NexGen Energy .(NXE) - 2025 Q1 - Quarterly Report

Condensed Interim Consolidated Financial Statements Condensed Interim Consolidated Statements of Financial Position As of March 31, 2025, NexGen Energy's total assets decreased to $1.57 billion from $1.66 billion at the end of 2024, primarily due to reduced cash and a significant decrease in investment in an associate Financial Position Summary (in thousands of CAD) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $1,566,970 | $1,657,243 | | Cash | $434,640 | $476,587 | | Exploration and evaluation assets | $613,758 | $584,889 | | Investment in associate | $146,982 | $229,594 | | Total Liabilities | $463,559 | $478,202 | | Convertible debentures | $424,313 | $455,783 | | Total Equity | $1,103,411 | $1,179,041 | Condensed Interim Consolidated Statements of Net Loss and Comprehensive Loss For the three months ended March 31, 2025, the company reported a net loss of $50.9 million, an increase from the $34.6 million loss in the same period of 2024, primarily due to an $81.0 million impairment loss on its investment in an associate, partially offset by a $70.9 million mark-to-market gain on convertible debentures Quarterly Performance Summary (in thousands of CAD, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Mark-to-market gain (loss) on convertible debentures | $70,918 | $(16,282) | | Impairment loss on investment in associate | $(81,009) | $- | | Net Loss | $(50,935) | $(34,620) | | Net Comprehensive Loss | $(81,290) | $(33,081) | | Basic and Diluted Loss Per Share | $(0.09) | $(0.06) | Condensed Interim Consolidated Statements of Cash Flows In the first quarter of 2025, the company experienced a net decrease in cash of $42.0 million, ending the period with $434.6 million, contrasting with a $92.4 million increase in the same period of 2024, driven by reduced cash used in operating activities and a large inflow from financing activities in the prior year Cash Flow Summary (in thousands of CAD) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cash used in operating activities | $(1,143) | $(9,344) | | Cash used in investing activities | $(34,317) | $(33,951) | | Cash (used in) provided by financing activities | $(6,537) | $134,961 | | Increase (decrease) in cash | $(41,947) | $92,416 | | Cash, end of period | $434,640 | $383,159 | Condensed Interim Consolidated Statements of Changes in Equity Total equity decreased from $1.18 billion at the beginning of the period to $1.10 billion as of March 31, 2025, primarily due to a net loss of $50.9 million and an other comprehensive loss of $30.4 million for the quarter - Total equity decreased by $75.6 million during Q1 2025[6] Key Changes in Equity - Q1 2025 (in thousands of CAD) | Item | Amount | | :--- | :--- | | Balance at December 31, 2024 | $1,179,041 | | Net loss | $(50,935) | | Other comprehensive loss | $(30,355) | | Share-based payments | $5,103 | | Shares issued on exercise of stock options | $557 | | Balance at March 31, 2025 | $1,103,411 | Notes to the Condensed Interim Consolidated Financial Statements Note 1: Reporting Entity NexGen Energy Ltd. is a Canadian-based exploration and development company focused on uranium properties in Canada, publicly traded on the TSX, ASX, and NYSE, and now accounts for its approximate 31.8% stake in IsoEnergy using the equity method after losing control in December 2023 - The company is engaged in the acquisition, exploration, evaluation, and development of uranium properties in Canada[8] - The company is listed on the Toronto Stock Exchange (TSX), Australian Stock Exchange (ASX), and New York Stock Exchange (NYSE)[9] - As of March 31, 2025, NexGen owns approximately 31.8% of IsoEnergy's outstanding common shares and accounts for it using the equity method since losing control in December 2023[11] Note 2: Nature of Operations As a development-stage company, NexGen currently generates no revenue and has a history of operating losses, with an accumulated deficit of $432.5 million as of March 31, 2025, though management asserts its cash balance of $434.6 million is sufficient to meet obligations for at least the next fifteen months despite inherent mining industry risks - The company is in the exploration and development stage and does not have revenues, resulting in recurring operating losses[12] - As of March 31, 2025, the company had an accumulated deficit of $432.5 million and cash of $434.6 million, which is considered sufficient to fund operations for at least the next fifteen months[12] - The business involves a high degree of risk, including development, operational, regulatory, and commodity price volatility[13] Note 5: Exploration and Evaluation Assets The carrying value of exploration and evaluation assets increased to $613.8 million as of March 31, 2025, up from $584.9 million at the end of 2024, reflecting $28.9 million in additions during the first quarter, all directed towards the Rook I project Additions to Deferred Exploration Costs - Q1 2025 (in thousands of CAD) | Category | Amount | | :--- | :--- | | General exploration and drilling | $7,149 | | Environmental, permitting, and engagement | $4,986 | | Technical, engineering and design | $6,160 | | Labour and wages | $8,781 | | Share-based payments | $1,439 | | Other | $354 | | Total Additions | $28,869 | Note 7: Investment in Associate The company's investment in its associate, IsoEnergy, decreased significantly from $229.6 million to $147.0 million during Q1 2025, primarily due to an $81.0 million impairment loss recognized due to a significant and prolonged decline in the fair value of IsoEnergy's shares - An impairment loss of $81,009 thousand was recorded on the investment in IsoEnergy during the three months ended March 31, 2025[22] - The impairment was triggered by a significant and prolonged decline in the fair value of IsoEnergy shares due to macroeconomic circumstances[22] - The carrying value of the investment was adjusted to its fair value of $146,982 thousand as of March 31, 2025[22] Note 8: Strategic Inventory In May 2024, NexGen acquired 2.7 million pounds of natural uranium concentrate (U3O8) for US$250 