Member Info for bullen

Tin supply threat I presume is why:

https://www.reuters.com/markets/europe/tin-spooked-by-threat-supply-disruption-myanmar-2023-04-17/

Discount of 4.7% to NAV, sorry.

At a close price today of 357p and at the same time a spot price $49/lb (ask rather than bid), YCA trading at a discount to NAV of around 4% I make it. Spot has since risen slightly to $49.75.

Looks correct to me. Or else we are both wrong! I make it a 2.75% discount to NAV as of close today, @ share price of 254.0p and spot price of 33.4$/lb.

I've been tracking this for probably around 18 months now, harvesting the spot price from numerco and recording uranium purchases / raises. I've been overlaying with the reported NAVs in the quarter report, and always tied up close enough with that, so pretty confident it is all working fairly smoothly.

This is the first time it's been at a discount since the start of the year. Summer 2020 it was at a 30% discount... I doubt it will drop anywhere near that, but sentiment isn't great right now. Hopefully it will pick up again coming into the winter months and year end. Long term I am expecting Spot price to get to $60/lb kind of level, enough to actually incentivise production.

Surprised to see the YCA chat board more active than on here... if you believe Uranium price is going to 50$/lb+ then surely you may as well get some leverage to it via GCL than simply (theoretically) tracking the price via YCA. YCA was a good option when it was trading at a big discount, for a much lower risk, but now it is at a premium, don't see the attractiveness of YCA vs GCL.

Amir Adnani.... I wouldn't pay too much attention to what that guy says. He is a pure promoter and will say anything to talk his own game up. I would avoid UEC unless you want to play it as a "redit momentum" type play, if the circumstances happened to provide it. He once claimed you got the uranium for free when investing in UEC... which was utter tosh. Just do some research on their titanium asset he was misleading investors on and it will tell you all you need to know how this guy goes about his business.

I make it a 1.3% premium, taking the money raised as gross. I couldn't see costs associated specified in any of the announcements. I assume it would make a fairly negligible difference to NAV.

I am bullish as I don't see how supply will meet demand and suspect the price will get squeezed. Base case I think $50/lb is needed to bring on new supply. There is not all that much uranium that can come online very quickly though, so I think the price will overshoot, so mid case I'd say $80/lb. Then what if the ESG/climate change momentum gets right behind nuclear energy? Throw in FOMO, social media etc., as tinder to the fire, I wouldn't be shocked if we saw $120/130/lb.. that is my most optimistic scenario. Time will tell, just my humble 2 cent thinking aloud.

Where do you get "half" of miners from? I am no expert, so please take the following with a large punch of salt, but the underlying message I believe correct. Kazatomprom are majority state owned, and together with currency devaluation as well as very low AISC, are the company most able to continue production in an environment with such a low U3O8 price. However, even they are looking to fill contracts from the spot market, especially likely now YCA have taken up the option of buying uranium from them, they still need to fulfill their obligations. Added on this is delays in well head development due to Covid meaning they are likely to fall short of production targets for this year, they are kicking the can down the road but will have to admit this sometime this year I suspect. No other company is actively mining uranium out of choice in this price environment. Cameco, the only other major uranium mining company arguably, has kept McArthur River mine under care and maintanence until prices get higher. All the prospective mines in the next 5 years will require $50/lb uranium before they will pull the trigger, many will require higher than this. Even with the supply gradually coming online as the price increases, it will not balance the upcoming demands in my opinion, and will therefore overshoot to the upside drastically.

In summary, I believe the only mining companies mining Uranium at the moment are those who have to for security of supply into the contracts they have already in place. And even these companies are buying from the spot market opportunistically where possible. No new supply will come online until the spot price is high 40s low 50s in my opinion. The thesis couldn't be more bullish for those patient to let it play out.

Very pleased to see YCA raise cash to take up their option with Kazatomprom. I was pretty disappointed it wasn't taken up last year actually, as they were trading at a premium to NAV just before the end of the year. If they had moved quickly, I believe there was the opportunity to give notice to Kazatomprom before the year end then raise the money after.. that really would have put the fire under the Uranium market. Anyway, good to see they have gone ahead with it already for this year's option. Raising $140m vs $110m, together with a number of sizable raises by uranium mining companies lately, shows there is a lot of money starting to be made available to the Uranium space which is bullish. Hopefully we see a move in the Spot price now, with this amount of uranium being taken out of the market. Uranium Participation may well follow suit too, something to watch.

