Exhibit 99.1

 

 

 

 

Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022

(expressed in thousands of Canadian dollars) - Unaudited

NexGen Energy Ltd.

Condensed Interim Consolidated Statements of Financial Position

(expressed in thousands of Canadian Dollars) - Unaudited

 

 

		As at June 30, 2022				As at December 31, 2021
Assets
Current assets
Cash		$	161,237			$	201,804
Marketable securities (Note 5)			6,033				9,315
Amounts receivable			862				1,178
Prepaid expenses and other assets			2,760				1,028
			170,892				213,325
Non-current assets
Exploration and evaluation assets (Note 6)			365,275				326,543
Property and equipment (Note 7)			5,966				6,619
Deposits			76				76
Total assets		$	542,209			$	546,563
Liabilities
Current liabilities
Accounts payable and accrued liabilities		$	12,738			$	7,499
Lease liabilities (Note 9)			737				706
			13,475				8,205
Non-current liabilities
Convertible debentures (Note 8)			61,716				72,011
Long-term lease liabilities (Note 9)			2,086				2,463
Deferred income tax liabilities			1,577				2,536
Total liabilities		$	78,854			$	85,215
Equity
Share capital (Note 10)		$	697,067			$	695,856
Reserves			80,858				68,837
Accumulated other comprehensive income			611				1,895
Accumulated deficit			(344,800)				(332,980)
Equity attributable to NexGen Energy Ltd. shareholders			433,736				433,608
Non-controlling interests (Note 15)			29,619				27,740
Total equity			463,355				461,348
Total liabilities and equity		$	542,209			$	546,563

Nature of operations (Note 2)

Commitments (Note 14)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

2

NexGen Energy Ltd.

Condensed Interim Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)

(expressed in thousands of Canadian Dollars, except per share and share information) - Unaudited

 

 

		Three months ended June 30,								Six months ended June 30,
		2022				2021				2022				2021
Expenses
Salaries, benefits and directors’ fees		$	1,867			$	2,026			$	3,737			$	4,477
Office, administrative, and travel			1,558				651				2,911				1,653
Professional fees and insurance			1,373				483				1,987				1,312
Depreciation (Note 7)			446				540				884				1,084
Share-based payments (Note 10)			6,340				11,381				13,736				13,578
			(11,584)				(15,081)				(23,255)				(22,104)
Finance income			491				280				742				405
Mark-to-market gain (loss) on convertible debentures (Note 8)			28,504				(5,913)				10,074				(64,922)
Interest expense on convertible debentures (Note 8)			(529)				(492)				(1,047)				(2,720)
Interest on lease liabilities (Note 9)			(54)				(70)				(110)				(142)
Gain on sale of assets			-				2,236				-				2,236
Foreign exchange gain (loss)			474				(251)				246				(429)
Other income			-				18				-				18
Income (loss) before taxes			17,302				(19,273)				(13,350)				(87,658)
Deferred income tax recovery (expense)			283				(526)				535				(257)
Net income (loss)			17,585				(19,799)				(12,815)				(87,915)
Items that may not be reclassified subsequently to profit or loss:
Change in fair value of convertible debenture attributable to the change in credit risk (Note 8)			196				3				221				(292)
Change in fair value of marketable securities (Note 5)			(2,359)				933				(3,283)				933
Deferred income tax recovery (expense)			300				(114)				422				(64)
Net comprehensive income (loss)		$	15,722			$	(18,977)			$	(15,455)			$	(87,338)
Net income (loss) attributable to:
Shareholders of NexGen Energy Ltd.		$	13,484			$	(18,894)			$	(12,187)			$	(84,983)
Non-controlling interests			4,101				(905)				(628)				(2,932)
		$	17,585			$	(19,799)			$	(12,815)			$	(87,915)
Net comprehensive income (loss) attributable to:
Shareholders of NexGen Energy Ltd.		$	12,586			$	(18,496)			$	(13,471)			$	(84,776)
Non-controlling interests			3,136				(481)				(1,984)				(2,562)
		$	15,722			$	(18,977)			$	(15,455)			$	(87,338)
Earnings (loss) per share attributable to NexGen Energy Ltd.  shareholders (Note 16)
Basic earnings (loss) per share		$	0.03			$	(0.04)			$	(0.03)			$	(0.19)
Diluted (loss) per share		$	(0.02)			$	(0.04)			$	(0.04)			$	(0.19)
Weighted average common shares outstanding (Note 16)
Basic			479,283,015				471,861,473				479,324,268				441,615,578
Diluted			504,256,307				471,861,473				504,390,280				441,615,578

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3

NexGen Energy Ltd.

