REG - Yellow Cake PLC - Interim Financial Report
06/12/2023 07:00
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RNS Number : 7912V Yellow Cake PLC 06 December 2023
6 December 2023
Yellow Cake plc ("Yellow Cake" or the "Company")
Unaudited Interim Financial Report for the six-month period ended 30 September
2023
Yellow Cake, a specialist company operating in the uranium sector holding
physical uranium for the long term, is pleased to announce its unaudited
interim financial report for the six-month period ended 30 September 2023
("half-year").
Highlights
· Increase in Yellow Cake's holdings of physical uranium
("U(3)O(8)") from 18.81 million lb of U(3)O(8) to 20.16 million lb of
U(3)O(8).
· Increase of 55.5% in the value of Yellow Cake's U(3)O(8) holdings from
USD952.5 million(( 1 )) as at 31 March 2023, to USD1,481.4 million 2 as at
30 September 2023, as a result of a 45.1% increase in the U(3)O(8) spot
price from USD50.65/lb(( 3 )) to USD73.50/lb(( 4 )) combined with the increase
in volume of U(3)O(8) held by Yellow Cake over the period.
· Increase in net asset value from USD1,035.3 million 5 as at 31
March 2023 to USD1,494.2 million 6 as at 30 September 2023. Increase in net
asset value per share from GBP4.23 per share (USD5.23 per share) 7 as at 31
March 2023 to GBP6.18 per share (USD7.54 per share) 8 as at 30 September
2023.
· Profit after tax for the half-year of USD458.8 million (30
September 2022: loss of USD145.5 million).
· On 30 September 2023, Yellow Cake took delivery of 1,350,000 lb
of U(3)O(8) that it had elected to purchase as part of its 2022 uranium
purchase option under its agreement (the "Framework Agreement") with JSC
National Atomic Company Kazatomprom ("Kazatomprom") at a price of USD48.90/lb,
or USD66.0 million in aggregate. The delivery was made at the Cameco storage
facility in Ontario, Canada. The purchase was funded from the proceeds of an
oversubscribed share placing in February 2023, which raised gross proceeds of
approximately GBP61.8 million (approximately USD74.3 million).
· Subsequent to the period-end, following the completion of a
further oversubscribed share placing on 2 October 2023, which raised gross
proceeds of approximately GBP103 million (approximately USD125 million) at a
price of GBP5.50 per share, Yellow Cake informed Kazatomprom that it had
elected to purchase 1,526,717 lb of U(3)O(8) at a price of USD65.50/lb, at a
cost of USD100.0 million, exercising the entirety of the Company's 2023
uranium purchase option under its Framework Agreement with Kazatomprom. Yellow
Cake expects to take delivery in H1 2024 and on completion will hold 21.68
million lb of U(3)O(8).
· All U(3)O(8) to which the Company has title and has paid for, is
held at the Cameco storage facility in Canada and the Orano storage facility
in France. The Company's operations, financial condition, and ability to
purchase and take delivery of U(3)O(8) from Kazatomprom, or any other party,
have, to date, remained unaffected by the geopolitical events in Ukraine.
· Yellow Cake's estimated pro forma net asset value on 4 December
2023 9 was GBP6.58 per share or USD1,799.3 million, based on 21.68 million
lb of U(3)O(8) 10 valued at a spot price of USD81.45/lb 11 and cash and
other current assets and liabilities of USD12.7 million as at 30 September
2023, plus net placing proceeds of USD120.6 million received on 2 October 2023
less a cash consideration of USD100.0 million to be paid to Kazatomprom
following the expected delivery of 1.53 million lb of U(3)O(8) in H1 2024.
Yellow Cake Estimated Pro forma Net Asset Value as at 4 December 2023 (9)
Units
Investment in Uranium
Uranium oxide in concentrates ("U(3)O(8)") ((10)) (A) lb 21,682,318
U(3)O(8) fair value per pound ((11)) (B) USD/lb 81.45
U(3)O(8) fair value (A) x (B) = (C) USD m 1,766.0
Cash and other net current assets/(liabilities) (() 12 ()) (D) USD m 33.3
Net asset value in USD m (C) + (D) = (E) USD m 1,799.3
Exchange Rate (F) USD/GBP 1.2614
Net asset value in GBP million (E) / (F) = (G) GBP m 1,426.5
Number of shares in issue less shares held in treasury(() 13 ()) (H) 216,856,447
Net asset value per share (G) / (H) GBP/share 6.58
Andre Liebenberg, CEO of Yellow Cake, said:
"The uranium price has recently hit a 15-year high, driven by the same
supply-demand characteristics that we have consistently highlighted since our
listing. Specifically, we are seeing higher demand as nuclear energy is
increasingly accepted as the critical choice to meet our future net zero
ambitions. Notably in France, we have seen plans to reduce nuclear's share of
electricity generation to 50% jettisoned, while China's nuclear capacity
target is expected to increase significantly from previous targets. At the
same time, supply remains constrained despite steadily rising prices, due in
part to operational challenges associated with mining the commodity, and
geopolitical factors, risks that do not impact Yellow Cake. We have continued
to deliver against our stated strategy to buy and hold physical uranium giving
our shareholders the opportunity for direct exposure to the commodity. Our
ten-year framework agreement with Kazatomprom, which allows us to acquire
USD100 million of uranium every year until 2027, is key to our investment
case. We recently raised funds through an oversubscribed share placing and
purchased a further USD100.0 million of U(3)O(8) at a price of USD65.50/lb,
boosting our holding to nearly 22 million pounds of uranium. We remain very
confident in our strategy, and the long term outlook for uranium."
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
Tel: +44 (0) 207 523 8000
Joint Broker: Berenberg
Matthew Armitt Jennifer Lee
Detlir Elezi
Tel: +44 (0) 203 207 7800
Financial Adviser: Bacchus Capital Advisers
Peter Bacchus Richard Allan
Tel: +44 (0) 203 848 1640
Communications Adviser: Powerscourt
Peter Ogden
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)"). It may also seek
to add value through 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 20.16
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 required to do so by applicable law or the AIM Rules.
Chief Executive's Statement
Overview
Longer-term trends in uranium supply/demand fundamentals crystallised in a
strong rise in uranium prices in the six months to 30 September 2023.
Electricity use is projected to escalate strongly in the decades ahead as a
result of population growth, development, urbanisation, electric vehicles, big
tech data centres and heavy industry. Nuclear power is increasingly recognised
globally as an essential part of the solution in the context of
decarbonisation goals and energy security.
The list of countries showing positive shifts towards nuclear continued to
grow during the period, including favourable policy developments,
recommissioning idled capacity, constructing new facilities and extending
operating licences. China alone aims to add nuclear capacity of approximately
90% of the current global reactor count by 2060. Advanced reactors and small
and modular reactors ("SMRs") continue to make progress towards
commercialisation with strong support from investors and governments,
improving the ease and speed of rolling out nuclear solutions at reduced cost.
