The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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Thanks for that - I am reading the table correctly then, and they do have contracts in place that positioned them bearish/flat on the price for years.
The spot price for uranium, vital for fueling nuclear reactors, climbed to just over $103/pound on Monday, a level not seen since 2007, according to a chart from Numerco, a U.K.-based spot price for uranium.
That follows a roughly 90% price gain for the metal in 2023 in a market that has struggled to keep up with fresh demand.
https://www.morningstar.com/news/marketwatch/20240115172/the-squeeze-is-on-uranium-prices-hit-new-record-and-industry-watchers-see-further-to-go
The squeeze is really on as you all know. Could reach highest price ever.
https://www.marketwatch.com/amp/story/the-squeeze-is-on-uranium-prices-hit-new-record-and-industry-watchers-see-further-to-go-54f9d7c8
Agree - have doubled my holdings here.
GLA
More action than I was expecting on a US holiday - they'll have a bit of catching up to do tomorrow!
Love seeing the price action with buyer chasing sellers
Moved 104/108 now
Numerco - indicative now up at 106 outside the bid / ask range
Jan-24 IND 102.00 106.00 0.00 105.00 IND
Yca_700p_2023
You’ve passed your handle name target 😊
1. https://x.com/quakes99/status/1746666112291586319?s=20
Useful reminder of KAP agreement
"When $YCA shares trade at a premium to NAV, $YCA can then notify $KAP that they wish to exercise their $100M purchase option at that day's published Spot price.⛏️ Under the terms of their agreement, $YCA then has 2 weeks to launch a financing to raise the $100M needed to close the deal. If successful at raising the full amount (past history shows that $YCA cash raises are usually oversubscribed within 24 hours) they then close the deal 2 weeks later. Over that 2 week interval the Spot price may have risen significantly higher, or not, but the price that $YCA pays on delivery from $KAP will be the price set 2 weeks prior."
2. Sunday Times article - don't expect new info however but may be of interest for those who can't access directly.
https://drive.google.com/file/d/1WBI92YzuViaobffmfxnWlybPcRe0Fx-_/view?usp=drive_link
2.
Well if KAZ fail to deliver on a contract the market will go bananas. They would have t ocover in SPOT or pretty catstrophic
> I'm a bit concerned that YCA may not get delivery in H1 24 of the last purchase.
Haven't gone back to double check - but I think I read KAZ saying they could meet all current commitments OK. Just that the amount they produce above those commitments will be below what they had previously targeted.
>Isnt the 1H 24 new material
No, it's the 2023 option that's not been delivered yet.
Not much info but the publicity can help as we hopefully enter the media phase.
https://www.thetimes.co.uk/article/90c35fd0-7123-482f-a9b2-4b89da0cee09?shareToken=ffa441dcb1154cc4da23076920944ea7
"....This small investor is jolly glad I told you about uranium last September when I paid 486p for shares in Yellow Cake (YCA), a £1.3 billion London-listed business that owns more than 20 million pounds of the metal, which equals almost 15 per cent of the annual global supply. Back then, I said: “The price could continue to rise if more countries decide to place greater emphasis on energy independence or carbon-free self-sufficiency.
Since then, YCA’s share price has surged, hitting 632p on Monday, when I bought some more. Priced at 696p on Friday, they are now my tenth most valuable holding
Isnt the 1H 24 new material that they would have ot raise money to exercise the option? So if it didnt happen no fund raising no materila nothing changes? However they have a right to exercise so KAZ has ot buy spot to fulfill. Isnt the exercsieprice lined ot the spot price anyway. Maybe I misunderstood the natre of the option.
Thanks for sanity checking.
So this announcement by Kaz, could be this bull markets cigar lake moment - if you recall, the last bull market, saw uranium go parabolic, when that mine flooded and there wasn't even a supply shortage back then
I'm a bit concerned that YCA may not get delivery in H1 24 of the last purchase.
