Yellow Cake reports rise in value of uranium held

Long-term uranium investor Yellow Cake reported an estimated net asset value at the end of the March quarter of £4.42 per share, or $1.07bn, in an update on Wednesday.

The AIM-traded firm said that it consisted of 15.83 million pounds of triuranium octoxide, valued at a spot price of $57.90 per pound, and cash and other current assets and liabilities of $152.3m.

It said the value of triuranium octoxide it held increased 38% over the quarter, to $916.7m as at 31 March from $665m as at 31 December.

Yellow Cake said it had entered into two agreements for the purchase of uranium which, when completed, would increase its holdings to 18.81 million pounds of triuranium octoxide.

Under Kazatomprom's October offer, the firm said it had agreed to purchase 0.95 million pounds of triuranium octoxide at a price of $47.58 per pound, for delivery to the Cameco storage facility in Canada by June.

It also exercised its buyback option with Kazatomprom to acquire 2,022,846 pounds of triuranium octoxide for $43.25 per pound, for delivery to Cameco between April and May.

The purchases would be funded with cash at the bank, earmarked for the purpose.

Yellow Cake said its estimated pro forma net asset value on 26 April was £4.40 per share, or $1.02bn, assuming 18.81 million pounds of triuranium octoxide valued at a spot price of $53 per pound, as well as cash and other current assets and liabilities.

The company said its operations, financial condition and ability to take delivery from Kazatomprom, or any other party, remained unaffected by Russia’s ongoing invasion of Ukraine.

All triuranium octoxide to which it had title and had paid for was held at the Cameco storage facility in Canada and the Orano storage facility in France.

While part of Kazatomprom's production was transported through Russia, the company said it was unaware of any restrictions on Kazatomprom's activities related to the supply of its products to end customers, adding that it did not anticipate any material delays to scheduled deliveries.

The company said it did not expect any restrictions on being able to make further purchases under its option agreement with Kazatomprom.

“The outlook for uranium continued to improve in the quarter and with it, our confidence in the case for investing in the commodity,” said chief executive officer Andre Liebenberg.

“That confidence is based on the very clear supply demand characteristics that look set to support the long-term fundamentals for uranium, further endorsed by the considerable global momentum behind nuclear energy as an ever more important source of clean energy generation.

“On the supply side, we continue to forecast a prolonged deficit as production remains constrained, exacerbated by the likelihood of Western-aligned markets cutting reliance on Russian enrichment.”

Liebenberg said that on the demand side, the company noted recent analysis by the International Energy Agency reinforcing the expectation that world nuclear generation capacity would increase “significantly” by 2050, facilitated by new reactors coming online.

“This was illustrated most recently by the UK government's ‘British Energy Security Strategy’, which set out an ambitious nuclear power programme including the development of 24 gigawatts of nuclear capacity by 2050.

“Yellow Cake is ideally placed to benefit from these market dynamics.”

At 1039 BST, shares in Yellow Cake were flat at 400.19p.