million, financed through the issuance of convertible debentures, and as of March 31, 2025, this strategic inventory is carried on the balance sheet at its cost of $341.2 million - On May 28, 2024, the company purchased 2,702,411 pounds of natural uranium concentrate for US$250 million[24] - The acquisition was funded by issuing US$250 million in unsecured convertible debentures[24] - The strategic inventory is valued at its cost of $341,150 thousand as of March 31, 2025[24] Note 9: Convertible Debentures The company has two series of unsecured convertible debentures (issued in 2023 and 2024) with a total fair value of $424.3 million as of March 31, 2025, down from $455.8 million at year-end 2024, with a Q1 2025 fair value adjustment resulting in a $70.9 million gain in net loss and a $39.4 million loss in other comprehensive loss Fair Value of Convertible Debentures (in thousands of CAD) | Description | Fair Value | | :--- | :--- | | Balance at December 31, 2024 | $455,783 | | Fair value adjustment | $(31,470) | | Balance at March 31, 2025 | $424,313 | - The fair value adjustment for Q1 2025 was split between a $70.9 million gain in net loss and a $39.4 million loss in other comprehensive income (related to credit risk)[25] 2023 Debentures These are US$110 million debentures issued in September 2023, carrying a 9% annual interest rate (6% cash, 3% common shares), convertible at the holder's option at a price of US$6.76 per share Valuation Inputs for 2023 Debentures | Input | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Volatility | 42.00% | 40.00% | | Credit spread | 17.69% | 22.89% | | Underlying share price | US$4.49 | US$6.60 | 2024 Debentures These are US$250 million debentures issued in May 2024 to fund the strategic uranium purchase, with the same 9% interest structure (6% cash, 3% shares) and convertible at a price of US$10.73 per share Valuation Inputs for 2024 Debentures | Input | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Volatility | 42.00% | 40.00% | | Credit spread | 17.69% | 22.89% | | Underlying share price | US$4.49 | US$6.60 | Note 10: Share Capital As of March 31, 2025, the company had 569.2 million common shares outstanding, with minimal share capital activity in the first quarter (100,000 shares issued from stock option exercises), and maintains a stock option plan with 48.3 million options outstanding Share Issuances In Q1 2025, the company issued 100,000 shares for gross proceeds of $557 thousand from stock option exercises, following a very active 2024 which included raising $135 million from an ATM program and $226 million from an ASX offering - During Q1 2025, 100,000 shares were issued from the exercise of stock options for gross proceeds of $557 thousand[33] - In 2024, the company raised significant capital through a 13 million share ATM program ($135M gross) and a 20.2 million share ASX offering ($226M gross)[34][35] Share Options The company's stock option plan allows for granting options up to 20% of outstanding shares, with 48.3 million options outstanding at a weighted average exercise price of $6.08 as of March 31, 2025, and a share-based payment expense of $5.1 million for Q1 2025 Share Option Activity | Date | Options Outstanding | Weighted Avg. Exercise Price (C$) | | :--- | :--- | :--- | | Dec 31, 2024 | 48,616,795 | $6.09 | | Mar 31, 2025 | 48,268,462 | $6.08 | - Share-based payments for Q1 2025 totaled $5,103 thousand, with $3,664 thousand expensed and $1,439 thousand capitalized to exploration assets[39] Note 12: Related Party Transactions Remuneration for key management personnel in Q1 2025 was $4.1 million, a decrease from $5.9 million in Q1 2024 primarily due to lower share-based payments, and in February 2025, the company invested $6.25 million in a private placement by its associate, IsoEnergy Key Management Compensation (in thousands of CAD) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Short-term compensation | $780 | $830 | | Share-based payments | $3,317 | $5,067 | | Consulting fees | $32 | $32 | | Total | $4,129 | $5,929 | - On February 28, 2025, the Company participated in an IsoEnergy private placement, purchasing 2.5 million shares for $6.25 million[43] Note 13: Financial Instruments and Risk Management The company's primary financial instruments include cash, receivables, payables, derivatives, and convertible debentures, with the debentures being the most significant risk factor measured at fair value (Level 2) and sensitive to the company's share price and credit spread, exposing the company to liquidity, foreign currency, and commodity price risks, with a portion of its US dollar exposure hedged Fair Value Hierarchy The company's convertible debentures and foreign currency derivatives are classified as Level 2 in the fair value hierarchy, with the Q1 2025 fair value gain on the debentures driven by a lower company share price, partially offset by a reduction in the company's credit spread from 22.89% to 17.69% - Convertible debentures are classified as Level 2 fair value instruments[45] - The reduction in the company's credit spread was partly due to the de-risking of the Rook I Project as hearing dates were set by the Canadian Nuclear Safety Commission[45] Financial Risks The company manages several financial risks, including liquidity risk (current liabilities of $460.8M exceed cash of $434.6M), foreign currency risk from US dollar-denominated debentures (a 10% CAD/USD change could impact net loss by $37.8 million, partially hedged), and equity and commodity price risk through its share price and uranium prices - Liquidity Risk: As of March 31, 2025, the company had cash of $434.6 million to settle current liabilities of $460.8 million (which includes convertible debentures)[50] - Foreign Currency Risk: The company has US dollar net financial liabilities of US$262.9 million. A 10% change in the CAD/USD exchange rate would change net loss by $37.8 million[54] - Hedging: On January 22, 2025, the company entered into a USD/CAD forward contract with a notional amount of US$60 million to hedge future interest payments on its convertible debentures[53]