DEEP YELLOW LIMITED — Interim / Quarterly Report 2016

Jul 28, 2016

ASX Announcement

ASX: DYL

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29 July 2016

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDING 30 JUNE 2016

HIGHLIGHTS

Corporate:

• DYL is pleased to report a cash and liquid assets balance of $1.6 million at the end of the quarter.

• This figure excludes the funds raised in a Share Purchase Plan that closed on 1 July 2016.

• The Share Purchase Plan raised a total of $752,600 and resulted in the issue of 188,150,000 new shares to existing shareholders.

• These funds will allow the Company to continue to progress its promising Tumas Project in Namibia.

Tumas Project

• The metallurgical testwork program, supervised by Marenica Energy Ltd (“MEY”), was completed on schedule.

• As announced during the quarter, the interim results were largely in line with, and in some cases even exceeded expectations.

• The final report which will deliver the final results and conclusions from the test is currently being drafted and will be completed in August.

• Reinterpretation of the existing Tumas JORC resource is nearing completion.

• Planning for the next phase of metallurgical testwork, resource expansion and a prefeasibility study is well underway.

• A project incorporating Marenica’s U-pgrade[TM] beneficiation process as an integral part of the overall flowsheet has the potential to have comparatively low capital and operating costs and an accelerated development timeline.

Namibian Licence Applications

• Renewal confirmations for Exclusive Prospecting Licences (EPLs) 3496 and 3497 were received during the quarter. This is the fourth renewal for these two EPLs and allows DYL to continue to progress the Tumas and Omahola Projects.

• The Namibian Ministry of Mines and Energy declined the Mining Licence Applications lodged in 2011 for the so-called INCA Project and the Tubas Red Sands Project on economic grounds.

• Realistically this has no impact on DYL because the INCA Project has been superseded by the much larger Omahola Heap Leach Project and the Tubas Sand Project is, at current prices, clearly uneconomic.

• The Tubas Sand Project was placed on hold by the Company in 2014 specifically for economic reasons.

Unit 1, Spectrum Building, 100-104 Railway Road, Subiaco, WA 6008 Tel : 61 8 9286 6999 / Fax : 61 8 9286 6969 / ABN 97 006 391 948 Email: info@deepyellow.com.au / Website: www.deepyellow.com.au

Quarterly Report - 30 June 2016

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BUSINESS REVIEW

TUMAS PROJECT

- Marenica Energy Ltd U pgrade[TM] Testwork Program

Introduction

The bench scale metallurgical testwork program being conducted under the supervision of Marenica Energy Ltd (“MEY”) at the Nagrom and CSIRO Laboratories in Perth was completed on schedule. The program incorporated additional tests conducted to enhance confidence in the results. The testwork has been conducted on bulk samples that were removed from the Tumas calcrete deposit late in 2015 and early 2016. The program, designed to assess the amenability of MEY’s U-pgrade[TM] flowsheet (Figure 1) to Tumas’s calcrete ore, achieved results that met and in some cases even exceeded expectations.

The proposed metallurgical U-pgrade[TM] flowsheet, developed by Marenica, has a patent pending and DYL has executed a Confidentiality Agreement. However, the process in its simplest form involves the physical beneficiation of the sample through two key stages before moving to concentrate the remaining uranium minerals.

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Figure 1: Marenica U-pgrade[TM] Flowsheet - Schematic Representation.

Two bulk samples were excavated from the Tumas deposit and arrived in Perth at the beginning of the year for the test. The first was a higher grade medium sulphate composite (“MSC”) sample and the second a slightly lower grade low sulphate composite (“LSC”) sample (See Table 1).

Sample	Ca (%)	Fe (%)	Mg (%)	SO4 (%)	Si (%)	U (ppm)	V (ppm)
MSC LSC	8.9 9.7	1.4 1.1	0.79 0.67	1.4 0.03	29.2 28.5	568 254	200 100

Table 1: Nagrom Assay Results of the MSC and LSC Bulk Samples

Page 2

Quarterly Report - 30 June 2016

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As a first step and also throughout the program CSIRO conducted detailed mineralogical characterisation studies on the feed samples and the various product streams generated by the testwork. As a result of these extensive mineralogical analyses it was concluded that the primary uranium bearing mineral, carnotite, will be liberated in the process.

Conventional Processing Issues

Calcrete ores such as Tumas are characterised by specific carbonate minerals and fine particulate material (clays). The presence of carbonate minerals excludes the use of acid leaching due to high acid consumption and thus the conventional approach is to leach these ore types with alkali, a high temperature, slow kinetics and relatively high cost process. Also, the inclusion of fine particulate material in the ores results in materials handling issues which result in higher operating costs and reduced uranium recovery.

