Yellow Cake reports strong year as uranium prices rise

19th Jul 2024 13:18

(Sharecast News) - Yellow Cake reported a significant rise in its full-year financial performance on Friday, driven by a substantial increase in uranium prices.

The AIM-traded firm said the spot price of triuranium octoxide peaked at a 16-year high of $107 per pound in February 2024 and closed the financial year at $87 per pound, marking a 72% rise from $50.65 per pound on 31 March 2023.

During the 12 months ended 31 March, the value of Yellow Cake's triuranium octoxide holdings surged 84%, reaching $1.75bn.

That increase was put down to a net rise in uranium volume from 18.81 million pounds to 20.16 million pounds, coupled with the price appreciation of uranium.

The company raised around $125m (£103m) through a share placing in October, which was used to acquire additional uranium.

As of 31 March, Yellow Cake held 20.16 million pounds of triuranium octoxide.

Following the year-end, the company acquired an additional 1.53 million pounds of triuranium octoxide by exercising the 2023 Kazatomprom option, with that uranium received in June.

Consequently, by 18 July, the company's holdings increased to 21.68 million pounds of triuranium octoxide, acquired at an average cost of $34.64 per pound.

That represented about 15% of the global uranium production for 2023.

Its net asset value rose to $1.88bn, or 688p per share, as of 31 March, compared to $1.04bn, or 423p per share, at the end of the prior year.

The company reported a profit after tax of $727m for the year, a sharp turnaround from a loss of $102.9m in the 2023 period.

That profit was primarily due to the 72% increase in the spot price, which led to a $735m gain in the fair value of Yellow Cake's uranium holdings.

"The uranium price continued to rise steadily over the course of the year, reaching a 16-year high in February," said chief executive officer Andre Liebenberg.

"Yellow Cake's strategy is to provide our investors with direct exposure to uranium through the buying and holding of the physical commodity and commercial activities related to our inventory.

"We remain confident in our strategy and the opportunities to deliver value for our shareholders."

Liebenberg said that was based on the fact that the same supply-demand market fundamentals that had driven the stronger uranium price were even more entrenched now than they were at the time of the company's initial public offering.

"A significant highlight for us during the year was the value of our holdings reaching $2bn.

"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.

"We look forward with confidence."

At 1313 BST, shares in Yellow Cake were up 1.4% at 544p.

Reporting by Josh White for Sharecast.com.