Yellow Cake capitalises on higher uranium demand as company awaits nuclear power transition

Yellow Cake shares gained 2% to 357.4p in late afternoon trading on Friday after the group announced continued market improvement for U3O8, with the spot price increasing 89% from $30.65 per pound on 31 March 2021 to $57.90 per pound on 31 March 2022.

The uranium-specialised company reported a 203% rise in the value of its holding in U3O8 across the financial year to $916.7 million at 31 March 2022 on the back of the increased price of uranium.

- Advertisement -

Yellow Cake also highlighted the net growth in the volume of uranium held from 9.8 million pounds of U3O8 to 15.8 million pounds.

The firm mentioned a post-tax profit of $417.3 million for FY 2022 from $29.9 million in FY 2021.

Yellow Cake confirmed $236.6 million raised over the period through share placings in June and October 2021, after it raised $138.5 million in March 2021.

The company said it applied the proceeds of the three placings to acquire 8.3 million pounds of U3O8 in FY 2022, along with an additional 0.9 million pounds post-year end.

- Advertisement -

It noted a NAV of $1 billion, representing 442p per share on 31 March 2022, against a NAV of $421.4 million at 238p per share the last year.

Yellow Cake further reported a completed $3 million share buyback after year-end of 566,833 shares between 4 April and 6 May 2022.

The group also confirmed a 47% increase in the value of its 18.8 million pound holding of U3O8 at 15 July 2022 to $860.4 million, relative to the acquisition cost of $585.1 million.

“I am very pleased to report on another year of considerable progress. We have remained focused on our strategy to buy and hold uranium, providing investors with the opportunity to directly participate in the continued rise in the price of the commodity, which in turn has generated consistent returns for our shareholders,” said Yellow Cake CEO Andre Liebenberg.

“In 2021, we raised approximately USD375 million to acquire 8.35 million lb of uranium during the financial year, which with an additional purchase after year-end, means we now own 18.81 million lb, doubling the amount since the end of the 2021 financial year.”

Yellow Cake commented it was optimistic in its outlook, on the back of strong demand for uranium and an expected price increase as nuclear power potentially grows in popularity.

“The confidence we have in our longer term outlook remains very strong and this is driven by the same supply demand fundamentals that have supported the performance to date,” said Liebenberg.

“We expect to see a sustained increase in uranium demand and price increases in years to come as the global demand for clean energy highlights the need for nuclear energy. We have seen very positive policy developments in the US, the EU and in China as nuclear is increasingly recognised as a core way to urgently address climate change.”

“Yet despite a clear growing demand picture and recent prise rises, supply remains severely constrained, and looks set to get even tighter as utility companies around the world start to address their future uncovered fuel requirements. Yellow Cake is very well placed to capitalise on these market characteristics.”

Latest News

Subscribe to the UK Investor Magazine email newsletter

Register for our free email newsletter and receive the latest investment news, podcasts, event information and offers.

More Articles Like This

Tagdiv Cloud library - template content.