Proactiveinvestors United Kingdom Yellow Cake PLC https://www.proactiveinvestors.co.uk Proactiveinvestors United Kingdom Yellow Cake PLC RSS feed en Mon, 22 Jul 2019 20:00:30 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190722174816_14158672/ Mon, 22 Jul 2019 17:48:16 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190722174816_14158672/ <![CDATA[News - Yellow Cake posts quarterly NAV update, sees positive developments in uranium market ]]> https://www.proactiveinvestors.co.uk/companies/news/224260/yellow-cake-posts-quarterly-nav-update-sees-positive-developments-in-uranium-market-224260.html Yellow Cake PLC (LON:YCA) has reported a net asset value of 218p per share as at 30 June 2019.

The valuation is derived primarily from a holding of 9.2mln pounds of physical uranium, worth US$24.70 at prevailing spot prices, but acquired at an average price of US$21.8 per pound.

WATCH: Price pullback gives Yellow Cake good opportunity to acquire additional uranium

The total portfolio valuation rings in at US$243.7mln.

During the quarter to June the company was able to raise £25.9mln and use the proceeds to buy 1.175mln pounds of uranium from Kazatomprom.

The successful conclusion to a recent investigation in the US into the uranium market provides a positive context for the company’s operations going forward, said chief executive Andre Liebenberg.

 

]]>
Mon, 22 Jul 2019 07:56:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/224260/yellow-cake-posts-quarterly-nav-update-sees-positive-developments-in-uranium-market-224260.html
<![CDATA[RNS press release - Quarterly Operating Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190722070005_14157124/ Mon, 22 Jul 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190722070005_14157124/ <![CDATA[RNS press release - Director Appointment ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190718070009_14153798/ Thu, 18 Jul 2019 07:00:09 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190718070009_14153798/ <![CDATA[News - Shining some light on the uranium market ]]> https://www.proactiveinvestors.co.uk/companies/news/224075/shining-some-light-on-the-uranium-market-224075.html The price of uranium could get its own ‘Trump bump’ in coming weeks after the US president declined to impose tariffs on imports of the radioactive metal.

Investors are hoping the so-called ‘232 decision’, named after the section of the US Trade Expansion Act that governs tariffs, will help pull the uranium market out of a period of uncertainty that has persisted over the last 18 months as investors fretted over the possibility of new restrictions. Colorado-based Energy Fuels Inc (TSE:EFR) (NYSEMKT:UUUU) was one of the instigators of the 232 decision.

WATCH: Energy Fuels commends President Trump's decision to review domestic uranium-supply solution

Andre Liebenberg, chief executive of uranium investment firm Yellow Cake PLC (LON:YCA), said that the move is expected to bring a return to “more measured” market activity, leaving the firm with a “highly confident” outlook of prices.

Uranium investors will be hoping for a recovery, as the spot price of uranium on Monday was languishing at around US$24.5 per pound (lb), down from around US$29 in January and well off the price of US$35.5 seen four years ago.

However, figuring out what moves the uranium price isn’t easy due to the disjointed nature of its market, which involves off-market deals between a cartel of companies and a network of uranium buyers in addition to day-to-day trading.

Who controls the supply?

The global uranium supply is dominated by a handful of producers which, as of 2017, made up 57% of total production.

The biggest player in the industry by far is Kazatomprom, a Kazakhstan state-backed mineral giant that contributed 20% of the world’s uranium output.

It is followed in second place by Cameco Corp (NYSE:CCJ), a Canada-based uranium miner that accounted for 15% of global production. Cameco also has controlling stakes in Cigar Lake and McArthur River, the world’s largest uranium mines.

Taking up the remaining spots in the top four are fellow Canadian firm Uranium One and French group Orano, which contribute 9% and 13% respectively.

There are also some familiar names further down the list, with FTSE 100 miners Rio Tinto PLC (LON:RIO) and BHP Group PLC (LON:BHP) collectively producing 8% of the world’s uranium.

However, while a Kazakh firm is the world’s biggest producer, the country itself only holds 14% of the global uranium resource, with Australia taking the top spot with 30%.

Languishing in fifteenth place is the US with around 1%, so it is perhaps not surprising that Trump would be hesitant about cutting off imports given the country’s limited supply and the importance of the metal to the military’s massive nuclear missile arsenal and as a power source for the reactors of its entire submarine and aircraft carrier fleet.

Long term vs spot pricing

Pricing uranium is a twofold process.

The first element is the spot price. This, in theory, is the daily price that reflects ongoing shifts in sentiment and to some extent trading on an open market between willing buyers and sellers.

Most non-mining companies that trade uranium, such as Yellow Cake, will often calculate their net asset value (NAV) based on this price.

