Yellow Cake Share Discussion Threads

[skyship] 17/6/2021 14:39

Successful placing for sure; but YCA still trading at a premium to the 248p NAV. Should be at a discount...

[7kiwi] 17/6/2021 13:48

That's a good result on the placing. £62.5m raised at just over NAV in just a few hours.

[jsforum] 15/6/2021 08:38

https://edition.cnn.com/2021/06/14/politics/china-nuclear-reactor-leak-us-monitoring/index.html - another Chinese disaster?

[pob69] 09/6/2021 15:50

Rick Rule talking about physical uranium (UPC (soon Sprott physical & Yellowcake). He has a conflict of interest as the largest shareholder in Sprott and thus is more bullish on UPC!

hxxps://youtu.be/B7pMG_JjREo?t=283

[quepassa] 08/6/2021 14:34

1. For U3o8 buffs, fascinating BBC documentary on the construction of the Hinckley C nuclear power complex scheduled for commissioning in 2025. This is the single largest infrastructure project in Europe. Providing enough green energy to fuel a massive six million homes.

2. Sector bellwether Cameco has now passed C$26 and is on the cusp of breaking through its previous C$26.80 ten year high achieved in 2011.

[pob69] 07/6/2021 08:27

New presentation by CEO

[return_of_the_apeman] 03/6/2021 23:00

Quite a balanced article

[7kiwi] 03/6/2021 19:04

Russia to revive Elkon Uranium project with massive resources. No mention of reserves, so I guess it's some way from production.

[quepassa] 27/5/2021 17:05

Sector bellwether Cameco today makes a new:

1 year high
3 year high
5 year high
7 year high

Uraniums stocks all making 4% or 5% gains in the Toronto session today.

Good read across. Important sector feedback. Positive for U308 and Yellow Cake.

[troc1958] 25/5/2021 16:52

Kiwi ...thanks for the analysis. Very informative. I believe we will get the price surge before year end. Utilities are going to wake up and realise that if there is a delay in the pipeline for new uranium mines globally there will be a massive squeeze on resources when so many of the new reactors come on stream. I agree with Yellow Cake plc trying to get shareholder authority now to issue more shares and buy more uranium now rather than next year. The 30 dollar per pound price is ridiculously low. Break even for most potential new producers hoping to come on stream soon is probably double that price.Happy to hold here even though the share price is already discounting a higher uranium price, but nowhere near what it needs to be.Cheers Troc

[7kiwi] 24/5/2021 18:55

The latest EIA Uranium report came out late last week.



Using data from the the tables inside, I have pulled together a chart showing the evolution of term and spot prices, demand and inventory cover.




Overall, I was a bit disappointed that inventory didn't fall by more than it did last year. I had thought with Cameco's mines shut in for a lot of the time, inventory reduction would have been stronger. So, still very bullish in the medium to long term, but I now think we might be closer to two years away from the expected price surge, rather than my initial thought of within the next 12 months. But I could be wrong.

[mm84] 19/5/2021 21:38

Very good fireside chat with some of the most knowledgeable guys in the sector. In the second half they talk about the implications of the Sprott acquisition.

[7kiwi] 19/5/2021 09:51

Thanks pob69. That's a pretty comprehensive review of the sector.

[pob69] 18/5/2021 22:13

Cannacord upgrade £2.95 from £2.90

[pob69] 14/5/2021 13:51

New presentation by CEO

[mm84] 13/5/2021 23:27

It's my understanding that the fact that the new UPC can just issue shares whenever it wants will serve to feed the demand, thus lowering the NAV (as you've mentioned previously). Regarding buying uranium through the UK or through the US, I believe it's just a matter or personal preference tied to liquidity and tax issues, but I'm aware that there might be stuff I'm not seeing right now.

[leading] 13/5/2021 16:10

It would definitely make sense to line up the purchases ahead of raising the money. Presumably this would be done by negotiating a call option ahead of fund raising, but that might in itself disturb the price at which the material is available? I don’t think YCA had agreed terms in advance for its recent purchases which weren’t covered by the KAZ option,or at least I haven’t seen anything that said otherwise.

Regarding the premium/discount argument we will just have to wait and see. If say U3O8 is priced at $30/lb now and the market expects this to move to $50/lb in a year, I don’t see why YCA or UPC should not trade at a premium to the current spot price. Perhaps I am not understanding something. Anyway, given that the spot market is not thought to be very deep, if UPC raise a lot of money and buy up all of the available uranium, the price will shoot up and we will all be happy whether in YCA or UPC.

