Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
SP up and looks like small premium to NAV
Anyone know what has been YCA biggest discount to NAV ? Are we at that point now.
https://twitter.com/quakes99/status/1440045114684940294?s=19
>Anyone know what has been YCA biggest discount to NAV?
Since I've been following the Uranium sector (April 2020) the biggest discount to NAV from memory was over 20%. They were buying their own shares in the market last year. A quick look at a couple of the quarterly updates suggest it was 22% on 17th April 2020.
Completely different situation now though with Sprott able to buy on a daily basis on the right conditions. YCA should loosely track the spot price more closely now that Uranium is in the news.
Thanks Cyberduck. Absolutely agree that situation very different not just with Sprott but the realisation that nuclear power is required to achieve climate goal objectives further increasing demand.
My reading is that we are in a bit of a pause for breath. The imponderable is the pace and timing at which flows into SPUT will recommence. Heavy inflows make SPUT a forced buyer in the spot market which pushes up the spot price. In recent days the flows have been a gentler, and buying subdued and probably private investor driven. At some point we need a whale or two to get involved, and they will be wanting to take positions in the equities ahead of launching a bombardment on SPUT. They will be looking carefully at timing their trade, hoping for a lower entry point, but aware they aren't going to be the only whale waiting, and that the fundamentals playing out means the clock is ticking. That would be my take. Very interesting times
Good post Tall. I’ve just taken more though while I had the chance.,Clock is indeed ticking! Good luck
This is a very good take Tallchad. Big money will be positioning, if they hadn't already positioned over the summer correction. Dips will be opportunities for whales to accumulate the miners and physical. I think the writing is on the wall of where this market is going. There is too much money in the system and the uranium market is too small for a big investor not to jump onto the opportunity. Like you, I expect the physical market to get hit hard a little further down the line after said entities have accumulated all the shares of miners they can get their hands on.
Very interesting perspective on the "whales" approach.
I have a question if anyone can help. If I have understood correctly then Sprott can only buy physical if the share price is at a premium to NAV - can't do so if at a discount to NAV - is my understanding correct ?
If this is the case then is this likely to slow down spot price progression for example if Sprott is at a small discount (possibly the case later today) then they can't purchase more physical => less demand => further softness in spot price => potential increasing discount to NAV. Is this a viscous circle ? Grateful for any assurance and help with filling me in with any missing pieces.
Thanks
I guess I'll appear like I'm losing the plot as I'll now answer my own question but it's not be useful for others. I asked the question below to John Quakes on Twitter (well worth a follow). Got the following answer:
"Sprott can buy physical #uranium whenever they have sufficient cash, no matter NAV premium or discount. However, they can't raise cash when units trade below NAV unless willing investors agree to purchase large quantities of ATM units at a premium price just above NAV."
Thats right, SPUT can only issue new units when it is >1% premium. New units are sold for cash. Cash is then available to buy Uranium. What you need to bear in mind however is that units can be issued consistently during the day, and in issuing units, buyer demand is absorbed and the share price doesn't really rise. So a fairly flat share price may be disguising quite alot of new issuance and uranium buying. Yesterday seemed to be one of those days, a lacklustre share price performance day, but 680,000 units were issued and $9m cash raised used to buy 200,000lbs (cash balance fell from $8m to $7m. So quite a decent day, at this rate that's 1m lbs a week, which is 50m lbs a year and about 3x the rate at which new supply usually hits the spot market (15m lbs a year)
Really helpful thanks.
Great points made. The trading action of SPUT can be misleading when it is treading water, as Sprott will be absorbing all buying by issuing new units, bring money into SPUT for future purchases.
A much better indicator for how SPUT is trading I find is to watch the volumes instead of price action. If there is huge volume, SPUT is trading above NAV and price action is flat, you know that SPUT is issuing lots of units and bringing in big money into their trust. On good days like this the price can still move, but this most likely be when there is a change in the underlying price of physical uranium at which point the NAV will have changed and SPUT will now start to issue units at a price that reflects a premium to the new NAV value.
It is also important to remember that one of Sprotts primary goals will be to ensure the trust trades as close to NAV as possible to make it as attractive as possible to investors (particularly IIs). The recent 20-30% premium to NAV was an exception and likely a result of SPUT using up it's $300m ATM facility and waiting for the paperwork to complete to enable them to upsize the ATM to $1300m. During these few days it was unable to issue new units to absorb the buying and keep the premium to NAV to a few percent.
