Rook I is NexGen's 100%-owned flagship property which hosts the land-based, basement hosted and high-grade Arrow deposit comprised of a series of 5 sub-vertical mineralized shear zones - A1 to A5 - which vary in thicknesses between 4 and 25 m. The mineralized area is currently defined as 280 m wide by 875 m in strike with mineralization starting at 110 m from surface and extending to 980 m. The 100%-owned Arrow deposit has an Indicated mineral resource estimate of 179.5Mlbs U3O8 contained within 1.18Mt grading 6.88% U3O8 including a high-grade core of 164.9Mlbs U3O8 contained within 0.40Mt grading 18.84% U3O8 and an Inferred mineral resource estimate of 122.1Mlbs U3O8 contained within 4.25Mt grading 1.30% U3O8 (see the Company's technical disclosure statement: http://www.nexgenenergy.ca/corporate/corporate-governance/). Arrow remains open in most directions and at depth. The Rook I property also hosts the Harpoon, Bow and Cannon discoveries which are located 4.7 km, 3.7 km and 1.3 km northeast into the Athabasca Basin from Arrow, respectively.
On July 31, 2017 NexGen released its independent maiden Preliminary Economic Assessment (“PEA”) of the basement-hosted Arrow Deposit. The maiden PEA was completed by Roscoe Postle Associates Inc. (“RPA”), and is based on the mineral resource estimate announced by the Company in March 2017 (with an effective date of December 20, 2016). The PEA does not include the results of the Company’s 2017 winter drill program or the recently commenced summer drill program.
|PEA Financial Highlights|
|After-Tax Net Present Value (NPV8%)||CAD $3.49 Billion|
|After-Tax Internal Rate of Return (IRR)||56.7%|
|After-Tax Payback||1.1 Years|
|Pre-production Capital Costs (CAPEX)||CAD $1.19 Billion|
|Average Annual Production (Years 1-5)||27.6 M lbs U3O8|
|Average Annual Production (Life of Mine)||18.5 M lbs U3O8|
|Mine Life||14.4 Years|
|Average Unit Operating Cost (Years 1-5)||CAD $5.53 (US $4.42)/lb U3O8|
|Average Unit Operating Cost (Life of Mine)||CAD $8.37 (US $6.70)/lb U3O8|
|Uranium Price Assumption||USD $50/lb U3O8|
|Saskatchewan Royalties (Life of Mine)||CAD $2.98 Billion|
Exchange Rate CAD$1 = USD$0.80
The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that PEA results will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
PEA Sensitivity to Uranium Price
|Uranium Price ($ USD/lb U3O8)||After-Tax NPV1,2||After-Tax IRR||After-Tax Pay Back1,2|
|$80/lb U3O8||CAD $6.45 Billion||82.3%||0.7 Years|
|$60/lb U3O8||CAD $4.48 Billion||65.9%||0.9 Years|
|$50/lb U3O8||CAD $3.49 Billion||56.7%||1.1 Years|
|$40/lb U3O8||CAD $2.49 Billion||46.2%||1.4 Years|
|$30/lb U3O8||CAD $1.50 Billion||34.1%||1.9 Years|
|$25/lb U3O8||CAD $1.00 Billion||27.0%||2.4 Years|
1. Based on an 8% Discount Rate.
2. Based on a 0.80 USD / 1.00 CAD Exchange Rate.
Arrow Annual Production and Grade Profile
Arrow Undiscounted Cumulative After-Tax Cash Flow
The PEA envisions a production profile supported by conventional long-hole stope mining averaging 1,442 tonnes per day at an average head grade of 1.73% U3O8 over the life of mine. It is envisaged that mine production will be fed into a conventional uranium processing plant where uranium recovery is projected to be 96.0% over the life of mine.
It is envisaged that cemented paste fill tailings will be used, where tailings are constituted into a paste, mixed with approximately 5% cement and delivered back underground. The cemented paste fill tailings will be used to backfill stopes and the excess will be placed in a, purpose built, Underground Tailings Storage Facility. Among many other benefits, this tailings management process is expected to significantly reduce the surface footprint of the project.
Long Section View of Conceptual Arrow Deposit Mine Infrastructure
Athabasca Basin Setting
Arrow Mineral Resource Estimate Summary - December 20, 2016 (the "Effective Date")
|Structure||Tonnage (tonnes)||Grade (U3O8 %)||Metal U3O8 (U3O8 lbs)|
|Indicated Mineral Resources|
|A2 High Grade||400,000||18.84||164,900,000|
|Inferred Mineral Resources|
|A2 High Grade||30,000||12.72||8,600,000|
|A3 High Grade||150,000||8.74||28,200,000|
|180 m SW||110,000||0.94||2,300,000|
- CIM Definition Standards were followed for Mineral Resources.
- Mineral Resources are reported at a cut-off grade of 0.25% U3O8 based on a long-term price of US$65 per lb U3O8 and estimated costs.
- A minimum mining width of 1.0 m was used
- Numbers may not add due to rounding.
NexGen successfully published an updated Indicated and Inferred mineral resource estimate based on drilling to the end of the summer 2016 program which included only 200 drill holes. Utilizing a unique drilling methodology comprising 95% angled drill holes allowed NexGen to pierce 2-3 shears with each hole given the fact the deposit is comprised of parallel stacked and sub-vertical shear zones. This enabled the Company to define the Arrow deposit efficiently both in terms of time and cost. The Company is well-funded with approximately C$200 million in the treasury.