The spot price is also sensitive to perceptions of supply and demand, with outages or production declines at the major uranium mines likely to move the needle.

However, it is widely known that most purchases of uranium are done away from the open market and on long-term fixed contract prices between the seller and the buyer.

These sellers, which are usually uranium miners, and the buyers, such as nuclear power plant operators, are under no obligation to reveal the price at which they trade, and they often don’t.

But a nuclear power station may want to secure a five or ten year supply at a price it has fixed in advance, giving it more security about the way it prices power for its customers.
If the spot price moves during the duration of these contracts, then that is just the good fortune of the party the price moves in favour of.

Most uranium trading is done in this more opaque market, hence using the spot to work out the uranium price can only ever be a guide.

The secondary market

As no new uranium mines are currently under construction, you’d think it would be easy to figure out the amount that is currently in the market, after all, you just need to know the resources within each of the existing mines.

However, it is not known exactly how much uranium is currently held in stockpiles by various countries.

This secondary uranium market often comes from former weapons-grade material or spent nuclear fuel left over from prior decades, particularly the Cold War.

Russia, for example, is expected to have a large amount of uranium stockpiled from the USSR days, and previous price rises have seen Moscow dumping part of their stash onto the market, which in turn depresses uranium’s value.

This mysterious Russian stockpile, coupled with a recent souring of the reputation of nuclear power following the Fukushima disaster in 2011, has depressed the price of uranium.

Uranium investing

With such an unclear (and some would say shadowy) market, how can an ordinary investor trade on the ups and downs of uranium?

This is where companies such as AIM-listed Yellow Cake come in.

READ: Yellow Cake welcomes US decision on uranium imports

Essentially, they buy and hold physical uranium in storage houses, akin to putting gold in a vault, and peg their NAV to the market’s spot price.

This provides shareholders with indirect exposure as the company is effectively acting as a proxy to fluctuations in the uranium price through its shares.

Yellow Cake isn’t the only firm to have adopted this model, with Toronto-listed Uranium Participation Corp (TSE:U) also offering investors the opportunity to indirectly hold uranium assets.

It is these companies that lie in wait for a value spike like that of 2007, when a flood at the Cigar Lake mine sent the spot price soaring 78% to US$135 per lb in six months.

However, with the current price about three quarters lower than that, they will need to be patient.

]]>
Wed, 17 Jul 2019 14:10:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/224075/shining-some-light-on-the-uranium-market-224075.html
<![CDATA[RNS press release - Result of AGM ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190717131713_14153261/ Wed, 17 Jul 2019 13:17:13 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190717131713_14153261/ <![CDATA[News - Yellow Cake welcomes US decision on uranium imports ]]> https://www.proactiveinvestors.co.uk/companies/news/223895/yellow-cake-welcomes-us-decision-on-uranium-imports-223895.html YellowCake PLC (LON:YCA) has welcomed the decision by US President Donald Trump not to impose any new trade restrictions on uranium imports into the US. 

The threat of action had created an 18-month period of uncertainty which has severely restricted activity in the uranium market, said Andre Liebenberg, chief executive.

Trump also announced the establishment of a United States Nuclear Fuel Working Group to examine the current state of US domestic nuclear fuel production.

“We view the decision that no new trade restrictions will be implemented at this stage as positive, and likely to support a return to more normal levels of activity. 

“We therefore expect a more measured return to market activity in the near term and remain highly confident in the long-term price outlook for uranium, and therefore in the Yellow Cake investment model." 

]]>
Mon, 15 Jul 2019 08:47:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/223895/yellow-cake-welcomes-us-decision-on-uranium-imports-223895.html
<![CDATA[RNS press release - Statement re: S.232 Decision on US Uranium Imports ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190715070005_14148495/ Mon, 15 Jul 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190715070005_14148495/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190705070004_14137684/ Fri, 05 Jul 2019 07:00:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190705070004_14137684/ <![CDATA[RNS press release - Notice of AGM and Publication of Annual Report ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190621070005_14119208/ Fri, 21 Jun 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190621070005_14119208/ <![CDATA[News - Yellow Cake books profit of nearly US$30mln in maiden full year financials following IPO ]]> https://www.proactiveinvestors.co.uk/companies/news/222301/yellow-cake-books-profit-of-nearly-us30mln-in-maiden-full-year-financials-following-ipo-222301.html Yellow Cake PLC (LON:YCA) increased the value of the uranium it holds for investment by 22% during the 15 month period from January 2018 to March 2019.

As at the end of March the value of the U3O8 held stood at US$217.4mln, as against the acquisition cost of US$178.2mln.

 

During the period Yellow Cake bought just over 8.4mln pounds of U3O8 from Kazakh uranium giant Kazatomprom.

