WELCOME TO DEEP YELLOW LIMITED

ABN: 97 006 391 948

PROJECTS

QUEENSLAND (September 2008)

Mt Isa District

DYL's Mt Isa District exploration programme covers ground held 100% and tenements subject to the NW Queensland JV with Matrix Metals Ltd and the Isa West JV with Xstrata.

Key Points

• Permanently staffed operational base in Mt Isa

• Direct ownership or access to 100% of uranium rights to over 6,200 km˛ around Mt Isa and Cloncurry

• Multiple uranium anomalies and 1970/80s drill intercepts

• Queens Gift drilling returns wide intersections in quartz-hematite breccia, e.g. 69 m at 467 ppm U₃O₈

• Miranda drilling returns wide intersections, e.g. 32 m at 625 ppm U₃O₈

• Conquest drilling returns wide intersections, e.g. 22 m at 575 ppm U₃O₈

• Isa West surface samples returning highly anomalous results ahead of drilling

Mt Isa District Tenements

Within the Mt Isa district DYL carries out exploration on its 100% owned tenements and on two joint venture areas. In agreement with Matrix Metals Ltd, DYL can earn the rights to 100% of the uranium within Matrix's extensive tenement holding to the north and north-east of Mt Isa and to the south of Cloncurry. DYL is currently earning into the first tranche of the agreement, namely a 51% interest in the uranium rights. Exploration is well advanced on various tenements with two prospects (Miranda and Conquest) returning encouraging widths and grades of uranium mineralisation from RC percussion drilling.

In agreement with Mt Isa Mines Ltd, part of the Xstrata Group DYL can ultimately acquire 100% of the uranium rights over a project and immediately west of the Mt Isa minesite (ASX 21 January 2008). Exploration programmes commenced in March 2008 and targets have been developed for drilling.

Queens Gift Prospect - Prospector EPM 15070 - DYL 100%

The Queens Gift Prospect is located 70 km north of Mt Isa within EPM 15070. Surface mapping and sampling by DYL outlined a uranium mineralised zone up to 50 m wide over 1,300 m strike with a best surface composite rockchip sample assaying 2.86% U₃O₈. Previous diamond drilling by Queensland Mines Ltd (QML) in 1969 and by Agip Nucleare Australia Pty Ltd (Agip) in 1974 was all completed above 50 m vertical depth.

Some significant intercepts included:

• QML 2 - 4.57 m at 5,840 ppm (0.584%) U₃O₈ from 71.63 m 

• QML 3 - 6.10 m at 830 ppm (0.083%) U₃O₈ from 32.31 m 

• Agip 1 - 21.0 m at 470 ppm (0.047%) U₃O₈ from 41.0 m 

• Agip 2 - 4.0 m at 1,020 ppm (0.102%) U₃O₈ from 72.25 m 

• Agip 3 - 3.0 m at 900 ppm (0.090%) U₃O₈ from 61.80 m

An RC percussion drill programme totalling 47 holes for 4,930 metre was carried out over 800 m strike of the outcropping area of the 1.3 km strike radiometric anomaly with the best results coming from the Central and North anomalies. (ASX 16 October 2007)

The Queens gift diamond drill holes (sites N1 to N6). 
All have been drilled except site 4

Uranium mineralisation is hosted by altered (albitisation) basalts with quartz hematite breccia zones locally developed through the alteration zone. This metasomatic style of mineralisation is common within the Mt Isa district with the best example being Summit Resources Ltd's Valhalla uranium deposit (JORC Code 2004 compliant resource estimate - 25,970 tonne U₃O₈).

It is important to note that within some of the wider 400 ppm U₃O₈ intercepts, intervals with average grades in excess of 700 ppm U₃O₈ occur which approximates the resource grade of the Valhalla deposit. Uranium mineralisation is associated with intense hematite-magnetite alteration with a sharp western and a gradational eastern contact.

