DEEP YELLOW LIMITED — Interim / Quarterly Report 2016

Jan 28, 2016

ASX Announcement

ASX: DYL

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29 January 2016

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDING 31 DECEMBER 2015

HIGHLIGHTS

Corporate and Market Comments:

• DYL is pleased to report a cash and liquid assets balance of $2.8 million at the end of the quarter.

• Overheads have decreased with the recent departures and non-replacement of the previous chairman and Namibian Country Manager.

• The uranium spot price finished the year 3.5% down on the previous year, second only to lead in commodity price performance for the challenging year that was 2015.

• Uranium supply for the year was marginally up possibly due to one large mine exceeding production expectations (Cigar Lake) whilst another under development experienced delays (Husab).

• The nuclear power industry experienced a second year of consistent growth, whilst the outcomes from COP21 in Paris in December 2015 are likely to encourage greater nuclear expansion.

Tumas Project

• A small bulk sample was excavated for metallurgical testwork to be conducted by Marenica Energy Ltd (“MEY”) in Perth.

• The testwork is the first phase of a program designed to assess the amenability of MEY’s U- pgrade[TM] flowsheet to Tumas’s calcrete ore.

• The sample was delivered to Perth just before year end, a few weeks earlier than anticipated.

• The excavation will be deepened in the New Year and a larger second sample will be sent to Perth to supplement the first sample and enable a wider suite of tests which will take longer than originally anticipated.

• The test will be completed around mid-year, although interim results will be released during the program.

• The market analysis conducted by the Company concluded that in the foreseeable future there will be a competitive offtake market for intermediate feed to the existing uranium mines operating in the region.

Level 4, 502 Hay Street, Subiaco, WA 6008 / PO Box 1770, Subiaco, WA 6904 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 - 31 December 2015

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BUSINESS REVIEW

TUMAS PROJECT

Tumas-Tubas Palaeochannel Exploration

In November 2015 DYL’s wholly-owned operating subsidiary, Reptile Uranium Namibia Pty Ltd (“RUN”) completed the excavation of a small bulk sample from its Tumas Zone 1 palaeochannel calcrete deposit for metallurgical testwork purposes. The location of the site (see Figure 1) was within the infill drilling area of a program completed in December 2014 and reported in an ASX release dated 16 July 2015 titled “Enhanced Palaeochannel Prospectivity”.

The small bulk sample will be the subject of metallurgical testwork to be conducted by Marenica Energy Ltd (“MEY”) in Perth, designed to assess the amenability of MEY’s U-pgrade[TM] flowsheet to Tumas’s calcrete ore. If the testwork is successful the Company’s ultimate objective is to develop an operation capable of cost effectively producing a high grade intermediate product for satellite supply to any one of the existing Namibian uranium mines. If the metallurgical testwork results are similar to what has been achieved by MEY on other deposits, the resulting high grade product should be economical to transport and attractive to existing Namibian uranium producers.

The potential also exists (once again assuming testwork success) that RUN’s palaeochannels (Tumas and Tubas) could become a standalone operation, depending primarily on relative capital and operating costs.

Initially, it was planned to send a sample of approximately 1 tonne however during the excavation a hard layer was encountered which the bucket excavator could not penetrate. With no immediate way to break through this layer (equipment availability being a problem at that time of the year) a decision was made to send an initial smaller sample to Perth.

During the festive season break plans were made to recommence excavation immediately once the RUN office re-opened. The excavation will be deepened and a larger second sample will be sent to Perth to supplement the first sample and enable a wider suite of tests.

As a result of this change in plan the testwork is expected to take longer and be completed around mid-year, although it is expected that interim results will be available to be released during the program.

Whilst the existing palaeochannel resource is relatively small its upside potential is substantial as demonstrated by the Company’s recent exploration success. (See DYL’s previous quarterly reports and its ASX release dated 16 July 2015 titled “Enhanced Palaeochannel Prospectivity” for more information.)

Offtake Market Analysis

As explained in its previous Quarterly DYL had historically engaged with the two existing Namibian uranium mines and the third aspiring producer (see Figure 2) to find an offtaker for an intermediate product planned to be produced from RUN’s Tubas Sand Project. At the time, none of these parties were willing, for their own various reasons, to commit to offtake. DYL is becoming increasingly more confident from its recent market analysis that this picture is changing and has concluded that in the foreseeable future there will be a competitive offtake market for intermediate feed to the existing uranium mines operating in the region.

