NexGen Energy Ltd. Annual Report - Your Investor's Guide

Welcome to your comprehensive guide to NexGen Energy Ltd.'s annual report. This summary distills the company's performance over the past year, offering clear insights for current and prospective investors. We'll navigate the key financial and operational highlights in straightforward language, ensuring you grasp the essential details.

Who is NexGen Energy? Developing Tomorrow's Uranium

NexGen Energy Ltd. is a Canadian company focused on developing future uranium mines. Its primary asset is the Rook I Project, which includes the high-grade Arrow Deposit in Saskatchewan, Canada. As an exploration and development company, NexGen currently invests heavily in defining its mineral resources and moving towards construction and eventual production, as it is not yet generating significant revenue from mining operations. Its strategy revolves around advancing the Rook I Project to become a leading global supplier of uranium, a critical fuel for clean energy generation.

Understanding the Financials: The Big Picture

All financial figures presented are in millions of Canadian dollars (CAD). The financial statements cover the years ending December 31, 2025, and December 31, 2024.

KPMG LLP, the company's independent auditors, issued an unqualified opinion on NexGen Energy's financial statements and internal control systems for 2025. This signifies their confidence in the financial reports' accuracy and the company's robust financial controls. The auditors highlighted "Critical Audit Matters," which are areas requiring significant judgment. For NexGen, these included the valuation and existence of its uranium inventory. This is common for companies like NexGen and demonstrates the auditors' thoroughness in complex areas.

Financial Performance: A Deeper Dive into 2025

Turning to NexGen's financial performance, as an exploration and development company, it does not yet generate significant operating revenue. NexGen Energy reported a net loss of $309.7 million in 2025, a significant increase from the $77.6 million loss in 2024. This reflects the company's development stage, where expenditures often exceed revenues. As a result, the loss per share also increased from $0.14 in 2024 to $0.53 in 2025.

Several factors contributed to this increased loss:

• Operating Costs: Operating expenses rose. Salaries, benefits, and directors’ fees increased slightly to $14.6 million (from $13.8 million), while office, administrative, and travel expenses rose to $23.0 million (from $20.4 million). Share-based payments (compensation in company shares for all employees) also increased notably, reaching $38.2 million in 2025 compared to $29.5 million in 2024.
• Convertible Debentures: Convertible debentures (bonds convertible into shares) significantly impacted results. In 2024, the company recorded an $18.4 million 'mark-to-market' gain on these debentures, which reversed into a $78.2 million loss in 2025. Mark-to-market adjustments reflect changes in the debentures' fair value, often influenced by the company's share price or interest rates, and are typically non-cash accounting adjustments. Interest paid on these debentures also increased significantly to $46.4 million in 2025 from $32.5 million in 2024.
• Investment Impairment: A significant new impact was an $81.0 million 'impairment loss on investment in associate' in 2025. This means NexGen reduced the recorded value of an investment in another company (likely a resource or related firm) due to a significant decline in its market value or future prospects. The company also incurred an $11.5 million 'loss on dilution' from this associate, up from $0.1 million in 2024. This indicates a decrease in NexGen's ownership percentage, likely due to the associate issuing new shares.
• Other Factors: Additionally, finance income (earnings from investments) decreased, and the company experienced a swing from a foreign exchange gain to a loss.

Balance Sheet Snapshot: What NexGen Owns and Owes

Despite the increased net loss, NexGen's balance sheet reflects significant overall financial growth:

• Overall Growth: Total assets grew substantially to $2.47 billion in 2025, up from $1.66 billion in 2024, reflecting ongoing investment in the Rook I Project.
• Strong Cash Position: The company's cash balance significantly strengthened, rising to $802.6 million in 2025 from $476.6 million in 2024. NexGen also initiated 'short-term investments,' holding $321.1 million in 2025 compared to none in 2024. This demonstrates successful capital raises and a robust liquidity position to fund future development.
• Investing in the Future: A significant portion of assets is in 'Exploration and evaluation assets,' which grew substantially to $812.3 million in 2025 from $584.9 million in 2024. This represents the company's core investment in discovering and developing future uranium mines, primarily the Rook I Project.
• Strategic Uranium Inventory: NexGen holds $341.2 million in 'strategic inventory' (natural uranium concentrate), purchased in May 2024. This inventory provides NexGen flexibility to capitalize on future uranium market opportunities or fulfill potential sales contracts.
• Investment in Associate: 'Investment in associate' decreased to $153.8 million from $229.6 million, primarily due to the $81.0 million impairment loss previously discussed.
• Liabilities: What NexGen Owes: Total liabilities also increased to $640.8 million in 2025 from $478.2 million in 2024. A notable increase occurred in 'current convertible debentures,' which reached $586.2 million (up from $455.8 million). The "current" classification indicates a significant portion of these debentures matures within the next year. Investors should monitor this, as repayment in cash could impact cash flow, or conversion into equity could lead to significant share dilution.
• Shareholder Equity: Total equity (shareholders' ownership) increased to $1.83 billion from $1.18 billion. This increase primarily stems from a substantial boost in 'share capital' (funds raised from issuing new shares), which grew from $1.41 billion to $2.38 billion. However, the 'accumulated deficit' (total past losses) also grew significantly to $691.2 million from $381.6 million, reflecting this year's substantial loss.

