LSE Release

Yellow Cake plc (AIM: YCA) ("Yellow Cake" or the "Company"), founded and established by Bacchus Capital to be a specialist company operating in the uranium sector with a view to holding physical uranium for the long-term, today announces its intention to conduct a non-pre-emptive placing of new ordinary shares in the Company ("Ordinary Shares") to raise gross proceeds of approximately US$150 million (equivalent to £109 million) at the Placing Price (as defined below) (the "Placing").

The Placing will be conducted through an accelerated bookbuild which will be launched immediately following this announcement (the "Announcement") and will be made available to new and existing eligible institutional investors (the "Bookbuild"). The Placing is subject to the Terms and Conditions set out in the Appendix to this Announcement.

Cantor Fitzgerald Canada Corporation ("Cantor"), Canaccord Genuity Limited ("Canaccord") and Joh. Berenberg, Gossler & Co. KG, London Branch ("Berenberg"), are acting as joint bookrunners (together being the "Joint Bookrunners"). Bacchus Capital Advisers is acting as Financial Adviser in connection with the Placing.

The Ordinary Shares will be placed at the price per Placing Share (as defined below) set out in the terms of sale scheduled to the Placing Agreement (as defined below) (the "Placing Price"). The final number of Ordinary Shares placed (the "Placing Shares") will be determined following the close of the Bookbuild. The Placing is being conducted utilising the authorities to allot Ordinary Shares in the Company on a non-pre-emptive basis granted at the annual general meeting of the Company held on 8 September 2021.

Highlights of the Placing

• Intention to conduct a non-pre-emptive placing to raise gross proceeds of approximately US$150 million (equivalent to £109 million)

• The Company intends to use the proceeds of the Placing to fund purchases of physical uranium ("U3O8") of approximately 3 million lb of U3O8 expected to comprise:

• Approximately 1 million lb of U3O8 from JSC National Atomic Company Kazatomprom ("Kazatomprom"), at a price of US$47.58/lb, representing the average of the weekly UxC and TradeTech spot prices as reported on 25 October 2021 and 22 October 2021 respectively with delivery of all of the U3O8 purchased from Kazatomprom to take place by June 2022. This purchase will be above and beyond the Company's 2021 option under its agreement with Kazatomprom (the "Framework Agreement"), which has already been fully exercised earlier this year;

• Approximately 2 million lb of U3O8 from Curzon Uranium Limited ("Curzon"), who has committed to providing the Company with up to 2 million lb of U3O8, if the Company elects on or prior to 1 November 2021, at a price of US$46.32 /lb (being the Tradetech weekly price as at 22 October 2021 less a discount of 3%). Curzon is sourcing the U3O8 from CGN Global Uranium Limited ("CGN"), who has agreed to deliver the U3O8 directly to the Company's account at Cameco's Port Hope / Blind River facility, with delivery of all the U3O8 purchased from Curzon to take place before the end of November 2021; and 

• To pay certain costs associated with the Placing and for working capital and general corporate purposes

• The Company believes that the current level of the uranium price offers a compelling buying opportunity. Increased buying and continued supply discipline have tightened the market, driving the price of U3O8 up 54% this year to date. While nuclear power capacity levels in Europe are declining, in the US they remain relatively stable, and demand is significantly increasing elsewhere globally, especially in China. At present, 56 new reactors are under construction, with 18 of these located in China alone, where a further 37 reactors are planned and a further 168 proposed. In order to meet increased demand for uranium, U3O8 supply will need to increase substantively. MineSpans is projecting that even with a 23% increase in uranium production by 2030 (154 million lb), there will still be a 49.5 million lb supply gap, equal to approximately 32% of projected annual production. Overall as the trend for decarbonisation continues globally, demand growth is expected to outpace supply.

Andre Liebenberg, Chief Executive Office of Yellow Cake, commented:

"The agenda for the 2021 United Nations Climate Change Conference in Glasgow ("COP26") has highlighted the urgent need for the world to address climate change and by extension, the critical role nuclear energy has to play in supporting our net zero ambitions. A key topic at COP26 will be accelerating the transition away from coal. As the IAEA's "Nuclear Energy for a Net Zero World" highlights, replacing 20% of coal generation with 250GW of nuclear generation would reduce emissions by 2 Gt CO2, or around 15% of electricity sector emissions per year. The long term outlook for the uranium price remains strong, driven by the more positive demand outlook and on-going supply constraints, causing the supply deficit to grow every year. We continue to seek further opportunities for value accretive opportunistic uranium purchases at an attractive price. Having already exercised our 2021 purchase option with Kazatomprom in full, and supplemented this with a second capital raise in June to secure a further 6.5 million lb in the year to date, this new raising will enable us to acquire approximately an additional 3 million lb. Yellow Cake has rapidly delivered on its strategy to purchase and hold uranium oxide in 2021, offering investors direct exposure to the spot uranium price without exploration, development, mining or processing risk. Total uranium holdings in 2021 will have increased 101% from 9.36 million lb to 18.86 million lb once this transaction is complete and if the Company elects to purchase an additional 3 million lb. We remain confident in our business model, and the overall investment case for uranium."

Background to the Placing

Corporate Background:

Yellow Cake is a specialist company operating in the uranium sector with a view to holding physical uranium for the long-term.

Yellow Cake was founded on the fundamental premise that uranium, as a commodity, is structurally mispriced. The Directors believe the central source of this mispricing is the potential looming supply gap, as demand for nuclear power as a low-carbon baseload source continues to increase, while a lack of investment in new supply sees existing mines reaching end of life, with insufficient new mines under development to replace them.