P.S. Having not posted in a little while and now reading back, I noticed someone asked about where to find spot data. I use numerco who post daily prices: http://numerco.com/NSet/

Yellow Cake PLC down lately with the general markets. Not much was spared yesterday! Discount to NAV widened to 25.5% . 31.6% discount was the largest that was reached back in March during the turmoil then for those interested.

Also the share buyback scheme has slowed quite significantly over the last couple weeks, perhaps that also hasn't helped hold up the share price, but at least we shouldn't expect a big drop as soon as the scheme ends now in my opinion (could be wrong of course). At the slow rate they have reduced the buybacks to lately, it could be another couple of weeks before the scheme completes, I roughly estimate there is only $250k left. It will be interesting to see if / how soon they announce a new buyback scheme.

Do you think the US elections will significantly impact the uranium spot price?

YCA is currently trading at a 24% discount to NAV. In the March market meltdown the discount peaked at around 31%. In the time YCA has been trading, the discount has been between 0 and 15% up until the march meltdown.. so I would suggest now is quite a good time to get involved. I have also read seasonality is good for uranium spot price through the winter months (but haven't verified this so DYOR).

I'm holding, but with some funds kept dry incase the discount plunges below 30%.

As far as I understand after just taking a quick look, they have the authority to buyback 8.6m shares (10% of issued capital). This was a resolution passed in the AGM on 2nd September 2020. I am assuming this is on top of the current share buyback. Resolution copied below for you to take your own look at, or the full notice is available on yellowcakeplc website, just search annual general meeting and it'll come up.

With regards the current share buyback, they are 90% of the way through now. Just under $1m left to make purchases. Assuming remaining repurchases of the same cost as the average of the last 10 share repurchases, I make it around 11 trading days until the buyback scheme is complete. Rough calculations so DYOR.

Latest discount to NAV is 23% and this is with a Share Price at close yesterday of 199p and a Spot Price reported by Numerco of 29.95 $/lb.

Resolution 13 – Authority to purchase own shares
In certain circumstances, it may be advantageous for the Company to purchase its own ordinary shares. Resolution 13 seeks authority from shareholders to authorise the Directors to make such purchases in the market.The authority limits the number of ordinary shares that can be purchased to a maximum of 8,643,753 ordinary shares (representing approximately 10 percent of the Company’s issued share capital not held in treasury as at 3 August 2020) and sets a minimum and maximum price.The Directors would only exercise such authority if they consider that the effect of such purchase would be to increase earnings and/or net assets per ordinary share and that such exercise would be in the best interests of shareholders generally.In addition, the Directors would only exercise the authority if they are satisfied that the Company has, at the time such purchase is contemplated, sufficient cash resources for current working capital purposes. In determining whether to exercise such authority, the Directors will have regard to prevailing market conditions.Any ordinary shares the Company purchases under this authority may either be cancelled or held in treasury. No dividends are paid on ordinary shares whilst held in treasury and no voting rights attach to treasury shares. If the ordinary shares that the Company purchases under this authority are held in treasury, this would give the Company the ability to re-issue treasury shares quickly and cost-effectively and would provide the Company with additional flexibility in the management of its capital base.

I think partly the small market wobble last week didn't help, Yellow Cake followed it down a bit. Sentiment of late hasn't been strong anywhere in the uranium market either the last month or two. Now it is under the 200p mark (which I thought may have been a floor) and with the buyback scheme ending soon, the short term isn't looking strong BUT things can change very quickly. The thesis certainly hasn't changed, the discount is 24% now. Conviction and patience will be key, and conviction isn't something you get just from listening to others on message boards unfortunately. I am confident the discount will close when the uranium market inevitably gets going upwards again. It is a when and not an if.

"It never was my thinking that made me the big money. It always was my sitting. Got that? My sitting tight!" Jesse Livermore.

