Yellow Cake 'delighted' at IPO success and uranium market strength

Uranium storage company Yellow Cake on Wednesday predicted the uranium market’s strength will continue beyond the third quarter due to demand from Asia.

The company, which raised $200m when it joined the AIM market in July, said the value of its physical uranium had increased by 29.6% to $230.9m since flotation as the spot price rose from $22.85 per pound to $27.35.

Andre Liebenberg, chief executive of Yellow Cake, said: "We were delighted with the success of our listing and are pleased with the strong start we have made as a public company. The IPO of Yellow Cake clearly highlighted the significant emerging interest in uranium as a commodity."

The price of uranium has increased as Japan restarts its nuclear power stations, with nine now operating and a further six having gained approval for operations, and China’s nuclear programme expands, with 15 nuclear reactors currently under construction in the nation.

"With new-build nuclear power capacity outpacing closures, demand for uranium is expected to remain strong long into the future. The combination of constrained supply and the run-off of long-term contracts, means we remain positive on the outlook for the uranium price," said Liebenberg.

Liebenberg added that the board remain confident in the investment case for uranium, as the industry possesses "very attractive long-term fundamentals and high barriers to entry".

Broker Berenberg commented that the uranium price is "accelerating quicker than we could have expected", making previous analysis of Yellow Cake appear "a little conservative".

Yellow Cake’s shares were up 1.67% at 244.00p at 1211 BST.