WELCOME TO DEEP YELLOW LIMITED

ABN: 97 006 391 948

PROJECTS

NORTHERN TERRITORY (May 2009)

Figure 1: Northern Territory Tenements. Click to enlarge

• Operational base in Alice Springs

• Defined projects cover 12,851 km²

• DYL has 100% rights to uranium within Tanami Gold's tenements covering an additional 15,929 km²

• Napperby Farm-Out/Sale to Toro Energy Ltd

• Ongoing CLC and Landowner negotiations for access to prospective areas

DYL's exposure to the highly prospective Tanami - Arunta uranium province totals approximately 28,780 km2 comprising:

• 17 granted exploration licences covering 6,877 km² held 100%.

• 13 exploration licence applications covering 5,974 km² held 100%.

• 100% of the uranium rights to a further 15,929 km² of granted exploration licences and applications held by Tanami Gold NL (TGNL).

The target within the majority of the tenement areas is calcrete-hosted uranium mineralisation similar to DYL's Napperby deposit. The potential for this style of mineralisation occurring in buried (palaeo) channels can be rapidly assessed by airborne electromagnetic surveys and 1 to 2 km spaced shallow drill traverses. Other targets include roll-front uranium mineralisation at Mt Liebig located 250 km WNW of Alice Springs.

DYL has been constantly assessing and prioritizing target areas under granted tenure or applications within the Territory. Since early 2005 DYL has fully evaluated and 'relinquished' over 29,000 km² of unprospective ground (subject to the agreement with TGNL) and made application for 5,974 km² of new ground.

NAPPERBY PROJECT
(DYL 100% - Toro Energy Limited Option to Purchase)

Drilling at the Napperby Uranium Project, 150 km northwest of Alice Springs was completed in early September 2008 (Toro Energy ASX 30 September 2008). A total of 333 sonic drillholes for 3,300 metre and 784 aircore drillholes for 9,723 metre were completed. The majority of these holes were drilled to assess extensions to the previously reported, JORC Inferred Mineral Resource of 4.6 million tonne at 305 ppm (0.031%) U3O8 for 1,420 tonne (3.13 million pounds) of contained uranium oxide (using a 200 ppm U3O8 cut off: refer to Toro Energy ASX Release 25 July 2008).

The Napperby Project is a historic mineralised zone discovered and explored by CRA Exploration and Uranerz in the late 1970's early 1980's. The project comprises an extensive, consistent mineralised zone within 3 to 7 m depth from surface in semi-consolidated and unconsolidated sediments. The project is close to infrastructure, being 150 km NW of Alice Springs along the sealed section of the Tanami Highway, within 20 km of the Alice Springs to Darwin gas pipeline and with access to the main N-S railway through Alice Springs.

Toro Energy have an Option Agreement with Deep Yellow Ltd over the Napperby Project which allows 100% purchase of the project at a capped price per resource pound (lb) basis at any stage, over a three year period.

Toro recently announced (TOE ASX 3 March 2009) a resource upgrade for the Napperby uranium deposit which now totals 9.34 million tonnes at 359 ppm (0.036%) U3O8 at a cut-off grade of 200 ppm U3O8 for 3,351 tonne or 7.39 million pounds of contained U3O8.  Toro is targeting between 5,700 and 6,200 tonnes of U3O8 at Napperby.

Figure 2: Completed Toro Energy 2008 drilling showing grade x thickness (GT)  using corrected eU3O8 equivalent grades

Notes on the analysis in Figure 2:

1) Grade x thickness (GT) - the product of grade (U3O8 ppm) and ore thickness (metres) is used as an indicator of potential mineability.

2) eU3O8 grades shown here are for indicative mineralisation purposes only, and samples from the sonic drilling have been gathered under QAQC procedures and dispatched for assay. Initial results are pending. Gamma eU3O8  grades are currently not used by Toro Energy for resource calculation purposes, but this will depend if ongoing disequilibrium work provides the basis for increased confidence in grade estimation from gamma data.

3) Data were generated by applying a cut-off of 130 ppm eU3O8  to the gamma derived grades. GTs were then calculated and a grid applied. The lowermost GT increment in this figure, 100 ppm.m, translates to a grade of 130 ppm with a thickness of 0.75m.

The gamma equivalent grade x thickness from the 2007 and 2008 drilling to date continues to show very good continuity along the palaeochannel (Figure 2).

The Central Land Council (CLC) and Tory Energy hosted a traditional owners' meeting at Laramba with up to 70 traditional owners attending.  Information was provided on the Napperby project and a site visit was also conducted.

