Member Info for bullen

200p has held up very well so far after briefly dipping below this morning and yesterday morning. I'm no technical analyst but that looks like a solid floor, and any dip below is being strongly bought into.

Hi Jefferson,

I have also barely posted on the boards up until now, so we are in the same boat! I also do not want to claim to be an expert, but I will try to answer your questions.

I believe the discount should be calculated against the market cap. We want to know at what discount the market is valuing the net assets (assets - liabilities). The assets are cash which is easy to value and the uranium held in store which we are valuing at the bid price of uranium in the spot market (the source I use is Numerco: numerco dot com slash NSet). We then subtract any liabilities. I wouldn't then subtract the cash from the market cap as this is what is already accounted for within the NAV and included in what the market is valuing.

Shares in treasury should not be included in calculating the market cap. If i think about it, it makes sense as these shares are owned by the company and therefore part owned by the shareholders, so if you include them it would effectively and unfairly dilute and defeat the purpose of share buybacks (I think! Need to think it through again, but anyway a google search confirms it shouldn't be included in NAV calcs and also YCA dont include them in their NAV calculation).

I am not too sure why the shares bought back aren't cancelled and instead are held in treasury, perhaps it makes it easier/cheaper if they carry out a new capital raise to buy more uranium further down the line. Saves them costs I imagine for this process.

I will take a look at your spreadsheet, cyberduck, and compare to my method and report back! Would be good to get this nailed down, my calcs match that reported by YCA at the end of quarter, but differ slightly to what they claim the latest on the Q release. It looked a bit fishy to me the latest reported NAV because they use liabilities and net assets from the end of Q date but the share price and spot price from the report date. I.e. assets and liabilities from 31st March 2020 but spot and share price from 17th April. So it hasn't subtracted the cash used in the buybacks... dont know if it makes a big difference or not, need to check, but something I spotted and looked odd.

@noonereallycares

Sorry it's a typo! The discount of 31.15% is indeed calculated using a spot price of $33.0 and share price of 200p. My apologies.

I have written a script which harvests the spot price from numerco and also harvests the share buybacks reported by YCA. Taking both into account, the script calculates the discount to NAV at the push of a button. I would happily share my output graphs with those on here, just not sure the best means of doing so..

Sorry, hit post early by mistake. cont/

If you are taking a longer term look here, I don't think there's much doubt that once the Uranium bull market truly gets going, YCA will trade at a premium to NAV. Even outside of the bull market in the early days after listing (when I guess there was excitement around the new vehicle to play uranium) YCA traded at > 10% premium to NAV, when share price was 257p and spot price was only around 26$/lb.

This adds a nice bit of low risk leverage to the Spot Price from here forwards in my opinion.

Also to add, I've taken a look at UPC's historical discount. From the end of 2016 to Mid 2018 (and again in mid 2019 briefly) it has traded at a premium to it's NAV.

At yesterday's close of 200p and a spot price reported by numerco of 30.0$/lbs U3O8, I calculate YCA to be at a 31.15% discount, the highest discount I believe it has been since listing.

Frustrating, for sure, but it has only relatively recently surged to such a large discount. It was the crash of the markets earlier this year due to covid which spiked the discount to the previous high of 31%. The discount did close slightly during the beginning of the spot price rally but for the remainder of the rally, the Spot Price continued much harder than the YCA share price and thus the discount widened again. Now the Spot Price is consolidating whilst the YCA share price is dropping steadily and we have seen a return to above 30% discount. All of this has happened in only a few months, I dont think management can be expected to fix this at a flick of a switch. They have limited cash available and are no doubt constrained in how they can go about deploying it, they have agreed $2m currently for share buybacks. My concern would be if the discount remains above 20% (or god forbid remains above 30%!) for an extended period of time, let us see what management do to close the gap if the market itself doesn't correct this difference over the short to mid term.

Another thing to note and keep an eye on in my opinion, is the 200p mark which the SP has reached. Just looking at the price action this morning, it opened below and quickly recovered to above. I suspect this may prove to be a good floor.

All only my opinion of course. DYOR

The other is Uranium Participation I believe, listed on the TSE. Their last reported discount to NAV was 14.67% on the last trading day of May.

That's actually a really good idea to play the arbitrage in discounts. I'm quite bullish on the spot price of uranium in general over the mid to long term, so going short on Uranium Participation doesn't feel necessary, but it would almost completely remove any risk that I could think of, so I might consider it and up the stakes to still see a decent return. I will set up the same calculations to monitor the discount to NAV for Uranium Participation as Yellow Cake and post on this board over the next few months if there's interest. Let's see if Yellow Cake does indeed close the gap as we suspect it should.