BUT the impact on NAV is quite minimal c2%
https://twitter.com/andmillsy/status/1744765616244896022?t=vaVD4s5xWnfIOEwvm6PQDg&s=19
Thanks for sharing those tweets. All this increased uncertainty on supply, imho, heightens the likelihood of YCA being taken over.
I'm surprised the trading companies -likes of Vitol, Trafigura, Glencore, Cargill haven't entered the Uranium market.
John Quakes post continued:
Nuclear utilities can't afford to incur disruptions to their chain of reactor fuel conversion & enrichment contracts across the fuel cycle, so they too will be looking at contingency plans to avert a catastrophic outcome, looking to other suppliers and the Spot market for lbs to secure in their own warehouses as a hedge against potential 'we are unable to deliver' emails from their Kazakh-related suppliers.📨😱
U see... the knock-on effects from an unexpected Friday morning news release by the world's largest supplier of mined uranium will reverberate throughout the entire nuclear fuel industry🔊 from Kazatomprom and its global JV partners to Nuclear utilities and traders. All will now be looking to find alternative sources of supply to meet their contractual obligations, including near-term purchases in the Spot market.🛒
The upshot is, no matter whether Kazakhstan achieves its previous 2024 and 2025 production targets or not, every other producer, trader and nuclear utility affected by the 'potential' for missed deliveries will now be actively seeking out Spot lbs to hedge against that possible outcome, which will then translate into far higher Spot U3O8 prices as a bidding war erupts in the Spot market.⚔️
Kazatomprom has heaved a rock into the global nuclear fuel industry waters and now we watch the ripples spread across the world.🪨♒️
That's the way my analysis sees it. U may see it differently and have different outcomes in your own analysis.🙃 That's what makes a market!🤠🐂
PS. U might want to do some research into a contract term known as 'force majeure'.😉
John Quakes post continued:
Now, just 3 weeks before releasing their year-end 2023 production, sales & earnings along with updated production guidance for this year and 2025, Kazatomprom blindsides all those Nuclear fuel buyers who just signed new supply contracts😊 with a surprise announcement😯 warning them that their suppliers with mines in Kazakhstan (Kazatomprom, Cameco, Orano, CGN, Energy Asia, Sumitomo, KANSAI, SMCP, Uranium One) may not be able to produce the quantities that had been promised for delivery into contracts with their customers!⚠️😱
U saw the reaction in the stock markets and Spot Uranium markets, both surging higher with Spot blasting past $100/lb to a new 16-year high of $104/lb U3O8.🚀
Why?🤔 Because of the many knock-on effects that impact Kazatomprom, its JV co-producers and all their combined Nuclear utility customers all around the world!♒️
Not only does Kazatomprom run the risk that it will be forced to buy lbs in the Spot market, which by all accounts is flashing a $104/lb 'almost sold out' sign, but all of its JV partners expecting delivery of supply out of Kazakhstan (without even getting into all the uranium shipping and transportation issues plaguing Kazakhstan right now) may also be forced to buy in the Spot market in order to make deliveries under their own customer supply contracts - Cameco, Orano, CGN, Energy Asia, Sumitomo, KANSAI, SMCP, Uranium One.🛒
What about Kazatomprom's mega contracts with China to fill up that 60 Million lb warehouse by the end of 2026? Will $KAP come up short and force China into the Spot market to make up the shortfall?🛒
What about the many nervous Nuclear fuel buyers who have supply contracts with Kazatomprom and that long list of JV partners scattered across the globe?🌍😯
Do U think they are going to sit and happily watch and wait to see if they will actually receive delivery of the mined U3O8 needed to fulfill their other signed contracts for conversion, enrichment and fuel fabrication required to keep their reactor fleets operating and load those 3X annual fuel assemblies into the 61 new reactors under construction?🤔
Fantastic post from John Quakes today, would highly recommend reading: https://twitter.com/quakes99/status/1746335647508619432
⚡️The world's largest #Uranium miner $KAP has sent the market a surprise warning ahead of releasing its Q4/2023 Earnings & Guidance.⚠️ Why is this a bigger deal than most realize🫨 that will drive #U3O8 prices higher no matter how many lbs #Kazakhstan produces in 2024/2025?🤔 Let's dive into it🤿...