Condensed Interim Consolidated Statements of Cash Flows

(expressed in thousands of Canadian dollars) - Unaudited

 

 

		Three months ended June 30,								Six months ended June 30,
		2022				2021				2022				2021
Net income (loss) for the period:		$	17,585			$	(19,799)			$	(12,815)			$	(87,915)
Adjust for:
Depreciation (Note 7)			446				540				884				1,084
Share-based payments (Note 10)			6,340				11,381				13,736				13,578
Mark-to-market (gain) loss on convertible debenture (Note 8)			(28,504)				5,913				(10,074)				64,922
Interest expense on convertible debentures (Note 8)			529				492				1,047				2,720
Interest on lease liabilities (Note 9)			54				70				110				142
Deferred income tax (recovery) expense			(283)				526				(535)				257
Unrealized foreign exchange (gain) loss			(474)				251				(246)				429
Gain on sale of assets			-				(2,236)				-				(2,236)
Operating cash flows before working capital			(4,307)				(2,862)				(7,893)				(7,019)
Changes in working capital items:
Amounts receivable			4				(18)				316				30
Prepaid expenses and other			(1,267)				(1,213)				(1,732)				(858)
Accounts payable and accrued liabilities			(273)				(186)				(461)				393
Cash used in operating activities		$	(5,843)			$	(4,279)			$	(9,770)			$	(7,454)
Expenditures on exploration and evaluation assets (Note 6)			(20,121)				(4,954)				(30,816)				(12,986)
Proceeds on sale of assets			-				96				-				96
Acquisition of equipment			(68)				(259)				(275)				(483)
Cash used in investing activities		$	(20,189)			$	(5,117)			$	(31,091)			$	(13,373)
Proceeds from bought-deal financing, net of share issuance costs (Note 10)			-				(446)				-				163,477
Proceeds from common share issuance on ASX, net of share issuance costs			-				1,501				-				1,501
Proceeds from exercise of options and warrants			234				16,942				1,211				19,231
Payment of lease liabilities (Note 9)			(227)				(264)				(456)				(525)
Interest paid on convertible debentures			(707)				(692)				(707)				(2,258)
Cash (used in) provided by financing activities		$	(700)			$	17,041			$	48			$	181,426
Foreign exchange gain (loss) on cash			474				(251)				246				(429)
(Decrease) Increase in cash		$	(26,258)			$	7,394			$	(40,567)			$	160,170
Cash, beginning of period			187,495				226,798				201,804				74,022
(Decrease) Increase in cash			(26,258)				7,394				(40,567)				160,170
Cash, end of period		$	161,237			$	234,192			$	161,237			$	234,192

Supplemental cash flow information (Note 11)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

NexGen Energy Ltd.

Condensed Interim Consolidated Statements of Changes in Equity

(expressed in thousands of Canadian dollars, except share information) - Unaudited

 

 

		Share Capital
		Common Shares
		Number				Amount				Reserves				Accumulated Other Comprehensive Income (Loss)				Accumulated Deficit				Attributable to shareholder’s of NexGen Energy Ltd.				Non- controlling interests				Total
Balance at December 31, 2020			381,830,205			$	255,953			$	54,939			$	(4,339)			$	(212,302)			$	94,251			$	25,001			$	119,252
Share-based payments (Note 10)			-				-				14,243				-				-				14,243				1,588				15,831
Shares issued on exercise of stock options (Note 10)			6,450,001				28,961				(11,604)				-				-				17,357				-				17,357
Shares issued on converted debentures (Note 8)			48,083,335				230,301				-				-				-				230,301				-				230,301
Shares issued for convertible debenture interest payments (Note 8)			217,874				1,087				-				-				-				1,087				-				1,087
Shares issued on bought-deal financing, net of share issue costs (Note 10)			38,410,000				163,181				-				-				-				163,181				-				163,181
Shares issued on ASX, net of share issue costs (Note 10)			400,000				1,192				-				-				-				1,192				-				1,192
Shares issued for the Rook I property development (Note 10)			200,000				900				(326)				-				-				574				-				574
Ownership changes relating to non-controlling interests			-				-				-				-				1,012				1,012				954				1,966
Net loss for the period			-				-				-				-				(84,983)				(84,983)				(2,932)				(87,915)
Reclass accumulated other comprehensive income related to converted debentures (Note 8)			-				-				-				4,015				(4,015)				-				-				-
Other comprehensive income			-				-				-				207				-				207				370				577
Balance at June 30, 2021			475,591,415			$	681,575			$	57,252			$	(117)			$	(300,288)			$	438,422			$	24,981			$	463,403
Balance at December 31, 2021			479,198,233			$	695,856			$	68,837			$	1,895			$	(332,980)			$	433,608			$	27,740			$	461,348
Share-based payments (Note 10)			-				-				12,377				-				-				12,377				3,525				15,902
Shares issued on exercise of stock options (Note 10)			183,332				960				(356)				-				-				604				-				604
Shares issued for convertible debenture interest payments (Note 8)			42,252				251				-				-				-				251				-				251
Ownership changes relating to non-controlling interests			-				-				-				-				367				367				338				705
Net loss for the period			-				-				-				-				(12,187)				(12,187)				(628)				(12,815)
Other comprehensive loss			-				-				-				(1,284)				-				(1,284)				(1,356)				(2,640)
Balance at June 30, 2022			479,423,817			$	697,067			$	80,858			$	611			$	(344,800)			$	433,736			$	29,619			$	463,355

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

1.	REPORTING ENTITY

NexGen Energy Ltd. (“NexGen” or the “Company”) is an exploration and development stage entity engaged in the acquisition, exploration and evaluation and development of uranium properties in Canada. The Company was incorporated pursuant to the provisions of the British Columbia Business Corporations Act on March 8, 2011. The Company’s registered records office is located on the 25th Floor, 700 West Georgia Street, Vancouver, B.C., V7Y 1B3.

