DEEP YELLOW LIMITED — Interim / Quarterly Report 2017

Mar 12, 2017

==> picture [402 x 21] intentionally omitted <==

==> picture [402 x 21] intentionally omitted <==

==> picture [402 x 21] intentionally omitted <==

==> picture [402 x 21] intentionally omitted <==

10 March 2017

ASX Market Announcements Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000

Dear Sir/Madam,

31 December 2016 Half Year Financial Report

Attached please find Half Year Financial Report for the six months ended 31 December 2016.

Yours faithfully

==> picture [134 x 72] intentionally omitted <==

JOHN BORSHOFF Managing Director/CEO Deep Yellow Limited

Unit 1, 100-104 Railway Road 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: admin@deepyellow.com.au / Website: www.deepyellow.com.au

==> picture [482 x 97] intentionally omitted <==

(ACN 006 391 948)

==> picture [483 x 37] intentionally omitted <==

HALF YEAR REPORT - 31 DECEMBER 2016

==> picture [483 x 32] intentionally omitted <==

==> picture [373 x 36] intentionally omitted <==

Contents

==> picture [373 x 32] intentionally omitted <==

Corporate Information	1
Directors’ Report	2
Auditor’s Independence Declaration	5
Interim Consolidated Statement of Profit and Loss and	6
Other Comprehensive Income
Interim Consolidated Statement of Financial Position	7
Interim Consolidated Statement of Changes in Equity	8
Interim Consolidated Statement of Cash flows	9
Notes to the Half-Year Financial Statements	10
Directors’ Declaration	18
Independent Review Report	19

Corporate Information

Board of Directors

Registered Office

Rudolf Brunovs Chairman (Non-executive) Unit 1, Spectrum Building John Borshoff Managing Director 100 Railway Road Mervyn Greene Non-executive Director Subiaco Western Australia 6008 Justin Reid Non-executive Director Telephone: + 61 8 9286 6999 Gillian Swaby Executive Director Facsimile: + 61 8 9286 6969 Christophe Urtel Non-executive Director

Company Secretary

Postal Address

Mr Mark Pitts

PO Box 1770 Subiaco Western Australia 6904

Stock Exchange Listings

Auditor

Australian Securities Exchange (ASX) Namibian Stock Exchange (NSX)

Ernst & Young 11 Mounts Bay Road Perth Western Australia 6000

Website Address

Share Registry

www.deepyellow.com.au

ASX and NSX Code

Computershare Investor Services Pty Limited Level 2, Reserve Bank Building 45 St George’s Terrace

DYL

Australian Business Number

Perth Western Australia 6000 Telephone: 1300 557 010 Facsimile: +61 8 9323 2033

97 006 391 948

Deep Yellow Limited

Half Year Report 2016

- 1 -

Directors’ Report

The Directors of Deep Yellow Limited (“Company”) submit their report for the half-year ended 31 December 2016.

Directors

The names of the Company’s directors in office during the half-year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.

Rudolf Brunovs	Chairman (Non-Executive)
John Borshoff	Managing Director (Appointed 23 October 2016)
Mervyn Greene	Non-Executive Director
Justin Reid	Non-Executive Director (Appointed 28 October 2016)
Gillian Swaby	Executive Director
Christophe Urtel	Non-Executive Director
Greg Cochran	Managing Director (Ceased 23 October 2016)

Review and results of operations

On 23 October the Company appointed John Borshoff as Managing Director and established a strategic relationship with Exploration Capital Partners an affiliate of the North American Sprott Group (“Sprott”). Concurrently, Sprott made an initial investment via a placement to recapitalise the Company and support its future growth strategy, anchored by its flagship Namibian assets. Justin Reid was appointed to the Board as Sprott’s nominee.

Subsequently, a detailed review of the Company was undertaken resulting in the development of a strategic growth plan that was adopted by the Board post the end of the half-year. The first step in the plan required a consolidation of the share capital of the Company. On 28 February 2017 shareholders passed an ordinary resolution to consolidate its issued capital on the basis that every twenty fully paid ordinary shares (Shares) and Performance Share Rights (Rights) be consolidated into one Share and Right respectively.