Discount to NAV I now make to be 29.59%*. The highest I calculate it has ever been is 31.1% on the 20th March 2020 during the market meltdown. Looks like a good time to buy and arguably the safest way to play the uranium market. If spot doesn't reach $45 to $50 /lb, no new supply will come on the market.

*Calculated on the closing share price yesterday of 204p and yesterday's reported spot bid price of 33.25$/lb from numerco.

Yes all very good points. There is also an interesting $3-$4 price arbitrage opened up on Cameco’s Port Hope (“CMC”) in Canada and the other two converter facilities ConverDyn’s Metropolis (“CVD”) in the United States and Orano’s Comurhex (“CHX”). Whether that is an arbriatge Yellow Cake PLC could play I dont know, but could be an option. Interesting none the less.

I believe the spot price will at least consolidate, but hoping it will push on still. I doubt Cameco have any intention of letting the spot price fall again. They clearly say they will only reopen if the price warrants it. They closed cigar lake because of safety but that doesn't mean they will open again when the virus permits... far from it. It's costly to restart a mine and it only makes sense to do so if economic. Cameco will no doubt utilise the spot market until the price of uranium reaches a point where they can sign profitable long term contracts with utilities.

Discount creeping up again to 28%. To put that into perspective, at the end of last year the discount to NAV was 8%.. big disconnect here that should close over time. Nice safety margin to have before we even start talking about the uranium price rising further.

Just been doing the same myself! I make the discount on your numbers 22.41% though... I calculate the discount to NAV today at 25.24% (NAV/share £2.98 at a spot price of 33.25$/lb and SP @£2.23).

Have you looked at how the discount has varied since listing? I know it's not been this wide previously, but will look through the RNSs over the weekend hopefully and plot it to see exactly. Same plan as you to buy while at such a wide discount.

Interesting that Geiger Counter Ltd. is trading at a slight premium to NAV whereas Yellow Cake PLC is at such a large discount. Been a lovely rise for both in the last couple weeks, hopefully it keeps going! The discount is certainly a nice buffer to have.

Just doing a bit of research into BERI. Out of the top 10 holdings, First Quantum Minerals seems rather large and stands out a bit as a left field pick to an untrained eye. Anyone able to share any history/thoughts as to why it is such a large holding ?

One quote specifically interested me: "And nuclear energy experts from a variety of countries have expressed their support for Stop Uranio, a group that opposes Berkeley Minera Espa�a's plans to open the mine." Although I do wonder who the experts are and on what grounds the oppostion is on. Anyone know further details of the opposition to the mine? Is the fact it is uranium being mined make any additional significant risks in comparison to mining other metals or minerals? I'll have a look over the weekend to read up around the subject, but would be interested to hear other's thoughts.

Thanks NigWit, Tomcorvid and cjgoldsmith, appreciate your time taken to reply. NigWit, that makes perfect sense, thank you. I agree, as promising as the potential in the uranium sector is, I definitely wouldn't be putting all my eggs in the uranium basket! I do want some exposure to uranium though, and willing to be patient over the medium to long term to give time for any bull run to gather pace. As Tomcorvid says, there really can't be much more on the downside and I hope it is just a case of being patient now. I've picked BKY to have a look at first, reasons being that even if the uranium price stays low over the mid-term, I'd expect a steady rising share price as the project moves towards completing construction and sees a reduction in risk as a result. That's the initial thought anyway, before I dig a bit further. Thanks for pointing out a few others in the uranium space, cjgoldsmith. One I also had my eye on was Fission Uranium as, from what little I have read, they have a high-grade deposit project in the Athabasca Basin region. I'll be looking into them further, then probably a few of the ones you have suggested. I've seen some of John Quakes' posts, he seems very insightful so I'll make an effort to follow - thanks for the tip.

Hi everyone. I'm fairly new to the investing world and although I have been reading LSE for a short while, it's my first post. Very interesting discussion about leverage here that I'd be greatful if anyone could provide more information about to a newbie. I understand the very basics as to why Uranium stocks will react at scale to movement in uranium price: all other things being equal and the cost of production remaining the same, any increase in uranium price goes directly to an increased margin. But I'm not so confident on understanding the best way to select companies within the Uranium sector. So, let's say uranium suddenly shot up in price tomorrow, if we split uranium companies into Explorers, Developers and Producers categories, could anyone explain the rationale as to which group would see the greatest immediate uplift in shareprice? In my mind, the companies producing would see the greatest up lift as they have the Uranium to sell at the greater price? Whereas a developer (let's say still 2-3 years off producing) still has an element of risk that the uranium price does not stay high before it can get to production? Is this correct? Any further thoughts/comments on this topic would be greatly appreciated - thank you.