goes on.
To Travis's point, there's no shortage of demand and anyone who's taking a project into production that has a healthy resource life fully exposed to the future price of uranium are in the leading positions with respect to economic returns of the future.
Maybe let me just ask you back to the other question then, because that's sort of where I'm going with this, is the big shortfall out in the future. People start to think they're going to expand above 30 million pounds post in your negotiations, post 2030.
I would say that at the moment, we couldn't commit to that because we will only commit to what we are certain we can deliver. At, as we speak, we are permitted to construct a project that will be capable of 30 million pounds per annum once in operation. That is all we are managing. As we speak, if PCE materializes and we commence the amendment to the permit or the addition to the existing permit to facilitate that's a whole new exercise which is going to take a lot of time to conclude. I we are not going to do it at any expense to getting Rook I into production at 30 million pounds per annum for the time being.
Great. Very clear. Thanks, Leigh and Travis, for that. Sorry, the only thing I just want to check, you talked about 29,000 meters of drilling at PCE in January. I believe you announced 42,000 and then another 3,500 to SW-three. Has anything changed or what's the difference?
No, that's correct. No, you're exactly right, Brian. We did about 10,200 meters in the winter before we had to stop given the thaw and the ground conditions. The program for 2026 was at 42,000 meters. We've done 10,200 of it or thereabouts, and the balance of the 42,000 meters, including the three and a half thousand meters, will occur prior to the end of 2026.
Sorry, my last question. Given how strategic and interesting this could be, is there any reason why you wouldn't advance this faster? I mean, I take your focus on the focus has got to be on Arrow, is there any reason why you can't go a little faster? Is it constrained by drills and stuff at the moment?
Yeah, I'd say it's a combination of those things, Brian. You know, we've got a history of doing what we do well. We're very foundational, like bottom up, conservative, I guess, to a certain degree. Well, conservative around execution. We are very driven to deliver what we said we would before elevating further. Look, I think, you know, I love the question. I love the perspective about where PCE is heading. I just, I only like to, you know, comment on things I can be conclusive about. Everything looks great at PCE. I think the optionality that it gives NexGen is incredible. We're just not advanced enough yet to be more conclusive about it.
If all of a sudden we hit some zingers at PCE, you know, additional zingers, similar to what happened at Arrow, you know, it changes the whole equation and we will adjust accordingly. As I speak, we are very focused on constructing safely to scope, to cost, and schedule Rook I at 30 million pounds per annum and watching, you know, PCE develop in parallel to it. I think 4 weeks and everything, given our resources and our focus, is a really good balance. It is 1 of the biggest programs in the Athabasca Basin on its own at PCE. In context, you know, everyone's incredibly busy at NexGen. Yeah, that's our position on it as it currently stands, Brian.
Thank you very much for answering all my questions.
Privilege.
The next question comes from Dave Osborne with Carden Investments. Please go ahead.
Yes, this is Dave Osborne. Major oil companies, the reserve is not forever. Why wouldn't those companies be interested in stepping in here and having this as the next step in their business? Because their business is not forever. I'm amazed that you haven't had some discussions with major oil companies to do exactly that.
Excellent question. Yeah. I think all I could really say there is watch this space. I think you're completely on it. I think there is realization by the oil companies as to where this is heading. I think you'll see that materialize in due course. It is, yeah, it's about as transparent as I could be around that question. But what you are doing is recognizing the importance of nuclear energy and the aspects of the hydrocarbons. You know, there is problematic hydrocarbons given the centralization of production, yet the global usage of oil. You've got a similar situation in uranium as we speak.
The current majority of production worldwide is very centralized in Kazakhstan and/or countries that have what is considered very substantial sovereign risk. You know, any uranium producer or company going into production near term with an asset in Canada, the U.S. or Australia has a tremendous advantage because it's the Western world which are the largest consumers of nuclear energy currently. There has been that mismatch. NexGen, Denison, have the opportunity to help return Canada to be the world's leader in the production of nuclear fuel. That's gonna materialize over the world and it's energy, which oil is as well. Those big energy companies, you know, they don't want to close down. I think you're gonna see that.
You actually saw that in the 1980s go through the historical ownership records of uranium deposits in the USA in the 1980s, and a lot of them were by the oil companies. You know, we may see the day where that returns.
You know, if I were a chief executive of a major oil company, I would be looking down the road for the future. This is the way to do it, is to put this in reserve for when the time comes that the energy is declined, that the source is declined. It would be if a major company took a look at this and got serious about it. I think it'd be the most productive and forward-thinking that any company could do.
Yeah, I agree. I think it's very astute observation. I actually and I agree with you totally. I think the hyperscalers might be a little more nimble and a little more proactive with respect to that actual aspect that you mentioned. Makes perfect sense for an oil company to do it, but I think, you know, my prediction is that you'll see the hyperscalers get ahead of the oil companies in the first instance, because they are building billions of CAD worth of data centers. They are contracting power rates at multiples of what it currently costs to ensure that the power is coming from nuclear energy. You know, I think they're actually leading the charge in that respect. No, very astute question.
The next question comes from Graham Tanaka with Tanaka Capital Management. Please go ahead.
Thank you. Congratulations on your progress so far. I'm very curious. You mentioned that PCE could be accessed from Arrow. Is that correct? With a horizontal shaft, is that correct?
That's correct.
Okay. With that kind of scenario, which is new to me, what, could this speed up the development of PCE? Should it be deemed to be commercially attractive? How much faster could you bring PCE on, or when could you bring PCE on, if demand does in fact become one of, almost perhaps a hyper shortage of uranium, in the industry? How fast could you bring PCE on, and would it be at a lower cost, per pound than Arrow was de novo?