In the face of this projected increased demand, uranium supply is likely to
struggle to keep pace. The World Nuclear Association reported in September
that primary uranium supply met only 76% of global demand in 2022, a trend
likely to remain in place as existing mines deplete. Upping production at
current producers is not necessarily a simple matter, as seen in technical
challenges and supply chain constraints reported by major producers like
Kazatomprom and Cameco during the period. The concentrated nature of uranium
resources is a further complicating factor in the context of the
Russia/Ukraine conflict and a coup in Niger, which together affect around 19%
of annual uranium production. Concerns remain about the ability of Kazakhstan,
the world's largest producer of uranium, to supply uranium to the West at
volume while avoiding the complexities of transit across Russian territory.
These factors saw the uranium spot price rise by 45% from 31 March 2023 to 30
September 2023 on relatively low volumes. Term uranium price indicators rose
by 30% as nuclear utilities acquired additional inventory to meet future fuel
needs. Increased annual volumes under newly negotiated term uranium contracts
may force associated prices to rise to incentivise uranium mining development,
placing further pressure on near-term uranium prices.
Yellow Cake's uranium purchase option under its Framework Agreement with
Kazatomprom is a key asset in our strategy to provide investors with low risk,
low cost and liquid exposure to the uranium spot price in a publicly-quoted
vehicle. Shortly after period end, the Company raised funds through an
oversubscribed share placing and committed to purchase a further USD100.0
million (1.53 million lb of U(3)O(8)) at a price of USD65.50/lb. Yellow Cake
expect delivery to take place in H1 2024, boosting Yellow Cake's holding to
21.68 million lb of U(3)O(8). This increased holding provides shareholders a
substantial opportunity to participate in the continued unfolding of the
long-term supply/demand mismatch in the uranium market.
Global Uranium Market
The uranium spot price rose significantly over the half-year from USD50.65/lb
up to USD73.50/lb, securing gains of more than 45%. Aggregate spot market
volumes remained modest during April-September period with UxC reporting a
total of 27.4 million lb of U(3)O(8) transacted during the six-month period,
averaging slightly more than 4.5 million lb of U(3)O(8) per month.
The Sprott Physical Uranium Trust ("SPUT") was relatively inactive during
April-September SPUT traded at a discount for 95% of the trading days during
the period) with the uranium fund reporting purchases totalling 459,979 lb of
U(3)O(8) during the six month period, compared to 5.1 million lb in the
comparative prior period. 14 (#_ftn14)
Total transactional volume in the term market reported during the period was
92 million lb of U(3)O(8) (excluding multi-year agreements involving
non-utility buyers). Term uranium price indicators strengthened as a result,
with the three-year Forward Price rising from USD57.00/lb at the end of March
to USD75.00/lb at the end of September. Similarly, the five-year Forward Price
improved from USD61.00/lb up to USD79.00/lb. The long-term price gained
USD8.00/lb from the end of March 2023 from the then-reported level of
USD53.00/lb to USD61.00/lb at the end of the half-year.
Nuclear Generation / Uranium Demand
In July 2023, China announced that its commercial nuclear power programme now
has 24 reactors under construction. 15 The country's State Council approved
the construction of six nuclear reactors: units 5 and 6 of the Ningde nuclear
power plant ("NPP") in Fujian Province, units 1 and 2 of the Shidaowan NPP in
Shandong Province, and; units 1 and 2 of the Xudabao NPP in Liaoning
Province. 16
In September 2023, the China Nuclear Energy Association announced that China's
nuclear power sector is expected to supply 10% of the nation's electricity by
2035. Furthermore, China's installed nuclear capacity is planned to reach 400
GWe by 2060 supplying 18% of China's electricity at that time. Currently,
China has 55 operating reactors (reported capacity 56.8 GWe) with a further 24
under construction. Twenty-one reactors have been approved for construction
since the beginning of the 14(th) Five-Year Plan period (2021-2025). 17
In April 2023, India's Minister of State, Jitendra Singh, announced that the
country's nuclear generating capacity is expected to reach about 9% of its
total installed generating capacity by 2047. The 47,112 TWh of nuclear power
generated in India in 2021-2022 represented about 3.2% of India's total
electricity generation. India anticipates expanding its current installed
nuclear capacity of 6,780 MWe to 22,480 MWe by 2031, as ten approved nuclear
reactors are constructed, with further units being built in fleet mode. 18
In June 2023, India's Prime Minister, Narendra Modi, and US President, Joe
Biden, released a joint statement following talks in Washington supporting the
significant role of nuclear power in global decarbonisation efforts. The two
leaders reported that negotiations are ongoing between Nuclear Power
Corporation of India Ltd and Westinghouse Corporation for the construction of
six AP-1000 reactors while further discussions are being held regarding small
modular reactors in India. 19
Japan's Kansai Electric Power Company recommenced operation of the Takahama-1
reactor in July 2023 and of the Takahama-2 reactor in September 2023. 20 The
units had been offline since 2011. Both reactors have been granted operating
license extensions which will allow the units to operate for up to 60
years. 21
During the half-year, the US Department of Energy's Energy Information
Administration released its Uranium Marketing Report which contains a broad
spectrum of data relating to owners and operators of US civilian nuclear power
reactors, nuclear fuel purchases and usage during 2022. US nuclear utilities
purchased a total of 40.5 million lb of U(3)O(8) during 2022, 13% less than
the 2021 level of 46.7 million lb of U(3)O(8). The weighted average purchase
price rose from USD33.91/lb in 2021 to USD39.08/lb in 2022. Principal supply
origin countries included Canada (27.4%), Kazakhstan (24.7%), Russia (11.8%),
Uzbekistan (11%) and Australia (8.9%). Russian-origin uranium acquired by US
utilities was reported at 8.1 million lb of U(3)O(8) in 2020, declining by 41%
over the two-year period. During 2022, 15% of the uranium delivered in the
market was purchased under spot contracts at a weighted-average purchase price
of USD40.70/lb while the remaining 85% was purchased under long-term contracts
at a weighted-average price of USD38.81/lb. At the end of 2022, the maximum
uranium deliveries for 2023 through to 2032 under existing purchase contracts
totalled 223 million lb of U(3)O(8) while unfilled uranium market requirements
for the same period totalled 179 million lb of U(3)O(8). 22
Having declared commercial operation of the Vogtle-3 reactor, the first newly
constructed power reactor in the United States in more than 30 years (31 July
2023), Georgia Power announced the commencement of fuel-loading at Vogtle-4
effective 17 August 2023. The unit is scheduled for commercial operation in 4Q
2023 or 1Q 2024. 23
A joint development agreement has been executed between US utility Energy
Northwest and X-Energy Reactor Company for the deployment of up to 12 Xe-100
small modular reactors in central Washington state. The utility anticipates
the first Xe-100 module to be online by 2030 at a site adjacent to the
