Nexgen Energy - Q4 2023

Transcript

Operator (participant)

Morning, ladies and gentlemen, and welcome to the NexGen Energy year-end and Q4 2023 conference call. Note that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session at the end. If you would like to ask a question during this time, simply press star then number one on your telephone keypad. If you would like to withdraw from the question queue, simply press star then the number two. Also note that this call is being recorded. Mr. Leigh Curyer, CEO and Director for NexGen Energy, you may begin your conference.

Leigh Curyer (CEO and Director)

Thank you, Sylvie, and thank you everyone for joining NexGen's year-end and Q4 2023 financial results conference call. I'm Leigh Curyer, Chief Executive Officer of NexGen Energy, with Travis McPherson, Chief Commercial Officer, and Benjamin Salter, Chief Financial Officer, who are joining me on today's call. I'll provide an update on the exciting progress made this quarter and reiterate the key accomplishments from the past year regarding the uranium market, permitting, project development, financing, and for those who have seen the news release this morning, a very exciting discovery of new intense mineralization in a greenfield discovery only 3.5 km from Arrow. After that, we'll move into the Q&A portion of the call. We will make forward-looking statements throughout the call, so please visit our website for the relevant disclaimers. As we collectively navigate the global energy transition, nuclear power has emerged as a pivotal force.

It presently accounts for approximately 10% of the global electricity mix, with targets set to elevate to 20%-25% in the coming decades to meet three generational goals: the provision of power for an increasingly energy-intensive world, two, decarbonization, and three, providing access to power to those who currently do not have it. The commitment to expanding global nuclear capacity was prevalent at COP28, where NexGen presented on a panel with the Premier of Saskatchewan regarding the province's commitment to sustainably producing uranium to meet the global nuclear requirement. This was further reflected at COP28, where countries pledging to triple nuclear capacity by 2050, acknowledging its essential role in achieving carbon neutrality, ensuring energy reliability, and enhancing national security.

India recently announced it will be constructing an additional 18 civil nuclear reactors by 2032, aiming to boost its nuclear generation to 2.42 GW, a tripling of its current capacity. Canada supports these efforts, evidenced as recently as two weeks ago with the issuance of its second green bond for nuclear development, raising $4 billion, ensuring cost-effective financing for nuclear projects in Canada, and reflecting widespread federal government support for nuclear energy in Canada and globally. Further, Natural Resources Minister Jonathan Wilkinson announced the Government of Canada would expedite the approval processes of new nuclear projects domestically. Similarly, the EU has officially labeled nuclear power as strategic for its decarbonization agenda, acknowledging its cost competitiveness and potential to draw investment. In November 2023, EDF successfully raised EUR 1 billion for nuclear energy through a green bond issuance, representing the first of its kind in Europe.

Japan has also demonstrated the impact of its strategy with the restart of 12 nuclear reactors and, as a consequence, have reduced their dependence on fossil fuels by 15%, demonstrating nuclear energy's immediate positive impact. With the rise of technologies and the imperativeness for cleaner energy, the demand for uranium is projected to increase by 127% by 2030 and 200% by 2040. Yet the supply side presents a stark contrast with its fragility due to the confluence of factors, primarily underinvestment in exploration development for over a decade, geopolitical tensions, and supply chain challenges. Challenging mine restarts and overall resource depletion have all affected the current supply levels and the long-term forecasted ability of supply to come online.

The potential ban on Russian uranium imports by the U.S. Senate adds to this precarious situation, leaving many market participants reassessing future strategies and looking for sustainable, diversified primary uranium sources in sound jurisdictions. Given these inventory scarcities and the trend towards increased contracting, we anticipate continuous upward pressure on the spot and term prices for uranium for a long period of time. This underscores a critical juncture for the nuclear sector. While nuclear power is embraced as a strategic component in the global decarbonization effort, ensuring a stable and sufficient uranium supply chain is paramount to fulfilling the growing energy needs. We are facing a probable long-term supply deficit with an anticipated cumulative shortfall of over 1.5 billion lbs expected through 2040, underscoring the significant role and the value that NexGen has in the global energy markets.