Namibian assets

Reptile (EPLs 3496, 3497)

• A Mineral Resource Estimate of the Tumas Deposit conforming to the JORC (2012) Code has been completed with a 12% increase in metal content at the previous average grade and cut-off. The Mineral Resource Estimate announced during October 2016 totals 16.6Mt at 366 pm U3O8 for 13.3Mlb of U3O8 at a cut-off of 200 ppm U3O8.

• A detailed data review and evaluation is underway to identify the possibility for a further resource increase by data reinterpretation and mapping. This will be followed by grade confirmation drilling to commence March 2017 for ore resource re-estimation and identifying new calcrete uranium resources within the paleo-channel system.

• A Technology Licence Agreement was entered into with Marenica Energy Ltd (“Marenica”) in relation to the use of Marenica’s U-pgrade[TM] process. Following a full operational review to establish the optimal way forward for the Company, the active engagement with Marenica has ceased indefinitely, to accommodate the new priorities that have been identified through the strategic growth plan developed for the Company.

Tumas JORC 2012 Mineral Resource Estimate

Category	Cut-off Tonnes eU3O8 U3O8 U3O8
	(ppmU3O8) (M) (ppm) (t) (Mlb)
Measured Indicated Inferred Total	200 9.7 386 3,700 8.2 200 6.5 336 2,200 4.8 200 0.4 351 150 0.3
	200 16.6 366 6,050 13.3

Deep Yellow Limited

Half Year Report 2016

- 2 -

Directors’ Report

Nova JV (EPLs 3669, 3670)

• Satellite imagery with 1.5m spatial resolution covering the total JV area has been acquired to prepare an initial geological photointerpretation of both tenements. Initial results of the interpretation indicate that field checking in 2017 could lead to substantial changes in geological understanding with the expectation that targets could be delineated for follow-up drilling.

• On 19 January 2017, the Minister of Mines and Energy (“MME”) issued notices of preparedness to grant renewal of EPLs 3669 and 3670. Application for renewal was made in August 2015 and renewal extensions have now been granted by the MME to 20 November 2019.

Exploration Results and Mineral Resource Estimate

The information in this report that relates to exploration results or planning is based on information compiled by Mr. Martin Hirsch, M.Sc .Geology, 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 and 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.

Where the Company refers to the Tumas Project Mineral Resource Estimate in this report (referencing the release made to the ASX on 25 October 2016 entitled “Tumas Project Mineral Resource Estimate”), it confirms that it is not aware of any new information or data that materially affects the information included in that announcement and all material assumptions and technical parameters underpinning the resource estimate with that announcement continue to apply and have not materially changed.

Australian assets

• The Company relinquished ownership of its Napperby Project (EL24246) located in the Northern Territory during October 2016.

• The Company retains its right for 100% of any uranium identified in certain tenements located in the Northern Territory through agreement with ABM Resources NL.

Results of operations

Exploration expenditure for the half-year was $619,119 (December 2015: $433,469).

Consolidated loss from continuing operations after income tax for the half-year was $1,342,928 (December 2015: $881,331). Included in the total expenses of $1,417,694 (December 2015: $984,810) for the period is exploration costs written off to the amount of $15,379 (December 2015: $88,888).

Fund raising

The Company has successfully raised $752,600 (before costs) through a Share Purchase Plan that closed on 1 July 2016 with subscriptions for 188,150,000 ordinary shares at 0.4 cents per share.

On 28 October 2016 an affiliate of Sprott made an initial investment via placement and subscribed for 321,648,376 fully paid ordinary shares in the issued capital of the Company at 0.44 cents per share for gross proceeds of A$1,415,253.

Issued share capital increased by $2,396,031 during the period. The increase relates to the above fund raisings after costs, issue of shares to employees in relation to the vesting of Performance Share Rights and issue of shares in lieu of director fees.

Deep Yellow Limited

Half Year Report 2016

- 3 -

Directors’ Report

Auditor’s Declaration

A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 is set out on page 5 and forms part of this Directors’ Report for the half year ended 31 December 2016.

Signed in accordance with a resolution of the Board of Directors.