The Company is listed on the Toronto Stock Exchange (the “TSX”) under the symbol “NXE”, and is a reporting issuer in each of the provinces of Canada other than Québec. On July 2, 2021, the Company commenced trading on the Australian Stock Exchange (the “ASX”) under the symbol “NXG”. On March 4, 2022 the Company up-listed from NYSE American exchange (the “NYSE American”) and began trading on the New York Stock Exchange (“NYSE”) under the symbol “NXE”.

In February 2016, the Company incorporated four wholly owned subsidiaries: NXE Energy Royalty Ltd., NXE Energy SW1 Ltd., NXE Energy SW3 Ltd., and IsoEnergy Ltd. (collectively, the “Subsidiaries”). The Subsidiaries were incorporated to hold certain exploration assets of the Company. In 2016, certain exploration and evaluation assets were transferred to each of IsoEnergy Ltd. (“IsoEnergy”), NXE Energy SW1 Ltd. and NXE Energy SW3 Ltd. Subsequent to the transfer, IsoEnergy shares were listed on the TSX-V. As of June 30, 2022, NexGen owns 50.1% of IsoEnergy’s outstanding common shares (December 31, 2021 – 51%).

 

2.	NATURE OF OPERATIONS

As an exploration and development stage company, the Company does not have revenues and historically has recurring operating losses. As at June 30, 2022, the Company had an accumulated deficit of $344,800 and working capital of $157,417. The Company will be required to obtain additional funding in order to continue with the exploration and development of its mineral properties.

The business of exploring for minerals and development of projects involves a high degree of risk. NexGen is an exploration and development company and is subject to risks and challenges similar to companies in a comparable stage. These risks include, but are not limited to, the challenges of securing adequate capital; development and operational risks inherent in the mining industry; changes in government policies and regulations; the ability to obtain the necessary environmental permits or, alternatively NexGen’s ability to dispose of its exploration and evaluation assets on an advantageous basis; as well as global economic and uranium price volatility; all of which are uncertain.

The underlying value of the exploration and evaluation assets is dependent upon the existence and economic recovery of mineral reserves and is subject to, but not limited to, the risks and challenges identified above. Changes in future conditions could require material write-downs of the carrying value of exploration and evaluation assets.

 

3.	BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

 

a)	Basis of Presentation

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Certain disclosures required by IFRS have been condensed or omitted in the following note disclosures as they are disclosed or have been disclosed on an annual basis only. Accordingly, these condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the years ended December 31, 2021 and 2020 (“annual financial statements”), which have been prepared in accordance with IFRS. These condensed interim consolidated financial statements follow the same accounting policies and methods of application as the annual financial statements.

On August 4, 2022, the Audit Committee of the Board of Directors authorized these financial statements for issuance.

 

6

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

b)	Basis of Consolidation

The accounts of the subsidiaries controlled by the Company are included in the condensed interim consolidated financial statements from the date that control commenced until the date that control ceases. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The subsidiaries of the Company and their geographic locations at June 30, 2022 are as follows:

 

Name of Subsidiary		Location		Percentage Ownership
NXE Energy Royalty Ltd.		Canada		100%
NXE Energy SW1 Ltd.		Canada		100%
NXE Energy SW3 Ltd.		Canada		100%
IsoEnergy Ltd.		Canada		50.1%

Intercompany balances, transactions, income and expenses arising from intercompany transactions are eliminated in full on consolidation.

 

4.	CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS IN ACCOUNTING POLICIES

Judgments, estimates and assumptions are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The significant judgments, estimates and assumptions made by management in applying the Company’s accounting policies are consistent with those that applied to the annual financial statements and actual results may differ from these estimates.

 

5.	MARKETABLE SECURITIES

 

a)	Clover, Gemini, and Tower uranium properties sale

In April 2021, the Company’s subsidiary, IsoEnergy, sold its interest in the Clover, Gemini and Tower uranium properties (“Properties”). IsoEnergy received cash of AUD $200 ($192) and 10,755,000 common shares of 92 Energy Pty Ltd. (“92 Energy”) at a price of $0.20 Australian Dollars (“AUD”) for a total value of AUD $2,151 ($2,068). In addition, IsoEnergy will retain a 2% Net Smelter Return (“NSR”) on the Properties.

The Properties had a book value of $24, which resulted in a gain of $2,236 in 2021.

 

7

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

b)	Mountain Lake Option Agreement

In August 2021, IsoEnergy completed an option agreement (the “Option Agreement”) with International Consolidated Uranium Inc. (which subsequently changed its name to Consolidated Uranium Inc. (“CUR”)) to grant CUR the option to acquire a 100% interest in IsoEnergy’s Mountain Lake uranium property in Nunavut, Canada (the “Option”).

