London-quoted Yellow Cake Uranium Fund plc recently raised capital through an additional issuance of shares, with the purpose of buying uranium oxide from Kazatomprom as part of a purchase option for 2022. This news was reported in the World Nuclear News newsletter. The initial placement of shares was for $50 million, but due to strong demand from investors, the size was increased to $75 million.
The company intends to use the raised capital to purchase natural uranium at $48.9 per pound, as per the framework agreement with NAC Kazatomprom JSC. The spot price of uranium had started to strengthen in January and reached above $50 per pound, making this the last chance for Yellow Cake to take advantage of the 2022 option while still maintaining its option for 2023.
The transaction price was determined by taking into consideration the average of the weekly spot prices of UxC and TradeTech agencies published between January 20th to 23rd. On January 25th, 2023, the company offered to purchase uranium oxide at $48.9 per pound, which represented a 3.6% discount compared to the current spot prices on February 1st, 2023. The company has until February 8th, 2023 to pay for the purchase, which will give it the right to execute the transaction at the unchanged price.
The agreement to purchase natural uranium from the national uranium company Kazatomprom was signed in 2018 and allows Yellow Cake to purchase up to $100 million worth of products from Kazatomprom over the next nine years. In 2021, the fund raised $375.1 million and purchased 8.35 million pounds, or about 3.2 tons, of uranium, fully utilizing its option.
Currently, Yellow Cake has 18.81 million pounds, or approximately 7.2 tons, of natural uranium stored in Canada and France, and delivery of the purchased material is planned for 2023.