NexGen Energy (ASX:NXG) has struck a binding deal with MMCap International to buy over 2.7 million pounds of natural uranium concentrate for US$250 million ($380 million).
The price of the uranium is based on the five-day UxC average spot price. UxC is one of the nuclear industry’s market research and analysis companies which offers services spanning the entire nuclear fuel cycle, with a focus on market-related issues.
NexGen, which is also listed on the Toronto Stock Exchange under the ticker (TSX:NXE), will issue the US$250 million via unsecured convertible debentures.
MMCap will have the option to convert the debentures into about 23 million worth of NexGen shares — equivalent to 4.3% of the issued capital in the company — valued at US$10.73 per share, a 30% premium to the five-day volume-weighted average price (VWAP) on the TSX.
The debentures will also attract 9% interest over a five-year term.
Two-thirds of the interest, equivalent to 6% per annum, is payable in cash, while the remainder is payable in shares.
NexGen has also agreed to issue MMCap over 909,000 shares as an establishment fee. Upon closing of a previously announced Australian chess depository interest offering, as well as today’s transaction with MMCap, the company will have C$600 million ($664.5 million) in cash and US$250 million worth of physical uranium.
NexGen CEO Leigh Curyer says the purchase of physical uranium is opportunistic for the company to bolster its marketing discussions given the projected scarcity and long-term supply deficit.
“The company is at a pivotal time, shaping the industry towards transparency, whilst prioritising local community engagement and participation in Saskatchewan and Canada, and providing the globe with clean energy fuel,” Curyer says.
“The transaction is also a significant endorsement of NexGen’s approach, role and opportunity in the nuclear sector. Upon closing of the CDI offering and this strategic uranium purchase, the company will hold cash and uranium worth over C$930 million and will significantly assist the company in funding the anticipated capital needs to develop the Rook I Project.”
NexGen’s Rook I project is supported by a Canadian NI 43-101 compliant feasibility study and is touted as the largest development-stage uranium project in Canada. It sits in the southwestern area of the renowned Athabasca Basin.
NexGen is headquartered in Vancouver, British Columbia, and has its primary offices in Saskatoon, Saskatchewan.
MMCap is an investment company which concentrates on small to mid-sized corporate actions in Canada, the US, and elsewhere.
Write to Adam Drought at Mining.com.au
Images: Stock
