Yellow Cake PLC Intention to Float on London Stock Exchange






Yellow Cake announces its intention to seek admission of its Ordinary Shares to trading on AIM, a market of the London Stock Exchange plc (“Admission”) and to conduct a placing of Ordinary Shares with institutional and professional investors (the “Placing”, and together with Admission, the “IPO”). Dealings in the Company’s Ordinary Shares on AIM are expected to commence in early July 2018.

On Admission, Yellow Cake plc, will be a major holder of physical uranium (“U3O8“) and intends to generate value for shareholders across a spectrum of activities relating to uranium, based on the fundamental premise that the commodity is structurally mispriced in the current market (with c.75% of the world’s 2018 uranium production projected to cost more to produce per pound than the current uranium spot price).

Yellow Cake will use its expertise to generate value through the ownership of physical U3O8 together with a range of activities and opportunities connected with owning physical U3O8, such as the trading of U3O8, optimisation of logistics associated with the trading of U3O8, generating revenue from the lending of physical U3O8 and uranium-based financing initiatives such as commodity streaming and royalties.

In particular, Yellow Cake has entered into a long-term supply contract (the “Kazatomprom Contract”) with JSC National Atomic Company Kazatomprom (“Kazatomprom”), the world’s largest, and one of the world’s lowest cost, producers of uranium, under which, upon Admission and completion of the Placing, Yellow Cake will purchase up to US$170 million of U3O8, which will be stored in the Port Hope and Blind River facilities run by Cameco Corporation in Canada (the “Initial Uranium Purchase”). Taking into account the Company’s working capital requirements, Yellow Cake may also purchase additional volumes of uranium by separate agreement with Kazatomprom or on the spot market in the event that the net proceeds from the offering exceed US$170 million.

Key terms of the Initial Uranium Purchase are as follows:

§ Up to 8.1 million pounds of U3O8 to be acquired under contract from Kazatomprom at a price of US$21.01 per pound for a total investment of up to US$170 million

§ The agreed uranium purchase price per pound represents a discount of 7.7% to the spot price of $22.75 per pound, as per Ux Consulting Company (“UxC”) on 28 May 2018

–      By comparison, the closest peer to Yellow Cake, Uranium Participation Corporation, traded at approximately a 19% premium to its most recently reported NAV, trading at CAD$4.12 /sh vs NAV of CAD$3.47 /sh as of 1 June

In addition, Yellow Cake’s contract with Kazatomprom provides Yellow Cake the further right, but not the obligation, to purchase up to an additional US$100 million of U3O8each year, for the next nine years, with the ability to lock in the purchase price of U3O8for a period prior to making the purchase.

At US$170 million, this purchase of uranium would represent approximately one quarter of Kazatomprom’s annual production (2016 marketed production, prior to Kazatomprom’s recently announced production cuts as reported by the World Nuclear Association) and approximately 5% of 2016 global marketed production.

Yellow Cake has been founded and incorporated by Bacchus Capital Advisers (“Bacchus Capital”) which is acting as IPO adviser. Numis Securities Limited (“Numis”) is acting as Nominated Adviser and Joint Broker to the Company in respect of the IPO. Joh. Berenberg, Gossler & Co. KG London Branch (“Berenberg”) is acting as Joint Broker to the Company in respect of the IPO. Numis and Berenberg are acting as Joint Bookrunners in respect of the Placing and Olivetree Financial Limited and Scott Harris UK Ltd are acting as Selling Agents.

Admission is expected to occur in early July 2018.



§ Direct investment in U3O8 offers Shareholders:

–      Exposure to the uranium price

–      No direct exposure to risks associated with exploration, development, mining or processing

–      Upside exposure to uranium price not capped by long-term uranium sales contracts

§ Supportive emerging supply side discipline in the uranium industry:

–      Yellow Cake plc created to purchase and hold physical U308, which reinforces the emerging supply side discipline recently exhibited in the uranium market, and to realise return on investment from any increase in the uranium price

–      Yellow Cake’s Initial Uranium Purchase expected to be equivalent to approximately one quarter of 2016 annual production from world’s largest producer or approximately 5% of global 2016 marketed production

–      With Yellow Cake’s and its adviser’s expertise and market knowledge, Yellow Cake will seek to generate additional value through the purchase, sale, or trading of uranium in both the spot market and via long-term contracts

–      Additionally, Yellow Cake intends to achieve positive exposure to the uranium price via other transactions, including the acquisition of production or synthetic production via streaming, royalties or similar mechanisms