Under the terms of the Option Agreement and as consideration, CUR issued 900,000 common shares of CUR at a price of $1.64 per share for a total value of $1,476, and paid cash of $20. The Option is exercisable, at CUR’s election, on or before the second anniversary of receipt of TSXV approval (August 3, 2023) for additional consideration of $1,000 payable in cash or CUR shares. If the Option is exercised, IsoEnergy will be entitled to receive the following contingent payments in cash or CUR shares:

 

●

If the uranium spot price reaches US$50 per pound, IsoEnergy will receive an additional $410

 

●

If the uranium spot price reaches US$75 per pound, IsoEnergy will receive an additional $615

 

●

If the uranium spot price reaches US$100 per pound, IsoEnergy will receive an additional $820

The spot price contingent payments will expire 10 years following the date the Option is exercised.

The Mountain Lake property had a book value of $126, which resulted in a gain of $1,370 in 2021.

At the date of these financial statements the Option has not been exercised by Consolidated Uranium.

On February 22, 2022, CUR completed its spin-out of Labrador Uranium Inc. (“LUR”) though a plan of arrangement (the “Arrangement”). Pursuant to the Arrangement, CUR distributed, on a pro-rata basis, 0.214778 of LUR shares for each CUR share held by CUR shareholders on February 22, 2022. Accordingly, IsoEnergy received 193,300 LUR shares.

During the three and six months ended June 30, 2022, the Company recognized a loss of $2,359 and $3,283, respectively, associated with the mark to market valuation of the 10,775,000 shares of 92 Energy, 900,000 shares of CUR and 193,300 shares of LUR (three and six months ended June 30, 2021 - $933 gain) which is recorded in the consolidated statement of net income (loss) and comprehensive income (loss). The fair value at June 30, 2022 of the marketable securities held in 92 Energy shares was $4,304 (December 31, 2021 - $6,732), CUR shares was $1,611 (December 31, 2021 - $2,583) and LUR shares was $118 (December 31, 2021 - $nil), for a total marketable securities value at June 30, 2022 of $6,033 (December 31, 2021 - $9,315).

 

8

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

6.	EXPLORATION AND EVALUATION ASSETS

 

		Rook I				Other Athabasca Basin Properties				IsoEnergy Properties				Total
Acquisition Cost
Balance at December 31, 2021		$	235			$	1,458			$	26,660			$	28,353
Additions			-				-				-				-
Balance as at June 30, 2022		$	235			$	1,458			$	26,660			$	28,353
Deferred exploration costs
Balance at December 31, 2021			260,941				9,180				28,069				298,190
Additions:
General exploration and drilling			1,434				-				3,527				4,961
Environmental, permitting, and engagement			6,252				-				-				6,252
Technical, engineering and design			20,665				-				-				20,665
Geochemistry and assays			-				-				112				112
Geological and geophysical			215				160				861				1,236
Labour and wages			2,695				-				384				3,079
Share-based payments (Note 10)			1,378				-				789				2,167
Travel			159				-				101				260
Total Additions			32,798				160				5,774				38,732
Balance as at June 30, 2022		$	293,739			$	9,340			$	33,843			$	336,922
Total costs, June 30, 2022		$	293,974			$	10,798			$	60,503			$	365,275
		Rook I				Other Athabasca Basin Properties				IsoEnergy Properties				Total
Acquisition cost
Balance at December 31, 2020		$	235			$	1,458			$	26,778			$	28,471
Additions			-				-				27				27
Dispositions			-				-				(145)				(145)
Balance as at December 31, 2021		$	235			$	1,458			$	26,660			$	28,353
Deferred exploration costs
Balance at December 31, 2020			216,350				9,173				20,728				246,251
Additions:
General exploration and drilling			6,502				-				3,615				10,117
Environmental, permitting, and engagement			15,154				-				2				15,156
Technical, engineering and design			13,893				-				1				13,894
Geochemistry and assays			-				-				333				333
Geological and geophysical			116				7				775				898
Labour and wages			4,925				-				815				5,740
Share-based payments			3,696				-				1,561				5,257
Travel			305				-				239				544
Total Additions			44,591				7				7,341				51,939
Balance as at December 31, 2021		$	260,941			$	9,180			$	28,069			$	298,190
Total costs, December 31, 2021		$	261,176			$	10,638			$	54,729			$	326,543

 

9

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

7.	PROPERTY AND EQUIPMENT

 

		Computer Equipment				Software				Field Equipment and Vehicles				Office, Furniture and Leasehold Improvements				Road				Total
Cost
As at December 31, 2020			$    451				$    1,060				$    6,822				$    5,142				$  2,079				$  15,554
Reclassification			-				-				(275)				275				-				-
Additions			46				295				98				858				-				1,297
Disposals			-				-				-				(494)				-				(494)
As at December 31, 2021			$    497				$    1,355				$    6,645				$    5,781				$  2,079				$  16,357
Additions			106				3				20				110				-				239
Balance as at June 30, 2022			$    603				$    1,358				$    6,665				$    5,891				$  2,079				$  16,596
Accumulated Depreciation
As at December 31, 2020			$    370				$       841				$    3,761				$    1,420				$  1,583				$    7,975
Reclassification			-				-				(193)				193				-				-
Depreciation			57				202				612				885				389				2,145
Disposals			-				-				-				(382)				-				(382)
Aa at December 31, 2021			$    427				$    1,043				$    4,180				$    2,116				$  1,972				$    9,738
Depreciation			34				86				261				480				31				892
Balance as at June 30, 2022			$    461				$    1,129				$    4,441				$    2,596				$  2,003				$  10,630
Net book value at December 31,   2021			$      70				$       312				$    2,465				$    3,665				$     107				$    6,619
Net book value at June 30, 2022			$    142				$       229				$    2,224				$    3,295				$       76				$    5,966

