Yellow Cake confident despite fall in uranium prices

Yellow Cake, a specialist company holding physical uranium for long-term investment, reported a 4.4% decrease in the value of its uranium holdings during the September quarter on Monday.

The AIM-traded firm said the decline mirrored a drop in the uranium spot price, which fell from $85.50 per pound at the end of June, to $81.75 per pound by the close of the quarter on 30 September.

However, since the quarter ended, the spot price had seen a recovery to $83.25 per pound.

The company said its uranium holdings, valued at $1.77bn at the end of September, were down from $1.85bn in June.

Correspondingly, Yellow Cake's estimated net asset value per share decreased by 10.1%, from 686p to 617p, driven by the declining uranium price and sterling appreciation.

Market activity in the uranium sector was seeing increased engagement from financial entities and utilities, as Kazakhstan’s production continued to face challenges.

Further downgrades in Kazatomprom’s production guidance for 2025 could increase spot market demand in the near term.

However, Yellow Cake said utility contracting, particularly in the US, remained subdued as companies seek waivers related to new Russian nuclear fuel ban legislation.

Yellow Cake said its uranium holdings are securely stored at facilities in Canada and France, with an estimated net asset value of 646p per share as of 18 October.

“Though the uranium spot price remains subdued from its January highs, we remain very optimistic about the medium term sector fundamentals,” said chief executive officer Andre Liebenberg.

“Demand for uranium is growing driven by improving awareness of the need for nuclear power as part of the future energy mix, while nuclear power is also seen as critical to supporting the artificial intelligence boom and the development of hyperscale data centres.

“Microsoft, for example, recently signed an agreement with Constellation Energy to purchase energy from the Three Mile Island Unit 1 nuclear plant in Pennsylvania.”

Liebenberg added that Amazon announced three new agreements to support the development of nuclear energy projects, including the construction of several new small modular reactors.

“We are also seeing a fundamental global shortage of uranium while in the US governmental actions including the total ban on Russian nuclear fuel imports, subject to potential waivers through 2027, and Chinese uranium products being added to the increased import tariff list potentially impacting availability.

“These factors have exacerbated the already tight global uranium supply shortage, with primary mine supply of 140 million pounds some way behind fast-growing global annual demand of over 180 million pounds to fuel the world's nuclear reactors.

“We believe this presents an excellent opportunity for investors to increase their exposure to the commodity.”

At 1318 BST, shares in Yellow Cake were up 1.51% at 606p.

Reporting by Josh White for Sharecast.com.