TIDMYCA
RNS Number : 1217H
Yellow Cake PLC
23 March 2020
23 March 2020
Yellow Cake plc ("Yellow Cake" or the "Company")
COVID-19 and NAV discount
Yellow Cake ("Yellow Cake" or the "Company") , a specialist
company operating in the uranium sector with a view to holding
physical uranium for the long term, today makes a statement
regarding the impact of COVID - 19 on its business activities and
NAV.
Yellow Cake is mindful of the huge impact COVID-19 is having on
relatives, friends and colleagues around the world and would like
to express its thanks to all those who are working to keep us safe
and well.
Yellow Cake wishes to reassure the company's shareholders that
it is currently unaffected by COVID-19 both operationally and
financially and notes that the uranium price has remained
resilient.
Given its focus on maintaining a minimal cost base, Yellow
Cake's executive team are already home-based and it has no physical
operations. Yellow Cake also benefits from an extremely strong
capital position. It has sufficient working capital for at least
two years before the need to raise any additional funds and it has
no debt or hedges on the balance sheet.
Yellow Cake's estimated net asset value as at 29 February 2020
was GBP2.15 per share [1] or US$241.6 million, consisting of
9,616,385 lbs of U(3) O(8) valued at a spot price of US$24.70/ lb
[2] , a derivative liability of US$2.7 million and other net assets
of US$6.8 million.
Yellow Cake's estimated net asset value as at 20 March 2020 was
GBP2.31 per share [3] .
As at close on 20 March 2020, the Company's share price was
GBP1.60 per share, which represents a 31% discount to the above
estimated net asset value of GBP2.31 per share.
Uranium market update - supply risks support resilient uranium
price
The spot uranium price has traded in the range of US$24.00-26.00
per lb. since March 2019 and remains generally unaffected by the
current global situation.
As recently reported by the International Atomic Energy Agency
(IAEA), nuclear power generated around 10% of global electricity
during 2019 representing almost one-third of all low carbon
electricity second only to hydroelectric power production.
As the World addresses the COVID-19 pandemic, we see minimal
risk in the uranium demand arena as reactor operations are expected
to continue at a high level supplying reliable base load
electricity.
The near-term industry risk profile remains focused on the
nuclear fuel supply side due to a high degree of concentration
throughout uranium production, conversion services and enrichment
facilities. Furthermore, transportation and logistics requirements
inject increased delivery risks. These factors are likely to
support the uranium price.
Andre Liebenberg, Chief Executive, stated:
"The uncertainty created by COVID-19 has weighed heavily on the
share price and consequently the company is trading at a very
substantial discount to net asset value. Though the impact on the
global economy has been extreme and there is no way of forecasting
how long it will take to recover, Yellow Cake is in a very robust
financial position and we have been able to safely continue the
effective stewardship of the business.
"The price of uranium has remained remarkably resilient and we
see far more risk on the supply side than the demand side, which we
expect will support, or more likely put upward pressure on the
uranium price over the medium term. Given our clear financial
strength and the solid outlook for the uranium market, we believe
the current discount to NAV is excessive. Our share buyback
programme has allowed us to acquire further uranium exposure at a
discount to the spot price at a time when the longer-term supply
and demand characteristics of uranium make the commodity a
compelling investment opportunity."
ENQUIRIES:
Yellow Cake plc
Andre Liebenberg, CEO Carole Whittall, CFO
Tel: +44 (0) 153 488 5200
Nominated Adviser and Joint Broker: Numis Securities Limited
John Prior Paul Gillam
Alamgir Ahmed
Tel: +44 (0) 207 260 1000
Joint Broker: Berenberg
Matthew Armitt Jennifer Wyllie
Detlir Elezi
Tel: +44 (0) 203 207 7800
Financial Adviser: Bacchus Capital Advisers
Peter Bacchus Richard Allan
Tel: +44 (0) 203 848 1640
Investor Relations: Powerscourt
Peter Ogden Linda Gu
Tel: +44 (0) 7793 858 211
ABOUT YELLOW CAKE
Yellow Cake is a London-listed 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 the
acquisition of uranium royalties and streams or 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 lower cost base and ten-year Framework Agreement for
the supply of U(3) O(8) with Kazatomprom, the world's largest
uranium producer. Yellow Cake currently holds 9.62 million lb of
U(3) O(8) , all of which is held in storage in North America.
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.
[1] Yellow Cake's net asset value per share on 29 February 2020
is calculated assuming 88,215,716 ordinary shares in issue less
155,467 held in treasury on that date and the Bank of England's
daily exchange rate of 1.2776 on 28 February 2020.
[2] Month-end spot price published by UxC LLC on 24 February 2020.
[3] Y ellow Cake's estimated net asset value as at 20 March 2020
was US$235.9 million, consisting of 9,616,385 lbs of U(3) O(8)
valued at the weekly price of US$24.10/ lb published by UxC LLC on
16 March 2020, a derivative liability of US$2.7 million and other
net assets of US$6.8 million as at 29 February 2020 and a GBP / USD
exchange rate of 1.1629. The estimated net asset value per share as
at 20 March 2020 is calculated assuming 88,215,716 ordinary shares
in issue less 281,586 held in treasury on that date.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDJTMBTMTBTTRM
(END) Dow Jones Newswires
March 23, 2020 03:00 ET (07:00 GMT)
Yellow Cake (LSE:YCA)
Historical Stock Chart
From Apr 2024 to May 2024
Yellow Cake (LSE:YCA)
Historical Stock Chart
From May 2023 to May 2024