I've always been interested in "alternative investment" propositions such as catastrophe insurance, litigation finance, etc. where returns can be expected to be uncorrelated with economic activity and general equity markets. I may have found another example in YCA.

Demand for uranium has been depressed since the Fukushima disaster of 2011, and the so-called spot price of U3O8 oxide ("yellowcake") has fallen fairly steadily to a current value of around US$23/lb. However, there are signs that we might see a reversal of this. China and (surprisingly) Japan are building reactors, and some large mines have ceased production. Many in the business, though talking their own book no doubt, are positive for 2019 onwards. Demand is expected to permanently outstrip supply from about 2022. [1]

It should be said that this spot price isn't really trustworthy, being thinly traded and allegedly manipulated. Contracts for large supplies are made off market and some expect these to be agreed at more than double the published spot price this year. [2]

The IPO of YCA this month is intended to take advantage of this. It has raised £144.4m net and bought 8.1 mmlb of U3O8 from the world's largest producer in Kazakhstan at $21.01/lb (a 9% discount to spot) to be shipped to Canada for storage. It also has the right to further purchases subject of course to having funds. There were 76.2m shares issued at 200p, with my estimate of an initial NAV of around 185p. Storage costs are low.

So, buy the shares at 200p-ish, sit back and wait? Well, sort of, that would be the idea, and the documentation stresses the "long term". What possible downsides? Here are a few:

• It looks to be in a pretty unregulated market.

• The uranium price could fall. Of course!

• Running costs look reasonable, but I may not have considered them thoroughly enough.

• Trump has threatened to apply tariffs to imported uranium. These might, of course, be selective and in any case, I'm unsure whether these would affect overall supply/demand (hence price) or just displace it.

So the investment case is that they have bought an asset and are sitting on it and using it for trading purposes. It really looks fairly simple and has none of the complexities involved in buying a miner or explorer. Whether it will prove a good investment…

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