Reptile Uranium achieves excellent report
Uranium junior set to take advantage of expected world uranium shortage.
Augetto Graig - Deep Yellow Limited and its Reptile Uranium project are the subject of a research report by Zacks Small-Cap Research released on 3 August and showing why the current share price then, of 53 US cents, was undervalued for a unique junior uranium company with a plan.
According to Steven Ralston, CFA, and as illustrated in the in-depth report, Deep Yellow is being developed to become a tier-one uranium producer ahead of an anticipated upcycle.
“Ongoing annual supply deficits and the rationalisation of capacity by the major producers, along with production cutbacks due to the pandemic, have hastened the inflection point in uranium’s commodity cycle,” according to the market researcher.
He says Deep Yellow is developing its Namibian uranium projects, including the Reptile Project, where work on a definitive feasibility study advances.
Ambitious
The company wants to become a Tier I multijurisdictional uranium producer during the current uranium up-cycle. Completion of the definitive feasibility study, including an objective of achieving a life-of-mine longer than 20 years, up from the 11 ½ years in the pre-feasibility study, is the current goal.
Several highly significant milestones have been achieved over the last six months, the report says. A multi-phase infill drilling programme was completed in the area of Tumas 3, which comprised of a 17 679-metre campaign that consisted of 911 holes. The initial focus was on Tumas 3 East, and then the programme moved to Tumas 3 Central and West. The infill drilling programme targeted the lateral extensions of the Tumas 3 deposits. Drill holes were surveyed with down-hole radiometric gamma logging providing data to confirm grade continuity across the drilled areas.
The drilling programme at Tumas 3 led to a significant upgrade of the company’s estimated resources, according to the report. The Tumas 3 deposit now has estimated indicated and inferred resources of 59.9 million pounds with U308 grading at 308 parts per million (ppm) uranium, of which 54.9 million pounds, is classified as indicated at 320 ppm uranium. The infill drilling programme upgraded 117% of prior existing inferred resources to the indicated category.
Resource increased
Total measured and indicated resources for the Tumas Project, including Tumas 1, Tumas 2 and Tumas 3 deposits, are now estimated to be 79.1 million pounds of U308 at 271 ppm, up 508% from the estimated measured and indicated resources of 13 million pounds of U308 in October 2016, when the current management took charge.
Since 2016 the company’s exploration campaigns have increased its estimated total resources by 109% from 93.8 million pounds U308 in 2016 to 195.8 million pounds of U308 in July 2021.
“Importantly, infill drilling programmes have increased indicated resources by 196% through the discovery of additional Indicated Resources and the conversion of Inferred Resources to the Indicated category,” reads the report.
Work continues on the economic feasibility of mining the uranium deposits, pit optimisation studies and additional metallurgical optimisation test work. Baseline studies on groundwater, radiological, air quality, and flora and fauna conditions were completed for the Environmental Impact Assessment (EIA) during the first half of 2021. Thereafter, the EIA Scoping Report for the Tumas Project was delivered to the relevant agencies of the Namibian government on 15 July 15 2021. The submission and approval of an EIA is required before the environmental commissioner can issue an environmental clearance certificate (ECC), which is a requirement for a mining license.
Mining licence
On 21 July, Deep Yellow filed a project mining licence application the ministry of mines and energy (MME) for the Tumas Project area. As part of the process, the MME will require submission of the definitive feasibility study on the Tumas Project, an environmental impact assessment (EIA) and an environmental management plan (EMP). Once an ECC is granted by the ministry of environment, forestry and tourism, Mining Licence (MLA 237) can be granted by the MME. The process is expected to require 18 months to complete, according to the research report.
In May, Deep Yellow was added to the Morgan Stanley Capital International (MSCI) Global Market Cap Index and to the Australia Micro-Cap Index. According to the researcher, many professional portfolio managers and mutual funds benchmark to these indices. Ninety-five of the world’s 100 largest money managers are clients of MSCI’s indices database and analytics.
“Consequently, the shareholder base of Deep Yellow should broaden, and the stock should experience greater liquidity. In addition, the inclusion of the company’s stock into these two indices should expand awareness of Deep Yellow among investors, both retail and institutional,” the report reads.
Already this year Deep Yellow has successfully completed financing to fund the twin-pillar management strategy of advancing the Tumas Project to production while becoming a multi-jurisdictional Tier 1 uranium producer. The company wants to provide a leveraged opportunity to participate in all phases of the expected upswing in uranium prices.
Track record
CEO John Borshoff and his team, previously with Paladin Energy, were able to acquire, develop and advance the Langer Heinrich deposit into production within four years (2002-2006) and the Kayelekera Mine in Malawi from 2009 to 2013, during the last uranium up-cycle.
The Langer Heinrich uranium mine is situated 30 km northeast of the Tumas Project. Deep Yellow’s executive team acquired, defined, funded, developed, optimised and operated Langer Heinrich from 2002 to 2017. The geology and type of deposit mineralisation at Langer Heinrich and Tumas are quite similar, and the mining jurisdiction is the same. Management is well prepared to fast-track Tumas to production during this uranium up-cycle, according to the report.
If the development process advances smoothly, it can be anticipated that the Tumas Project will enter production phase in two or three years, which should dovetail with the beginning of the expected uranium shortage, to become ominous with a blatant supply versus demand imbalance around 2023 or 2024, with price of uranium increasing the US$60-to-US$70 per pound. Deep Yellow’s current Namibian licences could produce 2.5-to-3.5 million pounds of uranium annually for over 20 years.