Importantly, the Company is dedicated to putting the most dollars into the exploration efforts compared to G&A spending. In 2016, the ratio of dollars-in-the-ground to corporate G&A was >12:1.
Current Plan View of Arrow Zone
A2 High Grade Domain
Additionally, NexGen has successfully identified an A2 High Grade Domain which is characterized by substantial accumulations of dense semi-massive and massive pitchblende and carries across a strike length of over 300 m. As of the updated mineral resource estimate which included drilling only until the end of 2016 drilling accounted for an Indicated mineral resource of 164.9 Mlbs U3O8 (0.40 Mt at 18.84% U3O8). This high-grade core of Arrow represents a top tier mineral asset in its own right and makes up only part of the global resource estimate.
2017 Summer Drill Program
The recently commenced summer program will consist of a minimum of 25,000 m of diamond drilling, utilizing seven drill rigs. Six rigs are drilling expansion and delineation targets at the Arrow Deposit. The seventh rig is testing a newly identified area 300 m southeast of Arrow.
The company recently made the discovery of the South Arrow Discovery, approximately 400 m south of Arrow on a separate conductor to that which hosts Arrow. Discovery hole AR-17-151c1 intersected 7.0 m of total composite mineralization including 0.45 m of off-scale radioactivity (>10,000 to >61,000 cps) marked by narrow massive pitchblende veining.
Historical Drill Programs
The Company recently completed an expanded 35,000 m winter 2017 drill campaign which focused on expansion as well as infill drilling the Arrow Deposit. Of the 7 total rigs utilized in this program, 5 used directional drilling and targeted the Arrow Deposit. An additional two rigs focused on identifying new zones of mineralization, both laterally and along strike from Arrow.
The Company completed a 2016 summer drill program of 37,000 m in 53 drill holes, focused on continued infill and expansion drilling at Arrow Deposit, with metallurgical, baseline monitoring studies conducted.
Complied all drilling for updated resource of Indicated mineral resource estimate of 179.5Mlbs U3O8 contained within 1.18Mt grading 6.88% U3O8 including a high-grade core of 164.9Mlbs U3O8 contained within 0.40Mt grading 18.84% U3O8 and an Inferred mineral resource estimate of 122.1Mlbs U3O8 contained within 4.25Mt grading 1.30% U3O8.
The Company completed their largest program to date consisting of 36,000 m in 69 drill holes, expanding the Arrow Deposit by 180 m to the South-West. The most intense mineralization to date encountered in the A2 & A3 High Grade shears.
Completed a successful and expanded summer 2015, 5 rig, 33,000 m campaign which exceeded the goals the Company set out prior to the start of the program. The goals were to further define the extents of Arrow by systematically testing the zone including the A2 and A3 high-grade zones.
NexGen aggressively tested the extents of Arrow by drilling and hitting on 3 step-outs in increments of 50, 100 and 210 m to the southwest of AR-15-44b. Due to the fact all of the holes hit mineralization, the decision was made to expand the program in order to infill the space between -44b and the 210 m southwest extension. Not only was the company successfully in doing that, but in doing so NexGen discovered the higher grade A2 sub-zone which is now defined as a sub-horizontal sub-zone of the A2 high-grade shear that is characterized by substantial massive to semi-massive pitchblende mineralization and very high-grades of uranium. Complied all data for maiden resource estimate of Inferred Mineral
Resource of 201.9 M lbs of U3O8 contained in 3.48 M tonnes of mineralization grading 2.63% U3O8.
A fully-funded 18,000 m 2015 winter program was initiated in early January (expanded to over 21,000 m) and exceeded the Company's expectations. The winter 2015 program was successful in extending the area of known mineralization at the A2 shear zone by an additional 88 m to the southwest (from AR-14-30).
The Company discovered the new mineralized A3 shear which appears to be even larger than the A2 shear. Mineralization intersected in the A2 and A3 shears show true widths of these high-grade mineralized zone of approximately 11.0 - 48.3 m and 30.0 - 78.6 m, respectively (see news release dated March 23, 2015).
The summer 2014 program totaled 18,885.8 m in 33 drill holes on the Rook I property (24 drill holes at the Arrow discovery, and 9 drill holes regionally on Rook I). Shortly after the company released the initial assay results from drill hole AR-14-15, they drilled the first ever vertical hole at the Arrow zone in AR-14-30 which returned one of the best drill holes ever drilled in the Athabasca Basin history (909 on a total composite "GT" - grade x thickness metric).
NexGen initially drilled their flagship Rook I project in August 2013 with a 3,000 m drill campaign which resulted in eleven of twelve holes confirming the presence of strong clay and hematite alteration. This first pass program was exploratory in nature with no hole being drilled closer than 200 m.
NexGen followed up the successful summer 2013 drill campaign with an expanded 6,000 m winter program in January 2014. The company discovered high-grade uranium at the on land Arrow target with the first drill hole, AR-14-1 (twenty-first hole ever drilled by NexGen at Rook I property). It encountered multiple structural zones containing uranium mineralization. At the time of drilling this discovery hole at the Arrow zone, no other holes existed within a 4 km radius.