Yellow Cake PLC on Wednesday predicted U308 prices to remain high due to ongoing shortages, as the company said shareholders would benefit into for the foreseeable future.
Yellowcake, a Jersey-based uranium investor, was founded by Bacchus Capital Advisers in 2018.
The uranium spot-price increased 24% to $91.00 per pound on December 31 from $73.50 in September, the company said, going by figures from UxC LLC. This has since increased to a current price of $105.00 per pound.
As a result, the company experienced a corresponding 24% increase in the value of its U308 holdings to $1.83 billion from UD1.48 billion between September and December. Estimated net asset value per share increased 15% over the quarter to 7.11 pence.
Yellow Cake said that the global market for uranium remains ‘supply constrained’, as limited supply from inventories, geopolitical issues, delays in production ramp-ups and increasing demand will continue to exert ‘upward pressure’ on uranium prices in the near- to medium-term.
In October, the company completed an oversubscribed share placing, raising proceeds of around £103 million through the issue of 18.7 million new shares with existing and new investors at a price of £5.50 per share.
Following the placing, Yellow Cake informed National Atomic Co Kazatomprom JSC, Kazakhstan’s national operator for the import and export of uranium, that it had chosen to purchase 1.5 million pounds of U308 for an aggregate price of $100.0 million or $65.50 per pound. This exercised the entirety of the company’s purchase options under a 2022 framework agreement with Kazatomprom.
On Wednesday, Yellow Cake said that it expects this delivery to take place in June 2024, following which it will hold 21.68 million pounds of U308.
Assuming the successful delivery by Kazatomprom, and a spot price of $105.00 per pound, the company’s estimated pro forma net asset value on Tuesday was £8.40 per share, or $2.31 billion in total.
Chief Executive Officer Andre Liebenberg said: ‘We were proud to pass the considerable milestone of a $2 billion market value, up from $200 million when we first listed in 2018. Since then, we have remained committed to our stated strategy and delivered significant value to our shareholders through the buying and holding of physical uranium.
‘The uranium market is still under stress, driven by limited supply as a result of geopolitical factors and project ramp-up delays, alongside rising demand as nuclear power gains market share worldwide due to the need to decarbonise our energy supply. We remain confident in the outlook for uranium and for Yellow Cake.’
Shares in Yellow Cake were up 0.9% at 720.50 pence each in London on Wednesday morning.
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