Q: Hi 5i
You have suggested NXE ($8.20) as a good way to play uranium demand. With actual production still 3+ years away, do they have enough cash to get there or will they need to issue more shares or debt? And your thoughts on the potential of a takeover, what are the odds and who would do it?
Thanks, Greg
You have suggested NXE ($8.20) as a good way to play uranium demand. With actual production still 3+ years away, do they have enough cash to get there or will they need to issue more shares or debt? And your thoughts on the potential of a takeover, what are the odds and who would do it?
Thanks, Greg
5i Research Answer:
NXE has $290.7M in cash on its balance sheet. Dilution risk is cartainly at play here as NXE's flagship Rook I mine is still not fully financed. The company recently upwardly revised its costs for this mine to $1.6B so it is reasonable to assume that NXE will require further equity or debt financing. One of NXE's goals this year is to formalize its financing package so getting this sorted out sooner than later will be beneficial for investors. We do not see it as a takeover candidate just yet. But CCO would be the most obvious buyer, as we are not sure an international player would be allowed.