–      Yellow Cake structured to provide liquidity to investors through admission to trading on AIM

§ Strong board and management, with focused adviser in 308 Services Limited (“308 Services”):

–      Board of directors includes highly-experienced team committed to ensuring the highest standards of corporate governance, with a focus on creating and protecting value for shareholders

–      Yellow Cake’s executive management, supported by 308 Services, possess significant expertise and market knowledge to enable Yellow Cake to pursue its strategy

–      Focused adviser in 308 Services, which has employees and consultants with considerable experience in the uranium market, providing a low-cost operating basis for Yellow Cake compared to its closest peer

§ Strategic relationship with Kazatomprom:

–      Agreement with Kazatomprom enables the Initial Uranium Purchase of up to US$170 million of uranium, on an undisturbed price basis, a volume that would otherwise be difficult to source within the confines of a tight spot market for uranium

–      The Kazatomprom Contract enables the Company to acquire an additional US$100 million of U3O8 per year, for nine years following the IPO, also on an undisturbed price basis

–      The Initial Uranium Purchase will be undertaken at US$21.01 /lb, allowing Yellow cake to benefit from a price that is 7.7% lower than the current spot price



§ A significant rationale for nuclear power is that it provides low operating cost, low carbon, baseload power, and can be used in conjunction with less reliable renewable energy sources as part of a country’s green energy strategy

–      Nuclear power remains the least expensive low-carbon power option in terms of cost per MWh

–      According to the World Nuclear Association (“WNA”), nuclear power is also one of the lowest sources of lifecycle carbon emissions per MWh, producing lower carbon emissions than both Solar and Biomass energy sources

§ Increased demand for green energy is being driven by growing economies in non-OECD countries and the increased electrification of OECD economies, with increased demand expected to come from electric vehicles (“EVs”). In the UK alone, National Grid estimates that by 2030 EVs could require 3.5 – 8.0 GW of additional capacity, equal to 6% – 13% of the UK’s current capacity

§ As global energy demand grows, nuclear power is expected to be a key aspect of the global energy mix

–      The US Energy Information Administration (“EIA”) expects global energy demand to increase by 35% between 2015 and 2035

–      Nuclear power is expected to satisfy 11% of total energy demand, with produced electricity volumes expected to increase by 36% between 2015 and 2035

§ 2016 saw the largest commissioning of new reactor capacity in over 25 years, while additional reactors equivalent to almost 47% of current operating reactor fleet are either planned or under construction

§ According to the WNA, there are 450 nuclear reactors operational globally

–      Additionally, there are 57 nuclear reactors under construction, and 154 reactors planned for construction, with an increasing expected demand for uranium



§ A decade of declining uranium prices has seen little investment in uranium mining, resulting in a projected supply deficit absent material increases in the uranium price

§ Even with a material increase in the uranium price, it may take years before new sources of uranium are ready to be mined, due to delays associated with permitting for exploration and development of uranium mines

§ The supply gap is currently being covered by secondary supply, largely from enrichment providers underfeeding. However, secondary supplies have declined, and are expected to continue to decline and may not be sufficient to fill the supply deficit while new mines are developed



§ Based on figures provided by SRK Consulting, the spot price as at 28 May 2018 of $22.75 /lb results in c. 75% of uranium production operations being loss making in 2018E on an estimated total cost basis

§ This has led to an emerging thematic of supply side discipline, characterised by substantial production cuts and operations being shut or suspended (e.g. McArthur River, Rabbit Lake, Kayelekera, Langer Heinrich)

§ The incentive price for the majority of new projects is estimated to be well above the current spot price, which has resulted in underinvestment in exploring for, and development of, new uranium deposits


Andre Liebenberg, CEO of Yellow Cake, said:

“Due to an exceptional confluence of events, uranium is one of the few commodities yet to recover from the recent commodities bear market. We believe that uranium is fundamentally and structurally mispriced in the current market, and on a historical basis.


Yellow Cake’s long-term supply contract with the world’s largest, and one of the world’s lowest cost uranium producers, Kazatomprom, has enabled it to be in a position to secure a highly significant and strategic position in physical uranium at a competitive price.


Yellow Cake will offer exposure to investors looking to capitalise on the expected resurgence in the uranium price, while avoiding direct exposure to exploration, development, mining and processing risk.


We look forward to welcoming new investors to Yellow Cake”.



