Yellow Cake raises $150M to buy more uranium amid its tight supply
(Kitco News) - Yellow Cake, a specialistcompany operating in the uranium sector with a view to holding physical uraniumfor the long-term, today announced its intention to conduct a non-pre-emptiveplacing of new ordinary shares in the company to raise gross proceeds ofapproximately US$150 million.
The company said it intendsto use the proceeds of the placing to fund purchases of physical uranium("U3O8") of approximately 3 million lb of U3O8.
According to a press-release,Yellow Cake will purchase approximately 1 million lb of U3O8 from Kazakhstan'sKazatomprom, the world's largest uranium producer, at a price of US$47.58/lb.
"This purchase will be aboveand beyond the company's 2021 option under its agreement with Kazatomprom,which has already been fully exercised earlier this year," the company noted.
In addition, the company willpurchase approximately 2 million lb of U3O8 from Curzon Uranium Limited at aprice of US$46.32 /lb.
"Curzon is sourcing the U3O8from China's CGN Global Uranium, who has agreed to deliver the U3O8 directly tothe company's account at Cameco's Port Hope / Blind River facility in Ontario,"the company said in its statement.
Yellow Cake added it believesthat the current level of the uranium price offers a compelling buyingopportunity. Overall, as the trend for decarbonisation continues globally,uranium demand growth is expected to outpace supply, the company pointed out.
"Despite the significantprice rally in the U3O8 spot market during August to October of this year,third-party research suggests an incentive price in excess of US$60 would berequired to bring significant new capacity on line," the company noted.
Importantly, Yellow Cake stressedout that uranium supply is projected to continue its decline without a furtherand sustained significant increase in the uranium price that would enable minesto restart or be newly commissioned to produce in future years.
The company also mentionedthat the Sprott Physical Uranium Trust has been active on the sport market,purchasing 16.5 million lb of material from the market since its at-the-marketfacility went live on 17 August 2021, and said it is expected to continue todeplete the tight spot market.
By Vladimir BasovFor Kitco News
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