REG - Yellow Cake PLC - Interim Report
07/12/2022 07:00
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RNS Number : 8211I Yellow Cake PLC 07 December 2022
7 December 2022
Yellow Cake plc ("Yellow Cake" or the "Company")
Unaudited Interim Financial Report for the six-month period ended 30 September
2022
Yellow Cake, a specialist company created to exploit commercial opportunities
in the uranium sector, including the purchase and holding of physical uranium
for the long term, is pleased to announce its unaudited interim financial
report for the six-month period ended 30 September 2022 ("half-year").
Highlights
· Increase in the Company's holdings of physical uranium ("U(3)O(8)") during the
half-year from 15.83 million lb of U(3)O(8) to 18.81 million lb of U(3)O(8).
· Decrease of 1% in the value of U(3)O(8) held by Yellow Cake over the half-year
from USD916.7 million 1 (#_ftn1) as at 31 March 2022 to
USD907.4 million 2 (#_ftn2) as at 30 September 2022, resulting from a
decrease in the spot price from USD57.90/lb 3 (#_ftn3) to USD48.25/lb 4
(#_ftn4) during the period, partially offset by an increase in the volume of
uranium held.
· Decrease in net asset value from USD1,069.0 million as at 31 March 2022 to
USD920.6 million as at 30 September 2022, as a result of the reduction in the
value of U(3)O(8) held by the Company.
· Increase in net asset value per share over the half-year from GBP4.42 per
share 5 (#_ftn5) as at 31 March 2022 to GBP4.50 per share 6 (#_ftn6) as at
30 September 2022, with the reduction in net asset value in US dollar terms
offset by the devaluation of sterling relative to the US dollar over the
period.
· Loss after tax of USD145.5 million for the six-month period ended 30
September 2022, driven by a fair value loss of USD142.0 million on the
Company's investment in uranium.
· During the half-year, Yellow Cake took delivery of 2.97 million lb of U(3)O(8)
under the following uranium purchase agreements. These purchases were funded
with cash at bank:
o The Company exercised its option with Kazatomprom to buy back 2,022,846 lb
of U(3)O(8) from Kazatomprom at a cost of USD43.25/lb or USD87.5 million in
aggregate consideration. This was received by the Company at the Cameco
storage facility in Canada on 19 May 2022 in accordance with the agreed
delivery schedule.
o Pursuant to Kazatomprom's offer of 26 October 2021, the Company entered
into an agreement with Kazatomprom to purchase 950,000 lb of U(3)O(8) at a
price of USD47.58/lb for a total consideration of USD45.2 million. This was
received by the Company at the Cameco storage facility in Canada on 30 June
2022 in accordance with the agreed delivery schedule.
· Yellow Cake's operations, financial condition and ability to purchase and take
delivery of U(3)O(8) from Kazatomprom, or any other party, remain unaffected
by the geopolitical events in Ukraine to date. 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.
· On 4 April 2022, Yellow Cake announced the initiation of a share buyback
programme to purchase up to USD3 million of the Company's Ordinary Shares.
Given that the Company's shares had traded at a material discount to its
underlying net asset value in the months prior to the announcement, the Yellow
Cake Board resolved to implement the share buyback programme as a means of
effectively acquiring exposure to uranium at a discount to the commodity spot
price. Under the programme, the Company acquired 566,833 shares between 4
April and 6 May 2022, for a total consideration of USD3.0 million, at a
volume weighted average price of GBP4.15 pence per share and a volume
weighted average discount to net asset value of 10.4%.
· Yellow Cake's estimated net asset value on 5 December 2022 was GBP4.09 per
share or USD915.9 million, based on 18.81 million lb of U(3)O(8) valued at a
spot price of USD48.00/lb. 7 (#_ftn7)
Yellow Cake Estimated Net Asset Value as at 5 December 2022
Units
Investment in Uranium
Uranium oxide in concentrates ("U(3)O(8)") (A) lb 18,805,601
U(3)O(8) fair value per pound ((7)) (B) USD/lb 48.00
U(3)O(8) fair value (A) x (B) = (C) USD m 902.7
Cash and other net current assets/(liabilities) (() 8 (#_ftn8) ()) (D) USD m 13.2
Net asset value in USD m (C) + (D) = (E) USD m 915.9
Exchange Rate (( 9 (#_ftn9) )) (F) USD/GBP 1.2218
Net asset value in GBP m (E) / (F) = (G) GBP m 749.6
Number of shares in issue less shares held in treasury (() 10 (#_ftn10) ()) (H) 183,104,399
Net asset value per share (G) / (H) GBP/share 4.09
Andre Liebenberg, CEO of Yellow Cake, said:
We continue to deliver on our stated strategy. During the period we took
delivery of a further three million pounds of uranium, bringing our total
holdings to 18.81 million pounds. The case for buying and holding uranium,
despite a much weaker economic outlook, is compelling. The underlying
fundamentals for nuclear energy, particularly with recent events highlighting
the need for greater energy security, continue to strengthen. We are seeing an
acceleration of new nuclear build intentions, particularly from China and a
broader based appreciation of the value of the existing nuclear fleet
infrastructure, with life extensions in the US and Europe and further restarts
in Japan. Meanwhile, supply is still heavily constrained driven by supply side
pressures and cost inflation and will not keep up with rising demand. We
remain very excited about the outlook for uranium and confident in our
strategy and 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
Gordon Hamilton
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 Molly Melville
Tel: +44 (0) 7793 858 211
ABOUT YELLOW CAKE
Yellow Cake is a London-quoted company, headquartered in Jersey, which
exploits commercial opportunities in the uranium sector, including the
purchase and holding of physical triuranium octoxide ("U(3)O(8)"). 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
18.81 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
Global economic factors significantly impacted the uranium spot market during
the April-September 2022 reporting period, with a marked decline in spot
market volumes and a softening of the spot price. However, despite the
weaker macro environment, the underlying fundamentals for the nuclear industry
continued to strengthen. We have seen an acceleration of new build intentions,
particularly from China and a broader based appreciation of the value of the
existing nuclear fleet infrastructure, with life extensions in the US and
Europe and further restarts in Japan. Broad based adoption of carbon-zero
ambitions and a focus on energy security since the Russian invasion of Ukraine
provide solid support for nuclear demand growth. Supply side conditions
continue to remain challenging with supply chain issues and capital cost
inflation very evident.