The company sees a steady improvement in the market for U3O8, with the spot price increasing from US$22.85 at the time of the IPO in July 2018 to US$25.75 at the end of March 2019.

During the period Yellow Cake booked a profit of US$29.7mln.

Net assets rang in at US$2.93 per share.

Post-period, as at 31 May, the net asset value was slightly lower, at US$2.70 per share.

“We have been active in the market, acquiring additional uranium on three separate occasions following our admission to the AIM market, taking our total uranium holdings to nearly 10 million pounds, in line with the strategy we set out at the time of our IPO,” said Andre Liebenberg, chief exeutive of Yellow Cake.

“We continue to believe that the uranium market is structurally mis-priced and that prices will continue to rise in the long-term. Despite some continued volatility, market activity has justified our investment proposition, with the spot price increasing by 13% from USD22.85/lb at our IPO to USD25.75/lb at the end of March 2019. We continue to offer investors exposure to the uranium spot price without the operating risks associated with exploration, development and mining, and the market dynamics underpinning our thesis remain robust.”
 

 

]]>
Tue, 18 Jun 2019 07:45:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/222301/yellow-cake-books-profit-of-nearly-us30mln-in-maiden-full-year-financials-following-ipo-222301.html
<![CDATA[RNS press release - Final Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190618070009_14114110/ Tue, 18 Jun 2019 07:00:09 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190618070009_14114110/ <![CDATA[News - Yellow Cake offers "cleanest way to play uranium market" as it amasses a big pile of the radioactive metal ]]> https://www.proactiveinvestors.co.uk/companies/news/221655/yellow-cake-offers--cleanest-way-to-play-uranium-market--as-it-amasses-a-big-pile-of-the-radioactive-metal-221655.html Yellow Cake PLC (LON:YCA) is a physical uranium trader with a moniker that is a nickname for the radioactive metal, U3O8.

The group floated on AIM in July 2018 after raising US$200mln (£151mln) from the sale of 76mln new shares at 200p apiece in an initial public offering.

The firm is backed by Bacchus Capital, the corporate finance boutique set up in 2016 by a group of senior bankers led by Peter Bacchus.

The cash raised was used to buy 8.1mln pounds of uranium from Kazakstan’s state-owned firm, NAC Kazatomprom JSC, one of the world’s largest uranium producers. Yellow Cake paid US$21.01/lb (per pound), a discount of about 8% to the then spot price.

A uranium pile of that size, which cost around US$170mln, was equal to one quarter of Kazatomprom's annual production and approximately 5% of 2016 global marketed production.

In addition, the Kazatomprom contract allows Yellow Cake to buy up to an additional US$100mln of U3O8 each year for the next nine years.

How is it doing:

On 1 June 2019, Yellow Cake announced that it had taken delivery of a further shipment of 1.175mln pounds of uranium from Kazatomprom, after exercising its existing option.

The group said the uranium was delivered on 31 May and transferred to Yellow Cake at Cameco Corporation's Port Hope/Blind River facility in Ontario, Canada, where the material will be held in storage.

The total cost of that U3O8 purchase amounted to just over US$30mln. Following completion of the transaction Yellow Cake now owns around 9.62mln pounds of uranium.

On 12 April, the company said it had raised a further £25.9mln in a placing to buy the 1.175mln lbs of uranium from Kazatomprom at a price of US$25.88/lb.

In a trading update on 26 April, Yellow Cake had pointed out that a recent pullback in spot prices for uranium presented a good buying opportunity as it remained confident in the long-term outlook for the radioactive metal.

The global spot uranium price softened over the first three months of 2019 to end the quarter at US$25.75 per pound of U3O8, from US$28.50/lb three months before.

The price decline came after the US Department of Commerce (DOC) submitted a report to the White House about the impact of the importation of foreign-source uranium.

The US government had 90 days from the report’s submission to respond to the DOC report and either take no action or legislate, which could take the form of tariffs or quotas.

What the boss says - chief executive Andre Liebenberg

“The recent pullback in the uranium price has provided us with an excellent window to add to our uranium inventory at an attractive price.

“We are very confident in the long term fundamentals of the uranium market, where a combination of constrained supply, the run-off of long term contracts and growing demand outlook means we remain confident on the outlook for the uranium price."

Blue Sky:

In a recent note to clients, analysts at Numis Securities pointed out that the uranium price was slightly down in May through June to date, as the market remains quiet in advance of the US DOC Section 232 decision with regards to US uranium imports.

They said: “We believe that the fundamentals remain in place for a uranium price recovery, driven by utility contracting. Until such time that utilities have clarity on potential structural changes to Government legislation, they cannot confirm their future supply arrangement and thus the Section 232 investigation has paused the market.”