existing Columbia Generating Station in Richland, Washington. 24
South Korea is evaluating the country's need for additional nuclear power
reactors in response to increasing electricity demand resulting from the
expansion of data centres, investment in high technology industries
(semi-conductors and batteries) and escalating utilisation of electric
vehicles. The 29(th) Energy Committee meeting was under the auspices of the
Ministry of Trade, Industry and Energy. Based upon strong Committee support,
the Committee decided to bring forward the initiation of the 11(th)
Electricity Plan addressing the years 2024-2038. 25
Taiwan's People's Party, the political opposition party, has stated that if
successfully elected in 2024, they will reverse the country's nuclear
phase-out policy which calls for the shut-down of the two remaining operating
NPPs (Maanshan NPP) by 2025, when the units will have reached the end of their
40-year operating licenses. Taiwan People's Party Chairman and presidential
candidate, Ko Wen-je, has stated that nuclear power is essential to the
nation's goal of attaining carbon neutrality by 2050. 26
The Polish government initiated the process to construct a NPP based on South
Korean reactors. PGE PAK Energia Jadrowa SA ("PPEJ") submitted an application
to Poland's Ministry of Climate and Environment for a decision-in-principal
for the construction of the proposed NPP consisting of at least two APR-1400
reactors to be built in central Poland. Assuming the approval process leads to
a license to construct and operate, PPEJ plans on commercial operation by
2035. 27 Poland also issued an environmental permit for its first NPP which
is to be built on the Baltic Coast. Construction is planned to begin in 2026
with the facility operational by 2033. 28
Sweden's Minister for Climate and Environment called for the Nordic country to
construct up to ten new large nuclear reactors (or the equivalent SMRs) by
2045, to supplement the current commercial reactor fleet of six reactors
(6,937 MWe). The Minister's comments followed the release of the Radiation
Safety Authority (Sweden) report (9 August) supporting a pre-licensing review
of new reactor designs as well as the development of the regulatory framework
which may be needed for the future expansion of nuclear power. 29
Turkey expects to reach agreement with China for its second NPP to be sited
near the city of Kirklareli, in the northwestern area of the country. The NPP
will follow the current NPP being built by Russia's Rosatom which is expected
to enter commercial operation in 2024. 30
The Italian government established a working group to assess the restart of
the country's nuclear power programme. Historically, Italy operated four NPPs
(total capacity 1,423 MWe). However, a decision to shut down two remaining
reactors was taken in July 1990 in response to the nuclear accident at
Chernobyl, following the earlier closure of the other two reactors. The newly
drafted "National Platform for Sustainable Nuclear" calls for a multi-agency
review of potential technologies and sites. 31
Nuclear power development in Africa continued to progress. Kenya announced
plans to begin construction of a NPP at coastal sites in either Kilifi or
Kwale counties. The facility is expected to cost USD3.4-4.1 billion and start
construction in 2027. 32 The Ugandan President announced that Russia and
South Korea will construct two NPPs in Uganda. Agreements have been reached
but no date for construction start was given except for "soon." 33 Nuclear
Power Ghana selected two potential sites for its planned NPP with Nsuban
(Western Region) as the preferred location and Obotan (Central Region) serving
as the back-up. The country expects to select the reactor vendor by 2030 with
construction commencing that year.
Uranium Supply
Cameco Corporation ("Cameco") released the company's Q3 2023 financial results
on 30 October 2023. Uranium production increased to 11.9 million lb of
U(3)O(8) for the nine months to 30 September 2023 compared to 6.6 million lb
of U(3)O(8) during the same period in 2022, as the McArthur River/Key Lake
Mill facility ramped up after an extended period of care and maintenance and
Cameco's ownership share of Cigar Lake increased incrementally. Cameco
confirmed its reduced guidance (announced 3 September) for McArthur River/Key
Lake and Cigar Lake production in 2023. Guidance for production at McArther
River/Key Lake reduced from 15.0 million lb of U(3)O(8) to 14.0 million lb of
U(3)O(8) (Cameco's share reducing from 10.5 to 9.8 million lb of U(3)O(8))
following challenges at the Key Lake Mill facility. These related to the
length of time the facility was in care and maintenance, operational changes,
skills shortages and supply chain challenges affecting availability of
materials and reagents.
Guidance for production at Cigar Lake reduced from up to 18.0 million lb
of U(3)O(8) to up to 16.3 million lb of U(3)O(8) in 2023 (Cameco's share
reducing from up to 9.8 to up to 8.9 million lb of U(3)O(8)). Planned
production was negatively affected by technical issues and unplanned
maintenance. In addition, the company is entitled to purchase 4.2 million lb
of U(3)O(8) from JV Inkai (Kazakhstan) during 2023 from planned production of
8.3 million lb of U(3)O(8) at the Kazakh ISR production facility. Guidance for
both McArther River/Key Lake and Cigar Lake 2024 production remained at 18
million lb U(3)O(8) each.
Cameco expects to purchase 11-13 million lb of U(3)O(8) during the year due to
increased 2023 deliveries and to maintain a working inventory (that total
includes existing purchase commitments including Cameco's share of output from
the JV Inkai in Kazakhstan). Corporate executives talked of "transformative
tailwinds for the nuclear power industry" arising from ongoing geopolitical
events, the global focus on the climate crisis and energy security
concerns 34 . The accompanying news release referred to "durable, full-cycle
demand growth across the nuclear energy industry" and "the industry's best
ever market fundamentals" 35 .
Cameco continued its term uranium and conversion services contracting
strategy, involving nuclear utilities in Central and Eastern Europe, as
Bulgaria executed a long-term purchase agreement for 100% of the UF(6) needs
of the Kozloduy 5 reactor complex. The agreement, which will be effective
through 2033, calls for Cameco to deliver a total of approximately 2.2 million
kg of UF(6) (the equivalent of about 5.7 million lb of U(3)O(8)). 36
Kazatomprom announced the approval of several agenda items during the
company's Annual General Meeting on 25 May 2023. More than 90% of the votes
cast approved a "major transaction", allowing Kazatomprom to enter into
agreements representing more than fifty percent of the total book assets of
Kazatomprom, including the recently announced long-term uranium sales
agreement "and other transactions for the purchase and sale of natural uranium
concentrates" with China National Nuclear Corporation Overseas Limited. 37
In September 2023, Kazatomprom announced its plans for increased uranium
production in CY2025 to 100% of subsoil agreements and stated that, driven by
a strong contract book and already growing sales portfolio, planned output
would reach 79.3-81.9 million lb of U(3)O(8) in 2025 which would be an
increase of around 15.6 million lb above the currently planned output for
CY2024. However, Kazatomprom warned that geopolitical uncertainty, global
supply chain issues and inflationary pressure could impact the planned
production increase.
