Despite dramatic headwinds in both the uranium and exploration industries, Canadian explorer NexGen Energy has cornered the Athabasca Basin’s two best, recent uranium discoveries.
The Athabasca Basin from helicopter, Feb 2012 / Photo: CEO.CA
On March 11, 2011, the uranium industry was devastated by the nuclear catastrophe at the Fukushima power plant on the west coast of Japan. The black swan event also coincided with a five-year top in the mineral exploration markets as represented by the TSX-Venture Exchange.
It's been a very difficult environment for uranium and exploration companies ever since, save for a few notable exceptions in Saskatchewan’s Athabasca Basin. Hathor Exploration’s Roughrider deposit was sold to Rio Tinto for $642 million in late 2011 -- its economics were simply too good for the major to pass up. More recently, Alpha Minerals and joint venture partner Fission Energy’s Patterson Lake South (PLS) project has become one of the most exciting uranium discoveries in recent times, having announced just yesterday 10.5 meters of 29.26% U308 (Read the PLS discovery backstory here). Alpha and Fission have been among the only bright spots in an otherwise terrible 2013 venture market.
NexGen CEO Leigh Curyer
Despite sitting on opposite ends of the Athabasca Basin, both Roughrider and PLS share a common neighbor. NexGen Energy (TSXV:NXE), a Canadian company with Australian management soon to be based in Vancouver, has assembled a portfolio of uranium projects in the Basin that includes land adjacent and on trend to both discoveries. Neither NexGen’s Radio and Rook properties have yet to have a drill hole put in them, but that will change this summer.
NexGen listed on the TSX-Venture Exchange this morning under the symbol NXE. We caught up with CEO Leigh Curyer for the backstory this morning, before the opening bell:
Ambitious Australians
NexGen would not be here today were it not for CEO Leigh Curyer and VP Exploration Andy Browne, two Australians with long track records in the uranium business in Canada.
Curyer, a Chartered Accountant, became CFO of Southern Cross Resources in 2002 (now Uranium One) and helped raise over $250 million in equity to fuel its growth. He left the company in 2006 to lead corporate development, assessing worldwide uranium projects for Accord Nuclear Resources (a partnership with First Reserve International, the world’s largest energy-focused private equity firm).
NexGen VP Exploration Andrew (Andy) Browne
Andy Browne is a highly respected uranium focused geologist, having worked on numerous exploration, development and production stage projects over the past 40 years.
The two men met while working at Accord Nuclear Resources. They left in 2010 to focus on acquiring some of the projects they were seeing, and zeroed in on the Athabasca Basin for its high grade, large tonnage, shallow uranium resources. They had always had their eye on Hathor’s Roughrider property, but no land was available in the area. That all changed one day in early 2011.
Radio
In 2009, a private syndicate assembled the land adjacent to Hathor’s Roughrider, Roughrider East and Roughrider Far East deposits; the ground, known as Radio, had been previously unavailable for staking since 1979. Interestingly, this group had also staked the claims that contained Hathor's discoveries. With this new ground, they sought a partner to explore the property in the Winter of 2010/2011.
Enter on the scene one Leigh Curyer. “A colleague in Canada gave me a call relaying the news that the ground had become available," he told me. "We flew geophysics over the property which suggested the structure that hosts Roughrider is interpreted to continue onto the Radio property.” He continued, “The area is prolific with uranium, when you look at the structure that hosts the nearby deposits. Within a 10km radius of Radio there is 170 million pounds at 1 - 11% percent of known resources."
NexGen Director Chris McFadden
Curyer and Browne then went out to find a financial partner to develop the project with. They soon found themselves on the doorstep of Chris McFadden, a fellow Aussie who was formerly in charge of corporate development for Rio Tinto’s uranium assets, now working with a resource development group known as Tigers Realm.
Tigers Realm
Based in Melbourne, Australia, the Tigers Realm Group acquires, finances and recruits management for resource projects, a business model similar to that of Hunter Dickinson here in Canada.
