07-50 June 2007 Quarterly Report Page No. 1
DEEP YELLOW
LIMITED
ABN 97 006 391 948
Level 1 329 Hay Street Subiaco WA 6008
PO Box 1770 Subiaco WA 6904
Tel : 08 9286 6999
Fax : 08 9286 6969
Email: admin@deepyellow.com.au
Website: www.deepyellow.com.au
25 July 2007
QUARTERLY REPORT
FOR THE PERIOD ENDING 30 JUNE 2007
HIGHLIGHTS
AUSTRALIA
• The commencement of targeted RC percussion drilling in the Mt Isa district is a
milestone in DYL’s strategic plan for the region. From a logistical base in Mt Isa
the Company has the resources in place to carry out both regional and detail
exploration programmes on its existing tenements and to actively seek out other
opportunities.
NAMIBIA
• Reptile Uranium Namibia (100% owned DYL subsidiary) now has a full
complement of technical and support staff (totalling 13) operating out of
Swakopmund. RC percussion drilling on both regional targets and known
resources has commenced with early results confirming the nature of the Tubas
resource discovered by Anglo American.
CORPORATE
• The one for twelve Entitlement Issue at 50c which closed on Friday 20 July
raised a total of $26,614,062. This will allow the Company to aggressively pursue
its objectives to convert the extensive historic outlined resources in Namibia to
JORC status, evaluate the advanced exploration projects in both Australia and
Namibia while continuing with its project generation activities.
• As stated in the ASX announcement dated 12 June 2007 the Entitlement Issue
was not underwritten and the Directors reserved the right to place any shortfall
shares. No decision on whether to place any of the shortfall has yet been taken.
07-50 June 2007 Quarterly Report Page No. 2
EXPLORATION ACTIVITIES
Figure 1: Australian Projects
NORTHERN TERRITORY
Napperby Project
Deep Yellow Ltd (DYL) and Toro Energy Ltd (Toro) have previously announced the farm-in
and acquisition by Toro of the Napperby Uranium Project and its associated tenements EL
24246 and EL 24606. The Napperby Project is located approximately 150 km northwest of
Alice Springs in the Northern Territory (Figure 1).
DYL and Toro announced (ASX 20 July 2007) that all pre-conditions pursuant to the farm-in
and acquisition had been completed so allowing Toro to commence exploration programmes.
The key milestones were:
1. Ministerial approval and registration under Section 173 of the Northern Territory Mining
Act;
2. Execution of the Novation Deed with Paladin Energy Minerals NL; and
3. Execution of the Deed of Assumption with the Central Land Council (“CLC”).
AUSTRALIAN PROJECTS
07-50 June 2007 Quarterly Report Page No. 3
Taking the Napperby Project Forward
A key focus for Toro during the initial stages of the option period will be resource conversion
drilling of the defined mineralised zone within the Historic Deposit Area as defined by
previous explorers (Figure 2). Within this Historic Deposit Area, DYL defined an Inferred
Mineral Resource of 1.9 million tonnes at 0.036% (360ppm) U308 for 670 tonne or 1.5 million
pounds of contained U308 in a small portion of the defined mineralised system as depicted in
Figure 2.
Figure 2: Historic Deposit Area Containing Defined Mineralised
Zone and JORC Inferred Resource Grid
Preparations for the resource definition and further exploration work are already well
advanced with drilling expected to commence in late August or early September pending
Northern Territory Government approval and site clearances.
Although significant resource definition work is still required, the Boards and Management of
both DYL and Toro are excited at the prospect of the Napperby project being advanced
toward a potentially viable economic mine, particularly given current long term uranium
prices and future industry demand projections.
Tanami – Arunta Project
During the Quarter the title to three tenements previously held by Tanami Gold NL (TGNL)
was transferred to DYL under the terms of the 2005 Agreement between DYL and TGNL.
EL’s 23636, 23923 and 23924 cover 1,290 km2 and in all cases target calcrete hosted
uranium mineralisation.
07-50 June 2007 Quarterly Report Page No. 4
Reynolds Range Project
The Reynolds Range Project comprises DYL’s ELs 23923, 23924 and 23991; TGNL’s EL
23888 and Select Resources’ EL 23655. These granted tenements are subject to two Native
Title agreements specifically for gold exploration. DYL submitted a proposal to the Central
Land Council (CLC) to carry out uranium exploration on the tenements in October 2006 and
presented its proposal for exploration and possible future mining on the Project tenements to
the Traditional Owners at three meetings convened by the CLC in June 2007. DYL has yet
to hear if its access proposal was successful.