Uranium Market Developments
Global Market
As at the end of September, the aggregate reported spot market volume for 2022
stood at 47.1 million lb of U(3)O(8) 11 (#_ftn11) , compared to 75.4 million
lb of U(3)O(8) 12 (#_ftn12) for the same period in 2021, a reduction of more
than one-third. The spot uranium price ended March 2022 at USD57.90/lb,
eventually increasing to USD63.50/lb by mid-April 2022 before falling to a low
for the period of USD45.50/lb on 23 May 2022 and recovering to USD48.25/lb by
the end of September 2022. Following the half-year end, the spot price rose to
end November at USD49.50/lb.
The launch of the Sprott Physical Uranium Trust ("SPUT") in mid-2021 has
enabled the purchase of more than 40 million lb of U(3)O(8) in the spot market
to date. However, principally in response to global economic conditions, SPUT
significantly moderated its spot market purchasing during the half-year. SPUT
acquired a total of only 5.1 million lb of U(3)O(8) during the half-year
(compared to 24.3 million lb of U(3)O(8) during the six-month period from
September 2021 to March 2022), reflecting market conditions where the trust
units were trading at a discount for most of the six month period. As at 30
September 2022, SPUT held a total of 58.6 million lb of U(3)O(8). 13
(#_ftn13)
Long-term uranium market indicators exhibited significantly less volatility
than the spot price during the April-September period. The UxC 3-year forward
price fluctuated in the range USD53.50/lb-USD56.00/lb while the 5 year
forward price remained in the range USD56.50/lb-USD58.00/lb. The UxC Long-Term
Price ended March at USD48.00/lb before gradually rising to USD50.00/lb over
the June-August period and ending September at USD49.00/lb. UxC reports that
long-term uranium contracting volume has increased through 2022 reaching 79.6
million lb of U(3)O(8) in the nine months to the end of September 2022,
compared to about 53 million lb of U(3)O(8) in the comparable period of
2021. 14 (#_ftn14)
UxC completed its bi-annual assessment of global uranium inventories and
concluded that "after seven years of tracking global inventories, it is now
clear that the era of excessive inventories overhanging the nuclear fuel
markets is emphatically behind us." 15 (#_ftn15)
Nuclear Generation / Uranium Demand
At the conclusion of the Group of Seven ("G7") meeting held in Germany (26-28
June 2022), the broad-ranging G7 Leader's Communiqué affirmed the G7's
commitment to phase out dependency on Russian energy. The communiqué stated
that "those countries that opt to use it reaffirm the role of nuclear energy
in their energy mix. Those countries recognise its potential to provide
affordable low-carbon energy and contribute to the security of energy supply
as a source of baseload energy and grid flexibility." Recognising the global
role of Russian-sourced nuclear fuel, the communiqué stated that "We will
further reduce reliance on civil nuclear and related goods from Russia,
including working to assist countries seeking to diversify their supplies.
We task our relevant Ministers to evaluate the feasibility and efficiency of
these measures urgently." 16 (#_ftn16)
On 16 August 2022, US President Joseph Biden signed into law the Inflation
Reduction Act of 2022 which incorporates far reaching support/subsidies for
clean energy, including nuclear power. The legislation establishes
production tax credits (up to USD0.015/kWh of electricity generated by
nuclear) as well as investment tax credits for new nuclear power plants,
including advanced reactor designs. The programme includes USD700 million for
the development/production of High-Assay Low-Enriched Uranium ("HALEU")
necessary for advanced reactors which is currently solely available from
Russian sources. 17 (#_ftn17)
The US Department of Energy completed a comprehensive study assessing a
coal-to-nuclear transition strategy "Investigating Benefits and Challenges of
Converting Retiring Coal Plants into Nuclear Plants". The assessment found
that 157 retired coal plant sites and a further 237 operating coal plant sites
could be potential candidates for a coal-to-nuclear transition. The study
found that 80% of those coal sites are good candidates to host advanced
reactors smaller than 1.0 Gwe. 18 (#_ftn18)
The European Union Parliament voted to include both natural gas and nuclear
power as green investments under the Taxonomy Complementary Climate Delegated
Act ("CDA"). On 6 July 2022 the European Union ("EU") Parliament rejected a
motion to veto the CDA, thus allowing the sustainable finance taxonomy to
enter force expected on 1 January 2023. 19 (#_ftn19)
The European Commission released its proposed REPowerEU Plan on 18 May 2022
developed in response to the Russian invasion of Ukraine. The plan looks to
reduce/eliminate the EU dependency on fossil fuel imports from Russia as
stated in the Plan, "REPowerEU is about reducing our dependency on Russian
fossil fuels by fast forwarding the clean transition and joining forces to
achieve a more resilient energy system and a true Energy Union." As reported
by the World Nuclear Association ("WNA") news service, the REPowerEU Plan
specifically recognizes that to diversify their options, EU Member States that
are currently dependent on Russia for nuclear fuel for their reactors will
need to work within the EU and with international partners "to secure
alternative sources of uranium and boosting the conversion, enrichment and
fuel fabrication capacities available in Europe or in the EU's global
partners." 20 (#_ftn20)
French President Emmanuel Macron won a second term in office during national
elections on 24 April 2022. President Macron has cancelled the plan to close
12 reactors by 2035 and requested the state-owned nuclear operator, EDF, to
study the feasibility of prolonging reactor lifespans beyond the statutory 50
years. In addition, his government supports the construction of six European
Pressurized Reactors (EPR) by 2050 with an option for eight more units pending
further assessment. 21 (#_ftn21)
The UK government released its national energy strategy policy paper on 7
April 2022 outlining the nation's plans for enhanced energy security. Under
the energy policy, nuclear would provide up to 25% of the country's
electricity by 2050 from up to 24 Gwe of nuclear generating capacity. In
order to support its ambitious commercial nuclear power goals, the UK will
establish the Great British Nuclear Vehicle designed to provide support to
