NEWS PROVIDED BYNexGen Energy Ltd. May 08, 2024, 06:30 ET
VANCOUVER, BC, May 8, 2024 /PRNewswire/ - NexGen Energy Ltd. ("NexGen" or the "Company") (TSX: NXE) (NYSE: NXE) (ASX: NXG) is pleased to announce that it has entered into a binding term sheet with MMCap International Inc. SPC ("MMCap") for the purchase (the "Purchase") of 2,702,410 pounds natural uranium concentrate ("U3O8") for an aggregate purchase price of US$250 million based on the five day average UxC spot price.
In satisfaction of the purchase price for the U3O8, the Company has agreed to issue US$250 million aggregate principal amount of unsecured convertible debentures (the "Debentures"). The Debentures will be convertible at the holder's option into approximately 23 million common shares of NexGen (the "Common Shares") equivalent to ~4.3% of the Company's issued and outstanding Common Shares.
Upon closing of the previously announced Australian Chess Depository Interest ("CDI") offering, as well as this transaction with MMCap, the Company will have ~C$600 million in cash and US$250 million worth of physical uranium on its balance sheet.
Leigh Curyer, Chief Executive Officer, commented: "At a time when available physical uranium is extremely tight and expected to continue to be scarce given the long-term supply deficit, this purchase represents a strong opportunity for the Company to bolster its marketing discussions and optimises the optionality of project financing structures under evaluation. 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. 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.
"Strategic Alignment ProvisionsIn connection with the Debenture issuance, the Company will enter into an investor rights agreement with MMCap, containing voting alignment, standstill, and sale and transfer restriction covenants.
Terms of the DebenturesThe Debentures will carry a 9.0% coupon (the "Interest") over a 5-year term. The Debentures will be convertible at the holder's option into Common Shares, at a conversion price (the "Conversion Price") per Common Share of US$10.73 (C$14.70 per Common Share equivalent incorporating today's exchange rate) representing a 30% premium to the volume-weighted average trading price (the "VWAP") per Common Share on the Toronto Stock Exchange (the "TSX") for the 5-days ending on the day prior to the date of this announcement.
Two-thirds of the Interest (equal to 6% per annum) is payable in cash. One-third of the Interest (equal to 3% per annum) is payable in Common Shares issuable at a price equal to the 20-day VWAP on the New York Stock Exchange (the "NYSE") ending on, and including, the third trading day prior to the date such interest payment is due. The Company will be entitled, on or after the third anniversary of the date of the issuance of the Debentures, at any time that the 20-day VWAP on the NYSE exceeds 130% of the Conversion Price, to redeem the Debentures at par plus accrued and unpaid Interest. The Company agreed to issued to MMCap an aggregate of 909,090 Common Shares as an establishment fee in connection with the Debentures, representing 3% of the aggregate principal amount of the Debentures.ConditionsClosing of the Purchase is conditional upon the satisfaction of customary closing conditions prior to June 28, 2024, including stock exchange approvals and third-party approvals required for the transfer of the U3O8 and issuance of the Debentures and the completion of definitive documentation. ------------------------------------------------------==========================================----------------------------------
My back of the envelope calculation, makes that per pound (spot) price of US$92.51
At the time of posting this, looks like the market did not like this (shortsighted??, seems a good play in my book, either a hedge against mine build delays v contracted pounds, or, a good investment with spot price rising...)... NXENexGen Energy Ltd$7.83-$0.93 -10.57% NXENexGen Energy Ltd$10.70-$1.30 -10.83% (but most of North American U stocks are as red as a Frey welcome mat....)
Had a quick look at MMCAP, Hedge Fund with a focus on energy stocks (total portfolio value i could find was $546,106,922 USD), already holds considerable position in the Uranium space. Their biggest holding is UEC with 25,304,663 shares (valued at US$160.55mil). Also hold Denison $54mil), UR-Energy ($23.7mil), Energy Fuels ($25.88mil) as their top U investments.
NXG Price at posting:
$13.20 Sentiment: Buy Disclosure: Held
(20min delay)