viewYellow Cake PLC

Yellow Cake confident over long-term potential of uranium


The company currently holds around 9.2mln tonnes of uranium as well as a supply agreement with Kazakstan’s state-owned producer Kazatomprom

Yellow Cake PLC - Yellow Cake predicts long-term rise in uranium prices

Quick facts: Yellow Cake PLC

Price: 199.8 GBX

Market: AIM
Market Cap: £176.43 m
  • Physical uranium trader tagged with nickname of the radioactive metal

  • Owns around 9.62mln pounds of uranium

  • Contract to buy up to an additional US$100mln of U3O8 each year for the next nine years from Kazatomprom

What Yellow Cake does:

Yellow Cake PLC (LON:YCA) is a physical uranium trader with a moniker that is a nickname for the radioactive metal, U3O8.

The group floated on AIM in July 2018 after raising US$200mln (£151mln) from the sale of 76mln new shares at 200p apiece in an initial public offering.

The firm is backed by Bacchus Capital, the corporate finance boutique set up in 2016 by a group of senior bankers led by Peter Bacchus.

The cash raised was used to buy 8.1mln pounds of uranium from Kazakstan’s state-owned firm, NAC Kazatomprom JSC, one of the world’s largest uranium producers. Yellow Cake paid US$21.01/lb (per pound), a discount of about 8% to the then spot price.

A uranium pile of that size, which cost around US$170mln, was equal to one quarter of Kazatomprom's annual production and approximately 5% of 2016 global marketed production.

In addition, the Kazatomprom contract allows Yellow Cake to buy up to an additional US$100mln of U3O8 each year for the next nine years.

Inflexion points

  • In October, the company reported a net asset value (NAV) of 232p per share, derived primarily from its uranium holdings which were worth US$25.65 per pound at prevailing spot prices,
  • Net assets were worth US$252mln (£197mln) compared to a market value of £168mln.
  • Yellow Cake said it is mulling a buyback of its shares given the large discount to NAV

What the broker says

Berenberg’s analysts said the current discount of Yellow Cake’s stock in relation to their 280p target price represented “an attractive buying opportunity”, adding that the firm could work to close the discount through a share buyback.

“This is not yet planned or announced, but feels logical and is within the company’s mandate of optimising its uranium/share ratio”, the broker added.

What the boss says: Andre Liebenberg, chief executive

"Trading activity in the uranium market remains subdued as we await the findings of the US Nuclear Fuels Working Group.

“Though this uncertainty continues to weigh on the uranium price in the near term, we are positive about the medium and long term outlook for uranium.”


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