[mm84] 13/5/2021 13:58

Hi Leading, indeed my concerns were originated from Bambrough twit thread, but also by Brandon Munro. Here's what he wrote for Crux recently:

"SPUT will now be able to utilise ATM raising, which means it won’t need to trade up to a 10% NAV premium to justify the discount/fee impost of raising from professional money. Just like an ETF, SPUT will be able to raise quickly, cheaply and frequently – adding accretive pounds on even slight premiums. Uranium purchases can be executed as close to real time as possible in small frequent transactions, minimising spread and avoiding front-running traders."

I understand that YCA doesn't have to front-run traders because of the KAZ purchase option, but after buying those pounds from KAZ it will have to trade at a reasonable premium to NAV in order to keep buying, right? And why would it trade at such a high premium (needed to pay for the hassle) if UPC doesn't?

Also, I'm not sure about what I'm about to say, but I would bet that in their current form, both these vehicles would have secured the pounds before raising the cash, and not the other way around, right? (Not referring to the KAZ agreement)

[leading] 13/5/2021 09:18

I have seen these comments about removal of a premium for UPC and YCA and whilst they come from a respected if excitable source (Bambrough, I think) they do puzzle me a bit.

Firstly, I think that YCA should trade at a premium to UPC because of the KAZ purchase option. YCA agrees the purchase terms before raising the money. UPC has to raise the money, then see what it can purchase from sellers who know it is coming and will be pricing accordingly.

I also do not see why the change to UPC's status will necessarily imply the removal of a premium or discount to NAV. I don't see why the price should not continue to reflect the overall animal spirits of the Uranium market. Perhaps the magnitude of the fluctuations above or below NAV may decrease somewhat if the mechanics of raising capital for UPC are eased, but I don't see why any premium should be eliminated?

Maybe I do not understand what an ATM is properly? AFAICS it is a mechanism to issue shares on the market without requiring prior shareholder approval. YCA already has this (within limits) by virtue of a standing resolution renewed annually at the AGM. Also, YCA has just raised something like $140m without any noticeable difficulty or delay, so I am not sure what more it needs to do as regards its structure and access to capital.

It seems to me that UPC has an inferior structure to YCA and it is now trying to catch up. Having done so, it will still be inferior as it doesn't have the KAZ purchase option. However, it will have the weight of the US market behind it, so it will inevitably become the big player in this space.

[mm84] 12/5/2021 16:59

Does anyone know if YCA can get an ATM running? Once UPC gets US exposure as a Trust, it should become the investment vehicle for many and end its own and YCA's premium to NAV, thus preventing YCA from buying more uranium, right?

Comments?

[7kiwi] 09/5/2021 09:15

I guess many followers of this thread have seen this excellent article on Seeking Alpha:



I was struck by two charts in particular:

First global U3O8 production:



Peak production was ~165m lb in 2016. It has fallen recently due to shut-ins, but the 165m might be regarded as a practical limit to production from current operable mines.

The second is the histogram of production costs:



This shows max production of around 145m lb with the most marginal mine only operating at breakeven over ~$75/lb.

Yet, current demand is estimated around 180m lb, rising to 200m lb in the not too distant future.

Of course, the shortfall is being made up by depleting inventories at the present time. The investment case for Uranium is based on these inventories falling below safe levels soon, leading to a rush from utilities to secure long term supply at higher prices than exist today.

But even when Cameco bring their mines back online and Kazatomprom resume full production, according to the stats above, there will still be a shortfall of 15-35m lb per annum if peak production of 165m lb can be restored, obviously larger if max production is only 145m lb. It will take years to bring new mines from the likes of Denison and NexGen on line and during that time, existing mines will deplete. This will lead to a continuing structural deficit.

Shown here:



and here:





Yet, the same chap who wrote the seeking alpha article talks of $50-70/lb being required to balance supply and demand.

I am increasingly thinking that this estimate is very conservative. What do others think, and do any of you have any views on where spot Uranium is going over the next 18-24 months?

Plus, what other secondary supply of Uranium (or substitutes) might be available?

I understand that most of the potential fuel from converting missile-grade Uranium has been exhausted. It might be possible to bring on more MOX fuel. China also has big inventories, but I am not sure they can be persuaded to share their strategic supplies with the rest of the world when they are increasing their own nuclear fleet and the world is in structural Uranium deficit for a while.

[zcaprd7] 09/5/2021 08:03

I suppose you could maintain a core holding in both, and then trade a third block back and forth between them...

[bmcb5] 06/5/2021 16:35

@zcap I'm pretty sure that I would make a terrible job of that, if I tried. But I would be interested to hear how this goes, if you choose to do it. So please keep us informed