Yellow Cake, the London-listed uranium investment company, has announced its plan to raise gross proceeds of up to approximately $125 million through a share placing to fund the purchase of uranium. The shares will be placed at a fixed price of 550 pence ($6.69) each, raising around GBP103 million. This represents a 2.2% discount to the company's closing share price of 562.5 pence on Wednesday.
Use of Proceeds
The company intends to utilize the raised funds to acquire 1.5 million pounds of physical uranium at a price of $65.50 per pound as part of an agreement with NAC Kazatomprom. In addition, the funds will be allocated towards covering certain placing costs, as well as for working capital, general corporate purposes, and potentially funding further uranium purchases.
Favorable Market Conditions
Chief Executive Andre Liebenberg acknowledges the strengthened supply-demand fundamentals influencing the uranium price, with rising production costs and utilities re-stocking acting as additional drivers for investment in this sector. As of Tuesday, the purchasing price offered by Kazatomprom represents a 7.1% discount to the uranium spot price of $70.50 per pound.
The company expects that its shares will be admitted to trading around October 2nd.