NexGen Energy .(NXE) - 2025 Q2 - Quarterly Report

Condensed Interim Consolidated Financial Statements Condensed Interim Consolidated Statements of Financial Position NexGen's total assets decreased, liabilities increased, and equity declined by June 30, 2025, driven by reduced cash and increased convertible debentures Consolidated Statements of Financial Position (CAD '000) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :---------------- | | Cash | 371,556 | 476,587 | (105,031) | | Exploration and evaluation assets | 648,146 | 584,889 | 63,257 | | Property and equipment | 7,228 | 5,354 | 1,874 | | Investment in associate | 156,601 | 229,594 | (72,993) | | Strategic inventory | 341,150 | 341,150 | 0 | | Other non-current assets | 10,666 | 3,072 | 7,594 | | Total assets | 1,546,228 | 1,657,243 | (111,015) | | Accounts payable and accrued liabilities | 20,218 | 21,402 | (1,184) | | Convertible debentures | 488,520 | 455,783 | 32,737 | | Derivative liability | 3,024 | - | 3,024 | | Other non-current liabilities | 8,017 | 91 | 7,926 | | Total liabilities | 520,339 | 478,202 | 42,137 | | Share capital | 1,421,237 | 1,405,968 | 15,269 | | Reserves | 150,224 | 142,619 | 7,605 | | Accumulated other comprehensive income (deficit) | (26,381) | 12,017 | (38,398) | | Accumulated deficit | (519,191) | (381,563) | (137,628) | | Total equity | 1,025,889 | 1,179,041 | (153,152) | Condensed Interim Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) NexGen reported a significantly wider net loss for the six months ended June 30, 2025, driven by an impairment loss on associate investment and increased debenture interest Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) (CAD '000) | Metric | 3 months ended Jun 30, 2025 | 3 months ended Jun 30, 2024 | 6 months ended Jun 30, 2025 | 6 months ended Jun 30, 2024 | | :------------------------------------------ | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Salaries, benefits and directors' fees | 2,484 | 2,628 | 5,695 | 5,369 | | Office, administrative, and travel | 4,967 | 4,612 | 11,031 | 9,765 | | Professional fees and insurance | 3,152 | 3,790 | 5,921 | 6,812 | | Share-based payments | 3,815 | 6,018 | 7,479 | 12,084 | | Finance income | 3,505 | 5,923 | 7,590 | 9,428 | | Mark-to-market gain (loss) on convertible debentures | (55,661) | 29,714 | 15,257 | 13,432 | | Interest expense on convertible debentures | (11,661) | (6,056) | (23,285) | (9,431) | | Share of net income (loss) from associate | (572) | (1,940) | 1,089 | (3,517) | | Impairment loss on investment in associate | - | - | (81,009) | - | | Mark-to-market loss on derivative instruments | (2,993) | - | (3,024) | - | | Foreign exchange gain (loss) | (1,988) | 68 | (2,043) | 797 | | Net income (loss) | (86,693) | 13,196 | (137,628) | (21,424) | | Change in fair value of convertible debenture attributable to credit risk | (8,547) | 12,425 | (47,994) | 11,277 | | Share of other comprehensive income (loss) from associate | (1,805) | (630) | (3,363) | 1,747 | | Net comprehensive income (loss) | (94,737) | 21,636 | (176,026) | (11,445) | | Basic earnings (loss) per share | (0.14) | 0.02 | (0.23) | (0.04) | | Diluted loss per share | (0.14) | (0.02) | (0.23) | (0.04) | Condensed Interim Consolidated Statements of Cash Flows Cash decreased for the six months ended June 30, 2025, driven by increased investing activities and reduced financing inflows from equity programs Consolidated Statements of Cash Flows (CAD '000) | Cash Flow Activity | 3 months ended Jun 30, 2025 | 3 months ended Jun 30, 2024 | 6 months ended Jun 30, 2025 | 6 months ended Jun 30, 2024 | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) for the period | (86,693) | 13,196 | (137,628) | (21,424) | | Operating cash flows before working capital | (7,396) | (5,107) | (15,376) | (12,518) | | Cash used in operating activities | (10,927) | (2,380) | (12,070) | (11,723) | | Expenditures on exploration and evaluation assets | (25,590) | (26,054) | (53,657) | (58,947) | | Investment in IsoEnergy | (12,000) | - | (18,250) | - | | Cash used in investing activities | (37,906) | (26,741) | (72,223) | (60,692) | | Proceeds from at-the-market equity program, net | - | - | - | 130,237 | | Proceeds from ASX CDI offering, net | - | 216,321 | - | 216,321 | | Proceeds from exercise of stock options | 4,268 | 6,756 | 4,825 | 11,737 | | Interest paid on convertible debentures | (14,780) | (4,536) | (14,780) | (4,536) | | Cash provided by (used in) financing activities | (11,792) | 218,284 | (18,329) | 353,244 | | Effect of exchange rates on cash and cash equivalents | (2,459) | 41 | (2,409) | 791 | | Increase (decrease) in cash | (63,084) | 189,204 | (105,031) | 281,620 | | Cash, end of period | 371,556 | 572,363 | 371,556 | 572,363 | Condensed Interim Consolidated Statements of Changes in Equity Total equity decreased by June 30, 2025, primarily due to a net loss and other comprehensive loss, partially offset by share issuances Consolidated Statements of Changes in Equity (CAD '000) | Equity Component | Balance at Dec 31, 2024 | Share-based payments | Shares issued on exercise of stock options | Shares issued for convertible debenture interest payments | Net loss | Other comprehensive loss | Balance at Jun 30, 2025 | | :-------------------------------- | :-------------------------- | :------------------- | :----------------------------------------- | :-------------------------------------------------------- | :------- | :----------------------- | :-------------------------- | | Share Capital | 1,405,968 | - | 7,389 | 7,880 | - | - | 1,421,237 | | Reserves | 142,619 | 10,169 | (2,564) | - | - | - | 150,224 | | Accumulated Other Comprehensive Income (Loss) | 12,017 | - | - | - | - | (38,398) | (26,381) | | Accumulated Deficit | (381,563) | - | - | - | (137,628) | - | (519,191) | | Total Equity | 1,179,041 | 10,169 | 4,825 | 7,880 | (137,628) | (38,398) | 1,025,889 | Notes to the Condensed Interim Consolidated Financial Statements 1. Reporting Entity NexGen Energy Ltd. is a uranium exploration and development company listed on major exchanges, now holding a 30.9% investment in associate IsoEnergy - NexGen Energy Ltd. is an exploration and development stage entity engaged in the acquisition, exploration, evaluation, and development of uranium properties in Canada[7] - The Company is listed on the Toronto Stock Exchange (TSX), Australian Stock Exchange (ASX), and New York Stock Exchange (NYSE) under the symbol 'NXE' (TSX, NYSE) and 'NXG' (ASX)[8] - On December 5, 2023, NexGen deconsolidated IsoEnergy Ltd., now owning approximately 30.9% of IsoEnergy's outstanding common shares as of June 30, 2025[10] 2. Nature of Operations NexGen, an exploration and development stage company, has recurring losses and an accumulated deficit, requiring additional funding for mineral property development - As an exploration and development stage company, NexGen does not have revenues and historically has recurring operating losses[11] - As at June 30, 2025, the Company had an accumulated deficit of $519,191 thousand, a working capital deficit of $126,861 thousand, and $371,556 thousand of cash[11] - The Company has sufficient working capital (excluding convertible debentures) to meet current obligations for at least the next fifteen months, but will require additional funding for mineral property development[11] - The business of exploring for minerals and development involves a high degree of risk, including development and operational risks, policy changes, and securing adequate capital[12] 3. Basis of Preparation and Material Accounting Policies Interim financial statements are prepared under IAS 34, consistent with IFRS, incorporating new policies for derivatives and decommissioning provisions a) Basis of Presentation%20Basis%20of%20Presentation) Interim financial statements are prepared under IAS 34, consistent with IFRS, and should be read with annual financial statements - These condensed interim consolidated financial statements are prepared in accordance with International Accounting Standard ("IAS") 34, consistent with International Financial Reporting Standards ("IFRS")[14] - They should be read in conjunction with the consolidated financial statements for the years ended December 31, 2024 and 2023[14] b) Adoption of Material Accounting Policies%20Adoption%20of%20material%20accounting%20policies) New material accounting policies adopted include derivative financial instruments and decommissioning and restoration provisions - Derivative financial instruments are now classified as fair value through profit or loss, used to reduce exposure to foreign currency exchange rates on convertible debenture US dollar interest payments[16] - Decommissioning and restoration provisions are recorded when a present obligation exists, with a provision of $5,365 