The ASX uranium share Nexgen Energy (Canada) CDI (ASX: NXG) could be one of the most compelling ASX energy shares to own for the long term. It's one of the picks by fund manager L1 Capital for a few different reasons.
The fund manager points out that nuclear energy has not been a global focus over the last few decades following safety incidents in Chernobyl, Fukushima, and Three Mile Island, which led to a declining public perception and increasing regulatory burden. There were also rising capital requirements and cost overruns.
But, there has been another shift as power generation requirements grow, particularly with the emergence of data centres and AI. L1 says that nuclear energy is "carbon free, firm, reliable, safe, not weather or local resource dependent and land efficient". It is a contender to be a major source of baseload power that can complement the volatility in output from renewables.
Countries and companies appear to be signing on to using nuclear energy, which could benefit the ASX uranium share.
In 2023, more than 20 countries (including France, the UK, and South Korea) issued a declaration to triple nuclear capacity by 2050. This year (2025), US President Trump signed several executive orders promoting nuclear, including a target to quadruple US nuclear capacity by 2050.
Names like Microsoft, Alphabet, Amazon, and Meta Platforms have all signed deals regarding the utilisation of nuclear energy.
Let's take a look at why Nexgen Energy shares specifically are a compelling pick.
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How the ASX uranium share could benefit from nuclear energy
Nexgen has a market capitalisation of around C$8 billion, and it's predicted by L1 to generate annual post-tax cash generation of around C$1.7 billion and annual operating profit (EBITDA) of approximately C$2.8 billion once its uranium project is operational. Those projections use a price of US$80 per pound of uranium, which is lower than the current price.
L1 believes the uranium price could rise "significantly" in the coming years as a result of increasing national competition for uranium.
Nexgen owns 100% of Rook I, where it is preparing to develop the world's largest undeveloped uranium deposit, called Arrow, in Saskatchewan, Canada.
It has the potential to produce around 29 million pounds of uranium for the first five years, making it the largest uranium mine globally. It's also expected to have very low operating costs compared to the rest of the sector.
L1 also pointed out longer-term potential of a new deposit that has recently been found:
A recent new material development has been the discovery of a brand-new deposit, Patterson Corridor East (PCE), which is 3.5km from the Arrow deposit. While it remains early stage, significant mineralisation zones have been confirmed (600m strike x 600m depth), with drill results indicating pockets of extremely high-grade mineralisation. It is very possible that PCE is another Arrow style deposit, very proximate to the existing mill, providing long term optionality for more production (optimise grade) or life extensions.
Overall, this ASX uranium share appears to have a very promising future, and it's one I intend to keep a close eye on.
