WELCOME TO DEEP YELLOW LIMITED

ABN: 97 006 391 948

PROJECTS

DIVESTMENT OF NON-CORE ASSETS (September 2008)

Above:  Divestment - Joint Ventures

In mid 2007 the DYL Board reviewed its portfolio of exploration projects Australia wide and resolved to consider the divestment of 'non-core' assets.

The Board's rationale for the sale of these non-core projects was to allow DYL to focus on its advanced exploration projects in Namibia, the Mt. Isa district and other priority regional targets close to already established DYL bases throughout Australia. In addition DYL would endeavour to realise an immediate return in cash terms from the projects and deploy this cash to priority projects. Last but not least there is the opportunity to further benefit DYL's shareholders through the retention of a significant direct stake in each project and a retained equity interest with the purchaser.

The divestment resulted in a joint venture with Uranio Ltd on properties in Western Australia and South Australia and with Rum Jungle Uranium Ltd over tenements in the Northern Territory.

DYL is negotiating with unlisted Dragon Energy Ltd with respect to tenements in Queensland. In addition DYL has entered into agreement with WCP Resources Ltd over the phosphate potential on its Sherrin Creek EPM to the west of Mt Isa.

Uranio Limited Agreement

As announced to the ASX (22 May 2007) DYL entered into a JV agreement with Uranio Ltd (Uranio) over the Gardner Range, Ponton North and Anketell properties in Western Australia and the Siccus JV in South Australia. DYL received an initial payment of $500,000 on signing the agreement.

With the admission of Uranio to the ASX (29 January 2008) a joint venture was formed with Uranio holding 70% and DYL 30% in the divestment tenements. In the case of the pre-existing Siccus JV, Uranio holds 70%, DYL 20% and Signature Resources retain their 10% holding. As part of the settlement Uranio issued DYL with 3,849,379 shares and 3,848,379 options plus $500,000 in cash.

Consideration for this transaction was $2 million cash and the equivalent of 9.8% in post IPO equity in shares and matching options. DYL has received the shares and options and $1 million in cash, the balance of $1 million has been deferred for 12 months (21 January 2009) and is attracting interest at the rate of the official cash rate of The Reserve Bank of Australia plus 2%.

Uranio has over the last 12 months carried out drilling on the Siccus JV tenement and flown an airborne electromagnetic survey over the Ponton North project area.

Uranio is planning diamond and RC percussion drill programmes on the Gardner Range Project in Western Australia. The drilling is following-up on previously intersected mineralisation at the Don Prospect within E80/3275 where drilling in the 1980s returned 0.44 m at 1.5% U3O8 from 40.5 m depth.

At the Ponton North Project in the Eastern Goldfields, Uranio will drill 3,500 metre aircore programme targeting uranium mineralisation within a palaeochannel system contiguous with the Mulga Rock uranium deposit.

Details of the projects and upcoming drill programmes can be found on the Uranio website at www.uranio.com.au

Rum Jungle Uranium Agreement

Deep Yellow reached agreement with Rum Jungle Uranium Limited (RJU) whereby RJU could enter into a Joint Venture with Deep Yellow on six exploration licences in the Alice Springs District (ELs 10360, 10401, 10404, 22918, 22923 and 25101 - ASX 30 August 2007).

RJU was admitted to the ASX on 21 November 2007 and in accordance with the Agreement they acquired 50% interest in six exploration licences.

The principal commercial terms were that RJU issue DYL with 2 million ordinary shares and 2 million options to acquire ordinary shares upon listing on the ASX so acquiring a 50% interest in the tenements. RJU can go on to earn a further 20% interest in the Joint Venture tenements by spending $2 million on exploration within four years.

RJU is planning to commence drilling on the Arltunga (EL 22918) and Ambulindum (EL 10360) tenements following clearance from the Mines Department and the Central Land Council. Aircore drilling totalling 3,000 m in 150 holes at Arltunga and 1,500 m in 40 holes at Ambulindum is planned to commence in September 2008.

