Deep Yellow Ltd.

Deep Yellow Limited is an advanced-stage uranium exploration and development company with a diverse portfolio of projects across Namibia and Australia. The company is positioning itself to become a major player in the global uranium market, with a focus on developing long-life, low-cost uranium operations to meet the growing demand for nuclear energy as part of the global transition to clean energy sources.

Deep Yellow's flagship project is the Tumas Project in Namibia, which has completed a Definitive Feasibility Study (DFS) and is moving towards a Final Investment Decision (FID) in Q4 CY 2024. The company also owns the Mulga Rock Project in Western Australia, which is undergoing a post-acquisition revised DFS. This is the only fully permitted uranium project in Western Australia with a granted mining lease.  These two advanced projects form the core of Deep Yellow's near-term production strategy, with a combined potential production capacity of over 7 million pounds of uranium per annum.

In addition to its advanced projects, Deep Yellow maintains a pipeline of exploration assets, including the Omahola Project in Namibia and the Alligator River Project in Australia's Northern Territory. These earlier-stage projects provide the company with significant organic growth potential and the opportunity to further expand its resource base.

Deep Yellow distinguishes itself in the uranium sector through its experienced management team, led by industry veteran John Borshoff, who has a proven track record in uranium exploration, development, and production. The company's strategy is centered on creating a multi-project, globally diversified uranium platform capable of delivering long-term, stable supply to meet the anticipated growth in uranium demand.

The global uranium market is at a critical juncture, with supply constraints meeting rapidly growing demand driven by the resurgence of nuclear power as a clean energy solution. Several factors are converging to create a compelling opportunity for well-positioned uranium companies like Deep Yellow:

• Nuclear Renaissance: Governments worldwide are increasingly recognizing nuclear power as a crucial component in achieving climate goals and ensuring energy security. The pledge by 22 countries at the UN's COP28 conference to triple global nuclear energy capacity by 2050 underscores this shift in sentiment.
• Supply-Demand Imbalance: Years of underinvestment in new uranium projects, coupled with the depletion of secondary supplies, have created a significant supply gap. The World Nuclear Association forecasts uranium requirements of 280-320 million pounds by the late 2030s, far exceeding current global production of around 150 million pounds.
• Geopolitical Factors: Concerns over the reliability of uranium supplies from traditional sources like Russia, Kazakhstan, and Niger are driving utilities to seek more diverse and secure supply options.
• Rising Uranium Prices: The spot price of uranium has seen a substantial increase, recently ranging between $80-$106 per pound, reflecting the tightening market conditions and creating a more favorable environment for new project development.

Deep Yellow is well-positioned to capitalize on these market dynamics. With two advanced projects in Tier-1 mining jurisdictions, the company offers potential investors exposure to near-term production in a sector with strong fundamentals. The Tumas Project in Namibia, with its completed DFS and 22.5-year mine life, provides a clear path to production. Meanwhile, the Mulga Rock Project in Western Australia offers additional upside through its polymetallic potential, including critical minerals and rare earth elements.

Deep Yellow's management team is one of its key strengths, bringing extensive experience in the uranium sector and a proven track record of developing and operating successful uranium mines. The team is led by John Borshoff, Managing Director and CEO, who has 48 years of uranium industry experience. Borshoff is the founder and former CEO of Paladin Energy, where he led the company from explorer to producer status.

The board is chaired by Chris Salisbury, who brings 30 years of experience from Rio Tinto, including 12 years in the uranium sector. This combination of Borshoff's entrepreneurial drive and Salisbury's major mining company experience provides a balanced leadership approach.

The executive team includes several ex-Paladin professionals, ensuring continuity of expertise and a shared understanding of the uranium market dynamics. Key members include Gillian Swaby as Executive Director, Ed Becker as Head of Exploration, and Darryl Butcher as Head of Project Development. The team's collective experience spans over 500 years in the uranium industry, covering all aspects from exploration and development to marketing and finance.

As the company now embarks on developing the Tumas Project, the team has been expanded to include additional ex-Paladin professionals with direct uranium construction experience. This is being led by the appointment Jim Morgan as Head of Project Delivery.

This depth of experience is particularly valuable in the uranium sector, where specialized knowledge is critical due to the unique characteristics of uranium mining and the complexities of the nuclear fuel market. The team's track record of successfully developing and operating uranium mines, particularly in Africa, provides confidence in their ability to execute Deep Yellow's growth strategy.

Deep Yellow's growth strategy is centered on becoming a tier-one uranium producer through a combination of organic growth and strategic acquisitions. The company's multi-faceted approach prioritizes near-term production, with a primary focus on advancing the Tumas Project in Namibia. Having completed the Definitive Feasibility Study and secured a mining licence, Deep Yellow is targeting a Final Investment Decision in Q4 CY 2024, aiming to commence production in the second half of 2026. This project alone has the potential to produce 3.6 million pounds of uranium per annum, marking a significant step towards the company's production goals.