The analysts said they remain high conviction in their uranium thesis and sees Yellow Cake “as the cleanest way to play uranium with direct price exposure, without the inherent operating, permitting and jurisdiction risks inherent in miners.”

Numis reiterated a ‘buy’ rating and 300p price target on the stock based on a valuation on 1.1x net asset value (NAV) and its one-year average spot uranium price forecast of US$35 per pound.

Yellow Cake’s estimated net asset value stood at 224p at the end of the first quarter – before the April placing and uranium acquisition - compared to 253p at the end of December.

Yellow Cake shares were trading at 211.50p on 6 June, giving the group a market cap of around £192mln.

]]>
Thu, 06 Jun 2019 14:50:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/221655/yellow-cake-offers--cleanest-way-to-play-uranium-market--as-it-amasses-a-big-pile-of-the-radioactive-metal-221655.html
<![CDATA[News - Yellow Cake takes deliver of US$30mln uranium shipment ]]> https://www.proactiveinvestors.co.uk/companies/news/221370/yellow-cake-takes-deliver-of-us30mln-uranium-shipment-221370.html Yellow Cake PLC (LON:YCA) has taken delivery of a shipment of 1.175mln pounds of uranium from NAC Kazatomprom JSC.

The shipment comes after Yellow Cake exercised an existing option with Kazatomprom.

WATCH: Price pullback gives Yellow Cake good opportunity to acquire additional uranium

On 31 May 2019 the uranium was delivered and transferred to Yellow Cake at Cameco Corporation's Port Hope/Blind River facility in Ontario, Canada, where the material will be held in storage.

The total cost of this U3O8 purchase amounts to just over US$30mln.

Following completion of this transaction Yellow Cake owns around 9.62mln pounds of uranium.

 

 

]]>
Mon, 03 Jun 2019 08:34:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/221370/yellow-cake-takes-deliver-of-us30mln-uranium-shipment-221370.html
<![CDATA[RNS press release - Purchase of Additional Uranium ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190603070007_14095152/ Mon, 03 Jun 2019 07:00:07 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190603070007_14095152/ <![CDATA[RNS press release - Changes to the Board of Directors ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190531070004_14093280/ Fri, 31 May 2019 07:00:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190531070004_14093280/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190507070009_14063813/ Tue, 07 May 2019 07:00:09 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190507070009_14063813/ <![CDATA[Media files - Price pullback gives Yellow Cake good opportunity to acquire additional uranium ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/13170/price-pullback-gives-yellow-cake-good-opportunity-to-acquire-additional-uranium-13170.html Wed, 01 May 2019 13:05:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/13170/price-pullback-gives-yellow-cake-good-opportunity-to-acquire-additional-uranium-13170.html <![CDATA[News - Yellow Cake hails robust market fundamentals for uranium ]]> https://www.proactiveinvestors.co.uk/companies/news/219166/yellow-cake-hails-robust-market-fundamentals-for-uranium-219166.html Physical uranium stockpiler Yellow Cake PLC (LON:YCA) said the recent pullback in spot prices presented a good buying opportunity as it remained confident in the long-term outlook for the radioactive metal.

The global spot uranium price softened to end the quarter at US$25.75 per pound of U3O8, from US$28.50/lb three months before.

After the US Department of Commerce submitted a report to the White House about the impact of the importation of foreign-source uranium, Yellow Cake chief executive Andre Liebenberg said: "Our confidence in the long-term outlook for uranium is unchanged despite the short-term uncertainty created by the Section 232 investigation in the US.”

The US government has 90 days to respond to the report and either take no action or legislate, which could take the form of tariffs or quotas.

Robust fundamentals

“We see robust market fundamentals regardless of the outcome of the Section 232 investigation, where rising demand and constrained supply, together with the steady run-off of long-term contracts has created a positive price environment,” Liebenberg said. “The recent pullback in the uranium price provided us with a good opportunity to acquire additional uranium at a competitive price.”

Since the end of the first quarter, the company raised £25.9mln in a placing to buy 1.175mln lbs of uranium from Kazakstan’s state-owned NAC Kazatomprom JSC at a price of US$25.88/lb.

Before the purchase, Yellow Cake’s estimated net asset value stood at 224p at the end of the first quarter, compared to 253p at the end of December. The NAV is a premium of around 5% to the closing price on Thursday.

After the Kazatomprom deal, which was made as part of an option under a framework agreement that offers the option to hoover up to US$100mln each year until 2028, the company owns 9.62mln lbs of uranium, acquired at an average cost of US$21.68/lb.

