REG - Yellow Cake PLC - Interim Financial Report
09/12/2021 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211209:nRSI0506Va&default-theme=true
RNS Number : 0506V Yellow Cake PLC 09 December 2021
9 December 2021
Yellow Cake plc ("Yellow Cake" or the "Company")
Unaudited Interim Financial Report for the six-month period ended 30 September
2021
Yellow Cake, a specialist company operating in the uranium sector with a view
to holding physical uranium for the long term, is pleased to announce its
unaudited interim financial report for the six-month period ended
30 September 2021 ("half-year").
Highlights
· Net asset value as at 30 September 2021 of GBP3.26 per
share(1) or USD675.2 million, comprising 13.86 million lb of physical
uranium ("U(3)O(8)") valued at a spot price of USD43.00/lb(2) and other net
assets.
· 97% increase in the value of the Company's uranium holding
during the half-year by from USD302.1 million(3 )as at 31 March 2021 to
USD595.8 million(4) as at 30 September 2021, as a result of the appreciation
in the uranium price and a net increase in the volume of uranium held. This
compares to an acquisition cost of USD337.8 million, or USD24.38/lb(5),
representing an increase in value of 76% as at 30 September 2021.
· Total comprehensive income after tax of USD169.1 million for
the six-month period ended 30 September 2021.
· Following the completion of an upsized share placing and retail
offer in March 2021 (which raised gross proceeds of approximately GBP99.3
million (USD138.5 million)) and an oversubscribed share placing and retail
offer in June 2021(which raised gross proceeds of approximately GBP62.5
million (USD86.9 million)), the Company:
o Purchased and took delivery of 3.45 million lb of U(3)O(8) through the full
exercise of the Company's option for 2021 under its Framework Agreement with
JSC National Atomic Company Kazatomprom ("Kazatomprom") at a price of
USD28.95/lb, for a total consideration of USD100.0 million;
o Purchased in the spot market and took delivery of 893,053 lb of additional
U(3)O(8) at an average price of USD31.12/lb, for a total consideration of
USD27.8 million;
o Sold 348,068 lb of U(3)O(8) to Uranium Royalty Corp. ("URC") at a price of
USD28.73/lb, for a total consideration of USD10.0 million following the
exercise of URC's purchase option, bringing the Company's holdings to 13.86
million lb of U(3)O(8) as at 30 September 2021; and
o Signed an agreement with Kazatomprom on 26 August 2021 to purchase a further
2.0 million lb of U(3)O(8) at a price of USD32.23/lb, for a total
consideration of USD64.5 million.
Post period end updates
· In October 2021, Yellow Cake successfully completed another
oversubscribed share placing (the third placing in the calendar year), which
raised gross proceeds of approximately GBP109.2 million (USD149.7 million)
(the "October Placing").
· Following the period end, Yellow Cake took delivery of a further
4.0 million lb of U(3)O(8):
o Applied part of the proceeds of the October Placing to fund the purchase of
2.0 million lb of U(3)O(8) from Curzon Uranium Limited ("Curzon") at a price
of USD46.32/lb, and took title to this uranium in November 2021; and
o Took delivery of 2.0 million lb of U(3)O(8) from Kazatomprom on 4 December
2021, pursuant to the agreement of 26 August 2021 mentioned above.
· The Company intends to use part of the remaining proceeds of the
October Placing to fund the purchase of 0.95 million lb of U(3)O(8) from
Kazatomprom, pursuant to Kazatomprom's offer of 26 October 2021 and subject to
contract, at a price of USD47.58/lb, with delivery expected to take place by
June 2022.
· Under an existing arrangement (as previously disclosed in the
Company's admission document, annual reports and recent press releases),
Kazatomprom has an option to repurchase, at the uranium spot price less an
aggregate discount of USD6.6 million, up to 25% of the initial purchase volume
which the Company purchased from Kazatomprom in July 2018 under the Framework
Agreement (the "Repurchase Option"). The Company has a corresponding buyback
option to purchase from Kazatomprom, at the prevailing spot price, all or a
portion of the volume repurchased by Kazatomprom under its Repurchase Option
(the "Buyback Option"). Kazatomprom's right to exercise the Repurchase Option
arises only once during the term of the Framework Agreement, for a period of
60 days, when certain conditions are met.
· Following the conditions being met for Kazatomprom to exercise
its Repurchase Option:
o Kazatomprom exercised its Repurchase Option at a price of USD43.25/lb less
an aggregate discount of USD6.6 million, and took delivery of 2,022,846 lb of
U(3)O(8) from Yellow Cake on 22 November 2021; and
o Yellow Cake exercised its Buyback Option for the same quantity of uranium
at a price of USD43.25/lb and is expected to take delivery of the 2,022,846 lb
of U(3)O(8) from Kazatomprom between March 2022 and April 2022.
o The net impact of the Repurchase Option and Buyback Option transactions is
expected to be a pay-out by the Company to Kazatomprom of USD6.6 million.
Further details on these arrangements can be found in note 5 of the financial
statements.
· Following completion of the transactions with Kazatomprom
described above (whereby the Company expects to acquire 0.95 million lb of
U(3)O(8) from Kazatomprom and following the completion of the Repurchase
Option and Buyback Option transactions with Kazatomprom), Yellow Cake's
holdings of U(3)O(8) are expected to increase to 18.81 million lb.
· Estimated proforma net asset value on 7 December 2021 was GBP3.55
per share or USD864.3 million, assuming 18.81 million lb of
U(3)O(8)(6 )valued at a spot price of USD44.75/lb(7).
Yellow Cake Estimated Proforma Net Asset Value as at 7 December 2021
Units
Investment in Uranium
Uranium oxide in concentrates ("U(3)O(8)") ((6)) (A) lb 18,805,601
U(3)O(8) fair value per pound ((7)) (B) US$/lb 44.75
U(3)O(8) fair value (A) x (B) = (C) US$ m 841.6
Uranium derivative liability ((8)()) (D) US$ m (6.6)
Cash and other net current assets/(liabilities) ((9)()) (E) US$ m 29.3
Net asset value in US$ m (C) + (D) + (E) = (F) US$ m 864.3
Exchange Rate (G) US$/GBP 1.3244
Net asset value in £ m (F) / (G) = (H) £ m 652.6
Number of shares in issue less shares held in treasury ((10)) (I) 183,671,232
Net asset value per share (H) / (I) £/share 3.55
Andre Liebenberg, CEO of Yellow Cake, said:
"We continue to meet our stated objectives, delivering considerable returns
for our shareholders, justifying the confidence in our strategy and investment
thesis as set out at the time of our IPO. That strategy is centred on the
purchase and storage of U(3)O(8), providing investors with exposure to the
uranium price without the associated mining risk, with the aim of realising a
return on investment from an increase in uranium prices over the long term.
"Since March, we've conducted another two successful share placings raising a
further c. USD237 million. These will enable us to acquire more uranium,
bringing our total holdings to nearly 19 million pounds once these
transactions and deliveries are complete, more than double our holdings since
the start of the year.
"Our view is the outlook for the uranium price remains strong, with the
factors that have driven the higher spot price still very much prevalent,
being the combination of supply demand characteristics and the growing
appreciation of the role of nuclear in our clean energy future. We believe
COP26, while rightly highlighting the need to increase investment in
renewables, has once again shone a light on the vital role nuclear energy will
play in helping us all meet the ambitious climate goals set out last month.
The demand side of uranium is strong and growing, yet considerable supply
constraints remain. We continue to have real confidence in our business model,
our strategy and our investment case."
This announcement contains inside information for the purposes of Article 7
of Regulation (EU) no 596/2014 which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018.