 

8.	CONVERTIBLE DEBENTURES

 

		2016 Debentures				2017 Debentures				2020 Debentures				IsoEnergy Debentures				Total
Fair value at December 31, 2020		$	94,768			$	86,568			$	31,483			$	14,034			$	226,853
Fair value adjustment			30,291				18,674				15,427				11,067				75,459
Settlement with shares			(125,059)				(105,242)				-				-				(230,301)
Fair value at December 31, 2021		$	-			$	-			$	46,910			$	25,101			$	72,011
Fair value adjustment			-				-				(7,305)				(2,990)				(10,295)
Fair Value at June 30, 2022		$	-			$	-			$	39,605			$	22,111			$	61,716

The fair value of the debentures decreased from $72,011 on December 31, 2021 to $61,716 at June 30, 2022, resulting from a mark-to-market gain of $28,700 and $10,295 for the three and six months ended June 30, 2022, respectively (three and six months ended June 30, 2021 – loss of $5,910 and $65,214, respectively). The gain for the three and six months ended June 30, 2022 was bifurcated with the amount of the change in fair value of the convertible debentures attributable to changes in the credit risk of the liability recognized in other comprehensive income (loss) of a gain of $196 and $221 for the three and six months ended June 30, 2022, respectively (three and six months ended June 30, 2021 – gain of $3 and loss of $292, respectively) and the remaining amount recognized in the consolidated statement of income (loss) for the three and six months ended June 30, 2022 with a gain of $28,504 and $10,074 respectively (three and six months ended June 30, 2021 – loss of $5,913 and $64,922, respectively). The interest expense during the three and six months ended June 30, 2022 was $529 and $1,047, respectively (three and six months ended June 30, 2021 - $492 and $2,720, respectively).

 

10

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

2016 and 2017 Convertible Debentures

On February 18, 2021 and February 23, 2021, the holders of the 2016 and 2017 Debentures elected to convert their respective US$60 million aggregate principal amount of 7.5% unsecured convertible debentures, both due to mature on July 22, 2022, into common shares of the Company. The Company issued 25,794,247 and 22,289,088 common shares relating to the conversion of the principal of the 2016 and 2017 Debentures, respectively, and 89,729 and 87,316 common shares at a value of $848 relating to the accrued and unpaid interest up to the date of conversion for the 2016 and 2017 Debentures, respectively. The amounts recorded in other comprehensive income (loss) as a result of changes in credit risks of the 2016 and 2017 Debentures from inception through to conversion totaling losses of $4,016 were reclassified to accumulated deficit.

The fair value of the 2016 and 2017 Debentures at conversion was based on the number of shares issued at the closing share price on the conversion date. The closing share price on February 18, 2021 was $4.69 and $4.88 on February 23, 2021 and the conversion price for the 2016 Debentures was US$2.33 and US$2.69 for the 2017 Debentures. The fair value of the shares issued for interest was based on the closing share price on the date of issuance and recorded as interest expense in the consolidated statement of net income (loss) and comprehensive income (loss).

2020 Convertible Debentures

On May 27, 2020, the Company issued US$15 million principal amount of unsecured convertible debentures (the “2020 Debentures”). The Company received proceeds of $20,889 (US$15 million) and a 3% establishment fee of $627 (US$450) was paid to the debenture holders through the issuance of 348,350 common shares and a consent fee of $355 was paid to the investors of the 2016 and 2017 Debentures in connection with the financing through the issuance of 180,270 common shares. The fair value of the 2020 Debentures on issuance date was determined to be $20,262 (US$14,550). The 2020 Debentures bear interest at a rate of 7.5% per annum, payable semi-annually in US dollars on June 10 and December 10 in each year. Two thirds of the interest (equal to 5% per annum) is payable in cash and one third of the interest (equal to 2.5% per annum) is payable, subject to any required regulatory approval, in common shares of the Company, using the volume-weighted average trading price (“VWAP”) of the common shares on the exchange or market that has the greatest trading volume in the Company’s common shares for the 20 consecutive trading days ending three trading days preceding the date on which such interest payment is due. The 2020 Debentures are convertible, from time to time, into common shares of the Company at the option of the debenture holders under certain conditions. During the period ended June 30, 2022, the Company issued 42,252 shares for a value of $251 and paid $474 (US$375) associated with the interest payment.

