Yellow Cake Plc · LSE:YCA
Yellow Cake — Investor Presentation (March 2023)
33 slides from Yellow Cake's investor presentation, March 2023
Slide 1: Pure Exposure to the Uranium Commodity – Investor Presentation
PURE EXPOSURE TO THE URANIUM COMMODITY INVESTOR PRESENTATION March 2023
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) is provided on a strictly Requirements, Exemptions and Ongoing Registrant Recipients of this Presentation are not to construe its private and confidential basis for information purposes only Obligations; (D) in Australia, are sophisticated investors
Slide 3: Yellow Cake
Yellow Cake Buy and hold strategy We purchase uranium and hold for the long-term Pure exposure to the No exploration, development or operating risk uranium commodity price Ability to purchase in Ability to purchase US$100m of U3O8 from Kazatomprom volume, at the spot price per year Inventory stored
Slide 4: Uranium market update – February 2023
Uranium market update February 2023 Spot Market Overview(1,2) ▪ Activity in the global spot market increased with UxC reporting an almost doubling of transacted volumes in February of 4.9 Mlbs. vs. 2.5 Mlbs. in January ▪ The UxC U3O8 Spot Price rose slightly ending February at US$51.00/lb., an incre
Slide 5: Uranium market update – Cameco and Japan
Uranium market update February 2023 Cameco(1) ▪ On 8 February, Cameco announced a major uranium / conversion service long-term sales agreement with the Ukrainian nuclear power company, Energoatom ▪ The two companies reached agreement on a contract to provide 100% of Ukraine’s uranium and conversion
Slide 6: Proforma net asset value as at March 2023
Proforma net asset value as at 27 March 2023 Investment in Uranium Units Uranium oxide in concentrates (“U₃O₈”)(1) (A) lbs. 20,155,601 U₃O₈ fair value per pound(2) (B) US$ /lb. 50.35 U₃O₈ fair value (A) x (B) = (C) US$ mm 1,014.8 Cash and other net current assets / (liabilities)(3) (D) US$ mm 18.2 N
Slide 7: Yellow Cake corporate summary
Yellow Cake corporate summary Corporate overview GBP share price and uranium price L12M(1,3) Last share price(1) £3.61 70 6.00 NAV per share(2) £4.25 60 5.00 Market cap (mm)(1) £714.4 Uranium Spot Price (US$/lb.) 50 Yellow Cake Share Price (£) Shares outstanding less those held 4.00 198.1 in treasur
Slide 8: U3O8 spot price has recovered to levels at the time of the Fukushima accident
U3O8 spot price has recovered to levels at the time of the Fukushima accident(1,2) 80 Current spot price Fukushima accident 22 March 2023 11 March 2011 (Spot US$50.00) (Spot US$68.08) 70 Demand from developing countries (China, India) is increasing SPUT completes 60 2011-2016 UPC acquisition 19 July
Slide 9: Decarbonisation
Decarbonisation Climate change and energy transition supporting nuclear growth 8
Slide 10: Nuclear power generates the least CO2 equivalent emissions compared to all other power sources
Nuclear power generates the least CO2 equivalent emissions compared to all other power sources Even compared to the two next lowest emission power sources of wind and solar, nuclear generates 25% and 40% less CO2 equivalent emissions per unit of power(1) CO2 equivalent emissions per GWh over the lif
Slide 11: Global demand for nuclear increasing towards 2050
Global demand for nuclear increasing towards 2050 Market conditions and policies are shifting views on natural gas and limiting its role, while underlining the potential for nuclear power to cut emissions and strengthen electricity security(1) Global electricity consumption (TWh)(1) Global nuclear e
Slide 12: Uranium demand growth
Uranium demand growth Reactor build programs, life extensions, and small modular reactor developments 11
Slide 13: Future demand for uranium is growing
Future demand for uranium is growing Global nuclear reactor fleet will continue to grow, especially in China, India, and the Middle East China India Russia UAE 21 reactors 8 reactors 3 reactors 3 operating reactors, under construction, under construction, under construction, 1 reactor under 47 plann
Slide 14: Countries re-engaging nuclear power
Countries re-engaging nuclear power Rather than declining, western demand for nuclear power is stable to growing through reactor life extensions and new construction ▪ Five operating reactors with another planned, will take nuclear contribution to 60% ▪ On 16 February, Finland’s government issued op
Slide 15: Small modular reactors are becoming a reality
Small modular reactors are becoming a reality SMR market value could reach US$1 trillion by 2050 76 SMR designs are being developed globally across 18 countries (1) Early Stage Middle Stage Final Stage Finished Stage 18 16 14 12 10 8 6 4 2 -- Source: 1) Barclays Research, European Utilities – “New H
Slide 16: Energy security
Energy security Energy independence and security of energy supply now becoming increasingly important 15
Slide 17: Russia is a major player in the nuclear fuel cycle