My take on the planned reopening of Cigar Lake is that the spot market is too thin for Cameco to be confident of supplying into their contracts. This may also be driven by concern that Kazatomprom are likely to further delay production resumption and may need to come into the spot market. An extended shut down by Kazatomprom I believe is quite critical to wellhead development, which is not really feasible through the winter months, so may have a longer lasting effect on production levels going into next year. All in all I'm quite surprised at the big sell off the other day in Uramiun equities, but it already looks to be rebounding judging by yesterday.

As for Yellow Cake, it's a relief they have the capability of buy backs which seems to be larger volumes on down days holding up the price a little. I'm happy to be patient here and wait for the discount to close almost entirely. No doubt if the bull market really gets going it will trade at a premium to NAV.

I also calculate a discount of around 25% still:

Discount to NAV: 24.9%
Calculated using:
Share Price @ close on the 6th July: 218.5p
Spot Price reported by Numerco on 6th July: 32.75 $/lb

News released yesterday:

https://www.kazatomprom.kz/en/media/view/COVID-19:_Update_on_Kazatomprom_Operations

"Today’s extension of the protection measures for an additional month is not expected to have a material impact on the Company’s 2020 production volume guidance (19,000 tU to 19,500 tU on a 100% basis - attributable production between 10,500 tU and 10,800 tU). Kazatomprom's production decisions and contractual obligations are backed by inventory, and the Company will continue to responsibly manage its supply sources, including purchases in the spot market if necessary, in order to meet its sales commitments (unchanged at 13,500 tU to 14,500 tU)."

No material impact to guidance.... interesting. Kicking the can down the road?

Really good write up that reflects my thoughts exactly at the link below. Not sure if urls post well on here, if not, search for hammerinvesting and it's his blog post dated today (30th June). Well worth a read.

Url: https://hammerinvesting.wordpress.com/2020/06/30/yellow-cake-takes-advantage-of-historically-high-discount/

Excellent RNS released this morning. YCA taking a more aggressive approach now at reducing the discount to NAV. Exactly what investors' were crying out for.

"
·     Intention to conduct an enlarged share buyback programme to purchase up to US$10 million of the Company's shares

·     Buyback financed by the disposal of 300,000 lb U3O8 raising net proceeds of US$9.9 million"

@olderandwiser thanks for posting as it is always good to get a view from the opposing side. Personally I agree with the comments countering that the risk reward is excellent especially at current discount to NAV. I believe it is the only way to assess making any investment: the odds and magnitude of the downside vs the odds and magnitude of the upside.

I take your point about the amount of idle supply that could come back onto the market. However I dont believe this supply can be assumed to come back on as soon as possible... these are business as well which need to make profit. It is in the interest of all producers for the uranium price to be much higher than where it is now, let alone not let the price drop back into mid-20s. For a much, much more detailed analysis of idle supply I suggest people look up uraniuminsider (Justin Huhn), his latest (free) newsletter goes through the details of what idle supply there is, when it is likely to come back online and what impacts this may have on the market. An extract of the summary I've provided below.

"Yes, there is a significant amount of idled supply that can come on earlier/more easily than greenfield projects, BUT will largely not come back unless and until we see a 40-50% move up from current uranium prices. 

Additionally, this idled supply will be necessary going forward, with the majority of US nuclear utilities uncovered past 2022, and 1/3 of European utilities uncovered past 2024. "

I have just taken a quick look at your NAV calcs compared to mine:

# shares 87628950 87628950
£/$ 1.24 1.2428
U price 33.15 33
# U lbs 9616385 9616385
other 3600000 4511145 (other assets)
spent 444664 2092050 (liabilities)
SP 2.01 2
NAV/s 2.96 2.94
Discount 32.20% 32.01%

As I understand, for "other" this is the last reported assets - liabilities in your calculations. On this row I have my calculated other assets, taking into account the buybacks. For "spent" this I believe is what you have totaled up has been spent on the share buyback scheme since the last Q report? For me on this line, I have the reported liabilities.

I think the only difference we have is this "spent" value, my automated way has the total spent since 31st March as £503,032 vs your £444,664. Not a significant difference really, but I will double check manually my script is doing it correctly later this weekend if I get a chance.

Anyway, minor details aside, we can all agree the discount is very large (the largest it's ever been). Let's hope it starts to close.