“The net cashflow from Arrow will place us into the top 15 mining companies worldwide. Time will tell how we will structure the financing, but our goal is to put Arrow into production ourselves.”

Could you provide some background about NexGen and the Arrow deposit? Shortly after the establishment of NexGen in 2011, we acquired a group of properties in the Athabasca Basin and started exploration in 2013. In February 2014, we discovered the Arrow deposit on our 21st drill hole. Since that time, Arrow has developed into what is now the world’s largest and highest-grade uranium ore body, and it is still getting bigger. We currently have a resource of 350 million pounds, and the deposit is not closed in any direction at all. We have only explored 10% of the conductor that hosts Arrow.

Knowing that we had a mega deposit, we decided early on to set up the engineering and environmental aspects, so we published a preliminary economic assessment (PEA) in 2017, which we followed with a pre-feasibility study in November 2018. The former study established that the project has an incredibly fast payback period, based on a mine plan of approximately 25 million pounds per annum (lbs/y), which would make us the world’s largest producer of uranium. You are now working on the final feasibility study. What is the timeline for this, and do you expect it to bring major changes to the economic parameters of the project? We put a lot of work into the PEA right at the beginning. We saw very strong consistency between the PEA and the PFS, and we expect this consistency to continue in our final feasibility study, which is scheduled to be completed at the end of 2020. That document will then be incorporated into the environmental impact statement that we will submit during H1 2021. These will be major milestones for the Arrow project. Arrow will be a conventional mining operation. Could you develop on its cost profile and competitiveness against in-situ recovery (ISR) operations? Before Arrow was discovered, you could argue ISR is the lowest-cost form of uranium production. The advantage of the Athabasca Basin is that deposits have an average grade which is 100 times higher than in uranium mines elsewhere, including ISR operations. Arrow is not only large and very high grade, it is also very simple for a mining operation. It is hosted in basement rock near surface and has a very clean metallurgy. Our all-in cost is C$11.77/lbs according to the PFS, and this already includes reclamation expenditures – on cessation of activities we will not be adding any environmental liability. Could you explain about the projected underground tailings facility? The underground tailings facility is not the cheapest option both in terms of capex and opex, but the quality of the deposit allows for it. This method is new in Canada but there are a lot of paste backfill operations throughout the world where this is run very successfully. Crystalline basement rock is the natural chamber to host the tailings, so this is the proposal that we have presented. We want to have the world’s leading mine from an environmental management perspective, and underground tailings management will be a large component of that. This said, if in the end the tailings need to be placed on surface, we have an ideal location for that as well. Capex is large at C$1.25 billion [US$950 million]. Will you need partners to put Arrow into production? Right from the beginning, NexGen put together a board and executive team that covers all stages of mining, all the way to closing and reclamation. Therefore we have the technical skills to take the project to production. On the financing side, the net cashflow that will be generated by Arrow will place us into the top 15 mining companies worldwide, just from a single asset – so we have had great support from some of the world’s leading investors such as Li Ka-Shing out of Hong Kong through CEF Holdings, which is run by Warren Gilman. How we will structure the financing is something that time will tell, but our goal is to put Arrow into production ourselves. NexGen was created just after Fukushima. How different are market fundamentals a decade later? Uranium demand is strong and will continue to be strong, growing at 1% to 2% per annum. On the supply side, we do not have a steady supply of nuclear fuel at a competitive cost. The major producers have seen substantial cost increases over the last decade, so the uranium price needs to rise further to incentivize new production outside of Arrow (Arrow works in any type of price environment). Our forecast for the middle part of this decade is that the world is going to need two to three Arrow-equivalent projects to fill the gap, and that gap already exists today with approximately an 80 million-pound supply deficit this year. The fundamentals of uranium for the coming decade are incredibly exciting. The U.S. is the largest uranium consumer and its government is trying to promote local uranium production through a number of initiatives. What is the situation in Canada? The U.S. is an interesting story: They consume about 50 million lbs/y, yet they produce less than 1 million lbs/y because the ore bodies in the U.S. are currently not competitive. The uranium inputs from Kazakhstan to the U.S. have increased from 5% to around 44% now, and when it comes to nuclear fuel you want a very diversified fuel procurement –both the U.S. and the Canadian government recognize that.

How can nuclear energy help decarbonize the economy? Undoubtedly, uranium has had some PR issues, but the facts remain that nuclear energy is the cleanest form of baseload power that exists. Renewables should be incorporated into energy policy, but baseload power is the key fundamental to a healthy economy and a healthy climate. Every source of power has a cost: The WHO estimates that coal generation and pollution cause 1 million deaths per year in Beijing alone.

Now, the development of Small Modular Reactors (SMRs) can be a real catalyst for economic development. Putting these in some parts of Africa, for instance, where often you do not have reliable power at night, would massively improve the standard of living. The technology is not new, the U.S. aircraft carriers have small reactors powering their ships. These are large structures carrying thousands of people, and they only need to refuel them once every 20 years. So, nuclear is a phenomenal power source, and a clean one.