The 2020 Debentures were valued using a convertible bond pricing model based on a system of two coupled Black-Scholes equations where the debt and equity components are separately valued based on different default risks and assumptions. The inputs used in the pricing model as at June 30, 2022 and December 31, 2021 are as follows:

 

		June 30, 2022				December 31, 2021
Volatility			45.00%				40.00%
Expected life			2.91 years				3.41 years
Risk free interest rate			3.52%				1.78%
Expected dividend yield			0%				0%
Credit spread			19.62%				16.88%
Underlying share price of the Company			$4.62				$5.54
Conversion exercise price			$2.34				$2.34
Exchange rate (C$:US$)			$0.777				$0.791

 

11

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

IsoEnergy Debentures

On August 18, 2020, IsoEnergy entered into a US$6 million private placement of unsecured convertible debentures (the “IsoEnergy Debentures”). The IsoEnergy Debentures are convertible at the holder’s option at a conversion price of $0.88 into a maximum of 9,206,311 common shares of IsoEnergy. IsoEnergy received gross proceeds of $7,902 (US$6,000). A 3% establishment fee of $272 (US$180) was also paid to the debenture holders through the issuance of 219,689 common shares in IsoEnergy. The fair value of the IsoEnergy Debentures on issuance date was determined to be $7,630 (US$5,820). During the period ended June 30, 2022, IsoEnergy issued 29,644 shares for a value of $96 and paid $233 associated with the interest payment.

The IsoEnergy Debentures were valued using a convertible bond pricing model based on a system of two   Black-Scholes equations where the debt and equity components are separately valued based on different default risks and assumptions. The inputs used in the pricing model as at June 30, 2022 and December 31, 2021 are as follows:

 

		June 30, 2022				December 31, 2021
Volatility			53.13%				50.00%
Expected life			3.1 years				3.6 years
Risk free interest rate			3.52%				1.78%
Expected dividend yield			0%				0%
Credit spread			25.84%				21.86%
Underlying share price of IsoEnergy			$3.10				$3.74
Conversion exercise price			$0.88				$0.88
Exchange rate (C$:US$)			$0.777				$                   0.791

 

9.

LEASES

 

(a)	Right-of-use assets

 

		June 30, 2022				December 31, 2021
Right-of-use assets, beginning of period		$	2,640			$                    3,544
Additions			-			29
Disposals			-			(147)
Depreciation			(339)			(786)
Balance, end of period		$	2,301			$                    2,640

The right-of-use assets recognized by the Company are comprised of $2,301 (December 31, 2021 - $2,640) related to corporate office leases and are included in the office, furniture and leasehold improvements category in Note 7.

 

(b)	Lease liabilities

 

		June 30, 2022				December 31, 2021
Lease liabilities, beginning of period		$	3,169			$                    4,031
Terminations			-			(124)
Interest expense on lease liabilities			110			265
Payment of lease liabilities			(456)			(1,003)
Balance, end of period		$	2,823			$                    3,169
Current portion			737			706
Non-current portion			2,086			2,463
Balance, end of period		$	2,823			$                    3,169

 

12

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

The undiscounted value of the lease liabilities as at June 30, 2022 was $4,593 (December 31, 2021 - $5,268).

 

(c)	Amounts recognized in consolidated statements of net income (loss)

 

		Three months ended June 30,								Six months ended June 30,
		2022				2021				2022				2021
Expense relating to variable lease payments		$	104			$	112			$	208			$	224

The Company engages drilling companies to carry out its drilling programs on its development, exploration and evaluation properties. The drilling companies provide all required equipment for these drilling programs. These contracts are short-term in nature and the Company has elected not to recognize right-of-use assets and associated lease liabilities in respect to these contracts but rather to recognize lease payments associated with these leases as incurred over the lease term. Payments by the Company to the drilling companies for the three and six months ended June 30, 2022 were $0.1 million and $2.3 million, respectively (three and six months ended June 30, 2021 - $nil).

 

10.	SHARE CAPITAL

 

(a)	Authorized capital

Unlimited common shares without par value.

Unlimited preferred shares without par value.

Share issuances for the six months ended June 30, 2022:

During the six months ended June 30, 2022, the Company issued 183,332 shares on the exercise of stock options for gross proceeds of $604 (Note 10(b)).

On June 10, 2022, the Company issued 42,252 shares relating to the interest payment on the 2020 Debentures at a fair value of $251 (Note 8).

Share issuances for the year ended December 31, 2021:

On February 3, 2021 and February 23, 2021, the Company issued an aggregate of 200,000 common shares to arm’s length parties to advance the development of the Rook I property at a fair value of $900.

On February 18, 2021 and February 23, 2021, the Company issued 25,794,247 and 22,289,088 common shares relating to the conversion of the principal of the 2016 and 2017 Debentures at a fair value of $125,059 and $105,242, respectively. In addition, 89,729 and 87,316 common shares were issued relating to the accrued and unpaid interest up to the date of conversion for the 2016 and 2017 Debentures at a fair value of $407 and $441, respectively.

On March 11, 2021, the Company completed a bought deal financing where 33,400,000 common shares of the Company were issued at a price of $4.50 per common share (the “Offering Price”) for gross proceeds of approximately $150,300. On March 16, 2021, the Company closed the over-allotment of 5,010,000 common shares of the Company at the Offering Price for additional proceeds of $22,545. In connection with the financing, $9,590 was incurred for share issue costs.