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Quarterly Report - 31 December 2015

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Figure 1: Map showing location of the area from which the bulk sample was excavated.

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Figure 2: Map showing potential future intermediate product offtakers.

Page 3

Quarterly Report - 31 December 2015

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MARKET COMMENT

The uranium spot price finished the year 3.5% down on the previous year, second only to lead in commodity price performance for the challenging year that was 2015. However on an annual average price basis the price was actually 10% up on the previous year one of the few commodities to do so.

Uranium supply for the year was marginally up possibly due in part to one of the world’s largest mines, Cigar Lake, exceeding production expectations in what is still considered its ramp-up phase. On the other hand, CGNPC’s Husab Project, located some 25km due north of RUN’s Omahola Project, experienced an unfortunate serious mill fire on 29 December 2015 which can reasonably be expected to lead to a significant delay in commissioning. Given the size of the Chinese strategic stockpile it is debatable whether this may have any tangible impact on overall market dynamics; only time will tell.

Market demand in 2015 was encouraging with the nuclear power industry experiencing a second year of consistent growth. China, Russia, India and South Korea continue to drive growth but the prognosis for Japanese restarts also continues to improve, as does new build in regions such as the Middle East and more recently South Africa.

Some may consider it optimistic to claim that the outcomes from the COP21 climate meeting in Paris in December 2015 are likely to encourage greater nuclear expansion across the globe, however many commentators believe this to be an entirely reasonable claim. After all, 196 countries have now signed an agreement to limit the global rise in temperature to 2[o] C by the end of this century. To achieve this, the planet’s power generation will need to be virtually decarbonised by mid-century. The only way to do this is with a mix of technologies including nuclear and renewables.

It is worth noting that nuclear provides some 11% of the world’s electricity (without subsidies) and avoids over 2 billion tonnes of CO2 emissions annually. By comparison, after decades of subsidies, incentives and promotion, the combined output of all renewables (wind, solar, geothermal, and biomass) is still only 2% of the world’s electricity and avoid approximately only 0.1 billion tonnes of CO2 emissions annually.

CORPORATE

DYL is pleased to report a balance of $2.8 million of cash and liquid assets as at 31 December 2015. Overheads have decreased with the recent departures and non-replacement of the previous chairman, Mr Tim Netscher and the Namibian Country Manager, Mr Peter Christians and the implementation of a further 10% reduction in non-executive director fees, as signalled in DYL’s previous quarterly. Mr Rudolf Brunovs, a longstanding DYL non-executive director succeeded Mr Netscher whilst no replacement will be made for Mr Christians until the situation changes significantly.

During the quarter 12,481,513 shares were issued in relation to shareholder approved payments in lieu of salaries and director fees and 1,250,000 shares were issued as a result of the vesting of performance share rights. During the quarter 43,900,000 performance share rights were granted, 6,012,000 were cancelled and 4,000,000 lapsed unexercised.

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

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Quarterly Report - 31 December 2015

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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. Its flagship is the higher grade alaskite Omahola Project on which studies are being conducted to supplement the recently completed preliminary economic analysis and the scoping phase of metallurgical testwork is being planned.

The Company is also evaluating fast track development options for its surficial calcrete deposits which are amenable to various physical beneficiation upgrading techniques that have been successfully tested over the last four years.

Competent Person’s Statements

In this report where the Company refers to the results of the Tumas Zone 1 Infill Drilling Exploration Program and the Geophysical Interpretation by consultants Resource Potentials (referencing the release made to the ASX on 16 July 2015), DYL confirms that it is not aware of any new information or data that materially affects the information disclosed in that release and the form and context of the announcement has not materially changed.

Forward-Looking Statements

Certain statements made in this announcement, including, without limitation, those concerning the preliminary economic analysis of the Omahola Project and the resource potential of the Company’s Palaeochannel system located in Namibia, contain or comprise certain forward-looking statements regarding DYL’s exploration operations, economic performance and financial condition. Although DYL believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in metals prices and exchange rates and business and operational risk management. DYL undertakes no obligation to update publicly or release any revisions to these forwardlooking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events.

The Company notes that an inferred resource has a lower level of confidence than an indicated or measured resource. The Company believes that based on the geological nature of its deposit and the work done over several years by its geological team and its Competent Person that there is a high degree of probability that the inferred resources will upgrade to indicated resources with further exploration work.