==> picture [132 x 63] intentionally omitted <==

John Borshoff Managing Director Dated this day 10 March 2017

Deep Yellow Limited

Half Year Report 2016

- 4 -

Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

==> picture [71 x 81] intentionally omitted <==

Auditor’s Independence Declaration to the Directors of Deep Yellow Limited

As lead auditor for the review of Deep Yellow Limited for the half-year ended 31 December 2016, I declare to the best of my knowledge and belief, there have been:

• a. no contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

• b. no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Deep Yellow Limited and the entities it controlled during the financial year.

Ernst & Young

==> picture [132 x 46] intentionally omitted <==

G H Meyerowitz Partner 10 March 2017

GHM:JT:DYL:006

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Half Year Ended 31 December 2016

	Consolidated
Notes	31 December 2016 $ 31 December 2015 $
Interest revenue Other income 3 Revenue and other income Depreciation and amortisation expenses 3 Marketing expenses Occupancy expenses Administrative expenses Employee expenses 3 Exploration costs written off 7 Loss before income tax Income tax expense 3 Loss for the period after income tax Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation profit/(loss) Other comprehensive profit/(loss) for the period, net of tax Total comprehensive profit/(loss) for the period, net of tax Earnings per share for loss attributable to the ordinary equity holders of the Company Basic loss per share 14 Diluted loss per share 14	24,369 51,326 50,755 52,525
	75,124 103,851 (17,227) (16,506) (12,554) (5,227) (30,355) (49,222) (647,888) (469,696) (694,291) (355,271) (15,379) (88,888)
	(1,342,570) (880,959) (358) (372)
	(1,342,928) (881,331)
	3,922,440 (6,233,215)
	3,922,440 (6,233,215)
	2,579,512 (7,114,546)
	Cents Cents (1.19) (0.92)
	(1.19) (0.92)

The accompanying notes form part of these financial statements

Deep Yellow Limited

Half Year Report 2016

- 6 -

Interim Consolidated Statement of Financial Position

As at 31 December 2016

	Consolidated
Notes	31 December 2016 30 June 2016
	$ $
Assets Current Assets Cash and cash equivalents 5 Trade and other receivables Other assets Total Current Assets Non-Current Assets Property, plant and equipment 6 Deferred exploration expenditure 7 Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Total Current Liabilities Total Liabilities Net Assets Equity Issued capital 8 Accumulated losses Employee equity benefits reserve Foreign currency translation reserve Total Equity	2,401,526 1,579,488 151,239 71,619 81,719 98,897
	2,634,484 1,750,004
	492,623 442,607 53,390,163 49,039,393
	53,882,786 49,482,000
	56,517,270 51,232,004
	512,370 289,148
	512,370 289,148
	512,370 289,148
	56,004,900 50,942,856
	224,451,472 222,055,441 (163,069,073) (161,726,145) 10,529,350 10,442,849 (15,906,849) (19,829,289)
	56,004,900 50,942,856

The accompanying notes form part of these financial statements

Deep Yellow Limited

Half Year Report 2016

- 7 -

Interim Consolidated Statement of Changes in Equity For the Half Year Ended 31 December 2016

	Issued capital Accumulated losses Employee equity benefits reserve	Foreign currency translation reserve Total Equity
	$ $ $	$ $
At 1 July 2016 Loss for the period Other comprehensive income Total comprehensive (loss)/income for the period Transactions with owners in their capacity as owners: Issue of share capital Capital raising costs Vesting of performance rights Performance rights expensed Share based payments At 31 December 2016	222,055,441 (161,726,145) 10,442,849	(19,829,289) 50,942,856
	- (1,342,928) - - - -	- (1,342,928) 3,922,440 3,922,440
	- (1,342,928) - 2,167,853 - - (83,743) - - 192,530 - (192,530) - - 279,031 119,391 - -	3,922,440 2,579,512 - 2,167,853 - (83,743) - - - 279,031 - 119,391
	224,451,472 (163,069,073) 10,529,350	(15,906,849) 56,004,900
	Issued capital Accumulated losses Employee equity benefits reserve	Foreign currency translation reserve Total Equity
	$ $ $	$ $
At 1 July 2015 Loss for the period Other comprehensive loss Total comprehensive loss for the period Transactions with owners in their capacity as owners: Vesting of performance rights Performance rights expensed Share based payments At 31 December 2015	221,601,827 (159,969,549) 10,404,702	(14,436,491) 57,600,489
	- (881,331) - - - -	- (881,331) (6,233,215) (6,233,215)
	- (881,331) - 149,105 - (149,105) - - 56,342 177,151 - (33,433)	(6,233,215) (7,114,546) - - - 56,342 - 143,718
	221,928,083 (160,850,880) 10,278,506	(20,669,706) 50,686,003

