Yellow Cake confident despite fall in uranium value
By Josh White
Date: Tuesday 28 Jan 2025
(Sharecast News) - Specialist uranium investor Yellow Cake reported a decline in the value of its holdings during the quarter ended 31 December on Tuesday, reflecting a drop in the uranium spot price.
The AIM-traded company said its uranium portfolio decreased 10.7% to $1.58bn, down from $1.77bn at the end of September, as uranium prices softened significantly.
It said its estimated net asset value per share fell 4.4% over the quarter, from 617p to 590p, impacted by the decline in uranium prices, partially offset by the depreciation of sterling.
As of 27 January, the net asset value further declined to 546p per share, with the uranium spot price dropping to $67.30 per pound.
Yellow Cake confirmed that all its uranium holdings remained securely stored at Cameco's facility in Canada and Orano's facility in France, emphasising its operational stability despite market fluctuations.
The broader uranium market experienced notable price volatility, with the spot price declining 10.7% to $73.00 per pound by the end of December and further to $67.30 in January.
Long-term uranium prices also eased, ending the quarter at $79.00 per pound.
Reduced transaction volumes over the year indicated tightening mobile inventories, though Yellow Cake said it expected uranium term contracting to increase in 2025, particularly among nuclear utilities in the US and Asia-Pacific.
Nuclear power expansion was reportedly continuing to drive long-term optimism in the uranium sector.
Following commitments at the COP29 conference to triple global nuclear capacity, countries such as China and India and states in eastern Europe were advancing large-scale reactor projects, while interest in small modular reactor (SMR) technology was growing worldwide.
Nations including Argentina, Italy, Indonesia and Norway were among those pursuing ambitious SMR development programmes, Yellow Cake noted, which were expected to boost medium-term uranium demand.
The board said it was optimistic about the long-term fundamentals of the uranium market, underpinned by increasing global reliance on nuclear power and emerging technologies.
"We remain confident in the long outlook for the uranium price," said chief executive officer Andre Liebenberg.
"We see current market volatility as presenting compelling new entry points for investors.
"We expect to see uranium term contracting increase in 2025, especially among nuclear utilities in the US and Asia-Pacific region, while producers look to meet increased demand by developing higher cost greenfield projects."
Liebenberg said that at the same time, the firm believed this year would highlight the "fragility of the supply side" in the face of growing demand.
"These factors are expected to place upward pressure on the uranium price.
"The overall market trend continues to support investment in uranium.
"There is now real momentum in the demand for nuclear with a growing number of countries publicly supporting the tripling of worldwide nuclear generating capacity, not only through large reactors, but also SMR technologies."
Andre Liebenberg noted that "ambitious" nuclear power programmes were expected to translate into ever-increasing uranium demand in the medium term.
"Argentina's president Javier Milei, for example, launched the 'Argentina Nuclear Plan' based on investment in SMRs stating 'nuclear energy is making a powerful comeback', a sentiment with which we agree."
At 1204 GMT, shares in Yellow Cake were down 0.59% at 472.2p.
Reporting by Josh White for Sharecast.com.
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