On June 10, 2021, the Company issued 40,829 shares relating to the interest payment on the 2020 Debentures at a fair value of $238.

On June 30, 2021, the Company issued 400,000 common shares at a price of AUD $5.60 for total proceeds of $2,074 in relation to its public listing on the ASX. In connection with the financing, $1,035 was incurred for share issuance costs.

On December 10, 2021, the Company issued 36,818 shares relating to the interest payment on the 2020 Debentures at a fair value of $202.

 

13

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

(b)	Share options

Pursuant to the Company’s stock option plan, directors may, from time to time, authorize the issuance of options to directors, officers, employees and consultants of the Company, enabling them to acquire up to 20% of the issued and outstanding common shares of the Company.

The options can be granted for a maximum term of 10 years and are subject to vesting provisions as determined by the Board of Directors of the Company.

A summary of the changes in the share options is presented below:

 

		Options outstanding				Weighted average exercise price (C$)
At December 31, 2020			36,473,162			$	2.47
Granted			17,400,000				5.61
Exercised			(10,020,001)				2.59
Expired			(266,666)				2.18
Forfeited			(150,001)				5.84
At December 31, 2021			43,436,494			$	3.69
Granted			94,277				5.76
Exercised			(183,332)				3.28
Expired			(33,334)				5.44
Forfeited			(180,001)				5.33
At June 30, 2022 – Outstanding			43,134,104			$	3.69
At June 30, 2022 – Exercisable			33,409,824			$	3.25

The following table summarizes information about the exercisable share options outstanding as at June 30, 2022:

 

				Number of share options outstanding						Number of share options exercisable				Exercise prices (C$)		Remaining contractual life (years)		Expiry date
					2,405,000					2,405,000				3.39		0.46		December 14, 2022
					75,000					75,000				2.39		0.79		April 13, 2023
					3,450,000					3,450,000				2.85		0.94		June 8, 2023
					100,000					100,000				2.66		0.97		June 20, 2023
					720,482					720,482				2.49		1.14		August 21, 2023
					2,300,000					2,300,000				2.41		1.50		December 31, 2023
					500,000					500,000				2.27		1.73		March 21, 2024
					250,000					250,000				2.22		1.74		March 27, 2024
					3,250,000					3,250,000				1.92		1.95		June 12, 2024
					188,679					188,679				1.59		2.13		August 16, 2024
					3,667,334					3,667,334				1.59		2.49		December 24, 2024
					4,375,000					4,375,000				1.80		2.95		June 12, 2025
					4,796,666					3,186,659				3.24		3.45		December 11, 2025
					250,000					166,667				5.16		3.64		February 16, 2026
					650,000					433,335				4.53		3.75		April 1, 2026
					8,913,332					5,946,666				5.84		3.95		June 10, 2026
					7,148,334					2,395,002				5.44		4.46		December 14, 2026
					94,277					-				5.76		4.56		January 18, 2027
					43,134,104					33,409,824

 

14

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

The following weighted average assumptions were used for Black-Scholes valuation of the share options granted:

 

		For the three months ended June 30,										For the six months ended June 30,
		2022		2021								2022				2021
Expected stock price volatility		-			60.06%								60.95%				60.10%
Expected life of options		-			5 years								5 years				5 years
Risk free interest rate		-			0.86%								1.68%				0.86%
Expected forfeitures		-			0%								0%				0%
Expected dividend yield		-			0%								0%				0%
Weighted average fair value per option granted in period		-			$2.93								$3.02				$2.92
Weighted average exercise price		-			$5.75								$5.76				$5.74

Share-based payments for options vested for the three and six months ended June 30, 2022 amounted to $7,383 and $15,903, respectively (three and six months ended June 30, 2021 – $13,444 and $15,831) of which $6,340 and $13,736, respectively (three and six months ended June 30, 2021 – $11,381 and $13,578) was expensed to the statement of net income (loss) and comprehensive income (loss) and $1,043 and $2,167, respectively (three and six months ended June 30, 2021 - $2,063 and $2,253) was capitalized to exploration and evaluation assets (Note 6).

 

11.	SUPPLEMENTAL CASH FLOW INFORMATION

The Company did not have any cash equivalents as at June 30, 2022 and December 31, 2021.