thousand recorded for the quarter ended June 30, 2025[17][18][20] 4. Critical Accounting Judgments, Estimates and Assumptions Critical accounting judgment focuses on impairment assessment of investment in associate, evaluating objective evidence of adverse changes or fair value decline - Significant judgments include the impairment assessment of investment in associate, considering objective evidence of adverse changes or prolonged fair value decline below cost[21][22] 5. Exploration and Evaluation Assets Exploration and evaluation assets increased to $648,146 thousand by June 30, 2025, primarily due to deferred exploration costs at the Rook I project Exploration and Evaluation Assets (CAD '000) | Category | Balance at Dec 31, 2024 | Additions for 6 months ended Jun 30, 2025 | Balance at Jun 30, 2025 | | :-------------------------------- | :-------------------------- | :------------------------------------------ | :-------------------------- | | Rook I Deferred exploration costs | 559,193 | 63,257 | 622,450 | | Other Athabasca Basin Properties Deferred exploration costs | 24,002 | - | 24,002 | | Total Deferred exploration costs | 583,195 | 63,257 | 646,452 | | Total Acquisition Cost | 1,694 | - | 1,694 | | Total Exploration and evaluation assets | 584,889 | 63,257 | 648,146 | Key Additions to Deferred Exploration Costs (Rook I) for 6 months ended Jun 30, 2025: * General exploration and drilling: $14,439 thousand * Environmental, permitting, and engagement: $8,472 thousand * Technical, engineering and design: $16,967 thousand * Labour and wages: $14,704 thousand * Asset retirement obligation assets: $5,365 thousand 6. Property and Equipment Net book value of property and equipment increased to $7,228 thousand by June 30, 2025, driven by additions partially offset by depreciation Property and Equipment (CAD '000) | Category | Balance at Dec 31, 2024 | Additions for 6 months ended Jun 30, 2025 | Depreciation for 6 months ended Jun 30, 2025 | Balance at Jun 30, 2025 | | :----------------------- | :-------------------------- | :------------------------------------------ | :------------------------------------------- | :-------------------------- | | Cost | 18,691 | 2,953 | - | 21,644 | | Accumulated Depreciation | 13,337 | - | 1,079 | 14,416 | | Net Book Value | 5,354 | 2,953 | (1,079) | 7,228 | 7. Investment in Associate Investment in associate decreased to $156,601 thousand by June 30, 2025, primarily due to an impairment loss, partially offset by additional acquisitions Investment in Associate (CAD '000) | Metric | Balance at Dec 31, 2024 | Changes for 6 months ended Jun 30, 2025 | Balance at Jun 30, 2025 | | :------------------------------------ | :-------------------------- | :------------------------------------------ | :-------------------------- | | Investment in associate | 229,594 | (72,993) | 156,601 | | Loss on dilution of ownership interest | - | (7,960) | (7,960) | | Share of net income from associate | - | 1,089 | 1,089 | | Share of other comprehensive loss from associate | - | (3,363) | (3,363) | | Acquisition of additional investment | - | 18,250 | 18,250 | | Impairment loss | - | (81,009) | (81,009) | - The fair value of the investment in associate (IsoEnergy) as at June 30, 2025, was $158,506 thousand[25] Summarized Financial Information for IsoEnergy (CAD '000) | Metric | Six months ended Jun 30, 2025 | Year ended Dec 31, 2024 | | :-------------------------- | :---------------------------- | :------------------------ | | Net income (loss) | 3,218 | (42,135) | | Other comprehensive income (loss) | (10,937) | 10,172 | | Total comprehensive loss | (7,719) | (31,963) | 8. Strategic Inventory Strategic inventory of 2,702,411 pounds of U3O8 is valued at $341,150 thousand, acquired in May 2024 via US$250 million debentures - On May 28, 2024, the Company purchased 2,702,411 pounds of natural uranium concentrate ("U3O8") for an aggregate purchase price of $341,150 thousand (US$250 million)[27] - The purchase was satisfied through the issuance of US$250 million aggregate principal amount of five-year, 9.0% per annum unsecured convertible debentures (the "2024 Debentures")[27] - The strategic inventory is valued at the lower of cost and net realizable value of $341,150 thousand as at June 30, 2025[27] 9. Convertible Debentures Total fair value of convertible debentures increased to $488,520 thousand by June 30, 2025, due to fair value