The successful removal of fine particulate material and carbonate minerals from a calcrete ore produces a concentrate with minimal acid consumers, delivering a suitable feed for an acid leach process. Generally, one would expect significantly faster kinetics and lower capital and operating costs with an acid leach process. Removal of the clay greatly improves a plant’s materials handling characteristics, which is a significant advantage for a beneficiation process and the subsequent leach and solid/liquid separation stages.

Test Results

The interim results determined that >95% of the carbonate minerals could be removed with a loss of <5% of the uranium. The de-sliming step rejected ~27% of the mass as fine particulate material with <7% of the uranium feeding the de-slime stage. These interim results have demonstrated that the critical carbonate and de-slime removal steps of the process do work on the Tumas samples provided. Application of the process will enable a significant reduction in the mass being handled with an acceptable, minor loss of the primary mineral.

Now that the program has been completed it has been successfully demonstrated that upgrading of the uranium into a low mass concentrate is feasible. In fact, the results obtained were very encouraging as a concentrate containing less than 3% of the ore feed mass (i.e. a 3% “mass pull”) was achieved. The mass balance compiled around the process concluded an overall uranium recovery of over 82% and a concentrate grade in excess of 13,000 ppm U3O8 (i.e. 1.3% U3O8).

Benefits

The table below is a theoretical example used to illustrate some of the benefits of using the Upgrade[TM] process when compared to a conventional alkali leach process.

Process	Annual ROM Tonnage	Leach Circuit Throughput
Conventional alkali leach U-pgradeTMProcess	2,000,000 tpa 2,000,000 tpa	1,100,000 tpa 60,000 tpa**

** If the U-pgrade[TM] process performs in line with the testwork results achieved to date.

In addition, the size differential is not simply linear as the enhanced kinetics of the acid leach circuit offers additional benefits over the current conventional alkali leach approach.

A concentrate produced by an U-pgrade[TM] process provides additional optionality in that it will not only be suitable for processing using conventional acid leaching and refining technology to produce yellowcake; alternatively the concentrate produced may be safely and cost-effectively transported to an established third party for refining to produce yellowcake which would reduce capital costs and accelerate the project’s development schedule.

Page 3

Quarterly Report - 30 June 2016

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Strategically, over the last four years the Company has consistently sought opportunities to become a producer by pursuing various fast track, relatively low capex development projects.

As a result of the successful completion of the initial Tumas metallurgical testwork program the Company is in a stronger position to deliver on its strategy.

Tumas Deposit Resource Work

A new resource model over Tumas Zones 1 and 2 (Figure 2) has been built and a resource update will be completed within the next quarter. Information generated from the infill drill and bulk sample excavation area has been incorporated and whilst there is an expectation of only a minor resource increase a significant enhancement in confidence levels is expected.

The area along strike and to the east of Zone 1 described in the previous quarterly (“Zone 0”), which contains holes previously drilled but not included in the current JORC resource, was modelled but has not yet been incorporated in the updated resource. The area (highlighted in red in Figure 2) is some three kilometres in extent and grades seem comparable to those in the existing Tumas Zones 1 and 2 (approximately 350ppm U3O8).

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Figure 2: Map showing location Tumas “Zone 0” to the east the current Tumas JORC Resource.

At the appropriate time the Company will look to conduct field work on the area further east along strike beyond Tumas “Zone 0” which may be prospective for further resource extension. This area, together with Zone 0 and Zone 3 have the potential to increase the Project’s resource base.

Page 4

Quarterly Report - 30 June 2016

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NAMIBIAN LICENCE APPLICATIONS

Exclusive Prospecting Licences Renewed

The Company previously advised that its wholly owned Namibian operating subsidiary, Reptile Uranium Namibia (Pty) Ltd (RUN), had received renewal confirmation for Exclusive Prospecting Licences (EPLs) 3496 and 3497 (see Figure 1). This is the fourth renewal for these two EPLs and allows DYL to continue to progress the Tumas/ and the Omahola Projects.

Mining Licence Applications Declined

The Namibian Ministry of Mines and Energy notified the Company that the Minister had declined the Mining Licence Applications lodged in 2011 for the so-called INCA Project and the Tubas Red Sands Project. The Minister’s decision, on economic grounds, was strictly in accordance with Namibia’s Minerals (Prospecting and Mining) Act, No 33 of 1992. Realistically, he had no other option as Section 92 (2) (c) of the Act specifically stipulates that the Minister must be satisfied on reasonable grounds that the envisaged mining operation can be conducted on a profitable basis.

This decision has no meaningful impact on DYL or its future:

• The INCA Mining Licence Application, as conceived at the time, was not well defined and was soon after superseded by the much larger Omahola Uranium Heap Leach Project. The application was based on a small indicated and inferred resource of 16.4Mlbs U 3O8, envisaged trucking an iron rich uranium ore for processing at Rössing and was supported by only conceptual level technical studies.

