Nexgen Energy Ltd
TSX:NXE
Earnings Call Analysis
Q4-2023 Analysis
Nexgen Energy Ltd
NexGen Energy is well-positioned in the uranium market, reinforcing its role with a significant new mineral discovery near the Arrow project. The company has put forth a compelling case regarding the increasing demand for uranium, driven by global decarbonization efforts and the anticipated tripling of nuclear capacity by 2050. Emerging markets like India and favorable policies across nations, including Canada's federal support manifested through a $4 billion green bond for nuclear development, are indicative of the industry's growth trajectory. The potential ban on Russian uranium imports by the U.S. could further tighten the market, stressing NexGen's importance as a sustainable uranium provider. The company's Rook I Project is anticipated to cover over 50% of Western uranium supply, etching its significance in the sector.
NexGen's Rook I Project has achieved provincial environmental assessment approval, marking it as a pioneering project in Canada. The company is proceeding with Federal EIS submission and responses to technical comments, expecting to finalize this phase soon. NexGen's approach to community engagement includes training programs that notably support indigenous women and contribute to building a skilled local workforce. These initiatives are aligned with NexGen's goals to ensure the project's success and create enduring economic benefits in the region.
From a financial standpoint, NexGen Energy concluded 2023 with a strong capital balance and subsequently bolstered its position with an additional $100 million raised, totaling approximately CAD 410 million in treasury. This financial stability supports all current and projected activities, including the drive toward advancing the Rook I Project. With inclusion in significant indexes like the FTSE Global Index and the ASX 300 Index, NexGen is acknowledged for its growth and evolving global footprint, forecasting a promising future and an increase in shareholder value.
Looking ahead into 2024, NexGen focuses on the final permitting phase, detailed engineering, procurement, and continued exploration. As the industry experiences cost pressures, NexGen will be updating the market with revised capital and operating cost figures in the latter half of the year, despite stating that inflationary impacts have not significantly altered project economics. Global lenders have already shown over USD 1.25 billion of interest, indicating confidence in the company’s prospects. NexGen emphasizes a volume-based spot contracting strategy for uranium that promises transparency and aligns with the future market dynamics, aiming for a sustainable transition within the sector.
You don't have any saved screeners yet
Good morning, ladies and gentlemen, and welcome to the NexGen Energy Year-End and Q4 2023 Conference Call. [Operator Instructions] Also note that this call is being recorded. Mr. Leigh Curyer, CEO and Director for NexGen Energy, you may begin your conference.
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 kilometers 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% to 25% in the coming decades to meet 3 generational goals: the provision of power for an increasingly energy-intensive world; 2, decarbonization; and 3, 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 the 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 it for essential rolling 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 this nuclear generation to 2.42 gigawatts, a tripling of its current capacity. Canada supports these efforts, evidenced as recently as 2 weeks ago with the issuance of its second green bond for nuclear development, raising USD 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 Governor 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, new 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 pounds 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 as ] NI 43-101 feasibility study of February 2021, it is forecasted to deliver up to 30 million pounds of uranium for the market annually. This represents over 20% of current uranium fuel production and over 50% of Western supply. This will not only reestablish candidates a preeminent uranium producer in the globally recognized Province of Saskatchewan, but will also emphasize NexGen's unique position to meet the wells increasing uranium requirements. Over the past 12 months, NexGen has stayed 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 element. This is highlighted to our industry ESG standards approach, historic benefits agreements and optimal permitting progress. From the offset, we have been focused on innovation and paid performance to bring Rook I into production this decade. As our actions and track record demonstrate we are committed to playing our role successfully in delivering the fast benefits of nuclear to improve the quality of living globally. We are 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 nongovernment 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 being ready for full construction once all federal permits are in hand. Recently, on February 12, we received the Canadian Nuclear Safety Commissions results of the 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 from 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 projects are realized as a priority for the region and its community. As mentioned earlier, we avoid 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 thinking contract is imminent, signifying subject to federal approval to 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 this highly prospective land package in the Southwestern Athabasca Basin. On 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 1 Arrow Deposit, adding value through the drill bit. And 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 kilometers east of NexGen's world-class Arrow Deposit, Figure 1 as per the news release. The new mineralized occurrence in RK-24-183 is located in our 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, we intersected 3 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 millimeter of greater than 9,999 CPS. Exploration is predominantly open in all directions, including over 1.5 kilometers of strike in a setting, incorporating many of the