The Lord St John of Bletso – Independent Non-Executive Director and Chairman           Age:  61

Anthony Tudor St John is a cross bench peer in the House of Lords of the United Kingdom. He is a member of the Select Committee on Communications and a Vice Chair of the All-Party Parliamentary Group on South Africa. He is currently a non-executive director of Albion Ventures LLP, Chairman of the Governing Board of Certification International and Chairman of Strand Hanson. Anthony was Chairman of Spiritel PLC between 2004-2012 and has also been a non-executive director of Regal Petroleum plc, Sharp Interpak Limited and Pecaso Group Inc. He has also served on the advisory boards of Infinity SDC, Chayton Capital and Ariya Capital with a focus on Agriculture and African business opportunities.

Andre Liebenberg – Executive Director and Chief Executive Officer                                    Age:  56

Andre Liebenberg is an experienced mining industry professional and has extensive investor market, finance, business development and leadership experience. Andre has spent over 25 years in private equity, investment banking, senior roles within BHP Billiton and most recently at QKR Corporation, where he was Chief Financial Officer. Andre’s previous roles within BHP Billiton included Acting President for BHP Billiton’s Energy Coal division, Chief Financial Officer for the Energy Coal division, the Head of Group Investor Relations and Chief Financial Officer for the Diamonds and Speciality Products division. These roles were based in London, Melbourne and Sydney. Prior to joining BHP Billiton, Andre worked for UBS in London and the Standard Bank Group in Johannesburg.

Carole Whittall – Executive Director and Chief Financial Officer                                           Age:  46

Carole Whittall is a director and co-founder of Mining Strategies Limited, which provides M&A and transaction advisory services to the metals and mining sector. Most recently, she was Vice President, Head of M&A at ArcelorMittal Mining and member of its Mining Executive Team, responsible for global M&A, government relations and corporate and social responsibility and serving as a board member of subsidiary companies and joint ventures. Previously, she was with Rio Tinto where she held various senior commercial and business development roles. Her prior career was with JP Morgan and Standard Corporate and Merchant Bank in corporate finance.

Sofia Bianchi – Independent Non-Executive Director                                                             Age:  61

Sofia Bianchi is the Founding Partner of Atlante Capital Partners, which specialises in investing in structurally undervalued businesses in emerging markets. Previously, she served as a Portfolio Manager of BlueCrest Capital Management. Sofia served as a Deputy Managing Director of the Emerging Africa Infrastructure Fund with Standard Bank. From 1987 to 1992 Sofia held senior positions with the European Bank for Reconstruction & Development, where she was a member of its global M&A advisory team. She has extensive experience in banking, fund management and mergers & acquisitions and served as an Independent Non-Executive Director of Kenmare Resources plc from 2008 to 2017.

Alexander Downer – Independent Non-Executive Director                                                    Age:  66

The Hon Alexander Downer AC was appointed Australian High Commissioner to the United Kingdom in March 2014. Alexander has had a long and distinguished political career in Australia, and was until recently the United Nations Special Adviser to the Secretary-General on Cyprus. He joined the Department of Foreign Affairs in 1976 and served at the Australian Embassy in Belgium before moving into federal politics. He served as Australia’s Minister for Foreign Affairs, from 1996 to 2007, making him Australia’s longest-serving Foreign Minister. Mr Downer was appointed a Companion of the Order of Australia in 2013 and was awarded the Centenary Medal in 2001.

Alan Rule – Independent Non-Executive Director                                                                   Age:  56

Alan Rule has more than 20 years’ experience as Chief Financial Officer and Company Secretary in the mining industry in Australia and Africa. He has considerable experience in international debt and equity financing of mining projects, implementation of accounting controls and systems, governance and regulatory requirements, and in mergers and acquisitions. He is a Chartered Accountant and holds a Bachelor of Commerce and a Bachelor of Accounting degree. He currently serves as Chief Financial Officer of Australian lithium producer, Galaxy Resources. His previous positions have also included CFO of uranium producer Paladin Energy Limited, Sundance Resources Limited, Mount Gibson Limited, Western Metals Limited and St Barbara Mines Limited.

James Keating – Independent Non-Executive Director                                                         Age:  44

James Keating is a Client Director at Langham Hall Fund Management (Jersey) Limited. He has worked in the global fund administration business for a number of years, holding directorships on various fund structures. He is presently a director on a number of boards which invest in a variety of underlying assets, notably commercial and residential real estate predominantly in the UK.