19th Jul 2024 16:23
(Alliance News) - Yellow Cake PLC reported an increase in net asset value, supported by a bullish uranium price.
Its net asset value on March 31, the end of the company's financial year, was USD1.88 billion in total, or GBP6.88 per share, up 82% and 63%, respectively, from USD1.04 billion and GBP4.23 a year before.
Yellow Cake holds 21.7 million pounds of U3O8 - a compound of uranium known as yellowcake - as of Wednesday, up from 20.2 million on March 31.
Yellow Cake bought that uranium at an average cost of USD34.64 per pound, while the spot price was USD87 on March 31, up 72% from USD50.65 a year before. The price hit USD107 per pound in February, pushing the value of Yellow Cake's holdings briefly above USD2 billion.
"Simply put, uranium supply continues to lag demand following years of underinvestment and mine closures, further exacerbated by the rapid expansion of the global nuclear reactor fleet, with China alone planning to add up to as many as 150 new reactors by 2040," says Chief Executive Officer Andre Liebenberg.
Pretax profit in the recent financial year amounted to USD727.0 million, swinging from a loss of USD102.9 million the year before, thanks to uranium's price rise.
Berenberg analysts commented: "We remain uranium bulls. This view is driven by our expectation of supply struggling to meet demand, and, in light of tight physical markets, we think that long-term prices have scope for upward pressure and short-term prices can squeeze higher (as they did earlier this year) in the case of tight supply."
"On the supply front, the summer months will bring two major catalysts – the first is Cameco's results, scheduled for 31 July, which we think are likely to provide further colour on market tightness, and the second is Kazatomprom's H1 results, due for release on 23 August, when the company will provide updated guidance for 2025."
Cameco is a provider of uranium fuel. Kazatomprom is the national operator of Kazakhstan for the import and export of uranium, rare metals, nuclear fuel for nuclear power plants.
Berenberg continued: "This could tighten the market further and push prices higher. Further, with the US import ban of Russian uranium (with some near-term exceptions) now in place, we think there is scope for Russian supply into the US potentially being disrupted, which could cause a dislocation of trade flows and, again, push prices higher. Last, we look at demand. 60 nuclear reactors are under construction worldwide, and more than 90 are planned – this will drive a material uplift in demand, and this, coupled with the expectation of rising contracting from utilities, plus growth in demand from small modular reactors leads us to remain bullish about the price direction."
Shares in Yellow Cake were up 1.0% at 542.00 pence each in London on Friday afternoon.
By Eric Cunha, Alliance News news editor
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