]]>
Fri, 26 Apr 2019 08:49:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/219166/yellow-cake-hails-robust-market-fundamentals-for-uranium-219166.html
<![CDATA[RNS press release - Quarterly Operating Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190426070010_14052760/ Fri, 26 Apr 2019 07:00:10 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190426070010_14052760/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190418135229_14046793/ Thu, 18 Apr 2019 13:52:29 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190418135229_14046793/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190418112005_14046527/ Thu, 18 Apr 2019 11:20:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190418112005_14046527/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190417142530_14045079/ Wed, 17 Apr 2019 14:25:30 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190417142530_14045079/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190416070014_14042093/ Tue, 16 Apr 2019 07:00:14 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190416070014_14042093/ <![CDATA[News - Yellow Cake ups share placing to £25.9mln amid strong investor demand ]]> https://www.proactiveinvestors.co.uk/companies/news/218480/yellow-cake-ups-share-placing-to-259mln-amid-strong-investor-demand-218480.html Yellow Cake PLC (LON:YCA) is raising £25.9mln, increased from £22.9mln, through a share placing in order to fund the purchase of at least 1mln pounds of uranium.

The company, a vehicle specifically set up to acquire and own physical uranium as an investment strategy, upgraded the funding after the original offer (announced yesterday) saw strong investor demand.

Via a framework agreement with Kazatomprom – a Kazakstan state-owned miner and the world’s largest producer of natural uranium – the London listed firm can buy at a price of US$25.88 per pound, and, it has the option to acquire up to US$100mln worth of uranium during 2019.

WATCH: Yellow Cake gives investors unique exposure to uranium

Yellow Cake said that the current uranium price represents a “compelling buying opportunity” as it sees the opportunity to take advantage of power utilities’ currently cautious approach to purchasing ahead of action by the United States, in its investigation into uranium imports.

In a statement on Friday, chief executive Andre Liebenberg said: "We welcome the support from both our existing and new shareholders to enable us to increase the size of our fundraising and consequentially to now purchase 1.175 mmlb of uranium at the firm price of US$25.88 per pound.

“The recent pullback in the uranium price has provided us with an excellent window to add to our uranium inventory at an attractive price.

“We are very confident in the long term fundamentals of the uranium market, where a combination of constrained supply, the run-off of long term contracts and growing demand outlook means we remain confident on the outlook for the uranium price."

]]>
Fri, 12 Apr 2019 08:08:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218480/yellow-cake-ups-share-placing-to-259mln-amid-strong-investor-demand-218480.html
<![CDATA[RNS press release - Result of placing ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190412070005_14038596/ Fri, 12 Apr 2019 07:00:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190412070005_14038596/ <![CDATA[RNS press release - Proposed Uranium Purchase, Placing of New Shares ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190411164513_14038311/ Thu, 11 Apr 2019 16:45:13 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190411164513_14038311/ <![CDATA[RNS press release - Quarterly Operating Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190116070003_13935887/ Wed, 16 Jan 2019 07:00:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20190116070003_13935887/ <![CDATA[RNS press release - Half-year Report ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181126070007_13879419/ Mon, 26 Nov 2018 07:00:07 +0000 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181126070007_13879419/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181105090046_13854787/ Mon, 05 Nov 2018 09:00:46 +0000 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181105090046_13854787/ <![CDATA[RNS press release - Second Price Monitoring Extn ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181031164046_13850139/ Wed, 31 Oct 2018 16:40:46 +0000 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181031164046_13850139/ <![CDATA[RNS press release - Price Monitoring Extension ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181031163526_13850127/ Wed, 31 Oct 2018 16:35:26 +0000 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181031163526_13850127/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181018163600_13834524/ Thu, 18 Oct 2018 16:36:00 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181018163600_13834524/ <![CDATA[RNS press release - Price Monitoring Extension ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181017163520_13832899/ Wed, 17 Oct 2018 16:35:20 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181017163520_13832899/ <![CDATA[News - Yellow Cake offers investors direct exposure to physical uranium, and all its associated upside ]]> https://www.proactiveinvestors.co.uk/companies/news/206893/yellow-cake-offers-investors-direct-exposure-to-physical-uranium-and-all-its-associated-upside-206893.html Nearly half of uranium production doesn’t make money at the prevailing spot price. That’s the startling statistic highlighted by Andre Liebenberg, the chief executive of Yellow Cake PLC (LON:YCA).

Yellow Cake has been set up to provide investors with a clean entry point into what has hitherto been a pretty opaque market. What really is the true price of uranium? There’s the spot price, of course, but that really only tells half, or even less than half, the story.

WATCH: Yellow Cake Plc giving investors unique exposure to uranium price

Most uranium production is actually locked into long-term contracts, which is why it can afford to keep going even with the uranium price still trading at under US$30 per pound.

