TIDMYCA
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
(A) x (B)
U(3) O(8) fair value = (C) USD m 1,766.0
------------
Cash and other net current
assets/(liabilities) ( [12]
() (D) USD m 33.3
(C) + (D)
Net asset value in USD m = (E) USD m 1,799.3
------------
Exchange Rate (F) USD/GBP 1.2614
(E) / (F)
Net asset value in GBP million = (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]
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
30 September 31 March
Units 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
------------
(A) x (B)
U(3) O(8) fair value = (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 (C) + (D) USD
m = (E) m 1,494.2 1.035.3
------------- ------------
Exchange Rate ([56]) (F) USD/GBP 1.2207 1.2364
Net asset value in GBP (E) / (F)
million = (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 31 March 2023
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
----------------------------- ------ ------------- --------------
Total assets 1,564,985 1,037,256
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 30 September
2023 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)
Profit/(loss) before tax attributable
to the equity owners of the
Company 458,824 (145,476)
Tax expense - -
Profit/(loss) and total comprehensive
income/(loss) for the period after
tax attributable to the equity owners
of the Company 458,824 (145,476)
------------------------------------------------- ------------- -------------
Basic earnings/(loss) per share
attributable to the equity owners
of the Company (USD) 10 2.32 (0.79)
Diluted earnings/(loss) per
share attributable to the equity
owners of the Company (USD) 10 2.31 (0.79)
Condensed Statement of Changes in Equity
Attributable to the equity owners of the Company
Share
based
Share Share payment Treasury Retained Total
capital premium reserve Shares earnings equity
Notes USD USD USD'000 USD'000 USD '000 USD '000
'000 '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
----------------------- ------ --------- ---------- ---------- ----------- ----------- -----------
Total comprehensive
income after tax
for the period - - - - 42,540 42,540
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 7 - - - - - -
options
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 30 September
2023 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 22,826,515 lb 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, a ssuming 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 USD 83,087,030 and GBP 257,264, which is, in
total, equivalent to USD 83,401,072 (31 March 2023: USD 84,428,484
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.
S hare 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 % of share
shares 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 30 September
2023 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 U O 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 U O 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.
1 5 China Nuclear Energy Association: "China takes world's crown
in nuclear power units under contraction"; 26 April 2023.
1 6 World Nuclear News; "Six reactors approved for construction in China"; 1 August 2023.
1 7 China Daily; "China's nuclear power to generate 10% of total
electricity by 2035": 26 September 2023.
1 8 World Nuclear News; "Indian minister eyes 9% nuclear share by 2047"; 12 April 2023.
1 9 World Nuclear News: "Biden, Modi affirm commitment to
nuclear as Kovvada plans intensify"; 23 June 2023.
2 0 World Nuclear News; "Takahama 2 reactor restarted"; 15 September 2023.
2 1 World Nuclear News; "Eleventh Japanese reactor resumes operation"; 28 July 2023.
2 2 US Department of Energy, Energy Information Administration:
"2022 Uranium Marketing Annual Report"; 13 June 2023.
2 3 Nuclear Newswire; "Vogtle-4 fuel load started"; 18 August 2023.
2 4 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
2 6 Taipei Times; "Taiwan needs nuclear energy, Ko says"; 13 August 2023.
2 7 Korea Economic Daily; "Poland starts approval process to
import S. Korean reactors"; 24 August 2023).
2 8 Reuters; "Poland issues environmental permit for first
nuclear power plant"; 22 September 2023.
2 9 Bloomberg News; "Sweden Needs to Treble Nuclear Power as
Electricity Demand Soars": 9 August 2023.
3 0 Nikkei Asia; "Turkey close to deal with China on nuclear
power plant"; 15 September 2023.
3 1 Nature Italy; "Italian nuclear industry revival on the table"; 11 September 2023.
3 2 TRT Afrika; "Kenya plans construction of nuclear power plant"; 26 September 2023.
3 3 Anadolu Agency News Broadcast System; "Russia, South Korea
to build nuclear power plants in Uganda"; 8 September 2023.
3 4 Cameco Corporation; "Management's discussion and analysis
for the quarter ended September 30, 2023"; 30 October 2023.
3 5 Cameco Corporation; "Cameco announces third quarter results"; 31 October 2023.
3 6 Cameco Corporation; "Cameco Signs Nuclear Fuel Agreement to
Support Bulgaria's Diversification Efforts"; 20 April 2023.
3 7 Kazatomprom Press Release; "Voting Results of the General
Meeting of Shareholders;" 25 May 2023.
3 8 Kazatomprom; "Kazatomprom 3Q23 Operations and Trading Update"; 1 November 2023.
3 9 www.rfi.fr ; "Macron's Visit to Mongolia was Focused on
Ensuring France's Uranium Supply;" 23 May 2023.
4 0 Ux Weekly, "2022 U(3) O(8) Production Review"; 15 May 2023.
4 1 Ux Weekly; "IAEA URAM-2023: Pressure on New Uranium Projects
to Meet Demand Growth"; 22 May 2023.
4 2 World Nuclear News; "A guide: Uranium in Niger"; 28 July 2023.
4 3 Nuclear Energy Institute; "The future of Nuclear Power 2023 Baseline Survey"; April 2023.
4 4 World Nuclear News; "Five G7 countries in nuclear fuel agreement"; 17 April 2023.
4 5 Nuclear Energy Institute Blog, "State of the Nuclear Energy Industry 2023"; 15 May 2023.
4 6 International Energy Agency; "Net Zero Roadmap - A Global
Pathway to Keep the 1.5 C Goal in Reach 2023 Update"; September
2023.
4 7 Based on the daily spot price of USD50.65/lb published by
UxC, LLC on 31 March 2023 and 18,805,601 lb U O held by the Company
on that date.
4 8 Based on the daily spot price of USD73.50/lb published by
UxC, LLC on 30 September 2023 and 20,155 , 601 lb U O held by the
Company on that date.
49 Daily spot price published by UxC, LLC on 31 March 2023.
5 0 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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END
IR TABBTMTMMTJJ
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December 06, 2023 02:00 ET (07:00 GMT)
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