Yellow Cake Plans GBP23 Million Placing To Fund Uranium Purchase (ALLISS)

LONDON (Alliance News) - Yellow Cake PLC on Thursday said it intends to raise around GBP22.9 ...

Alliance News 11 April, 2019 | 5:59PM
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LONDON (Alliance News) - Yellow Cake PLC on Thursday said it intends to raise around GBP22.9 million through a share placing in order to buy physical uranium.

The number of placing shares issued and the price per share will be determined once the bookbuild is completed, the company said. Numis Securities Ltd, Joh Berenberg, Gossler & Co KG London Branch and Cantor Fitzgerald & Co will act as joint bookrunners.

Money raised from the placing will be used to buy at least 1.0 million pounds of physical uranium under its framework agreement with JSC National Atomic Co Kazatomprom. Yellow Cake operates in the uranium sector and its goal is to hold physical uranium on a long-term basis.

Of the GBP22.9 million, around 90% will be used to buy uranium from Kazatomprom at a price of USD25.88 per pound. The rest will be used for "general corporate purposes"

Yellow Cake said that, despite the increase in the price of uranium in 2018, new sources are limited and the incentive price for new production is estimated to be around USD50.00 per pound.

"Underinvestment in new uranium exploration and development has resulted in a production supply gap, which is currently being met by secondary sources and inventories, with supply deficits expected to arise in the future," said Yellow Cake.

"In the near-term, the uncertainty around the ongoing section 232 investigation into uranium ore and product imports in the US has resulted in reluctance from utilities to enter into new uranium purchases. However, with the expected removal of uncertainty following the completion of the section 232 investigation in the coming months, it is expected that utilities and other end users of uranium will need to re-enter the market, with a corresponding impact on the uranium price," Yellow Cake added.

Shares in Yellow Cake closed down 0.4% at 227.00 pence on Thursday.

By Anna Farley;

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Yellow Cake PLC Ordinary Shares 219.50 GBX -0.68 -
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