ENQUIRIES:
Yellow Cake plc
Andre Liebenberg, CEO Carole Whittall, CFO
Tel: +44 (0) 153 488 5200
Nominated Adviser and Joint Broker: Canaccord Genuity Limited
Henry Fitzgerald-O'Connor James Asensio
Georgina McCooke
Tel: +44 (0) 207 523 8000
Joint Broker: Berenberg
Matthew Armitt Jennifer Wyllie
Varun Talwar Detlir Elezi
Tel: +44 (0) 203 207 7800
Financial Adviser: Bacchus Capital Advisers
Peter Bacchus Richard Allan
Tel: +44 (0) 203 848 1640
Investor Relations: Powerscourt
Peter Ogden Linda Gu
Tel: +44 (0) 7793 858 211
ABOUT YELLOW CAKE
Yellow Cake is a London-quoted company, headquartered in Jersey, which offers
exposure to the uranium spot price. This is achieved through its strategy of
buying and holding physical triuranium octoxide ("U(3)O(8)"). The Company may
also seek to add value through the acquisition of uranium royalties and
streams or other uranium-related activities. Yellow Cake seeks to generate
returns for shareholders through the appreciation of the value of its holding
of U(3)O(8) and its other uranium-related activities in a rising uranium price
environment. The business is differentiated from its peers by its ten-year
Framework Agreement for the supply of U(3)O(8) with Kazatomprom, the world's
largest uranium producer. Yellow Cake currently holds 15.83 million pounds of
U(3)O(8), all of which is held in storage in Canada and France.
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 U(3)O(8), 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 Services Limited, changes in the legal or
regulatory environment, insolvency of counterparties to the Company's material
contracts or breach of such material contracts by such counterparties. These
forward-looking statements speak only as at the date of this announcement. The
Company expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based unless it is required to do so by applicable law or the AIM Rules.
Chief Executive's Statement
Overview
The global uranium market experienced significant changes over the past six
months after the spot price traded in a very narrow range during 2020 and into
early 2021. The turning point was in February/March of this year when Yellow
Cake came to the market to raise approximately USD140 million to exercise its
2021 option with Kazatomprom. In a very short space of time, we saw a number
of uranium companies taking advantage of the improved investor sentiment
towards the commodity with over USD 1 billion raised in the short period that
followed. A number of these companies utilised the funds raised to purchase
physical uranium in the spot market.
In July, the Sprott Physical Uranium Trust ("SPUT") completed the takeover of
Uranium Participation Corporation and, along with the launch of its
At-The-Market ("ATM") funding programme, began significant spot market
purchases, driving the spot price up to USD50/lb. The spot uranium market
entered a period of unprecedented volatility and transactional volumes, due in
part to SPUT's activity.
Against this backdrop, Yellow Cake completed two further oversubscribed share
placings in 2021, raising approximately USD87 million in June and
approximately USD150 million in October. With the proceeds from these raises,
we secured additional uranium and expect to increase our holdings from
c.9 million lb of U(3)O(8) at the beginning of the 2021 calendar year to c.19
million lb of U(3)O(8) when the purchase transactions complete.
On the demand side, forecasted installed nuclear generating capacity continued
to improve, as national programmes to meet "net zero" carbon goals recognised
the role of nuclear power as a contributing technology. This sentiment carried
through to the COP 26 meeting with Mariano Grossi, head of the International
Atomic Energy Agency, noting that "This COP is perhaps the first where nuclear
energy has a chair at the table, where it has been considered and has been
able to exchange without the ideological burden that existed before".
Uranium Market Developments
During the quarter to 30 June 2021, the UxC U(3)O(8) Price (spot)(11 )traded
within a narrow range of USD28.65/lb up to USD32.10/lb, reaching USD32.30/lb
in the week of 21 June. Transactional spot volumes were modest in April,
reporting a total of 2.4 million lb(12), but increased to 6.6 million
lb(13) in May. The aggregate quantity for June was 6.4 million lb, resulting
in a total spot market volume of 15.4 million lb for the quarter, above the
ten-year average for the June quarter of 11 million lb(13).
Following the establishment of an initial USD300 million ATM funding facility
by the newly-formed SPUT, August spot market volumes totalled 13.0 million lb
U(3)O(8 )(14), more than double the July aggregate of 5.6 million lb. On 13
September 2021, SPUT announced a USD1 billion upsizing of the ATM funding
facility to allow the trust to issue new units and accumulate physical
uranium(15). In a presentation given on 9 November, WMC Energy (SPUT's
technical advisor) reported that SPUT had purchased a total of 18.3 million
lb(16) since its launch.
Further near-term purchases drove the September 2021 spot market volume to
18.0 million lb, with the high level of market activity being reflected in the
intra-month (16-17 September 2021) price peak of USD50.50/lb U(3)O(8), before
the price declined to USD43.00/lb by the end of September 2021(17), a
percentage increase of over 27% for the month.
Prices in the forward market, as reported by UxC, remained relatively stable
through July and August 2021, having ended June 2021 at a long-term price of
USD32.00/lb, a 3-year forward price of USD34.00/lb, and a 5-year forward price
of USD38.00/lb with slight increases by the end of August 2021 (USD33.50/lb,
USD35.75/lb and USD39.50/lb respectively). However, the unprecedented rise in
the spot market price, beginning in August 2021, led to upward price pressure
in the forward market, resulting in end of September 2021 forward prices
reaching USD40.00/lb, USD43.00/lb and USD47.00/lb, respectively. UxC reported
that as of the end of September 2021, more than 52.6 million lb had been
contracted in the term market thus far in 2021(18).
The World Nuclear Association annual report, "World Nuclear Performance
Report", published in September 2021, reflected the decrease in
nuclear-generated electricity during the pandemic year of 2020. Global
nuclear generation was down by almost 4%, with the average capacity factor
declining to 80.3% from the 2019 level of 83.1%. A total of six nuclear
reactors (5,165 Mwe net) were permanently shut down during 2020 for a variety
of reasons, including for policy reasons (Fessenhein 1 & 2 in France) and
due to market conditions (Duane Arnold in the US). Five new reactors (5,521
Mwe net) entered commercial operations including units in China (2 reactors),
Russia, Belarus and the United Arab Emirates(19).
The US Department of Energy, Energy Information Administration ("USDOE/EIA")
released its "2020 Uranium Marketing Annual Report,"(20) which documents
nuclear fuel activities by US nuclear utilities as well as provides data for
the 2021-2030 time period. US nuclear utilities took delivery of 48.9 million
lb U(3)O(8) (equivalent) during the year at a weighted-average price of
USD33.27/lb. While the aggregate volume closely tracked the total 2019
purchases of 48.3 million lb, the weighted-average price paid declined from
USD35.59/lb. By the end of 2020, uranium inventory owned by US utilities
declined to 107.2 million lb. Those inventories had been as high as 128
million lb as recently as 2016. The USDOE/EIA reported that maximum
anticipated uranium market requirements totalled 381.2 million lb (2021-2030)
while almost 50% (187.5 million lb) were yet to be filled by the utilities. As
a percentage of maximum market requirements, unfilled needs are 28% in 2023,
reaching 45% by 2025 and aggregate over 88% in 2030.
The EURATOM Supply Agency (ESA) released its "Annual Report -
2020"(21) which, similar to the USDOE/EIA annual uranium marketing report,
documents nuclear fuel activities by the commercial nuclear power industry
within the European Union and the United Kingdom. Gross uranium requirements
totalled 41.1 million lb in 2020, with utilities purchasing 32.7 million lb
(97% under multi-year/term uranium agreements). The five principal uranium
suppliers included Niger, Russia, Kazakhstan, Canada and Australia, which in
aggregate provided 91.3% of the total uranium acquired during the year.
Uranium inventories fell slightly from their 2019 level to 110.2 million lb,
which is down considerably from the 2016 inventory level which totalled 133.9
million lb. Forward uranium coverage ranges from 116% in 2024 declining to 57%
by 2029.
UxC released its 2020 U(3)O(8) Production Review(22), reporting 2020 global
U(3)O(8) production of 125 million lb U(3)O(8) in aggregate, a significant
decline from the 2019 figure of 141 million lb U(3)O(8) (representing a
reduction of 17 million lb U(3)O(8), or 12% year-on-year), principally driven
by reductions in operations due to the COVID-19 pandemic in Kazakhstan and
Canada. Kazakhstan experienced an annual decline in total output of 8 million
lb U(3)O(8) or 15% year-on-year, while Canada's total output declined 8
million lb U(3)O(8), or 44% year-on-year. Australian production declined by
less than 1 million lb U(3)O(8) compared to 2019, with 2020 production
reported at 16 million lb U(3)O(8),( )while uranium output in Namibia and
Russia remained relatively stable. Uranium production in the Republic of Niger
rose from its 2019 level of 7.8 million lb U(3)O(8), to 9.5 million lb
U(3)O(8) in 2020, a 23% year-on-year increase.