There is an urgent need for more uranium from technically, environmentally, and jurisdictionally sound sources of supply, and that is the profile of NexGen's Rook I project. We just passed the 10-year anniversary of discovering Arrow, and the significance of the deposit and project cannot be overstated. Once operational, it will dramatically reshape the Western supply landscape. As per its NI 43-101 feasibility study of February 2021, it is forecasted to deliver up to 30 million lbs of uranium to the market annually. This represents over 20% of current uranium fuel production and over 50% of Western supply. This will not only reestablish Canada as a preeminent uranium producer in the globally recognized province of Saskatchewan but will also emphasize NexGen's unique position to meet the world's increasing uranium requirements. Over the past 12 months, NexGen has successfully and safely executed the strategy to advance the Rook I project.

Our commitment to the company's values and dedication to excellence in everything we do has resulted in a world-class organization leading positive, necessary change in the sector and setting new standards for sustainable, responsible resource development. This is highlighted through our industry ESG standards approach, historic benefits agreements, and optimal permitting progress. From the outset, we have been focused on innovation and peak performance to bring Rook I into production this decade. As our actions and track record demonstrate, we're committed to playing our role successfully in delivering the fast benefits of nuclear to improve the quality of living globally. We're well on our way. In November, we secured the provincial environmental assessment approval for the Rook I project, the first uranium project in Canada to obtain this approval in over 20 years, and the first ever in Canada from a non-government organization.

With this approval, we have submitted the initial applications for approvals of site earthworks, shaft sinking infrastructure, site water, mine waste management facilities, and associated ancillary infrastructure and services. We are continually in communication with the applicable Saskatchewan ministries regarding these phases of development so we can continue to progress Rook I site and be ready for full construction once all federal permits are in hand. Recently, on February the 12th, we received the Canadian Nuclear Safety Commission's results of their thorough review of NexGen's responses to the federal technical comments received on the environmental impact statement. The team are developing responses to the few remaining technical review comments as a matter of priority, and once complete, we'll be submitting these to the CNSC along with an updated federal EIS.

In collaboration with our Indigenous community partners, we look forward to securing a commission hearing date with the CNSC in the near term to ensure the benefits of this generational project are realized as a priority for the region and its community. As mentioned earlier, we applaud the federal government of Canada's commitment to nuclear energy, evidenced by the Resource Minister Jonathan Wilkinson announcing the focus to expedite the approval processes of new nuclear projects domestically. In 2023, NexGen made considerable progress on its site confirmation works, expecting completion by the end of this quarter. The site confirmation program has been highly successful in providing the data to validate and inform future design of the production shaft and exhaust shaft for the Rook I project, which is on the critical path.

In the meantime, we are finalizing detailed engineering and are well underway in procuring long lead items, and the awarding of the shaft sinking contract is imminent, signifying, subject to federal approval, the construction readiness of the project. While the company is focused on advancing the Rook I project, NexGen has also embarked on a bold exploration program on its highly prospective land package in the southwestern Athabasca Basin. Our 2024 30,000-meter exploration program follows up on last year's successful program, which identified highly anomalous areas to follow up as well as generate new target areas based on our previous drilling and geophysical surveys. All of this is focused on making new material discoveries over and above the Tier one Arrow deposit, adding value through the drill bit.

We are pleased to announce this morning the discovery of new intense uranium mineralization on our 100% owned SW2 property, Rook I, approximately 3.5 km east of NexGen's world-class Arrow deposit. Figure one as per the news release. The new mineralized occurrence in RK-24-183 is located on a previously untested conductor segment of the Patterson Corridor East. Localized uranium mineralization was intersected for 19.8 meters between 347 meters and 367.5 meters below surface, with peaks up to and greater than 61,000 counts per second. To put this intercept into context, it intersected three meters of greater than 61,000 counts per second, which is significantly higher on all metrics than RK-14-21, the Arrow Discovery hole, which only intersected less than 0.5 of a meter of greater than 9,999 CPS.