geological features seen in and around Arrow, figures 2 and 3 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 markets of mineralization in the region improved with every drill hole and geophysical surveys. And the NexGen exploration programs of the past years have been extremely valuable in contributing to today's results. A 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 extended 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, anticipating 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 on to our existing world-class team. Over last year, we have been and continue to be highly engaged with investors, industry members and those who play a key role in the new per fuel cycle through about those conversations, several themes have emerged. First and foremost, there is 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 recognized as it provides transparency, price discovery and promotes the resiliency of uranium miners and the nuclear industry. To be clear, we will only produce uranium that is needed and they will optimize the market dynamics. We are 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 USD 10 per pound as per the 43-101 feasibility study. Our contracts will be predominantly volume-based over the life of the project and lead 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 is being 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 USD 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 focused and disciplined 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 $279 million as at the end of the year, post December 31, an additional USD 100 million was raised through the ATM with a single Australian domiciled investor who has increased their shareholder. 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 since incorporation has deployed approximately $451 million in the successful development of the Rook I Project and other exploration properties against the current market capitalization of CAD 5.4 billion, all whilst maintaining an industry-leading low ratio of general and 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 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 our 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 local support from local and indigenous communities to see NexGen's steward this opportunity through to fruition. With continued collaboration from government partners, grown shareholder and investor interest, especially large generalists globally and a surge in requirement for [ uranium-neutron 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 Instructions] And your first question will be from Katie Lachapelle at Canaccord.
Also, congrats on the new discovery announced this morning. I was just wondering if you could -- sorry, Leigh, go ahead.
No, I was just saying thank you. Yes, we're very excited about it.
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?
Yes. We're really pleased with the report card that we got back on February 12 from the CNSC. It was effectively an A+. 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 and a black line of the EIS in the coming weeks. So given the speed of replay, it really does signify the materiality of those questions overall. Whilst every question is very, very important, we assess the materiality of them to be low and we'll 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.
Awesome. And 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 a revised capital cost as well as operating cost figures. And in your view, are those requirement to trigger the debt or the potential signing of a long-term contract this year?
Yes, 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 of 2021. We will be updating the market with respect to those aspects in the second half of this year once that process is concluded.
Next question will be from Alexander Pearce at the Bank of Montreal.
My question is just around, obviously, permitting and you're now 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 obviously gets very cold up there.
Yes, sure. And look, yes, 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 yes, seasonally, it won't be terribly determinant or impactful with respect to when we start. But ultimately, yes, we would love to be studying the full-scale construction at their list 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.
Next question will be from Craig Hutchison at TD.
Just with regards to setting up the hearing from the federal government, do they require all the responses to be complete from the information requests? Or could 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 set up that hearing to potentially making a final decision?
Yes. 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 whilst every question is important in an overall context that determined is 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 don't see -- we're not seeking a short cut 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 that commission hearing date as soon as possible. Based on previous companies in this position, the commission hearing date as a notice period of 3 to 6 months. But every case is different. And look, we have met all requirements with respect to the EIS approval process. And so the document is being well understood and now in the public forum since November of 2023 -- sorry, November 2022, when it concluded [ the 120-day ] public comment period. So 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.
Okay. Great. 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?
Yes. The 30,000 meters had a budget of $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 $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 $12 million up.
It works, I thought the math as well.
Sorry, I just dropped out there, Craig?
Sorry, just wondering the early works preconstruction works that you guys had planned. I think there's still a bit of a balance left on that, any plans you're spending here in 2024?
Yes. So all the early confirmation works are on budget. We'll have those [ included in imminently ] near the end of the first quarter here or early in the second. But 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 yes, we've got it well in hand. And as I said, everything is ready to really go up a significant notch once the federal approvals are received.
