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Deep Yellow Assays Confirm Ongolo High Grade Uranium Intercepts

Deep Yellow (ASX: DYL) has confirmed high grade equivalent uranium intercepts made during its drilling in December and January at the Ongolo Alaskite uranium deposit in Namibia after carrying out Fusion XRF chemical assays.

The eU results obtained during drilling operations were used in the recent resource update of the Ongolo deposit to 29.6 million tonnes at 384ppm U3O8 for 25.1 million pounds of U3O8 at a 250ppm cut-off.

Notable assay results include 5 metres at 480ppm U3O8 from 49 metres and 9 metres at 3,158ppm U3O8 from 96 metres; 6 metres at 849ppm U3O8 from 70 metres; 17 metres at 677 ppm U3O8 from 101 metres; and 12 metres at 2,214 ppm U3O8 from 207 metres.

Managing director Greg Cochran was pleased the chemical assay results confirmed the eU readings.

"We are cautious in our approach to using eU numbers in resource estimation, but these results demonstrate once again that at Ongolo this information is reliable which may in future allow us to reduce our reliance on chemical assays.

"With the completion of the Ongolo program we are now drilling in the Ongolo South area whilst we review all available information in our exploration database as we look to generate new high grade targets to rapidly grow the Omahola Project resource base."


The Ongolo deposit is key part of Deep Yellow's Omahola project, the last independently held alaskite project in Namibia.

Mineralisation at the project comes to within 20 metres of surface and underlies a broad, flat gently sloping sheetwash plain, thinly veneered by gravelly alluvial and aeolian sands.

The uranium mineral is primarily uraninite, and where present at grades of greater than 500 ppm, is marked by the presence of significant visible smokey quartz and frequently, biotite.

Resources had recently been increased by 39% to 25.1 million pound of U3O8, bringing the company closer towards its short term project resource target of 50 million pounds.

Once this is reached, the company will progress the project towards a Pre-Feasibility Study.

Besides Ongolo deposit, the Omahola project also includes the high grade MS7 deposit that is located about 2 kilometres west of Ongolo with a mineralised zone of about 600 metres along strike and is up to 400 metres wide and the INCA deposit that hosts unique high grade uranium, magnetite and pyrite mineralisation.

MS7 i has a resource of 6.8 million tonnes at 442ppm U3O8 for 6.6 million pounds of U3O8 while INCA has a contained resource of 13.4 million pounds of U3O8.

This brings the total resource at Omahola to 45.1 million pounds.

Most of these resources will be mineable through open pit methods.

These will all feed into a mine that Deep Yellow envisions as capable of producing at least 2.2 million pounds of U3O8 from 2016 from a processing plant located close to the Ongolo Alaskite deposit.

Interim Pre-Feasibility results released in 2011 based on the INCA and Tubas Sand deposits had demonstrated the potential for an operation with competitive capital costs of less than US$340 million and operating costs of around US$32 per pound of U3O8.

Omahola is located within Namibia's 'Alaskite Alley', which includes the Rossing uranium mine and Husab uranium project. Structures along this trend are associated with higher grade alaskites.

Due to the proximity of the project to the coastal towns of Swakopmund and Walvis Bay and ready access via a sealed, black-top road there will be no need for on-site housing for construction and operation personnel.

Uranium renaissance

Deep Yellow is set to be a beneficiary from the expected resurgence in uranium demand.

Japan is planning to steadily restore nuclear power capacity between 2013 and 2015 while China has committed to increasing its nuclear power capacity at least fivefold to an installed capacity of between 70 and 80 GWe by 2020.

These factors will likely fuel the anticipated near-medium term appreciation in the uranium price.


They say grade is king and Ongolo has it in spades. The deposit ranks more highly on average grade of uranium than almost all of its Namibian peers.

There is also a growing resource base at flagship Omahola Project which promises to provide the critical mass and tonnage for development options to increase. Omahola is also Namibia's last independently held high grade alaskite project.

There are some significant catalysts for Deep Yellow to be re-rated including:

- Achieving its short term exploration objective of 50 million pounds of U3O8;
- Further growth of its resource base through exploration;
- Starting its Pre-Feasibility Study;
- Carrying out Scoping level metallurgical testwork;
- Completing the Pre-Feasibility Study in 2014;

With an EV/Resource of just $0.57 per pound of U3O8 - based on an EV of $68.99 million and a total resource base in Namibia and Australia of 121.7 million pounds of U3O8, there is scope for re-rating relative to its peers as it meets upcoming milestones.

The company is also well funded with $7.2 million in cash as of the end of December 2012 quarter.

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