Exploration is predominantly open in all directions, including over 1.5 km of strike in a setting incorporating many of the geological features seen in and around Arrow, Figures two and three of today's news release. I'd like to take the opportunity to congratulate and acknowledge the fine, dedicated work of the NexGen geological team. Our understanding of the markers of mineralization in the region improved with every drill hole and geophysical survey, and the NexGen exploration programs of the past years have been extremely valuable in contributing to today's result. Our highly prospective land position in the southwestern section of the Athabasca Basin is still in its infancy, and a significant amount of exploration is in front of us to fully define the extent of mineralization at this location and on the balance of the Rook I SW2 property.

Consequently, drilling will continue to focus on this area and later this year in parallel at SW1. As development progresses, community initiatives are at the forefront of our approach and planning for the long-term success of the project. I'm proud to share that last year, in 2023, over 300 community members from the local priority area participated in our education, training, and certification programs, of which 39% were Indigenous women, and we expect that number to grow to approximately 400 in 2024. We are contributing to building a strong and thriving local workforce, which has always been an important aspect of our development and success, and we'll continue to expand these initiatives to contribute to the local economy while creating a highly qualified talent pool located within the local project area, and that will build onto our existing world-class team.

Over the last year, we've been and continue to be highly engaged with investors, industry members, and those who play a key role in the nuclear fuel cycle. Throughout those conversations, several themes have emerged. First and foremost, there's a lot of interest in NexGen, and the company has been elevated to a key supplier for global utilities as they seek to find future material sources of sustainable uranium. It is well understood and accepted that the project is vital to support the growing demand. Our spot contracting strategy is being well recognised as it provides transparency, price discovery, and promotes the resiliency of uranium miners and the nuclear industry. To be clear, we'll only produce uranium that is needed, and that will optimise the market dynamics. We're taking a leadership role in the sector given the unparalleled flexibility, scale, and cost structure of the project.

Due to the technical nature of the project and the natural hedge through the low all-in sustaining cost, approximately $10 per pound as per the NI 43-101 feasibility study, our contracts will be predominantly volume-based over the life of the project and link directly to the spot prices at the time of delivery, fully leveraging to the future uranium prices and capturing the economics. We acknowledge this approach will signify a transition from traditional practices, but one that has been seen in other valued commodities worldwide and one that is in the beneficial interest of all stakeholders in the industry, ensuring a sustainable and successful energy transition. Further, growing interest from global lenders reinforces that we have a sound strategy, with expressions of interest now totaling over $1.25 billion.

We are starting the final confirmatory technical due diligence and are aiming to be in a decision point with respect to the total funding mix for the project in the second half of this year. Finally, it is clear that our focus and discipline approach is setting new standards in every aspect of responsible mine development. The team in place is focused on optimally bringing the Rook I project into production, continuously delivering industry-leading economic, social, and environmental performance. Now for an overview of our financial position ending on December 31, 2023. NexGen had a working capital balance of CAD 279 million at the end of the year. Post-December 31, an additional $100 million was raised through the ATM with a single Australian domiciled investor who has increased their shareholding.

Consequently, as I speak, NexGen has approximately CAD 410 million in its treasury to fund all programs, permitting, and running expenses.

To the end of 2023, NexGen's incorporation has deployed approximately CAD 451 million in the successful development of the Rook I Project and other exploration properties against a current market capitalization of CAD 5.4 billion, all while maintaining an industry-leading low ratio of general administrative expenses relative to development and market capitalization in any given year. Further, we are pleased to announce that NexGen has been included in the FTSE Global Index as well as the ASX 300 Index, effective in mid-March 2024. This reflects the continued growth and strength of our company in the global market, and especially in the Australian context. Our ASX listing continues to grow in terms of CDI market capitalization as well as daily liquidity, and this index inclusion will continue to build on that.

Given the large captive capital market dynamics combined with strong resource market focus in Australia, the growth of ASX ownership of NexGen is expected to increase. For 2024, our focus is advancing the Rook I project through the final phase of permitting process, detailed engineering, and procurement, all while aggressively pursuing new material discoveries. With that, our priorities for the year include safely completing the site confirmation program, establishing a federal commission hearing date and approval, continuing critical path detailed engineering and procurement, formalizing a finance package, and marketing our product. It's shaping up to be a historic year for the company as we continue to see strong and vocal support from local and Indigenous communities to see NexGen steward this opportunity through to fruition.

