Namibia Summary - January 2011

Deep Yellow Ltd (DYL’s) wholly owned subsidiary Reptile Uranium Namibia (RUN) commenced its 2011 intensive drill programmes on its tenements located southeast of Swakopmund (Figure 1) with seven RC rigs and one diamond rig operating since start-up exploration programme in mid-January.

The exploration office and laboratory complex are located in Swakopmund where RUN has an all-Namibia permanent staff of 57 running the exploration programmes plus contractor drilling and rehabilitation company personnel which total about 80 people.
 

• RUN holds 100% of four contiguous Exclusive Prospecting Licences (EPLs) covering 2,681 km² and 65% in three adjoining EPLs covering 1,323 km2.
• RUN has announced JORC Code resources totalling 155.5 million tonne at 254 ppm U₃O₈ for 39,531 tonne or 87.2 million pounds of U₃O₈.
• Uranium mineralisation occurs both as primary (in alaskite and associated with metasomatism) and secondary mineralisation (in palaeochannels, sand and calcrete).
• RUN has Namibian Ministry of Mines and Energy (MME) approval for its local Namibian and broader Community Benefit Trust participation undertakings at the project (Mining Licence) stage.
• RUN has spent in excess of N$250 million since commencing exploration in 2006. It has drilled ~ 16,500 RC and DC holes for ~ 425,000 metres.
• Further JORC Code resource estimations are pending and existing ones will be increased as drilling progresses.
• SNC Lavalin engineering consultants provided an interim Omahola Project Pre-Feasibility Study (PFS) indicating capital costs in range US$324 – US$336 and operating costs of US$24.90 to US$25.30 per pound U₃O₈.
• Targeting production 2014.
• Continued aggressive exploration drilling programme ramping up to 8-9 rigs completing up to 15,000 metres of reconnaissance and resource drilling per month.
• RUN is also evaluating a magnetite deposit located 35 kilometre inland of the deep-sea port of Walvis bay. Engineers and consultants have been appointed to complete resource estimations and a scoping study.

The Omahola Project comprises the primary mineralised INCA deposit and the secondary mineralised Tubas Red Sand (TRS) deposit about 8 kilometres to the south. The PFS is being conducted by SNC-Lavalin.

The INCA deposit is a unique metasomatic style of introduced uranium and magnetite mineralisation within a north-easterly plunging syncline with the fluids probably emanating from uraniferous alaskite intrusives. The mineralisation commences close to the surface and rapidly gets deeper until the syncline flattens out at depths of about 350 metre. The upper portions will be mined by open-cast mining methods and the deeper zones will probably require underground development pending the economics.

Magnetite may potentially be separated during processing and sold as a by-product to other uranium producers with acid leach circuits.

The TRS deposit is part of the greater Tubas palaeochannel (calcrete) prospect but is unique in that the uranium mineralisation comprises carnotite in aeolian (wind-blown) red sand located immediately south of the Tubas palaeochannel system. The sand deposit as drilled is up to 15 metre thick and contains visible organic carbon that acts as a reductant to precipitate the uranium in solution in the circulating groundwater. The low concentrations of carbonate (calcrete) in the sand mean it will be amenable to either acid or alkaline extraction of the uranium. A beneficiation pilot plant to test laboratory studies that indicate ~90% of the uranium present can be concentrated in ~20% of the mass is on site.
 

• INCA and TRS deposits have combined resources containing 8,294 tonnes (18.3 million pounds) U₃O₈, with additional resources anticipated from both deposit types.
• Production rate of 1,000 tonnes (2.2 Mlbs) U₃O₈ per annum beginning 2014 and targeting resources to provide a minimum 12 year mine life
• Open-cut mining at the INCA deposit (80% of plant feed) and simplified surface mining and beneficiation at TRS deposit (20% of plant feed)
• Conventional processing plant with crushing, grinding, sulphuric acid leach and solvent extraction followed by uranium precipitation, drying and packaging of yellowcake
• Sulphuric acid to be partially generated on-site from contained pyrite
• Iron (magnetite) anticipated to be produced as saleable by-product
• PFS capital costs estimated to be US$324 to US$336 million with 10% contingency
• PFS operating costs estimated to be US$24.90 to US$25.30 per pound U₃O₈

The timeline for completion of the PFS has been extended to the 2nd Quarter 2011 in order to evaluate the inclusion of material from the recently discovered Ongolo Alaskite project as an additional source of ore for the Omahola Project. Ongolo Alaskite offers the potential to increase the production rate and/or extend the life of the project. Uranium mineralisation at Ongolo is metallurgically compatible and of similar uranium grade (~400 ppm U₃O₈) to INCA and is currently being drilled for an initial Mineral Resource estimate in March 2011.

This extensive Tubas-Tumas palaeo-river system has a cumulative length of about 80 kilometres in the RUN tenements and the mineralisation style is the same as at Langer Heinrich Uranium. In the western or Tubas section the resource estimate totals 38.9 million pounds of U₃O₈ at a grade of 228 ppm with a higher grade sub-set of 22.9 million pounds U₃O₈ at a grade of 455 ppm. The present resource for the eastern or Tumas section is 11.9 million pounds of U₃O₈ at 366 ppm (Figure 1).

The combined higher grade resource sub-set for Tubas-Tumas totals 34.8 million pounds of U₃O₈ at 420 ppm.

Tumas Zone 3 has a current Exploration Target Range of 10 to 30 million tonnes at a grade of 300 to 400 ppm U₃O₈ at 200 ppm cut-off in accordance with the JORC Code and will be drilled in detail from March 2011.
 

In April 2010 RUN announced the discovery of a high grade alaskite zone in the northern sector of EPL 3496 approximately 15 kilometres NNE of the INCA deposit. The discovery hole ALAR13 returned 89 metres at 503 ppm U₃O₈* from 128 metres. Previous widespaced reconnaisance drilling by RUN in 2007/8 in this area had returned ‘typical’ low-grade wide alaskite intersections of around 200 ppm U₃O₈.

Following up the results from ALAR13 a programme of widespaced regional lines (850 metres) outlined a 2 kilometre strike zone with numerous plus 400 ppm U₃O₈ intercepts such as:

• ALAR 46 11 metres at 510 ppm U₃O₈ from 147 metres
• ALAR 47 14 metres at 522 ppm U₃O₈ from 192 metres
• ALAR 62 29 metres at 511 ppm U₃O₈ from 138 metres
• ALAR 125 16 metres at 964 ppm U₃O₈ from 68 metres
• ALAR 126 27 metres at 692 ppm U₃O₈ from 171 metres

* All U₃O₈ assay results are chemical fusion - XRF

A decision was made in early December 2010 to fast track drilling with five RC rigs and one diamond rig on a nominal 80 metre x 50 metre grid spacing to JORC Code standard to provide an initial resource estimate by end March 2011 (Figure 2).

It is envisaged that open pit high grade alaskite mineralisation will supplement production from the INCA pit. Testwork on a blend of INCA and Ongolo ore is currently being undertaken by Mintek in South Africa.