Further sign of uranium rebound as Deep Yellow raises $40.8m

Deep Yellow ASX DYL uranium placement 2021
Following the placement and share purchase plan, Deep Yellow will have $50 million to fund definitive feasibility work and potential acquisition opportunities.

Namibia uranium play Deep Yellow (ASX: DYL) has raised $40.8 million with a placement of its shares at $0.65 each as it embarks on the definitive feasibility study of its Tumas project in the southern African country.

Shareholders will be offered an additional $2 million worth of shares at the same price as the placement.

The company says there was “significant” domestic and international interest with “quality” institutions added to its register.

The raising comes as spot uranium prices have been given a leg up by the freezing storms in the US that have caused blackouts in Texas as wind turbines froze and gas supplies faltered.

ASX uranium share prices have also recently been showing signs of revived interest.

Spot uranium price rising

The US gets about 20% of its electricity from nuclear plants and the high level of demand has been reflected in uranium prices which were up this week by 9.4% to US$32.65 per pound.

The spot price had been in a rut just below the US$30/lb mark for weeks before the cold weather hit.

Deep Yellow’s present cash balance is $50 million.

Managing director and chief executive officer John Borshoff said the raising will enable Deep Yellow to take the next major step toward establishing a tier-one uranium company.

“This impressive raising places Deep Yellow in a very strong financial position to advance our stated and differentiated growth strategy to propel the company into the top league of aspiring uranium developers,” he added.

The company’s primary objective is to become a low-cost producer with annual output of between 5-10 million pounds per annum over multiple projects.

The DFS, which is now underway at the flagship Tumas project in Namibia follows a positive pre-feasibility study that was released last week.

The PFS examined the viability of open pit mining and processing of the four Tumas deposits, within Deep Yellow’s wholly owned Reptile project.

Tumas 1, Tumas 1E, Tumas 2 and Tumas 3 are within a 30km radius of the proposed processing plant which would have a capacity of 3.75Mtpa of uranium-bearing ore.

Growth from Namibia projects and acquisitions

The PFS was based on a break-even uranium price of US$47.33/lb.

It forecasts gross life of mine revenue of US$1.89 billion to generate undiscounted after-tax cash flow of US$447.4 million.

The DFS is expected to be completed by mid to late 2022.

Deep Yellow has a dual pillar plan: to develop its existing Namibian portfolio while expanding through acquisitions of third-party projects.

“A variety of expansions opportunities exist in this period of uranium downturn and further work is required to determine the most optimal avenue to maximise shareholder return,” the company stated.

Namibia gained its independence in 1990. Before then, it was known as South West Africa, first ruled by Germany until 1915 and then under the control of South Africa.

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