Cameco Corporation announced the planned restart of the Cigar Lake Uranium
Mine (9 April 2021)(23) which had initially been placed on care and
maintenance effective 13 April 2020, in response to the COVID-19 pandemic. The
company reported total 2020 uranium production of 5.0 million lb U(3)O(8) from
the facility. Cameco stated that "the timing of production restart and the
production rate at Cigar Lake will be dependent on how quickly we are able to
remobilize the workforce."
In its 28 July 2021 Second Quarter Result Conference Call, Cameco reported
that Cigar Lake production could be as high as 12.0 million lb in 2021
(subject to any further disruptions due to Covid-19 or forest fires in the
area) with Cameco receiving "up to 6.0 million lb". Regarding 2021 market
purchases, the company is forecasting 11 - 13 million lb, which includes
volumes that have already been delivered, those that are already under
contract for 2021 delivery, its purchase entitlement from JV Inkai
(Kazakhstan) (expected to be 5.3 million lb, based on Inkai's 2021 planned
production)(24) as well as "purchase of excess inventory from (nuclear fuels
trader) NUKEM." Regarding the term market, the company reported that an
additional 7.0 million lb had been added to their contract portfolio,
supplementing the 9.0 million lb secured earlier in the year and bringing the
aggregate of new term contracts executed since 2019 to "over 60 million
pounds."
In its announcement of 2 July 2021(25), Kazatomprom advised that uranium
production during 2023 would remain at the planned 2022 level of 22,500-23,000
tU (58.5-59.8 million lb), which is approximately 20% below the expected
production rate under the Subsoil Use Contracts (27,500-28,00 tU; 71.5-72.8
million lb). Full implementation of the production restraint plan would
remove 5000 tU (13.0 million lb) from the previously anticipated global
primary supply in 2023. Kazatomprom's CEO, Galymzhan Pirmatov, stated that,
"the Company does not expect to return to full Subsoil Use Contract production
levels until a sustained market recovery is evident, supply and demand
conditions signal a need for more uranium, and the Company's pipeline of
mid-to-long-term contract negotiations implies that there is a low risk of
produced volumes further delaying the recovery."
The International Atomic Energy Agency (IAEA) distributed its annual outlook
for nuclear power and, for the first time since the Fukushima Daiichi accident
in March 2011, forecasted a potential increase in nuclear power capacity
during the coming decades. In the High Case scenario, the IAEA now anticipates
world nuclear generating capacity to double to 792 Gwe by 2050 (up from 393
Gwe in 2020), representing a more than 10% increase from the 2020 forecast.
The IAEA Low Case scenario indicates that world nuclear capacity by 2050 would
remain essentially the same as the current capacity(26).
On 8 September 2021, the World Nuclear Association released the latest edition
of its biennial nuclear fuel cycle assessment and forecast(27). The industry
trade association noted that "world uranium production dropped considerably
from 63,207 tonnes of uranium (tU) in 2016 to 47,731 tU in 2020. Unfavorable
market conditions, compounded by the Covid-19 pandemic, led to a sharp
decrease in investment in the development of new and existing mines."
Looking to the future uranium needs of the anticipated increase in commercial
nuclear power, the report states "intense development of new projects will be
needed in the current decade to avoid potential supply disruptions."
Furthermore, "there will have to be a doubling in the development pipeline for
new projects by 2040. There are more than adequate project extensions, uranium
resources and other projects in the pipeline to accomplish this need, but it
is essential for the market to send the signals needed to launch the
development of these projects." (28)
Uranium Market Outlook
The Nuclear Energy Institute (NEI) convened the annual International Uranium
Fuel Seminar from 7-9 November 2021. This was the first industry in-person
conference in 22 months, and the principal focus was the current and future
global uranium market.
Jonathan Hinze, President of UxC, LLC, provided the group's observations on
the direction of the uranium market. Annual spot market volumes averaged
54.5 million lb during the period 2010-2019, but over the past two years
(2020-2021), that yearly transactional volume had risen to 90.5 million lb as
the global market entered "the 2(nd) Era of Financials" (the "1(st) Era of
financials having taken place in 2005-2009). Investor interest in uranium
appears to be at its highest levels ever, with SPUT being a leading market
factor. Hinze observed "High levels of secondary buying is leading to rapid
price swings, greater market unpredictability, and accelerated market
rebalancing as inventories are removed," and concluded, "SPUT and other
investor activity will fundamentally change the uranium market in ways we are
yet to fully appreciate."(29)
In Yellow Cake's opinion, the future market trend will continue to be
characterised by an upward price trendline, with periods of price volatility.
Uranium prices at or above USD50.00/lb can be reasonably expected, certainly
as the industry enters the 2022 calendar year. Furthermore, long-term uranium
contracting, especially by nuclear utilities located in the United States, can
also be anticipated.
Andre Liebenberg
Chief Executive Officer
Chief Financial Officer's Report
It is my pleasure to report a number of highlights for the half-year:
• Increase in the value of the Company's uranium holding by 97%
from USD302.1 million to USD595.8 million, as a result of the appreciation in
the uranium price and a net increase in the volume of uranium held.
• Increase in the Company's holdings from 9.86 million lb of
U(3)O(8) to 13.86 million lb of U(3)O(8).
• During the half-year, USD117.8 million of the proceeds of the
March and June placings were applied to complete the purchase of a net 4.0
million lb of U(3)O(8) at an average price of USD29.45/lb, and
USD64.5 million of the proceeds of the placings were utilised to purchase of
a further 2.0 million lb of U(3)O(8) from Kazatomprom at price of USD32.23/lb.
• Profit after tax of USD169.1 million (30 September 2020: USD21.7
million).
Yellow Cake completed an oversubscribed share placing and retail offer in June
2021, raising gross proceeds of approximately GBP62.5 million (USD86.9
million). This followed an upsized share placing and retail offer in March
2021, raising gross proceeds of approximately GBP99.3 million (USD138.5
million).
During the half-year, the proceeds from the March and June placings were
applied to fully exercise the Company's 2021 option to purchase USD100 million
of U(3)O(8) from Kazatomprom under the Framework Agreement, and an additional
2.5 million lb of U(3)O(8) from Kazatomprom and the spot market, securing net
additional purchases of 6.0 million lb of U(3)O(8) and funding related
expenses and working capital.
Subsequent to the period-end, the Company successfully completed an
oversubscribed share placing in October 2021, raising gross proceeds of
approximately GBP109.2 million (USD149.7 million). The Company has applied
part of the proceeds of the October Placing to the purchase of 2.0 million lb
of U(3)O(8) from Curzon and expects to purchase a further 0.95 million lb of
U(3)O(8) from Kazatomprom for delivery in June 2022, subject to contract.
In November 2021, after the period-end, the Company agreed the arrangements
for the exercise of Kazatomprom's Repurchase Option and the Company's Buyback
Option under the Framework Agreement. Kazatomprom exercised its Repurchase
Option at a price of USD43.25/lb less an aggregate discount of USD6.6 million,
and Kazatomprom took delivery of 2,022,846 lb of U(3)O(8) from Yellow Cake on
22 November 2021. Yellow Cake exercised its Buyback Option for the same
quantity at a price of USD43.25/lb, and is expecting to take delivery of the
2,022,846 lb of U(3)O(8) from Kazatomprom between March 2022 and April 2022.
The net impact of these transactions is expected to be a pay-out by the
Company to Kazatomprom of USD6.6 million.
The above transactions, when completed, are expected to bring Yellow Cake's
holdings of U(3)O(8) to 18.8 million lb.
Uranium transactions
• Yellow Cake began the period with a holding of 9.86 million lb
of U(3)O(8) and took delivery of an additional net 4.0 million lb of U(3)O(8)
to end the half-year with a total holding of 13.86 million lb of U(3)O(8).
• On 3 March 2021, Yellow Cake exercised its option under the
Framework Agreement with Kazatomprom to acquire a further 3.45 million lb of
U(3)O(8) for an aggregate cash consideration of USD100.0 million. The
Kazatomprom purchase completed during the half-year and the Company took
delivery of the uranium on 21 June 2021.