I think these few days gave the impression that SPUT would rise in an organic way, like most stocks, but in reality I can see the upwards movement only moving in a bumpy staircase manor, as the pricing of the underlying physical uranium changes and altars the NAV of the trust.
30june20 NAV 2.92 price 2.02 - discount 31%
where is a time machine when you need one...
Exactly MoreThanMe. SPUT should be far less volatile hereon in, particularly on the upside, due to the dampening effect of issuing more units.
Comparing SPUT to YCA. YCA is preferable because...
I like SPUT because when above NAV they will raise money and buy Uranium. But AFAIK that don't have a mechanism for share buyback when below NAV, whereas YCA has done buybacks when below NAV in the past.
SPUT's upside is capped at the uranium price, but the downside isn't. Hence I'm a happy investor in YCA and not SPUT, and will continue to hold it rather than SPUT until it carries a higher (how much higher I don't know) premium than SPUT.
I ask this as an invitation for anyone/all to correct my understanding rather than being rhetorical: why would anyone buy SPUT rather than YCA?
I guess if you're a US investor you avoid fx risk.
I don't have clear view on this but I think the management charge on Sprott is only 0.35% and I'm sure YCA corporate costs will be greater equivalent %.
I agree that YCA has more flexibility
Interesting dynamic starting to play out in Uranium spot market as KAZ and others "need" to buy I understand c10mil lbs. In doing so they will likely push up spot pushing Sprott to premium allowing further raise for more purchases. Bring it on !
Yeah I am expecting less volatility in SPUT, but I think there is going to be huge volatility in the physical uranium spot market before year end. Wouldn't be surprised by $65/70 spot price by year end.
>I don't have clear view on this but I think the management charge on Sprott is only 0.35% and I'm sure YCA corporate costs will be greater equivalent %.
https://www.hl.co.uk/shares/shares-search-results/y/yellow-cake-plc-ord-gbp0.01/costs says
Average annual charge 0.54%
So greater, but not hugely.
>Interesting dynamic starting to play out in Uranium spot market as KAZ and others "need" to buy I understand c10mil lbs.
I can't tell if this following idea is madness or genius... someone ask/suggest to the KAZ board?: they should buy up YCA shares below NAV, then buy uranium at spot from YCA, deliver to YCA at the forward prices already agreed, and then deliver it back to themselves.
Snooz that is whacky. As an alternative I thought Sprott could buy YCA as an easy(ish) way to acquire physical
Morethanme
Well that prediction appeared to let the greyhounds out of the traps!!
Blimey what a day.
All the best I'm sitting tight...
Spot down to 45. Some rumors on a trigger for this. Keep remembering though move had been +50% this month and yesterday -10%
"Word is that Japanese uranium trading group Itochu were deliberately walking down Spot price today. They do this to significantly cut their costs on received shipments that are Spot market referenced at delivery. By walking Spot down $4 they can save $4M on next 1M lbs shipment."
Volatility works both ways and if you want to to be on this roller-coaster, you have to ride the drops as well as the ups. I think many of the recent new investors into the space didn't look at the historic graphs of PDN, FSY, CCJ ect. and comprehend just how volatile this sector can be. But those without conviction, who haven't done extensive research will likely get flushed out within this current pull-back/consolidation. Wouldn't be surprised to see the sector pull-back a little lower, but the trend is clear and more obvious to many with the spot price having moved so aggressively in the last month. Expecting this pull-back and future ones to be much shorter in duration as pull-backs from here on out will likely be brought into more aggressively.
Seeing through this volatility I am expecting $60 by the end of the year and wouldn't be surprised by $65/70 spot price by year end.
UK in talks with Westinghouse over new nuclear power plant in Wales - The Times
link - https://www.reuters.com/world/uk/uk-talks-with-westinghouse-over-new-nuclear-power-plant-wales-times-2021-09-24/?utm_source=reddit.com
From the article:
The government said nuclear had a key role to play in reducing Britain's reliance in fossil fuels and exposure to volatile gas prices.
The recent spike in gas prices combined with a fall in renewable generation due to low wind speeds had underlined the need for more nuclear capacity, The Times said, citing a government source.
"If our current situation shows anything it is that we need more stable home grown, low carbon generation in the UK," the source told the newspaper. "This is an important project that we’re very keen to try and get off the ground."