Next question will be from Graham Tanaka of Tanaka Capital Management.
Congratulations guys to you and your team. I'd like to focus on Patterson each quarter discovery. Could you tell us a little bit more about the geologic structure and then maybe what 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 6 to 8 years?
Yes. And there are absolute key focuses once we understand what we have at this new occurrence 3.5 kilometers almost due east of Arrow, but also at a similar deck to their own mineralization. Look, I think we -- it's still very early days. I just referenced everyone to Figure 3 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 kilometer 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 -- what 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 RRR owned by Fission to the Southwest. So we know we're in a heavily mineralized area. And to give some context to Arrow, and as I said, that we've got 3 meters 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, et cetera, 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. But it's -- 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. And any new occurrences such as at Patterson Corridor said we found today if proven to be economic would also be subject to permitting. But look, I think the takeaway from everyone today is that we expect to be producing at Rook I for well in -- well, considerably longer than what the current feasibility studies suggest. We've always known that. We've also got mineralization below Arrow at depth. So we -- and whilst 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. So it's incredibly exciting. In fact, potentially a major game changer over and above what we already have at Arrow, which is world-class. So Graham, give us some time, and we look forward to responding with respect to all of those points that you've made.
Yes. 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 the 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 to 12 years...?
Well, what I can tell you based on what we know, I can only tell you what we know at the moment, Graham, and it's exhibiting 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 deposition 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 be -- 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.
Next question will be from Brian MacArthur at Raymond James.
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?
Yes. Well, sorry. [ 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 in and around Arrow that is subsequently discovered. I think you can safely assume will come under the current approval. New occurrence as that 3.5 kilometers 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. So in summary, based on what we know today and 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.
Great. And following up just another question, I think you mentioned minor scope change when you're talking -- 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 to 1,400 tons a day there? Is there anything like that in there, or is it just minor adjustments, shall I say, to the construction and things like that?
Yes. Brian, it's a good question. It's -- 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.
Great. And maybe I could ask one more quick. It's great you now got $1.25 billion versus $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'd get it done by the back half of the year, and maybe whether there's been any new people coming in, are they still the same, what I would call international institutions? There are actually utilities and customers coming in [ at that last $250 million ].
Look, I'll start with the first part of that answer then hand over to Travis. The amount of interest that we are receiving every day is increasing. The project's profile from an economics, 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?
Yes. Yes. Exactly. That's the key point, Leigh. And in terms of the quantum and the amount, it will 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 is, 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 in the market.
Next question will be from Andrew Wong at RBC Capital Markets.
Just some questions on contract discussions. I guess first is, could you kind of talk about 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, like, how would you -- how do you plan to incorporate some flexibility around timing of the mine startup? I'd assume there'll be some volume flex, pull forward, push out, obviously there's always uncertainty around mine startup and timing. Can you just talk about that thing?
Yes, I'll start with that and then also hand over to Travis. 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 purchases 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?
Yes. And I might just add, yes, exactly, Leigh. 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.
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, and it goes into production in 2028, so you sign contracts for delivery starting in 2028, but we never know what happens and anything you can call like, let's say it gets pushed out to 2029, 2030, like I guess I'm just trying to understand on NexGen side, these contracts, is there flexibility for how that works? Like, would you be in a -- put in a situation where you have to deliver by 2028, for example -- just kind of think around that.
Yes. 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. And as we've done with everything since the company incorporated like 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 whilst we -- 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.
Next question will be from Chris Thompson at PI Financial.
Leigh and team, congratulations on this morning's news. Just on that, on the discovery there, I'm just sort of reading through the descriptions. It seems to be largely basement-host. Is that correct in mineralization?
Yes. Fully basement hosted. Yes.
And then -- 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? What is the budget for this year outside of exploration?
So excluding exploration, the budget this year is about $170 million, which is subject to, obviously, the timing of federal approvals.
Yes. Wonderful. Okay. That's it. Congratulations again.
And at this time, Mr. Curyer, we have no other questions. Please proceed.
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 are eagerly awaiting conclusion of that process, respectively, 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 9 -- 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 yes, 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.
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.