Fund Manager Summary
The fund managers believe that the outlook for NGX Ltd presents a significant opportunity, particularly due to the rising uranium prices, which have reached a 15-year high. In their opinion, this trend is supported by strong medium-term demand and potential supply deficits anticipated by the end of the decade. They emphasize that the world’s largest uranium producer, Kazatomprom, has indicated a downgrade in its 2024 production targets, highlighting the fragility of current supply. Furthermore, NexGen is poised to develop the world’s largest uranium deposit, Arrow, located in Saskatchewan, Canada, which could become a crucial Western source to mitigate the expected market deficit. At current uranium prices, Arrow has the potential to generate over C$2b in annual cash flow once operational, making it a compelling investment opportunity.
Source: Trading View
Commentary From The Managers
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L1 Capital
31 Dec 2024
$0.18
Summary
- L1 Capital continues to hold its position in NexGen Energy (Long -20%) as spot uranium prices fell ~5% during the month.
- Uranium term prices remain stable and are currently attracting more than a 10% premium to spot prices.
- Supply risk is heightened due to Kazatomprom and Cameco announcing a temporary suspension of the Inkai joint venture in Kazakhstan.
- NexGen is poised to develop the world’s largest undeveloped uranium deposit, Arrow, located in Saskatchewan, Canada.
- This project is viewed as a strategic Western source to address the looming uranium market deficit.
- NexGen is nearing the final stage of federal approval, with a commission hearing expected in H1 25.
- Once operational, Arrow may generate more than C$2b of cash flow annually, making it a compelling opportunity considering NexGen’s current market cap of ~C$6b.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
L1 Capital
31 Dec 2024
$0.18
- L1 Capital continues to hold its position in NexGen Energy (Long -20%) as spot uranium prices fell ~5% during the month.
- Uranium term prices remain stable and are currently attracting more than a 10% premium to spot prices.
- Supply risk is heightened due to Kazatomprom and Cameco announcing a temporary suspension of the Inkai joint venture in Kazakhstan.
- NexGen is poised to develop the world’s largest undeveloped uranium deposit, Arrow, located in Saskatchewan, Canada.
- This project is viewed as a strategic Western source to address the looming uranium market deficit.
- NexGen is nearing the final stage of federal approval, with a commission hearing expected in H1 25.
- Once operational, Arrow may generate more than C$2b of cash flow annually, making it a compelling opportunity considering NexGen’s current market cap of ~C$6b.
Summary
L1 Capital
30 Nov 2024
$0.19
- NexGen Energy (Long +16%) strengthened during the month.
- The company has successfully completed the final federal technical review, a major de-risking milestone.
- NexGen is set to enter the final stage of federal approval with a commission hearing expected in H1 25.
- Following federal approval, NexGen can commence full-scale project construction.
- State approvals for the project have already been granted.
- NexGen is developing the world’s largest undeveloped uranium deposit, Arrow, in Saskatchewan, Canada.
- Arrow represents a strategic Western source to address the looming uranium market deficit.
- Once developed, Arrow has the potential to generate over C$2b of cash flow annually.
- This proposition is attractive given NexGen's current market cap of ~C$6.5b.
Summary
L1 Capital
30 Sept 2024
$0.16
- NexGen Energy (Long -7%) weakened as uranium prices fell 5% over the quarter.
- L1 Capital continues to see the uranium market having positive fundamental supply/demand tailwinds over the medium to long term.
- NexGen is preparing to develop the world's largest undeveloped uranium deposit, Arrow, located in Saskatchewan, Canada.
- This would be a major, new, strategic Western source to address the looming uranium market deficit.
- L1 Capital anticipates that NexGen will have completed all regulatory requirements over the course of the next six months, providing a clear pathway to full scale construction of the project.
- Arrow has the potential to generate more than C$2b of cash flow annually, once developed (2028).
- This serves as a highly attractive proposition given NexGen's current market cap of approximately C$5.5b.
Summary
L1 Capital
31 Aug 2024
$0.17
- L1 Capital highlights a 12% decline in NexGen due to a 6% drop in uranium prices over the month.
- The uranium market is viewed as having positive fundamental supply/demand tailwinds in the medium to long term.
- NexGen is focused on developing Arrow, the world’s largest undeveloped uranium deposit located in Saskatchewan, Canada.
- Arrow is positioned to be a strategic Western source for the anticipated uranium market deficit.
- L1 Capital anticipates NexGen will finalize all regulatory requirements within the next six months.
- This would provide a clear pathway to full-scale construction of the Arrow project.
