NexGen Energy (ASX:NXG) is viewed as a core uranium sector holding, with its Rook I project potentially supplying about 14% of global reactor demand and offering a partial hedge against execution risk through tighter uranium markets, Jefferies said in a Thursday note.
Jefferies said Rook I is one of the world's largest undeveloped high-grade uranium projects, with Arrow expected to support 28.1 million pounds of annual peak output by 2033, equal to about 14% of 2035 global reactor demand, following first production in mid-2031.
Construction of Rook I began on June 8, following the March 5 project license, with separate licensing still required for operations.
The investment firm said the project's scale partly hedges execution risks, as delays or lower output could tighten uranium supply and lift prices, with a sustained 30% shortfall potentially adding about $28 per pound to its $95 per pound balanced-market estimate.
It estimates the company will require CA$2.76 billion in direct pre-production capital and CA$3.39 billion in external funding, potentially sourced through prepayments, equity, project sell-downs and CA$1.89 billion in project debt.
Meanwhile, the company held CA$756.2 million in cash, CA$214.1 million in short-term investments, 2.7 million pounds of uranium inventory and a 27.8% stake in IsoEnergy as of June 30.
Jefferies sees upside in Patterson Corridor East, estimating 110.2 million pounds of triuranium octoxide and first production in 2040, with a net present value of CA$1.25 billion, though its maiden resource, funding, permitting and integration remain unresolved.
Jefferies started coverage on NexGen Energy with a buy rating and a AU$20.60 price target.