The accompanying notes form part of these financial statements

Deep Yellow Limited

Half Year Report 2016

- 8 -

Interim Consolidated Statement of Cash Flows For the Half Year Ended 31 December 2016

	Consolidated
Notes	31 December 2016 31 December 2015
	$ $
Cash flows from operating activities Payments to suppliers and employees Interest received Research and development tax incentive Other receipts Tax paid in foreign jurisdiction Net cash flows used in operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for exploration expenditure Proceeds on disposal of security deposits Net cash flows used in investing activities Cash flows from financing activities Proceeds from issue of shares Capital raising costs Net cash flows from financing activities Net increase/(decrease) in cash held Net foreign exchange difference Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 5	(773,666) (620,995) 17,375 49,176 44,730 50,323 6,025 - (358) (372)
	(705,894) (521,868)
	(18,915) (9,341) (693,808) (581,427) 40,532 2,500
	(672,191) (588,268)
	2,167,852 - (83,743) -
	2,084,109 -
	706,024 (1,110,136) 116,014 (45,331) 1,579,488 3,926,631
	2,401,526 2,771,164

The accompanying notes form part of these financial statements

Deep Yellow Limited

Half Year Report 2016

- 9 -

Notes to the Financial Statements for the Half Year ended 31 December 2016

Note 1 Corporate information

The interim condensed consolidated financial statements of Deep Yellow Limited and its subsidiaries (collectively, the Group) for the half year ended 31 December 2016 were authorised for issue in accordance with a resolution of the Directors on 8 March 2017, subject to minor changes.

Deep Yellow Limited is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded. The Group’s principal activities are uranium mineral exploration and pre-development activities in Namibia.

Note 2 Basis of preparation and changes to the Group’s accounting policies

Basis of preparation

The interim condensed consolidated financial statements for the half year ended 31 December 2016 have been prepared in accordance with IAS 34 Interim Financial Reporting and the Corporations Act 2001.

The interim condensed consolidated financial statements do not include all the information and disclosures normally included within the annual financial statements and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the annual financial statements.

It is recommended that the interim condensed consolidated financial statements be read in conjunction with the Group’s annual financial statements for the year ended 30 June 2016 and considered together with any public announcements made by Deep Yellow Limited during the half year ended 31 December 2016 in accordance with the continuous disclosure obligations of the ASX listing rules.

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2016.

Deep Yellow Limited has elected not to adopt any new standards or amendments that have been issued but are not yet effective.

Deep Yellow Limited

Half Year Report 2016

- 10 -

Notes to the Financial Statements for the Half Year ended 31 December 2016

Note 3 Income and expenses

	Consolidated
	31 December 2016 31 December 2015
	$ $
Loss for the period includes: Other income Rental and sundry income Research and development tax incentive Depreciation expense Office equipment Buildings Employee expenses Wages, salaries and fees Superannuation Share based payments	6,025 2,202 44,730 50,323
	50,755 52,525
	5,392 4,574 11,835 11,932
	17,227 16,506
	401,548 212,491 29,721 9,160 263,022 133,620
	694,291 355,271

Income Tax

The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings.