Figure 3: Reynolds Range Project
QUEENSLAND
Mt Isa District
The June Quarter saw a ramp up of exploration activity in the Mt Isa district with programme
highlights being:
• Flying of a high resolution airborne radiometric and magnetic surveys over nine
prospect areas. The 100 m line spaced data has greatly enhanced the resolution of
uranium anomalies seen in the previous regional datasets.
• Native Title clearances were conducted by Kalkadoon representatives over the
Miranda, Queen’s Gift and Calton Hills prospects ahead of drilling.
• Geological mapping of the Queen’s Gift, Calton Hills and Miranda prospects was
completed in conjunction with ground radiometric surveys in order to delineate
anomalous areas for detail drilling.
07-50 June 2007 Quarterly Report Page No. 5
• Assay results were received during the period for composite surface samples taken at
Queen’s Gift that returned grades up to 2.86% U3O8.
• RC percussion drilling commenced at the Queen’s Gift Project on 9 July with 16 holes
for 1,003 m completed to date. This is part of an initial programme of 39 holes for
3,000 m out of a total district programme of 10,000 m. All drill holes will be logged
radiometrically by downhole probe to determine anomalous zones that will be sent for
assay. Until disequilibrium ratios are determined, eU3O8 values will not be reported.
Figure 4: Mt Isa District Tenements
Queens Gift Prospect (100% DYL)
At the Queen’s Gift Prospect (Figure 4) surface mapping and sampling has outlined a
uranium mineralised zone up to 50 m wide over 1,300 m strike with a best surface composite
rockchip sample assaying 2.86% U3O8 (ASX 22 May 2007). Previous diamond drilling by
Queensland Mines Ltd (QML) in 1969 and by Agip Nucleare Australia Pty Ltd (Agip) in 1974
was all completed above 50 m vertical depth.
Some significant intercepts include:
• QML 2 – 4.57 m at 5,840 ppm (0.584%) U3O8 from 71.63 m
• QML 3 – 6.10 m at 830 ppm (0.083%) U3O8 from 32.31 m
• Agip 1 – 21.0 m at 470 ppm (0.047%) U3O8 from 41.0 m
• Agip 2 – 4.0 m at 1,020 ppm (0.102%) U3O8 from 72.25 m
• Agip 3 – 3.0 m at 900 ppm (0.090%) U3O8 from 61.80 m
07-50 June 2007 Quarterly Report Page No. 6
Surface mapping of the mineralised zones undercut by the previous drilling indicates that in
most cases the mineralised zones are sub-vertical so simplifying the targeted drilling
programme.
Notwithstanding the above excellent drill results, field mapping in conjunction with
examination of the available historical data, indicates that the previous drilling did not
adequately test the observed surface radiometric highs or the mapped extent of the
mineralisation.
Figure 5: Queen’s Gift Metatorbernite Uranium Mineralisation
Details of the mapped surface geology and rockchip sampling have previously been
announced (ASX 19 March and 22 May).
In summary the 16 RC percussion drill holes so far completed are successfully undercutting
surface anomalous outcrops and returning downhole anomalism as anticipated. The first
batch of samples was submitted to a laboratory for chemical analysis by pressed powder
XRF method on 23 July.
Miranda Prospect (DYL can earn 100% of the uranium rights)
The Miranda Prospect was targeted in an initial RC drilling campaign by DYL during 2006.
Unfortunately the drilling programme was terminated early due to bush fires in the prospect
area.
The prospect comprises an outcrop of variably chlorite-magnetite altered, weakly pyritic
granitoid, and contains inclusions of (magnetite)-(quartz)-chlorite-schist occurring either
strongly foliated or as structurally deformed zones.
The drilling results outlined a broad zone of uranium mineralisation with a strong iron
oxide association including significant intersections of 12 m at 960 ppm U3O8 from 9 m in
hole DMRC-001 and 3 m at 730 ppm U3O8 from 43 m in hole DMRC-002. Previous drilling at
Miranda by CRAE in 1982 returned 18 m at 810 ppm U3O8 from 30 m depth and surface
rock chips collected by Matrix Metals Ltd 100 m NNE of the drill holes assayed up to 1.18%
U3O8.