When those contracts are up, though, the chances are the production will be idled, and that in turn is likely to lead to an increase in price as supply dwindles.

It will be an interesting inflexion point, and one at which investors could stand to make a lot of money.

But even on that medium-term bullish outlook, there are still limited ways to play the uranium market. There are the majors of course, like Cameco (TSE:CCO), and there are junior explorers too, like Manhattan Corporation LTD (ASX:MHC). But both will be subject to the vagaries of sentiment in a market in which the supply-demand dynamic is likely to change rapidly.

But for a more straightforward long-only option there’s Yellow Cake.

Yellow Cake was set up by veteran mining financier Pete Bacchus, the man who successfully defended Rio Tinto against a hostile takeover bid during the last boom. He’s now set up on his own at Bacchus Capital Advisers and, amongst other things, has put together Yellow Cake for his clients.

The company listed on the London Stock Exchange in July of this year, and is the only vehicle of its kind in Europe. There is a similar vehicle in Canada, which was one of the inspirations behind Yellow Cake, but Liebenberg doesn’t regard it as a competitor.

The more companies there are around stockpiling physical uranium, the tighter the supply becomes and the better it is for the spot price.

But is it enough to make a difference?

Liebenberg is a firm uranium bull. Worth noting for a start that since Yellow Cake listed, the price has risen from just over US$22 per pound to just over US$27 per pound, and that’s a trend he thinks is set to continue.

“We think we’re closer to the bottom than the top,” he says.

“In uranium the demand side is actually very visible,” he says. “The lead times are long and the build times are long. But the supply side hasn’t been visible, particularly post Fukushima. And Yellow Cake is a vehicle that allows investors to take a view on the uranium price,” says Liebenberg.

The company is long-only on uranium, so investors needn’t worry about the value becoming tangled up in a complicated web of financial instruments.

Yellow Cake has big enough backers​

In fact, it couldn’t be more simple. Yellow Cake holds just under 8.45mln pounds of physical uranium in a warehouse owned by Cameco. As at 3rd October that uranium was worth 242p per Yellow Cake share, while the company itself was trading on the market at 240p. So the discount is running at about 1%, much narrower than most investment companies, and testament to the simplicity and transparency of the vehicle.

Down the line, there’s even the possibility that Yellowcake could do some small royalty deals which would deliver enough cash flow to cover the running costs and allow the shares to trade at exactly par value, or even at a premium.

Why should Yellow Cake trade at a premium when it’s benchmarked against spot? The answer is that if you are bullish uranium and you think the price is going to rise, taking a position early in a vehicle like Yellow Cake is one way to catch the upside early.

And of course, if the Yellow Cake share price does end up trading at a premium to net assets, that will create an opportunity for Liebenberg.

“If we were trading at a premium we could issue stock and buy uranium,” says Liebenberg. “And if we were trading at a persistent discount we could consider selling uranium and buy stock.”

The company has an agreement in place with Kazatomprom that allows for the purchase of up to US$100mln worth of uranium a year, and crucially that deal allows for the fixing of the amount and the price before Yellow Cake goes into the market for new money.

That allows the company to be precise about the nature of the deal it will put to existing and potentially new shareholders in the event of a future raise. Yellow Cake has big enough backers to allow it to be pretty confident of securing additional funding. The real question is whether or not it’s right in its bullish call on uranium.

We’ll find out soon enough.

]]>
Thu, 11 Oct 2018 12:31:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/206893/yellow-cake-offers-investors-direct-exposure-to-physical-uranium-and-all-its-associated-upside-206893.html
<![CDATA[Media files - Yellow Cake Plc giving investors unique exposure to uranium price ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/10711/yellow-cake-plc-giving-investors-unique-exposure-to-uranium-price-10711.html Wed, 03 Oct 2018 08:31:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/10711/yellow-cake-plc-giving-investors-unique-exposure-to-uranium-price-10711.html <![CDATA[RNS press release - Quarterly Operating Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181003070007_13814047/ Wed, 03 Oct 2018 07:00:07 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181003070007_13814047/ <![CDATA[RNS press release - Price Monitoring Extension ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181002120233_13813281/ Tue, 02 Oct 2018 12:02:33 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20181002120233_13813281/ <![CDATA[RNS press release - TR-1: Notification of major holding ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180824175907_13768295/ Fri, 24 Aug 2018 17:59:07 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180824175907_13768295/ <![CDATA[RNS press release - Purchase of additional Uranium ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180810070004_13750676/ Fri, 10 Aug 2018 07:00:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180810070004_13750676/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180731091730_13737506/ Tue, 31 Jul 2018 09:17:30 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180731091730_13737506/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180717144707_13721150/ Tue, 17 Jul 2018 14:47:07 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180717144707_13721150/ <![CDATA[News - Uranium outlook decidedly mixed, says Liberum, favours Yellow Cake ]]> https://www.proactiveinvestors.co.uk/companies/news/200675/uranium-outlook-decidedly-mixed-says-liberum-favours-yellow-cake-200675.html UK broker Liberum has sounded a note of caution about the future supply-demand balance in the uranium market.

