Yellow Cake announces $3m share buyback
By Josh White
Date: Monday 04 Apr 2022
(Sharecast News) - Long-term uranium holding company Yellow Cake announced a buyback programme to purchase up to $3m (£2.66m) of its ordinary shares over 30 days on Monday, starting immediately.
The AIM-traded firm's board said its shares had traded at a "material discount" to its underlying net asset value since mid-January, and so it had decided to implement the buyback to "effectively acquire exposure" to uranium at a discount to the commodity spot price.
It said the geopolitical events in Kazakhstan and Russia's invasion of Ukraine had no material impact to date on its operations, nor affected its financial position, while both demand and supply fundamentals around the outlook for uranium remained compelling.
The war in Ukraine, as well as the conclusions of COP26 climate change conference last year, had resulted in a "comprehensive review" of the benefits of nuclear energy.
While the company had purchased, and intended to continue to purchase, triuranium octoxide U3O8 from Kazatomprom, all triuranium octoxide to which it had title and had paid for was being held at the Cameco storage facility in Canada and the Orano storage facility in France.
Additionally, Yellow Cake said it did not expect any material delay in deliveries of uranium it had agreed to purchase as part of agreements last year.
Yellow Cake currently holds 15,832,755 pounds of triuranium octoxide in Canada and France, and had exercised its buyback option with Kazatomprom to acquire 2,022,846 pounds of triuranium octoxide from Kazatomprom to be delivered to Cameco between April and May.
In addition, it had agreed to purchase 950,000 pounds of triuranium octoxide from Kazatomprom to be delivered to Cameco by 30 June.
On completion, Yellow Cake said it would hold 18,805,601 pounds of triuranium octoxide, and did not expect any restrictions on being able to make further purchases under its option agreement with Kazatomprom should it choose to.
Purchases under the buyback programme would be made under its existing authority, the board said, which permits it to purchase up to 15,358,435 shares.
"We believe this buyback provides us an attractive opportunity to increase our exposure to the uranium price in the current environment," said chief executive officer Andre Liebenberg.
"We are currently unaffected by the tragic situation in Ukraine and do not foresee any material impact in the future, although we continue to monitor the situation."
Liebenberg said further, the events had again turned attention from governments globally to the importance of energy security.
"We note the decisions by various governments to delay their planned phaseouts or extend the life of their nuclear energy capacity, and continue to believe the supply demand fundamentals for uranium remain compelling."
At 1022 BST, shares in Yellow Cake were up 1.84% at 430.2p.
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