07-50 June 2007 Quarterly Report Page No. 7
RC percussion drilling comprising 8 holes for 1,000 m will test the strike and depth
extensions to the mineralised zone. The recently flown low-level radiometric and magnetic
survey over the Miranda Prospect (Figure 6) has returned a number of outlying uranium
anomalies in the area which will be ‘scout drilled’. Two targets, Miranda North and Foxhole
are similar magnitude uranium anomalies to Miranda. In addition an interpreted deep
magnetic halo to the uranium mineralisation will also be drill tested in the light of the strong
iron oxide (magnetite) and pyrite association with uranium mineralisation at Miranda and
Queen’s Gift.
Figure 6: EPM 14281 – U2/ Th Ratio Image
Detail Airborne Radiometric and Magnetic Survey
Preliminary data has been received for a 5,470 line kilometre low-level airborne radiometric
and magnetic survey flown over nine selected target areas in the Mt Isa district. The 100 m
line spaced data has greatly enhanced the resolution of uranium anomalies associated
basement structures seen in the previous regional datasets. Further processing and
interpretation of the new data is underway with the objective of identifying targets for the
scout drilling programme.
Tenement Divestment
DYL has decided to divest the Company of direct management of several of its 100% owned
tenements in Queensland in order to focus specifically on Proterozoic basement hosted
uranium mineralisation on its tenements in the Mt Isa district.
The majority of the tenements have a documented exploration history including uranium
exploration which outlined anomalous results worthy of follow-up. The tenement locations are
shown in Figure 7.
07-50 June 2007 Quarterly Report Page No. 8
The divestment package comprises:
• Granted EPM’s 15072, 15494 and 15249 and Application 16008 in North West
Queensland
• Granted EPM’s 15615, 15620, 15621 and 15622 and Application 15624 in South East
Queensland
Targets include shallow secondary uranium deposits associated with younger cover
sequences to the Mt Isa Inlier basement rocks and uranium mineralisation in concealed
Tertiary channels draining ‘hot granites’ in the Croydon district.
In the case of the Durong Project in South East Queensland there is an opportunity to
explore for roll front uranium mineralisation in a buried palaeochannel setting as delineated
by a recently flown airborne electromagnetic survey carried out by DYL.
DYL is seeking a party to take over management of the tenements through a joint venture
arrangement whereby the party can earn up to 70% interest in the tenements and DYL is
free carried to a decision to mine.
Figure 7: Queensland Divestments
SOUTH AUSTRALIA
Western Gawler Project (DYL can earn 100% of the uranium rights)
Following clearance for its planned drilling programme from the Antakirinja Matu -
Yankunytjatjara Native Title Claimants in early June, DYL completed an initial pass of aircore
drilling with 102 holes for 7,214 m being drilled. These holes were sited along existing lines
of access or where natural access permitted. Hole spacing varied from 500 m to one
kilometre, with hole depths ranging from 80 to 110 m.
07-50 June 2007 Quarterly Report Page No. 9
Lithologies intersected included surficial channel sands; lignitic clays; basinal clays,
claystones and various metamorphic basement rocks. Most holes were radiometrically
logged downhole and drill cuttings scanned with a hand-held scintillometer.
All the targeted paleodrainages received some drill coverage, with the Mulgathing tributary of
the Anthony Paleochannel receiving most attention. Only low order radiometric anomalism
was detected. Some 35 drill samples have been submitted for uranium analysis. Follow-up
drilling will be carried out where prospective lithologies were found once clearance and
access is in place.
GENERAL
BlackGrange Ltd / Uranio Agreement
On 22 May 2007 the Boards of DYL and BlackGrange Ltd. (soon to be renamed Uranio
Limited “Uranio”) announced they had reached agreement on commercial terms for the
acquisition by Uranio of a majority interest in four DYL uranium properties located in Western
Australia and South Australia.
Essentially, the proposal provides Uranio with the opportunity to acquire 70% of each of the
wholly owned DYL properties and in addition to acquire an overall 70% interest in the Siccus
joint venture, 90% of which is owned by DYL (Figure 8).