With continued collaboration from government partners, growing shareholder and investor interest, especially large generalists globally, and a surging requirement for uranium nuclear energy, I'm incredibly proud of the focus and discipline the entire NexGen team exhibits. We are ready. Now, let's transition into Q&A, and we encourage questions from all of you. I'll turn it over to the moderator to commence.

Operator (participant)

Thank you, sir. Ladies and gentlemen, as stated earlier, if you would like to ask a question, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, you will need to press star two on your keypad. And if you're using a speakerphone, please lift the handset first before pressing any keys. Please go ahead and press star one now if you have any questions.

Your first question will be from Katie Lachapelle at Canaccord. Please go ahead.

Katie Lachapelle (Managing Director of Equity Research in Metals and Mining)

Hey, good morning, guys, and thanks for taking my question. Also, congrats on the new discovery announced this morning. I was just wondering if you could, sorry, Leigh. Go ahead.

Leigh Curyer (CEO and Director)

No, I was just saying thank you. Yeah, we're very excited about it.

Katie Lachapelle (Managing Director of Equity Research in Metals and Mining)

Oh, it was awesome to see that, especially now that you guys have pivoted back to the regional exploration to show the prospectivity of the land package that you have outside of Arrow. But on Arrow specifically, I was just wondering if you're able to provide any more granularity on the progress that you're going through right now with the federal regulators with respect to the nature of some of the remaining technical questions as well. When are you expecting to provide a response to those questions?

Leigh Curyer (CEO and Director)

Yeah, thanks, Katie. Look, we're really pleased with the report card that we got back on February the 12th from the CNSC. It was effectively an A-plus. We're down to about 48 remaining items that require a response to the CNSC, and we're in the process of triaging those 48 remaining items, and we expect to hand back our responses to those questions in a black line of the EIS in the coming weeks. So given the speed of reply, it really does signify the materiality of those questions overall. While every question is very, very important, we assess the materiality of them to be low and will be easily clarified and concluded. So when you consider when you start this process, you've got thousands and thousands of questions, if not easily, probably about 20,000 aspects to address. We are in the final stages of the process.

We also have full community support with respect to our EIS as currently presented, and we expect a pretty efficient process here on out with respect to the federal approval.

Katie Lachapelle (Managing Director of Equity Research in Metals and Mining)

Awesome. Maybe just one follow-up. You've obviously made pretty considerable progress with advanced engineering as well as procurement now underway. When, if at all, are you expecting to update the market with revised capital costs as well as operating cost figures? In your view, are those a requirement to trigger the debt or the potential signing of a long-term contract this year?

Leigh Curyer (CEO and Director)

Yeah, sure. And so we're in that process at the moment. Look, we are subject to inflation like everyone else in this industry, and the feasibility study of February 2021, we have been impacted by inflation, and we are finalizing the exact design scope of the project. Costs have gone up, but as we speak, I don't believe that they will have affected the overall after-tax economics of the project. In fact, given the commodity price movement, I would dare say that the payback period has even been shortened from what was presented back in February 2021. We will be updating the market with respect to those aspects in the second half of this year once that process is concluded.

Katie Lachapelle (Managing Director of Equity Research in Metals and Mining)

Awesome. Thank you, guys. That's all my questions.

Operator (participant)

Thank you. Next question will be from Alexander Pearce at the Bank of Montreal. Please go ahead.

Alexander Pearce (Director and Equity Research Analyst)

Great. Thank you. Morning, Leigh. My question is just around, obviously, permitting and talking about targeting a decision point maybe in H2 this year. I just wondered, in terms of the climate up in Saskatchewan, how much of an impact, if it is a little bit later in the year, how much of an impact it could have on your kind of critical path timing for first production, given it obviously gets very cold up there?

Leigh Curyer (CEO and Director)

Yeah, sure. And look, yeah, we're very eagerly awaiting the conclusion of this federal permitting process. But look, it is ideal to commence activities during the drier months, but it's not an absolute requirement. We can commence the full-scale construction at any time during the year. So yeah, seasonally, it won't be terribly determinant or impactful with respect to when we start, but ultimately, yeah, we would love to be starting the full-scale construction at the earliest point in time. We're ready. We know exactly what we're building. It's well understood by ourselves and also the local community, and we just look forward to the conclusion of this federal permitting process.