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Annexure 1

Schedule of Mineral Tenure – December 2015

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) **	Number Name Interest Expiry Date JV Parties Approx. Area **(km2) **
EPL 3496 Tubas 100% 05.06.2015#1 - 709
EPL 3497 Tumas 100% 05.06.2015#1 - 637
EPL 3498 Aussinanis 85% 07.05.2016			5% Epangelo#3 253
EPL 3499 Ripnes 85% 05.06.2015#1 10% Oponona#4 522
EPL 3668 Gawib West 65% 20.11.2015#1			25% Nova (Africa)#5 10% Sixzone#6 185 163 640
EPL 3669 Tumas North 65% 20.11.2015#1
EPL 3670 Chungochoab 65% 20.11.2015#1
ML 173#2 Tubas Sand 95% Application -
ML 174#2 Inca 95% Application		5% Oponona#4 -
ML 176#2 Shiyela 95% 05.12.2027 -
#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 3,109

NORTHERN TERRITORY

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

QUEENSLAND

Number EPM 14916	Name Ewen	Interest 100%	Expiry Date 14.05.16	JV Parties -	Approx. Area (km2) 58
EPM 15070	Prospector	100%	27.03.16	-	77
			Sub-Total		135
			DYL Total		3,478

AGREEMENTS

ABM Resources NL - Northern Territory	(100%	uranium rights	stay	with DYL)	Approx. Area (km2) 14,142
				Sub-Total	14,142
				Total Area	17,620

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
DEEP YELLOW LIMITED
ABN 97 006 391 948 Consolidated statement of cash flows	Quarter ended (“current quarter”)
	31 DEC 2015
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Tax refund 1.7 Other Net Operating Cash Flows*		Current quarter $A’000	Year to date (6 months) $A’000
		- (275) - - (292) - 24 - - 1	- (589) - - (617) - 49 - 50 2
		(542)	(1,105)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets (d) environmental and other bonds 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets (d) environmental and other bonds 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)		- - (7) - - - - 2 - - -	- - (10) - - - - 3 - - -
		(4)	(7)
		(546)	(1,112)

• 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)	1.13 Total operating and investing cash flows (brought forward)	1.13 Total operating and investing cash flows (brought forward)	(546)	(546)	(546)	(1,112)
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			- - - - - -			- - - - - -
			-			-
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			(546) 3,435 (118)			(1,112) 3,927 (44)
			2,771			2,771
Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities
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
						144
						-
1.25 Explanation necessaryforanunderstanding ofthe transactions Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets andliabilities but didnotinvolve cash flows NIL 2.2 Details of outlays made by other entities to establish or increase their share in projects in whichthereporting entityhas an interest NIL	Explanation necessaryforanunderstanding ofthe transactions
	NIL
	Details of outlays made by other entities to establish or increase their share in projects in whichthereporting entityhas 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
		-		-
		-		-

Financing facilities available	Financing facilities available
Add	notes as necessary for an understanding of the position.
		Amount available	Amount used
		$A’000	$A’000
3.1	Loan facilities	-	-
3.2	Credit standby arrangements	-	-

• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 2

Appendix 5B Mining exploration entity quarterly report

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	370
	-
	-
	280
Total	650

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related itemsinthe accountsis asfollows.	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)	2,271	1,935
	500	1,500
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	2,771	3,435

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 **
	EL24246 EPM14281	Partial relinquishment Transfer	149 blocks 22 blocks	74 blocks 0 blocks
	-	-	-	-

• 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.

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	1,931,335,128	1,931,335,128	-	-
	13,731,513	13,731,513	*	*
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 -
	-	-	-	-
	-	-	-	-
	- - - -	- - - -	- - - -	- - - -
	-	-	-	-

*Shares issued in lieu of director fees and in relation to vested performance rights.

• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 4

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 12,761,000 3,000,000 24,475,000 21,985,000	- - - -	- - - -	Vesting dates 01/07/2016 01/12/2016 01/07/2017 01/07/2018
	5,780,000 15,475,000 22,645,000	- - -	- - -	Vesting dates 01/07/2016 01/07/2017 01/07/2018
	1,250,000	-	-	Share issue date 31/12/2015
	4,000,000	-	-	Date lapsed 31/12/2015
	6,012,000	-	-	Date cancelled 24/07/2015
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 not~~ * (delete one) give a true and fair view of the matters disclosed.

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Sign here: ............................................................ Date: 29 January 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.

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• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 6