DEEP YELLOW LIMITED — Capital/Financing Update 2008

Feb 26, 2008

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DEEP YELLOW LIMITED

ABN 97 006 391 948

Level 1 329 Hay Street Subiaco WA 6008 PO Box 1770 Subiaco WA 6904 Tel : 61 8 9286 6999 Fax : 61 8 9286 6969 Email: admin@deepyellow.com.au Website: www.deepyellow.com.au

26 February 2008

EMPLOYEE OPTION ISSUE RELEASE OF RESTRICTED SECURITIES

The Directors have resolved to issue 20,100,000 unlisted options to acquire ordinary shares in Deep Yellow Limited to employees, and contractors. he issue has been made in two packages and is pursuant to the terms of the Deep Yellow Limited Directors, Employees and Other Permitted Persons Option Plan which was approved at the Company’s Annual General Meeting held on 30 November 2006.

The Directors continue to use the policy of issuing options as a reasonable basis for rewarding employees and contractors and providing an incentive to join / remain with Deep Yellow.

The Company has established a full compliment of operational staff in Namibia to resource its expanded drilling programme and has appointed a number of new personnel in Australia. The Directors have issued two packages of options on the following basis:

Reward Options

Directors have issued 11,060,000 Reward Options on the following terms:

• 50% vest on 1 December 2008 and have an exercise price of 27.5 cents which is payable on or before 30 June 2011; and

• 50% vest on 1 December 2009 and have an exercise price of 40 cents which is payable on or before 30 June 2011.

Loyalty Options

Directors have issued 9,040,000 Loyalty Options on the following terms:

• 50% vest on 1 June 2009 and have an exercise price of 45 cents which is payable on or before 30 June 2011; and

• 50% vest on 1 June 2010 and have an exercise price of 60 cents which is payable on or before 30 June 2011.

The Directors reserve the right to cancel the options in the event that an employee or contractor resigns from their employment or ceases their engagement with the Company.

No Director or Director related entity will participate in this issue. The attached Appendix 3b provides details of the options.

Page No. 1

08-21

Employee Options and Release of Restricted Securities

Release of Restricted Securities

Pursuant to an announcement earlier this month (12 February 2008), the Directors confirm the release today of the voluntary restriction applicable to 82 million ordinary shares issued in late 2006 and in part consideration for the acquisition/merger of Raptor Minerals Limited (“Raptor”).

Raptor through wholly owned Namibian subsidiary companies, owns and controlls Namibian Exclusive Prospecting Licences (EPL’s 3496 - Tubas, 3497 – Tumas, 3499 - Ripnes and 3498 - Aussinanis).

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Mark Pitts Company Secretary

Page No. 2

08-21

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003.

Name of entity

DEEP YELLOW LIMITED

ABN

97 006 391 948

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

• 1 +Class of +securities issued or to be Unlisted options issued

• 2 Number of[+] securities issued or to A) 11,060,000 be issued (if known) or maximum B) 9,040,000 number which may be issued

• 3 Principal terms of the[+] securities A) Reward Options (eg, if options, exercise price and • 50% vest on 1 December 2008 and have an expiry date; if partly paid exercise price of 27.5 cents which is +securities, the amount outstanding payable on or before 30 June 2011; and and due dates for payment; if • 50% vest on 1 December 2009 and have an +convertible securities, the exercise price of 40 cents which is payable conversion price and dates for on or before 30 June 2011. conversion) B) Loyalty Options • 50% vest on 1 June 2009 and have an exercise price of 45 cents which is payable on or before 30 June 2011; and

• • 50% vest on 1 June 2010 and have an exercise price of 60 cents which is payable on or before 30 June 2011.

• See chapter 19 for defined terms.

Appendix 3B Page 1

1/1/2003

Appendix 3B New issue announcement

4 Do the+securities rank equally in all respects from the date of allotment with an existing+class of quoted +securities? If the additional securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 7 Dates of entering+securities into uncertificated holdings or despatch of certificates 8 Number and+class of all +securities quoted on ASX (_including_the securities in clause 2 if applicable)	A) and B) If exercised shares issued will rank equally with those already on issue.	A) and B) If exercised shares issued will rank equally with those already on issue.
	Nil
	A) and B) Options issued as an incentive to Employees and contractors and pursuant to the terms of the Deep Yellow Option Scheme.
	A) and B) 26 February 2008
	Number	+Class
	1,108,726,958	ORD

• See chapter 19 for defined terms.