Cash Flow Insights: How Money Moves

While the income statement reports losses, the cash flow statement offers a clearer perspective on NexGen's liquidity management:

• Cash Flow from Operations: As an exploration and development company, NexGen typically experiences negative cash flow from operations, meaning it spends more cash on day-to-day activities than it generates. This is expected given its current development stage.
• Cash Flow from Investing: The company deployed significant cash for investing activities, primarily for developing its exploration and evaluation assets (Rook I Project) and purchasing its strategic uranium inventory.
• Cash Flow from Financing: NexGen successfully raised substantial capital through financing activities, primarily by issuing new shares and potentially new debt. This explains the significant increase in its cash balance and demonstrates its ability to attract funding for its large-scale project.

Management Compensation & Related-Party Transactions

This section details NexGen Energy's executive compensation and certain operational costs.

Consulting Fees: NexGen paid consulting fees for corporate advice to a firm connected to one of its directors. These fees were recorded as a regular business expense under "professional fees and insurance." Transactions with entities related to directors often face scrutiny for transparency.

Key Management Compensation: This refers to compensation paid to NexGen Energy's key management personnel (top executives and decision-makers). All figures below are in millions of Canadian dollars.

• Short-term Compensation: This includes salaries and bonuses.

  • In 2025, total short-term pay for key management was $5.95 million, a slight decrease from $6.03 million in 2024.
  • Most of this, $5.49 million in 2025 (down from $6.03 million in 2024), was "expensed," meaning it was recognized immediately as a cost, reducing the company's profit for that year.
  • A small portion, $0.46 million in 2025 (compared to nil in 2024), was "capitalized," meaning it was added to the value of exploration and evaluation assets. This treats it as an investment in future projects rather than an immediate cost, reflecting NexGen's view that these management efforts directly contribute to mining project development.

• Share-based Payments: This compensation, paid in company shares or stock options, aligns management's interests with shareholders.

  • In 2025, these payments amounted to $32.40 million, a notable increase from $24.75 million in 2024.
  • Similar to short-term pay, most of this ($30.49 million in 2025, up from $24.75 million in 2024) was expensed.
  • A portion of $1.91 million in 2025 (compared to nil in 2024) was also capitalized to exploration and evaluation assets.

Key Risks & The Road Ahead

Investing in NexGen Energy involves specific risks inherent to the mining industry and its development stage:

• Commodity Price Risk: NexGen's future profitability heavily depends on uranium prices. Significant fluctuations could impact project economics.
• Development & Permitting Risk: Advancing the Rook I Project from exploration to production involves complex technical challenges, significant capital expenditure, and numerous regulatory approvals and permits. Delays or unexpected costs could impact timelines and financial projections.
• Financing Risk: While NexGen maintains a strong cash position, the full development of a large-scale mine requires substantial ongoing capital. The company will need to secure additional financing, which could lead to further share dilution or increased debt.
• Exploration & Resource Risk: While the Arrow Deposit is high-grade, inherent uncertainty exists in resource estimates and the ability to extract them economically.
• Environmental & Social Risk: Mining projects face scrutiny regarding environmental impact and relationships with local communities and Indigenous groups.

Looking ahead, NexGen Energy continues to focus on advancing the Rook I Project. Key milestones include completing definitive feasibility studies, securing environmental assessments and permits, and ultimately making a construction decision. The company's substantial cash reserves and strategic uranium inventory position it well to navigate these development phases. However, investors should monitor progress on these fronts and the evolving uranium market.

Competitive Position

NexGen Energy operates within the global uranium mining industry, characterized by a relatively small number of major producers and a pipeline of development projects. The company's primary competitive advantage stems from the Rook I Project's Arrow Deposit, recognized as one of the highest-grade and largest undeveloped uranium deposits globally. This high-grade nature is anticipated to translate into lower operating costs once in production, positioning NexGen favorably on the industry's cost curve.

Furthermore, the project's location in Canada's Athabasca Basin, Saskatchewan, offers significant advantages, including a well-established mining jurisdiction with supportive infrastructure, skilled labor, and a proven regulatory framework for uranium production. This geographic advantage, coupled with the deposit's geological characteristics, differentiates NexGen from many other development-stage uranium companies. The company's strategic acquisition of a uranium inventory also provides flexibility and potential leverage in future market conditions, distinguishing it from peers solely focused on exploration. While the uranium market is competitive, NexGen aims to become a significant, low-cost producer, leveraging its unique asset quality to compete effectively with established players and other emerging projects.

In Summary

NexGen Energy Ltd. is in a significant growth phase, heavily investing in its future. While it reported a larger net loss in 2025, this primarily stems from non-cash accounting adjustments and substantial investments in its core assets, including the Rook I Project and strategic uranium inventory. The company maintains a strong cash position and has successfully raised significant capital. However, investors should be mindful of the substantial current convertible debentures and the inherent risks associated with developing a major mining project, particularly its reliance on future uranium prices and the need for additional financing.