In September last year Kazatomprom issued a news release confirming their plan to increase #Kazakhstan's national production from 80% up to 90% of permitted levels in 2024, and to 100% in 2025 and beyond.🇰🇿⛏️⬆️ Investors saw that as a bearish signal for the uranium mining sector with many major U stocks selling off -10 to -20% in the 2 weeks following that announcement⬇️ before resuming their upward climb.📉
These were the revised middle-of-range Guidance figures given for Kazakhstan's production:
2023: 21.0 tU = 54.6M lbs
2024: 25.3 tU = 65.8M lbs
2025: 31.0 tU = 80.6M lbs
These numbers were met with a lot of skepticism as Kazatomprom had been saying for the prior 2+ years that they were experiencing supply chain, costs, capital, transportation, labour and other challenges that were making it difficult to achieve their 2022 and 2023 production targets. How was it that these challenges were being magically erased in Kazakhstan in 2024 and 2025 with no signs of solutions, political or operational, that removed these barriers?🤨
In spite of that skepticism, there was a Q4 surge in long-term contracts being signed in the wake of that announcement🧾🛒 as Nuclear fuel buyers lined up to secure their share of this expanded production from Kazatomprom $KAP and its many JV partners in Canada, France, China, Japan and Russia that receive supply from mines in Kazakhstan that they sell on or deliver under supply contracts with their own customers. (see graphics below)
In 2023, Nuclear fuel consultants UxC reported 160 Million lbs of term contract volume, the highest level since 2012 and the first time in over a decade that Nuclear utilities were contracting for sufficient fuel to match their reactor consumption, having only purchased less than half their annual burn rate on average since 2012.📊🐂
As well, Kazatomprom entered into 2 mega supply contracts with China last year that both required $KAP shareholder approval given the massive volume of material being shipped across the Chinese border, much if not all of it going to fill the new Chinese warehouse along the Kazakh border at Alashankou that is to be filled by 2026 with 23,000 tU (60 Million lbs U3O8) supplied by mines in Kazakhstan, more than was produced by the entire country in 2023.🇨🇳🚛🚛
It might seem outlandish now considering the discount that YCA is trading to NAV, but I am starting to entertain the possibility we could see YCA exercising their option to buy uranium from Kazatomprom earlier in the year than many expect.
Interesting post about it from Marcelo Lopez at L2 Capital: https://twitter.com/malopez1975/status/1745941242473742623
I got same answer as you.
I've looked a bit more at the tracker particularly the sheet entitled "backup" which does the number crunching.
The 56.2 cash raised (actually 56.165388) is a bit of a rough estimate and not actually disclosed by Sprott as far as I can tell.
Take a look at backup sheet row 631.
The number of units issued is known at 2,341,200 and disclosed by Sprott but the issue price is assumed to be at closing price 23.99. See formula in cell AB631.
On a day when ATM was active throughout and share price was up c7% this is a bit too crude.
If it's out by c2% which is very possible and they therefore raised c$1mil less then it takes purchase price to c$103/lb.
Am I being dim here.
Cash previous day 18.179mio. Captial rasie 56.165 = 74.344 take away ~0.1mio running cost and balcne on 12/1 of 62.931 imples 11.313 or $113 per lb spent? Figures all from SPROTT tracker. I must have something wrong as seems a very high price. This calcuation has bene fine previously.
Would highly recommend this Crux Investor podcast with Bannerman's Brandon Munro. Really interesting insight into the recent Kazatomprom production issue news.
link: https://m.youtube.com/watch?v=BLcqLe55twc&pp=ygUQVXJhbml1bSAtcG9rZW1vbg%3D%3D