While these properties are highly prospective, they were mostly acquired during DYL’s
formative stages prior to its present Board’s decision to concentrate efforts in select
exploration areas where the Company now holds large tracts of land under tenure and
exploration bases have been established.
DYL has received the first $500,000 payment in relation to this agreement and look forward
to further benefiting its shareholders once Uranio has completed its IPO, listed on the ASX
and commenced exploration on the tenements.
Figure 8: BlackGrange Ltd / Uranio Agreement Tenements
07-50 June 2007 Quarterly Report Page No. 10
NAMIBIA
DYL through its wholly owned Namibian registered subsidiary Reptile Uranium
Namibia (Pty) LTD (RUN) is actively exploring for uranium on its four 100% owned
contiguous Exclusive Prospecting Licences (EPLs) covering 2,872 square kilometre
as shown in Figure 9.
Figure 9: RUN EPLs showing surface projection of known uranium mineralisation
General
RUN has completed its recruitment drive and has successfully employed 13 technical and
support staff operating out of Swakopmund. It is pleasing that all but one of these are
Namibian citizens.
RC percussion drilling on both regional targets and known resources has commenced with
early results confirming the nature of the Tubas resource discovered by Anglo American.
07-50 June 2007 Quarterly Report Page No. 11
The Company is prohibited by the ASX rules to publish historical data generated by previous
explorers and will endeavour to convert these substantial previous uranium estimates to
comply with JORC as soon as practically possible.
Known uranium mineralisation occurs as carnotite in pedogenic calcrete and superficial
cover associated with palaeochannel development which has a depth of not more than 20 m
(Figure 10).
Figure 10: Outcropping Pedogenic Carnotite Mineralisation at Tubas
Exploration Update
Initially drilling on 50 m centres commenced along a four kilometre long N-S line as depicted
in Figure 11 which has been overlayed on the old Anglo American Tubas prospect field map.
This drilling (to basement) was carried out to better understand the morphology of the
palaeochannel and whether in fact it had properly developed anywhere. It was found that at
its deepest point it is incised to 104 m thereby enhancing the areas potential to also host
Langer Heinrich style mineralisation at depth. All the historic exploration was restricted to
near surface (within 15 m) secondary mineralisation mainly associated with sheetwash or
overbank deposits (Figure 10). The basement profile of this drill traverse will also assist
interpretation of the planned airborne electromagnetic survey data.
Upon completion of the reconnaissance drilling of these 112 holes (totalling 4,193 m) a
further 154 step out holes from this line (totalling 2,186 m) were drilled to check extent of
mineralisation previously intersected. The aerial extent of the mineralisation at Tubas is ~60
square kilometre and with increasing confidence of the controls on mineralisation the drill
pattern is being increased from 50 m to 100 and 200 m centres.
All holes are being radiometrically logged with a calibrated probe (inside the drill rods); drill
chips are isolated from other anomalous samples and checked with a hand held
spectrometer; at the Company’s Swakopmund laboratory anomalous samples are checked in
a sealed lead discriminator box and radioactivity measured; and, finally all anomalous
samples (above a nominal 100 ppm eU3O8 cut-off) are chemically assayed by powder XRF
by an external contract laboratory.
07-50 June 2007 Quarterly Report Page No. 12
Figure 11: Location of RUN Drilling on Historic Anglo American Tubas Project
This routine is being carried out to build the confidence level on uranium disequilibrium prior
to releasing equivalent U3O8 values from downhole logging on an ongoing basis. All
anomalous samples will routinely be checked by chemical assay.
To date only 289 assays have been received as reported to the ASX on 19 July. The powder
XRF results are highly encouraging ranging to 1,790 ppm U3O8 over a one metre interval.
Where intersections and drill holes coincide and duplicate percussion drilling of Anglo
American carried out in the 1970s and early 1980s the RUN assays closely replicate or
exceed the historical published information thereby lending early confidence in the historic
data.
Although the chemical data is restricted (statistically) at this point a scatter diagram to
compare uranium content as determined by Anglo vs RUN for the closest neighbouring holes
and intersections with all outliers removed indicate a variance of 1.444 (R2 of 0.6539), which
means that RUN’s uranium assay results are almost 50% higher. This is typical of what can
be expected from 1970 and 1980’s drilling where open hole percussion drilling and sampling
techniques often resulted in surface coating carnotite mineralisation being liberated and
blown out with the dust fraction, i.e. not collected and thereby reducing the contained
uranium assay values. As more data is acquired this statistical model will be better
understood and proven.
