Yellowcake plc

November 27, 2008 08:19 ET


                                                                                      27 November 2008

                                            YELLOWCAKE PLC
                                    ("YELLOWCAKE" OR THE "COMPANY")
                          PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2008

Chairman's Statement


    *       Uranium spot price down 56.6% in the period

    *       A second resurgence foreseen in the future for the uranium mining industry

    *       Strong progress at the Grease River project, Athabasca Basin, Canada

At the commencement of the period under review, the market spot price for uranium ("U3O8"), which had
been US$7.20 in December 2002, reached an all-time high of US$136 per pound on 1 July 2007.  The main
factors behind this near-vertiginous rise in market prices were reactions of utility buyers to the
production problems encountered during 2007 coupled with the arrival of uranium investment funds whose
buying exacerbated supply shortages.

By the end of the period under review, the market price had reacted to US$59 per pound on 30 June
2008, a diminution of 56.6%. During the year, world production stabilised, the funds sold part of
their uranium stocks and, with inventories rebuilt, Utilities restrained their buying of Spot material
to more normal levels.

Additionally, from mid-August 2007, the world credit crunch began to adversely affect the share prices
of all commodity stocks as institutional investors and especially hedge funds sold down stocks
indiscriminately in the hunt for liquidity.

The investment climate for uranium mining companies in which Yellowcake was invested, based on the
highly visible spot price, thus deteriorated during the period under review.

Yellowcake modified its portfolio structure during these difficult conditions to mitigate the effect
of these market forces, reducing the percentage of exploration and development companies in the
portfolio in favour of producers who have revenue and cash-flow. By the end of the period producing
and near-producing companies comprised 28.8% of the portfolio (2007: 16.7%).

The net result has been that the aggregate market value of Yellowcake's portfolio was reduced by 32%
during the year under review compared with the reduction of 56.6% in the Spot Price.  A pre-tax loss
of £69,719 was made compared with £192,169 pre-tax profit in the previous year.

Uranium is an essential commodity; nuclear power stations cannot be run without fuel.  At the end of
August 2008, according to The World Nuclear Association, a total of 36 new nuclear stations were under
construction in addition to the 439 operating stations globally, with 99 new reactors planned with
funding and 232 proposed.  These figures include the six new reactors announced by the UK Government
upon the acquisition of British Energy by EDF in September 2008.

The International Energy Agency (IEA) released its 2008 World Energy Outlook (WEO) on 13 November
2008. The WEO projects that limiting the global temperature rise to 2°C will require large increases
in nuclear power in addition to contributions from various other energy sources. This will necessitate
an increase of world nuclear generation capacity by a factor of 1.8 from 368GW in 2006 to 680GW by

The leading authority on the uranium market, Ux Consulting, estimates that instead of the projected
increase in production of uranium in 2007, last year's world availability of uranium including
secondary sources at 159,000 pounds was less than in 2006.  In September 2008, when commenting on
current supply conditions, Ux stated "On the supply side, Cameco's announcement that McArthur
River/Key Lake production may be about 1 million pounds under the 18.7 million pound U3O8 target for
2008 is certainly not positive news". On 22 October 2008, Uranium One announced that its Dominion
uranium mine in South Africa, expected to produce 1m lbs in 2009, would now be put on a care and
maintenance status.  Faced with further supply shortages, the Spot Price, which had fallen to a low of
US$44 a pound by 20 October, has subsequently reacted upwards to US$55.

With  the ending of the USA-Russia agreement for the supply of down-blended uranium from 2013,  severe
shortages are forecast for the period thereafter.  According to a Deutsche Bank forecast, the  biggest
impediment  to achieving the IEA targets is not global legislation change but the potential  inability
of global supply to respond to increased demand from 2015.

In the US, which with 104 operating stations is the world's largest generator of nuclear-powered
electricity, approvals and permits are now under way for both new stations and new mines.  Following
the 2005 Energy Policy Act, nuclear power operators are now also applying for part of the US$18.5
billion in allocated government loan guarantees for new nuclear station construction. On 17 September,
in a vote of confidence in the US nuclear industry, legendary investor Warren Buffett's energy holding
company bought Constellation Energy, the country's biggest wholesale power seller which generates 60%
of its power from nuclear energy and is among those generators applying for more stations.

