Yellow Cake Plc · LSE:YCA
Yellow Cake — Investor Presentation (September 2019)
21 slides from Yellow Cake's investor presentation, September 2019
Slide 1: Pure Exposure to the Uranium Commodity
PURE EXPOSURE TO THE URANIUM COMMODITY Proactive Investors Presentation September 2019 0
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) is provided on a strictly private and confidential basis for information purposes only and does not constitute, and should not be construed as, an offer to sell or issue securities or otherwise constitute an invitation or inducement to any person to
Slide 3: Investment Case for Yellow Cake
Investment Case for Yellow Cake Macro-economic Context ▪ Steady demand growth driven by nuclear reactor build program, mainly in developing regions (non-OECD) ▪ Extended period of low uranium prices has curtailed investment in future uranium supply ▪ Uranium producers have made significant supply cu
Slide 4: The Nuclear Fuel Value Chain
The Nuclear Fuel Value Chain ▪ Kazakhstan produces 41% of world supply, Canada 13%, and Australia 12%(1) ▪ Mining methods; Mining - In-situ leaching - Open pit and underground mining ▪ Mines produce uranium oxide concentrate U3O8 ▪ Physical U3O8 converted from powder form into natural uranium hexafl
Slide 5: The Uranium Market
The Uranium Market Miners Production of 138 mmlb uranium oxide (U3O8) in 2018 Yellow Cake bought 6% of Producers bought 10 mmlb 2018 production from the 2018 spot market Secondary Supplies Spot Market Traders and Financial 88.7 mmlb traded on the spot market in 2018(1) Buyers Utilities Utilities con
Slide 6: Yellow Cake – Key Contracts Provide Strategic Advantage
Yellow Cake – Key Contracts Provide Strategic Advantage Yellow Cake plc Kazatomprom Framework 308 Services Agreement Kazatomprom 308 Services Ltd ▪ The world’s largest and lowest ▪ A uranium specialist company cost producer Cameco Storage Contract focused on the uranium ▪ 10-year Framework Agreement
Slide 7: Yellow Cake Operations Summary
Yellow Cake Operations Summary Strategy: To buy and hold physical uranium and to deliver maximum exposure to expected resurgence in the uranium market ▪ IPO: July 2018 - Raised US$200 mm - Purchased 8.1 mmlb U3O8 at US$21.01 /lb ▪ August 2019 - Purchased 350 klb U3O8 at US$23.30 /lb ▪ April 2019 - R
Slide 8: Yellow Cake Financial Summary
Yellow Cake Financial Summary Key Financials Yellow Cake AIM:YCA Share Price and Premium (Discount) Last Share Price £2.01 to NAV(1) Market Cap (mm) £175.5 10% 3.00 Shares Out. (mm) 88.2 52 wk High £2.60 5% 2.50 52 wk Low £1.96 Premium (Discount) to NAV NAV 30 June 2019 £2.18 - 2.00 Major Shareholde
Slide 9: 1. Uranium Market Overview
1. URANIUM MARKET OVERVIEW
Slide 10: Nuclear is a Key Element of Global Energy Supply
Nuclear is a Key Element of Global Energy Supply ▪ Least expensive non-carbon power option ▪ Lowest source of carbon emissions per MWh ▪ Reliable base load power ▪ Can be a key component in achieving the Paris Agreement targets ▪ Land required to produce electricity is lower than other non-carbon so
Slide 11: Current Demand
Current Demand The World Nuclear Association estimates a total Uranium requirements percentage of world demand(1) of 169 mmlb of uranium is required to power today’s fleet of 444 operating reactors(1) 50 45 29% USA 40 U3O8 required by country (mmlb) 97 reactors operating, producing 98,699 MWe 35 22%
Slide 12: Future Demand
Future Demand Global nuclear reactor fleet will continue to grow, especially in China, India and the Middle East China – 11 reactors under construction, 43 planned India – 7 reactors under construction, 14 planned Russia – 6 reactors under construction, 24 planned South Korea – 4 reactors under cons
Slide 13: Supply – Uranium Price Chart
Supply – Uranium Price Chart Uranium price is near record lows, and uranium remains one of few commodities not yet to have risen strongly since 2016 Historical Uranium Price(3) Commentary 160 ▪ A uranium price of US$25.30 /lb(1) 2007: Uranium price sees the uranium market near its hits US$140 /lb lo
Slide 14: Supply – Majority of Current Supply Loss Making at Current Spot Price
Supply – Majority of Current Supply Loss Making at Current Spot Price 2018 Estimated Total Production Costs(1) (US$/lb) Highest Cost Producer 80 74 70 Total Production Cost (US$/lb) 60 75th Percentile 50 50th Percentile 40 40 25th Percentile 31 30 Lowest Cost Producer 21 US$25.30 /lb(3) 20 14 10 - (
Slide 15: Global Supply Cuts and Yellow Cake Purchase
Global Supply Cuts and Yellow Cake Purchase Producers have started taking self-help measures Commentary Production cuts seen since 2017(1) and ▪ Supply side responses have Yellow Cake’s 2018 purchase of 8.4 mmlb U3O8 been the major theme of the 170 market since 2017 ‐ Cameco’s shut down of 160 Rabbi
Slide 16: Growing Mine Supply Gap
Growing Mine Supply Gap Underinvestment in exploration and development is leading to a potential future supply gap Supply / Demand Imbalance (U3O8 mmlb) 350 300 250 200 150 100 50 - 2017 2018 2020 2021 2025 2026 2030 2035 Current Capacity Secondary Supply Under Development Planned Mines Prospective
Slide 17: Long-Term Contracts Need to be Replaced
Long-Term Contracts Need to be Replaced Contract covering has the potential to create a rapid tightening of the spot market Future Contracted Coverage Rates of US & European Utilities 120% 108% 98% 101% 100% 88% 83% 82% 89% 80% 67% 70% 66% 60% 49% 45% 43% 40% 36% 28% 20% 11% 9% 3% - 2019 2020 2021 2
Slide 18: Current Uranium Market Dynamics
Current Uranium Market Dynamics ▪ Section 232 speculation has dominated 2019 activity ▪ The decision by the President of the United States of America to not implement any trade restrictions was welcomed ▪ However, the establishment of a Working Group will likely result in some extended uncertainty ▪
Slide 19: Macro-Economic Context Provides Opportunistic Timing for Investment in Uranium
Macro-Economic Context Provides Opportunistic Timing for Investment in Uranium Confluence of current events leading to potentially dramatic resurgence in the uranium market and the uranium price Uranium Price at ▪ Sustained low price environment Historic Lows ▪ More than half of global production ha
Slide 20: Yellow Cake – Investment Highlights
Yellow Cake – Investment Highlights ▪ No exposure to risks associated with exploration, development, mining or processing Direct ▪ Upside exposure to a uranium price not capped by long-term contracts Investment in ▪ Listed on London Stock Exchange - investors can buy and sell shares in Yellow Cake,
Slide 21: Strong, Independent and Experienced Board and Executive Management Team
Strong, Independent and Experienced Board and Executive Management Team Yellow Cake Executive Team Yellow Cake Independent Non-Executive Directors ▪ Andre Liebenberg – CEO, Yellow Cake plc ▪ The Lord St John of Bletso, Chairman ‐ Previously CFO of QKR, a Qatar backed mining fund ‐ Cross-bench peer;