In a detailed 11-page research note Liberum set out its case that although demand for uranium from new power stations is likely to be material, the rise of renewables and an increasing tendency to favour gas-powered electricity generation will mitigate against any significant breakout in the price in the near-term.

In particular, Liberum also noted that the uranium market is not currently in deficit, as supply from stockpiles continues to be fed into the market, and that it could take years before all this inventory is drawn down.

Based on BP's projections

Much of this analysis is based on projections put together by BP in its Energy Outlook report. BP has downgraded its future demand estimates for power from coal, nuclear and hydro. The likely reduction in coal-fired power is not particularly surprising, as this trend has been well highlighted both in the financial and in the popular press. Even the Chinese are beginning to move on from coal, although it does still have far more adherents in Africa and the Far East than it does in Europe.

In the case of hydro power, it’s the capital costs involved that will likely render it less popular. But nuclear has a powerful mixture of environmental, political and capital risk that has meant that a range of forecasters, not just BP, are now becoming quite conservative in their predictions for future demand.

At the lower end of the scale, Statoil predicts demand for nuclear power will grow by just over 1% by 2040. The EIA has growth at around 1.5%, while BP is roughly in the middle with a forecast of 1.8% growth. At the high end is CNPC, which forecasts demand growth of just over 3% by 2040.

These figures show an industry in reasonable shape, but not one that’s likely to roar away. And uranium miners, therefore, will have to model current and future production very carefully to ensure an economic return.

Permitting issues and Berkeley Energia

Notably, Liberum is lukewarm towards market favourite Berkeley Energia (LON:BKY). Liberum highlights permitting issues with the Spanish project, although Berkeley Energia itself has recently highlighted the significant support it has both from government and local communities on the ground in Spain.

What’s perhaps more interesting from the perspective of the Liberum research isn’t so much the likely success of failure of Berkeley’s Salamanca mine itself, but the fact that it’s the only uranium mine of any significance currently in development anywhere in the world.

Still, all that being said, Liberum does expect a steady increase in the uranium spot price over the next five years, rising from the current price of around US$20 to closer to US$60 by 2025.

That should go a long way towards making the Berkeley Energia mine economic, and might perhaps stimulate further mine restarts. But of course, if those restarts bring further supply into the market, the price itself will be subject to more downward pressure.

Yellow Cake

Liberum’s preferred way of playing these complex dynamics is through market newcomer Yellow Cake PLC (LON:YCA), which is aiming to trade in uranium and in particular is likely to buy up much of the spot market excess supply that’s currently available.

Clearly, if the uranium price does move as Liberum expects, this could be a very successful medium-term strategy. It also obviates the need for mining and permitting risk, and although there is significant capital outlay involved, that capital will come straight onto the Yellow Cake balance sheet and can be marked to market.

But for all its risks, the financial forecasts Liberum has put together for Berkeley Energia still make it look fairly attractive. The company is likely to have cleared its debts in five years, and to be generating a profit of around US$170mln.

That’s not bad going from a company which has only been around a couple of years, and goes to show that even in unfavourable markets, skilled positioning and skilled people can still get things done.

 

 

]]>
Thu, 12 Jul 2018 10:38:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/200675/uranium-outlook-decidedly-mixed-says-liberum-favours-yellow-cake-200675.html
<![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180712093005_13715381/ Thu, 12 Jul 2018 09:30:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180712093005_13715381/ <![CDATA[News - Yellow Cake announces receipt of Uranium following its debut on AIM ]]> https://www.proactiveinvestors.co.uk/companies/news/200337/yellow-cake-announces-receipt-of-uranium-following-its-debut-on-aim-200337.html Yellow Cake PLC (LON:YCA) has announced that 8.1mmlb of uranium has been received from Kazatomprom, which is stored at Cameco Corporation’s Port Hope/Bling River facility in Ontario, Canada, following its admission to the AIM market.

The company said its strategy is to be a long-term holder of uranium and the company intends to hold and grow its level of uranium ownership over time.

READ: Uranium trader Yellow Cake debuts on AIM after raising £150mln in its IPO

Yellow Cake believes the recent emerging theme of supply side discipline in the uranium market and the industry cost structure will be supportive of this strategy.

