TIDMYCA
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] as at
31 March 2022 to USD907.4 million [2] as at 30 September
2022, resulting from a decrease in the spot price from
USD57.90/lb [3] to USD48.25/lb [4] 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] as at 31 March 2022 to GBP4.50
per share [6] 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]
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
(A) x (B)
U(3) O(8) fair value = (C) USD m 902.7
------------
Cash and other net current
assets/(liabilities) ( [8]
() (D) USD m 13.2
(C) + (D)
Net asset value in USD m = (E) USD m 915.9
------------
Exchange Rate ( [9] ) (F) USD/GBP 1.2218
(E) / (F)
Net asset value in GBP m = (G) GBP m 749.6
Number of shares in issue
less shares held in treasury
( [10] () (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
G ordon 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] ,
compared to 75.4 million lb of U(3) O(8) [12] 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]
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]
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]
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]
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]
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]
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]
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]
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]
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] 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]
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]
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] 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]
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]
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]
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]
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] 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]
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]
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]
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]
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]
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] 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]
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]
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]
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] 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]
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]
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]
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] .
On 26 September 2022, the IAEA released its latest annual
forecast of nuclear power capacity extending through to 2050 [45] .
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] , 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]
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] as
at 31 March 2022 to USD907.4 million [49] 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] as at 31 March 2022 to GBP4.50 per share [51]
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 s hare 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] 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
(A) x (B)
U(3) O(8) fair value = (C) USD m 907.4
------------
Cash and other net current
assets/(liabilities) (D) USD m 13.2
(C) + (D)
Net asset value in USD m = (E) USD m 920.6
------------
Exchange Rate ( [53] () (F) USD/GBP 1.1170
(E) / (F)
Net asset value in GBP m = (G) GBP m 824.1
Number of shares in issue
less shares held in treasury
( [54] () (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 31 March 2022
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
----------------------------- ------- ------------- ----------------
Total assets 922,100 1,069,983
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 30 September
2022 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)
(Loss)/profit before tax attributable
to the equity owners of the
Company (145,476) 169,112
Tax expense - -
(Loss)/profit and total comprehensive
income for the period after tax attributable
to the equity owners of the Company (145,476) 169,112
------------------------------------------------- ------------- -------------
Basic (loss)/earnings per share
attributable to the equity owners
of the Company (USD) 10 (0.79) 1.19
Diluted (loss)/earnings per
share attributable to the equity
owners of the Company (USD) 10 (0.79) 1.18
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
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 30 September
2022 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 USD
585,052,269 a ssuming 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.
S hare 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 USD
'000 '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 % 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%
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 30 September
2022 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] Based on the daily spot price of USD57.90/lb published by
UxC, LLC on 31 March 2022 and 15,832,755 lb U O held by the Company
as at that date.
[2] Based on the daily spot price of USD48.25/lb published by
UxC, LLC on 30 September 2022 and 18,805,601 lb U O held by the
Company as at that date.
[3] Daily spot price published by UxC LLC on 31 March 2022.
[4] Daily spot price published by UxC, LLC on 30 September 2022.
[5] N et 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] 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] Daily spot price published by UxC, LLC on 5 December 2022.
[8] Cash and cash equivalents and other net current assets and
liabilities as at 30 September 2022.
[9] Bank of England's daily USD/ GBP exchange rate as at 5 December 2022.
[10] 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] Ux Weekly vol 36 no 40. 3 October 2022.
[12] Ux Weekly vol 35 no 40. 4 October 2021.
[13] Source: Sprott.com; "Daily and Cumulative Pounds of Uranium (U3O8) Acquired by Trust".
[14] Ux Weekly; "UxC Market Statistics"; 3 October 2022.
[15] Ux Weekly; "The Era of Inventory Overhang is Over"; 5 September 2022.
[16] G7 Germany 2022; "G7 Leaders' Communiqué"; 28 June 2022.
[17] H.R. 5376 - Inflation Reduction Act of 2022; 117th Congress (2021-2022).
[18] USDOE; "DOE Report Finds Hundreds of Retiring Coal Plant
Sites Could Convert to Nuclear"; 13 September 2022.