nuclear projects "through every stage of the development process." 22
(#_ftn22) On 19 July 2022, the UK government launched the "Nuclear Fuel
Fund", a GBP75 million fund which "will seek to award grants to projects that
can increase the UK's domestic nuclear fuel sector, reducing the need for
foreign imports and creating the material used in nuclear power stations to
generate electricity - with funding going towards designing and developing new
facilities." 23 (#_ftn23)
Germany took the decision to maintain operations at three reactors, Isar-2,
Neckarwestheim-2 and Emsland, until mid-April 2023 rather than shut down and
decommission the units by December 2022 as previously slated. 24 (#_ftn24)
China announced plans to construct a further six nuclear reactors as the
country pursues its Net Zero goals. During an executive meeting of the State
Council, approval was given for Sanmen units 3 and 4, Haiyang 3 and 4 and
Lufeng 5 and 6. The four reactors destined for the Sanmen and Haiyang sites
will be Westinghouse AP1000 (1,250 Mwe) while Lufeng will receive
domestic-designed Hualong One (1,200 Mwe) units. 25 (#_ftn25) According to
Wang Shoujun, President of the Chinese Nuclear Society, "installed capacity of
nuclear power under operation is expected to reach 70 million kW by 2025 from
the current 55.8 million kW and nuclear power is expected to account for 10
percent of China's total power generation by 2035, compared to 5 percent in
2021." Furthermore, according to China Daily, "as China continues pushing
forward the goals of peaking carbon emissions by 2030 and achieving carbon
neutrality by 2060, with more attention focused on energy security, it is
believed that the nuclear power sector will see massive opportunities in the
years to come." 26 (#_ftn26)
South Korea added nuclear power to that country's taxonomy on sustainable
activities. This was a change from the previous administration's stance on
nuclear power, which had excluded nuclear from the taxonomy. The policy
change is expected to hasten the restart of construction of Units 3 & 4 of
the Shin Hanul nuclear power plant which had been suspended under the previous
anti-nuclear president. 27 (#_ftn27)
Japanese Prime Minister, Fumio Kishida, called for a comprehensive review of
that country's nuclear power programme including reactor restarts, reactor
operating license extensions, new reactor technologies and possible new-build
units. Japan's Energy Minister stated that additional reactors must be
restarted to ensure stable power supply for summer 2023. Furthermore,
Japan's Minister of Industry plans to bring seven additional reactors back
online by next summer which would result in a total of 17 operating nuclear
reactors in Japan. Of the seven proposed restarts, four of the units have
already received national and local approval to operate but are awaiting the
completion of mandated safety upgrades and modifications. 28 (#_ftn28)
The Russian government expects to construct 16 new nuclear reactors by 2035 as
it pursues the goal of nuclear power providing 25% of total domestic energy by
2045. Russian nuclear supplier, ROSATOM, plans to initiate a large scale NPP
construction program in parallel with the decommissioning of eight RBMK
reactors. 29 (#_ftn29)
The Egyptian Nuclear and Radiological Authority granted a permit on 29 June
2022 for the construction of the first nuclear power plant in the country. The
initial unit will form the basis for a four reactor program at El-Dabaa under
a joint Egyptian-Russian agreement. The 4800 Mwe complex (4x1200 Mwe VVER
reactors) is scheduled to be in full operation by 2030 at a capital cost of
USD21 billion. 30 (#_ftn30) ROSATOM announced on 20 July 2022 that the
pouring of the "first concrete" for Egypt's initial nuclear power plant, the
El-Dabaa Nuclear Power Plant Unit 1 (VVER-1200 design) had commenced. 31
(#_ftn31)
Construction of the fourth nuclear reactor at the Akkuyu Nuclear Power Plant
(Mersin Province, Turkey) commenced in late July. ROSATOM, is constructing
four VVER-1200 reactors at Akkuyu with the initial unit scheduled to be
operational in 2023. 32 (#_ftn32)
Saudi Arabia's Ministry of Energy announced on 26 September 2022 that it has
initiated a study focused on licensing the country's first nuclear power
plant. The government is working with the International Atomic Energy Agency
("IAEA") to develop a national nuclear energy programme under the Milestones
Approach, progressing to Phase 3 of the programme which includes contracting,
licensing, and construction of a nuclear power plant. Saudi Arabia distributed
a formal request for proposals in June 2022 to China, France, South Korea and
the United States for the possible construction of two 1400 Mwe reactors. 33
(#_ftn33)
Subsequent to the period-end, Sweden's newly-elected center-right coalition
government adopted pro-nuclear energy policies including the possible restart
of Ringhals Units 1 and 2 (closed at the end of 2020 and 2019, respectively)
as well as preparing for the construction of new reactors. The government
has changed it's energy policy goal from "100% renewable" to "100%
fossil-free." 34 (#_ftn34)
Poland announced on 28 October 2022 that the government had selected
Westinghouse Electric to build that country's initial nuclear power plant. The
Polish government has been seeking partners to develop 6-9 Gwe of nuclear
capacity by the early 2040s and may ultimately order a total of six
Westinghouse AP-1000 reactors. 35 (#_ftn35)
Uranium Supply
Cameco Corporation's senior management stated on their 1Q 2022 investor call,
that the Russian invasion of Ukraine had created "an unprecedented realignment
of the global nuclear fuel market" and that "Russian replacement demand" will
result in major effects on the market as nuclear utilities alter their nuclear
fuel procurement patterns in the face of a looming uranium supply and origin
gap. The company reported that "presently, JV Inkai is experiencing wellfield
development, procurement and supply chain issues, including inflationary
pressure on production materials and reagents, which are expected to continue
and could pose a risk to JV Inkai's 2022 production volume, impacting its
costs." 36 (#_ftn36) In their 2Q 2022 investor call on 27 July 2022, the
company reported a slight delay in the start-up of McArthur River / Key Lake
due to the availability of critical materials, equipment and necessary skills.