Yellow Cake is differentiated from its peers by its ten-year Framework Agreement for the supply of U3O8 with Kazatomprom, the world's largest uranium producer. Under this Framework Agreement, Yellow Cake has the option to purchase up to US$100 million of U3O8  each year for a period of nine years, starting from the Company's IPO in 2018. On 2 March 2021, Yellow Cake successfully completed an upsized share placing of approximately US$140 million. The Company utilised the proceeds of the placing to fully exercise its 2021 option to purchase US$100 million worth of U3O8 from Kazatomprom pursuant to the Framework Agreement and to purchase a net additional US$15 million worth of U3O8 in the spot market. On 21 June 2021, Yellow Cake successfully completed a further oversubscribed share placing and retail offer, raising gross proceeds of approximately US$86.9 million (£62.5 million), utilising the proceeds to purchase a further US$64.5 million worth of U3O8 from Kazatomprom (with delivery agreed between October 2021 and December 2021) and to purchase a further volume of U3O8 in the spot market.

Yellow Cake continues to seek additional physical uranium purchases on a value accretive basis (particularly in light of the discounted price for the Curzon Purchase) and the Company believes that the structural misalignment of supply and demand in the uranium market requires the price of uranium to increase from present levels.

Yellow Cake currently holds 13.86 million lb of U3O8, all of which is held in storage in Canada and France. On completion of the above purchase of which US$64.5 million worth of U3O8 from Kazatomprom is expected by year end, the Company will hold 15.86 million lb of U3O8.

At the annual general meeting held on 8 September 2021, the Company received shareholder approval to issue an aggregate of up to 49,995,137 shares to raise proceeds to exercise its option under the Framework Agreement to purchase up to US$100 million of U3O8  in the relevant calendar year, to make purchases of uranium should it be able to identify value accretive purchase opportunities and for general purposes.

On 26 October 2021, Kazatomprom indicated that it will provide the Company with approximately 1 million lb of U3O8, at the Company's election, at a price of US$47.58 /lb, representing the average of the weekly UxC and TradeTech spot prices as reported on 25 October 2021 and 22 October 2021 respectively (the "Kazatomprom Purchase"). The Company expects to enter into a purchase agreement with Kazatomprom to acquire U3O8 following completion of the Placing with delivery of all of the U3O8 purchased from Kazatomprom to take place by June 2022.

The Company expects to purchase up to 2 million lb of U3O8 from Curzon, pursuant to an option agreement for the sale and purchase of natural uranium concentrates entered into on 23 October 2021, at the Company's election on or prior to 1 November 2021, at a price of US$46.32 /lb (being the Tradetech weekly price as at 22 October 2021 less a discount of 3%) (the "Curzon Purchase"). Curzon is sourcing the U3O8 from CGN, who has agreed to deliver the U3O8 directly to the Company's account at Cameco's Port Hope / Blind River facility, with delivery of all the U3O8 purchased from Curzon to take place before the end of November 2021.

Under an existing arrangement (as previously disclosed in the Company's admission document and the 2021 annual report) Kazatomprom has an option to repurchase, at a discounted uranium spot price, 25% of the initial purchase volume which the Company purchased from Kazatomprom in July 2018 under the Framework Agreement. The Company has a corresponding buyback option to purchase from Kazatomprom, at the prevailing spot price, all or a portion of the volume repurchased by Kazatomprom under its repurchase option. Following the conditions being met for Kazatomprom to exercise its repurchase option, the parties have entered discussions regarding arrangements for the exercise of the repurchase option and the buyback option. These discussions are ongoing and subject to agreement.

Exceptional Fundamentals in Uranium:

A key driving theme of the uranium market remains the growing potential supply gap. Despite the significant price rally in the U3O8 spot market during August to October of this year, third-party research suggests an incentive price in excess of US$60 would be required to bring significant new capacity on line. Existing older mines, such as the Ranger mine in Australia, have also recently or are reaching end of life, further restricting supply. Additionally, Sprott Physical Uranium Trust ("SPUT") has been active, purchasing 16.5 million lb of material from the market since its at-the-market facility went live on 17 August 2021 and is expected to continue to deplete the tight spot market. Overall, supply is projected to continue its decline without a further and sustained significant increase in the uranium price that would enable mines to restart or be newly commissioned to produce in future years.

Conversely, demand for nuclear energy remains a key, and growing, element of the global energy supply with 441 operable reactors globally, and 157 new reactors either under construction or planned. A combination of increasing electrification in OECD countries and developing / newly developed countries' expanding demand for low-cost, low-carbon baseload power has seen growing investment into new nuclear power generation. Further, there is increasing support for 'renewables plus nuclear' strategies as part of a solution to achieve the International Energy Agency's 1.5°C or 2.0°C targets as nuclear power remains the least expensive low-carbon power option, and can be considered a key source of baseload energy in most low-carbon future scenarios.

Notably, countries such as China (18 reactors under construction, 37 planned), India (7 reactors under construction, 14 planned) and Russia (3 reactors under construction, 27 planned) are building new nuclear capacity, while countries such as the US, which had previously announced plans to reduce their nuclear power capacity, are extending the life of their reactors rather than decommissioning, due to the steep cost of building replacement infrastructure. In both instances, these strategies are increasing the projected demand for U3O8.

Use of Proceeds

The Company primarily intends to use the proceeds of the Placing for the Kazatomprom Purchase and the Curzon Purchase. In addition, the Company will retain sufficient proceeds of the Placing to pay certain costs associated with the Placing and for working capital and general corporate purposes. It is anticipated that the uranium acquired will be stored in Cameco's Port Hope / Blind River facility.

Net Asset Value Update

Yellow Cake's estimated net asset value at 25 October 2021 was £3.62 per share or US$766.5 million, consisting of a pro-forma 15.9 million lb of U3O8 valued at a price of US$47.40/lb a uranium derivative liability of US$6.5 million and other net current assets of US$21.5 million.