Rook I is NexGen's 100%-owned flagship property which hosts the land-based, basement hosted and high-grade Arrow Deposit comprised of a series of currently and at least 6 sub-vertical mineralized shear zones – A0 to A5 - which vary in thicknesses between 4 and 25 m. The mineralized area is currently defined as 308 m wide by 895 m in strike with mineralization starting at 110 m from surface and extending to 980 m. The 100%-owned Arrow Deposit has an Indicated Mineral Resource of 256.6 M lbs of U3O8 contained in 2.89 M tonnes grading 4.03% U3O8, including the A2 High Grade Core of 181.0 M lbs of U3O8 contained in 0.46 M tonnes grading 17.85% U3O8 and an Inferred Mineral Resource of 91.7 M lbs of U3O8 contained in 4.84 M tonnes grading 0.86% U3O8 (see the Company's technical disclosure statement: http://www.nexgenenergy.ca/corporate/corporate-governance/). Arrow remains open in most directions and at depth. The Rook I property also hosts the South Arrow, Harpoon, Bow and Cannon discoveries which are located 400 m, 4.7 km, 3.7 km and 1.3 km northeast into the Athabasca Basin from Arrow, respectively.
Pre-Feasibility Study Highlight
On November 5, 2018 NexGen released its independent Pre-Feasibility Study (“PFS”) of the basement-hosted Arrow Deposit. The PFS was completed jointly by Wood., and Roscoe Postle Associates Inc. ("RPA"), with other technical inputs completed by sub-consultants (with an effective date of May 25 , 2018). The PFS does not include the results of the Company’s 2018 summer drill programs.
Summary of PFS Results
|PEA (July 31, 2017)||PFS||Variance|
|After-Tax Net Present Value (8% discount)||CAD $3.49 Billion||CAD $3.7 Billion||+6%|
|After-Tax Internal Rate of Return (IRR)||56.7%||56.8%||-|
|After-Tax Payback||1.1 Years||1.2 Years||+9%|
|Initial Capital Costs (“CAPEX”)||CAD $1.19 Billion||CAD $1.25 Billion||+5%|
|Average Annual Production (Life of Mine)||18.5 M lbs U3O8||25.4 M lbs U3O8||+37%|
|Average Annual Production (Years 1-5)||27.6 M lbs U3O8||29.0 M lbs U3O8||+5%|
|Average Daily Throughput||1,448 tonnes per day||1,039 tonnes per day||-28%|
|Average Annual Grade||1.73% U3O8||3.09% U3O8||+79%|
|Mine Life||15 Years||9 Years||-6 years|
|Average Annual After -Tax Net Cash Flow (Life of Mine)||CAD $553 Million||CAD $909 Million||+64%|
|Average Annual Operating Cost (“OPEX”, Life of Mine)||CAD $8.37 (US $6.70)/lb U3O8||CAD $ 5.81 (US $4.36)/lb U3O8||-31%|
|Operating Margins (Life of Mine)||85.5%||90.6%||+6%|
PEA and PFS based on US$50/lb U3O8 and PEA Exchange Rate CAD$1.00 = USD$0.80, PFS Exchange Rate CAD$1.00 = USD$0.75
PFS Sensitivity to Uranium Price
|Uranium Price ($ USD/lb U3O8)||After-Tax NPV1,2||After-Tax IRR||After-Tax Pay Back1,2|
|$80/lb U3O8||CAD $6.62 Billion||80.4%||0.8 Years|
|$60/lb U3O8||CAD $4.65 Billion||65.5%||1.0 Years|
|$50/lb U3O8||CAD $3.66 Billion||56.8%||1.2 Years|
|$40/lb U3O8||CAD $2.67 Billion||46.9%||1.5 Years|
|$30/lb U3O8||CAD $1.69 Billion||35.6%||1.9 Years|
|$25/lb U3O8||CAD $1.19 Billion||28.9%||2.3 Years|
1. Based on an 8% Discount Rate.
2. Based on a 0.75 USD / 1.00 CAD Exchange Rate.
Arrow Annual Production and Grade Profile
Arrow Undiscounted Cumulative After-Tax Cash Flow
The PFS confirms a production profile supported by conventional long-hole stope mining The mine production will be fed into a conventional uranium processing plant where uranium recovery is projected to be 97.6% over the life of mine.
