Zacks Small Cap Research – DYLLF: Deep Yellow Issues Quarterly Report – Review of recent achievements as company continues to proceed toward expected production at Tumas (Namibia) in 2026; The spot price of uranium exceeded US$100/lb. during January 2024. – Earn Charter

By Steven Ralston, CFA



Deep Yellow Ltd. (OTCQX:DYLLF) (ASX:DYL) is unique among junior mining companies: the company is being positioned to provide a leveraged opportunity to participate in all phases of the expected upswing in uranium prices. Management’s Dual Pillar strategy is designed to deliver both organic and inorganic growth by advancing the company’s Namibian and Australian projects through the production stage and by acquiring additional projects as the industry consolidates. Management is focused on becoming a low-cost, Tier I uranium producer, defined as a multi-project producer of uranium with the capacity to deliver 5-10 million lbs. of uranium annually.


Deep Yellow recently filed its Quarterly Activities Report for the period ending December 31, 2023.

Tumas Project Update

A Mining License (ML 237) was issued by the Namibian Ministry of Mines and Energy issued Mining , which is valid September 21, 2043. This is a significant milestone that allows Deep Yellow to continue to advance toward production.

A Definitive Feasibility Study Re-Costing Study was completed, which updated the base case price of uranium to US$75/lb. from US$65/lb. U308 (a conservative increase considering the spot price has exceeded US$100/lb.) and adjusted the initial cost estimates to reflect the moderating rate of inflation and an abatement of the supply chain pressures. The base case IRR increased from 19.2% to 27.0%.The Re-Costing Study continues to validate the commercial viability of the Project.

Between late March and mid-August 2023, Deep Yellow completed a 235-hole (8,017m) RC drill program that targeted areas west of Tumas 3 East and Tumas Central. 109 holes explored for additional resources (spaced lines between 200m to 1,000m) and 126 holes focused on expanding the current resource, along line and holes spacing of 100m. Based on the results of the drill program, the Indicated MRE increased 10.4% from 54.9 Mlb at 320 ppm eU308 to 60.6 Mlb at 325ppm eU308. The Inferred MRE increased 24.0% from 5.0 Mlb at 219 ppm eU308 to 6.2 Mlb at 170ppm eU308.

Management continues to identify additional resources through drilling programs in order to achieve its goal of extending the LOM of the overall Tumas Project to over 30 years from the current level of 22.5 years.

The timeline for the Final Investment Decision is being maintained with the FID expected to be made during the third calendar quarter of 2024.

Mulga Rock Project Update

In late October, management provided an update on the metallurgical test work program being conducted for the Mulga Rock Project (Western Australia). Thus far, the results are encouraging that critical minerals (base metals and rare earth elements) will be able to contribute additional value to the uranium resource.

Fresh samples were collected from the two drilling campaigns that were completed in late-2022 (from all 63 air-core holes) and mid-2023 (from 233 of the 656 close-spaced air-core holes) at the Ambassador and Princess deposits.

Thus far, the metallurgical test work for Mulga Rock indicates that:

• an overall uranium recovery rate above 90% is probable

overall recoveries for base metals (copper, nickel, cobalt and zinc) and rare earth elements (neodymium, praseodymium, terbium and dysprosium) are above 70% and

• management expects that a revised DFS will result in an improved economic outcome

The metallurgical test work program continues to proceed.

NOVA JV Update

Deep Yellow is the manager and 39.5% interest holder of the 556.8 square km NOVA JV, with JOGMEC (Japan Oil, Gas and Metal National Corporation) having earned a 39.5% interest in the project through exploration and development expenditures of AUD$4.5 million, with Nova Energy (a subsidiary of Toro Energy Ltd) holding a 15% interest and Sixzone Investments Pty holding a 6% carried interest.

An 8-hole (1,558m) follow-up drill program at the Barking Gecko prospect was conducted between September 22, 2023 and November 10, 2023. The drill program successfully tested for an extension of uranium mineralization to the north of the Barking Gecko prospect with four holes intersecting multiple low-grade intervals and confirming the continuation of the mineralization. The best intersections graded between 242ppm and 382ppm eU308. The area remains prospective.


The company is well funded with a cash balance of AUS$25.248 million as of December 31, 2023.

Equity Related

Insider ownership has increased over the last six months from 9.51% to 10.56% of the shares outstanding.

During the same time period, the short interest has increased from 0.2 days to 21.8 days. If management successfully achieves commercial production, as we expect, the high level of short interest will exacerbate the upward price momentum of the company’s stock.


Tumas Project

Final Investment Decision (FID) expected to be made during the 3rd calendar quarter of 2024

Mulga Rock Project

• Additional results of metallurgical test work during 1Q 2024

• An updated MRE in the first quarter of 2024, with some Inferred Uranium Resources expected to be upgraded to the Indicated category, along with the addition of critical minerals

• A revised DFS for the Mulga Rock Project, including base metals and rare earth elements (REE) in addition to uranium, is expected to commence early in 2024 with expectations of it being completed in mid-2025.

Alligator River Project

• Desk top prospectivity appraisal to define exploration corridors in 1Q 2024

Tubas Calcrete Project

• The Tubas Calcrete Project is being reviewed in order to update the MRE from JORC (2004) to JORC (2012)


On January 4, 2024, Citigroup Global Markets Australia Pty Limited reported that three (3) entities affiliated with Citibank/Citigroup Global now control 52,579,906 shares (6.88% of the voting power) of Deep Yellow Limited as of Jan 2, 2024. We interpret that the increase in equity ownership is a precursor to securing financing for the Tumas Project.


Since the World Nuclear Association’s Symposium held in early September 2023, the spot price of uranium oxide has increased 65%. The stocks of almost all uranium junior mining companies have followed suit. The driving force has been the recognition of the tightening supply/demand structure of uranium market with the projected demand by nuclear power plants increasing and the sequestration of uranium by physical funds (such as the Sprott Physical Uranium Trust and Yellow Cake Plc) continuing. The change in sentiment of utility buyers of long-term contracted uranium has resulted in the volume of contracted volume increasing to the highest level in over a decade. Furthermore, at COP28 (28th Conference of the Parties of the United Nations Framework Convention on Climate Change), which took place in Dubai between November 30 to December 12, 2023, 22 countries pledged to triple the nuclear capacity by 2050.

In 2023, the spot uranium price increased 90.9% from US$47.68/lb. to US$91.00/lb. On January 17, 2024, the spot uranium price reached US$106.50/lb., a 17-year high. Meanwhile Deep Yellow’s stock (OTCQX: DYLLF) rallied over 57.4% from $0.465 to $0.732, and a further 30.7% to $0.957 thus far in 2024.


Broadly speaking, the public uranium companies can be grouped into three segments: producers, development companies and exploration companies. Producers are actively mining and generating revenues. Exploration companies are prospecting and/or drilling to establish mineral resources. In between these two segments are the development companies that already have established resources and are advancing through the process to bring a mine in operation, generally from the point of initiating a Pre-Feasibility Study to the actual construction of a mine. The comparable companies to Deep Yellow fall into this category.

Further, the comparable companies have been narrowed through quantitative factors, particularly those with a market capitalization over $500 million and trading above $0.90 per share. This process captures a range of well-funded junior uranium development companies, which are listed in the table above. Currently, the P/B valuation range of these comparable companies is between 4.48 and 9.08. With the expectation that Deep Yellow’s stock will attain a mid-second quartile P/B ratio of 7.2, our comparable analysis valuation price target is US$2.30.

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