 

a)	Schedule of non-cash investing and financing activities:

 

		Three months ended June 30,								Six months ended June 30,
		2022				2021				2022				2021
Capitalized share-based payments		$	1,043			$	2,063			$	2,167			$	2,253
Exploration and evaluation asset expenditures included in accounts payable and accrued liabilities			(1,792)				927				5,750				3,456
Interest expense included in accounts payable and accrued liabilities			(441)				(363)				77				77
Share consideration on sale of properties			-				2,068				-				2,068

 

12.	RELATED PARTY TRANSACTIONS

The remuneration of key management which includes directors and management personnel responsible for planning, directing, and controlling the activities of the Company during the period was as follows:

 

		For the three months ended June 30,												For the six months ended June 30,
		2022				2021								2022				2021
Short-term compensation(1)		$	1,014			$	1,789							$	1,989			$	2,437
Share-based payments(2)			5,928				11,615								12,777				13,263
Consulting fees(3) (4)			55				34								166				67
		$	6,997			$	13,438							$	4,932			$	15,767

⁽¹⁾ Short-term compensation to key management personnel for the three and six months ended June 30, 2022 amounted to $1,014 and $1,989 (2021 - $1,789 and $2,437) of which $961 and $1,886 (2021 - $1,638 and $2,236) was expensed and included in salaries, benefits, and directors’ fees on the statement of net income (loss) and comprehensive income (loss). The remaining $53 and $103 (2021 - $151 and $201) was capitalized to exploration and evaluation assets.

 

15

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

⁽²⁾ Share-based payments to key management personnel for the three and six months ended June 30, 2022 amounted to $5,928 and $12,777 (2021 - $11,615 and $13,263) of which $5,805 and $12,529 (2021 - $11,255 and $12,889) was expensed and $123 and $248 (2021 - $360 and $374) was capitalized to exploration and evaluation assets.

⁽³⁾ The Company used consulting services from a company associated with one of its directors in relation to advice on corporate matters for the three and six months ended June 30, 2022 amounting to $32 and $65 (2021 - $32 and $65).

⁽⁴⁾ The Company used consulting services from a company associated with one of its employees in relation to various studies for the three and six months ended June 30, 2022 amounting to $23 and $101 (2021 - $nil and $nil).

As at June 30, 2022, there was $47 (December 31, 2021 - $58) included in accounts payable and accrued liabilities owing to its directors and officers for compensation.

 

13.	CAPITAL MANAGEMENT

The Company manages its capital structure and adjusts it, based on the funds available to the Company, to support the acquisition, exploration, development and evaluation of assets. To effectively manage the entity’s capital requirements, the Company has in place a planning, budgeting, and forecasting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain the future development of the business.

In the management of capital, the Company considers all components of equity and debt, net of cash, and is dependent on third party financing, whether through debt, equity, or other means. Although the Company has been successful in raising funds to date, there is no assurance that the Company will be successful in obtaining required financing in the future or that such financing will be available on terms acceptable to the Company.

The properties in which the Company currently has an interest are in the exploration and development stage. As such, the Company has historically relied on the equity markets and convertible debt to fund its activities. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it determines that there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

The Company is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the period.

In the management of capital, the Company includes the components of equity, and convertible debentures, net of cash.

Capital, as defined above, is summarized in the following table:

 

		June 30, 2022				December 31, 2021
Equity		$	463,355			$	461,348
Convertible debentures (Note 8)			61,716				72,011
			525,071				533,359
Less: Cash			(161,237)				(201,804)
		$	363,834			$	331,555

 

14.	FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company’s financial instruments consist of cash, marketable securities, amounts receivable, accounts payable and accrued liabilities and convertible debentures.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values.

 

16

NexGen Energy Ltd.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(expressed in thousands of Canadian dollars, except as otherwise stated) - Unaudited

 

 

The three levels of the fair value hierarchy are:

 

●

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities

 

●

Level 2 – inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

 

●

Level 3 – inputs that are not based on observable market data.

The fair values of the Company’s cash, amounts receivable, and accounts payable and accrued liabilities approximate their carrying values due to their short-term nature.

The marketable securities are re-measured at fair value at each reporting date with any change in fair value recognized in other comprehensive income (loss) (Note 5). The marketable securities are classified as Level 1.

The convertible debentures are re-measured at fair value at each reporting date with any change in fair value recognized in the consolidated statement of net income (loss) with the exception that under IFRS 9, the change in fair value that is attributable to change in credit risk is presented in other comprehensive income (loss) (Note 8). The convertible debentures are classified as Level 2.

Financial Risk

The Company is exposed to varying degrees of a variety of financial instrument-related risks. The Board approves and monitors the risk management processes, controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Financial instruments potentially subject to credit risk are cash and amounts receivable. The Company holds cash with large Canadian banks. The Company’s amounts receivable consists of input tax credits receivable from the Government of Canada and interest accrued on cash. Accordingly, the Company does not believe it is subject to significant credit risk.

The Company’s maximum exposure to credit risk is as follows:

 

		June 30, 2022				December 31, 2021
Cash		$	161,237			$	201,804
Amounts receivable			862				1,178
		$	162,099			$	202,982

Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity requirements are managed based on expected cash flows to ensure that there is sufficient capital to meet short-term obligations. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at June 30, 2022, NexGen had cash of $161,237 to settle current liabilities of $13,475.

The Company’s significant undiscounted commitments at June 30, 2022 are as follows:

 

		Less than 1 year				1 to 3 years				4 to 5 years				Over 5 years				Total
Trade and other payables		$	12,738			$	-			$	-			$	-			$	12,738
Convertible debentures (Note 8)			-				61,716				-				-				61,716
Lease liabilities (Note 9)			1,346				3,247				-				-				4,593
		$	14,084			$	64,963			$	-			$	-			$	79,047

 

17