Numerical reconciliation between aggregate tax expense recognised in the statement of profit and loss and other comprehensive income and tax expense calculated per the statutory income tax rate Loss before income tax Prima facie tax on result at 30% (2015: 30%) Effect of tax rates in foreign jurisdictions Non-deductible share based payment expense Under provision in prior year Carry forward tax losses not brought to account Non-assessable income: Research and development incentive Other Income tax expense recognised in statement of profit and loss and other comprehensive income	(1,342,570) (880,959)
	(402,771) (264,288) 53,923 67,034 78,907 60,018 (358) (372) 265,767 143,867 (13,419) (15,097) 17,593 8,466
	(358) (372)

Deep Yellow Limited

Half Year Report 2016

- 11 -

Notes to the Financial Statements for the Half Year ended 31 December 2016

Note 4 Operating segment information

The following tables present revenue and profit information for the Group’s operating segments for the half years ended 31 December 2016 and 2015, respectively.

		Australia $ Namibia $	Total $
Half Year Ended 31 December 2016 Revenue Other income Unallocated Interest income Research and development tax incentive Total revenue Results Pre-tax segment profit and loss Unallocated Interest income Research and development tax incentive Income tax expense Loss from continuing operations after income tax		6,000 25	6,025 24,369 44,730
		(1,268,355) (143,314)
			75,124
			(1,411,669) 24,369 44,730 (358)
			(1,342,928)
		Australia $ Namibia $	Total $
Half Year Ended 31 December 2015 Revenue Other income Unallocated Interest income Research and development tax incentive Total revenue Results Pre-tax segment profit and loss Unallocated Interest income Research and development tax incentive Income tax expense Loss from continuing operations after income tax		- 2,202	2,202 51,326 50,323
		(764,770) (217,838)
			103,851
			(982,608) 51,326 50,323 (372)
			(881,331)

Deep Yellow Limited

Half Year Report 2016

- 12 -

Notes to the Financial Statements for the Half Year ended 31 December 2016

Note 4 Operating segment information (cont.)

The following tables present assets information for the Group’s operating segments as at 31 December 2016 and 30 June 2016, respectively.

	Australia $ Namibia $	Total $
Half Year Ended 31 December 2016 Segment Assets Segment operating assets Unallocated assets Cash Receivables Total assets	62,923 53,901,583	53,964,505 2,401,526 151,239
		56,517,270
	Australia $ Namibia $	Total $
Year Ended 30 June 2016 Segment Assets Segment operating assets Unallocated assets Cash Receivables Total assets	103,078 49,477,819	49,580,897 1,579,488 71,619
		51,232,004

Adjustments and eliminations

The following items and associated assets are not allocated to individual segments as the underlying instruments are managed on an overall group basis:

• Interest income

• Taxes

• Cash

• Receivables

• Liabilities are not allocated to the segments as they are not monitored by the executive management team on a segment by segment basis

Note 5 Current assets – cash and cash equivalents

	Consolidated
	31 December 2016 30 June 2016 31 December 2015
	$ $ $
Cash at bank and in hand Short term deposits Total cash and cash equivalents	1,401,526 829,488 2,271,164 1,000,000 750,000 500,000
	2,401,526 1,579,488 2,771,164

Deep Yellow Limited

Half Year Report 2016

- 13 -

Notes to the Financial Statements for the Half Year ended 31 December 2016

Note 6 Property, Plant and equipment

There had been no significant acquisitions or disposals of assets for the half year ended 31 December 2016.

Note 7 Deferred exploration expenditure

	Consolidated
	31 December 2016 30 June 2016 31 December 2015
	$ $ $
Cost brought forward at the start of the reporting period Exploration expenditure incurred during the period at cost Exchange adjustment Exploration expenditure written off Cost carried forward at the end of the reporting period	49,039,393 47,591,203 53,301,619 619,119 651,611 433,469 3,747,030 829,629 (6,054,997) (15,379) (33,050) (88,888)
	53,390,163 49,039,393 47,591,203

The Group has relinquished ownership of its last Australian tenement, Napperby during October 2016 and continues to focus all exploration efforts on its Namibian assets.

Exploration expenditure written off relates to Australian assets that were relinquished and Namibian assets for which the expenditure is not expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale.

Note 8 Issued capital

Issued share capital increased by $2,396,031 during the period. The Company raised capital through an affiliate of Sprott making an initial investment via placement of A$1,415,253 and Share Purchase Plan subscriptions of $752,600. The remainder of the movement relates to the issue of shares to employees in relation to the vesting of Performance Share Rights and issue of shares in lieu of director fees.