Details of the Alice Springs programme can be found on RJU's website at www.rumjungleuranium.com.au.

Dragon Energy IPO (100% DYL)

The Company announced to the ASX (12 December 2007) that it had entered into an agreement with Dragon Energy Ltd (Dragon) whereby they could acquire 75% of each of the DYL properties by sole funding expenditure on the tenements. Dragon will also have the opportunity to maximise its ownership of the properties in the future by paying for the proven in-ground resource.

The divestment tenement package comprises:

• Granted EPM's 15072, 15494 and 15249 and Application 16008 in North West Queensland 

• Granted EPM's 15615, 15620, 15621 and 15622 and Application 15624 in South East Queensland

Targets include shallow secondary uranium deposits associated with younger cover sequences to the Mt Isa Inlier basement rocks and uranium mineralisation in concealed Tertiary channels draining 'hot granites' in the Croydon district.

In the case of the Durong Project in South East Queensland there is an opportunity to explore for roll front uranium mineralisation in a buried palaeochannel setting as delineated by a recently flown airborne electromagnetic survey carried out by DYL.
 

Above:  Queensland Divestments

Queensland Divestments

The principal commercial terms are as follows:

A. Consideration

1. A$500,000 in cash made up as follows:

a) Dragon has made an upfront payment of A$50,000 in cash on the signing of the Farm-in and Joint Venture Agreement. 
b) A final cash payment of A$450,000 will be paid by Dragon out of the financial proceeds realised from the proposed listing on the ASX.

2. During the Sole Funding Period, Dragon may earn a 75% interest in the Tenements by spending $3,000,000.
     

3. If, during the Sole Funding Period, Dragon makes a discovery in the Tenements of a JORC Code compliant inferred mineral resource of at least an aggregate of 5,000 tonne of uranium oxide, Dragon will be deemed to have satisfied the earn-in requirements in Clause 2 above and to have earned a 75% legal and beneficial interest in the Tenements.

Given Dragon's objective of becoming a uranium explorer, DYL and its shareholders will benefit from Dragon's focused efforts as DYL will remain a stakeholder in the projects going forward.

Owing to the market downturn Dragon Energy Ltd have deferred their proposed IPO listing until at least November 2008. In the meantime they are maintaining the Joint Venture tenements in good standing.

Farm Out of Rights to Non Uraniferous Minerals at Sherrin Creek

DYL's wholly owned subsidiary Superior Uranium Pty Ltd (Superior), entered into an agreement with WCP Resources Ltd (ASX Code: WCP) to provide WCP with the option to earn a 100% interest in all minerals (other uranium and associated minerals) on the Company's Sherrin Creek Prospect (Queensland tenement EPM 16007).

The EPM 16007 tenement - 70 kilometres northwest of Mount Isa - covers 351 square kilometres in an area with phosphate deposits in the Georgina Basin, Queensland. WCP is particularly interested in extending known phosphate mineralisation on the EPM. Previous drilling on EPM 16007 returned encouraging intercepts of P₂O₅ with hole Y105 containing 14.5 metres of 12.93% P₂O₅ from 16.8 metres depth, including 9.9 metres at 15.38% P₂O₅ from 19 metres depth; and hole SC27 containing 11.9 metres at 15.41% P₂O₅ from 33.8 metres which includes 7.9 metres at 21.71% P₂O₅ from the same depth.

The terms of the agreement provide for WCP to earn a 100% interest in all minerals contained within EPM 16007, with the exception of any uranium and associated deposit minerals which shall remain 100% owned by Deep Yellow. Consideration for the earn in comprises two tranches:

• an upfront payment of $100,000, which has been satisfied by the issue of 1,325,590 ordinary shares in WCP (escrowed for twelve months); and

• an additional payment of $250,000 worth of WCP's ordinary shares at a price equal to the Company's 5 day VWAP in the event it elects to retain its interest in twelve months time.

WCP is responsible to ensure that the statutory expenditure levels and annual work programs for the tenement are met.