Within the North anomaly the deepest intersection is 11 m at 585 ppm U₃O₈ from 119 m downhole the centre of this intercept is 95 metre below surface with mineralisation being open to depth.
Significant assay results from the drilling are highlighted below:

• DQRC-0006   9 m at 818 ppm U₃O₈ from 35 m 

• DQRC-0013   4 m at 2,225 ppm U₃O₈ from 19 m 

• DQRC-0014   3 m at 1,407 ppm U₃O₈ from 41 m 

• DQRC-0016   13m at 438 ppm  U₃O₈ from 41 m 

• DQRC-0018   3 m at 2,330 ppm U₃O₈ from 7 m 

• DQRC-0028   8 m at 424 ppm U₃O₈ from 34 m 

• DQRC-0032   50 m at 400 ppm U₃O₈ from 1 m 

• DQRC-0033   69 m at 467 ppm U₃O₈ from 1 m 

• DQRC-0036   22 m at 325 ppm U₃O₈ from 82 m 

• DQRC-0038   20 m at 260 ppm U₃O₈ from 0 m 

• DQRC-0041   23 m at 409 ppm U₃O₈ from 108 m 

• DQRC-0044   11 m at 585 ppm U₃O₈ from 119m 

• DQRC-0047   37 m at 538 ppm U₃O₈ from 41 m

 

Close-up of hematite alteration – brecciation – Hole QGDC001

 

Queens Gift Diamond Drilling

As follow-up to the 2007 RC percussion drill programme a total of six diamond holes for 969 metre was completed (including one abandoned hole) (ASX 21 August 2008).

Assay results have been received from three of the six drill holes. QGDC001 was drilled to determine the extent and orientation of the mineralised zone that was encountered by 2007 RC percussion drilling. Mineralisation was intersected down-plunge of previously reported holes DQRC0032 and DQRC0033. The mineralised zones are foliated and often brecciated with pervasive hematite and carbonate alteration (see photograph of core).

Holes QGDC002 (an undercut of DQRC0047) and QGDC006 are located 200 metres and 300 metres south of QGDC001 respectively and intersected similar styles of mineralisation as in QGDC001, confirming previous RC percussion drill intersections.

Further diamond drilling and RC percussion is planned for the Queens Gift Prospect area later in the field season following priority drill programmes on the Ewen and Isa West Project tenements.

Diamond Drilling Queens Gift Prospect

Queens Gift Diamond Drill Results

Drillhole	UTM		Azi (T)	Dip	TD (m)	Depth (m)		Interval (m)	U3O8* (ppm)
	East	North				From	To
QGDC001	319412	7781533	354	-60	206.1	125	150	25	338
QGDC002	319497	7781314	354	-60	180.7	74	97	23	634
QGDC006	319502	7781233	060	-60	251.7	154	161	7	451

* XRF Chemical Assays 

The Directors consider that these early results from Queens Gift indicate the prospect has the potential to host an economically viable uranium deposit.


NW QUEENSLAND JOINT VENTURE (Matrix Metals Ltd)

DYL commenced exploration on the joint venture tenements in November 2006 with RC percussion drill programmes over the Lochness and Miranda Prospects. In August 2007 DYL undertook the first of two helicopter supported reconnaissance mapping and sampling programmes over the extensive joint venture tenement holdings (ASX 5 October and 13 November 2007) which resulted in the delineation of drill targets throughout the tenements with the main cluster being within the EPM 14916 (Ewen) located 85 km north of Mt Isa.

Ewen Project EPM 14916 Prospect Locations

An initial and limited RC percussion drill programme on its Conquest Prospect returned highly encouraging assay results (ASX 2 January 2007). Previous exploration in the prospect area was carried out by Mineral Deposits Limited and Agip Nucleare (Agip) in the 1970s. Agip drilled 7 holes for 553 m however selective assaying of drill core by Agip returned only narrow intercepts the best being 4 m at 1,210 ppm U₃O₈.

Significant wide intercepts at Conquest were returned by DYL in late 2007 namely:

• Hole DCQRC- 006 22 m at 575 ppm U₃O₈ from 22 m
  Hole DCQRC- 006 13 m at 723 ppm U₃O₈ from 75 m

As follow-up to the 2007 results, the 2008 RC percussion drilling programme commenced in late July.