Russia is a major player in the nuclear fuel cycle Russia is a key player in both conversion and enrichment Front-end nuclear cycle overview (1) Mining Conversion Enrichment Fuel Fabrication Global conversion capacity (2) Global enrichment capacity (3) 16.0 15 15 30.0 27.7 14.0 12.5 12.5 25.0 12.0 C
Slide 18: Impact of the Russian invasion of Ukraine
Impact of the Russian invasion of Ukraine ▪ Western nuclear utility dependency on Russian nuclear fuel highlighted; Especially in the European Union and United States ▪ Sanctions have to date not yet been imposed on Russian nuclear fuel, but growing number of nuclear utilities are “self sanctioning”
Slide 19: Sanctions pressure building on Russian nuclear fuel
Sanctions pressure building on Russian nuclear fuel U.S. Senate and House Committee leaders introduce bipartisan bill to ban Russian uranium imports ▪ On 9 March 2023, U.S. Senate and House leaders introduced proposed legislation entitled the “Reduce Russian Uranium Imports Act”, which would ban the
Slide 20: Global utilities are exposed to escalating geopolitical risk of natural uranium supply
Global utilities are exposed to escalating geopolitical risk of natural uranium supply The United States, the largest consuming country, is currently at its lowest annual uranium production level in more than 70 years. Domestic suppliers are generally idled and commercial inventory is decreasing Tot
Slide 21: U.S. Government purchased uranium at a 30% premium to the spot market price
U.S. Government purchased uranium at a 30% premium to the spot market price in order to secure strategic supply U.S. Federal Reserve purchasing summary of strategic uranium supplies(1,2) ▪ U.S. Department of Energy (“DOE”) National Nuclear Security Administration is establishing a federal reserve of
Slide 22: Contracting
Contracting Long term contracting has increased significantly, but is not yet close to replacement levels 21
Slide 23: Long-term contracts need to be replaced
Long-term contracts need to be replaced Increased term contracting activity during 2022 was one factor leading to the spot price rise Future contracted coverage rates of US and European utilities(1,2) 140% 125% 120% 113% 108% 99% 100% 92% 91% 76% 80% 75% 70% 77% 62% 60% 67% 40% 44% 40% 20% 28% 24% -
Slide 24: Unfilled uranium requirements
Unfilled uranium requirements United States / European Union / Japan (31 Dec 2021)(1) 45 40 35 30 25 Mlbs. U3O8 20 15 10 5 -- 2022 2023 2024 2025 2026 2027 2028 2029 2030 United States European Union Japan Source: 1) USDOE-EIA / Euratom/ TradeTech 23
Slide 25: Term contracting activity has started to increase
Term contracting activity has started to increase ▪ The term price indicator ended 2022 at US$51.00, a 32% increase over 2021, marking the largest single year increase since 2007(1) ▪ Potential term contracting identified for 2023 already exceeds the total volume posted in 2021 − 2022 total term con
Slide 26: Supply
Supply The supply side is being challenged to meet growing demand 25
Slide 27: Global uranium supply side is concentrated
Global uranium supply side is concentrated U3O8 production is concentrated, with the top 5 companies producing 59% of the total supply in 2021(1) Global production by company Production by country(1) (Mlbs. U3O8, 2022) (%, 2022) 45.0% 42.4% Kazatomprom 30.5 40.0% Orano 14.6 35.0% Cameco 13.7 30.0% U
Slide 28: Excess inventory overhang is over
Excess inventory overhang is over Global uranium inventories continue to reduce(1) ▪ Financial entities sequestering material ▪ Yellow Cake and SPUT have acquired 68.2 Mlbs. of U3O8 since Yellow Cake’s IPO in July 2018(2,3,4,5) ▪ Chinese utilities continue to procure uranium which his held off marke
Slide 29: Declining secondary supply
Declining secondary supply Secondary supply is expected to decline by 4% p.a. until 2033 due to decreases of available excess enrichment capacity Secondary uranium supplies, 2013-2033 (Mlbs. U3O8) (1) 60 HEU Tails Re-Enrichment / Underfeeding MOX/RepU 50 (9)% p.a. 40 30 (4)% p.a. 20 10 -- 2013 2017
Slide 30: Supply / demand balance
Supply / demand balance There is a growing supply deficit 29
Slide 31: Uranium supply-demand balance
Uranium supply-demand balance 33.3 Mlbs. of additional annual supply is required by 2031 in order to meet demand growth(1,2) Primary supply Secondary supply mlb. U3O8 +2.3% p.a. +2.0% p.a. 25.4 25.5 186.5 23.3 22.9 13.7 148.1 (33.3) 22.0 (21.1) 24.6 219.8 172.9 171.1 123.6 2021 Supply Ramp Up Restar
Slide 32: Summary
‘YELLOW CAKEPLC Summary 31
Slide 33: Yellow Cake is well positioned to benefit from current market trends
Yellow cake is well positioned to benefit from current market trends ▪ Nuclear energy provides low emission power generation that is critical to decarbonisation ▪ Western countries have been dependent on Russian uranium, conversion, and enrichment historically but are now shifting away towards ex-Ru