Yellow Cake Share Discussion Threads

[jonwig] 11/8/2018 07:04

Comment on yesterday's news:



Kazatomprom could be privatised with a London listing.

Useful:

[jonwig] 10/8/2018 07:18

RNS:

Yellow Cake, a specialist company operating in the uranium sector with a view to holding physical uranium ("U3O8") for the long term, is pleased to announce the purchase of 350,000 lb of uranium from NAC Kazatomprom JSC at a price of US$23.30 /lb. This reflects the price offered to Yellow Cake on 17th July 2018. The total cost of the U3O8 amounts to US$8,155,000 to be paid in cash. Transfer of the U3O8 into Yellow Cake's name will take place on 23rd August 2018 and the U3O8 will be stored at Cameco Corporation's Port Hope / Blind River facility in Ontario, Canada. Following completion of this transaction the Company will own 8.44 mmlb of uranium.

Including this purchase, Yellow Cake's estimated net asset value at 31st July 2018 (on a pro-forma basis) was 227.99 p per share or US$228.0 mm, consisting of 8,441,385 lbs of U3O8 valued at a spot price of US$25.81 /lb(1) and other net assets(2) of US$10.1 mm.



Share price should be a premium to this. (My guess was an underestimate, I'm pleased to say.)

EDIT: GBP has fallen 2.5% since the purchase date, so NAV would be nearer 234p today.

[jonwig] 08/8/2018 20:36

Interesting article:

• Cameco needs to purchase 11-15 million pounds of uranium to meet 2018 and 2019 commitments.

• The company will need to go to the spot market which has an annual volume of around only 50 million pounds.
...
Cameco could be able to swiftly drive the price up.

The concern is then, if Cameco succeeds and it pushes the market up but volume dries up on the spot market, where will the company get the uranium it needs to meet its commitments? Well, uranium funds like Yellow Cake would be more than happy to lend some product.

[jonwig] 06/8/2018 14:46

FT, just now:

Berenberg started coverage of Yellow Cake, the uranium storage and trading company, with “buy” advice and a 249p target.

The uranium price “remains near its lowest point in 12 years,” said Berenberg. “In our view, the market supply-demand balance is likely to tighten on the back of high-profile production cuts in effect in 2018, which will rapidly draw down inventory levels in 2018/19. In the longer term, a buildout of the global nuclear reactor fleet will ensure that demand for uranium continues to grow (up 47 per cent by 2030). We therefore believe that the uranium price is unsustainably low and must rise to a minimum of $50 per lb [from around $25 per lb currently] to incentivise new mine supply.”

Yellow Cake is “the uranium vehicle of choice” because “at this stage in the price cycle, the best way to create value is through buying and holding physical uranium”. Unlike its only listed peer, Uranium Participation Corp, Yellow Cake trades at a discount to net asset value in spite of having a supply agreement with the world’s largest producer and offering a lower cost base, said the broker.



I don't quite get their target. Is it based on the current spot, their estimate of future spot, or what? And the timeline? (I'm hoping for a lot more than 249p in due course. And at $50/lb YCA's NAV would be nearer 400p.)

EDIT: watch out for a secondary fundraising in short order, given their Kazakh agreement.

[davr0s] 01/8/2018 21:04

I'm trading this on trend basis until that ends.

[trjones2] 01/8/2018 19:52

spot u up to over 26

[jonwig] 29/7/2018 08:24

I'm going to hazard that the only objective way to value this is on assets: NAV per share. If the IPO NAV was 180/185p, it will be 212/217p now, based on spot-U. I'm not saying this captures all the details, naturally, and the share price could go to premium or discount depending on sentiment.

The year-end is 31 March, and half-year 30 Sept. Apart from annual and half-year reports they will make announcements to the market "as and when appropriate". I don't think it will be very often, frankly.

[bigtitbrit] 28/7/2018 07:58

Webull extended hours start at 4am https://activity.webull.com/landing/index.html?cs=a&s=BieWd

[jonwig] 28/7/2018 06:56

The Cameco presentation:



P9, reactor numbers under construction and p11, cost of sales.

[aim0raider] 27/7/2018 17:52

Pleased someone pointed that out. It's part of the spot price issue, the u cost in relation to the overall costs of running a power station (and the investment) is negligible, so there's no pressure to contract early because of fear of rising prices. A doubling or trebling of u spot won't shut a power station down. It's the fear of no supply that will be the driver. No supply will shut a power station down.