adjustments, including mark-to-market losses and gains 2023 Debentures Issued in September 2023 as US$110 million private placement, bearing 9% interest and convertible at US$6.76 per share - Issued on September 22, 2023, as a US$110 million private placement of unsecured convertible debentures, with gross proceeds of $148,145 thousand (US$110 million)[30] - Bear interest at 9% per annum, payable semi-annually (6% cash, 3% common shares), convertible at US$6.76 per share into a maximum of 16,272,189 common shares[31] 2023 Debentures Valuation Inputs | Input | June 30, 2025 | December 31, 2024 | | :------------------------ | :-------------- | :---------------- | | Volatility | 40.00% | 40.00% | | Expected life | 3.2 years | 3.7 years | | Risk free interest rate | 3.38% | 4.05% | | Credit spread | 16.40% | 22.89% | | Underlying share price | US$6.94 | US$6.60 | | Conversion exercise price | US$6.76 | US$6.76 | | Exchange rate (C$:US$) | 0.7349 | 0.6952 | 2024 Debentures Issued in May 2024 as US$250 million debentures for U3O8 strategic inventory, bearing 9% interest and convertible at US$10.73 per share - Issued on May 28, 2024, as US$250 million unsecured convertible debentures for 2,702,411 pounds of U3O8 strategic inventory, with a fair value on issuance of $330,916 thousand (US$242,500)[33] - Bear interest at 9% per annum, payable semi-annually (6% cash, 3% common shares), convertible at US$10.73 per share into a maximum of 23,299,161 common shares[34] 2024 Debentures Valuation Inputs | Input | June 30, 2025 | December 31, 2024 | | :------------------------ | :-------------- | :---------------- | | Volatility | 40.00% | 40.00% | | Expected life | 3.9 years | 4.4 years | | Risk free interest rate | 3.38% | 4.04% | | Credit spread | 16.40% | 22.89% | | Underlying share price | US$6.94 | US$6.60 | | Conversion exercise price | US$10.73 | US$10.73 | | Exchange rate (C$:US$) | 0.7349 | 0.6952 | 10. Share Capital Share capital increased from stock option exercises and debenture interest payments, with the stock option plan allowing up to 10% of outstanding shares a) Authorized Capital%20Authorized%20capital) Share capital increased from stock option exercises and shares issued for convertible debenture interest payments - For the six months ended June 30, 2025, the Company issued 1,030,000 shares from stock options for $4,825 thousand, and 906,785 shares for debenture interest payments at $7,880 thousand[36] - For the year ended December 31, 2024, the Company issued 13,000,800 shares under its at-the-market equity program for $134,948 thousand, and 20,161,290 common shares via an ASX CDI Offering for $226,000 thousand[37][38] - Additional issuances in 2024 included 8,757,006 shares from stock option exercises for $20,160 thousand, 909,090 shares for 2024 Debentures establishment fee for $10,235 thousand, and 215,219 shares for 2023 Debentures interest for $2,088 thousand[39][40] b) Share Options%20Share%20options) The stock option plan allows issuance of options up to 10% of outstanding common shares, with share-based payments expensed or capitalized - The Company's stock option plan allows for issuance of options up to 10% of issued and outstanding common shares[41] Share Options Summary | Metric | As at Dec 31, 2024 | Changes (6 months ended Jun 30, 2025) | At Jun 30, 2025 | | :-------------------------- | :----------------- | :------------------------------------ | :-------------- | | Options outstanding | 48,616,795 | (1,549,999) | 47,066,796 | | Weighted average exercise price (C$) | 6.09 | 0.01 | 6.10 | | Options exercisable | - | - | 40,039,264 | | Weighted average exercise price (C$) for exercisable options | - | - | 5.62 | - Share-based payments for the six months ended June 30, 2025, amounted to $10,169 thousand, with $7,479 thousand expensed and $2,690 thousand capitalized[42] 11. Supplemental Cash Flow Information This section details non-cash investing and financing activities, including capitalized share-based payments and debenture issuances for strategic inventory Schedule of Non-Cash Investing and Financing Activities (CAD '000) | Non-Cash Activity | 3 months ended Jun 30, 2025 | 3 months ended Jun 30, 2024 | 6 months ended Jun 30, 2025 | 6 months ended Jun 30, 2024 | | :---------------------------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Capitalized share-based payments | 1,251 | 976 | 2,690 | 1,814 | | Exploration and