Simultaneously, Deep Yellow is advancing its project pipeline, with particular emphasis on the Mulga Rock Project in Western Australia. A revised DFS is currently underway, with completion expected in Q3 2025. This project not only offers additional uranium production potential but also provides exposure to critical minerals and rare earth elements, potentially enhancing project economics and strategic importance. This diversification of resources adds another layer to Deep Yellow's growth strategy, potentially opening up additional market opportunities.

The company continues to invest in exploration activities across its portfolio, recognizing the importance of maintaining a robust pipeline for future growth. The Omahola Project in Namibia and the Alligator River Project in Australia's Northern Territory offer significant potential for resource expansion and new discoveries. These projects provide Deep Yellow with a pipeline for future development and production growth, ensuring long-term sustainability and growth prospects.

Deep Yellow remains open to value-accretive acquisition opportunities that align with its strategy of building a globally diversified uranium platform. This approach to strategic M&A allows the company to potentially accelerate its growth and achieve economies of scale, further solidifying its position in the global uranium market. By remaining flexible and opportunistic in its approach to acquisitions, Deep Yellow can respond to market dynamics and capitalize on emerging opportunities.

The company's development timeline is strategically aligned with projected uranium market dynamics. By targeting production commencement in 2026 for Tumas and potentially 2028 for Mulga Rock, Deep Yellow is positioning itself to capture the anticipated upswing in uranium prices driven by growing demand and supply constraints. This market timing strategy could potentially maximize returns and establish the company as a key player just as the market enters a period of expected growth.

Through this multi-pronged strategy, Deep Yellow aims to establish itself as a significant player in the uranium sector, capable of providing long-term, reliable uranium supply to global utilities. The company's focus on geographic diversification and project pipeline development provides flexibility and reduces single-project risk, creating a more robust and resilient business model. This comprehensive approach to growth positions Deep Yellow to potentially capitalize on the evolving dynamics of the global uranium market while building a sustainable and diversified uranium production platform.

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As of September 2024, Deep Yellow reported a strong financial position with approximately A$247 million in cash and cash equivalents. This substantial cash reserve provides the company with a solid foundation to advance its projects, particularly the Tumas Project, towards production without immediate need for additional funding.

The Tumas Project's economics, based on the December 2023 re-costed DFS, demonstrate robust potential returns across various uranium price scenarios. At a base case price of US$75/lb, the project shows a post-tax NPV of US$570 million and an IRR of 27%. These metrics improve significantly at higher uranium prices, with the NPV reaching US$878 million and the IRR rising to 36.1% at US$90/lb.

The project's anticipated C1 costs of US$34/lb (with vanadium by-product credits) position Tumas competitively on the global cost curve. This cost structure should allow for healthy margins even in more conservative uranium price environments.

While detailed financials for the Mulga Rock Project await the completion of the revised DFS, the project's polymetallic nature offers potential for enhanced economics through the production of critical minerals and rare earth elements alongside uranium.

Deep Yellow's market capitalization has seen significant growth, increasing from approximately A$410 million to A$1.4 billion over the past year. This growth reflects both improving uranium market conditions and the company's progress in advancing its projects.

It's important to note that as Deep Yellow transitions from explorer to producer, significant capital expenditure will be required. The initial capital cost for Tumas is estimated at US$360 million (excluding pre-production operating costs). The company's strong cash position and the potential for project financing should provide multiple options for funding this development.

Deep Yellow Limited presents a compelling investment opportunity in the uranium sector, positioned at the nexus of growing global demand for clean energy and constrained uranium supply. The company's combination of near-term production potential, experienced management, and strategic growth plans sets it apart in the uranium exploration and development space.

The Tumas Project in Namibia offers a clear path to production, with robust economics even at conservative uranium prices. The Mulga Rock Project in Western Australia provides additional growth potential and diversification, both geographically and in terms of commodity exposure. Deep Yellow's exploration pipeline, including projects like Omahola and Alligator River, offers further upside for long-term resource growth.

The company's management team, led by industry veteran John Borshoff, brings unparalleled experience in uranium project development and operation. This expertise is crucial in navigating the technical, regulatory, and market challenges specific to the uranium sector.

Deep Yellow's strong financial position, with A$265 million in cash, provides a solid foundation for advancing its projects towards production. The company's growth strategy aligns well with projected uranium market dynamics, positioning it to potentially capture significant value as new supply becomes increasingly critical to meeting global demand.

While risks exist, including uranium price volatility and the inherent challenges of mine development, Deep Yellow has demonstrated a thoughtful approach to risk mitigation. The company's focus on Tier-1 jurisdictions, phased development approach, and potential for diversified revenue streams through by-products all contribute to a more robust business model.

For investors seeking exposure to the uranium sector, Deep Yellow offers a compelling mix of near-term production potential, significant resource base, experienced management, and strategic positioning in a market poised for growth. As the global push for clean energy intensifies and nuclear power plays an increasingly important role, Deep Yellow stands to benefit as a future supplier of this critical fuel source.