“We expect that management will deliver on its plan to become a tier-one uranium producer with an annual operating capacity of 5-to-10 million pounds of U308, both through organic growth by means of developing its Namibian projects and through acquiring and developing additional uranium projects located in other jurisdictions,” the report concludes.
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According to Steven Ralston, CFA, and as illustrated in the in-depth report, Deep Yellow is being developed to become a tier-one uranium producer ahead of an anticipated upcycle.
“Ongoing annual supply deficits and the rationalisation of capacity by the major producers, along with production cutbacks due to the pandemic, have hastened the inflection point in uranium’s commodity cycle,” according to the market researcher.
He says Deep Yellow is developing its Namibian uranium projects, including the Reptile Project, where work on a definitive feasibility study advances.
Ambitious
The company wants to become a Tier I multijurisdictional uranium producer during the current uranium up-cycle. Completion of the definitive feasibility study, including an objective of achieving a life-of-mine longer than 20 years, up from the 11 ½ years in the pre-feasibility study, is the current goal.
Several highly significant milestones have been achieved over the last six months, the report says. A multi-phase infill drilling programme was completed in the area of Tumas 3, which comprised of a 17 679-metre campaign that consisted of 911 holes. The initial focus was on Tumas 3 East, and then the programme moved to Tumas 3 Central and West. The infill drilling programme targeted the lateral extensions of the Tumas 3 deposits. Drill holes were surveyed with down-hole radiometric gamma logging providing data to confirm grade continuity across the drilled areas.
The drilling programme at Tumas 3 led to a significant upgrade of the company’s estimated resources, according to the report. The Tumas 3 deposit now has estimated indicated and inferred resources of 59.9 million pounds with U308 grading at 308 parts per million (ppm) uranium, of which 54.9 million pounds, is classified as indicated at 320 ppm uranium. The infill drilling programme upgraded 117% of prior existing inferred resources to the indicated category.
Resource increased
Total measured and indicated resources for the Tumas Project, including Tumas 1, Tumas 2 and Tumas 3 deposits, are now estimated to be 79.1 million pounds of U308 at 271 ppm, up 508% from the estimated measured and indicated resources of 13 million pounds of U308 in October 2016, when the current management took charge.
Since 2016 the company’s exploration campaigns have increased its estimated total resources by 109% from 93.8 million pounds U308 in 2016 to 195.8 million pounds of U308 in July 2021.
“Importantly, infill drilling programmes have increased indicated resources by 196% through the discovery of additional Indicated Resources and the conversion of Inferred Resources to the Indicated category,” reads the report.
Work continues on the economic feasibility of mining the uranium deposits, pit optimisation studies and additional metallurgical optimisation test work. Baseline studies on groundwater, radiological, air quality, and flora and fauna conditions were completed for the Environmental Impact Assessment (EIA) during the first half of 2021. Thereafter, the EIA Scoping Report for the Tumas Project was delivered to the relevant agencies of the Namibian government on 15 July 15 2021. The submission and approval of an EIA is required before the environmental commissioner can issue an environmental clearance certificate (ECC), which is a requirement for a mining license.
Mining licence
On 21 July, Deep Yellow filed a project mining licence application the ministry of mines and energy (MME) for the Tumas Project area. As part of the process, the MME will require submission of the definitive feasibility study on the Tumas Project, an environmental impact assessment (EIA) and an environmental management plan (EMP). Once an ECC is granted by the ministry of environment, forestry and tourism, Mining Licence (MLA 237) can be granted by the MME. The process is expected to require 18 months to complete, according to the research report.
In May, Deep Yellow was added to the Morgan Stanley Capital International (MSCI) Global Market Cap Index and to the Australia Micro-Cap Index. According to the researcher, many professional portfolio managers and mutual funds benchmark to these indices. Ninety-five of the world’s 100 largest money managers are clients of MSCI’s indices database and analytics.
“Consequently, the shareholder base of Deep Yellow should broaden, and the stock should experience greater liquidity. In addition, the inclusion of the company’s stock into these two indices should expand awareness of Deep Yellow among investors, both retail and institutional,” the report reads.
Already this year Deep Yellow has successfully completed financing to fund the twin-pillar management strategy of advancing the Tumas Project to production while becoming a multi-jurisdictional Tier 1 uranium producer. The company wants to provide a leveraged opportunity to participate in all phases of the expected upswing in uranium prices.
Track record
CEO John Borshoff and his team, previously with Paladin Energy, were able to acquire, develop and advance the Langer Heinrich deposit into production within four years (2002-2006) and the Kayelekera Mine in Malawi from 2009 to 2013, during the last uranium up-cycle.
The Langer Heinrich uranium mine is situated 30 km northeast of the Tumas Project. Deep Yellow’s executive team acquired, defined, funded, developed, optimised and operated Langer Heinrich from 2002 to 2017. The geology and type of deposit mineralisation at Langer Heinrich and Tumas are quite similar, and the mining jurisdiction is the same. Management is well prepared to fast-track Tumas to production during this uranium up-cycle, according to the report.
If the development process advances smoothly, it can be anticipated that the Tumas Project will enter production phase in two or three years, which should dovetail with the beginning of the expected uranium shortage, to become ominous with a blatant supply versus demand imbalance around 2023 or 2024, with price of uranium increasing the US$60-to-US$70 per pound. Deep Yellow’s current Namibian licences could produce 2.5-to-3.5 million pounds of uranium annually for over 20 years.
“We expect that management will deliver on its plan to become a tier-one uranium producer with an annual operating capacity of 5-to-10 million pounds of U308, both through organic growth by means of developing its Namibian projects and through acquiring and developing additional uranium projects located in other jurisdictions,” the report concludes.
[email protected]
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