NexGen Energy Ltd. Corporate Video 2018 - PFS
The Study confirmed that all processed waste streams can be stored in an Underground Tailings Management Facility (“UGTMF”). The Study also confirmed the geotechnical design, size and sequencing of the UGTMF as it relates to the mine plan. The UGTMF will significantly reduce the surface footprint of the Rook I project and represents continued and ongoing reclamation during operations, allowing for industry leading environmental sensitivity.
PFS test work confirmed paste fill strength meet or exceed all requirements set in the original design for a potential Paste-Backfill to be used for underground stope stability. The Study confirmed the suitability of the tailings from Arrow Uranium Deposit for use as cemented paste backfill.
Long Section View of Conceptual Arrow Deposit Mine Infrastructure
Athabasca Basin Setting
Updated Arrow Mineral Resource Estimate Summary – May 25, 2018 (the "Effective Date")
|March 2017 Arrow Mineral Resource Estimate||2018 Arrow Mineral Resource Estimate||Diff. Between Arrow 2018 & 2017 Mineral Resource Estimate|
|Structure||Tonnage (Tonnes)||Grade (U3O8%)||Metal U3O8 (U3O8 lb)||Tonnage (Tonnes)||Grade (U3O8%)||Metal U3O8 (U3O8 lb)||Tonnage (Tonnes)||Grade (U3O8%)||Metal U3O8 (U3O8 lb)|
|Indicated Mineral Resources|
|A3||No Indicated in 2017||1,010,000||0.70||15,500,000||1,010,000||0.70||15,500,000|
|A3 HG||No Indicated in 2017||180,000||9.68||38,400,000||180,000||9.68||38,400,000|
|Inferred Mineral Resources|
|180||110,000||0.95||2,300,000||Combined into A3 & A4||(110,000)||(0.95)||(2,300,000)|
1. CIM Definition Standards were followed for Mineral Resources, Mineral Resources are reported inclusive of Mineral Reserves.
2. Mineral Resources are reported at a cut-off grade of 0.25% U3O8 based on a long-term price of US$50 per lb U3O8 and estimated costs.
3. A minimum mining width of 1.0 m was used, with a Mineral Resource effective date of May 25th, 2018.
4. Numbers may not add due to rounding.
5. Mineral Resources that are not Mineral Reserves do not have demonstrated economics.
The PFS defines Probable Mineral Reserves of 234.1 M lbs of U3O8 contained in 3.43 M tonnes grading 3.09% U3O8 from the Indicated Mineral Resources. The Probable Mineral Reserves include diluting materials and allowances for losses which may occur when material is mined.
Table 4 - Arrow Probable Mineral Reserves
|Probable Mineral Reserves|
|Structure||Tonnage (Tonnes)||Grade (U3O8%)||Metal U3O8 (U3O8 lb)|
- CIM definitions were followed for Mineral Reserves.
- Mineral Reserves are reported with an effective date of May 25, 2018.
- Mineral Reserves include transverse and longitudinal stopes, ore development, and incremental ore.
- Stopes and ore development were estimated at a cut-off grade of 0.25% U3O8.
- Incremental ore is material between 0.03% U3O8 and 0.25% U3O8 that must be extracted to access mining areas. 0.03% U3O8 is the limit for what is considered benign waste and material that must be treated and stockpiled in an engineered facility.
- No by-product credits have been included in the Mineral Reserve statement.
- Mineral Reserves are estimated using a long-term metal price of US$45 per pound U3O8, and a 0.75 US$/C$ exchange rate (C$1.00 = US$0.75).