We therefore foresee a "second coming" of the world nuclear resurgence which commenced in 2003.

Direct exploration in the Athabasca Basin, Saskatchewan, Canada

Our investment in our direct project in Grease River has continued to make exciting progress. In
September and November 2007, our Canadian partners CanAlaska Uranium reported on the initial
exploration work as part of the 2007 season programme.  250 anomalies for ground prospecting were
identified as a result of the 6,900 line-km airborne survey carried out in July 2007.  Ground
prospecting in July-September 2007 identified 13 target zones for follow-up work and in March 2008
CanAlaska reported assay results showing high concentrations of uranium mineralisation up to 3.53%
uranium at surface.

Yellowcake retains a 9% interest in an Option over the project, along with Uranium Prospects plc (51%)
and CanAlaska Uranium (40%). The parties are enthusiastic about prospects for the 2008 summer field
season programme, designed to further geologically investigate each target anomaly in order to
evaluate its potential as a drill target. The significance of the anomalous values of some Rare Earth
Elements reported within the Project area will also form part of this programme.  Further results are

Post Balance-sheet Strategy developments

As a result of the increasingly oversold market for uranium shares and the promising results expected
to be achieved at Grease River, the Board decided to liquidate its shares portfolio in August 2008 and
use the proceeds to bolster the funds available to Uranium Prospects plc which is responsible for the
funding of the Grease River exploration. This sale raised cash of £199,952, resulting in a loss of
£37,571 against the book value of these stocks as at 30 June 2008. As a result Yellowcake now holds
£231,500 in Loan Agreements from Uranium Prospects.

Robert Wallace stepped down as CEO in July 2008 and is now acting as an advisor to Yellowcake on the
uranium market on a short term agreement expiring 30 November 2008. The Company is currently in
discussions with Robert with a view to extending this arrangement. The Board would like to pay tribute
to Robert's invaluable contribution made whilst a Director of the Company.

Further information:

Yellowcake Plc
Mark Watson-Mitchell, Executive Chairman
Tel:  020 7638 8750

St Helen's Capital Plc
Duncan Vasey, Director
Tel: 020 7628 5582

    Profit and Loss Account
    For the year ended 30 June 2008
                                                                             Notes         2008             2007
                                                                                            £                £
            Turnover                                                                         29,709              131
            Administration expenses                                                       (150,948)        (121,694)
            Operating loss                                                                (121,239)        (121,563)
            Profit on disposal of fixed asset investments                                   165,835          288,375
            Amounts written (off)/back on fixed asset investments                         (116,816)           24,787
            Interest receivable                                                               2,501              570
            Profit/(loss) on ordinary activities before taxation                           (69,719)          192,169
            Tax on (loss)/profit on ordinary activities                                     (2,838)         (14,141)
            (Loss)/profit for the financial year after tax                                 (72,557)          178,028
            Earnings per share                                                 7                                    
            Basic earnings per share                                                        (0.12)p             0.3p
            Fully diluted earnings per share                                                (0.12)p             0.2p
    All of the Company's operations are classed as continuing. There were no gains or losses in the
    year other than those included in the above profit and loss account.
    Balance Sheet
    As at 30 June 2008
                                                                             Notes         2008             2007
                                                                                            £                £
         Fixed assets                                                                                               
         Investments                                                           6            363,987          395,951
         Current assets                                                                                             
         Current asset investments                                             6             10,436          120,634
         Cash at bank                                                                           951            6,735
         Debtors and prepayments                                                             73,397            4,084
         Total current assets                                                                84,784          131,453
         Total assets                                                                       448,771          527,404
         Creditors: amounts falling due within one year                                    (21,102)         (36,750)
         Net assets                                                                         427,669          490,654
         Capital and reserves                                                                                       
         Called up share capital                                                            146,889          145,625
         Share premium account                                                              280,510          272,924
         Total equity                                                                       427,399          418,549
         Share based payment reserve                                           13            18,180           17,458
         Profit and loss account                                               13          (17,910)           54,647
         Total reserves                                                                         270           72,105
         Shareholders' funds                                                   14           427,669          490,654

