- 44.5m new shares issued at 223p each
- Proceeds will be used to increase uranium holdings
Uranium has never really taken off on the spot market. Global supply is largely controlled by just two miners, Cameco (CA:CCO) in Canada and Kazatomprom in Kazakhstan, so its cycles can be more drawn out than other metals’ and minerals’, given the concentrated supply and contract-based sales.
That said, there is certainly an interested investor base for uranium. Cameco’s share price has doubled over the past year, and both institutional and retail investors flocked to Yellow Cake’s (YCA) equity raise at the end of February. The company added $30m (£21m) to the fundraising, taking it to $140m, because of high levels of investor interest.
Yellow Cake is a uranium holding company that listed on Aim in 2018, following in the footsteps of a briefly successful cobalt holding company in Canada called Cobalt27. Its most recent net asset value estimate of 243p per share means that as of 2 March, it was trading at a discount of 10 per cent to its 9.3m pounds (lbs) of uranium holdings.
Those holdings are set to expand by more than a third following the equity raise, as the proceeds will fund the purchase of 3.5m lbs of yellow cake bought at $28.95/lb from Kazatomprom. This raise-and-buy strategy is perhaps a turnaround from last year, when Yellow Cake completed a £9m buyback that removed 4m shares from circulation.
Chief executive Andre Liebenberg said that now was the right time to add to Yellow Cake’s holdings because supply cuts would start driving up uranium prices. Buy at 219p.
Last IC View: Buy, 217p, 11 Dec 2020
