Fall in uranium prices hits Yellow Cake in September quarter

31st Oct 2022 11:37

(Sharecast News) - Long-term uranium investor Yellow Cake reported an estimated net asset value of £4.50 per share, or $920.6m as at 30 September.

The AIM-traded firm said that consisted of 18.81 million pounds of triuranium octoxide valued at a spot price of $48.25 per pound, and cash and other current assets and liabilities of $13.2m.

It noted a decrease in the spot price over the quarter of 4.5% to $48.25 per pound, from $50.50, resulting in a corresponding decrease in the value of the triuranium octoxide it held to $907.4m, from $949.7m on 30 June.

There was, however, an increase in the estimated net asset value per share over the quarter of 3.8% to 450p per share, from 434p at the end of June.

Yellow Cake said its estimated net asset value on 28 October was 471p per share, or $1bn, assuming 18.81 million pounds of triuranium octoxide valued at a spot price of $52.55 per pound, and cash and other current assets and liabilities.

The company said its operations, financial condition and ability to purchase and take delivery of triuranium octoxide from Kazatomprom, or any other party, remained "unaffected" by the geopolitical events in Ukraine.

All triuranium octoxide to which it had title and had paid for, was held at the Cameco storage facility in Canada and the Orano facility in France.

"The supply demand characteristics that have driven the steady rise in the uranium price in 2022 remain as relevant today as they were in 2018, and continue to make for a compelling investment case," said chief executive officer Andre Liebenberg.

"These strong and consistent market fundamentals have been further boosted by major geopolitical and environmental forces that have only served to strengthen the case for holding uranium.

"Not least, the now widely held acceptance that global decarbonisation to fight the devastating effects of climate change cannot happen without security of supply in energy alternatives, and that nuclear power is a key part of the solution."

Liebenberg said governments worldwide were now adapting to the "new reality", most recently in the US with the Inflation Reduction Act.

"The latest nuclear power growth forecasts by the International Atomic Energy Agency make this even clearer.

"Under its high-case scenario, world nuclear power generating capacity is forecast to more than double by 2050.

"The world is already consuming more uranium than it produces - Yellow Cake is well positioned to continue to drive shareholder value for the long term."

At 1120 GMT, shares in Yellow Cake were down 4.76% at 416p.

Reporting by Josh White for Sharecast.com.