Kazakhstan-based physical uranium fund begins operations

23 November 2021

Kazakh national nuclear company Kazatomprom has signed a framework agreement with Genchi Global to invest in the newly established ANU Energy OEIC Limited physical uranium fund, meaning the fund can begin operations. Meanwhile, Kazatomprom has exercised an option to buy back uranium previously sold to Yellow Cake plc.

The signing cermony was attended by Kazatomprom CEO Mazhit Sharipov, seen here on the right, and Ali Ashraf, director of Genchi Global Limited (Image: Kazatomprom)

Kazatomprom is to be a key supplier to ANU, set up last month by Kazatomprom (48.5%), National Investment Corporation of the National Bank of Kazakhstan JSC (48.5%) and Genchi Global Limited (3%) to store physical uranium as a long-term investment. It is registered on the Astana International Financial Centre.

The fund's initial acquisition will be carried out using joint investments of USD50 million from its founders. The newly signed framework agreement sets out the terms and mechanisms for the supply of uranium products from Kazatomprom to the fund. It also sets out mechanisms regarding the lock-up period and price threshold after which the Fund could be able to sell certain amounts of uranium to the market, with Kazatomprom having a priority right to repurchase any uranium the Fund decided to sell. The primary purpose of the conditions is to maintain the future balance of supply and demand in the market, the company said.

"The creation of this uranium fund has been maturing for several years," Kazatomprom CEO Mazhit Sharipov said. The project is being implemented within the framework of the 2022-2031 development strategy of the Samruk-Kazyna sovereign wealth fund, which is the national holding company owning Kazatomprom, and Kazatomprom's value strategy, which is focused on creating long-term market value for all stakeholders, he said. "I am sure that it will open up new prospects for the development of the uranium industry in Kazakhstan and beyond," he added.

Buyback confirmed

Separately, Yellow Cake plc today confirmed the exercise of a previously announced uranium repurchase by Kazatomprom and a subsequent, related exercise of a uranium buyback option by Yellow Cake.

Kazatomprom has an option to repurchase at the uranium spot price (less an aggregate discount of USD6.55 million) up to 25% of the initial purchase volume (of 8,091,385 pounds U3O8, 3112 tU) which Yellow Cake purchased from Kazatomprom in July 2018 under a ten-year framework agreement between the two companies. Yellow Cake has a corresponding buyback option to purchase from Kazatomprom, at the prevailing spot price, all or a portion of the volume repurchased by Kazatomprom. Kazatomprom's right to exercise the repurchase option arises only once during the term of the agreement, for a period of 60 days, under certain conditions.

The conditions for Kazatomprom to exercise the option have been met, Yellow Cake said, and the parties have agreed that Kazatomprom will use the option to repurchase 2,022,846 pounds U3O8 at a price of USD43.25 per pound (less the discount), taking delivery of the material on 22 November. Yellow Cake will exercise its option to buy back from Kazatomprom the same quantity of U3O8 at a price of USD43.25 per pound, taking delivery between March and April 2022.

"The net impact of these transactions is expected to be a pay-out by the company to Kazatomprom of USD6.55 million," Yellow Cake said.

London-quoted Yellow Cake is headquartered in Jersey, in the Channel Islands.

Researched and written by World Nuclear News