Alexander Pearce (Director and Equity Research Analyst)

Great. Thank you.

Operator (participant)

Thank you. Next question will be from Craig Hutchison at TD. Please go ahead.

Craig Hutchison (Managing Director and Senior Equity Research Analyst)

Yeah, good morning, guys. Thanks for taking my question. Just with regards to setting up the hearing for the federal government, do they require all the responses to be complete from the information requests, or can that be set up in advance of that? And then just can you give us some sort of sense of what the timing is once they've set up that hearing to potentially make a final decision? Thanks.

Leigh Curyer (CEO and Director)

Yeah. Look, we see that there's it's fair enough for us to receive a commission hearing date. We believe the nature of the remaining 48 questions well, not that we believe. We know that the nature of the remaining questions, while every question is important in an overall context, they're determined as fairly immaterial. Whether the CNSC choose to provide a commission hearing date in advance of concluding those 48 or not, time will tell. But we're not we're not seeking a shortcut or a favor or anything. We respect the process and respect the CNSC have their protocols and procedures in place. I guess what we're expressing is that we feel that we're in the final stages of them completing the EIS review and are in a position to see their commission hearing date as soon as possible.

Based on previous companies in this position, the commission hearing date has a notice period of three-six months. But every case is different. Look, we have met all requirements with respect to the EIS approval process, and so the document's been well understood and out in the public forum since November of 2023, sorry, November of 2022, when it concluded the 120-day public comment period. Look, it's incredibly transparent. All the information is out there for everyone to assess, and so we would expect to be on the shorter end of that notice period once the commission hearing date has been announced.

Craig Hutchison (Managing Director and Senior Equity Research Analyst)

Okay, great. Thanks for that. And just can you give us a sense of what you're planning in terms of budget for exploration and maybe some of the early works that you guys have planned for this year?

Leigh Curyer (CEO and Director)

Yeah, the 30,000 meters had a budget of CAD 12 million. Obviously, with this new discovery this morning that we announced, look, we're going to be really focusing on that area. So it's safe to expect that the drilling budget will increase over and above that CAD 12 million in 2024, and obviously dependent on results. But given we've found an intercept which shows on all fronts is far more exciting than the Arrow discovery hole, we suspect we're going to be there for a decent period of time. So expect that budget to increase, Craig, from CAD 12 million up.

Craig Hutchison (Managing Director and Senior Equity Research Analyst)

Early works, I thought on that as well.

Leigh Curyer (CEO and Director)

Sorry, it just dropped out there, Craig.

Craig Hutchison (Managing Director and Senior Equity Research Analyst)

Sorry, just wondering the early works, pre-construction works that you guys had planned? I think there's still a bit of a balance left on that and the plans for spending here in 2024.

Leigh Curyer (CEO and Director)

Yeah, so all the early confirmation works are on budget. We'll have those concluded imminently near the end of the first quarter here or early in the second. Overall, everything is on budget as we currently speak, and we expect it to be on budget for 2024. A lot of the long lead-time items have been ordered, and yeah, we've got it well in hand. As I said, everything's ready to really go up a significant notch once the federal approvals are received.

Craig Hutchison (Managing Director and Senior Equity Research Analyst)

Okay, great. Thank you, guys.

Operator (participant)

Thank you. Next question will be from Graham Tanaka at Tanaka Capital Management. Please go ahead.

Graham Tanaka (President)

Congratulations, guys, to you and your team. I'd like to focus on Patterson Corridor East discovery. Could you tell us a little bit more about the geological structure and maybe what it implies for the ease or difficulty of replicating an Arrow Rook I development in terms of timing, cost? And then somewhat separately, how would you plan to dovetail a development of the Patterson Corridor East with the Arrow mine development production? Do you anticipate overlapping so that you'll have a rise in production sometime in the next six-eight years? Thanks.