Overall corporate production continued to rise significantly to 4.7 million lb
during the first six months of 2022 compared to 1.3 million lb during the
comparable period of 2021. The latest 2022 outlook forecasts total uranium
production (Cameco share) reaching up to 10.9 million lb (Cigar Lake - 9.5
million lb / McArthur River - up to 1.4 million lb). Regarding year-to-date
long-term uranium contracting, Cameco reported that the company had "added to
our long-term contract portfolio more than 50 million pounds in our uranium
segment" while, in addition, "we have advanced contracting discussions for
about 27 million pounds of long-term uranium business." 37 (#_ftn37)
The Board of Directors of Australian uranium producer, Boss Energy Ltd.,
approved the Final Investment Decision (FID) to restart the Honeymoon ISR
Uranium Project in South Australia (1 June 2022). First production is
scheduled for December 2023, ramping up to 2.45 million lb. within three years
at an All-In-Sustaining Cost estimated at USD25.60/lb. The company has
fully-funded the forecast A$113 million capital cost of the development. 38
(#_ftn38)
Paladin Energy Limited ("Paladin") announced that its idled Langer Heinrich
Uranium Mine in Namibia would return to production with initial output to be
achieved during the first quarter of 2024. Citing an improving uranium market,
Paladin stated that "the decision to restart production at the Langer Heinrich
Mine is supported by strong uranium market fundamentals and continued progress
on uranium marketing activities including the execution of a binding contract
for the previously announced Tender Award." Paladin advised that the total
project capital expenditure had increased to USD118 million on a 100% project
basis (previous guidance of USD87 million) "primarily driven by recent
inflationary pressures across the project supply chain, brought forward power
and water infrastructure works and increased owner's team costs." 39
(#_ftn39)
In October 2022, Kazatomprom reported that Kazakh uranium production for the
January-September period totalled 40.2 million lb, a decrease of 3% from the
comparable period of 2021, principally due to the impact of COVID-19 on
wellfield development in 2021 as well as supply chain disruptions resulting in
a shortage of certain production materials, such as reagents and piping. The
company anticipates that aggregate uranium output for 2022 will reach
54.6-57.2 million lb. Furthermore, Kazatomprom reported that "during the
third quarter, several transactions to purchase material in the spot market
were carried out." 40 (#_ftn40) Regarding future uranium production plans,
due to successful term contracting activities, the Company plans to increase
uranium production in 2024 by adding 5.2-7.8 million lb above the previously
planned level. 41 (#_ftn41)
Nuclear Power Forecasts
The International Energy Agency ("IEA") published its latest analysis of the
potential role of nuclear energy for the global transition away from fossil
fuels to generate electricity. "Nuclear Power and Secure Energy Transitions"
(June 2022) provides a background on the present role of nuclear power and
recommendations for consideration to enhance nuclear power's fundamental
position in the energy transition. The IEA observes that advanced economies
have lost market leadership as investment has stalled and the latest projects
have experienced cost overruns and have fallen behind schedule. The IEA
further reports that of the 31 reactors which commenced construction since the
beginning of 2017, all but four are of Russian and Chinese design. Relative
to the current Russian-induced concern of energy security, the report states
that "in the decade following the 1973 oil shock, construction started on
almost 170 GW of nuclear power plants and that those plants represent 40% of
the current global nuclear power fleet. Nuclear additions in the last decade
reached only 56 GW so with policy support and tight cost controls, the current
energy crisis could lead to a similar revival for nuclear power." 42
(#_ftn42)
The latest World Energy Outlook assessment, published 27 October, by the
International Energy Agency (IEA), underscores the crucial role which nuclear
power must assume over the next three decades. Nuclear power increases under
all three of the IEA government policy-related scenarios (Stated Policies
Scenario; Announced Pledges Scenario, and; Net Zero Emissions by 2050
Scenario). The report notes that "As markets rebalance, renewables, supported
by nuclear power, see sustained gains." Under the Net Zero Emissions by 2050
Scenario, an average of 24 Gwe/year must be added over the 2022-2050 period,
more than doubling current nuclear capacity (compounded average annual growth
rate = 2.6 percent). 43 (#_ftn43)
The United Nations Economic Commission for Europe ("UNECE") released a study
of the impacts of climate change titled "Roadmap to Carbon Neutrality for
Europe, North America and Central Asia". The report identifies a range of
technology and policy solutions for the region to attain carbon neutrality by
2050, despite the current energy and geopolitical crises. Noting that over
80% of the primary energy mix in the EU is fossil fuel based, the group calls
for the accelerated phase-out of unabated fossil fuels and the scale-up of
electrification of all sectors with emphasis on renewable energy and nuclear
power. Under the base Carbon Neutrality scenario, nuclear energy doubles by
2050 (20% of total global electricity generation) while under the Carbon
Neutrality innovation scenario, nuclear power provides 30% of total global
electricity generation amounting to 874 Gwe of installed nuclear capacity of
which 450 Gwe is projected to be Small Modular Reactors 44 (#_ftn44) .
On 26 September 2022, the IAEA released its latest annual forecast of nuclear
power capacity extending through to 2050 45 (#_ftn45) . In its high case
scenario, the IAEA envisions world nuclear generating capacity more than
doubling to 873 Gwe by 2050 (representing an incremental 81 Gwe above the 2021
forecast), compared with current levels of around 390 Gwe.
Market Outlook
In their third quarter spot market review 46 (#_ftn46) , UxC noted that "if
spot demand sees any meaningful increase in the months ahead, the spot price
could be susceptible to greater upward price pressure with fewer inventories
available in the market."
In a recent industry presentation, UxC senior executive, Anna Bryndza,
commented that nuclear fuel markets (uranium / conversion / enrichment) were
already in recovery prior to 2022 and that the Russian invasion of Ukraine
provided a "catalyst expediting transitions in each front end market".
Furthermore, the nuclear power/uranium demand side has "firmed up and outlook
for nuclear power has notably improved." Regarding the uranium sector, Bryndza
observed that uranium market was "on the mend" and "Spot and Long-Term uranium
prices are starting to delink" as the spot price was showing an increased
correlation to the financial market and that the long-term price "sees
recovery in 2022, which is reflective of longer-term market fundamentals and a
return to a production-driven market." 47 (#_ftn47)
While the spot uranium price has shown improvement since the beginning of 2022
increasing from USD42.00/lb at the end of December 2021 to reach USD48.25/lb
by the end of September 2022 (a 15% increase), the near-term price has
exhibited significant volatility (reporting a range of USD42.00/lb up to
USD63.75/lb in the calendar year to date).
While global financial market conditions may result in ongoing spot price
volatility in the near term, the longer term fundamentals of the uranium
market continue to strengthen due to a reduction of "mobile" near-term uranium
inventories, the fact that contracting activity in the uranium term market is
showing signs of noticeable increase and the increasing focus on energy
security. We therefore expect to see progressively higher offering prices by
primary producers into the forward market segment.