On 1 November 2023, Kazatomprom released its third quarter 2023 financial
results, including uranium production data. The company reported total
production of 39.8 million lb of U(3)O(8) for the nine months to 30 September
2023, a slight decrease from the 40.2million lb of U(3)O(8) produced in the
prior period. Kazatomprom's attributable share of production for the nine
months to 30 September 2023 was 17.9 million lb of U(3)O(8). The company's
average realised price rose by 14% to USD47.81/lb period-on-period. Production
volume for the year (100% basis) continues to be guided at 53.3 million
lb-55.9 million lb, although the company flagged persistent issues associated
with limited access to certain key materials, such as sulfuric acid, and
uncertainties relating to the Russia/Ukraine conflict as potential risks to
forecast production. 38
French President, Emmanuel Macron, conducted a state visit to Mongolia in May
2023. A major focus of the visit was joint cooperation between the two
countries in the area of uranium exploration and development, specifically the
Zuuvch-Ovoo ISR Uranium Project, which is being evaluated by Badrakh Energy, a
joint-venture of the French nuclear fuel cycle company, Orano (66%), and
Mongolia's Mon-Atom (34%). The project could eventually produce as much as 8-9
million lb of U(3)O(8)/year at full capacity, although a development decision
is yet to be taken. 39
UxC released its annual uranium production summary, "2022 U(3)O(8) Production
Review," on 15 May 2023. Worldwide uranium production increased 4.9% from 123
million lb of U(3)O(8) in 2021 to 129 million lb of U(3)O(8) in 2022. The
majority of the uplift in uranium output was due to the ramp-up of the Cigar
Lake uranium mine and the restart of the McArthur River uranium mine, both in
Northern Saskatchewan, while the Olympic Dam multi-mineral mine in Australia
contributed a portion of the incremental increase as the facility exited a
major smelter maintenance programme during the year. Kazakhstan remained the
largest producer, reporting 55.2 million lb of U(3)O(8) in 2022 (43% of global
production), followed by Canada with production of 19.2 million lb of U(3)O(8)
in 2022. Namibia produced 14.6 million lb of U(3)O(8) while Australia produced
12.2 million lb of U(3)O(8) in 2022. Uzbekistan reported total uranium
production of 9.1 million lb of U(3)O(8). The five largest uranium producing
countries accounted for just over 85% of total global uranium production in
2022. 40
The International Atomic Energy Agency ("IAEA") convened its periodic
International Symposium on Uranium Raw Material for the Nuclear Cycle
(URAM-2023) in May 2023. Held at five-year intervals, this symposium examined
a broad spectrum of technical and commercial factors relating to the
availability of uranium for the nuclear fuel cycle. UxC's Executive Vice
President-Uranium presented a keynote address entitled "Global Uranium Supply
and Demand Dynamics Amid Heightened Geopolitical Risk" which highlighted
challenges to future uranium developments as well as stating that UxC is
forecasting that global uranium requirements will increase by 62% through
2040. Further, TENEX/Rosatom's Alexander Boytsov observed that "the era of
"cheap" uranium in the world market is ending." 41
On 26 July 2023, presidential guards seized Niger's president, Mohamed Bazoum
in a military coup. Niger's uranium production totalled 5.85 million lb of
U(3)O(8) in 2022 (around 5% of the global total) from the operation of SOMAIR,
an open-pit mine owned by the French company, Orano (63.4%) and Sopamin, a
company that manages Niger's participation in mining ventures (36.66%). The
outcome of this geopolitical event remains unresolved, but Orano has stated
that any interruption in uranium production or transport would not impact the
French nuclear programme due to sufficient uranium inventories. Two foreign
uranium companies yet to commence operations in Niger, Global Atomic (Dasa
Uranium Project) and GoviEx (Madaouela Uranium Project), reported that their
activities were proceeding as normal. 42
Nuclear Power Forecasts
The US Nuclear Energy Institute ("NEI") released its report entitled "The
Future of Nuclear Power 2023" which documents the results of a survey
involving 19 NEI utility member companies which currently operate eighty of
the nuclear reactor facilities in the United States. The survey highlighted
that more than 90% of the 80 units surveyed anticipate receiving approval to
operate for at least 80 years (majority of fleet would operate to 2050 or
beyond) and that more than 50% of sites surveyed have a level of interest or
planning for power up rates for their site units. The survey identified plans
for over USD6.0 billion in capital investment supporting the planned changes
to the current operating fleet. Nearly two-thirds of the respondents indicated
that the recent federal policy developments have resulted in an increased
interest in new nuclear within their companies and half of the respondents
indicated that their companies are considering or actively working to include
new nuclear in the integrated resource plans. Nearly half of the respondents
indicated that they have an interest in pursuing actions to site or license a
new reactor, with the first applications expected to occur in the next
year. 43
In a statement issued at the conclusion of the recent Nuclear Energy Forum
convened during the G7 conference on climate, energy and environment, five
nations (United States, Canada, United Kingdom, Japan and France) stated that
they have identified "potential areas of collaboration on nuclear fuels to
support the stable supply of fuels for the operating reactor fleets of today,
enable the development and deployment of fuels for the advanced reactors of
tomorrow and achieve reduced dependence on Russian supply chains."
Furthermore, collaboration on strategic opportunities in the nuclear fuel
cycle will "establish a level playing field to compete more effectively
against predatory suppliers" while strengthening domestic sectors. 44
In her opening remarks before the 2023 Nuclear Energy Assembly, Nuclear Energy
Institute President and CEO, Maria Korsnick, stated that "This is the biggest
moment for nuclear energy since the dawn of the atomic age. Everywhere we
look, we see demand surging." 45
The International Energy Agency released an update to its 2021 report, "Net
Zero Roadmap," which examines various future energy development scenarios.
Under the net-zero emissions (NZE) scenario, the global energy analysis group
now foresees global nuclear power increasing from the current level (392 GW),
reaching 916 GW in 2050 as compared to the original study which concluded the
need for 812 GW by 2050. 46
The World Nuclear Association convened its Annual Symposium in London (6-8
September 2023). The global nuclear power organisation released the latest
edition of its comprehensive nuclear fuel markets assessment and forecast "The
Nuclear Fuel Report - Global Scenarios for Demand and Supply Availability 2023
- 2040." The presentation of the biennial report's conclusions regarding
future uranium availability, stated that "in 2022, only 76% of world reactors
requirements were covered by primary uranium supply. By the mid 2020s,
restart of idled capacity is expected, however the decrease of supply from the
presently-known existing mines will continue due to further depletion of
uranium resources" and "in the long run, intense development of new projects
and other unspecified sources will be needed to fill in the supply-demand
gap."
Uranium Market Outlook
The global spot uranium market continues to demonstrate upward price pressure
in spite of relatively modest levels of monthly transactions. Although there
has been a significant reduction in financial entity buying throughout 2023,
near-term demand from nuclear utilities, uranium producers and trading
entities has been sufficient to elicit further price increases.
Subsequent to the April-September period, the spot market price has continued
to strengthen, exceeding USD80.00/lb at the end of November. Factors
contributing to that trend include limited availability of near-term inventory
considered as mobile (available for sale), growing nuclear utility concerns
regarding future production of sufficient uranium to underpin both operating
and planned nuclear reactors as well as geopolitical risks associated with a
number of producing countries such as Russia and Niger.
A growing focus on term uranium contracting will be a contributing factor to
the expected increase in spot market demand as nuclear utilities acquire
additional inventory to support future fuel needs.
Since the Russian invasion of Ukraine in February 2022, the threat of
restrictions on Russian-sourced nuclear fuel deliveries into the European
Union, United Kingdom and the United States has persisted. An impediment to
those deliveries either through sanctions or logistical challenges would
likely impact the global nuclear fuel markets and result in further upward
price pressures.
These market factors may continue to prevail and exert upward pressure on the
uranium price, both spot and long-term. As annual volumes under newly
negotiated term uranium contracts increase, associated prices may need to rise
to incentivise necessary uranium development, placing incremental pressure on
near-term uranium prices.
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 holdings by 55.5%
from USD952.5 million(( 47 )) to USD1,481.4 million 48 , as a result of the
appreciation in the uranium price and an increase in the volume of uranium
held.
• Increase in the Company's holdings from 18.81 million lb of
U(3)O(8) to 20.16 million lb of U(3)O(8).
• 1.35 million lb of U(3)O(8) acquired at a price of USD48.90/lb,
or USD66.0 million in aggregate.
• Profit after tax of USD458.8 million (30 September 2022: loss of
USD145.5 million).