- A minimum mining width of 3.0 m was applied for all longhole stopes.
- The density varies according to the U3O8 grade in the block model. Waste density is 2.464 t/m3.
- Numbers may not add due to rounding.
RPA is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the Mineral Resource or Mineral Reserve estimates.
Historical Drill Programs
The Company completed a predominantly development-based summer drill program at the Arrow Deposit. The drill program consisted of 29 exploration, expansion and geotechnical holes totaling 20,482.31 m.
Consisted of 16 holes totaling 11,679.5 m, testing along strike to the northeast and southwest of currently defined parameters of the Arrow Deposit. These holes successfully furthered NexGen’s understanding of the Arrow Deposit along with identification of structural controls on mineralization. Further drilling concentrated on demonstrating the continuity of high-grade mineralization beyond the currently defined A2 high-grade domain. This resulted in AR-18-220c1 intersecting a 55.5 m of total composite mineralization including 2.25 m of total composite off-scale radioactivity (>10,000 to >61,000 cps) northeast of the A2 high-grade domain.
Consisted of 13 holes totaling 8,802.81 m following up on geotechnical holes drilled during the summer 2017 and winter 2018 programs targeting the footwall at the Arrow Deposit. The company successfully drilled the first 3 shaft pilot holes to date on the Rook I property. Further testing of the 500 m level of the footwall – envisioned for underground development – was successfully tested with initial results showing the area to be suitable for development. An additional area of testing was the geotechnical characterization of the rock surrounding the A2 sub-zone. The shallow angle intersection of -57° provided proof of concept in terms of targeting the area proximal to the deposit at an angle favorable for geotechnical testing. The two holes had the added benefit of locally increasing the thickness of the A2 high-grade. GAR-18-016 intersected 38.5 m of total composite mineralization including 10.7 m of total composite off-scale radioactivity (>10,000 to >61,000 cps) within a 75 m section (552.0 to 627.0 m) and featured 1.5 m of continuous minimum-greater-than-61,000 cps
The Company completed a winter exploration and development program at the Rook I property inclusive of the Arrow Deposit. The drill program consisted of 54 infill, expansion, exploration and geotechnical holes totaling 30,207.2 m.
Exploration and In-Fill
Lead to the Discovery of the A0 and Z5 shear zones, northwest of the A1 shear at the Arrow Deposit. Additionally, AR-18-189c4 drilled along strike to the northeast of the A1 and A2 shear zones intersected 7.0 m at 1.78% U3O8 (819.0 to 826.0 m) including 2.0 m at 5.86% U3O8 (822.5 to 824.5 m) and 36.5 m at 0.56% U3O8 (832.0 to 868.5 m), 215 m outside of the 2017 RPA Mineral Resource Estimate. Infill drilling was focused on the A3 shear, the purpose of which was converting inferred resource to indicated within the currently defined A3 high-grade domain.
Focused on holes drilled in the footwall of the Arrow Deposit. The holes were geotechnically logged and packer tested in-order to characterize the rock mass and hydraulic conductivity of the area. The winter program laid the ground work for the initial shaft pilot hole program in the summer of 2018 as well as the testing of the area proposed for underground development.
Initial positive results were released from Pre-Feasibility stage technical studies including metallurgical, geotechnical, and hydrogeological assessments. These studies were conducted on the basement-hosted Arrow Deposit, located on the Company's 100% owned Rook I project in Saskatchewan's Athabasca Basin.
The Company recently completed an expanded Summer 2017 drill campaign which consisted of 82 infill, expansion, exploration and geotechnical holes totaling 44,781 m of diamond drilling, utilizing eight drill rigs. The company recently made the discovery of the South Arrow Discovery, approximately 400 m south of Arrow on a separate conductor to that which hosts Arrow. Discovery hole AR-17-151c1 intersected 7.0 m of total composite mineralization including 0.45 m of off-scale radioactivity (>10,000 to >61,000 cps) marked by narrow massive pitchblende veining.
