Napperby Project - September 2011

In early May Deep Yellow received notice from Toro Energy Limited (Toro) that it would not be exercising its purchase option on the Napperby uranium project and would allow the purchase option period to expire on the close of business on 4 May 2010.

As a result of this decision, the project will once again become fully available to DYL and DYL will initiate an evaluation programme aimed at determining the highest value option to the Company. The Company will also consider the option of packaging the project with other DYL exploration tenements in the Northern Territory.

While it is disappointing that Toro has reached the decision not to exercise its purchase option, DYL is confident that Toro’s diligent efforts and investment across the past three years have added considerable technical knowledge to the project and provided important insights into the potential future value of the project.

One important example of Toro’s contribution to the value of the project was the delineation work on the deposit that resulted in classifying, as Inferred resources under the JORC Code, a total of 9.34 Mt @ 359 ppm for 3,351 tonnes (7.39 Mlbs) contained uranium oxide (U₃O₈) using a 200 ppm cut-off grade. This work was done on approximately half of the historic mineralised area and correlates well with the results of previous work carried out on this portion of the deposit. Additional drilling is required to complete the evaluation of the balance of the historic mineralised area to JORC Code standard.

Resource Drilling

A drilling programme utilising both aircore and sonic drilling was completed during 2008 at Napperby by Toro Energy Ltd with the aim of increasing the existing JORC resource and assessing extensions to the published resource. Aircore drill holes were drilled at nominal 100 metre centres and logged with a calibrated gamma probe. Previously reported disequilibrium studies have provided confidence in eU₃O₈ values at Napperby and gamma data are universally corrected for disequilibrium by a factor of 1.4. Any aircore drill hole reporting greater than 100 ppm eU₃O₈ over 1 metre was twinned with a sonic drill hole that provided samples for assay as well as additional calibrated gamma data.

Resource Upgrade

A JORC compliant update of the Napperby Resources was completed by SRK Consulting and included a revised geostatistical interpretation and updated estimation of the Napperby resource for the area outlined on. This update utilised all the assay data obtained from the Toro Energy 2007 and 2008 drilling programmes as well as assay data from the DYL drilling in 2006.

Approximately 50% of the mineralisation previously identified by Uranez now been redrilled. Assayed grade x thickness from the 2006, 2007 and 2008 drilling campaigns is shown in Figures 2 and 3.