Watching Uranium? NexGen’s $1.3B uranium project approval a major milestone.

Saskatchewan granted NexGen Energy (TSX: NXE; NYSE: NXE; ASX: NXG) environmental approval for its Rook I uranium project in the province’s far north, the first such authorization in two decades, the company says.

Now the project, forecast to cost $1.3 billion to build, awaits federal environmental consent as it conducts pre-construction site work, the company said in a news release on Thursday.

Both the company and BMO Capital Markets called the approval a major milestone for Rook I, which is expected to produce 21.7 million lbs. of uranium annually for nearly 11 years, according to a 2021 feasibility study.

“The update keeps it on track for a potential go-ahead decision next year,” BMO mining analyst Alexander Pearce wrote in a note to clients on Thursday. “NexGen is now focused on the Federal environmental assessment approval process.”

Uranium prices touched a 15-year high of US$74.50 per lb. last week as the demand to replace fossil fuels increases. About 60 nuclear plants are under construction in countries such as China, Russia and India. Rook I is said to be Canada’s largest development-stage project for the nuclear fuel.

The project in the southwest of the Athabasca basin about 40 km east of the Alberta-Saskatchewan border would generate an after-tax net present value of $3.5 billion at an 8% discount rate, and an after-tax internal rate of return of 52.4%, according to the 2021 study.

Global demand

“The achievement of this major milestone of provincial environmental assessment approval for Rook I is key in meeting the surging global demand for ethically sourced uranium,” NexGen CEO Leigh Curyer said. “NexGen has submitted all responses to the Federal technical review of the Rook I project environmental impact statement.”

The project’s mineral reserves total 4.5 million tonnes grading 2.37% uranium oxide for 239.6 million pounds. Its measured and indicated resources total 3.7 million tonnes grading 3.1% uranium oxide for 256.7 million pounds.

Shares in NexGen rose 6% on Thursday morning in Toronto $8.41, valuing the company at $4.4 billion. They’ve traded in range of $4.75 to $8.68 over the past 52 weeks.

“Saskatchewan and our northern communities are well-positioned to benefit from the increased demand for critical minerals,” Saskatchewan Premier Scott Moe said in a statement.

The project is located within the Clearwater Dene Nation (CRDN), Birch Narrows Dene Nation and Buffalo River Dene Nation traditional territories, and the Métis Homeland. All four communities confirmed their consent and support for the project.

“Since as early as 2013, the Rook I project has been a platform for both NexGen and the CRDN, together with regulatory authorities, to set a new and elite standard on Indigenous engagement, participation, and partnerships,” CRDN Chief Teddy Clark said in the release. “We stand collectively to maximize accommodation measures and business opportunities for our people.”
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