The Company recently completed an expanded 35,000 m winter 2017 drill campaign which focused on expansion as well as infill drilling the Arrow Deposit. Of the 7 total rigs utilized in this program, 5 used directional drilling and targeted the Arrow Deposit. An additional two rigs focused on identifying new zones of mineralization, both laterally and along strike from Arrow.
The Company completed a 2016 summer drill program of 37,000 m in 53 drill holes, focused on continued infill and expansion drilling at Arrow Deposit, with metallurgical, baseline monitoring studies conducted.
Complied all drilling for updated resource of Indicated mineral resource estimate of 179.5Mlbs U3O8 contained within 1.18Mt grading 6.88% U3O8 including a high-grade core of 164.9Mlbs U3O8 contained within 0.40Mt grading 18.84% U3O8 and an Inferred mineral resource estimate of 122.1Mlbs U3O8 contained within 4.25Mt grading 1.30% U3O8.
The Company completed their largest program to date consisting of 36,000 m in 69 drill holes, expanding the Arrow Deposit by 180 m to the South-West. The most intense mineralization to date encountered in the A2 & A3 High Grade shears.
Completed a successful and expanded summer 2015, 5 rig, 33,000 m campaign which exceeded the goals the Company set out prior to the start of the program. The goals were to further define the extents of Arrow by systematically testing the zone including the A2 and A3 high-grade zones.
NexGen aggressively tested the extents of Arrow by drilling and hitting on 3 step-outs in increments of 50, 100 and 210 m to the southwest of AR-15-44b. Due to the fact all of the holes hit mineralization, the decision was made to expand the program in order to infill the space between -44b and the 210 m southwest extension. Not only was the company successfully in doing that, but in doing so NexGen discovered the higher grade A2 sub-zone which is now defined as a sub-horizontal sub-zone of the A2 high-grade shear that is characterized by substantial massive to semi-massive pitchblende mineralization and very high-grades of uranium. Complied all data for maiden resource estimate of Inferred Mineral
Resource of 201.9 M lbs of U3O8 contained in 3.48 M tonnes of mineralization grading 2.63% U3O8.
A fully-funded 18,000 m 2015 winter program was initiated in early January (expanded to over 21,000 m) and exceeded the Company's expectations. The winter 2015 program was successful in extending the area of known mineralization at the A2 shear zone by an additional 88 m to the southwest (from AR-14-30).
The Company discovered the new mineralized A3 shear which appears to be even larger than the A2 shear. Mineralization intersected in the A2 and A3 shears show true widths of these high-grade mineralized zone of approximately 11.0 - 48.3 m and 30.0 - 78.6 m, respectively (see news release dated March 23, 2015).
The summer 2014 program totaled 18,885.8 m in 33 drill holes on the Rook I property (24 drill holes at the Arrow discovery, and 9 drill holes regionally on Rook I). Shortly after the company released the initial assay results from drill hole AR-14-15, they drilled the first ever vertical hole at the Arrow zone in AR-14-30 which returned one of the best drill holes ever drilled in the Athabasca Basin history (909 on a total composite "GT" - grade x thickness metric).
NexGen initially drilled their flagship Rook I project in August 2013 with a 3,000 m drill campaign which resulted in eleven of twelve holes confirming the presence of strong clay and hematite alteration. This first pass program was exploratory in nature with no hole being drilled closer than 200 m.
NexGen followed up the successful summer 2013 drill campaign with an expanded 6,000 m winter program in January 2014. The company discovered high-grade uranium at the on land Arrow target with the first drill hole, AR-14-1 (twenty-first hole ever drilled by NexGen at Rook I property). It encountered multiple structural zones containing uranium mineralization. At the time of drilling this discovery hole at the Arrow zone, no other holes existed within a 4 km radius.