London-listed Yellow Cake on Wednesday announced plans to raise about $125-million (£92.5-million) through a non-pre-emptive placing of new ordinary shares to fund the purchase of 1.33-million pounds of uranium from Kazatomprom.

The shares will be placed at £5.64 each, equal to Yellow Cake’s closing mid-market price on September 22. The accelerated bookbuild will be conducted by Canaccord Genuity as sole bookrunner, with Berenberg and Panmure Liberum as joint co-managers. Bacchus Capital, which founded Yellow Cake, is acting as financial adviser.

Proceeds will be used to fully exercise the company’s 2025 purchase option under its long-term supply agreement with Kazatomprom at $75.08/lb, a 7.1% discount to the spot price of $80.80/lb. Delivery of the material is expected in 2026. The funds will also cover working capital, corporate costs, and placing expenses.

Implied pro forma net asset value (NAV) at the Kazatomprom purchase price is £1.21-billion, or £5.60 a share. Based on the current spot price, implied NAV rises to £1.3-billion, or £6.02 a share.

“We remain confident in the uranium market's long-term potential and see now as the right moment to fully exercise our 2025 option with Kazatomprom," said CEO Andre Liebenberg.

"Secured prior to our 2018 IPO, this agreement allows Yellow Cake to acquire up to $100-million of uranium annually through to 2027 at a fixed price, providing a key strategic advantage in today's tightening market. By raising equity now, we aim to significantly bolster our uranium holdings, aligning with our core strategy of delivering value to our shareholders through direct exposure to physical uranium.”

He added that “the themes we have set out to our shareholders over the past six months remain very much in place. The supply-demand imbalance continues to intensify, driven by global nuclear energy expansion, persistent production constraints, escalating input costs, and increasing demand for secure supply, all of which reinforce the compelling investment case for Yellow Cake.”

Yellow Cake currently holds 21.68-million pounds of uranium in storage in Canada and France. The latest purchase will take its holdings higher once delivery is completed.