Note 9 Share based payment

(a) Performance rights

Performance rights have previously been granted on an annual basis to employees under the Deep Yellow Limited Awards Plan (Awards Plan) for no consideration. The rights provide an appropriate level of incentive in a competitive environment and are cost effective in that there is no cash outlay for the Group. The rights vest if certain time and market price measures are met in the measurement period. If these time and market price measures are not met, the rights lapse. The fair value of the rights granted is estimated using a hybrid employee share option pricing model that simulates the share price of Deep Yellow Ltd as at the test date using a Monte-Carlo model. The contractual life of each granted right is seven years with a performance period of three years. There is no cash settlement of the rights.

No rights have been granted during the six month period. For the six months ended 31 December 2016, the Group has recognised a write back of $73,209 of performance rights transactions in the interim consolidated statement of profit and loss and other comprehensive income as a result of performance rights that were forfeited. (30 June 2015: expense of $123,927).

Deep Yellow Limited

Half Year Report 2016

- 14 -

Notes to the Financial Statements for the Half Year ended 31 December 2016

(b) Share rights

Share rights have been allocated on a progressive monthly basis to directors in lieu of fees and salaries until 30 November 2016 in a continued effort to conserve cash reserves. Shares to be issued in relation to the share rights were calculated based on the 5-Day VWAP for the relevant month and the accumulated shares were issued on 1 December 2016. The 5-Day VWAP is the volume weighted average share price for the five days on which shares are traded up to but excluding the 20[th] of the relevant month. There were no outstanding share rights on 31 December 2016 with a portion of director fees accrued from 1 December 2016

(c) Loan Plan Shares

On 1 December 2016, 100,000,000 shares were granted to the Managing Director under the Deep Yellow Limited Share Loan Plan (Share Plan). The Share Plan rewards and incentivises employees (including Directors who are employees of the Company) and contractors (participant), where shareholder approval has been granted, through an arrangement where participants are offered shares subject to long term performance conditions. The shares are offered at market value such that the incentive is linked to the increase in value over and above the purchase price and so aligns the participants to the risks and rewards of a shareholder. The purchase price payable by the participant for the ordinary shares is lent to the participant under an interest free limited recourse loan, with the loan secured against the shares. The loan can be repaid at any time, however, the loan must be repaid on the earlier of 10 years after the issuance of the shares and the occurrence of:

• a) in the case of vested shares, the date being 12 months after cessation of employment or service contract for any reason; or

• b) pre-determined occurrences as per the Share Plan including but not limited to a Control Event or material breach by the Participant.

The shares vest if certain company share price targets are met and the holder of the awards remains employed with the Company during the measurement period. If these conditions are not met the shares are forfeited and the forfeited shares are treated as full consideration for the repayment of the loan. A participant may not trade shares acquired under the Plan until the shares have vested, any imposed dealing restrictions have ended and the limited recourse loan in respect to those shares has been paid in full. The fair value at grant date is estimated using a Black Scholes option pricing model for shares with non-market based vesting conditions and a Monte-Carlo model for those with market based vesting conditions. The fair value of shares granted during the six month period ended 31 December 2016 was estimated on the date of grant using the following assumptions:

Dividend yield (%) Zero Expected volatility (%) 110.00 Risk free interest rate (%) 2.73 Expected loan term (years) 10.00 Share price at valuation date ($) 0.011

The weighted average fair value of the shares granted during the six month period was $0.00833 (year ended 30 June 2016: Nil)

For the six months ended 31 December 2016, the Group has recognised $336,231 of loan plan share expense in the statement of profit or loss (31 December 2015: Nil)

Note 10 Contingent assets and liabilities

There were no material contingent assets or liabilities as at 31 December 2016.

Deep Yellow Limited

Half Year Report 2016

- 15 -

Notes to the Financial Statements for the Half Year ended 31 December 2016

Note 11 Events after the reporting date

On 28 February 2017 shareholders passed an ordinary resolution to consolidate the Company’s issued capital on the basis that:

• a) every twenty fully paid ordinary shares be consolidated into one fully paid ordinary share;

• b) the Performance Share Rights on issue be adjusted in accordance with Listing Rule 7.21; and

• c) where the number of Shares or Performance Share Rights held by a member of the Company as a result of the consolidation includes any fraction of a Share or Performance Right, that fraction be cancelled and extinguished.