XRF chemical assay results from the drilling (holes DCQRC008 - 010 drilled on the DCQGRC006 section) confirm mineralisation over approximately 25-30 metres true width at shallow depth. The intersections of 14 m at 1,008 ppm U₃O₈ and 12 m at 592 ppm U₃O₈ in hole DCQRC010 are very encouraging and are typical of the Valhalla and Queens Gift style of uranium mineralisation. Holes DCQRC011 and 012 drilled 20 m to the north of the main zone intersected narrower and lower grade mineralisation. The main intersection is open to the south and will be drilled shortly.

Conquest Central RC Percussion Drill Results

Drillhole	UTM		Azi (T)	Dip	TD (m)	Depth (m)		Interval (m)	U3O8* (ppm)
	East	North				From	To
DCQRC008	348615	7783520	270	-60	72	6	12	6	407
DCQRC008	348615	7783520	270	-60	72	17	21	4	1,012
DCQRC008	348615	7783520	270	-60	72	50	54	4	354
DCQRC009	348645	7783520	270	-60	99	46	54	8	675
DCQRC009	348645	7783520	270	-60	99	57	59	2	405
DCQRC009	348645	7783520	270	-60	99	79	85	6	255
DCQRC010	348590	7783510	090	-60	102	13	25	12	592
DCQRC010	348590	7783510	090	-60	102	29	43	14	1,008
DCQRC011	348575	7783510	090	-60	174	64	69	5	271
DCQRC012	348595	7783530	090	-60	138	30	35	5	366
DCQRC012	348595	7783530	090	-60	138	40	44	4	330
DCQRC013	348580	7783530	090	-60	180	55	58	3	258
DCQRC013	348580	7783530	090	-60	180	62	72	10	226

* XRF Chemical Assays

A 2008 RC drill programme comprising 113 holes has been designed to test the Ewen Prospects. An initial programme of 75 holes will commence on 25th July with the balance of the programme being results driven.

Within EPM 14281 (Miranda) uranium mineralisation is hosted by chloritic shear zones developed through granite.

Some of the wider intercepts returned indicate that the Miranda Prospect has tonnage potential and that further drilling in the 2008 field season is warranted.

Significant Miranda Prospect intercepts include:

• Hole DMRC-0008 32 m at 625 ppm U₃O₈ from 3 m

• Hole DMRC-0009 25 m at 654 ppm U₃O₈ from 14 m
  
    

NW QUEENSLAND JV - Regional Exploration

In the Mt Cuthbert area within EPMs 14282 and 11025 uranium mineralisation is associated with granitic rocks and felsic intrusives. At Anomaly 78 - Warwick, the highgrade samples assaying up to 1.17% U₃O₈ were collected over 80 m strike and are associated with narrow chlorite-sericite schist zones and more 'mafic' layers within the felsic rock similar to the mineralisation at the Miranda Prospect to the south. Elsewhere in the district granitic outcrops have returned anomalous uranium values and have been designated for follow-up in 2008.

To the south of Cloncurry rockchip sampling of airborne radiometric anomalies within the JV tenements returned numerous elevated uranium assays. Most of these anomalies lie along linear northwest trending fractures and lithologic contacts within pelitic sediments. Typically these features form ferruginous/siliceous ridge tops and are often coincident with small copper shows. Several of these structural linears or corridors have recently been drill-tested for copper-gold mineralisation by Matrix, particularly along the Sierra, Greenmount and Leopard Lines.

Most of the uranium anomalous samples comprise highly leached ferruginous/gossanous lode material, registering as only modestly radioactive with hand-held scintillometers. Some anomalies occur in sheared metasediment adjacent to siliceous/ferruginous ridgetops. The exception is sample WR 004 -Toby Barty, taken from a small copper working, which exposed visible torbernite in relatively fresh siltstone. This sample returned 1.14% U₃O₈. A percussion hole drilled directly beneath this site, returned 400 ppm U₃O₈ from a one metre sample registering only 2 x background. Although rather spotty and discontinuous, many of these ground-checked anomalies warrant follow-up radiometric surveying and downhole probing of available percussion drillholes.

The results from the sampling programme in the Cloncurry area compliment Matrix's extensive uranium anomalous database which formed the basis for DYL's initial move into the 'Mt Isa Province'.

