Yellow Cake PLC – Purchase of Additional Uranium

Yellow Cake, a specialist company operating in the uranium sector with a view to holding physical uranium (“U₃O₈“) for the long term, is pleased to announce that it has taken delivery of 1.175 million lbs of uranium from NAC Kazatomprom JSC.

On 12^th April 2019, Yellow Cake exercised its option under the Kazatomprom framework agreement to acquire 1.175 million lbs of uranium from Kazatomprom at a price of US$25.88 /lb. On 31^st May 2019, the U₃O₈ was delivered and transferred to Yellow Cake at Cameco Corporation’s Port Hope / Blind River facility in Ontario, Canada, where the material will be held in storage.

The total cost of this U₃O₈ purchase amounts to US$30,409,000 and will be settled from the Company’s cash balances.

Following completion of this transaction, Yellow Cake owns c.9.62 million lbs of uranium.  The average acquisition cost of the Company’s uranium holding is $21.68/ lb, with an aggregate acquisition cost of US$208.5 million.

Including this purchase, Yellow Cake’s estimated net asset value at 30^th April 2019 (on a pro-forma basis) was £2.17 per share or US$249.4 million ⁽¹⁾, consisting of 9,616,385 lbs of U₃O₈ valued at a spot price of US$25.25 /lb ⁽²⁾, a derivative liability of US$2.8 million ⁽³⁾ and other net assets of US$9.4 million ⁽⁴⁾.

As at close on 31^st May 2019, the Company’s share price was £2.10 per share, which represents a 3.2% discount to the above estimated pro-forma net asset value of £2.17 per share.

(1)   Net asset value per share is calculated assuming 88,215,716 ordinary shares in issue and the Bank of England’s daily exchange rate of 1.3036 on 30 April 2019.
(2)   Fair values are based on the month-end spot price published by UxC LLC, as at 29^th April 2019.
(3)   Estimated current value of the Kazatomprom repurchase option under the framework agreement, which is a potential liability of US$6.5 million and may only be exercised if the spot U₃O₈ price exceeds US$37.50 /lb for a period of 14 days during the period between 4 July 2021 and 30 June 2027.
(4)   Includes cash and cash equivalents of US$10.8 mm after purchase of 1.175 million lb of uranium.

Andre Liebenberg, CEO of Yellow Cake, said:

“ We are pleased to complete the purchase of additional uranium from Kazatomprom, in line with the strategy we set out at the time of our IPO, to buy and hold physical uranium and benefit from the clear long-term fundamentals of the commodity. We continue to expect that we will see a steady and sustained rise in the price of uranium, despite near-term uncertainty which has resulted in some end users delaying major purchasing decisions. Our confidence in our model and the long-term outlook is unchanged.”