Yeah, Graham, I'll start then hand over to Travis. Thanks for the question. Again, conceptually based on what we know, I think that perspective that the ore at PCE could be accessed from the underground workings at Arrow. I wanna be I don't wanna look like, you know, I'm very respectful of the regulatory process, I wanna caveat everything that it is subject to substantial amount of future drilling, engineering study, environmental study. That is an absolute given. Conceptually, the answer to your question is correct. It could be. I have no economic cost data as we speak. I think it's reasonable to include at a similar cost to what Arrow is without operating costs to Arrow, without the CapEx, apart from the tunnel going from the underground-
Yes
workings at Arrow 3.5 kilometers to PCE. But you know, the cost of that would be immaterial relative to the overall economics. So whilst I don't have the precise cost per pound, incorporating the parameters of the technical study, I think conceptually, yes, I believe that is possible and I think it's reasonable that you would consider it at or near similar economic operating costs, to, the Arrow deposit. But that's as, that's as much as I could, you know, we're in a position to convey, without further study and regulatory approvals. Travis?
Great. Yeah, I might just add to Graham. Just that you raise a good point actually, which is, you know, back to the earlier question on the oil companies and the hyperscalers and all of that. You know, mining is a very long-term business. To your question around, you know, speeding things up. You know, the reality is there's only so much you can do to speed up once you make a discovery to speed things up. There's obviously some regulatory efficiencies that, you know, the government of Canada and other policymakers have tried to address. The bulk majority of, like, look at NexGen as an example, 2014 discovery 4 years from now, so 2030 in production, that's 16 years.
We didn't waste a minute of a day, the vast majority of that timeline is actually not regulatorily. It's actually just advancing the project, doing all the drilling, engineering studies, all the other things you need to do. PCE, while there to Leigh's point, likely be significant efficiencies and synergies between the fact that we have, you know, the world's best asset built and operating, you know, three and a half kilometers away. There is still just a length of time that it takes. That speaks to why, you know, our contracting strategy and our certainty around where this market is going is based off the fact that, you know, we don't have enough supply today. Even when you look out at, okay, well, when could things get into production?
Look at PCE. You know, you're talking many years from now. It's, you can't really speed things up is the point. You can speed them up a little bit, but you can't materially speed them up. Yeah, I just wanted to make that point.
Yeah. Okay. Relative to that, an investor is trying to determine the sort of the net present value of that asset, how large do you think PCE could be based on this preliminary drilling that you've done to date? How large could that prospect be relative to Arrow? What is the possibility that Arrow itself could have significantly more addition to not only resources but annual production, as one of the other analysts was asking about? It seems to me that if there is a shortage scenario that could be a really serious one for the industry, NexGen might really almost have a responsibility to be able to have some upside flexibility in adding to pounds per year.
I'm just wondering if how those, the dynamics of those two assets, the sizes, and at what point you could expand production in total by NexGen. Thanks.
Yeah. Thanks, Graham. Can't give any guidance on respective sizes of what PCE relative to Arrow is. We've been very transparent with all of the technical facts and measurements in our news releases, and relative to Arrow. That's as conclusive as we can be at this stage. Just maybe take a moment to also highlight that Arrow itself isn't closed off. We've drilled three holes under the grade shell of Arrow, and that grade shell goes down to 920 meters. We intersected mineralization in three holes over a distance of 500 meters. There's very clear expansion at Arrow before we even went to PCE. Yeah, obviously subject to additional drilling, delineation, and regulatory approval.
In that scenario you outlined, Graham, we would have a responsibility alongside the with the Canadian government. We would work in lockstep with the Canadian government to then execute a development and production profile that got as much uranium processed as possible from the mineralization within the Rook I project, whilst respecting all of the and meeting all of the regulatory and social aspects that would do. Graham, yes, we would. Would we meet the challenge? Absolutely, we would. Subject to doing things which involve all the relevant stakeholders and their agreement to it.
Terrific. Great. Looking forward to hearing about it.
Okay.
Thanks.
Thanks, mate. Thanks, Graham.
The next question comes from Mohamed Sidibe with National Bank. Please go ahead.
Hi, Leigh and team. Thanks for taking my question. Most of my questions on PCE and the topics have been answered. Maybe a question for Ben. On the balance sheet, could you maybe help us think about the convertible debts that you currently have on the book? Should we expect that to run their course? Has there been any indication or willingness for an early convert on those? I believe they're in the money premises. Thank you.
I'll hand over to Travis as the Chief Commercial Officer.
Yeah.
Those converts are well in the forced conversion zone at the end of the 3rd year anniversary. Yeah. Over to you, Travis.
Well, exactly. I mean, that summarizes it. Yes, they're in the money and on or after the third anniversary of those converts, we can convert them at our discretion. That is the likely scenario. The first year coming up in September of this year, and then the next tranche is May of 2027. We've done that in every case that we've had since we've started these converts back in 2016. We've always done that. You know, it's reasonable to assume that we would continue to do that, all things being equal.
Great. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Leigh Curyer for any closing remarks.
Yeah. Thank you, Katie. Thank you everyone who attended today's call. Thank you very much for all the questions we received. Thank you to my team of Travis, Benjamin, and Chris. As I said, we look forward to providing the date and time of our webinar around the construction phase and introducing the broader team. Very exciting time at NexGen. Keep watching this space. There's a plethora of exciting developments, we appreciate your interest and support to what is a fantastic good news story in resources in Canada and for the globe. You know, with ourselves, Denison, we're gonna be bringing back Canada as the world leaders in the production of this key fuel for the globe.
We're very proud of our position in it.