CHAIRMAN'S AGM STATEMENT
21 December 2006
The Chairman will make the following statement at the Company's AGM to be held today:
I am pleased to report to shareholders that the market for uranium, in which Yellowcake plc has chosen to be solely invested, has continued to thrive very strongly since the issue of the Company's Annual Report on 16 November. The deferment of expected supplies from Cameco's majority-owned Cigar Lake mine referred to then by our Chief Executive has increased the pressure on the spot price which has now risen to $72 per pound. As he also presaged, this has driven the prices of other potential suppliers in the selected Yellowcake portfolio to new heights.
As a result, the value of our portfolio in Sterling at the close of business on 20 December 2006 has risen 112.3% since commencing investment at the end of September 2005, compared with a doubling of the spot price in Sterling in the same period. It should be noted that in the same period the Canadian and US dollar currencies have fallen by some 12% against Sterling.
The projected world production of uranium oxide (U308 or "yellowcake") in 2006 is reckoned by the industry to be no more than in 2005. However increases announced in the planned global number of nuclear stations particularly in China and Russia have raised projected demand.
In the future, the balance can only be supplied from new discoveries by uranium exploration and development companies and Yellowcake has therefore increased the percentage of its investments in this sub-sector in recent months. In particular, it has concentrated its portfolio on companies with aggressive drilling campaigns scheduled on what it considers to be the most propitious properties for the Canadian winter drilling season currently under way.
At the same time, the Company has entered into new discussions to acquire direct stakes in uranium properties and looks forward to being able to announce a successful conclusion of negotiations in the first half of the forthcoming year.
Notes to Editors
Nuclear Energy is currently undergoing a resurgence, following twenty years of "nuclear winter" in which the world relied on secondary supplies, the price of uranium stagnated and little exploration for new mined sources of the mineral was made. Since 2002, new nuclear stations have begun to be constructed. Currently there are 28 new stations under construction and a further 222 planned to add to the existing 442 in 39 countries which provide 16% of the world's electricity. Nuclear stations produce highly competitive energy with zero atmospheric pollution.
Consequently, demand for mined uranium oxide is rising fast. Annual demand is now some 180 m/t but the world's producers only mine some 105 m/t. The uranium spot price has witnessed substantial growth which is projected to continue in the years ahead as the world increases its demand for electricity and the advantages of nuclear power generation become more widely recognised.
Yellowcake was launched in July 2005 to offer investors a professionally
managed portfolio of selected uranium stocks in order to capture the growth
which it foresaw in the uranium mining, development and exploration industries.
It also intends to invest in directly owned uranium deposits.
The Directors of the Issuer accept responsibility for this announcement.