Andre Liebenberg
Chief Executive Officer
Chief Financial Officer's Report
Highlights
· Increase in the Company's uranium holdings from 15.83 million lb of U(3)O(8)
to 18.81 million lb of U(3)O(8).
· Decrease of 1% in the value of U(3)O(8) held by Yellow Cake over the half-year
from USD916.7 million 48 (#_ftn48) as at 31 March 2022 to
USD907.4 million 49 (#_ftn49) as at 30 September 2022, resulting from a
decrease in the spot price from USD57.90/lb(3) to USD48.25/lb(4), partially
offset by an increase in the volume of uranium held.
· Decrease in net asset value from USD1,069.0 million as at 31 March 2022 to
USD920.6 million as at 30 September 2022, as a result of the reduction in the
value of U(3)O(8) held by the Company.
· Increase in net asset value per share from GBP4.42 per share 50 (#_ftn50) as
at 31 March 2022 to GBP4.50 per share 51 (#_ftn51) as at 30 September 2022,
with the reduction in net asset value in US dollar terms offset by the
devaluation of sterling relative to the US dollar over the period.
· Loss after tax of USD145.5 million (30 September 2021: profit of USD169.1
million).
· Acquired 566,833 of the Company's Ordinary Shares under a share buyback
programme between 4 April and 6 May 2022, at a volume weighted average
purchase price of GBP4.15 per share or USD3.0 million in aggregate and at a
volume weighted average discount of 10.4% to the Company's proforma net asset
value.
Uranium purchases
Yellow Cake began the period with a holding of 15.83 million lb of U(3)O(8)
and took delivery of an additional 2.97 million lb of U(3)O(8) to end the
half-year with a total holding of 18.81 million lb of U(3)O(8).
· The Company exercised its option with Kazatomprom to buy back 2,022,846 lb of
U(3)O(8) from Kazatomprom at a cost of USD43.25/lb or USD87.5 million in
aggregate consideration and took delivery of this material at the Cameco
storage facility in Canada on 19 May 2022.
· Pursuant to Kazatomprom's offer of 26 October 2021, the Company entered into
an agreement with Kazatomprom to purchase 950,000 lb of U(3)O(8) at a price of
USD47.58/lb for a total consideration of USD45.2 million and took delivery of
this uranium at the Cameco storage facility in Canada on 30 June 2022.
Operating performance
Yellow Cake made a loss after tax for the half-year of USD145.5 million (30
September 2021: profit after tax of USD169.1 million).
Expenses for the half-year were USD3.4 million (September 2021: USD3.4
million) and comprised:
· USD0.4 million in commissions payable to 308 Services Limited in relation to
the purchase by Yellow Cake of U(3)O(8) (30 September 2021: USD1.2 million);
and
· USD3.0 million in expenses of a recurring nature (30 September 2021: USD2.1
million) comprising the following).
o Procurement and market consultancy fees (holding fees and storage
incentive fees) paid to 308 Services Limited of USD1.6 million (30 September
2021: USD0.8 million) (detailed in note 8); and
o Other operating costs of USD1.4 million (30 September 2021: USD1.3
million).
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 0.62% (30 September 2021: 0.82%).
Share buyback programme
On 4 April 2022, Yellow Cake announced the initiation of a share buyback
programme to purchase up to USD3 million of the Company's Ordinary Shares
over 30 calendar days. The Company's shares had traded at a material discount
to its underlying net asset value since the middle of January 2022 and the
Yellow Cake Board resolved to implement the Programme as a means of
effectively acquiring exposure to uranium at a discount to the uranium spot
price. Under the share buyback programme, the Company acquired 566,833 shares
between 4 April and 6 May 2022, at a volume weighted average purchase price of
GBP4.15 per share or USD3.0 million in aggregate and at a volume weighted
average discount of 10.4% to the Company's proforma net asset value.
Balance sheet and cash flow
The value of Yellow Cake's investment in U(3)O(8) decreased by 1% during the
half-year from USD916.7 million as at 31 March 2022 to USD907.4 million as at
30 September 2022, as a result of the decrease in the uranium price from
USD57.90/lb(3) to USD48.25/lb(4), partially offset by an increase in the
volume of uranium held from 15.83 million lb of U(3)O(8) to 18.81 million lb
of U(3)O(8).
Net asset value during the half-year decreased from USD1,069.0 million as at
31 March 2022 to USD920.6 million as at 30 September 2022, as a result of the
reduction in the value of U(3)O(8) held by the Company and a reduction in cash
balances on completion of uranium purchases during the half-year.
During the half-year, the Company applied USD132.7 million to complete
purchases of 2.97 million lb of U(3)O(8).
As at 30 September 2022, Yellow Cake had cash and cash equivalents of
USD14.4 million (30 September 2021 USD87.3 million).
The Company does not propose to declare a dividend for the period.
Net Asset Value
Yellow Cake's net asset value on 30 September 2022 was GBP4.50 per share or
USD920.6 million, consisting of 18.81 million lb of U(3)O(8), valued at a
spot price of USD48.25/lb 52 (#_ftn52) and cash and other current assets and
liabilities of USD13.2 million.