The company sold 76mln new shares at 200p apiece in its initial public offering on July 5, raising US$200mln (£151mln) which it used to buy 8.1mln pounds of uranium from Kazatomprom.

Andre Liebenberg, CEO of Yellow Cake, said: "We would like to thank Kazatomprom for its strong support as a reliable long-term strategic supplier, thereby contributing to the highly successful IPO of Yellow Cake."

]]>
Mon, 09 Jul 2018 07:56:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/200337/yellow-cake-announces-receipt-of-uranium-following-its-debut-on-aim-200337.html
<![CDATA[RNS press release - Receipt of Uranium ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180709070004_13709589/ Mon, 09 Jul 2018 07:00:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180709070004_13709589/ <![CDATA[News - Uranium trader Yellow Cake debuts on AIM after raising £150mln in its IPO ]]> https://www.proactiveinvestors.co.uk/companies/news/200187/uranium-trader-yellow-cake-debuts-on-aim-after-raising-150mln-in-its-ipo-200187.html Uranium trader Yellow Cake PLC (LON:YCA) has made its debut on AIM this morning (Thursday July 5).

Yellow Cake – a nickname for uranium – is backed by Bacchus Capital, the corporate finance boutique set up in 2016 by a group of senior bankers led by Peter Bacchus.

The company reckons Uranium is structurally mis-priced and will make its money from stockpiling the radioactive metal, commodity streaming and royalties.

READ: Yellow Cake to list on AIM in early July

It sold 76mln new shares at 200p apiece in its initial public offering, raising US$200mln (£151mln) which it has used to buy 8.1mln pounds of uranium from Kazatomprom, one of the world’s largest uranium producers.

Yellow Cake paid US$21.01 per pound, a discount of about 8% to the current spot price.

A uranium pile of that size, which cost around US$170mln, is equal to one quarter of Kazatomprom's annual production and approximately 5% of 2016 global marketed production.

In addition, the Kazatomprom contract allows Yellow Cake to buy up to an additional US$100mln of U3O8 each year for the next nine years.

“We are delighted with the outcome of this offering and the strong support from investors for Yellow Cake,” said chief executive Andre Liebenberg.

“Due to an exceptional set of circumstances, uranium is one of the few commodities yet to recover from the recent commodities bear market and we believe that uranium is currently fundamentally and structurally mispriced.”

He added: “Yellow Cake's long-term supply contract with Kazatomprom has allowed us to secure a highly significant and strategic position in physical uranium, at a competitive price, and to offer that exposure to a potential resurgence in the uranium price to investors, while avoiding direct exposure to exploration, development, mining and processing risk.”

Shares were trading at 194p early on Thursday morning, just below the IPO issue price.

]]>
Thu, 05 Jul 2018 09:05:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/200187/uranium-trader-yellow-cake-debuts-on-aim-after-raising-150mln-in-its-ipo-200187.html
<![CDATA[RNS press release - Admission to AIM and First Day of Dealings ]]> https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180705070006_13706290/ Thu, 05 Jul 2018 07:00:06 +0100 https://www.proactiveinvestors.co.uk/companies/rns/16509/LSE20180705070006_13706290/ <![CDATA[News - Uranium trader Yellow Cake to list on AIM next month ]]> https://www.proactiveinvestors.co.uk/companies/news/198260/uranium-trader-yellow-cake-to-list-on-aim-next-month-198260.html A uranium trader focused on Kazakhstan is set to make its debut on AIM next month.

Yellow Cake Plc is backed by Bacchus Capital, the corporate finance boutique set up in 2016 by a group of senior bankers led by Peter Bacchus.

Uranium (U3O8) is structurally mis-priced, it says and Yellow Cake will make its money from stockpiling the radioactive metal, commodity streaming and royalties.

Kazakhstan is one of the world’s lowest cost uranium producers and has increased production substantially in recent years.

Added to the curtailing of nuclear programmes following the Fukushima disaster in Japan, this has kept uranium prices under pressure.

The group has a long-term supply contract with Kazakh group Kazatomprom, one of the world's lowest cost producers of uranium, that will see it acquire US$170mln of U3O8 following the IPO.

Yellow Cake is paying US$21.01 per pound, a discount of about 8% to the current spot price.

In addition, the Kazatomprom contract allows it buy up to an additional US$100mln of U3O8 each year for the next nine years.

A uranium pile of US$170mln is equal to one quarter of Kazatomprom's annual production and approximately 5% of 2016 global marketed production.

Yellow Cake is expected to join AIM in early July.

]]>
Tue, 05 Jun 2018 09:11:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/198260/uranium-trader-yellow-cake-to-list-on-aim-next-month-198260.html