Uranium purchase
Yellow Cake began the period with a holding of 18.81 million lb of U(3)O(8.
)On 30 September 2023, Yellow Cake took delivery of 1,350,000 lb of U(3)O(8)
that it had elected to purchase as part of its 2022 uranium purchase option
under its Framework Agreement with JSC National Atomic Company Kazatomprom at
a price of USD48.90/lb, or USD66.0 million in aggregate. The delivery was made
at the Cameco storage facility in Ontario, Canada. The purchase was funded
from the proceeds of an oversubscribed share placing in February 2023 which
raised gross proceeds of approximately GBP61.8 million (USD74.3 million).
Subsequent to the period-end, following the completion of a further
oversubscribed share placing on 2 October 2023 which raised gross proceeds of
approximately GBP103 million (approximately USD125 million), Yellow Cake
informed Kazatomprom that it had elected to purchase 1,526,717 lb of U(3)O(8)
at a price of USD65.50/lb, or USD100.0 million in aggregate, exercising the
entirety of the Company's 2023 uranium purchase option under its Framework
Agreement with Kazatomprom. Yellow Cake expects delivery to take place in the
first half of calendar 2024 and on completion will hold 21.68 million lb of
U(3)O(8).
Uranium-related gain
Yellow Cake made a total uranium-related gain of USD462.9 million in the
half-year to 30 September 2023 (30 September 2022: loss of USD142.0 million).
Operating performance
• Yellow Cake delivered profit after tax for the half-year of USD458.8
million (30 September 2022: loss of USD145.5 million).
• Expenses for the half-year were USD5.7 million (September 2022:
USD3.4 million) and comprised:
o USD0.7 million in commissions payable to 308 Services Limited in relation to
the purchase by Yellow Cake of U(3)O(8) (30 September 2022: USD0.4 million);
and
o USD5.0 million in expenses of a recurring nature (30 September 2022: USD3.0
million) comprising the following):
§ Procurement and market consultancy fees (holding fees and storage
incentive fees) paid to 308 Services Limited of USD1.5 million (30 September
2022: USD1.6 million) (detailed in note 8); and
§ Other operating costs of USD3.6 million (30 September 2022: USD1.4
million). The increase was principally attributable to higher uranium storage
costs, following the expiration of a very competitive five-year storage
contract with Cameco in December 2022.
Yellow Cake's Management Expense Ratio for the half-year (total operating
expenses of a recurring nature, excluding commissions and equity offering
expenses, expressed as an annualised percentage of average daily net asset
value during the period) was 0.88% (30 September 2022: 0.62%).
Balance sheet and cash flow
The value of Yellow Cake's investment in U(3)O(8) increased by 55.5% during
the half-year from USD952.5 million as at 31 March 2023 to USD1,481.4 million
as at 30 September 2023, as a result of the increase in the uranium price from
USD50.65/lb(( 49 )) to USD73.50/lb(( 50 )), combined with an increase in the
volume of uranium held from 18.81 million lb of U(3)O(8) to 20.16 million lb
of U(3)O(8).
As at 30 September 2023, Yellow Cake had cash and cash equivalents of
USD83.4 million (31 March 2023 USD84.8 million). Of this, USD66.0 million
was applied after the period-end to paying for 1.35 million lb of U(3)O(8)
which was delivered to Yellow Cake on 30 September 2023.
The Company does not propose to declare a dividend for the period.
Net Asset Value
Net asset value during the half-year increased from USD1,035.3 million or
GBP4.23 per share 51 as at 31 March 2023 to USD1,494.2 million or GBP6.18
per share as at 30 September 2023. Yellow Cake's net asset value on
30 September 2023, comprised 20.16 million lb of U(3)O(8), valued at a spot
price of USD73.50/lb 52 and cash and other current assets and liabilities of
USD12.7 million 53 (31 March 2023: comprised 18.81 million lb of U(3)O(8),
valued at a spot price of US$50.65/lb 54 and cash and other current assets
and liabilities of US$82.8 million 55 ).
Yellow Cake Net Asset Value
Units 30 September 31 March
2023
2023
Investment in Uranium
Uranium oxide in concentrates ("U(3)O(8)") (A) lb 20,155,601 18,805,601
U(3)O(8) fair value per pound (B) USD/lb 73.50 50.65
U(3)O(8) fair value (A) x (B) = (C) USD m 1,481.4 952.5
Cash and other net current assets/(liabilities) (D) USD m 12.7 82.8
Net asset value in USD m (C) + (D) = (E) USD m 1,494.2 1.035.3
Exchange Rate (( 56 )) (F) USD/GBP 1.2207 1.2364
Net asset value in GBP million (E) / (F) = (G) GBP m 1,224.0 837.4
Number of shares in issue less shares held in treasury (( 57 )) (H) 198,156,447 198,104,399
Net asset value per share (G) / (H) GBP/share 6.18 4.23
Carole Whittall
Chief Financial Officer
Independent Review Report to Yellow Cake Plc
Conclusion
We have been engaged by Yellow Cake plc ('the Company') to review the
condensed set of financial statements of the Company in the interim financial
report for the six months ended 30 September 2023 which comprise the Condensed
Statement of Financial Position, Condensed Statement of Comprehensive Income,
Condensed Statement of Changes in Equity, Condensed Statement of Cash Flows
and the associated explanatory notes. We have read the other information
contained in the interim financial report and considered whether it contains
any apparent material misstatements of fact or material inconsistencies with
the information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the interim
financial report for the six months ended 30 September 2023 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.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ('ISRE (UK) 2410') issued 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.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with UK-adopted International Accounting Standards.
The condensed set of financial statements included in this interim financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting" as contained in UK-adopted International
Accounting Standards.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the Company to
cease to continue as a going concern.
Responsibilities of Directors
The interim financial report, is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the interim
financial report in accordance with International Accounting Standard 34,
"Interim Financial Reporting" as contained in UK-adopted International
Accounting Standards and the AIM Rules for Companies.