• As part of the subscription agreement entered into at the time
of the Company's IPO in July 2018, the Company granted Uranium Royalty Corp.
an option to acquire between USD2.5 million and USD10.0 million worth of
U(3)O(8) per year in each of the nine calendar years commencing on 1 January
2019, up to a maximum aggregate amount over such nine-year period of USD31.25
million worth of U(3)O(8). On 30 March 2021, Yellow Cake accepted Uranium
Royalty Corp's option exercise notice to purchase 348,068 lb of U(3)O(8) from
Yellow Cake at USD28.73/lb for an aggregate consideration of USD10.0 million.
The sale to Uranium Royalty Corp. completed on 28 April 2021. For
illustrative purposes, the Company realised a gain of USD2.7 million on the
disposal using a first in first out methodology.
• On 20 May 2021, Yellow Cake completed the purchase of 343,053 lb
of U(3)O(8) in the spot market at a price of USD29.15/lb for total
consideration of USD10.0 million.
• In July 2021, the Company concluded agreements to purchase a
further 550,000 lb of U(3)O(8) in the spot market at an average price of
USD32.35/lb for a total consideration of USD17.8 million and took delivery of
this uranium between July and August 2021.
• The Company concluded an agreement with Kazatomprom to purchase
a further 2.0 million lb of U(3)O(8) for delivery between October and December
2021 at a price of USD32.23/lb for a total consideration of USD64.5 million.
Uranium-related profit
• Yellow Cake made a total uranium-related profit of USD172.8
million in the half-year to 30 September 2021 (30 September 2020: USD23.5
million). This comprised an increase in the fair value of the Company's
uranium investment of USD175.9 million (30 September 2020: USD23.5 million)
and location swap fees of USD0.1 million (30 September 2020: USD0.4 million).
These gains were partially offset by an increase in the fair value of a
uranium derivative liability related to the Kazatomprom repurchase option of
USD3.2 million (30 September 2020: USD0.6 million) (detailed in note 5 of this
report).
Operating performance
• Yellow Cake delivered profit after tax for the half-year of
USD169.1 million (30 September 2020: USD21.7 million).
• Expenses for the half-year were USD3.4 million (September 2020:
USD1.7 million) recognised in the Statement of Comprehensive Income and
included the following costs:
o USD0.1 million in costs related to Yellow Cake's June share placing (30
September 2020: nil).
o USD1.2 million in commissions payable to 308 Services Limited in relation
to the purchase by Yellow Cake of U(3)O(8) (30 September 2020: USD0.1
million).
o The remaining expenses were of a recurring nature and amounted to USD2.1
million (30 September 2020: USD1.6 million).
• Operating expenses of a recurring nature of USD2.1 million
represent approximately 0.3% of the Company's net asset value as at 30
September or 0.6% on an annualised basis (30 September 2020:0.6% or 1.1% on an
annualised basis).
Share placings
• On 21 June 2021, the Company issued 23,947,009 new ordinary
shares to existing and new institutional investors and 1,052,991 new ordinary
shares to retail investors, at a price of GBP2.50 per share, equal to a 1%
premium to the Company's estimated net asset value at the date of the
offering. The Company raised net proceeds of GBP60.6 million (USD equivalent:
84.0 million net of costs of USD2.9 million).
• On 29 October 2021, after the period-end, the Company issued a
total of 30,000,000 new ordinary shares to existing and new institutional
investors, at a price of GBP3.64 per share, equal to a 1% premium to the
Company's estimated net asset value per share at the date of the offering. The
Company raised net proceeds of GBP106.0 million (USD equivalent: 145.7
million net of costs of USD4.0 million).
Balance sheet and cash flow
• The value of Yellow Cake's investment in U(3)O(8) increased by
97% during the half-year from USD302.1 million as at 31 March 2021 to USD595.8
million as at 30 September 2021, as a result of the appreciation in the
uranium price and a net increase in the volume of uranium held.
• At the beginning of the period, Yellow Cake had cash and cash
equivalents of USD126.2 million, largely from the then-unutilised net proceeds
of the March share placing and retail offer of USD134.4 million. The Company
raised a further USD84.0 million during the half-year in the June placing.
During the half-year, the Company applied USD117.8 million to completing net
purchases of 4.4 million lb of U(3)O(8).
• As at 30 September 2021, Yellow Cake had cash and cash
equivalents of USD87.3 million (30 September 2020 USD6.4 million) of which
USD64.5 million was earmarked to finance the purchase of 2.0 million lb of
U(3)O(8) from Kazatomprom later in 2021.
• The Company does not propose to declare a dividend for the
period.
Net Asset Value
Yellow Cake's net asset value on 30 September 2021 was GBP3.26 per share or
USD675.2 million, comprising 13.86 million lb of U(3)O(8) valued at a spot
price of USD43.00/lb(30), a uranium derivative liability of
USD6.6 million(31), and cash and other current assets and liabilities of
USD85.9 million as at 30 September 2021.
Yellow Cake Net Asset Value as at 30 September 2021
Units
Investment in Uranium
Uranium oxide in concentrates ("U(3)O(8)") (A) lb 13,855,601
U(3)O(8) fair value per pound ((30)) (B) US$/lb 43.00
U(3)O(8) fair value (A) x (B) = (C) US$ m 595.8
Uranium derivative liability ((31)) (D) US$ m (6.6)
Cash and other net current assets/(liabilities) (E) US$ m 85.9
Net asset value in US$ m (C) + (D) + (E) = (F) US$ m 675.2
Exchange Rate ((32)) (G) US$/GBP 1.3484
Net asset value in £ m (F) / (G) = (H) £ m 500.7
Number of shares in issue less shares held in treasury ((33)) (I) 153,671,232
Net asset value per share (H) / (I) £/share 3.26
Estimated proforma net asset value on 7 December 2021 was GBP3.55 per share
or USD864.3 million, assuming 18.81 million lb of U(3)O(8)(34) valued at a
spot price of USD44.75/lb(35), a uranium derivative liability of
USD6.6 million(36 )and cash and other current assets and liabilities of
USD85.9 million as at 30 September 2021, plus net proceeds from the October
Placing of USD145.7 million less an estimated USD202.3 million applied, or to
be applied, to uranium purchases.
Yellow Cake Estimated Proforma Net Asset Value as at 7 December 2021
Units
Investment in Uranium
Uranium oxide in concentrates ("U(3)O(8)")( (34)()) (A) lb 18,805,601
U(3)O(8) fair value per pound ((35)) (B) US$/lb 44.75
U(3)O(8) fair value (A) x (B) = (C) US$ m 841.6
Uranium derivative liability ((36)) (D) US$ m (6.6)
Cash and other net current assets/(liabilities) ((37)) (E) US$ m 29.3
Net asset value in US$ m (C) + (D) + (E) = (F) US$ m 864.3
Exchange Rate (G) US$/GBP 1.3244
Net asset value in £ m (F) / (G) = (H) £ m 652.6
Number of shares in issue less shares held in treasury((38)) (I) 183,671,232
Net asset value per share (H) / (I) £/share 3.55
Carole Whittall
Chief Financial Officer
Independent Review Report to Yellow Cake Plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2021, which comprises the Condensed Statement of Financial Position,
the Condensed Statement of Comprehensive Income, the Condensed Statement of
Changes in Equity, the Condensed Statement of Cash Flows and the related
explanatory notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
condensed set of financial statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing and
presenting the half-yearly financial report in accordance with the AIM Rules
for Companies.
As disclosed in note 2, the annual financial statements of the Company will be
prepared in accordance with UK-adopted International Accounting Standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as contained in UK-adopted International
Accounting Standards.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and consequently
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2021 is not prepared,
in all material respects, in accordance with International Accounting Standard
34, "Interim Financial Reporting" as contained in UK-adopted International
Accounting Standards, and the AIM Rules for Companies.
Use of our report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "'Review of Interim
Financial Information performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. Our review work has been undertaken so
that we might state to the Company those matters we are required to state to
them in an independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company, for our review work, for this report, or for the
conclusions we have formed.