Appendix 3B Page 2

1/1/2003

Appendix 3B New issue announcement

9 Number and+class of all +securities not quoted on ASX (_including_the securities in clause 2 if applicable)	Number	~~+~~Class
	12,500,000 31/7/08 at 8.1c 3,000,000 31/12/08 at 21.1c 2,000,000 31/12/08 at 31.1c 16,000,000 30/11/09 at 55.1 2,912,500 31/12/09 at 44.6c 2,912,500 31/12/10 at 59.6c 787,500 30/6/10 at 64.6c 787,500 30/6/11 at 74.6c 12,500,000 30/11/10 at 59.5c 5,530,000 30/6/11 at 27.5c 5,530,000 30/6/11 at 40c 4,520,000 30/6//11 at 45c 4,520,000 30/6/11 at 60c	Unlisted options “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “

10 Dividend policy (in the case of a N/A trust, distribution policy) on the increased capital (interests)

Part 2 - Bonus issue or pro rata issue

• 11 Is security holder approval required?

12 Is the issue renounceable or nonrenounceable?

13 Ratio in which the[+] securities will be offered

• See chapter 19 for defined terms.

Appendix 3B Page 3

1/1/2003

Appendix 3B New issue announcement

14	+Class of+securities to which the
	offer relates
15	+Record date to determine
	entitlements
16	Will holdings on different registers
	(or subregisters) be aggregated for
	calculating entitlements?
17	Policy for deciding entitlements in
	relation to fractions
18	Names of countries in which the
	entity has+security holders who
	will not be sent new issue
	documents
	Note: Security holders must be told how their
	entitlements are to be dealt with.
	Cross reference: rule 7.7.
19	Closing date for receipt of
	acceptances or renunciations
20	Names of any underwriters
21	Amount of any underwriting fee or
	commission
22	Names of any brokers to the issue
23	Fee or commission payable to the
	broker to the issue
24	Amount of any handling fee
	payable to brokers who lodge
	acceptances or renunciations on
	behalf of+security holders
25	If the issue is contingent on
	+security holders’ approval, the
	date of the meeting
26	Date entitlement and acceptance
	form and prospectus or Product
	Disclosure Statement will be sent to
	persons entitled

• See chapter 19 for defined terms.

Appendix 3B Page 4

1/1/2003

Appendix 3B New issue announcement

27	If the entity has issued options, and
	the terms entitle option holders to
	participate on exercise, the date on
	which notices will be sent to option
	holders
28	Date rights trading will begin (if
	applicable)
29	Date rights trading will end (if
	applicable)
30	How do+security holders sell their
	entitlements_in full_through a
	broker?
31	How do+security holders sell_part_
	of their entitlements through a
	broker and accept for the balance?
32	How do+security holders dispose
	of their entitlements (except by sale
	through a broker)?
33	+Despatch date

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

34 Type of securities ( tick one )

(a)[Securities described in Part 1 ]

(b)[All other securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35[If the ][+][securities are ][+][equity securities, the names of the 20 largest holders of the ] additional[+] securities, and the number and percentage of additional[+] securities held by those holders

• See chapter 19 for defined terms.

Appendix 3B Page 5

1/1/2003

Appendix 3B New issue announcement

36[If the ][+][securities are ][+][equity securities, a distribution schedule of the additional ][+][securities ] setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over 37[A copy of any trust deed for the additional ][+][securities ]

Entities that have ticked box 34(b)

38 Number of securities for which +quotation is sought 39 Class of+securities for which quotation is sought 40 Do the+securities rank equally in all respects from the date of allotment with an existing+class of quoted+securities? If the additional securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another security, clearly identify that other security) 42 Number and+class of all+securities quoted on ASX (_including_the securities in clause 38)
	Number	+Class

• See chapter 19 for defined terms.

Appendix 3B Page 6

1/1/2003

Appendix 3B New issue announcement

Quotation agreement

1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted[+] quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• We warrant that if confirmation is required under section 1017F of the Corporations Act in relation to the[+] securities to be quoted, it has been provided at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before[+] quotation of the[+] securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

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26 February 2008

Sign here: ............................................................ Date: ......................... (Director/Company secretary) Mark Pitts Print name: .........................................................

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• See chapter 19 for defined terms.

Appendix 3B Page 7

1/1/2003