(Alliance News) - Yellow Cake PLC on Thursday said it sunk to an interim loss as the price of uranium declined slightly in the period.
In the six months to September 30, the uranium investor posted a pretax loss of USD3.1 million compared to a profit of USD44.2 million for the period from January 18 to September 30 last year.
Yellow Cake held its initial public offering on London's AIM in July 2018.
The company noted it made an unrealised uranium related loss in the period of USD1.0 million, due to a decrease in the fair value of its inventory of USD1.1 million.
"This decrease in the fair value of inventory is attributable to the small decrease in the underlying price of triuranium octoxide during the half-year," the company said.
Yellow Cake made a USD49.7 million uranium related profit in the period last year.
Yellow Cakes' operating expenses tripled to USD1.4 million from USD500,000 the year before on costs associated with its GBP25.9 million placing carried out in April.
At September 30, Yellow Cake's net asset value was 232 pence, up 3.1% from 225p at March 31.
The company's net assets totalled USD252.2 million, rising 13% over the past six months, from USD222.9 million.
Yellow Cake's net assets comprise 9.6 million pounds of physical uranium, valued at a spot price of USD25.65 per pound. The company's average acquisition cost per pound stands at USD21.69.
The spot market price, which began the year at USD28.50 per pound and closed the first quarter at USD25.75 per pound, "generally slowed" during the six-month period ending September, the company said.
Yellow Cake explained: "Prices declined to USD24.10 per pound at the end of May before recovering partially to USD24.70 per pound at the end of June. The third quarter saw incremental firming with the spot price reaching USD25.65 per pound at the end of September."
Chief Executive Andre Liebenberg said: "As anticipated in late summer, buyers have started to return and we have seen increased activity in the broader traded triuranium octoxide sector, including from utilities deciding it was time to step into the market to purchase required inventory as the year draws to a close."
He continued: "We await the conclusion of the US Nuclear Fuel Working Group's investigations into the US nuclear fuel industry. We expect this to bring to an end a long period of uncertainty that has significantly slowed activity in the traded uranium market which has subsequently weighed heavily on the uranium price."
Yellow Cake said the value of its underlying uranium has increased by 18% to USD246.7 million, compared to the acquisition cost of USD208.6 million.
"We believe the longer-term supply and demand characteristics of uranium make the commodity a compelling investment opportunity and this supports Yellow Cake's strategy of buying and holding physical uranium. We remain confident in our strategy and investment proposition," Liebenberg added.
Yellow Cake also noted it is aware of the "significant" discount of its current share price to its NAV. Should the discount continues, the company said it might "consider" a buyback programme.
Shares in Yellow Cake were trading at 195.20p in London on Thursday, down 1.1% in the day's session.
By Paul McGowan; paulmcgowan@alliancenews.com
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