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
Date: 8 December 2021
Condensed Statement of Financial Position
As at As at
30 September 2021 31 March 2021
(unaudited) (audited)
Notes USD '000 USD '000
ASSETS:
Non-current assets
Investment in uranium 3 595,791 302,098
Total non-current assets 595,791 302,098
Current assets
Cash and cash equivalents 4 87,302 126,159
Trade and other receivables 169 119
Total current assets 87,471 126,278
683,262 428,376
Total assets
LIABILITIES:
Current liabilities
Trade and other payables (1,549) (3,621)
Uranium derivative liability 5 (6,554) (3,361)
Total current liabilities (8,103) (6,982)
Total liabilities (8,103) (6,982)
NET ASSETS 675,159 421,394
Equity
Attributable to the equity owners of the Company
Share capital 6 2,133 1,785
Share premium 6 442,913 358,812
Share based payment reserve 7 106 141
Treasury shares 8 (11,219) (11,458)
Retained earnings 241,226 72,114
TOTAL EQUITY 675,159 421,394
Condensed Statement of Comprehensive Income
1 April 2021 1 April 2020
to to
30 September 2021 30 September 2020
(unaudited) (unaudited)
Notes USD '000 USD '000
Uranium related profit
Fair value movement of investment in uranium 3 175,892 23,453
Uranium swap income 3 100 409
Premium to spot price on disposal of uranium 3 10 180
Fair value movement of uranium derivative liability 5 (3,193) (561)
Total uranium related profit 172,809 23,481
Expenses
Share based payments 7 (204) (46)
Commission on uranium transactions 9 (1,188) (132)
Procurement and market consultancy fees 9 (777) (597)
Other operating expenses (1,116) (940)
Equity offering expenses (149) -
Total expenses (3,434) (1,715)
Bank interest income 11 -
Loss on foreign exchange (274) (42)
169,112 21,724
Profit before tax attributable to the equity owners of the Company
Tax expense - -
Profit and total comprehensive income for the period after tax attributable to 169,112 21,724
the equity owners of the Company
Basic earnings per share attributable to the equity owners of the Company 11 1.19 0.25
(USD)
Diluted earnings per share attributable to the equity owners of the Company 11 1.18 0.25
(USD)
Condensed Statement of Changes in Equity
Attributable to the equity owners of the
Company
Share
capital
Total
equity
Share Share Treasury Retained
premium
based
Shares
earnings
payment
reserve
Notes USD '000 USD '000 USD'000 USD'000 USD '000 USD '000
As at 31 March 2020 (audited) 1,164 224,437 2 (726) 42,203 267,080
Total comprehensive income after tax for the period - - - - 21,724 21,724
Transactions with owners:
Share based payments 6 - - 46 - - 46
Purchase of own shares 8 - - - (9,698) - (9,698)
As at 30 September 2020 (unaudited) 1,164 224,437 48 (10,424) 63,927 279,152
As at 31 March 2021 (audited) 1,785 358,812 141 (11,458) 72,114 421,394
Total comprehensive income after tax for the period - - - - 169,112 169,112
Transactions with owners:
Shares issued 6 348 86,558 - - - 86,906
Share issue costs 6 - (2,457) - - - (2,457)
Share based payments 7 - - 204 - - 204
Exercise of bonus options 8 - - (239) 239 - -
As at 30 September 2021 (unaudited) 2,133 442,913 106 (11,219) 241,226 675,159
Condensed Statement of Cash Flows
1 April 2021 1 April 2020
to to
30 September 2021 30 September 2020
(unaudited) (unaudited)
Notes USD '000 USD '000
Cash flows from operating activities
Profit for the financial period 169,112 21,724
Adjustments for:
Change in fair value of investment in uranium 3 (175,892) (23,453)
Change in fair value of uranium derivative liability 5 3,193 561
Premium to spot price on disposal of uranium 3 (10) (180)
Share based payments 7 204 46
Loss on foreign exchange 273 42
Interest income (11) -
Operating cash flows before changes in working capital (3,131) (1,260)
Changes in working capital:
Increase in trade and other receivables (52) (81)
Increase in trade and other payables (2,070) 304
Increase in deferred contract income 3 - 736
Interest received 11 -
Net cash flows used in operating activities (5,242) (300)
Cash flows from investing activities
Purchase of uranium 3 (127,791) -
Proceeds of sale of uranium during the period 3 10,000 9,960
Net cash (used in)/generated from investing activities (117,791) 9,960
Cash flows from financing activities
Proceeds from issue of shares 6 86,906 -
Issue costs paid 6 (2,457) -
Proceeds from bonus issue 1 -
Share buyback programme - (9,698)
Net cash generated/(used in) financing activities 84,450 (9,698)
Net decrease in cash and cash equivalents during the period (38,583) (39)
Cash and cash equivalents at the beginning of the period 126,159 6,481
Effect of exchange rate changes (274) (35)
Cash and cash equivalents at the end of the period 87,302 6,407
Notes to the Condensed Interim Financial Statements
For the period from 1 April 2021 to 30 September 2021
1. General information
Yellow Cake plc (the "Company") was incorporated in Jersey, Channel Islands on
18 January 2018. The address of the registered office is Liberation House,
Castle Street, St Helier, Jersey, JE1 2LH.
The Company operates in the uranium sector and was created to purchase and
hold U(3)O(8). The strategy of the Company is to invest in long-term holdings
of U(3)O(8) and not to actively speculate with regards to short-term changes
in the price of U(3)O(8).
The Company was admitted to list on the London Stock Exchange AIM market
("AIM") on 5 July 2018.
2. Summary of significant accounting policies
Basis of preparation
The unaudited condensed interim financial statements for the six months ended
30 September 2021 have been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" as contained in
UK-adopted International Accounting Standards. This report should be read in
conjunction with the Company's annual financial statements for the period
ended 31 March 2021, available on the Company's website
(www.yellowcakeplc.com), which were prepared in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act
2006. The audited financial information for the year ended 31 March 2021 is
based on the statutory accounts for the financial year ended 31 March 2021.
The auditors reported on those accounts: their report was unqualified and did
not contain statements where the auditor is required to report by exception.
The accounting policies adopted and methods of computation followed in the
condensed interim financial statements are consistent with those applied in
the preparation of the Company's annual financial statements for the year
ended 31 March 2021 and are expected to be applied to the Company's annual
financial statements for the year ending 31 March 2022.
The unaudited condensed interim financial statements do not constitute
statutory accounts within the meaning of Section 105 of the Companies (Jersey)
Law 1991.
New and revised standards
At the date of approval of these condensed interim financial statements, there
are no new or revised standards that are in issue but not yet effective and
are relevant to the financial statements of the Company.
Going concern
The Directors, having considered the Company's objectives and available
resources along with its projected income and expenditure for at least 12
months from the date of approval of the condensed interim financial
statements, are satisfied that the Company has adequate resources to continue
in operational existence for the foreseeable future. Accordingly, the
Directors have adopted the going concern basis in preparing these condensed
interim financial statements.
The Board continues to monitor the ongoing impact of the COVID-19 pandemic on
Yellow Cake's activities, the uranium industry and the world economy. The
Company's operations were not significantly affected during the first and
second waves of the pandemic as the Company has no physical operations and the
executive team was already home-based. The business continuity plans
implemented at the Company's key business partners have to date been effective
in enabling them to continue to provide all key support services that were
provided to the Company prior to the pandemic outbreak. To date, Yellow
Cake's suppliers and other counterparties have been able to meet their
obligations to the Company.
As at 30 September 2021, Yellow Cake had sufficient cash balances to meet
approximately three years of working capital requirements, after taking into
account the following:
· On 29 October 2021, the Company issued 30,000,000 new Ordinary
Shares at a price of GBP3.64 per share, raising GBP109.2 million (approx.
USD149.7 million). The Company intends to use the proceeds of the placing to
fund approximately 3.0 million lb of U(3)O(8) purchases, as well as for
general purposes and to fund working capital; and
· Committed transactions that completed or are expected to complete
after the period end, including the purchase 2.0 million lb of U(3)O(8) from
Kazatomprom for a total consideration of USD64.5 million, to which the
Company took title on 4 December, and the Kazatomprom option transactions
described in note 5.
