08:00 Mon 20 Apr 2020
Yellow Cake PLC - Quarterly Operating Update
QUARTERLY OPERATING UPDATE
Yellow Cake, a specialist company operating in the uranium sector with a view to holding physical uranium for the long term, is pleased to report its performance for the quarter ended
Highlights
· Yellow Cake wishes to reassure shareholders that at present it is not adversely affected, either operationally or financially, by Covid-19. Yellow Cake benefits from an extremely strong capital position and has sufficient working capital for at least two years before needing to take any measures to access additional funds. The Company has no debt or hedges on its balance sheet.
· The escalation of the pandemic has significantly impacted global uranium supply as the world's largest uranium producers have had to curtail production, resulting in upward pressure on the uranium price during the quarter and after quarter-end.
· Value of U3O8 held by Yellow Cake increased over the quarter from
· Estimated net asset value at
· Yellow Cake's estimated net asset value as at
· Total increase in value of U3O8 held by Yellow Cake at quarter end of 26% to
· Total U3O8 holdings of 9.62 million lbs acquired at an average cost of
· At the beginning of the quarter, the Company's shares continued to trade at a discount to its underlying net asset value. On
· As at close on
"Supply side pressures have been building in the uranium market for some time, as low prices have forced many producers to cut output. These have now been exacerbated by the effects of Covid-19, which has resulted in further downward pressure on uranium production, taking yet more supply out of the market. We have already seen uranium prices respond with a strong uplift in March, and this has continued into April with the spot price exceeding
Uranium Market Developments and Outlook
Uranium Market Developments
The uranium spot market price ended CY2019 at
The spot uranium price rose sharply during March, increasing 11% to
Based upon Congressional testimony by the
Forward uranium requirements, yet to be contracted for, remain substantial especially for nuclear utilities in
In March, the escalation of the Covid-19 global pandemic resulted in major shifts in the nuclear fuel markets, especially in U3O8. In response to government-imposed social distancing restrictions, coupled with the remote locations of several uranium mining districts which necessitate fly-in, fly-out personnel rotations, Cameco announced (23 March) that
In a press release on 16 March, Kazatomprom advised that it would closely monitor the Covid-19 situation in southern
On 28 March, the Namibian government announced a partial lock-down, including minimal mining operations, in the Erongo region where both the Rossing uranium mine (
Uranium Market Outlook
Yellow Cake expects that the global uranium market will continue to be dominated by the effects of Covid-19 in the near term.
Demand
Assuming gradual economic recovery as national economies emerge from lock-downs, commercial nuclear power can be expected to maintain a fundamental role in the provision of crucial electricity generation. There has been, and will continue to be, minor disruption in reactor operations in specific countries as well as planned refuelling outages. However, the impacts on uranium demand are not expected to be significant nor long-lasting.
Regarding the forecast state of global commercial nuclear generation during 2020, several factors could come into play to reduce nuclear generated electricity. Depending upon the rate and eventual level of economic recovery during the year, nuclear generation could be impacted by reduced industrial consumption as well as demand shifts from the residential and commercial sectors. For example, Electricité de
Supply
Depending upon the severity and duration of the global pandemic, effects on the global nuclear fuel cycle may be substantial. Reductions in operations throughout the front-end of the fuel cycle (U3O8 production and conversion facilities in particular) have been pervasive as highlighted above. The restart of these facilities in a timely manner will minimize market impacts but prolonged reductions/shut-downs will place further stress on individual market segments, especially natural uranium concentrates. Uranium prices have already responded with a strong uplift throughout March and extending into the month of April, with the uranium spot price reaching
Net Asset Value
Yellow Cake's estimated net asset value on
Yellow Cake's estimated net asset value as at
As at close on
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) no 596/2014
ENQUIRIES:
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Tel: +44 (0) 153 488 5200 |
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Nominated Adviser and Joint Broker: |
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Tel: +44 (0) 207 260 1000 |
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Joint Broker: Berenberg |
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Detlir Elezi |
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Tel: +44 (0) 203 207 7800 |
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Financial Adviser: Bacchus Capital Advisers |
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Tel: +44 (0) 203 848 1640 |
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Investor Relations: Powerscourt |
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Tel: +44 (0) 779 3 85 8211 |
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ABOUT YELLOW CAKE
Yellow Cake is a
FORWARD LOOKING STATEMENTS
Certain statements contained herein are forward looking statements and are based on current expectations, estimates and projections about the potential returns of the Company and the industry and markets in which the Company will operate, the Directors' beliefs and assumptions made by the Directors. Words such as "expects", "anticipates", "should", "intends", "plans", "believes", "seeks", "estimates", "projects", "pipeline", "aims", "may", "targets", "would", "could" and variations of such words and similar expressions are intended to identify such forward looking statements and expectations. These statements are not guarantees of future performance or the ability to identify and consummate investments and involve certain risks, uncertainties and assumptions that are difficult to predict, qualify or quantify. Therefore, actual outcomes and results may differ materially from what is expressed in such forward looking statements or expectations. Among the factors that could cause actual results to differ materially are: uranium price volatility, difficulty in sourcing opportunities to buy or sell U3O8, foreign exchange rates, changes in political and economic conditions, competition from other energy sources, nuclear accident, loss of key personnel or termination of the services agreement with 308
[1] Based on the month end spot price of
[2] Based on the month end spot price of
[3] Based on the Broker Average Price of
[4] Net asset value per share on
[5] Month-end spot price published by
[6] Yellow Cake's estimated net asset value on
[7] Net asset value per share on
[8] Based on the month-end spot price published by
[9] Estimated current value of the Kazatomprom repurchase option under the framework agreement, which is a potential liability of
[10] Includes cash and cash equivalents of
[11] The estimated net asset value per share as at
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