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 30 September 2019.
Highlights
· Estimated net asset value at 30 September 2019 of £2.32 per share [1] or US$252.2 million, comprising 9.62 million lbs of physical uranium (U3O8) valued at a spot price of US$25.65/ lb [2] and other net assets.
· Value of U3O8 held by Yellow Cake increased over the quarter from US$237.5 million [3] to US$246.7 million [4].
· Total U3O8 holdings of 9.62 million lbs acquired at an average cost of US$21.68/ lb.
· Total increase in value of U3O8 held by Yellow Cake of 18.3% to US$246.7 million [4] relative to the aggregate acquisition cost of US$208.5 million.
· The Section 232 investigation into uranium imports into the US concluded during the quarter, with a decision by the US President not to implement new trade restrictions on imports. As part of this, a Nuclear Fuels Working Group was established to review the nuclear fuel supply chain, with their recommendations expected in mid-November 2019.
· The Company notes that Yellow Cake shares are currently trading at a significant discount to net asset value. Should this significant discount persist, it is the intention of the Yellow Cake board to consider implementing a share buyback program as a means of cost effectively acquiring additional exposure to uranium.
Andre Liebenberg, CEO of Yellow Cake, said:
“Trading activity in the uranium market remains subdued as we await the findings of the US Nuclear Fuels Working Group. Though this uncertainty continues to weigh on the uranium price in the near term, we are positive about the medium and long term outlook for uranium.
We expect activity to increase in due course as buyers re-enter the market and we see a return to more normal levels of term contracting, in particular from US utilities who have been holding off making purchase decisions. We believe the longer term supply characteristics of uranium make the commodity a compelling investment opportunity, further emphasised by the recent decision by the world’s largest producer Kazatomprom to extend production caps. This will remove nearly 15 million pounds of uranium from the market in 2021, a material 10% of estimated future global supply. We remain confident in our strategy and investment proposition.
With our share price trading well below NAV, this presents an opportunity for us to acquire additional exposure to uranium at a discount to the spot price, through a share buyback programme. The Board will consider this if the significant discount persists.“
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