Yellow Cake Net Asset Value as at 30 September 2022
Units
Investment in Uranium
Uranium oxide in concentrates ("U(3)O(8)") (A) lb 18,805,601
U(3)O(8) fair value per pound ((52)) (B) USD/lb 48.25
U(3)O(8) fair value (A) x (B) = (C) USD m 907.4
Cash and other net current assets/(liabilities) (D) USD m 13.2
Net asset value in USD m (C) + (D) = (E) USD m 920.6
Exchange Rate (() 53 (#_ftn53) ()) (F) USD/GBP 1.1170
Net asset value in GBP m (E) / (F) = (G) GBP m 824.1
Number of shares in issue less shares held in treasury (() 54 (#_ftn54) ()) (H) 183,104,399
Net asset value per share (G) / (H) GBP/share 4.50
Carole Whittall
Chief Financial Officer
Independent Review Report to Yellow Cake Plc
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 2022 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 2022 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 Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
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 Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
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: 6 December 2022
Condensed Statement of Financial Position
As at As at
30 September 2022 31 March 2022
(unaudited) (audited)
Notes USD '000 USD '000
ASSETS:
Non-current assets
Investment in uranium 3 907,370 916,717
Total non-current assets 907,370 916,717
Current assets
Cash and cash equivalents 4 14,423 153,136
Trade and other receivables 307 130
Total current assets 14,730 153,266
922,100 1,069,983
Total assets
LIABILITIES:
Current liabilities
Trade and other payables (1,542) (970)
Total current liabilities (1,542) (970)
Total liabilities (1,542) (970)
NET ASSETS 920,558 1,069,013
Equity
Attributable to the equity owners of the Company
Share capital 5 2,544 2,544
Share premium 5 588,181 588,181
Share-based payment reserve 6 140 122
Treasury shares 7 (14,216) (11,219)
Retained earnings 343,909 489,385
TOTAL EQUITY 920,558 1,069,013
Condensed Statement of Comprehensive Income
1 April 2022 1 April 2021
to to
30 September 2022 30 September 2021
(unaudited) (unaudited)
Notes USD '000 USD '000
Uranium investment (losses)/gains
Fair value movement of investment in uranium 3 (142,035) 175,892
Uranium swap income - 100
Premium to spot price on disposal of uranium - 10
Fair value movement of uranium derivative liability - (3,193)
Uranium investment (losses)/gains (142,035) 172,809
Expenses
Share-based payments 6 (18) (204)
Commission on uranium transactions 8 (452) (1,188)
Uranium holding fees and storage incentive fees 8 (1,619) (777)
Other operating expenses (1,350) (1,116)
Equity offering expenses - (149)
Total expenses (3,439) (3,434)
Bank interest income 35 11
Loss on foreign exchange (37) (274)
(145,476) 169,112
(Loss)/profit before tax attributable to the equity owners of the Company
Tax expense - -
(Loss)/profit and total comprehensive income for the period after tax (145,476) 169,112
attributable to the equity owners of the Company
Basic (loss)/earnings per share attributable to the equity owners of the 10 (0.79) 1.19
Company (USD)
Diluted (loss)/earnings per share attributable to the equity owners of the 10 (0.79) 1.18
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 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 5 348 86,558 - - - 86,906
Share issue costs 5 - (2,457) - - - (2,457)
Share-based payments 6 - - 204 - - 204
Exercise of bonus options 7 - - (239) 239 - -
As at 30 September 2021 (unaudited) 2,133 442,913 106 (11,219) 241,226 675,159
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
Condensed Statement of Cash Flows
1 April 2022 1 April 2021
to to
30 September 2022 30 September 2021
(unaudited) (unaudited)
Notes USD '000 USD '000
Cash flows from operating activities
(Loss)/profit after tax for the financial period (145,476) 169,112
Adjustments for:
Change in fair value of investment in uranium 3 142,035 (175,892)
Change in fair value of uranium derivative liability - 3,193
Premium to spot price on disposal - (10)
Share-based payments 6 18 204
Loss on foreign exchange 37 273
Interest income (35) (11)
Operating loss before changes in working capital (3,421) (3,131)
Changes in working capital:
Increase in trade and other receivables (177) (52)
Increase/(decrease) in trade and other payables 600 (2,070)
Interest received 35 11
Cash used in operating activities (2,963) (5,242)
Cash flows from investing activities
Purchase of uranium 3 (132,688) (127,791)
Proceeds of sale of uranium during the period - 10,000
Net cash used in investing activities (132,688) (117,791)
Cash flows from financing activities
Proceeds from issue of shares 5 - 86,906
Issue costs paid 5 - (2,457)
Proceeds from bonus issue - 1
Share buyback programme 7 (2,997) -
Net cash (used in)/generated from financing activities (2,997) 84,450
Net decrease in cash and cash equivalents during the period (138,648) (38,583)
Cash and cash equivalents at the beginning of the period 153,136 126,159
Effect of exchange rate changes (65) (274)
Cash and cash equivalents at the end of the period 14,423 87,302
Notes to the Condensed Interim Financial Statements
For the period from 1 April 2022 to 30 September 2022
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 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 the 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.
2. Summary of significant accounting policies
Basis of preparation
The unaudited condensed interim financial statements for the six months ended
30 September 2022 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 2022, 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 2022 is based on the statutory accounts for the
financial year ended 31 March 2022. 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 2022 and are expected to be applied to the Company's annual
financial statements for the year ending 31 March 2023.
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.
While the COVID-19 pandemic has continued to impact global supply chains,
including in the uranium industry, the Company's operations and uranium
deliveries have not been significantly affected. To date, Yellow Cake's
suppliers and other counterparties have been able to meet their obligations to
the Company.
In addition, the Board has considered the impact of the conflict in Ukraine
and sanctions imposed against Russia and Belarus in its going-concern
assessment for the Company.
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.
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 the
judgement that no tax liability has arisen during the period (year ended 31
March 2022: USD nil).
3. Investment in uranium
Fair value
USD '000
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
Acquisition of U(3)O(8) 157,100
Change in fair value 251,314
Sale of U(3)O(8) (87,488)
As at 31 March 2022 (audited) 916,717
Acquisition of U(3)O(8) 132,688
Change in fair value (142,035)
As at 30 September 2022 (unaudited) 907,370
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 USD48.25/lb as published by UxC LLC on 30 September
2022 (31 March 2022: USD57.90/lb).
With increasing liquidity in the uranium spot market and greater availability
of daily pricing data, UxC LLC began publishing a daily U(3)O(8) spot price
from 27 September 2021. Before this date, the month-end spot price for
U(3)O(8) published by UxC LLC on the last Monday of each calendar month was
used to value the Company's investment in U(3)O(8). The Company believes that
the daily U(3)O(8) spot price more accurately represents the period end market
price of the Company's uranium investment.
As at 30 September 2022, the Company:
· Had purchased a total of 21,476,515lb of U(3)O(8) at an average
cost of USD29.85/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 18,805,601 lb of U(3)O(8) at an average cost of
USD31.11/lb for a net total cash consideration of USD585,052,269 assuming a
first in first out methodology.
Acquisition of uranium
The Company completed the following purchase transactions during the period:
· On 25 May 2022, the Company purchased 2,022,846 lb of U(3)O(8) from
Kazatomprom for a cash consideration of USD87,488,090 or USD43.25/lb,
following the exercise of the 2022 option under the Kazatomprom Framework
Agreement.