evaluation asset expenditures included in accounts payable and accrued liabilities | 980 | (4,528) | (762) | (6,628) | | Interest expense included in accounts payable and accrued liabilities | (11,755) | (596) | (132) | 2,801 | | Decommissioning and restoration provision included in exploration and evaluation assets | 5,365 | - | 5,365 | - | | Issuance of convertible debentures | - | 330,916 | - | 330,916 | | Purchase of U3O8 strategic inventory | - | (341,150) | - | (341,150) | 12. Related Party Transactions Related party transactions include key management compensation and NexGen's participation in IsoEnergy's private placements to acquire additional shares Remuneration of Key Management (CAD '000) | Compensation Type | 3 months ended Jun 30, 2025 | 3 months ended Jun 30, 2024 | 6 months ended Jun 30, 2025 | 6 months ended Jun 30, 2024 | | :---------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Short-term compensation | 770 | 818 | 1,550 | 1,648 | | Share-based payments | 3,369 | 5,042 | 6,686 | 10,109 | | Consulting fees | 32 | 32 | 65 | 65 | | Total | 4,171 | 5,892 | 8,301 | 11,822 | - On February 28, 2025, NexGen purchased 2.5 million common shares of IsoEnergy for $6,250 thousand, and on June 24, 2025, purchased 1.2 million common shares for $12,000 thousand[48] 13. Financial Instruments and Risk Management NexGen manages financial instruments and risks including credit, liquidity, foreign currency, equity, commodity price, and interest rate risks through policies and hedging Fair Value Hierarchy Financial instruments are classified into Level 1 (cash, receivables) and Level 2 (convertible debentures, derivatives) based on fair value hierarchy - Cash, amounts receivable, accounts payable, and lease receivable are classified as Level 1 financial instruments[50][53] - Convertible debentures are re-measured at fair value (classified as Level 2), with changes due to credit risk recognized in other comprehensive income (loss); credit spread decreased from 22.89% to 16.40%[51][52][53] - Derivatives (foreign currency contracts) are classified as Level 2, measured using a market approach based on contracted and quoted forward exchange rates[53][54] Financial Risk The company manages credit, liquidity, foreign currency, equity and commodity price, and interest rate risks through various strategies - Credit Risk: The Company is not subject to significant credit risk, with maximum exposure of $383,630 thousand at June 30, 2025[55][56] - Liquidity Risk: At June 30, 2025, NexGen had cash of $371,556 thousand against current liabilities of $509,298 thousand (including convertible debentures), with no obligation to cash settle debentures in the next twelve months[57] Undiscounted Commitments at June 30, 2025 (CAD '000) | Commitment | Less than 1 year | 1 to 3 years | 4 to 5 years | Over 5 years | Total | | :-------------------------------- | :--------------- | :----------- | :----------- | :----------- | :------ | | Accounts payable and accrued liabilities | 20,218 | - | - | - | 20,218 | | Convertible debentures | 488,520 | - | - | - | 488,520 | | Lease liabilities | 908 | 2,044 | 1,327 | 1,714 | 5,993 | | Total | 509,646 | 2,044 | 1,327 | 1,714 | 514,731 | - Foreign Currency Risk: Exposed to US dollar denominated debentures, a 10% change in exchange rates would result in a $46,151 thousand change in net income; a forward contract hedges $82.5 million (US$60 million)[59][60][61] - Equity and Commodity Price Risk: Exposed to uranium and equity price risk, impacting debenture valuation and long-lived assets[63][64] - Interest Rate Risk: Cash earns variable rates with minimal impact; convertible debentures carry fixed interest rates of 9.0% per annum[65] 14. Earnings (Loss) Per Share Basic and diluted loss per share was $0.23 for the six months ended June 30, 2025, with anti-dilutive options excluded from diluted calculations Weighted Average Common Shares Outstanding (Basic and Diluted) | Metric | 3 months ended Jun 30, 2025 | 3 months ended Jun 30, 2024 | 6 months ended Jun 30, 2025 | 6 months ended Jun 30, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Weighted average number of common shares (Basic) | 570,022,148 | 551,519,415 | 569,559,568 | 544,020,730 | | Weighted average number of common shares (Diluted) | 570,022,148 | 613,813,089 | 569,559,568 | 544,020,730 | | Anti-dilutive options excluded (millions) | 47.1 | 23.9 | 47.1 | 46.6 |