Leigh Curyer (CEO and Director)

Yeah, thanks, Graham. And they're all absolute key focuses once we understand what we have at this new occurrence, 3.5 km almost due east of Arrow, but also at a similar depth to the Arrow mineralization. Look, I think it's still very early days. I just referenced everyone to Figure three in the news release. This hole is, like I said, a lot better than the discovery hole at Arrow. What we do know today is that we have 1.5 km strike target for us to investigate. We're seeing a lot of the similarities of the holes in and around Arrow in the holes that were drilled to date. Now, it's obviously subject to further drilling as to what we have here.

What we can tell you, though, is that today's result has confirmed that the Patterson Corridor East is a mineralized corridor similar to Patterson Corridor, which hosts Arrow, Cannon, Bow, Harpoon, and also Triple R owned by Fission to the southwest. So we know we're in a heavily mineralized area. And to give some context to Arrow, as I said, we've got three meters of greater than 61,000 counts per second. So that is incredibly intense mineralization. That's significantly higher than the Arrow discovery hole. We know we're in the right setting. We've hit some very intense mineralization. And what we have learned from Arrow is when you get that type of intense mineralization, you know you're near a source. And normally, subject to further drilling, a very, very significant source of uranium mineralization.

So any discovery of this nature is obviously going to be incredibly accretive to the long-term mine plan of Arrow. In terms of CapEx and OpEx, etc., again, way too early to determine that until we've done a number of programs that you've seen us do in the past since 2014 at Arrow. The Arrow Rook I feasibility study was always designed on the basis to facilitate additional uranium deposits in the area. We've also been incorporating that into the final design and scope of the project, all within the federal permitting parameters, of course. Any new occurrence such as that Patterson Corridor East that we've found today, if proven to be economic, would also be subject to permitting. But look, I think the takeaway for everyone today is that we expect to be producing at Rook I for, well, considerably longer than what the current feasibility studies suggest.

We've always known that. We've also got mineralization below Arrow at depth. While that mineralization is yet to be fully defined and assessed economically, it's clearly a reasonable expectation that you'll see that go through the mill as well at Rook I. It's incredibly exciting, in fact, potentially a major game-changer over and above what we already have at Arrow, which is world-class. Graham, give us some time, and we look forward to responding with respect to all of those points that you've made.

Graham Tanaka (President)

Yeah, I would just, if I could, sorry, there's so much here to try to digest, I'm sure even for you. But could you just give us a hint as to the geologic structure and whether a potential mine on PCE, Patterson Corridor East, would be similar to Arrow? And therefore, also given your applications for approvals for the Arrow Rook I project, can you accelerate the timeline for the development of a second major corridor, or would it take 10-12 years?

Leigh Curyer (CEO and Director)

Well, what I can tell you based on what we know I can only tell you what we know at the moment, Graham. And the holes in and around this new intercept are exhibiting similar metrics, similar style to the setting that is at Arrow. I can't yet quantify exactly what's there and the potential economics. It's 3.5 k's away, and it's on land. So any economically assessed deposit within the vicinity of Arrow will be able to be accommodated but subject to, obviously, permitting of those subsequent deposits. That is to be determined. I think what you can take away based on what we know today is that any economic mineralization within the vicinity of Arrow, practically and environmentally, would obviously go through the mine. I think it's way too early to talk about accelerating the development of any new occurrence after so few holes, though.

Graham Tanaka (President)

Yep. Thank you very much. Good luck.

Leigh Curyer (CEO and Director)

Thank you.

Operator (participant)

Next question will be from Brian McArthur at Raymond James. Please go ahead.

Brian MacArthur (Managing Director)

Good morning, and thank you for taking my question. If I can just follow up on the last question, you mentioned material at depth as well. If that turned out to be more economic, which would obviously have to be potentially pretty good, than the new Patterson East, could you do that under the current permit? I guess what I'm trying to get at here is what's actually being permitted now for flexibility, i.e., what else could you bring in in the later years without having to go through a whole process again?

Leigh Curyer (CEO and Director)

Yeah, well, so thank you, Brian. Directly under Arrow is obviously within the area of influence of the approvals that we're currently pursuing. The practicality of the matter, though, is that any mine extension goes through a certain process. But anything under Arrow, I think, and in and around Arrow that is subsequently discovered, I think you can safely assume will come under the current approval. New occurrence as at 3.5 km on the Patterson Corridor East, potentially. We don't know yet. We need to do many, many assessments around the environmental aspects of it and to ensure that what we're suggesting is consistent with what we've been approved for. If it's not, we would start that work very early on the basis that it does prove to be economic with further drilling.