• Similarly, the Tubas Sand Mining Licence Application was premature with a measured, indicated and inferred resource of only 4.9Mlbs U3O8 at the time and was reliant on final processing at a future INCA processing plant. Once again only conceptual level technical studies had been conducted. Subsequently, additional testwork and detailed studies by independent mining and engineering consultants were conducted and while results were considerably more encouraging, it was acknowledged by DYL in 2014 that the project required higher uranium prices. Therefore the Company took the decision to place the Tubas Sand Project on hold for economic reasons.

The two blocks that made up the Mining Licence Applications have now reverted back to being a part of the Company’s EPL3496 and can form a component part of any future mining licence application whilst the Environmental Clearances for the two areas, issued around that time, remain valid.

CORPORATE

DYL is pleased to report a balance of $1.6 million of cash and liquid assets as at 30 June 2016, which excludes the funds raised in a Share Purchase Plan (SPP) that closed on 1 July 2016. The SPP raised a total of $752,600 and resulted in the issue of 188,150,000 new shares to existing shareholders.

It is envisaged that the funds raised in the SPP will allow the Company to continue to progress its promising Tumas Project in Namibia which is now well positioned as a result of the recent successful completion of the first phase of U-pgrade[TM] metallurgical testwork.

During the quarter 16,441,876 shares were issued in relation to shareholder approved payments in lieu of salaries and director fees and 400,000 performance share rights were cancelled in accordance with their terms.

Page 5

Quarterly Report - 30 June 2016

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For further information regarding this announcement, contact:

Greg Cochran Managing Director

Phone: +61 8 9286 6999 Email: info@deepyellow.com.au

For further information on the Company and its projects - visit the website at www.deepyellow.com.au

About Deep Yellow Limited

Deep Yellow Limited is an ASX-listed, Namibian-focussed advanced stage uranium exploration company. It also has a listing on the Namibian Stock Exchange. Deep Yellow’s operations in Namibia are conducted by its 100% owned subsidiary Reptile Uranium Namibia (Pty) Ltd.

The Company recently completed metallurgical testwork and is evaluating fast track development options for its Tumas Project, an extensive surficial calcrete deposit amenable to the application of an effective beneficiation process. Various test have been successfully conducted over the last four years in pursuit of this strategy.

Deep Yellow also holds the Omahola Open Pit Heap Leach Project on which value engineering studies are being conducted to supplement the recently completed preliminary economic analysis.

Competent Person’s Statement

The information in this report that relates to previous Exploration Results for the Tumas Deposit is based on information compiled by Mr. Martin Hirsch, M.Sc .Geology, who is a member of the Institute of Materials, Minerals and Mining (UK) and the South African Council for Natural Science Professionals. Mr. Hirsch is the Exploration Manager for Reptile Uranium Namibia (Pty) Ltd, has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person in terms of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code 2012 Edition). Mr. Hirsch consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Page 6

Annexure 1

Schedule of Mineral Tenure – June 2016

NAMIBIA

Number Name Interest Expiry Date JV Parties Approx. Area **(km2) **	Number Name Interest Expiry Date JV Parties Approx. Area **(km2) **	Number Name Interest Expiry Date JV Parties Approx. Area **(km2) **
EPL 3496 Tubas 100% 05.06.2017 - 709
EPL 3497 Tumas 100% 05.06.2017 - 422
EPL 3498 Aussinanis 85% 07.05.2016#1 5% Epangelo#3 253
10% Oponona#4
EPL 3669 Tumas North 65% 20.11.2015#1		25% Nova (Africa)#5 163
EPL 3670 Chungochoab 65% 20.11.2015#1		10% Sixzone#6 640
ML 176#2 Shiyela 95% 05.12.2027 5% Oponona#4 54
#1Renewal documentation has been submitted and the Company awaits the administrative process to be finalised
#2Located entirely within EPL3496
#3Epangelo Mining (Pty) Ltd
#4Oponona Investments (Pty) Ltd
#5Nova (Africa) (Pty) Ltd
#6Sixzone Investments (Pty) Ltd

Sub-Total 2,241

NORTHERN TERRITORY

Number.	Name	Interest	Expiry Date	JV Parties	Approx. Area **(km2) **
EL 24246	Napperby	100%	10.10.16	-	234
			Sub-Total		234
			DYL Total		2,475

AGREEMENTS

	**Approx. Area (km2) **
ABM Resources NL - Northern Territory (100% uranium rights stay with DYL)	5,775
Sub-Total	5,775
Total Area	8,250