     Notes to the Accounts:

    1.      The above unaudited results cover the year to 30 June 2008.
    2.      The directors do not recommend the payment of a dividend.
3.      The financial information in this release has been extracted from the unaudited accounts.
    4.      The financial information set out above does not constitute the Company's statutory accounts
         for the year ended 30 June 2008, but is derived from those accounts. Statutory accounts for 2008 will
         be delivered to the Registrar of Companies following the Company's annual general meeting, the date of
         which will be announced as soon as the current audit of the accounts is finalised.
    5.      Copies of the full accounts will be filed on the Company's website and mailed to shareholders
         as soon as they are produced.
6.      Fixed and current asset investments:
                                                                                        2008           2007
                                                                                         £               £
     Fixed assets: listed investments at lower of cost and net realisable value                               
                                                                                         363,987       395,951
     Current assets: Cash deposits held at broker for long term investment                                    
     purposes                                                                             10,436       120,634
     Total fixed and current asset investments                                           374,423       516,585
    Listed investments analysed by functional category comprise:
                                                        2008            2008            2007           2007
                                                      Lower of         Market         Lower of        Market
                                                     cost or net        value          cost or         value
                                                     realisable                          net
                                                        value                        realisable
                                                          £               £               £              £
     Exploration and development                          58,737         68,613          249,850       523,607
     Direct exploration                                  178,792        330,170           89,766        98,077
     Near production                                      50,019         60,325            4,893        11,011
     Production                                           76,439        106,465           51,442       113,282
                                                         363,987        565,573          395,951       745,977
    As at 30 June 2008 the aggregate market value of listed investments was £565,573 (30 June 2007:
    £745,977) making total investments, including cash deposits, of £576,009 (2007: £866,611),
    resulting in an unrecognised gain of £201,586 as at 30 June 2008 (30 June 2007: £350,026). If this
    gain were to be realised this would result in a potential tax charge, subject to available tax
    losses, of £60,476 (2007: £105,008) being incurred by the Company, based on a corporation tax rate
    of 30%. Market value is based on published price quotations where applicable.
    7.      Earnings per share
          The basic loss per share is based upon a loss of £72,557 (2007: profit of £178,028) and the
          weighted average number of shares of 58,381,265 (2006: 57,813,014) in issue during the year.
          Given the Company's reported loss for the year, outstanding share options and warrants are
          not taken into account when determining the weighted average number of ordinary shares in
          issue during the year, and therefore the basic and diluted earnings per share are the same.
    8.      Post balance sheet events:
          R Wallace resigned his position as a Director of the Company with effect from 31 July 2008.
          He is retained by the Company as a consultant on the uranium market on a short term
          agreement expiring 30 November 2008. The Company is currently in discussions with Mr Wallace
          with a view to extending this arrangement.
          During the year the Company sold 51% of its 60% interest in the Grease River Project to
          Uranium Prospects Plc, and under the terms of this agreement, Uranium Prospects took over
          the obligation to fund the development costs on this project. During the year the Company
          provided loans to Uranium Prospects Plc totalling £94,000, of which £45,000 was repaid,
          leaving a balance outstanding of £49,000 at the balance sheet date. The Company also charged
          consultancy fees totalling £20,000 to Uranium Prospects during the year, which remains
          outstanding as at the balance sheet. At the end of August 2008 the Board decided to make a
          further loan of £160,000 to Uranium Prospects. These funds were raised by disposing of a
          substantial part of the Company's investment portfolio. The cash realised from these
          disposals amounted to £199,952, resulting in a £37,571 loss against the book value of these
          stocks as at 30 June 2008.
          The Company entered into a new loan agreement with Uranium Prospects dated 31 October 2008,
          consolidating all its loans and receivables. The total amount due from Uranium Prospects,
          including accrued interest, amounted to £231,500 at that date. The new loan carries interest
          at 9% per annum, and has a final repayment date of 31 December 2009.
The Directors of Yellowcake plc accept responsibility for this announcement.


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