NexGen Energy (CVE:NXE) is undervalued, said analyst Rob Chang at Cantor Fitzgerald, who calculated an estimate of 58 million pounds of uranium for the Arrow discovery at the company's Rook I project based on drilling results to date, "meaning NexGen is cheap".
Based on Cantor's estimate of 58.1 million pounds, NexGen is currently trading at a market capitalization per in-situ pounds in the ground valuation of $1.69 per pound. "This figure is notably lower than $3.71 per pound average value of its peers," wrote Chang in a research note to investors released today.
Cantor Fitzgerald reiterated its speculative buy rating on the uranium explorer, but continued to refrain from providing a target price until an official NI 43-101 compliant resource is established.
Chang said that based on post-Fukushima transactions in the Athabasca Basin which have averaged $9.41 per pound, NexGen has upside of over 456 percent over yesterday's closing price when the average takeout multiple is applied to Cantor Fitzgerald's resource estimate.
"While still early days, the Arrow project has shown many similarities to Cameco’s Eagle Point mine located on the eastern side of the basin," the analyst explained.
"The latter is regarded as one of Cameco’s most successful mines."
NexGen also announced today the finding of a new zone, called "Bow", located 3.7 kilometres northeast of the Arrow zone. Cantor said the discovery is a prime example of the company's prospectivity.
The new area was found by testing a radon anomaly, one of the key tools used to identify what now has become Patterson Lake South's 106 million pound Triple R deposit.
Two drill holes at the new Bow zone have already defined a 66 metre strike length of mineralization, and indicate the presence of much wider mineralized intercepts in the area.
NexGen said that it has expanded its 2015 winter drilling program to a minimum of 20,000 metres, with drilling to focus on the expansion of its Arrow zone and on step outs from the discovery holes at Bow.
Vancouver, BC-based NexGen owns a portfolio of prospective uranium exploration properties in the Athabasca Basin. In addition to Rook I, it holds an option to earn a 70 percent stake in the Radio property in the northeast part of the basin.