Yellow Cake Plc · LSE:YCA
Yellow Cake — Investor Presentation (April 2023)
34 slides from Yellow Cake's investor presentation, April 2023
Slide 1: Pure Exposure to the Uranium Commodity
PURE EXPOSURE TO THE URANIUM COMMODITY INVESTOR PRESENTATION April 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
Uranium market update March 2023 Spot Market Overview(1,2) ▪ Activity in the global spot market slowed during March with UxC reporting a total of 3.3 Mlbs transacted as compared to 5.2 Mlbs. during February 2023. The UxC U3O8 price declined slightly ending March at US$50.35 /lb., a decrease of US$0.
Slide 5: Uranium market update
Uranium market update March 2023 Kazatomprom(1) ▪ Kazatomprom announced CY2022 production results and 2023 outlook. Total uranium production declined slightly during 2022 recording 55.2 Mlbs. as compared to 56.7 Mlbs. in 2021 (3% decrease). However, Kazatomprom group uranium sales volume fell by onl
Slide 6: Uranium market update
Uranium market update March 2023 Europe(1,2) ▪ Public support for nuclear power continues to increase in Europe as per a range of recent polls ▪ A recent public opinion poll conducted by the Som Institute at Gothenburg University reported support for nuclear power in Sweden has reached a record high
Slide 7: Proforma net asset value as at 10 April 2023
Proforma net asset value as at 10 April 2023 Investment in Uranium Units Uranium oxide in concentrates (“U₃O₈”)(1) (A) lbs. 20,155,601 U₃O₈ fair value per pound(2) (B) US$ /lb. 51.00 U₃O₈ fair value (A) x (B) = (C) US$ mm 1,027.9 Cash and other net current assets / (liabilities)(3) (D) US$ mm 18.2 N
Slide 8: Yellow Cake corporate summary
Yellow Cake corporate summary Corporate overview GBP share price and uranium price L12M(1,3) Last share price(1) £3.62 70 6.00 NAV per share(2) £4.25 60 5.00 Market cap (mm)(1) £716.7 Uranium Spot Price (US$/lb.) 50 Yellow Cake Share Price (£) Shares outstanding less those held 4.00 198.1 in treasur
Slide 9: 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 10 April 2023 11 March 2011 (Spot US$51.00) (Spot US$68.08) 70 Demand from developing countries (China, India) is increasing SPUT completes 60 2011-2016 UPC acquisition 19 July
Slide 10: Decarbonisation
Decarbonisation Climate change and energy transition supporting nuclear growth 9
Slide 11: Climate change and energy transition supporting nuclear growth
Climate change and energy transition supporting nuclear growth Nuclear power generates the least CO2 equivalent emissions compared to all other power sources CO2 equivalent emissions per GWh over the lifecycle of a power plant (tonnes)(1) 720 820 490 78-230 34 3 4 5 Nuclear Wind Solar Hydropower Bio
Slide 12: 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 13: Uranium demand growth
Uranium demand growth Reactor build programs, life extensions, and small modular reactor developments 12
Slide 14: Reactor build programs and life extensions driving uranium demand
Reactor build programs and life extensions driving uranium demand Global nuclear reactor fleet will continue to grow, especially in China, India, and the Middle East China India Russia UAE 22 reactors 8 reactors 3 reactors 3 operating reactors, under construction, under construction, under construct
Slide 15: 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 16: 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 Ho
Slide 17: Energy security
Energy security Energy independence and security of energy supply now becoming increasingly important 16
Slide 18: Energy independence and security of energy supply now increasingly important
Energy independence and security of energy supply now becoming increasingly important 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 3
Slide 19: Impact of the Russian invasion of Ukraine
Impact of the Russian invasion of Ukraine ▪ Western nuclear utility dependency on Russian nuclear fuel highlighted ▪ Sanctions have to date not yet been imposed on Russian nuclear fuel, but growing number of nuclear utilities are “self sanctioning” ▪ “Deglobalisation” of the nuclear fuel market, wit
Slide 20: Sanctions pressure is building on Russian nuclear fuel
Sanctions pressure is building on Russian nuclear fuel U.S. Senate and House Committee leaders introduce bipartisan bill to ban Russian uranium imports ▪ “Reduce Russian Uranium Imports Act” introduced on 9 March 2023 ▪ The aim is to entirely remove all Russian energy, including uranium, from the Am
Slide 21: 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 22: U.S. Government purchased uranium at a 30% premium to spot
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 23: Contracting
Contracting Long term contracting has increased significantly, but is not yet close to replacement levels 22
Slide 24: 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 25: 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 24
Slide 26: Long term contracting has increased significantly, but is not yet close to replacement levels
Long term contracting has increased significantly, but is not yet close to replacement levels ▪ 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
Slide 27: Supply
Supply The supply side is being challenged to meet growing demand 26
Slide 28: 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 29: 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 30: 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 31: Supply / demand balance
Supply / demand balance There is a growing supply deficit 30
Slide 32: The supply side is being challenged to meet growing demand
The supply side is being challenged to meet growing demand 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
Slide 33: Summary
‘YELLOW CAKEPLC Summary 32
Slide 34: 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 ▪ Globally, demand for uranium is increasing due to aggressive nuclear plant build programs, reactor life extensions, and small modular rea