Chairman Owen Hegarty, after a 25-year career at Rio Tinto, founded the Oxiana Group (now Oz Minerals) in 1998, which sold for over $6 billion. Tony Manini, a geologist and current CEO of Tigers Realm, is Hegarty’s partner. The pair have been successful in the resource business despite keeping a low profile outside of Australia.
Curyer and Browne relayed the Radio opportunity to Tigers Realm’s McFadden. “Andrew and I gave him the case and they very quickly said yes, largely to due to Andy’s involvement. He has over 40 years experience in uranium directly, with strength in this region and structural setting.” Tigers Realm stepped up with some of the initial capital required to acquire the option on the Radio property. Off the company went, privately for the time being.
Mega Uranium
The newly formed NexGen Energy (with its Radio option in tow) sought to diversify its project portfolio with other properties also in shallow parts of the Basin, with strong geophysical characteristics, and close proximity to known mineralization. In 2012 NexGen merged with Sheldon Inwentash’s Mega Uranium, and gained Mega’s project portfolio. “They looked at Radio and really liked it and saw the benefits of having their projects under our technical direction, so we merged, meeting both companies goals. They also put in $4.25 million as well to apply against the projects,” Curyer told us.
Rook 1
Within Mega’s project portfolio was a dominant land position in the Southwestern Athabasca Basin region, around Patterson Lake, where in late 2012, Alpha Minerals and joint venture partner Fission Energy announced their tremendous PLS discovery. It was a stroke of good luck for NexGen, whose newly acquired Rook property was adjacent and just up ice from the discovery. “The electromagnetic conductors which host PLS are trending directly into our property,” Curyer commented.
Both Radio and Rook 1 will be drilled this summer. Beyond those properties, the company has a broader portfolio of projects and targets which will be explored more closely in the near future.
In the face of Fukushima and a crashing TSX-Venture
On raising $15.5 million as a private company in the worst exploration finance market in recent memory, Curyer told us, “The last two years have obviously been challenging, but we’ve always believed we have an excellent portfolio of exploration assets. Andy and I are uranium guys, having looked all around the world at projects in various stages of development, we are thrilled with what we have here. In the future the world will need high grade, high tonnage uranium resources in very good jurisdictions. We certainly have the potential for that within the portfolio of projects we have currently.”
Related: Amir Adnani on why uranium prices must go higher.
NexGen has over $6 million in the bank today, which will fulfill their 2013 exploration commitments at the Radio and Rook projects. Current shareholders include Tigers Realm, Mega Uranium, Pinetree Capital, Marquest, K2, and Sprott. The company has approximately 100 million shares out fully diluted, with the majority of the financing completed at .40 cents. Shares in NexGen closed at $.395 today - its first day of trading. The company will have to go back to the market to raise additional capital as soon as next winter.
“Going forward,” Curyer told us, “We’re funded for our summer exploration campaign both at Radio and Rook 1 where we’re testing the two targets which are closest to the known mineralization. We have a summer drilling campaign underway that we're ready to execute on. The news flow will begin in June and July onwards.”
Curyer continued, “It’s not just our land package, but our ability to discover the deposits. That can take time, but what you’re getting with NexGen is a diligent team that has the strategic land positions, the commitment, and the technical experience to make a discovery.” Demonstrating that commitment, Curyer is moving his young family from Australia to Canada this summer.
“This has been a difficult time in the uranium market,” Curyer told us, “But that difficulty has facilitated our ability to acquire the projects we’ve wanted. Of the explorers in the Basin, we feel we have the best opportunity to make a new discovery. This is real.”
We will be watching NexGen closely over the coming months and are optimistic for their success.
For more information, visit the company's Web site and corporate presentation.
Disclaimer: As of time of writing, the author has no position in the companies listed. That is subject to change in the future without notice. All information presented is believed to be reliable at the time of publishing. Nothing in this article should be construed as advice or a solicitation to trade any securities.