In summary, based on what we know today or even before discovery today, anything within an economic distance of Arrow, we would look to augment into the Rook I mill as proposed under the federal approval process we're undergoing.

Brian MacArthur (Managing Director)

Great, thanks. And following up just another question, I think you mentioned minor scope change when you were answering Katie's question about the new CapEx and OpEx. Is that correct, or is there anything major changing there, like throughput rate 1,300-1,400 tonnes a day? Is there anything like that in there, or is it just minor adjustments, shall I say, to the construction and things like that?

Leigh Curyer (CEO and Director)

Yeah, Brian, it's a good question. The mining and milling method has been identical from the very first preliminary economic assessment through the pre-feasibility study and the feasibility study. We are talking exactly the same mining and milling method with some slight improvements in the design to enhance environmental performance over the life of the mine. So nothing material, nothing dramatic, just some improvements around the edges in the long-term interest of the project. That's all.

Brian MacArthur (Managing Director)

Great, thanks. And maybe I could just ask one more quick. It's great you now got CAD 1.25 billion versus CAD 1.1 billion in commitments. Can you just talk a little bit again about what you need to do? I know you need documentation, but how much you might have to contract, if any, to get that done? You said you get it done by the back half of the year. And maybe whether there's been any new, the new people coming in, are they still same, what I would call international institutions, or are actually utilities and customers coming in in that last CAD 150 million?

Leigh Curyer (CEO and Director)

Yeah, look, I'll start with the first part of that answer and then hand over to Travis. The amount of interest that we are receiving every day is increasing. The project's profile from an economic, ESG, and green perspective is increasing the number of avenues or sources of potential debt and equity funding for the project. With respect to the percentage required in terms of contracting and offtake, I'll hand over to Travis in a moment. But what we do know from the process to date is that the lenders are very comfortable with us signing volume-based contracts that are tied to spot at the time of delivery in order to service that debt. Travis?

Travis McPherson (Chief Commercial Officer)

Yeah, yeah, yeah, exactly. That's the key point, Leigh. And in terms of the quantum and the amount, it'll obviously be relatively immaterial to the overall production volumes given the economics and how quickly it pays back. Obviously, the exact percentage will be determined by the agreed-upon forecasted long-term uranium price predominantly. But again, you're talking about a very immaterial amount of production being volume-based contracted or sorry, I should say a requirement to do that anyways by the lenders will be a very small percentage of a few years of the first part of production, and then everything else is as we want to optimize and determine best for ourselves and the market.

Brian MacArthur (Managing Director)

Great. Thank you both for answering all my questions.

Leigh Curyer (CEO and Director)

Thank you, Brian.

Operator (participant)

Next question will be from Andrew Wong at RBC Capital Markets. Please go ahead.

Andrew Wong (Associate Director of Market Data Services Solutions)

Hey, good morning. Thanks for taking my questions. Just some questions on contract discussions. I guess first is, could you kind of talk to what kind of customers you're talking to? Is it mostly utilities? Are there intermediaries? What kind of countries or regions are these customers from? And my second question is more around, how do you plan to incorporate some flexibility around timing of the mine startup? I'd assume there'd be some volume flex, pull forward, push out. Obviously, there's always uncertainty around mine startup and timing. Can you just talk about that, thanks?

Leigh Curyer (CEO and Director)

Yeah, I'll start with that, and then also hand over to Travis. Look, with respect to the timing of deliveries, it's very dependent on when we receive the federal permit. And we've been very transparent with the utilities in our negotiations that once we have that timing confirmed, we'll be able to get very specific with respect to quantities by certain dates. What the important part of the whole process is, is that we are transitioning this towards a more transparent pricing market as we've seen in iron ore back in the 2000s. And that's been in the interest of both producers and the purchasers of the commodity. And our area of focus or utilities that we are in advanced discussions with are located in the U.S., Europe, and Japan as we currently speak.