· On 30 June 2022, the Company purchased 950,000 lb of U(3)O(8) from
Kazatomprom for a cash consideration of USD45,201,000 or USD47.58/lb.
The following table provides a summary of the Company's investment in U(3)O(8)
as at 30 September 2022:
Quantity Fair Value
Location lb USD '000
Canada 18,505,601 892,895
France 300,000 14,475
Total 18,805,601 907,370
As at 31 March 2022:
Quantity Fair Value
Location lb USD '000
Canada 15,532,755 899,347
France 300,000 17,370
Total 15,832,755 916,717
4. Cash and cash equivalents
Cash and cash equivalents as at 30 September 2022 were banked with Citi Bank
Europe plc in a variable interest account with full access. Balances at the
end of the period were USD14,222,224 and GBP179,890, a total of USD14,423,161
equivalent (31 March 2022: USD153,136,073 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 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
Issued 29 October 2021 30,000,000 300 411
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
The number of shares on issue above includes 4,636,331 treasury shares - refer
to note 7.
Share
premium
GBP '000 USD '000
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
Proceeds of issue of shares 108,900 149,260
Share issue costs (2,913) (3,992)
Share premium as at 31 March 2022 (audited) 432,756 588,181
Share premium as at 30 September 2022 (unaudited) 432,756 588,181
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, USD18,000 was recognised in the statement of comprehensive
income, in relation to share-based payments (30 September 2021: USD204,000).
7. Treasury shares
Number GBP '000 USD '000
Treasury shares as at 31 March 2021 (audited) 4,156,385 8,866 11,458
Exercise of bonus options (86,887) (185) (239)
Treasury shares as 30 September 2021 (unaudited) 4,069,498 8,681 11,219
Treasury shares as 31 March 2022 (audited) 4,069,498 8,681 11,219
Share buyback programme 566,833 2,352 2,997
Treasury shares as at 30 September 2022 (unaudited) 4,636,331 11,033 14,216
In April 2022, Yellow Cake announced the initiation of a share buyback
programme to purchase up to USD3 million of the Company's Ordinary Shares over
30 calendar days commencing on 4 April 2022 (the "Programme"). Given that the
Company's shares traded at a material discount to its underlying net asset
value since mid-January this year, the Yellow Cake Board resolved to implement
a share buyback programme as a means of effectively acquiring exposure to
uranium at a discount to the commodity spot price. Shares were purchased when
the closing mid-market share price of the Company on any given day represented
a discount of 10% or more to the Company's pro forma net asset value at that
time. Under the Programme, the Company acquired 566,833 shares between 4 April
and 6 May 2022, at a volume weighted average purchase price of GBP4.15 per
share or USD3 million in aggregate and at a volume weighted average discount
to the Company's pro forma net asset value of 10.4%.
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 (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 USD1,618,711 (30 September 2021: USD776,828) 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 2022 calendar year. The Company
has therefore elected to include a provisional commission of USD226,000 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 USD452,010 (30 September 2021: USD1,187,906)
9. Related party transactions
During the period, the Company incurred USD82,594 (30 September 2021:
USD88,071) of administration fees payable to Langham Hall Fund Management
(Jersey) Limited ("Langham Hall"). Emily Manning was an employee of Langham
Hall and served as a Non-Executive Director of the Company from 31 March 2021
to 8 November 2022, for which she received no Directors' fees. Claire
Brazenall, an employee of Langham Hall was appointed as a Non-Executive
Director of the Company with effect from 9 November 2022 and for which she
will receive no Directors' fees. As at 30 September 2022 there were no amounts
due to Langham Hall (31 March 2022: USD nil).
The following Directors own ordinary shares in the Company as at 30 September
2022:
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%
Emily Manning - 0.00%
Alan Rule 18,837 0.01%
Andre Liebenberg 121,478 0.06%
Carole Whittall 49,918 0.03%
Total 259,646 0.14%
* 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 2022 1 April 2021
to to
30 September 2022 30 September 2021
(unaudited) (unaudited)
USD '000 USD '000
(Loss)/profit for the period (USD '000) (145,476) 169,112
Weighted average number of shares during the period - Basic* 183,186,301 142,491,867
Weighted average number of shares during the period - Diluted* 183,422,810 142,784,802
(Loss)/earnings per share attributable to the equity owners of the Company
(USD):
Basic (0.79) 1.19
Diluted (0.79) 1.18
*The weighted average number of shares excludes treasury shares.
11. Events after the period end
In the opinion of the directors, there are no significant events subsequent to
the period end that are deemed necessary to be disclosed in the interim
financial statements.
1 (#_ftnref1) Based on the daily spot price of USD57.90/lb
published by UxC, LLC on 31 March 2022 and 15,832,755 lb U₃O₈ held by the
Company as at that date.
2 (#_ftnref2) Based on the daily spot price of USD48.25/lb
published by UxC, LLC on 30 September 2022 and 18,805,601 lb U₃O₈ held by
the Company as at that date.
3 (#_ftnref3) Daily spot price published by UxC LLC on 31 March
2022.
4 (#_ftnref4) Daily spot price published by UxC, LLC on 30
September 2022.
5 (#_ftnref5) Net asset value per share as at 31 March 2022 is
calculated assuming 187,740,730 ordinary shares in issue less 4,069,498 shares
held in treasury, the Bank of England's daily USD/GBP exchange rate of 1.3162
as at 31 March 2022 and the daily spot price published by UxC LLC on 31 March
2022.
6 (#_ftnref6) Net asset value per share as at 30 September 2022 is
calculated assuming 187,740,730 ordinary shares in issue less 4,636,331 shares
held in treasury, the Bank of England's daily USD/ GBP exchange rate of 1.1170
and the daily spot price published by UxC, LLC on 30 September 2022.
7 (#_ftnref7) Daily spot price published by UxC, LLC on 5
December 2022.
8 (#_ftnref8) Cash and cash equivalents and other net current
assets and liabilities as at 30 September 2022.
9 (#_ftnref9) Bank of England's daily USD/ GBP exchange rate as
at 5 December 2022.
10 (#_ftnref10) Net asset value per share on 5 December 2022 is
calculated assuming 187,740,730 ordinary shares in issue, less 4,636,331
shares held in treasury on that date.
11 (#_ftnref11) Ux Weekly vol 36 no 40. 3 October 2022.
