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Sellers chasing buyers by the look of it - surprise
6875/7025 (was 6900/7100)
I thought the pullback was done, but maybe not...
Look like it was Kopernik from the TR1 RNS.
URNM holding in YCA largely unchanged.
Snooz thanks for the link on Cameco
The following link makes the data little easier to review
https://www.cameco.com/invest/markets/uranium-price
If SPUT are at a discount they can't raise cash through turning on ATM in usual manner which they do when at a premium.
The 10% is a huge number and they are nowhere near getting to that level.
What intrigued me was my interpretation is that they won't purchase on spot if the U price is raising ahead as they only want to purchase when the spot U price is at the level at which funds were raised.
I wasn't aware of this approach and it surprised me.
I don't think SPUT have ever purchased their own shares. Time for YCA to get on and do it again though.
So while they trade at a discount they cant buy physical Uranium unless they hit 10% cash? Is that the correct interpretation. Can they buy their own shares then as that is accretive to NAV? Maybe ETFs aren't allowed to do that. Yellowcake shoudl be buying back at effectively $61 if they thought taking delivery at $65.50 was a good deal.
Interesting comments from Quakes on SPUT buying :
#SPUT can buy #Uranium whenever it has sufficient cash and there are lbs available at a price low enough to not dilute shareholders. If cash was raised when Spot was at $60 then used to purchase $72 lbs then that would dilute its NAV per share. Like any buyer they will watch for lowest price being offered. They can hold up to 10% of NAV in cash so there is no rush to spend its cash. Mission of the Trust is to track the Spot price as closely as possible so they won't be buying if that action increases the discount to NAV by pushing up the Spot price today. Cheers!
From my history of this YCA were last at this level of discount c10 July 2023 and had been at greater than 10% from c19 June. Spot Uranium was pretty static in the $57-$58 range during this period.
The rate of change of Uranium price in September was dramatic and I'm not surprised spot is taking a bit of a breather and consolidation. It was just at the start of Sept $60 was breached and discount narrowed to about 2%.
Interestingly spot was at 70/72 similar to where it is today (71/72 )on just 27 Sept when discount closed to 6%.
The current discount feels too wide unless spot is going to fall further but I said that at 10% at start of the week and mis timed by buying then.
13.5% discount
Implied uranium price in shares at USD61.5/lb here…
Cameco have released their monthly data (30/09/2023) https://www.cameco.com/feeds/uranium-price
Short-term $71.58/lb
Long-term $61.50/lb
From memory Cameco define long-term as 9months+, but don't quote me on that.
Looking through the historical Cameco data, this backwardation only lasted 4 months when it last happened (when spot last peaked).
Selling the near-term for storage and buying the long-term seems another bit of sensible business in this market - especially for a company which is just going to hold it in storage otherwise.
Yellow Cake announced on 27 September that it was having a capital raise worth $125.0m through the issue of 18.7m shares at 550.0p per share – a move that Berenberg said was "taking advantage of an attractive market".
"The proceeds will be used to acquire circa 1.5m pounds of physical uranium (U3O8) from Kazatomprom as part of its $100.0m annual option to acquire physical uranium at the circa 12% in-the-money price of $65.50 per pound," Berenberg explained.
The funds will also be put towards working capital and general corporate costs, and to "potentially fund opportunistic additional purchases of uranium", according to the company.
"This allows Yellow Cake to further capitalise on tight spot volumes, which can keep prices elevated," said Berenberg, which raised its target price on the stock from 550.0p to 658.0p.
...and now 7000/7200.
Https://www.fnarena.com/index.php/2023/10/03/uranium-week-russia-scare/
"While the positive medium-long term story remains intact for listed uranium producers and soon-to-be producers, market analysts are beginning to feel the spot price, which has risen 52% year on year and 30% in the last three months, may be due for a blow-off top.
Any overdue pullback would be seen, however, as an opportunity."
Looking very prescient! Numerco down to 7100/7250.
This is fairly common for Yellowcake and the margin below NAV always seems to widen even more after each equity issue. Thats why I fixate on the actual Uranium spot price charts rather than YCA.L price if looking for a sell signal.
Previousy they dunked to over % discount to NAV after an equity raise but eventually we got back up to NAV again. Actually this would be an excellent opertunity as they could use the 100m to do share buybacks thus getting more uranium at a cheaper price than another KAZ shipment without the Russia risks
I couldn't wait for the pull back any longer and bought some more last week.
It's a sacrifice I made so that everyone else can buy cheaper.
They've just issued shares at 550p and bought Uranium at $65.50.
Selling some Uranium at $70+ and buying the shares at less than 540p seems a very sensible bit of business.
Can anybody throw any light as to why we are seeing quite a bad reversal pls?
Looks like the placing to buy Uranium at $65.50/lb has not been much of a success, the share are now at almost 12% below NAV.
They could have bought Uranium at $63.87/lb (price from their own website) by buying their own shares. In effect the placing allowed the purchase at a discount at to the market which reduced the value of the company by a lot more.
In which case - sorry LesBoy - I thought you were trying to encourage the price down, but actually it's just the source you are looking at is showing you the 31st August price.
This is a popular source for intra-day updates of "Spot" U3O8 : https://numerco.com/NSet , or the front page of https://www.yellowcakeplc.com/ .
Agreed masplin they should definitely do this again. We need to influence Andre ...
Haha it is if you believe ycharts August quote. Not sure how relevant that is however
You would have thought a share buy back was on the cards as good way to spend the extra $25mio buying at less than they exercised the option for?