[19] Bloomberg Green. "EU Lawmakers Remove Last Hurdle to Label
Gas, Nuclear as Green"; 6 July 202.
[20] World Nuclear News; "Nuclear included in EU's repowering plan"; 20 May 2022.
[21] Montel News; "Macron Wins Election, Vows to Boost Nuclear, Renewables"; 24 April 2022.
[22] HM Government; "British Energy Security Strategy"; 7 April 2022.
[23] UK Government Press Release, "Government fund to accelerate
nuclear fuel supply opens"; 19 July 2022.
[24] Deutsche Weld - DW; "Germany extends lifetime of remaining
nuclear plants"; 17 October 2022.
[25] World Nuclear News; "China Approves Construction of Six New Reactors"; 21 April 2022.
[26] China Daily.com.cn; "Nuclear power's role in green goals grows"; 10 August 2022.
[27] Ux Weekly; "Nuclear Power added to South Korea's
Sustainable Finance Taxonomy"; 26 September 2022.
[28] Nippon.com; "Japan to Restart 7 More Nuclear Reactors"; 24 August 2022.
[29] Nuclear Engineering International; "Russia to build 16 new
nuclear units by 2035"; 1 June 2022.
[30] Egypt Today; "Permit to build 1st reactor at Egypt's Dabaa
Nuclear Power Plant issued"; 29 June 2022.
[31] ROSATOM Press Release; "Main Construction Phase for
El-Dabaa Nuclear Power Plant Project Begins in Egypt"; 20 July
2022.
[32] World Nuclear News; "Construction begins of fourth Turkish reactors"; 21 July 2022.
[33] Ux Weekly; "Saudi Arabia Commences Licensing Study for
First Commercial Nuclear Power Plant"; 3 October 2022.
[34] World Nuclear News; "New Swedish government seeks expansion
of nuclear energy"; 17 October 2022.
[35] Power Technology; "Westinghouse Electric to build nuclear
power plant in Poland"; 31 October 2022.
[36] Cameco Corporation, "Management's discussion and analysis
for the quarter ended 31 March 2022"; 5 May 2022.
[37] Cameco Corporation; "Management Discussion and Analysis for
the quarter ended September 30, 2022"; 27 October 2022.
[38] Boss Energy Ltd. ASX Release; "Board makes Final Investment
Decision to develop Honeymoon"; 1 June 2022.
[39] Paladin Energy Press Release; "The Langer Heinrich Mine to
return to production"; 19 July 2022.
[40] Kazatomprom Press Release; "Kazatomprom 3Q2022 Operations
and Trading Update"; 26 October 2022
[41] Kazatomprom Press Release; "Operating and Financial Review
- Six Months ended 30 June 2022"; 19 August 2022.
[42] International Energy Agency; "Nuclear Power and Secure
Energy Transitions - From today's challenges to tomorrow's clean
energy systems"; May 2022.
[43] International Energy Agency; "World Energy Outlook 2022"; 27 October 2022.
[44] UNECE;"Carbon Neutrality by 2050 is Still Achievable
Despite Energy Crisis, According to New UN Report"; 19 September
2022.
[45] International Atomic Energy Agency; "IAEA Projections for
Nuclear Power Growth Increase for Second Year Amid Climate, Energy
Security Concerns"; 26 September 2022.
[46] Ux Weekly; "Third Quarter Spot Uranium Market Update"; 26 September 2022.
[47] "Geopolitics Overtakes the Markets"; International Uranium Fuel Seminar; 18 October 2022.
[48] Based on the daily spot price of USD57.90/lb published by
UxC, LLC on 31 March 2022 and 15,832,755 lb U O held by the Company
as at that date.
[49] Based on the daily spot price of USD48.25/lb published by
UxC, LLC on 30 September 2022 and 18,805,601 lb U O held by the
Company as at that date.
[50] N et 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] 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] Daily spot price published by UxC, LLC on 30 September 2022.
[53] Bank of England's daily USD/ GBP exchange rate as at 30 September 2022.
[54] 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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END
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