- Once developed, Arrow has the potential to generate over C$2b annually in cash flow starting in 2028.
- This represents a highly attractive proposition considering NexGen’s current market cap of approximately C$4.2b.
Summary
L1 Capital
30 June 2024
Unknown
- NexGen (Long -10%) weakened as uranium prices fell 8% over the month.
- L1 Capital continues to see the uranium market as having positive fundamental supply/demand tailwinds over the medium to long term.
- NexGen is preparing to develop the world’s largest undeveloped uranium deposit, Arrow, located in Saskatchewan, Canada.
- This project is expected to be a major new strategic Western source to address the anticipated uranium market deficit.
- L1 Capital anticipates that NexGen will have completed all regulatory requirements over the course of 2024, providing a clear pathway to full-scale construction.
- Arrow has the potential to generate more than C$2b of cash flow annually once developed (2028).
- This represents a highly attractive proposition given NexGen’s current market cap of ~C$5.2b.
Summary
L1 Capital
31 Mar 2024
$0.16
- NexGen (Long +11%) performed well as uranium prices reached 15-year highs during the quarter.
- Uranium price increase driven by structural demand tailwinds and a downgrade in 2024 production expectations from Kazatomprom, the world’s largest producer.
- L1 Capital continues to see the uranium market as having positive fundamental supply/demand dynamics over the medium to long term.
- NexGen is preparing to develop Arrow, the world’s largest undeveloped uranium deposit, located in Saskatchewan, Canada.
- Arrow aims to be a key Western source to meet the anticipated uranium market deficit.
- All regulatory requirements are expected to be completed in 2024, paving the way for full-scale construction.
- At current uranium prices, Arrow could generate over C$2b annually in cash flow once developed by 2028.
- This represents a highly attractive opportunity considering NexGen’s market cap of approximately C$5.8b.
- The majority of L1 Capital's investment occurred when NexGen's market cap was around C$2b.
Summary
L1 Capital
28 Feb 2024
$0.16
- L1 Capital continues to hold a position in NexGen despite shares pulling back by 8%.
- The decline follows a moderation in uranium market sentiment and a pullback in uranium spot prices from 15-year highs.
- Factors influencing this include stronger-than-expected 2024 production guidance from major producer Cameco.
- There are also indications that potential U.S. sanctions on Russian nuclear fuel exports may not materialize.
- L1 Capital sees the uranium market as having positive fundamental supply/demand tailwinds over the medium to long term.
- NexGen is preparing to develop the world’s largest uranium deposit, Arrow, located in Saskatchewan, Canada.
- This development is viewed as a significant new strategic Western source to address the anticipated market deficit.
- At current uranium spot prices, Arrow is positioned to generate more than C$2b of cash flow annually once developed.
- This proposition is considered highly attractive given NexGen’s market cap of C$5.6b.
- L1 Capital made most of its investment in NexGen when the market cap was around C$2b.
Summary
L1 Capital
31 Jan 2024
$0.14
- NexGen's stock increased by 11% as spot uranium prices surged in January.
- Uranium prices reached a 15-year high amid expectations of substantial demand.
- There are indications of potential supply deficits in the uranium market by the end of the decade.
- The world's largest uranium producer, Kazatomprom, indicated a production downgrade for 2024, highlighting supply vulnerability.
- NexGen is set to develop the Arrow deposit, the largest uranium deposit globally, located in Saskatchewan, Canada.
- Arrow is positioned to be a key strategic source for the Western market facing anticipated deficits.
- Projected cash flow from Arrow at current uranium prices exceeds C$2 billion annually.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"With uranium prices hitting a 15-year high and looming supply deficits, the stage seems set for a seismic shift in energy dynamics. NGX Ltd's Arrow project could emerge as a critical player, potentially reshaping the market landscape as demand surges."
Last Updated: 31 Dec 2024
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Frequently Asked Questions
Who is investing in NGX Ltd (ASX:NGX)?
Fund managers including L1 Capital have invested in NGX Ltd (ASX:NGX).
Why do fund managers invest in NGX Ltd?
Fund managers are investing in NGX Ltd due to the rising uranium prices, which reached a 15-year high, indicating strong medium-term demand and potential supply deficits by the end of the decade. The company is positioned to develop the Arrow deposit in Saskatchewan, projected to be the world's largest uranium source, which could generate over C$2 billion in annual cash flow once operational. This strategic positioning in a fragile supply market underpins the investment rationale.
What happened to NGX Ltd (ASX:NGX)?
There have been no recent updates from fund managers regarding NGX Ltd although fund managers including L1 Capital have previously commented.