Accordingly, the Company’s capital structure now comprises the following:

Accordingly, the Company’s capital structure now comprises	the following:
	Post Consolidation
Total Ordinary Shares	129,577,759
Performance Share Rights(i)	264,500
Performance Share Rights(ii)	225,250
Performance Share Rights(iii)	95,500
Performance Share Rights(iv)	124,000

(i) Time based vesting 1 July 2017 (ii) Time based vesting 1 July 2018 (iii) Market price vesting - $1.40 (iv) Market price vesting - $0.70

In addition, 3,500,000 shares have previously been issued pursuant to the Deep Yellow Loan Share Plan. These shares are included in the Total Ordinary Shares in the above table. The information below is provided as additional information to provide details on the vesting conditions post the consolidation.

300,000 Time based vesting 1 July 2017 600,000 Market price vesting $0.24 at 1 July 2017 350,000 Time based vesting 1 July 2018 850,000 Market price vesting $0.40 at 1 July 2018 350,000 Time based vesting 1 July 2019 1,050,000 Market price vesting $0.60 at 1 July 2019

Note 12 Financial instruments

Fair values

Set out below is a comparison of the carrying amounts and fair values of financial instruments as at 31 December 2016 and 30 June 2016:

Consolidated	December 2016 June 2016
	Carrying amount Fair value Carrying amount Fair value
	$ $ $ $
Cash and cash equivalents Trade and other receivables Trade and other payables	2,401,526 2,401,526 1,579,488 1,579,488 151,239 151,239 71,619 71,619 (512,370) (512,370) (289,148) (289,148)
	2,040,395 2,040,395 1,361,959 1,361,959

Determination of fair values

The determination of fair values for the above financial assets and liabilities have been performed on the following basis:

Cash and cash equivalents, trade and other receivables and trade and other payables approximate their carrying amounts largely due to the short term maturities of these instruments.

Deep Yellow Limited

Half Year Report 2016

- 16 -

Notes to the Financial Statements for the Half Year ended 31 December 2016

Note 13 Dividends

No dividends were paid or proposed for the six months ended 31 December 2016 or 31 December 2015.

Note 14 Earnings per share (EPS)

The number of ordinary shares outstanding decreased as a result of a consolidation of the Company’s issued capital on the basis that every twenty fully paid Shares and Rights be consolidated into one Share and Right respectively. Refer Note 11. Basic and diluted earnings per share for all periods presented were therefore adjusted retrospectively. The “per share” calculations are therefore based on the new number of weighted average shares of 112,718,530 (December 2015: 95,966,627).

Deep Yellow Limited

Half Year Report 2016

- 17 -

Directors’ Declaration

In accordance with a resolution of the Directors of Deep Yellow Limited (‘the Company’), I state that:

In the opinion of the Directors:

1. The financial statements and notes of the consolidated entity for the half year ended 31 December 2016 are in accordance with the Corporations Act 2001 , including:

2. a. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half year ended on that date; and

3. b. complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001

4. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

On behalf of the Board of Directors.

==> picture [132 x 63] intentionally omitted <==

John Borshoff Managing Director Dated this day 10 March 2017

Deep Yellow Limited

Half Year Report 2016

- 18 -

Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

==> picture [71 x 81] intentionally omitted <==

To the members of Deep Yellow Limited

Report on the half-year financial report

We have reviewed the accompanying half-year financial report of Deep Yellow Limited, which comprises the consolidated statement of financial position as at 31 December 2016, the consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Deep Yellow Limited and the entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

GHM:JT:DYL:005

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

==> picture [71 x 81] intentionally omitted <==

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Deep Yellow Limited is not in accordance with the Corporations Act 2001 , including:

• a. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and

• b. complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Ernst & Young

==> picture [132 x 46] intentionally omitted <==

G H Meyerowitz Partner Perth

10 March 2017

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation