Surging uranium prices generate windfall for Yellow Cake
Uranium-holding vehicle Yellow Cake today reported a near half-billion-dollar profit in its latest financial period as uranium spot prices hovered near 15-year highs.
In its half-year results covering the six months to the end of September 2023, the company said profit after tax totalled $458m (£364m) in the period, from a loss of $145m (£115m) last year.
The profit was driven by a 45.1 per cent increase in the spot price of physical uranium (U3O8 or triuranium octoxide). The price of the commodity rose from $50.65 per pound to $73.50.
Yellow Cake purchased an additional two million pounds of physical uranium in the period, bringing its stock to 20.16m lb.
As a result, Yellow Cake’s net asset value jumped from $1bn (£790m) at the end of March, to $1.5bn (£1.2bn) at the end of September. Net asset value per share jumped from $5.23 (415p) to $7.54 (599p).
The company said it will continue to buy uranium wholesale from the world’s largest producer and seller of the natural element, Kazakhstan’s national company, Kazatomprom. Uranium is the most vital ingredient in the process of creating energy through nuclear reactors.
The company has an agreement with Kazatomprom that allows it to buy up to $100m-worth of uranium every year until 2027.
Following a $66m (£52.4m), 1.3m lb purchase in September, the company will use $103m (£81.8m) from an oversubscribed share placing to buy another 1.5m lb and take delivery in the first half of next year.
Yellow Cake’s estimated pro forma net asset value on 4 December 2023 was $1.8bn (£1.4bn), based on 21.68 million lb of U3O8, valued at a spot price of $81.45/lb.
Chief Andre Liebenberg said: “The uranium price is 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.
“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 and we remain very confident in our strategy, and the long term outlook for uranium.”