[j5ack5k] 27/7/2018 10:09

@Thoms - A rising U price won't result in reactors closing. The cost of uranium is tiny in comparison to the overall costs of running a plant. I doubt one reactor would close due to cost if U hit $100.

[j5ack5k] 27/7/2018 10:06

It's taken off due to Cameco's latest results. By laying off staff and closing some mines indefinitely it points to us being nearer an inflection point in the price of U as supply/demand starts to rebalance. Sounds like they won't consider reopening them until price hits at least $40 and preferably more. They are also planning to buy off the open market to fulfil some of their existing obligations which will have the effect of further mopping up excess supply. If prices rise and utility companies blink and start trying to renegotiate long term contracts all at once things could get interesting. Strongly recommend listening to their conference call if you have time. Lot's of good info on the global U market.

[jonwig] 27/7/2018 10:00

@ arja - it's news-driven over this week (see recent posts and links). U spot has risen $2/lb in last day.

I was expecting this to be a slow trudge for a year or so, but the IPO timing was perfect.

[arja] 27/7/2018 09:52

wonder why it took off in last 2 days although it is a new listing and finding a true valuation ?

[jonwig] 27/7/2018 08:24

Trading on SETS (a bit unusual for such a small cap) which will mean some pretty wild price swings. On a five-year view (at least) these can be ignored.

Another fundraising in short order can be expected if they can still source their material from the Kazakh mine at a decent price.

EDIT: for some reason, the quote is stuck at 209-210 despite trades going through between 216 and 219. No wonder ADVFN's list shows them all as 'buys'.

[iq151] 26/7/2018 18:36

@decent fellow posters- you'll gather that we have a hyena in the house (bless!)- just filter him out.


Do hyenas have spots? I don't really know, but if they do just watch how he will change them when it suits him....

[jonwig] 26/7/2018 15:51

@ bmcb5 - you'll gather I have a fan club (bless!) - just filter them out.

[jonwig] 26/7/2018 15:29

@ Thoms - what I see is the share price of YCA rising today. Don't you see that?

In an earlier link it was said that China is busy building reactors,and Japan (surprisingly) reopening them. The reactor count has stopped falling.

[1tcm1] 26/7/2018 15:14

Quite right, chucko, wiggo shouldn't bring those dirty shareprophet habits on to a pristine thread like this. Buyers beware: your time WILL come but probably not now.

[thomscm2] 26/7/2018 15:13

jonwig

You are only seeing what you want to see. The outcome of the rise in the price
of uranium would be the closing of reactors. Then what happens when there are
less reactors in use. The price falls and it can't go up again because there are
less reactors to use up the supply.
The price is where it is and i think it will stay there for a few years yet.

[jonwig] 26/7/2018 14:31

FT, just now:

Shares in newly listed uranium holding company Yellowcake rose by 5 per cent on Thursday after Canadian producer Cameco said it would shut one of its mines indefinitely in the face of persistent low prices for the nuclear fuel.

Cameco said late Wednesday it would suspend its McArthur River operations for an “indeterminate duration” in order to support the uranium price, which has fallen by over 40 per cent over the past five years.

“Until we are able to commit our production under long-term contracts that provide an acceptable rate of return for our owners, we do not plan to restart,” Tim Gitzel, Cameco’s chief executive, said.

The closure could remove around 11 per cent of global supply of uranium, worth 18m pounds, according to analysts at Berenberg. Cameco had previously said the mine would be on a 10 month temporary closure starting in January. A total of 550 jobs will be lost in the closure, Cameco said.

“We view this as a positive move for the uranium price as it clearly flags that Cameco is willing to make long-term decisions for the benefit of the industry and its wider portfolio of production assets,” they said.

Shares in London-listed Yellowcake, a company that has bought 8.1m pounds of uranium in a bet on higher prices, rose 5 per cent to 207p Thursday.

The McArthur River closure could prod utilities to start purchase future uranium supplies, analysts at BMO Capital Markets said.

“The suspension of a tier one producing asset is another clear message to utilities that future supplies are by no means guaranteed at the current uranium price, therefore we would expect to see some more upward bias to the uranium price,” they said.

Uranium has been in a state of near collapse since 2011 when the Fukushima disaster upended demand projections for the fuel as Japan and other countries such as Germany closed operations or cancelled new projects. Since then, the price has collapsed from more than $70 a pound to $24.15.

[jonwig] 26/7/2018 14:27

@ Thoms ... The key phrase from your link?

“It is likely that if the tariffs are enacted, it would drive up the price of uranium,”