In preparing the interim financial report, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Review of the Financial Information
In reviewing the interim financial report, we are responsible for expressing
to the Company a conclusion on the condensed set of financial statements in
the interim financial report. Our conclusions, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim Financial
Information performed by the Independent Auditor of the Entity". 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: 5 December 2023
Condensed Statement of Financial Position
As at As at
30 September 2023 31 March 2023
(unaudited) (audited)
Notes USD '000 USD '000
ASSETS:
Non-current assets
Investment in uranium 3 1,481,437 952,504
Total non-current assets 1,481,437 952,504
Current assets
Trade and other receivables 147 324
Cash and cash equivalents 4 83,401 84,428
Total current assets 83,548 84,752
1,564,985 1,037,256
Total assets
LIABILITIES:
Current liabilities
Trade and other payables (70,821) (1,930)
Total current liabilities (70,821) (1,930)
Total liabilities (70,821) (1,930)
NET ASSETS 1,494,164 1,035,326
Equity
Attributable to the equity owners of the Company
Share capital 5 2,724 2,724
Share premium 5 660,203 660,203
Share-based payment reserve 6 96 166
Treasury shares 7 (14,061) (14,216)
Retained earnings 845,202 386,449
TOTAL EQUITY 1,494,164 1,035,326
Condensed Statement of Comprehensive Income
1 April 2023 1 April 2022
To To
30 September 2023 30 September 2022
(unaudited) (unaudited)
Notes USD '000 USD '000
Uranium investment gains/(losses)
Fair value movement of investment in uranium 3 462,918 (142,035)
Uranium investment gains/(losses) 462,918 (142,035)
Expenses
Share-based payments 6 (14) (18)
Commission on uranium transactions 8 (660) (452)
Procurement and market consultancy fees 8 (1,469) (1,619)
Other operating expenses (3,582) (1,350)
Total expenses (5,725) (3,439)
Bank interest income 1,637 35
Loss on foreign exchange (6) (37)
458,824 (145,476)
Profit/(loss) before tax attributable to the equity owners of the Company
Tax expense - -
Profit/(loss) and total comprehensive income/(loss) for the period after tax 458,824 (145,476)
attributable to the equity owners of the Company
Basic earnings/(loss) per share attributable to the equity owners of the 10 2.32 (0.79)
Company (USD)
Diluted earnings/(loss) per share attributable to the equity owners of the 10 2.31 (0.79)
Company (USD)
Condensed Statement of Changes in Equity
Attributable to the equity owners of the
Company
Share
capital
Total
equity
Share premium Share Treasury Retained
based
Shares
earnings
payment
reserve
Notes USD '000 USD '000 USD'000 USD'000 USD '000 USD '000
As at 31 March 2022 (audited) 2,544 588,181 122 (11,219) 489,385 1,069,013
Total comprehensive loss after tax for the period - - - - (145,476) (145,476)
Transactions with owners:
Share-based payments 6 - - 18 - - 18
Purchase of own shares 7 - - - (2,997) - (2,997)
As at 30 September 2022 (unaudited) 2,544 588,181 140 (14,216) 343,909 920,558
- - - - 42,540 42,540
Total comprehensive income after tax for the period
Transactions with owners:
Shares issued 180 74,072 - - - 74,252
Share issue costs - (2,050) - - - (2,050)
Share-based payments 6 - - 26 - - 26
Exercise of incentive options 7 - - - - - -
As at 31 March 2023 (audited) 2,724 660,203 166 (14,216) 386,449 1,035,326
Total comprehensive income after tax for the period - - - - 458,824 458,824
Transactions with owners:
Share-based payments 6 - - 14 - - 14
Exercise of incentive options 7 - - (84) 155 (71) -
As at 30 September 2023 (unaudited) 2,724 660,203 96 (14,061) 845,202 1,494,164
Condensed Statement of Cash Flows
1 April 2023 1 April 2022
To To
30 September 2023 30 September 2022
(unaudited) (unaudited)
Notes USD '000 USD '000
Cash flows from operating activities
Profit/(loss) after tax for the financial period 458,824 (145,476)
Adjustments for:
Change in fair value of investment in uranium 3 (462,918) 142,035
Share based payments 6 14 18
(Gain)/Loss on foreign exchange 6 37
Interest income (1,637) (35)
Operating cash outflows before changes in working capital (5,711) (3,421)
Changes in working capital:
Decrease/(increase) in trade and other receivables 178 (177)
Increase in trade and other payables 68,906 600
Interest received 1,637 35
Cash generated from/(used in) operating activities 65,010 (2,963)
Cash flows from investing activities
Purchase of uranium 3 (66,015) (132,688)
Net cash used in investing activities (66,015) (132,688)
Cash flows from financing activities
Share buyback programme 7 - (2,997)
Net cash generated from/(used in) financing activities - (2,997)
Net decrease in cash and cash equivalents during the period (1,005) (138,648)
Cash and cash equivalents at the beginning of the period 84,428 153,136
Effect of exchange rate changes (22) (65)
Cash and cash equivalents at the end of the period 83,401 14,423
Notes to the Condensed Interim Financial Statements
For the period from 1 April 2023 to 30 September 2023
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 3(rd) Floor, Gaspé
House, 66-72 The Esplanade, St Helier, Jersey, JE1 2LH.
The Company operates in the uranium sector and was established 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 in 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.
On 22 June 2022, the Company's shares were admitted to trading on the OTCQX,
the highest tier of the US over-the-counter market.
On 26 September 2023, the Company incorporated a wholly owned subsidiary, YCA
Commercial Ltd, in Jersey, which had no assets, liabilities or operations as
at the reporting date and has therefore not been consolidated in these
condensed interim financial statements.
2. Summary of significant accounting policies
Basis of preparation
The unaudited condensed interim financial statements for the six months ended
30 September 2023 have been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting". This report should be
read in conjunction with the Company's annual financial statements for the
period ended 31 March 2023, available on the Company's website
(www.yellowcakeplc.com), which were prepared in accordance with UK-adopted
International Accounting Standards ("IFRS"). The audited financial information
for the year ended 31 March 2023 is based on the statutory accounts for the
financial year ended 31 March 2023. 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 2023 and are expected to be applied to the Company's annual
financial statements for the year ending 31 March 2024.
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 that
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 impact of the conflict in Ukraine and
sanctions imposed against Russia and Belarus on the Company's activities, the
uranium industry and the world economy.
After taking into account the Company's cash balance of USD84.4 million at the
period-end, the net placing proceeds of USD120.6 million received by the
Company on 2 October 2023 and its post period-end commitments to settle the
USD166.0 million of U(3)O(8) purchases, the Company considered that, as at 5
December 2023, it had sufficient working capital to cover operating expenses
for at least twelve months before it would need to raise additional funds. 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.
Investments in uranium
Acquisitions of U(3)O(8) are initially recorded at cost net of transaction
costs incurred and are recognised in the Company's statement of financial
position on the date the risks and rewards of ownership pass to the Company,
which is the date that the legal title to the uranium passes.
After initial recognition, investments in U(3)O(8) are measured at fair value
based on the daily spot price for U(3)O(8) published by UxC LLC.
IFRS lacks specific guidance in respect of accounting for investments in
uranium. As such the Directors of the Company have considered the requirements
of International Accounting Standard 1 "Presentation of Financial Statements"
and International Accounting Standard 8 "Accounting Policies, Changes in
Accounting Estimates and Errors" to develop and apply an accounting policy.
The Directors of the Company consider that measuring the investment in
U(3)O(8) at fair value provides information that is most relevant to the
economic decision making of users. This is consistent with International
Accounting Standard 40 Investment Property, which allows for assets held for
long-term capital appreciation to be presented at fair value.
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
In preparing these unaudited condensed interim financial statements the
Directors have not made any significant accounting estimates.
Judgements
The Company receives regular tax advice and opinions from its advisors and
accountants to ensure it is aware of and can seek to mitigate the effects on
its tax position of, changes in regulation. While the Company stores its
uranium in storage facilities in Canada and France, the Company does not carry
on business in either of these jurisdictions. 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 (year ended 31 March 2023:
USD nil).
3. Investment in uranium
Fair value
USD '000
As at 31 March 2022 (audited) 916,717
Acquisition of U(3)O(8) 132,688
Change in fair value (142,035)
Sale of U(3)O(8) -
As at 30 September 2022 (unaudited) 907,370
Acquisition of U(3)O(8) -
Change in fair value 45,134
Sale of U(3)O(8) -
As at 31 March 2023 (audited) 952,504
Acquisition of U(3)O(8) 66,015
Change in fair value 462,918
As at 30 September 2023 (unaudited) 1,481,437
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 USD73.50/lb as published by UxC LLC on 30 September
2023 (31 March 2023: USD50.65/lb).