We've also got other discussions underway in other parts of the world, but the U.S., Europe, and Japan are the more advanced negotiations as we speak. Travis?

Travis McPherson (Chief Commercial Officer)

Yeah, and I might just add, yeah, exactly, Lee. And we're only speaking with the largest consumers of nuclear fuel in the world in those regions. And what we can tell you is that the approach and philosophy of the company with respect to these volume-based contracts is very much understood and accepted by these counterparties that we're in discussions with, again, given the fact that not only does it benefit us as producers and future producers, but the utilities themselves in the changing dynamic as we look forward in the uranium markets.

Andrew Wong (Associate Director of Market Data Services Solutions)

Okay, so I guess so let's assume you get the permit maybe as early this year, and you could get into construction, and everything goes smoothly. It goes into production 2028, so you sign contracts for deliveries starting in 2028. But we never know what happens, and anything can cause let's say it gets pushed up to 2029, 2030. I guess I'm just trying to understand on NexGen side, these contracts, is there flexibility for how that works? Would you be put in a situation where you have to deliver by 2028, for example? Just trying to think around that.

Leigh Curyer (CEO and Director)

Yeah, well, we're not going sorry, Travis?

Travis McPherson (Chief Commercial Officer)

No, no, go ahead, go ahead.

Leigh Curyer (CEO and Director)

Yeah, Andrew, we're not going to put ourselves in a position that unnecessarily inhibits the optimization or the maximizing the returns on each pound produced. We'll do this in a very conservative nature. As we've done with everything since the company incorporated, our use of capital is extremely efficient, and we always have a very healthy dose of conservatism in the expectations we set, and we deliver against those. With respect to the contracting, that approach will incorporate all of those disciplines and approaches. So while I can't tell you today specifically what the terms and conditions of those contracts are. You can take away that we're going to do it in our traditional, conservative, very careful and disciplined manner.

Andrew Wong (Associate Director of Market Data Services Solutions)

Okay, that's great. Thank you very much.

Operator (participant)

Thank you. Next question will be from Chris Thompson at PI Financial. Please go ahead.

Chris Thompson (Head of Research)

Good morning, Lee and team. Congratulations on this morning's news. Just on the discovery there, I'm just sort of reading through the descriptions. It seems to be largely basement hosted. Is that correct, the mineralization?

Leigh Curyer (CEO and Director)

Yeah, fully basement hosted. Yep.

Chris Thompson (Head of Research)

Great, thanks. And apologies, I might have missed this in an earlier sort of response to a question, but could you give us a sense of the remaining budget for this year? Or what is the budget for this year outside of exploration?

Leigh Curyer (CEO and Director)

Excluding exploration, the budget this year is about $170 million, which is subject to, obviously, the timing of federal approvals.

Chris Thompson (Head of Research)

Yeah, wonderful. Okay, that's it. Thank you very much, guys. Congratulations again. Thank you.

Leigh Curyer (CEO and Director)

Thank you.

Operator (participant)

At this time, Mr. Curyer, we have no other questions. Please proceed.

Leigh Curyer (CEO and Director)

Well, thank you, everyone. Very much appreciate everyone's interest in NexGen, and it's an incredibly exciting time focused on the remaining aspects of the federal approval. As discussed on this call, we're eagerly awaiting conclusion of that process respectfully with taking into account total stakeholder engagement. We have a fantastic project on the cusp of going into construction to meet the world's energy needs and one which will, at the current spot price, will take us into the top nine or top 10 mining companies worldwide on an after-tax cash flow basis. So today, to add a new discovery into the story is just incredibly exciting for everyone involved. And it really does signify the prospectivity of that dominant land package that we have in the mighty southwestern section of the basin.

And so we have a lot of work ahead of us to fully define the true extent of uranium mineralization on our properties. But yeah, the feasibility study on NexGen, I think it's safe for everyone to view that as a base case, that this is going to be an incredibly large generational mine which will impact the local communities, Saskatchewan, Canada, and the whole world when you consider the impact of the fuel that it will produce. And so with that, we look forward to heading into Q2 and the balance of this year and really delivering on a number of initiatives we have been working on for over 10 years now. And with that, I thank you all for listening and your continued support.

Operator (participant)

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.