Additional drill rigs are being sought and additional personnel sourced to speed up the
conversion of the historical estimates to JORC compliant resources.
07-50 June 2007 Quarterly Report Page No. 13
Airborne Radiometric and Magnetic Survey
A 16,800 line kilometre low-level radiometric and magnetic survey is currently being
completed over the entire tenement area. The data from the survey flown on 200 m spaced
lines at a nominal height of 80 m will be merged with similar recent Government acquired
data to produce a 100 m line spaced dataset over the entire project area.
The aim of this survey is to map in greater detail any near surface radiometric anomalies and
the magnetics will be used to map potential uraniferous granitic host rocks beneath the
desert sand cover similar to the alaskites that host the Rossing uranium mine 50 km to the
north.
Figure 12: RC Percussion Drilling – Tubas Prospect
CORPORATE
The DYL Board has resolved to review its portfolio of exploration projects and to consider
divestment of ‘non-core’ assets.
The Board’s rationale for the sale of these projects is to allow DYL to focus on its advanced
exploration projects in Namibia, the Mt. Isa district and other priority regional targets close to
already established DYL bases and personnel throughout Australia. In addition DYL will
endeavour to realise an immediate return in cash terms from the projects and deploy this
cash to priority projects. Last but not least there is the opportunity to further benefit DYL’s
shareholders through the retention of a significant direct stake in each project and a retained
equity interest with the purchaser.
Deep Yellow Ltd and Uranio Ltd Establish a Joint Venture on Four Uranium Properties
in Western Australia and South Australia
During the quarter, the Boards of DYL and BlackGrange Ltd (soon to be renamed Uranio
Limited “Uranio”) announced they had reached agreement on commercial terms for the
acquisition by Uranio of a majority interest in four DYL uranium properties located in Western
Australia and South Australia.
07-50 June 2007 Quarterly Report Page No. 14
A formal agreement has been executed, finalisation of the transaction is subject to the
proposed admission of Uranio Limited to the official list of the ASX no later than 23rd
November 2007.
DYL will have no representation on the Board of Uranio, nor is it involved in the application
by Uranio for admission to the ASX. DYL
Napperby (Farm-in and acquisition by Toro Energy Ltd)
Having previously announced the farm-in and acquisition by Toro of the Napperby Uranium
Project and its associated tenements EL24246 and EL24606 under the Napperby Option
Agreement (the “Agreement”).
The Boards of DYL and Toro were pleased to announce during the quarter that all preconditions
pursuant to the Agreement taking effect have been completed.
Following completion of these conditions Deep Yellow was issued 3,066,667 Toro shares
(approximately 2% of Toro’s issued capital) as consideration for the option. The shares were
issued at a deemed issue price of $0.75 each based on a 30 day volume weighted average
on the 12th February 2007 before the Agreement was publicly announced.
Deep Yellow Ltd / Dominion Mining Ltd – Western Gawler Project
DYL during the quarter, resolved to issue 21,931,651 fully paid ordinary shares to Dominion
Mining Ltd (DOM) in order to acquire a 51% interest in the uranium rights to the Western
Gawler Tenements subject to the Western Gawler Uranium Exploration and Development
Project (the Project) Heads of Agreement between DYL and DOM (ASX 22 February, 2006).
Non-Renounceable Entitlement Issue
During the quarter, DYL announced a 1:12 non-renounceable entitlement issue at 50c per
share, to raise up to approximately A$42 million.
The issue was not underwritten and Directors reserved the right to place any shortfall.
On 25 July 2007 DYL announced that the entitlement issue had closed with 63% of the
eligible entitlement taken up.
Total acceptances received were for 53,168,025 ordinary shares raising $26,584,012.00.
A decision on whether or not to place the shortfall of 31,734,049 shares has yet to be made.
Dr Leon Pretorius Further Information: Martin Kavanagh
Executive Chairman Executive Director
Deep Yellow Limited (08) 9286 6999
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information
compiled by Dr Leon Pretorius a Fellow of The Australasian Institute of Mining and Metallurgy. Dr Pretorius has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he
is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves’. Dr Pretorius consents to the inclusion in the report of the matters
based on his information in the form and context in which it appears.
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