ISA WEST PROJECT (earning 100% of uranium rights from Xstrata)

As previously announced to the ASX (21 January, 2008) DYL reached agreement with Mount Isa Mines Limited (a company within the Xstrata Group) (Xstrata) whereby DYL may (subject to a number of conditions) ultimately acquire 100% of the uranium rights over six (6) tenements held by Xstrata. The tenements cover a total of 504 km² immediately west of the Mt Isa townsite/minesite.

The six Exploration Permits for Minerals (EPMs) are known collectively as the Isa West Project and importantly they cover extensive basalt and sediment sequences of the prospective Haslingden Group which hosts the Valhalla and Skal (Summit/Paladin) and Queens Gift (DYL) uranium deposits.

Isa West Regional Geology and Tenement Locations

The study of historic uranium (and base metal) exploration reports confirmed a cluster of uranium prospects hosted by Haslingden Group basalts and sediments. Mapping and sampling of the prospects has been completed and assay results tabled below.

Uranium Anomalies Isa West Project

At two of the historic prospects shallow shafts were sunk and material mined in the 1950s. Historic trenching results include:

- 3 m at 1,450 ppm U₃O₈
- 5 m at 3,300 ppm U₃O₈ 
- 8 m at 800 ppm U₃O₈ and
- 5 m at 3,600 ppm U₃O₈

Several of the 1970's trenches have been selectively resampled and prospected using a handheld spectrometer to confirm mineralised zones.

XRF chemical assay results have been received for (horizontal) composite channel chip samples from the resampling of 'mineralised zones' within 1970s backhoe trenches (see ASX 23 July and 21 August 2008).

At the Folderol North and South Prospects located within EPMs 13098 and 12886, the best interval returned (Folderol North) was from a zone of hematite-magnetite altered chloritic schist (sheared basalt) over 3.5 m assaying 3,409 ppm U₃O₈. At Folderol South best assays were 2 m at 5,700 ppm U₃O₈ and 2 m at 4,100 ppm U₃O₈.

The best interval returned at Mothers Day was from a zone of magnetite altered dolerite containing patchy visible uranophane mineralisation over 4 m and assaying 8,557 ppm U₃O₈. At Turpentine best assays were 3 m at 1,414 ppm U₃O₈ and 6 m at 1,031 ppm U₃O₈ from epidote altered chloritic schist.

 Isa West Project - Composite Chip Sampling

Tenement	Easting  (mE)*	Northing  (mN)*	Width  (m)	U3O8 ppm
EPM 13098
Folderol North	336632	7716046	1.0	2,220
Folderol North	336629	7716041	1.8	1,947
Folderol North	336635	7715962	1.0	1,040
EPM 12886
Folderol North	336605	7715824	3.5	3,409
Folderol North	336607	7715818	2.5	755
Folderol North	336599	7715811	2.5	1,344
Folderol South	336553	7715369	2.0	4,100
Folderol South	336554	7715495	2.0	1,800
Folderol South	336553	7715449	1.5	2,100
Folderol South	336561	7715477	2.0	5,700
EPM 12886
Bambino	335610	7712403	3	995
Bambino	335578	7712477	1	1,191
Bambino	335601	7712598	3x3 area	1,022
Bambino	335615	7712390	2	1,046
Flat Tyre	336201	7716030	1.5	3,107
Flat Tyre	336186	7716006	1.5	9,585
Mothers Day	337212	7714946	1	1,294
Mothers Day	337202	7714938	4	1,269
Mothers Day	337293	7714766	4	8,557
Mothers Day	337293	7714787	3.5	1,383
Mothers Day	337323	7714726	5	592
Mothers Day	337334	7714714	2.5	1,735
Mothers Day	337265	7714896	0.9	6,416
Turpentine	335100	7713480	3	1,258
Turpentine	335104	7713485	5	337
Turpentine	335117	7713467	3	1,414
Turpentine	335142	7713412	6	1,031

* Datum MGA Zone 54 / GDA 94

Based on the assay results and ground radiometric survey data an RC percussion drill programme has been designed to test the mineralised targets at depth. The prospects covering an area of 6 x 2 km have been cleared for drilling by the Kalkadoon Traditional Owners.