Yellow Cake Plc · LSE:YCA
Yellow Cake — Investor Presentation (March 2019)
23 slides from Yellow Cake's investor presentation, March 2019
Slide 1: Pure Exposure to the Uranium Commodity
PURE EXPOSURE TO THE URANIUM COMMODITY Investor Presentation March 2019
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: Executive Summary
Executive Summary Designed to deliver maximum exposure to expected resurgence in the uranium market ▪ Yellow Cake plc (the “Company”) is a publicly listed vehicle focused on buying and holding physical uranium in North America and Western Europe, with the intent of realising return on investment fro
Slide 4: 1. Uranium Market Overview
1. URANIUM MARKET OVERVIEW
Slide 5: Highly Opportune Time to Seek Exposure to Resurgent Uranium Market
Highly Opportune Time to Seek Exposure to Resurgent Uranium Market Multiple external catalysts with potential to dramatically impact uranium A Key, and Growing, Element of Global Supply B Majority of Current Production Loss Making ▪ Nuclear power remains the least expensive non-carbon power ▪ The cu
Slide 6: Key, and Growing, Element of Global Energy Supply
A Key, and Growing, Element of Global Energy Supply Global nuclear generation recovering post-Fukushima Reactor Start-ups Outnumbering Closures ▪ 2018 – First year that nuclear electricity generation has recovered to pre-Fukushima levels ▪ Since 2010: ‐ 44 reactors (32 GWe) permanently closed in nin
Slide 7: Key, and Growing, Element of Global Energy Supply
A Key, and Growing, Element of Global Energy Supply Nuclear power’s low operating cost and carbon emissions likely to ensure it is a strategic element of the global power supply Cost of Power Generation ($/MWh) (1) Expected Growth in Energy Demand (TkWh) (2) OECD 300 Non- OECD 39% 40% 61% 60% 250 41
Slide 8: Key, and Growing, Element of Global Energy Supply
A Key, and Growing, Element of Global Energy Supply Global nuclear reactor fleet will continue to grow, especially in China, India and the Middle East World Nuclear Reactor Fleet: Operating Through to Proposed Operating Reactors + 507 649 990 383 (86%) 126 (28%) 445 57 (13%) Operating Reactors React
Slide 9: Majority of Current Production Loss Making
B Majority of Current Production Loss Making Uranium price is near record lows, and uranium remains one of few commodities not yet to have risen strongly since 2016 Historical Inflation Adjusted Uranium Price (1968 – 2017) Commentary $200 ▪ Current spot uranium price of Late 60s - Early 1976: Uraniu
Slide 10: Majority of Current Production Loss Making: Total Production Cost
B Majority of Current Production Loss Making Majority of global productions’ total costs above current spot price 2018 Estimated Total Production Costs (1) (US$/lb) Highest Cost Producer 80 74 70 Total Production Cost (US$/lb) 60 75th Percentile 50 50th Percentile 40 40 25th Percentile Lowest Cost P
Slide 11: Producers have started taking self-help measures
B Majority of Current Production Loss Making Producers have started taking self-help measures Commentary Production Cuts as a Percentage of 2017 Production (1) ▪ Supply side responses have been the major theme of the market 1% 1%2% Continuing Production 2% ‐ Cameco’s shut down of 3% Rabbit Lake, and
Slide 12: Growing Mine Supply Gap
C Growing Mine Supply Gap Underinvestment in exploration and development is leading to a potential near term 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 Prospec
Slide 13: Long Term Contracts Need to be Replaced
D 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% 100% 80% 60% 40% 20% - 2018 2019 2020 2021 2022 2023 2024 2025 2026 (1) (2) US Utilities Coverage European Ut
Slide 14: Spot market activity at record levels
D Long Term Contracts Need to be Replaced Spot market activity at record levels Uranium Spot Price and Quarterly Transaction Volumes $35.00 35.0 ▪ Global spot market volume at & Quarterly Transaction Volumes (mmlb) record levels ‐ 88.5 mm lbs. in 2018 $30.00 Spot Price (US$ /lb) ‐ Driven by fund and
Slide 15: Spot market activity likely to drive interest in the contract market
D Long Term Contracts Need to be Replaced Spot market activity likely to drive interest in the contract market Spot Price and Long-Term Contract Spread Between Long-Term Contract and Spot $55.00 $20.00 $16.00 $45.00 $12.00 $35.00 $8.00 $25.00 $4.00 $15.00 - Spot Long-Term Source: UxC Data Services 1
Slide 16: Estimated Global Inventories Reducing
D Long Term Contracts Need to be Replaced Estimated Global Inventories Reducing Estimated Global U3O8 Equivalent Inventories (mmlb) ▪ Estimated aggregate volumes of c. 854 mmlb of U3O8 equivalent - important to consider the ownership / control of these inventories ‐ Volumes represent c. five year fo
Slide 17: U3O8 – In Summary: Right Asset Class at the Right Time
U3O8 – In Summary: Right Asset Class at the Right Time Remarkable confluence of events leading to potentially dramatic resurgence in the uranium market and the uranium price ▪ Current price environment believed to be unsustainable Uranium Price at ‐ More than half of global production has total cost
Slide 18: 2. Yellow Cake plc
2. YELLOW CAKE PLC
Slide 19: Yellow Cake – Investment Highlights
Yellow Cake – Investment Highlights 1 Direct Investment in ▪ An investment in the Company represents an investment in the Company’s owned U 3O8 exposure ‐ No exposure to risks associated with exploration, development, mining or processing Uranium ‐ Upside exposure to a uranium price not capped by lo
Slide 20: Key Contracts
Key Contracts 1 Uranium Yellow Cake plc Services 308 Services Limited Kazatomprom 3 Purchase Contract (the “Company”) Contract (“308 Services”) 2 Storage Contract Storage Provider 1▪ Uranium Purchase Contract 2▪ Storage Contract 3▪ Services Contract ▪ Uranium Purchase Rights ▪ Initial storage contra
Slide 21: Yellow Cake – Strategic Relationship with URC
Yellow Cake – Strategic Relationship with URC (“Uranium Royalty Corporation”) / Uranium Energy Corp ▪ Canadian based uranium specialist. NYSE-listed Uranium Energy Corp is a founding and major shareholder URC ▪ Significant industry expertise ▪ Focused on the evaluation and implementation of uranium
Slide 22: Yellow Cake plc Net Asset Value as at 31st December 2018
Yellow Cake plc Net Asset Value as at 31st December 2018 Yellow Cake Net Asset Value as at 31st December 2018 Units NAV Uranium oxide in concentrates (“U3O8”) mmlbs 8.4 U3O8 spot price (1) US$ / lb 28.00 U3O8 fair value (2) US$mm 236.4 Net cash and cash equivalents (3) US$mm 9.0 Derivative financial
Slide 23: Strong, Independent and Experienced Board and Executive Management Team
Strong, Independent and Experienced Board and Executive Management Team Yellow Cake Executive Directors 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 p