FIRST REPORT ON ACTIVITIES TO SHAREHOLDERS
31 October 2005
This is the first report on activities to shareholders since the Company gained Admission to the Ofex market on 29 July 2005.
Yellowcake was formed to offer its shareholders, primarily UK investors, a vehicle to invest in the worldwide uranium exploration and production industry. Since July there have been several positive developments in the prospects for nuclear power which have encouraged the directors in their view that the market for uranium is set for long-term growth.
Many countries have announced the construction of further nuclear power reactors against the background of increased electricity consumption and at the same time an urgent need to reduce world's output of greenhouse gases in the face of increased evidence of global warming. Nuclear plants have zero emissions and the industry has delivered a 13,000 reactor-years record of uninterrupted safe production of clean power since the Chernobyl accident in 1986.
The USA contains 103 nuclear stations, which is more than any other country in the world; together they generate some 24% of that country's power. On 8 August the US Senate passed the Energy Policy Act which allocated a USD200 billion budget that will facilitate easier licensing of new nuclear stations. For the first time in over 20 years, several utilities are now planning to construct new installations in the USA. A consumer survey commissioned by the Nuclear Energy Institute, carried out in August and reported on 12 October, found that 83% of Americans living within 10 miles of an existing station are willing to see a new nuclear station built near them.
Countries in Asia have announced plans to step up the amount of their electricity produced by nuclear power. Whilst the latest figures for China show that country will spend some $48 billion to build 30 new reactors by 2030, by which time nuclear power will still only supply 4% of the country's energy needs compared to 2.3% at present. Similarly India is planning 17 new nuclear installations by 2012.
Understandably, with the prospect of such new installations, the price of uranium has advanced from USD29.25 at the time of the Yellowcake flotation to USD33 now, a near 13% advance in just 3 months. Yellowcake's Directors consider that there is a significant upside for the price of uranium over the next few years.
During the last three months, the Company has carried out research and investment in quoted and unquoted securities to achieve the objectives set out in its Prospectus.
Following detailed research and evaluation, investments have been made in a number of the world's leading primary producers of uranium. Investments in some of the world's near-term prospective producers have also been made. We are particularly pleased that we have made a significant investment in UraMin Inc, an unquoted company with substantial deposits in South Africa and Namibia. UraMin, which is scheduled to commence uranium production in 2007, is expected to float on AIM within the next few months.
The Company has also made investments in a selection of junior explorers and developers.
It is now recognised that here is a strong need to discover substantial new sources of uranium which will be required in the medium term to meet the shortfall demand forecast by the World Nuclear Association in the years from 2012. Although Yellowcake's portfolio contains explorers in the USA, Australia, South Africa, Namibia and Mongolia, the Company has concentrated its investment in a spread of companies working in the Athabasca Basin in Saskatchewan and Alberta in Canada, currently the source of 40% of the world uranium production. The Company has also investigated a number of deposits for direct investment but after initial due diligence has not been able to proceed with confidence. However we will continue to seek such participation.
Elsewhere Yellowcake's Directors are considering taking part in funding some direct exploration in Canada for uranium seeking radioactive anomalies at great depth and at low exploration cost through using aircraft-mounted rapid identification techniques. This will obviously be extremely speculative but could be very rewarding if at all successful.
The Directors see scope for world-class high-grade discoveries being made by some of our investee companies leading to substantial share price appreciation.
With the nuclear industry growing fast, in contrast to shrinking stockpiles and scope for secondary supply of uranium, the Directors are enthusiastic about the prospects for Yellowcake and its investment focus.
The Directors of the Issuer accept responsibility for this announcement.
FOR FURTHER INFORMATION
YELLOWCAKE PLC
Mark Watson-Mitchell, Chairman
Robert Wallace, Chief Executive
020 7638 8750
www.yellowcakeplc.co.uk