12 (#_ftnref12) Ux Weekly vol 35 no 40. 4 October 2021.
13 (#_ftnref13) Source: Sprott.com; "Daily and Cumulative Pounds of
Uranium (U3O8) Acquired by Trust".
14 (#_ftnref14) Ux Weekly; "UxC Market Statistics"; 3 October 2022.
15 (#_ftnref15) Ux Weekly; "The Era of Inventory Overhang is Over"; 5
September 2022.
16 (#_ftnref16) G7 Germany 2022; "G7 Leaders' Communiqué"; 28 June
2022.
17 (#_ftnref17) H.R. 5376 - Inflation Reduction Act of 2022; 117th
Congress (2021-2022).
18 (#_ftnref18) USDOE; "DOE Report Finds Hundreds of Retiring Coal Plant
Sites Could Convert to Nuclear"; 13 September 2022.
19 (#_ftnref19) Bloomberg Green. "EU Lawmakers Remove Last Hurdle
to Label Gas, Nuclear as Green"; 6 July 202.
20 (#_ftnref20) World Nuclear News; "Nuclear included in EU's
repowering plan"; 20 May 2022.
21 (#_ftnref21) Montel News; "Macron Wins Election, Vows to Boost
Nuclear, Renewables"; 24 April 2022.
22 (#_ftnref22) HM Government; "British Energy Security Strategy";
7 April 2022.
23 (#_ftnref23) UK Government Press Release, "Government fund to
accelerate nuclear fuel supply opens"; 19 July 2022.
24 (#_ftnref24) Deutsche Weld - DW; "Germany extends lifetime of
remaining nuclear plants"; 17 October 2022.
25 (#_ftnref25) World Nuclear News; "China Approves Construction of
Six New Reactors"; 21 April 2022.
26 (#_ftnref26) China Daily.com.cn; "Nuclear power's role in green goals
grows"; 10 August 2022.
27 (#_ftnref27) Ux Weekly; "Nuclear Power added to South Korea's
Sustainable Finance Taxonomy"; 26 September 2022.
28 (#_ftnref28) Nippon.com; "Japan to Restart 7 More Nuclear Reactors";
24 August 2022.
29 (#_ftnref29) Nuclear Engineering International; "Russia to build
16 new nuclear units by 2035"; 1 June 2022.
30 (#_ftnref30) Egypt Today; "Permit to build 1st reactor at Egypt's
Dabaa Nuclear Power Plant issued"; 29 June 2022.
31 (#_ftnref31) ROSATOM Press Release; "Main Construction Phase for
El-Dabaa Nuclear Power Plant Project Begins in Egypt"; 20 July 2022.
32 (#_ftnref32) World Nuclear News; "Construction begins of fourth
Turkish reactors"; 21 July 2022.
33 (#_ftnref33) Ux Weekly; "Saudi Arabia Commences Licensing Study for
First Commercial Nuclear Power Plant"; 3 October 2022.
34 (#_ftnref34) World Nuclear News; "New Swedish government seeks
expansion of nuclear energy"; 17 October 2022.
35 (#_ftnref35) Power Technology; "Westinghouse Electric to build
nuclear power plant in Poland"; 31 October 2022.
36 (#_ftnref36) Cameco Corporation, "Management's discussion and
analysis for the quarter ended 31 March 2022"; 5 May 2022.
37 (#_ftnref37) Cameco Corporation; "Management Discussion and Analysis
for the quarter ended September 30, 2022"; 27 October 2022.
38 (#_ftnref38) Boss Energy Ltd. ASX Release; "Board makes Final
Investment Decision to develop Honeymoon"; 1 June 2022.
39 (#_ftnref39) Paladin Energy Press Release; "The Langer Heinrich
Mine to return to production"; 19 July 2022.
40 (#_ftnref40) Kazatomprom Press Release; "Kazatomprom 3Q2022 Operations
and Trading Update"; 26 October 2022
41 (#_ftnref41) Kazatomprom Press Release; "Operating and Financial
Review - Six Months ended 30 June 2022"; 19 August 2022.
42 (#_ftnref42) International Energy Agency; "Nuclear Power and
Secure Energy Transitions - From today's challenges to tomorrow's clean energy
systems"; May 2022.
43 (#_ftnref43) International Energy Agency; "World Energy Outlook
2022"; 27 October 2022.
44 (#_ftnref44) UNECE;"Carbon Neutrality by 2050 is Still Achievable
Despite Energy Crisis, According to New UN Report"; 19 September 2022.
45 (#_ftnref45) International Atomic Energy Agency; "IAEA Projections
for Nuclear Power Growth Increase for Second Year Amid Climate, Energy
Security Concerns"; 26 September 2022.
46 (#_ftnref46) Ux Weekly; "Third Quarter Spot Uranium Market
Update"; 26 September 2022.
47 (#_ftnref47) "Geopolitics Overtakes the Markets"; International
Uranium Fuel Seminar; 18 October 2022.
48 (#_ftnref48) Based on the daily spot price of USD57.90/lb
published by UxC, LLC on 31 March 2022 and 15,832,755 lb U₃O₈ held by the
Company as at that date.
49 (#_ftnref49) Based on the daily spot price of USD48.25/lb
published by UxC, LLC on 30 September 2022 and 18,805,601 lb U₃O₈ held by
the Company as at that date.
50 (#_ftnref50) Net asset value per share as at 31 March 2022 is
calculated assuming 187,740,730 ordinary shares in issue less 4,069,498 shares
held in treasury, the Bank of England's daily USD/GBP exchange rate of 1.3162
as at 31 March 2022 and the daily spot price published by UxC LLC on 31 March
2022.
51 (#_ftnref51) Net asset value per share as at 30 September 2022 is
calculated assuming 187,740,730 ordinary shares in issue less 4,636,331 shares
held in treasury, the Bank of England's daily USD/ GBP exchange rate of 1.1170
and the daily spot price published by UxC, LLC on 30 September 2022.
52 (#_ftnref52) Daily spot price published by UxC, LLC on
30 September 2022.
53 (#_ftnref53) Bank of England's daily USD/ GBP exchange
rate as at 30 September 2022.
54 (#_ftnref54) Net asset value per share on 30 September
2022 is calculated assuming 187,740,730 ordinary shares in issue less
4,636,331 shares held in treasury on that date.
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