The Company aims to retain approximately three years of working capital
requirements following an equity issuance. The Company has no debt or hedge
liabilities on its balance sheet. In the absence of other sources of capital,
the Company can reasonably be expected to realise a portion of its investment
in uranium to raise working capital if required.
Critical accounting judgements and estimation uncertainty
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in
any future periods affected.
The resulting accounting estimates will, by definition, seldom equate to the
related actual results.
Accounting estimates
The key accounting estimates in prior periods were the assumptions made in
valuing the uranium derivative liability. As at 30 September 2021, the option
in favour of Kazatomprom was exercisable although not yet exercised. Refer to
note 5 that contains details of the derivative liability and the exercise by
Kazatomprom of the option on 22 November 2021.
Judgements
The Directors have considered the tax implications of the Company's operations
and have reached judgement that no tax liability has arisen during the period
which is consistent with the external advice received.
3. Investment in uranium
Fair Value
USD '000
As at 31 March 2020 (audited) 263,489
Change in fair value 23,453
Sale of U(3)O(8) (9,780)
As at 30 September 2020 (unaudited) 277,162
Acquisition of U(3)O(8) 15,024
Change in fair value 9,912
As at 31 March 2021 (audited) 302,098
Acquisition of U(3)O(8) 127,791
Change in fair value 175,892
Sale of U(3)O(8) (9,990)
As at 30 September 2021 (unaudited) 595,791
The value of the Company's investment in U(3)O(8) is based on the daily spot
price for U(3)O(8) of USD43.00/lb as published by UxC LLC on 30 September
2021 (31 March 2021: USD30.65/lb).
The value of the Company's investment in U(3)O(8) in prior periods was based
on the month-end spot price for U(3)O(8) which was published by UxC LLC on the
last Monday of each calendar month. With increasing liquidity in the uranium
spot market and greater availability of daily pricing data, UxC LLC has
commenced the publication of a daily U(3)O(8) spot price, which the Company
believes more accurately represents the period end market price of the
Company's uranium investment.
As at 30 September 2021, the Company:
· Had purchased a total of 14,503,669 lb of U(3)O(8)at an average
price of USD24.23/lb;
· Had disposed of 648,068 lb of U(3)O(8) at an average price of
USD30.80/lb that had been acquired at an average price of USD21.01/lb assuming
a first in first out methodology; and
· Held a total of 13,855,601 lb of U(3)O(8) at an average price of
USD24.38/lb for a net total cash consideration of USD337,763,174, assuming a
first in first out methodology.
Acquisition of uranium
The Company completed the following purchase transactions during the period:
· On 20 May 2021, the Company purchased 343,053 lb of U(3)O(8) in
the spot market for a cash consideration of USD9,999,995.
· On 21 June 2021, the Company purchased 3,454,231 lb of U(3)O(8)
from Kazatomprom for a cash consideration of USD99,999,987, following the
exercise of the 2021 option under the Kazatomprom Framework Agreement.
· On 21 July 2021, the Company purchased 250,000 lb of U(3)O(8) in
the spot market for a cash consideration of USD8,097,500.
· On 27 July 2021, the Company purchased 100,000 lb of U(3)O(8) in
the spot market for a cash consideration of USD3,237,000.
· On 3 August 2021, the Company purchased 200,000 lb of U(3)O(8) in
the spot market for a cash consideration of USD6,456,000.
Location swaps
Since May 2018, Yellow Cake has held an account with Cameco Corporation
("Cameco") for the storage of uranium owned by the Company at Cameco's
facilities at Blind River and Port Hope, Ontario in Canada.
On 15 November 2019, the Company entered into an agreement with Orano Cycle
("Orano") to open a holding account for the storage of uranium owned by the
Company at Orano's conversion facility at the Malvesi and Tricastin sites in
France.
The Company entered into the following two location swap transactions:
1) On 3 April 2020, a location swap agreement was entered into to
exchange 100,000 lb of U(3)O(8), earning an exchange fee of USD20,000. On 20
April 2020, the Company transferred 100,000 lb of U(3)O(8) from the Cameco
facility to the Orano facility in satisfaction of its obligations under this
location swap agreement.
2) On 24 July 2020, a series of location swap agreements were entered
into to exchange 500,000 lb U(3)O(8) located at Cameco's storage facility in
Canada for an equal volume of U(3)O(8) located at Orano's storage facility in
France for a period of six months. At the end of the term, the U(3)O(8) was
swapped back to its original location. In consideration, Yellow Cake received
proceeds of USD1.0 million, net of costs and commissions (gross proceeds of
USD1,125,000). As a consequence of the swap reversal transaction, the income
was recognised over the 6-month life of the location swap agreement.
The date of the reverse location swap date was extended by four months. This
location swap was reversed in May 2021 and the Company received the same
volume of uranium in Canada in exchange for uranium held in France. In
consideration for the extension of the reverse swap transaction, the Company
received an additional fee of USD90,000 net of costs and commissions (gross
proceeds of USD100,000).
Sale of uranium
On 30 March 2021, the Company accepted Uranium Royalty Corp's option exercise
notice to purchase 348,068 lb of U(3)O(8) from the Company at a price of
USD28.73/lb for a total consideration of USD10,000,000. The transaction
completed on 28 April 2021. In respect of the above disposal, a premium of
USD0.03/lb to the prevailing 28 April 2021 daily spot price of USD28.70/lb (as
published by UxC, LLC), or USD10,442, has been recognised in the condensed
statement of comprehensive income. This premium represents the cumulative
disposal proceeds of USD10,000,000 less the carrying value at the date of
disposal of USD9,989,558, being the premium to the spot price (and therefore
to the carrying value) that was realised on disposal.
For illustrative purposes, the above sale of uranium resulted in an effective
"realised gain" of USD2,687,091, being the total sales proceeds of
USD10,000,000 less the "acquisition cost" of USD7,312,909, where the
"acquisition cost" is estimated by applying a "first in first out" methodology
to the cost of all uranium purchases made by the Company.
The following table provides a summary of the Company's investment in U(3)O(8)
as at 30 September 2021:
Quantity Fair Value
Location lb USD '000
Canada 13,555,601 582,891
France 300,000 12,900
Total as at 30 September 2021 13,855,601 595,791
As at 30 March 2021:
Quantity Fair Value
Location lb USD '000
Canada 9,256,385 283,708
France 600,000 18,390
Total as at 31 March 2021 9,856,385 302,098
4. Cash and cash equivalents
Cash and cash equivalents as at 30 September 2021 were banked with Citi Bank
Europe plc in a variable interest account with full access. Balances at the
end of the period were USD87,020,036 and GBP209,386, a total of USD87,302,371
equivalent (31 March 2021: USD125,685,404 and GBP337,918, a total of
USD126,159,065 equivalent).
5. Uranium derivative liability
As part of the initial purchase on 5 July 2018 of 8,091,385 lb of U(3)O(8)
from( )Kazatomprom under a ten-year Framework Agreement with Kazatomprom, the
Company benefited from a purchase price which was 2.5% below the spot price,
resulting in the Company receiving an aggregate discount of approximately
USD4.3 million. In exchange for this discount, the Company provided to
Kazatomprom an option to repurchase up to 25% of the Initial Purchase volume
of 8,091,385 lb U(3)O(8) at the prevailing uranium spot price less an
aggregate discount of approximately USD6.55 million (the "Repurchase Option").
The Repurchase Option could only be exercised if the U(3)O(8) spot price
exceeded USD37.50 /lb for a period of 14 consecutive days (the "Pricing
Condition"), starting three years from 5 July 2018 and expiring on 30 June
2027 and was exercisable within 60 days of the Pricing Condition being met.
The Company had a corresponding option (the "Buyback Option") to purchase from
Kazatomprom all or a portion of the volume repurchased by Kazatomprom under
the Repurchase Option at the prevailing spot price.
The Pricing Condition was met in September 2021 and the following transactions
were agreed post period-end in satisfaction of Repurchase Option and Buyback
Option rights and obligations:
· Purchase by Kazatomprom from Yellow Cake of 2,022,846 lb of
U(3)O(8) at USD43.25/lb, less an aggregate discount of USD6.55 million, for
delivery on or before 20 November 2021; and
· Repurchase by Yellow Cake from Kazatomprom of the 2,022,846 of
U(3)O(8) at USD43.25/lb, for delivery between March and April 2022.
