Yellow Cake value tops $2bn after strong fourth quarter

(Sharecast News) - Uranium investor Yellow Cake reported a robust performance for the December quarter on Wednesday, as its value reached and surpassed the $2bn level. The AIM-traded firm said the uranium spot price surged 23.8% in the period, rising from $73.50 per pound on 30 September to $91.00 per pound by 31 December.

It currently stands at $105.00 per pound.

The company said the global uranium market was continuing to grapple with supply constraints due to limited inventories, geopolitical tensions like the Russia-Ukraine conflict, production delays, and increasing demand, which pushed the uranium price to $106.00 per pound on 15 January.

Company-wise, Yellow Cake completed an oversubscribed share placing on 2 October, raising £103m.

Following that, it exercised its 2023 uranium purchase option, acquiring 1,526,717 pounds of triuranium octoxide at $65.50 per pound, for a total of $100m.

Delivery was expected in June, increasing Yellow Cake's holdings of triuranium octoxide to 21.68 million pounds.

The value of Yellow Cake's holdings increased by 23.8% during the fourth quarter of 2023, reaching $1.83bn on 31 December, up from $1.48bn on 30 September, in tandem with rising uranium spot prices.

The estimated net asset value per share also saw growth, rising by 15% during the quarter, from 618p per share to 711p at the end of December, driven by uranium price gains offset partially by currency fluctuations.

As of 23 January, Yellow Cake's estimated pro forma net asset value was 840p per share, or $2.31bn, assuming a spot price of $105.00 per pound for 21.68 million pounds of triuranium octoxide, along with cash, current assets, and liabilities.

Notably, all uranium owned by Yellow Cake was securely stored at the Cameco storage facility in Canada and the Orano facility in France.

Geopolitical events in Ukraine had not impacted the company's operations, financial condition, or its ability to acquire triuranium octoxide from Kazatomprom or other parties.

"We were proud to pass the considerable milestone of a $2bn market value, up from $200m when we first listed in 2018," said chief executive officer Andre Liebenberg.

"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.

"Though the uranium price reached a 16-year high this month, we continue to believe the same supply-demand characteristics that have made the investment case in Yellow Cake so compelling, remain as relevant today as they did in 2018."

Liebenberg siad the uranium market was still under stress, driven by limited supply as a result of geopolitical factors and project ramp-up delays, alongside rising demand as nuclear power gained market share worldwide due to the need to decarbonise energy supplies.

"We remain confident in the outlook for uranium and for Yellow Cake."

At 1338 GMT, shares in Yellow Cake were up 1.33% at 723.5p.

Reporting by Josh White for Sharecast.com.