Rob Chang Comments: The ‘Nex’ Big Thing? NexGen Energy’s Assay Results Point to World-class Resource

 January 14, 2016, Uranium Investing News

Things are heating up for Athabasca Basin exploration company NexGen Energy (TSXV:NXE), which released the remaining assay results from 2015 summer drilling at the Rook I property this week. 

The company has released two sets of results this week, with the first set covering six holes and featuring the strongest assay to date in the A3 shear. However, it’s NexGen Energy’s second set that is raising the roof — that set highlights AR-15-62, a single angled hole at Rook I’s Arrow zone. 

According to the company, AR-15-62 returned the “most strongly mineralized intercept to date at Arrow with a continuous grade x thickness (GT) of 787. AR-15-621 intersected 78.0m at 10.00% u3O8, including 12.0 m at 38.29 percent u3O8 within the higher grade A2 sub-zone.” 

Commenting positively on those numbers, Garrett Ainsworth, vice president, exploration and development, at NexGen Energy, said, “[d]rill results of this calibre are very rare in the Athabasca Basin and speaks to the size and strength of the mineralizing event that has occurred at Arrow. Hole -62 confirms the strong continuity of high-grade mineralization within the A2 Sub-Zone throughout its current 203 m strike length.” 

Putting those statement in context, Raymond James analyst David Sadowski states in a Wednesday note to clients, “[t]he continuous grade-thickness (‘GT’) of 787 %-m easily ranks 62 as the best hole of the project, beating even the incredible hole 44b, which returned 655 %-m, as well as besting anything ever observed at Wheeler River, Roughrider or Cigar Lake — three of the most prolific deposits in the world.” 

In his note, Sadowski also highlights that the only other mine to regularly return GT of a similar magnitude to Arrow is Cameco’s (TSX:CCO,NYSE:CCJ) McArthur River mine. “In fact, we understand McArthur only had six holes drilled from surface with GT’s over 100 %- m, while Arrow already has 19, the bulk of which are widely-spaced,” he notes. 

McArthur River is the highest-grade uranium mine in the world, with aggregate wwwuction of nearly 700 million pounds of uranium, meaning that any comparison that pins Arrow to it bodes extremely well for NexGen Energy 

Echoing Sadowski, Cantor Fitzgerald analyst Rob Chang points out in his own note that a “GT greater than 100 is considered very good.” This figure is even more significant considering that of the 82 holes drilled at Arrow to date, 19 have returned a GT of over 100. Furthermore, “80 of the 82 holes drilled intercepted mineralization, which is an excellent hit rate that speaks to the size and continuity of mineralization at Arrow.” 

In his piece, Chang also translates the results from AR-15-62 into gold terms, noting that they would be equivalent to “78m of 219 g/t AuEq for 308,717 oz. Au.” 

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Though it’s still too soon to get an exact figure, both Raymond James and Cantor Fitzgerald have released their expectations for the maiden resource estimate at Arrow. 

For his part, Sadowski is assuming a 25-meter radius of influence, and has plotted a conservative resource estimate of 125 million pounds; that said, he would not be surprised if it came in somewhere between 150 and 200 million pounds of contained uranium grading over 1 percent U3O8 on average. 

Chang, on the other hand, had previously plotted a resource estimate of 127.3 million pounds at 0.75 percent U3O8. With the latest results, however, the analyst has increased his estimate by 17 percent, to 148.6 million pounds at an average grade of 0.64 percent. The increase, Chang states in his note, was driven by the assumed mineralized envelope dimensions for A2 and A3. 

For now, investors will have to wait for NexGen Energy to release its resource estimate. However, if the company remains on schedule, the waiting period will not be too long — the release of the resource is expected within the first half of 2016.