The fair value of the Repurchase Option granted to Kazatomprom has been
determined at USD6.55 million as at 30 September 2021 (31 March 2021:
USD3,361,000), being the expected option payoff at that date, when the option
was in the money but unexercised. In prior periods, the fair value of the
Repurchase Option was determined based on the expected option payoff using a
Monte Carlo simulation produced by an independent financial valuer.
6. Share capital
Authorised:
10,000,000,000 ordinary shares of GBP0.01
Issued and fully paid:
Ordinary shares
Number GBP '000 USD '000
Share capital as at 31 March 2020 (audited) 88,215,716 882 1,164
Share capital as at 30 September 2020 (unaudited) 88,215,716 882 1,164
Issued 2 March 2021 44,525,014 445 621
Share capital as at 31 March 2021 (audited) 132,740,730 1,327 1,785
Issued 21 June 2021 25,000,000 250 348
Share capital as at 30 September 2021 (unaudited) 157,740,730 1,577 2,133
The number of shares on issue above includes the 4,069,498 Treasury shares -
refer to Note 8.
Share
premium
GBP '000 USD '000
Share premium as at 31 March 2020 (audited) 169,956 224,437
Share premium as at 30 September 2020 (unaudited) 169,956 224,437
Proceeds of issue of shares 98,846 137,879
Share issue costs (2,512) (3,504)
Share premium as at 31 March 2021 (audited) 266,290 358,812
Proceeds of issue of shares 62,250 86,558
Share issue costs (1,771) (2,457)
Share premium as at 30 September 2021 (unaudited) 326,769 442,913
The Company has one class of shares which carry no right to fixed income.
7. Share-based payments
The Company implemented an equity-settled share-based compensation plan in
2019 which provides for the award of long-term incentives and an annual bonus
to management personnel.
During the period, USD204,000 was recognised in the statement of comprehensive
income, in relation to share-based payments (30 September 2020: USD46,000).
8. Treasury shares
Number GBP'000 USD'000
Treasury shares as at 31 March 2020 (audited) 309,788 565 726
Purchased in the period 3,443,597 7,504 9,698
Treasury shares as 30 September 2020 (unaudited) 3,753,385 8,069 10,424
Purchased in the period 403,000 797 1,034
Treasury shares as 31 March 2021 (audited) 4,156,385 8,866 11,458
Exercise of bonus options (86,887) (185) (239)
Treasury shares as at 30 September 2021 (unaudited) 4,069,498 8,681 11,219
During the period, options granted to executive management were exercised on
26 July 2021 and settled with 86,887 shares held in treasury. The reduction in
the value of treasury shares resulting from the exercise of bonus options has
been calculated based on the weighted average acquisition cost of the treasury
shares.
9. Commission, procurement and consultancy fees
308 Services Limited ("308 Services") provides procurement services to the
Company relating to the sourcing of U(3)O(8) and other uranium transactions
and in securing competitively priced converter storage services.
In terms of the agreement entered into between the Company and 308 Services on
30 May 2018, 308 Services is entitled to receive (i) a Holding Fee comprised
of a Fixed Fee of USD275,000 per calendar year plus a Variable Fee equal to
0.275% per annum of the amount by which the value of the Company's holdings of
U(3)O(8) exceeds USD100 million and (ii) an Annual Storage Incentive Fee equal
to 33% of the difference between the amount obtained by multiplying the Target
Storage Cost (initially set at USD0.12 /lb per year) by the volume of U(3)O(8)
(in pounds) owned by the Company on 31 December of each respective year and
the total converter storage fees paid by the Company in the preceding calendar
year.
The Company considers Holding Fees and Storage Incentive Fees to be costs of
an ongoing nature. During the period, the Company paid Holding Fees and
Storage Incentive Fees of USD776,828 (30 September 2020: USD597,158) to 308
Services.
308 Services is also entitled to receive commissions equivalent to 0.5% of the
transaction value in respect of uranium sale and purchase transactions
completed at the request of the Yellow Cake Board.
In addition, if the purchase price paid by the Company in respect of such a
purchase transaction is in the lowest quartile of the range of reported
uranium spot prices in the calendar year in which the transaction completed,
308 Services is entitled to receive, at the beginning of the following
calendar year, an additional commission of 0.5% of the value of the uranium
transacted. If the purchase price paid by the Company in respect of such a
purchase transaction is in the second lowest quartile of the range of reported
uranium spot prices in the calendar year in which the transaction completed,
308 Services is entitled to receive, at the beginning of the following
calendar year, an additional commission of 0.25% of the value of the uranium
transacted. If the purchase price is in the top half of the range for the
calendar year in which the transaction completed, no additional commission
will be payable to 308 Services.
Based on broker and industry expert uranium price forecasts and the Company's
own views, the Company considers it reasonably likely that the purchase prices
paid by the Company during the period will be in the lowest quartile of the
range of reported uranium spot prices in the 2021 calendar year. The Company
has therefore elected to include a provisional commission of USD558,953 within
these financial statements in respect of the uranium purchase transactions
completed by the Company during the period equal to 0.5% of the value
transacted.
During the period, commissions and provisional commissions payable to 308
Services totalled USD1,187,906 (30 September 2020: USD132,050).
10. Related party transactions
During the period, the Company incurred USD88,071 (30 September 2020:
USD91,040) of administration fees payable to Langham Hall Fund Management
(Jersey) Limited ("Langham Hall"). Emily Manning is an employee of Langham
Hall and has served as a Non-Executive Director of the Company since 31 March
2021, for which she has received no Directors' fees. As at 30 September 2021,
there were no amounts due to Langham Hall (31 March 2020: USD nil).
The key management personnel are the directors and as there are no other
employees, their remuneration in the period was USD570,458 (30 September
2020:USD324,525).
The following Directors own ordinary shares in the Company:
Name Number of ordinary shares % of share capital*
The Lord St John of Bletso** 26,302 0.02%
Sofia Bianchi 13,186 0.01%
The Hon Alexander Downer 29,925 0.02%
Emily Manning - 0.00%
Alan Rule 18,837 0.01%
Andre Liebenberg 121,478 0.08%
Carole Whittall 49,918 0.03%
Total 259,646 0.17%
* As at 30 September 2021
** The Lord St John of Bletso's shares are held through African Business
Solutions Limited, in which he holds 100% of the Ordinary Shares.
While the Non‐Executive Directors hold shares in the Company, the holdings
are considered sufficiently small so as not to impinge on their independence.
11. Earnings per share
1 April 2021 1 April 2020
to to
30 September 2021 30 September 2020
(unaudited) (unaudited)
USD '000 USD '000
Profit for the period (USD '000) 169,112 21,724
Weighted average number of shares during the period - Basic* 142,491,867 86,855,567
Weighted average number of shares during the period - Diluted* 142,784,802 86,975,157
Earnings per share attributable to the equity owners of the Company (USD):
Basic 1.19 0.25
Diluted 1.18 0.25
*The weighted average number of shares excludes treasury shares.
12. Events after the period end
The Company concluded an agreement with Kazatomprom on 25 August 2021 to
purchase 2.0 million lb of U(3)O(8) at a price of USD32.23/lb for a total
consideration of USD64.5 million. This transaction completed after the period
end and the Company took title to the uranium on 4 December 2021.
On 29 October 2021 the Company successfully placed 30,000,000 new Ordinary
Shares at a price of GBP3.64 per share, raising GBP109.2 million (approx.
USD149.7 million).
The Company applied part of the proceeds of the October Placing to fund
purchases of physical uranium of 2.0 million lb of U(3)O(8) from Curzon
Uranium Limited ("Curzon") at a price of USD46.32/lb, and took title to this
uranium in November 2021.
The Company intends to use part of the remaining proceeds of the October
Placing to fund the purchase of 0.95 million lb of U(3)O(8) from Kazatomprom,
pursuant to Kazatomprom's offer of 26 October 2021 and subject to contract, at
a price of USD47.58/lb, with delivery expected to take place by June 2022.
As set out in note 3, the Pricing Condition in respect of the Kazatomprom
Repurchase Option was met and on 22 November 2021 the Company announced the
following transactions in full satisfaction of the Repurchase Option:
· Purchase by Kazatomprom from Yellow Cake of 2,022,846 lb of
U(3)O(8) at USD43.25/lb, less an aggregate discount of USD6.55 million, for
delivery on or before 20 November 2021; and
· Repurchase by Yellow Cake from Kazatomprom of the 2,022,846 of
U(3)O(8) at USD43.25/lb, for delivery between March and April 2022.
Post period-end uranium transactions
Transaction and delivery date Quantity
lb
As at 30 September 2021 13,855,601
Purchased from Curzon, completed November 2021 2,000,000
Exercise of Kazatomprom Repurchase Option, completed November 2021 (2,022,846)
Purchased from Kazatomprom, completed December 2021 2,000,000
Exercise of Buyback Option, expected March - April 2022 2,022,846
Purchase from Kazatomprom (subject to contract), expected June 2022 950,000
Total 18,805,601
1 (#_ftnref1) Net asset value per share on 30 September
2021 is calculated assuming 157,740,730 ordinary shares in issue, less
4,069,498 shares held in treasury, the Bank of England's daily USD/ GBP
exchange rate of 1.3484 on 30 September 2021 and the daily spot price
published by UxC, LLC on 30 September 2021
2 (#_ftnref2) Daily spot price of USD43.00/ lb
published by UxC, LLC on 30 September 2021
3 (#_ftnref3) Based on the month-end spot price of
USD30.65/lb published by UxC, LLC on 29 March 2021 and 9,856,385 lb of
U₃O₈ held by the company as at 31 March 2021
4 (#_ftnref4) Based on the daily spot price of
USD43.00/lb published by UxC, LLC on 30 September 2021 and 13,855,601 lb of
U₃O₈ held by the company as at 30 September 2021
5 (#_ftnref5) Calculated based on a first in, first out
methodology
6 (#_ftnref6) Comprises 13.9 million lb of U(3)O(8)
held on 30 September 2021, plus 2.0 million lb of U(3)O(8) purchased from
Curzon and delivered in November 2021, plus 2.0 million lb of U(3)O(8)
purchased from Kazatomprom and delivered on 4 December 2021, plus 0.95 million
lb of U(3)O(8) to be purchased from Kazatomprom, subject to contract, for
delivery in June 2022
7 (#_ftnref7) Daily spot price published by UxC, LLC on
7 December 2021
8 (#_ftnref8) Expected pay-out by the Company to
Kazatomprom following the exercise of the Repurchase Option and Buyback
Option, as described in note 5 of the financial statements
9 (#_ftnref9) Includes cash and other current assets
and liabilities of US$85.9 million as at 30 September 2021, plus net October
Placing proceeds of USD145.7, less a cash consideration of USD92.6 million
paid to Curzon in respect of 2.0 million lb of U(3)O(8) delivered in
November 2021, less a cash consideration of USD64.5 m paid to Kazatomprom in
respect of 2.0 million lb of U(3)O(8) delivered on 4 December 2021, less a
cash consideration of USD45.2 m to be paid to Kazatomprom (subject to
contract) in respect of 0.95 million lb of U(3)O(8) to be delivered in 2022
10 (#_ftnref10) Net asset value per share on 7 December 2021 is
calculated assuming 157,740,730 ordinary shares in issue, including 30,000,000
shares issued on 29 October 2021, less 4,069,498 shares held in treasury
11 (#_ftnref11) Weekly price published by UxC LLC
12 (#_ftnref12) UxC Weekly, Vol 35, no 18, 3 May 2021
13 (#_ftnref13) UxC Weekly, Vol 35, No 30, 26 July 2021
14 (#_ftnref14) UxC Weekly, Vol 35, no 36, 6 September 2021
15 (#_ftnref15) Sprott press release: SPROTT PHYSICAL URANIUM
TRUST ANNOUNCES FILING OF AMENDED AND RESTATED BASE SHELF PROSPECTUS, 10
September 2021
16 (#_ftnref16) The SPUT Price," WMC Energy, NEI
International Uranium Fuel Seminar, 9 November 2021
17 (#_ftnref17) UxC Weekly, Vol. 35 No. 39, 27 September 2021
18 (#_ftnref18) UxC Weekly, Vol. 35 No. 40, 4 October 2021
19 (#_ftnref19) World Nuclear Association, "World Nuclear
Performance Report 2021," September 2021
20 (#_ftnref20) US Energy Information Administration 2020
Uranium Marketing Annual Report (May 2021)
21 (#_ftnref21) Euratom Supply Agency Annual Report 2020
22 (#_ftnref22) UxC Weekly "2020 U(3)O(8) Production Review,
26 April 2021
23 (#_ftnref23) Cameo Press Release, "Cameco Restarting Cigar
Lake Mine in April", 9 April 2021 (www.cameco.com (http://www.cameco.com) )
24 (#_ftnref24) Cameco Quarterly Report- 2021 -Q2
(www.cameco.com)
25 (#_ftnref25) Kazatomprom Press Release, "Kazatomprom
Announces 2023 Production Plans, Ortalyk Transaction Update.", 2 July 2021
(kazatomprom.com)
26 (#_ftnref26) IAEA press release, "IAEA Increases
Projections for Nuclear Power Use in 2050," 16 September 2021
27 (#_ftnref27) World Nuclear Association press release, "World
Nuclear Association launches The Nuclear Fuel Report 2021" (8 September 2021)
28 (#_ftnref28) World Nuclear Association, "The Nuclear Fuel
Report - 2021 Edition," 8 September 2021
29 (#_ftnref29) UxC Daily Spot Price Reporting in Response to
an Evolving Market," NEI IUFS, 9 November 2021
30 (#_ftnref30) Daily spot price published by UxC, LLC on 30
September 2021
31 (#_ftnref31) Expected pay-out by the Company to Kazatomprom
following the exercise of the Repurchase Option and Buyback Option, as
described in note 5 of the financial statements
32 (#_ftnref32) Bank of England's daily USD/ GBP exchange
rate of 1.3484 on 30 September 2021
33 (#_ftnref33) Net asset value per share on 30 September 2021
is calculated assuming 157,740,730 ordinary shares in issue less 4,069,498
shares held in treasury
34 (#_ftnref34) Comprises 13.9 million lb of U(3)O(8) held
on 30 September 2021, plus 2.0 million lb of U(3)O(8) purchased from Curzon
and delivered in November 2021, plus 2.0 million lb of U(3)O(8) purchased
from Kazatomprom and delivered on 4 December 2021, plus 0.95 million lb of
U(3)O(8) to be purchased from Kazatomprom, subject to contract, for delivery
in June 2022
35 (#_ftnref35) Daily spot price published by UxC, LLC on 7
December 2021
36 (#_ftnref36) Expected pay-out by the Company to
Kazatomprom following the exercise of the Repurchase Option and Buyback
Option, as described in note 5 of the financial statements
37 (#_ftnref37) Includes cash and other current assets and
liabilities of US$85.9 million as at 30 September 2021, plus net October
Placing proceeds of USD145.7, less a cash consideration of USD92.6 million
paid to Curzon in respect of 2.0 million lb of U(3)O(8) delivered in
November 2021, less a cash consideration of USD64.5 m paid to Kazatomprom in
respect of 2.0 million lb of U(3)O(8) delivered on 4 December 2021, less a
cash consideration of USD45.2 m to be paid to Kazatomprom (subject to
contract) in respect of 0.95 million lb of U(3)O(8) to be delivered in 2022
38 (#_ftnref38) Net asset value per share on 7 December 2021 is
calculated assuming 157,740,730 ordinary shares in issue, including 30,000,000
shares issued on 29 October 2021, less 4,069,498 shares held in treasury
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EAFAPEEAFFAARecent news on Yellow Cake
See all newsREG - Yellow Cake PLC - Quarterly Operating Update
AnnouncementREG - Yellow Cake PLC - TR1: Notification of Major Holdings
AnnouncementREG - Yellow Cake PLC JPMorgan Chase & Co - TR1: Notification of Major Holdings
AnnouncementREG - Yellow Cake PLC - TR1: Notification of Major Holdings
AnnouncementREG - Yellow Cake PLC - TR1: Notification of Major Holdings
Announcement