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity

Name of entity	Name of entity
DEEP YELLOW LIMITED
ABN			Quarter ended (“current quarter”)
97 006	391 948		30		JUN 2016
Consolidated statement of cash flows
					Current quarter	Year to date
Cash	flows related to operating activities					(12 months)
					$A’000	$A’000
1.1	Receipts from product sales and related debtors				-	-
1.2	Payments for (a) exploration & evaluation				(403)	(1,234)
	(b) development				-	-
	(c) production				-	-
	(d) administration				(270)	(1,095)
1.3	Dividends received				-	-
1.4	Interest and other items of a similar nature				23	81
	received
1.5	Interest and other costs of finance paid				-	-
1.6	Tax refund *				-	50
1.7	Other				-	3
	Net Operating Cash Flows				(650)	(2,195)
	Cash flows related to investing activities
1.8	Payment for purchases of:
	(a) prospects				-	-
	(b) equity investments				-	-
	(c) other fixed assets				(43)	(53)
	(d) environmental and other bonds				(13)	(13)
1.9	Proceeds from sale of:
	(a) prospects				-	-
	(b) equity investments				-	-
	(c) other fixed assets				-	-
	(d) environmental and other bonds				-	3
1.10	Loans to other entities				-	-
1.11	Loans repaid by other entities				-	-
1.12	Other (provide details if material)				-	-
	Net investing cash flows				(56)	(63)
1.13	Total operating and investing cash flows (carried
	forward)				(706)	(2,258)

• Research and Development grant received

• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward) (706) (2,258) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. - - 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (Capital Raising Costs) (37) (37) Net financing cash flows (37) (37) Net increase (decrease) in cash held (743) (2,295) 1.20 Cash at beginning of quarter/year to date 2,306 3,927 1.21 Exchange rate adjustments to item 1.20 16 (53) 1.22 Cash at end ofquarter 1,579 1,579 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 104 1.24 Aggregate amount of loans to the parties included in item 1.10 - 1.25 Explanation necessaryfor an understandingof the transactions Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows NIL 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest NIL	1.13 Total operating and investing cash flows (brought forward)	1.13 Total operating and investing cash flows (brought forward)	(706)	(706)	(2,258)
	Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (Capital Raising Costs) Net financing cash flows		- - - - - (37)		- - - - - (37)
			(37)		(37)
	Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter		(743) 2,306 16		(2,295) 3,927 (53)
			1,579		1,579
	1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10			Current quarter $A'000
					104
					-
		Explanation necessaryfor an understandingof the transactions
		NIL
		Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest
		NIL

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	-	-
	-	-

• See chapter 19 for defined terms.

Appendix 5B Page 2

30/9/2001

Appendix 5B Mining exploration entity quarterly report

Estimated cash outflows for next quarter

stimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	350
	-
	-
	200
Total	550

Reconciliation of cash

econciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	829	1,806
	750	500
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	1,579	2,306

Changes in interests in mining tenements – Refer to Annexure 1 of the Quarterly Activity Report for a list of all mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6 .2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter
	EPL3497 EPL3499 EPL3668 ML173 application ML174 application EPM14916	Reduced Relinquished Relinguished Cancelled Cancelled Relinquished	637km2 522km2 70% 100% 100% 36 blocks	422km2 - - - - -
	-	-	-	-

• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference+securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs,redemptions	-	-	-	-
	-	-	-	-
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	1,947,777,004	1,947,777,004	-	-
	16,441,876	16,441,876	-	-
7.5 +Convertible debt securities(description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	-	-	-	-
	-	-	-	-
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter 7.11 Cancelled during quarter	Unlisted options -	-	Exercise Price -	Expiry Date -
	-	-	-	-
	-	-	-	-
	- - - -	- - - -	- - - -	- - - -
	-	-	-	-

• See chapter 19 for defined terms.

Appendix 5B Page 4

30/9/2001

Appendix 5B Mining exploration entity quarterly report

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.12 Performance Rights 7.13 Granted during quarter 7.14 Vested during quarter 7.15 Lapsed during quarter 7.16 Cancelled during quarter	Unlisted rights 12,636,000 3,000,000 24,200,000 21,985,000	- - - -	- - - -	Vesting dates 01/07/2016 01/12/2016 01/07/2017 01/07/2018
	-	-	-	Vesting dates
	-	-	-	Share issue date
	-	-	-	Date lapsed
	400,000			Date cancelled
7.17 Debentures (totals only)	-	-
7.18 Unsecured notes (totals only)	-	-

• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 5

Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does ~~/does no~~ t* (delete one) give a true and fair view of the matters disclosed.

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Sign here: ............................................................ Date: 29 July 2016 ~~(Director/~~ Company secretary)

Print name:

Mark Pitts

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

== == == == ==

• See chapter 19 for defined terms.

Appendix 5B Page 6

30/9/2001