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ASX:NGX
NGX Ltd
Investment Summary
The fund managers believe that NexGen Energy remains a compelling investment as it prepares to develop the Arrow deposit, which is considered the world’s largest undeveloped uranium deposit in Saskatchewan, Canada. They emphasize that this development represents a significant strategic advantage in addressing the anticipated uranium market deficit. Despite fluctuations in share prices and spot uranium prices, the fund managers consistently see positive fundamental supply/demand tailwinds for uranium over the medium to long term. Notably, Arrow is projected to generate over C$2b of cash flow annually once developed, significantly contributing to the company’s valuation, which fluctuated between approximately C$4.2b and C$6.5b in market cap over the months. The fund managers are optimistic about NexGen's progress towards obtaining final federal approvals, which could lead to full-scale construction in the near future.
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.
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.
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.
L1 Capital
30 Sept 2024
$0.16
- NexGen (Long +9%) strengthened due to positive sentiment in the uranium sector.
- Microsoft's agreement with Constellation Energy to restart a nuclear power facility supports demand, particularly for AI data centres.
- L1 Capital continues to see positive fundamental supply/demand tailwinds in the uranium market over the medium to long term.
- NexGen is preparing to develop Arrow, the world’s largest undeveloped uranium deposit located in Saskatchewan, Canada.
- Arrow represents a strategic Western source to address the anticipated uranium market deficit.
- L1 Capital anticipates that NexGen will complete all regulatory requirements in the next six months, paving the way for full-scale construction.
- The Arrow project has the potential to generate over C$2b of cash flow annually once developed by 2028.
- This projection is highly attractive considering NexGen’s current market cap of ~C$5b.
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.
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.
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.
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.
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.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
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