Toro Energy have advised that baseline environmental and radiometric studies have also been completed.  These will feed into a planned Scoping Study for the project, during early part of 2009.

Scoping Study

URS Australia has been commissioned by Toro to undertake a scoping study to determine viable development options for the Napperby Uranium Project in the Northern Territory.  The scoping study is expected to be completed during the first quarter of 2009.  Toro will use the outcome of the scoping study to determine the Company's development strategy for Napperby.

As part of its study charter, URS will consider:

• mine development options

• preferred processing routes

• infrastructure requirements

• environmental management and

• likely capital and operating costs.

It will draw on new metallurgical test results that are currently being finalised by Amdel Ltd, and the new resource estimation upgrade for Napperby including the 2008 drilling results.

Prior to commissioning the scoping study, Toro had collected preliminary baseline environmental data and completed a preliminary social impact study.  No unmanageable environmental or social impacts were identified.

The project is accessible by 175km of sealed road from Alice Springs and is only 15km from the Palm Valley to Darwin gas pipeline.

Metallurgical Testing

The second round of metallurgical testing is in progress at an independent testing facility, Amdel Ltd, to build on the first set of results to determine:

• how suitable the mineralisation is to beneficiation

• the optimum conditions to alkaline leaching and

• the applicability of heap leaching by completing column testing.

Scrubbing and leaching test work has been completed with column tests still continuing.

Community Consultation

Consultation continued with traditional owner groups and the Northern /Territory Government as to how a project may be developed and the required approvals pathway.

 

NAPPERBY DEEPS PROJECT 
(DYL 50% - Tory Energy Limited 50%)

The Napperby Deeps Project agreement is part of the Napperby Option Agreement (4 May 2007) allowing for exploration for non-calcrete uranium mineralisation with 50/50 funding contributions by DYL and Toro.  The JV will target IOCG±U style mineralisation within Proterozoic terrane below about 150 metre of cover sequence.  A gravity survey of magnetic targets is planned for next quarter to assist with drill hole targeting.

Figure 3: Planned AEM and Drilling Programmes, Alice Springs District

 

MT LIEBIG PROJECT

The Mt Liebig Project located 250 km WNW of Alice Springs comprises two exploration licences contiguous to the SW of the Napperby tenements.  The target is shallow calcrete hosted uranium mineralisation as per Napperby and/or Tertiary sandstone hosted roll front uranium mineralisation at depth.  The tenements now 100% DYL were previously held by Tanami Gold.

A meeting with Traditional Aboriginal Owners to negotiate access for uranium exploration took place on 21 November 2007. The Company has recently been informed that its proposal to exploration for uranium and possible future mining has been accepted by the Traditional Aboriginal Owners.  A draft agreement will be forwarded to DYL shortly.  Permission has been received to fly an AEM survey over the tenements in August 2008 and DYL field crew has completed a reconnaissance visit to check access for the proposed drill programme.

Work area clearance for an aircore drill programme will commence in early May.  The 100% owned project area is contiguous tot he southwest of Napperby and DYL will target palaeochannel and deeper roll-front style uranium mineralisation within the tenements.  A 5,000 metre aircore drill programme is planned for Jun-July.

 

OFFICER PROJECT

DYL received notification that its application for access to the Officer Project tenements 400 km NW of Alice Springs has been successful.  The next stage in the process is the formal documentation of an Exploration Agreement.

 
NONOUBA

The Nonouba tenement EL 24547 covering 605 km² is located 70 km SW of Alice Springs was granted on 17 August 2007. The tenement lies 60 km west along strike from the Angela-Pamela uranium prospect.

The Nonouba ground was previously explored for uranium by Uranerz from 1972-1983. Uranerz identified two prospects, "Daria" and "Nonouba", and returned assays up to 1900 ppm U3O8 over 0.5 m, hosted by carbonaceous - pyritic Undandita Sandstone. The target is roll front uranium mineralisation as delineated at Angela-Pamela.

An RC drill programme totalling 10 holes for 1,148 metre was completed in early December 2008 with 3 holes returning anomalous values (Table 1).

          Table 1: Nonouba Drill Holes 2008

RUM JUNGLE JV 
(DYL 50%)

During the Quarter Rum Jungle carried out a mapping and sampling programme in the Mordor Pound (EL 10404) following up on an earlier completed gravity survey.

Most of the gravity highs were explained by outcrops of Shonkinite on the margins of the Mordor Alkaline complex. Highly uraniferous pegmatite with field assays up to 0.7% U3O8 was found in a patchy outcrop over 50 metre strike length.

XRF field analysis also demonstrated an area of higher copper values which will be followed-up.