LONDON, February 26, 2021 / PRNewswire / –
- Bacchus Capital advised Yellow Cake on its oversubscribed international fundraising from investors of Europe, Asia and North America
- The proceeds will be used to acquire up to 3.5 million pounds of uranium (“U3O8“) as part of the Kazatomprom purchase option
- Deepens Yellow Cake’s thesis of holding long-term uranium while the poor structural assessment of the raw material evolves towards correction
Bacchus Capital Advisers Limited (âBacchus Capitalâ), the independent investment and investment bank specializing in mergers and acquisitions in cross-border public markets and companies in the natural resource sector, is pleased to have arranged the financing of the $ 100 million purchase of physical uranium, by Yellow Cake Plc, under its option with Kazatomprom. The $ 140 million The oversubscribed fundraiser was led by accelerated bookbuilding, in which Canaccord Genuity Limited and Cantor Fitzgerald & Co. were appointed associate bookkeepers.
Yellow Cake plc (AIM: YCA) (âYellow Cakeâ), was founded and established by Bacchus Capital in 2018 on the fundamental principle that uranium, as a raw material, is structurally poorly valued. Bacchus Capital believes that the central source of this pricing error is the potential supply shortfall, as demand for nuclear power as a low-carbon base load source continues to increase, while a lack of investment in new supplies sees existing mines reaching the end of their life, with insufficient new mines being developed to replace them. Since 2018, Yellow Cake has accumulated 9.3 million pounds of U3O8 at an effective price of US $ 21.34 per pound; at the current spot price of US $ 28.35 per pound, that’s about a 33% gain, or US $ 65 million.
Timing of fundraising is based on the global Covid-19 pandemic and the Section 232 petition in United States causing uranium spot and futures markets to slow down, utilities reluctant to engage in purchases and the world’s largest uranium producers, Kazatomprom and Cameco, having cut production or suspended operations . The reduced activity resulted in a tightening of the spot market, with only c. 5.6 million pounds of U3O8 negotiated since the beginning of the year in 2021. The purchase of 3.5 million pounds by Yellow Cake will represent a very significant volume in this context. Following the transaction, Yellow Cake will increase its U3O8 to 12.8 million pounds and retains the option to purchase up to $ 100 million of you3O8 per annum of Kazatomprom until 2027. Although this transaction fully exercises the Kazatomprom 2021 purchase option of Yellow Cake, the company may choose to pursue additional purchases during the year outside of the option.
Bacchus Capital was created in 2017 by Pierre Bacchus, former Global Head of Mining & Metals Investment Banking at Morgan Stanley, to bring the traditional investment banking values ââof independence, objectivity and trust to a broad customer base, which includes some of the largest companies in the natural resources sector, alongside some of the industry’s most exciting and innovative growth companies. Its co-founders are Paul Cahill, former head of business development at Anglo American plc; Chris johannsen, previously founder of Australian consulting firm Gryphon Partners; and former Morgan Stanley banker, Richard Allan.
About Bacchus Capital
Bacchus Capital was created in 2017 as an independent investment banking platform specializing in mergers and acquisitions in public markets, capital raising and companies in the natural resources sector. Bacchus Capital is headquartered in Central london, with representation in Asia, United States and Australia.
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SOURCE Bacchus Capital Advisors