Deep Yellow Limited: Entitlement Offer to Raise Up to A$15M

Perth - Deep Yellow Ltd. (ASX:DYL) (OTCMKTS:DYLLF) (DYL or the Company) advises that it plans to undertake a non-renounceable entitlement offer to raise up to approximately $15,117,405 before costs (the Entitlement Offer).

- Eligible shareholders able to subscribe for new shares priced at $0.25 per share on the basis of 7 shares for every 15 shares held

- Each new share to attract a free attaching, listed DYL option with an exercise price of $0.50 and expiring on 1 June 2022 (unless accelerated)

- Strong support from the Sprott Group of Companies (TSE:SII) (Sprott) through a commitment to take up its 12.41% entitlement and seek to place the first A$7.5 million (less the amount of Sprott commitment) of any shortfall

- Capital raising will place DYL in a strong financial position to continue its successful exploration program in Namibia and the assessment of acquisition opportunities

The Entitlement Offer will place DYL in a strong financial position to continue to deliver on its growth strategy that was implemented by the new Management team appointed in October 2016 to create a multi-project, geographically diverse uranium development company.

This new strategy is built on a dual approach of extracting full value from its Namibian exploration projects and pursuing counter-cyclical, accretive acquisition opportunities in the current low uranium price environment.

Drilling of the first of a series of new targets at DYL's 100% owned Namibian project has identified a significant new zone of calcrete associated and palaeochannel hosted uranium mineralisation, similar to the Langer Heinrich deposit located 30km to the north east (refer to ASX announcement 19 April 2017). Further drill results from the 10,000m program are anticipated in the coming weeks.

In late March, a landmark strategic earn-in was signed with Japan Oil, Gas and Metal National Corporation (JOGMEC) for the Nova Joint Venture (Nova). By spending A$4.5 million over four years, JOGMEC can earn a 39.5% interest in Nova and DYL, which remains manager of the Joint Venture, will see its interest diluted to 39.5%. Nova is considered prospective for both alaskite-associated uranium targets (e.g. Rossing) and palaeochannel-related calcrete uranium targets (e.g. Langer Heinrich) and has only been subject to minimal testing. An IP survey at Nova is scheduled to begin in the middle of this month to assist with drill targeting for later in 2017.

The DYL management team has completed a high-level review of opportunities in the uranium sector and the detailed consideration of strategies to build long-term shareholder value through counter-cyclical acquisitions is underway.

Summary of offer

The Company is pleased to announce that it will be offering eligible shareholders the opportunity to participate in a non-renounceable entitlement issue of up to approximately 60,469,620 fully paid ordinary shares (Shares) at an issue price of $0.25 per Share on the basis of 7 Shares for every 15 Shares held on the record date and up to approximately 60,469,620 options on the basis of 1 free attaching listed option for every 1 Share issued, with each option having an exercise price of $0.50 and expiring on 1 June 2022 (unless accelerated) (Option) to raise up to approximately $15,117,405 before expenses (Entitlement Offer). Further details including the timetable, the key risks and how to accept the Entitlement Offer, will be set out in a prospectus (Prospectus).

In accordance with the ASX Listing Rules, eligible shareholders have been determined to comprise those shareholders with a registered address in Australia, New Zealand, Hong Kong, Ireland, Namibia, Panama, and the United Kingdom.

Shortfall and potential private placement

Sprott Private Wealth LP and CPS Capital Group Pty Ltd (CPS) will be Co-Lead Managers to the Entitlement Offer as outlined below.

The Company has entered into finders agreements with Sprott Private Wealth LP and certain of its affiliates (together, Sprott), pursuant to which Sprott has agreed to seek to place the first A$7,501,000 of any shortfall under the Entitlement Offer (Sprott Shortfall Placement Amount) with the take up (if any) by Exploration Capital Partners 2014 Limited Partnership (Explo) of its entitlement credited towards the Sprott Shortfall Placement Amount (Sprott Shortfall Placement).

If the shortfall available under the Entitlement Offer is less than Sprott Shortfall Placement Amount (after any take up by Explo of its Entitlement that is credited towards the Sprott Shortfall Placement Amount), the Company will arrange for Sprott to place the number of Shares representing the difference between the number of Shares issued under the Sprott Shortfall Placement and the number of Shares (and an equal number of Options) required for the Shortfall Placement Amount (after any take up by Explo of its Entitlement that is credited towards the Shortfall Placement Amount), by way of a private placement (Sprott Makeup Offering). The Sprott Makeup Offering will be capped to the Company's Listing Rule 7.1 capacity ie 15% of its Equity Securities on issue.

DYL has agreed to pay Sprott a fee of 6% cash commission on all Shares placed by Sprott.

The Company has also entered into an agreement with CPS pursuant to which CPS has agreed to place on a best endeavours basis up to A$7,500,000 of any remaining shortfall under the Rights Issue which exceeds the amount placed by Sprott under the Sprott Shortfall Placement (Remaining Shortfall).

DYL has agreed to pay CPS fee of: (i) 6% cash commission (excluding GST) on all Shares placed by CPS; and issue CPS (ii) 2,000,000 Options (which will be subject to voluntary escrow for a period of 3 months from the date of issue).

Use of funds

DYL intends to apply the funds raised under the Entitlement Offer and placement towards:

a) further drilling and exploration activities in Namibia to build on recent positive results;
b) the continued evaluation and potential funding for strategic, value accretive acquisitions to build a global multi-project platform;
c) in support of acquisition of possible new projects (if identified);
d) general working capital; and
e) expenses associated with the Offer.

Prospectus and timetable

Eligible shareholders should carefully read the Prospectus and accompanying entitlement and acceptance form, which are expected to be despatched on 16 May 2017.

An Appendix 3B for the Shares and Options to be issued pursuant to the Entitlement Offer follows this announcement.

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Event                                                 Date
Announcement of Offer                                 5 May 2017
Lodgement of Appendix 3B with ASX                     5 May 2017
Prospectus lodged at ASIC and ASX                     5 May 2017
Notice sent to Shareholders                           9 May 2017
"Ex" Date (date Shares are quoted ex-rights)          10 May 2017
                                                      5.00pm (WST), 
Record Date to determine Entitlements                 11 May 2017
Prospectus (together with Entitlement and 
Acceptance Form) despatched to Shareholders           16 May 2017
Opening Date                                          16 May 2017
Closing Date                                          30 May 2017
Shares quoted on a deferred settlement basis          31 May 2017
Notification to ASX of under subscriptions            2 June 2017
Allotment date with respect to Shares and Options     6 June 2017
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About the Sprott Group of Companies

With a history dating back to 1981, Sprott is a leading alternative asset manager with a history of delivering outstanding long-term performance to clients through a diverse range of innovative products and investment strategies. Sprott's products include asset management, physical bullion trusts, private equity and debt, and wealth management through its private client and brokerage businesses.


About Deep Yellow Limited:

Deep Yellow Ltd. (ASX:DYL) (OTCMKTS:DYLLF) is an ASX-listed, Namibian-focussed advanced stage uranium exploration company. It also has a listing on the Namibian Stock Exchange (NSX.DYL). 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 which consists of surficial calcrete palaeochannel deposits which are amenable to physical beneficiation and upgrading techniques.

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




Contact:

Deep Yellow Ltd.
John Borshoff Managing Director/CEO
T: +61-8-9286-6999
F: +61-8-9286-6969
Email: john.borshoff@deepyellow.com.au
www.deepyellow.com.au