As at 30 September 2023, the Company:
· had purchased a total of 22,826,515lb of U(3)O(8) at an average
cost of USD30.98/lb;
· had disposed of 2,670,914 lb of U3O8 at an average selling price
of USD40.23/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 20,155,601lb of U(3)O(8) at an average cost of
USD32.30/lb for a net total cash consideration of USD651.1 million, assuming a
first in first out methodology.
Acquisition of uranium
On 30 September 2023, the Company took title to 1,350,000 lb of U(3)O(8,)
acquired as part of its 2022 uranium purchase option under its Framework
Agreement with Kazatomprom, at a price of USD48.90/lb for a total
consideration of USD66.0 million. Payment occurred after 30 September 2023.
The following table provides a summary of the Company's investment in U(3)O(8)
as at 30 September 2023:
Quantity Fair Value
Location lb USD '000
Canada 19,855,601 1,459,387
France 300,000 22,050
Total 20,155,601 1,481,437
As at 31 March 2023:
Quantity Fair Value
Location lb USD '000
Canada 18,505,601 937,309
France 300,000 15,195
Total 18,805,601 952,504
4. Cash and cash equivalents
Cash and cash equivalents as at 30 September 2023 were banked in a variable
interest account with full access. Balances at the end of the period were
USD83,087,030 and GBP 257,264, which is, in total, equivalent to USD83,401,072
(31 March 2023: USD84,428,484 equivalent).
5. 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 2022 (audited) 187,740,730 1,877 2,544
Share capital as at 30 September 2022 (unaudited) 187,740,730 1,877 2,544
Issued 7 February 2023 15,000,000 150 180
Share capital as at 31 March 2023 (audited) 202,740,730 2,027 2,724
Share capital as at 30 September 2023 (unaudited) 202,740,730 2,027 2,724
The number of shares in issue above includes 4,584,283 treasury shares - refer
to note 7.
Share
premium
GBP '000 USD '000
Share premium as at 31 March 2022 (audited) 432,756 588,181
Share premium as at 30 September 2022 (unaudited) 432,756 588,181
Proceeds of issue of shares 61,650 74,072
Share issue costs (1,706) (2,050)
Share premium as at 31 March 2023 (audited) 492,700 660,203
Share premium as at 30 September 2023 (unaudited) 492,700 660,203
The Company has one class of shares which carry no right to fixed income.
6. 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, USD14,109 was recognised in the statement of comprehensive
income, in relation to share-based payments (30 September 2022: USD18,000).
7. Treasury shares
Number GBP '000 USD '000
Treasury shares as at 31 March 2022 (audited) 4,069,498 8,681 11,219
Share buyback programme 566,833 2,352 2,997
Treasury shares as 30 September 2022 (unaudited) 4,636,331 11,033 14,216
Treasury shares as 31 March 2023 (audited) 4,636,331 11,033 14,216
Exercise of long-term incentive options (52,048) (123) (155)
Treasury shares as at 30 September 2023 (unaudited) 4,584,283 10,910 14,061
On 2 June 2023, following an exercise of share options on 24 May 2023 under
the Yellow Cake plc Share Option Plan 2019, 31,686 ordinary shares held as
treasury shares were transferred at 213p per share to satisfy the exercise.
On 25 July 2023, following an exercise of share options on 19 July 2023
under the Yellow Cake plc Share Option Plan 2019, 20,362 ordinary shares held
as treasury shares were transferred at 288p per share to satisfy the exercise.
Following these transfers, the total number of treasury shares held by the
Company reduced from 4,636,331 to 4,584,283. The reduction in the value of
treasury shares resulting from the exercise of share options has been
calculated based on the weighted average acquisition cost of the treasury
shares.
8. 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.
Under the terms of the agreement entered into between the Company and 308
Services on 30 May 2018, 308 Services is entitled to receive:
1) 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
2) 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. Holding and Storage Incentive Fees payable by the Company
to 308 Services in respect of the period were USD1,469,168 (30 September 2022:
USD1,618,711).
308 Services is also entitled to receive commissions equivalent to 0.5% of the
transaction value in respect of certain uranium sale and purchase transactions
completed at the request of the Yellow Cake Board. Commissions in respect of
the period payable by the Company to 308 Services were USD330,075 (30
September 2022: USD226,000).
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 2023 calendar year. The Company
has therefore elected to include a provisional commission of USD330,075 within
these interim financial statements in respect of the uranium purchase
transactions completed by the Company during the period to which a commission
applies, equal to 0.5% of the value transacted.
During the period, commissions and provisional commissions payable to 308
Services totalled USD660,150 (30 September 2022: USD452,010).
9. Related party transactions
During the period, the Company incurred USD86,033 (30 September 2022:
USD82,594) of administration fees payable to Langham Hall Fund Management
(Jersey) Limited ("Langham Hall"). Claire Brazenall is an employee of Langham
Hall and has served as a Non-Execute Director of the Company since 9 November
2022, for which she has received no Directors' fees. As at 30 September 2023,
there were no amounts due to Langham Hall (31 March 2023: USD nil).
The following Directors own ordinary shares in the Company as at 30 September
2023:
Name Number of ordinary shares % of share capital
The Lord St John of Bletso* 26,302 0.01%
Sofia Bianchi 13,186 0.01%
The Hon Alexander Downer 29,925 0.02%
Claire Brazenall - -
Alan Rule 18,837 0.01%
Andre Liebenberg 121,478 0.06%
Carole Whittall 101,966 0.05%
Total 311,694 0.16%
* 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.
10. Earnings per share
1 April 2023 1 April 2022
To to
30 September 2023 30 September 2022
(unaudited) (unaudited)
Profit/(loss) for the period (USD '000) 458,824 (145,476)
Weighted average number of shares during the period - Basic* 198,135,025 183,186,301
Weighted average number of shares during the period - Diluted* 198,390,197 183,422,810
Earnings/(loss) per share attributable to the equity owners of the Company
(USD):
Basic 2.32 (0.79)
Diluted 2.31 (0.79)
*The weighted average number of shares excludes treasury shares.
11. Events after the period end
On 2 October 2023, the Company completed a share placing which raised gross
proceeds of approximately GBP102.9 million (USD124.7 million). Following
completion of the placing, Yellow Cake informed Kazatomprom that it had
elected to purchase 1,526,717 lb of U(3)O(8) at a price of USD65.50/lb, or
USD100.0 million in aggregate, exercising the entirety of the Company's 2023
uranium purchase option under its Framework Agreement with Kazatomprom. The
Company expects delivery to take place in H1 2024. On completion of this
purchase, Yellow Cake will hold 21.68 million lb of U(3)O(8).
In the opinion of the Directors, there are no other significant events
subsequent to the period end that are deemed necessary to be disclosed in the
interim financial statements.
1 Based on the daily spot price of USD50.65/lb published
by UxC, LLC on 31 March 2023 and 18,805,601 lb U₃O₈ held by the Company on
that date.
2 Based on the daily spot price of USD73.50/lb published
by UxC, LLC on 30 September 2023 and 20,155,601 lb U₃O₈ held by the
Company on that date.
3 Daily spot price published by UxC, LLC on 31 March 2023.
4 Daily spot price published by UxC, LLC on 30 September
2023.
5 Net asset value as at 31 March 2023 of
USD1,035.3 million comprises 18.81 million lb of U(3)O(8) valued at the
daily spot price of USD50.35/lb published by UxC, LLC on 31 March 2023 and
cash and other current assets and liabilities of USD82.8 million.
6 Estimated net asset value as at 30 September 2023 of
USD1,494.2 million comprises 20.16 million lb of U(3)O(8) valued at the
daily spot price of USD73.50/lb published by UxC, LLC on 30 September 2023
and cash and other current assets and liabilities of USD12.7 million.
7 Net asset value per share as at 31 March 2023 is calculated
assuming 202,740,730 ordinary shares in issue less 4,636,331 shares held in
treasury on that date and the Bank of England's daily USD/ GBP exchange rate
of 1.2364.
8 Estimated net asset value per share as at 30 September 2023 is
calculated assuming 202,740,730 ordinary shares in issue, less 4,584,283
shares held in treasury on that date and the Bank of England's daily USD/ GBP
exchange rate of 1.2207.
9 Pro forma Net Asset Value is neither audited nor
reviewed.
10 Comprises 20.16 million lb of U3O8 held as at 4 December 2023 plus
1.53 million lb of U3O8 which the Company has committed to purchase in H1
2024.
11 Daily spot price published by UxC, LLC on 4 December 2023.
12 Cash and other current assets and liabilities of USD12.7 million as
at 30 September 2023 plus net placing proceeds of USD120.6 million received 2
October 2023 less cash consideration of USD100.0 million to be paid to
Kazatomprom following delivery of 1.53 million lb of U3O8 in H1 2024.
13 Estimated pro forma net asset value per share on 4 December 2023
is calculated assuming 221,440,730 ordinary shares in issue, less 4,584,283
shares held in treasury on that date.
14 Source: Sprott.com; "Daily and Cumulative Pounds of Uranium
(U(3)O(8)) Acquired by the Trust"; 14 November 2023.
15 China Nuclear Energy Association: "China takes world's crown
in nuclear power units under contraction"; 26 April 2023.
16 World Nuclear News; "Six reactors approved for construction in
China"; 1 August 2023.
17 China Daily; "China's nuclear power to generate 10% of total
electricity by 2035": 26 September 2023.
18 World Nuclear News; "Indian minister eyes 9% nuclear share by
2047"; 12 April 2023.
19 World Nuclear News: "Biden, Modi affirm commitment to nuclear
as Kovvada plans intensify"; 23 June 2023.
20 World Nuclear News; "Takahama 2 reactor restarted"; 15
September 2023.
21 World Nuclear News; "Eleventh Japanese reactor resumes
operation"; 28 July 2023.
22 US Department of Energy, Energy Information Administration:
"2022 Uranium Marketing Annual Report"; 13 June 2023.
23 Nuclear Newswire; "Vogtle-4 fuel load started"; 18 August
2023.
24 World Nuclear News; "Multiple Xe-100 SMRs planned for
Washington State"; 19 July 2023.
25 World Nuclear News; "South Korea considering new nuclear
plants"; 12 July 2023
26 Taipei Times; "Taiwan needs nuclear energy, Ko says"; 13
August 2023.
27 Korea Economic Daily; "Poland starts approval process to
import S. Korean reactors"; 24 August 2023).
28 Reuters; "Poland issues environmental permit for first nuclear
power plant"; 22 September 2023.
29 Bloomberg News; "Sweden Needs to Treble Nuclear Power as
Electricity Demand Soars": 9 August 2023.
30 Nikkei Asia; "Turkey close to deal with China on nuclear power
plant"; 15 September 2023.
31 Nature Italy; "Italian nuclear industry revival on the table";
11 September 2023.
32 TRT Afrika; "Kenya plans construction of nuclear power plant";
26 September 2023.
33 Anadolu Agency News Broadcast System; "Russia, South Korea to
build nuclear power plants in Uganda"; 8 September 2023.
34 Cameco Corporation; "Management's discussion and analysis for the
quarter ended September 30, 2023"; 30 October 2023.
35 Cameco Corporation; "Cameco announces third quarter results";
31 October 2023.
36 Cameco Corporation; "Cameco Signs Nuclear Fuel Agreement to
Support Bulgaria's Diversification Efforts"; 20 April 2023.
37 Kazatomprom Press Release; "Voting Results of the General
Meeting of Shareholders;" 25 May 2023.
38 Kazatomprom; "Kazatomprom 3Q23 Operations and Trading Update"; 1
November 2023.
39 www.rfi.fr (http://www.rfi.fr) ; "Macron's Visit to Mongolia
was Focused on Ensuring France's Uranium Supply;" 23 May 2023.
40 Ux Weekly, "2022 U(3)O(8) Production Review"; 15 May 2023.
41 Ux Weekly; "IAEA URAM-2023: Pressure on New Uranium Projects
to Meet Demand Growth"; 22 May 2023.
42 World Nuclear News; "A guide: Uranium in Niger"; 28 July 2023.
43 Nuclear Energy Institute; "The future of Nuclear Power 2023
Baseline Survey"; April 2023.
44 World Nuclear News; "Five G7 countries in nuclear fuel
agreement"; 17 April 2023.
45 Nuclear Energy Institute Blog, "State of the Nuclear Energy
Industry 2023"; 15 May 2023.
46 International Energy Agency; "Net Zero Roadmap - A Global
Pathway to Keep the 1.5 C Goal in Reach 2023 Update"; September 2023.
47 Based on the daily spot price of USD50.65/lb published by
UxC, LLC on 31 March 2023 and 18,805,601 lb U₃O₈ held by the Company on
that date.
48 Based on the daily spot price of USD73.50/lb published by
UxC, LLC on 30 September 2023 and 20,155,601 lb U₃O₈ held by the Company
on that date.
49 Daily spot price published by UxC, LLC on 31 March 2023.
50 Daily spot price published by UxC, LLC on 30 September 2023.
51 Net asset value as at 31 March 2023 of USD1,035.3 million
comprises 18.81 million lb of U3O8 valued at the daily spot price of
USD50.35/lb published by UxC, LLC on 31 March 2023 and cash and other current
assets and liabilities of USD82.8 million. Net asset value per share as at 31
March 2023 is calculated assuming 202,740,730 ordinary shares in issue less
4,636,331 shares held in treasury on that date and the Bank of England's daily
USD/ GBP exchange rate of 1.2364.
52 Daily spot price published by UxC, LLC on
30 September 2023.
53 Cash and cash equivalents and other net current assets and
liabilities as at 30 September 2023.
54 Daily spot price published by UxC, LLC on 31 March 2023.
55 Cash and cash equivalents and other net current assets and
liabilities as at 31 March 2023.
56 Bank of England's daily USD/ GBP exchange rate as at 30
September 2023 and 31 March 2023.
57 Net asset value per share on 30 September 2023 is calculated
assuming 202,740,730 ordinary shares in issue less 4,584,283 shares held in
treasury on that date. Net asset value per share on 31 March 2023 is
calculated assuming 202,740,730 ordinary shares in issue less 4,636,331 shares
held in treasury on that date
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