$DYLLF : John Borshoff’s Shopping List

We think a bid of up to U.S. $55M (cash and shares) for turnkey Kayelekera is possible in an effort to begin padding out Deep Yellow’s 2023-2030 development pipeline.

In other words, Borshoff certainly could strike a better deal than has already been made with Lotus — a deal with which the Malawi government would be comfortable, as the preexisting one that Paladin struck with Lotus is raw. It is our hope that Bintony Kutsaira continues to stonewall the June A$5M arrangement.

Were I Borshoff, I would aggressively undercut Lotus and negotiate with Kutsaira a mine stake boost of up to 30%, from 15-20%, in exchange for generous tax breaks through 2030.

This is just our opinion. As always, anything can happen.

We also think Forsys Metals is an attractive acquisition target, with each outstanding share of Forsys presently representing a whopping $15.11 worth of U308, or ~0.6 lbs./share (you WANT to command a lot of resources per share), a result of the company’s long-term commitment to effective dormancy and ultra-low cash burn.

Another metric that probably hasn’t gone unnoticed is Forsys’ Market Cap Valuation per Resource Lb., which is a mere $0.14, which in our eyes, makes the company one of the most undervalued development-stage uranium names.

Additionally, Forsys Metals’ $12.8M market cap is currently valued at half a percent of the value of proven reserves at Norasa ($2,371,805,000), which is outrageous.

Deep Yellow in Discussions with Multiple Parties to Advance Its Project Acquisition Growth Strategy

Deep Yellow is eager to take advantage of the uranium downturn to buy lbs. cheap. Management has hinted that an acquisition would transform the company into a ‘globally diversified uranium platform,’ which suggests management may be in talks with advanced explorers and early developers outside of Namibia.* Wording in recent press releases may also be construed to indicate that a strategic acquisition is imminent.

*Strategy for Growth

Establish through selective sector consolidation a multi-project, global uranium platform with a project pipeline eventually supporting 5-10Mlb annual low cost production with multi-mine capability.

Press Release: Placement and SPP to Fund Growth Strategy

Namibia Poised to Become World’s 4th Largest Producer of Uranium, Eclipsing Niger

The Namibian Government has lifted a ten year moratorium on new uranium exploration and production licenses and has rescinded its long-standing Namibian ownership and management clause.

One recent beneficiary of deregulation is Australian explorer, Marenica Energy*, which has acquired exploration licenses for five tenements covering 180km of prospective territory.

With its uranium mining sector currently ranked fifth globally, it is the Namibian Government’s belief that aggressive deregulation will incentivize strategic investments that will transform the nation into the world’s 4th largest producer.

*Marenica Energy is the developer and patent-holder of the U-pgrade beneficiation process for surficial uranium projects. U-pgrade technology has been licensed for use at Deep Yellow’s Tumas Uranium Project, where it has been theorized that the process will dramatically transform the economics of the deposit, lowering capital and operating costs by as much as 50%, compared to conventional processing, as > 95% of mass of the ore is rejected prior to leaching. Incorporation of the technology into development of Tumas significantly lowers the price hurdle of the Project.

Japan to Pump N$1 billion into Namibian Uranium

Japan Oil, Gas and Metals National Corporation (Jomec) has approved a U.S. $70 M (N$1 Billion) ’20 exploration budget on its Nova JV with Deep Yellow.

The Nova JV, in which Jogmec holds a 39.5% interest, is exploring for alaskite and palaeochannel/calcrete-type uranium deposits. Two prominent zones of uranium mineralization were confirmed in ’17 and are currently being further delineated with IP, radiometric, gravity, ground magnetic, and EM ground surveys. Previously uncharted palaeochannel systems have been identified, as well.

On 31 May, Deep Yellow was placed in a trading halt, pending the release of an announcement (capital raise). The halt will remain in effect until Tuesday, 4 June.

Notes on Upcoming Rössing Sale to CNUC

The Chinese are paying an initial U.S. $6.5 M for Rio’s 69% stake (36,222,566 lbs. U308) and up to an additional U.S. $100 M, contingent upon the mine’s net income over the next 7 years. The estimated total cost of the sale is roughly U.S. $2.94/lb. U308.

This last figure is an important one, as it establishes a benchmark sale price for Namibian lbs. at current spot prices: ~$2.94/lb.

One can begin to get an idea of the types of offers with which nearby Namibian developers may be approached. Forsys Metals, for instance, could expect an offer at going spot prices of approximately U.S. $338.1 M or U.S. $2.08/sh. And Deep Yellow could expect an offer of up to U.S. $306.3 M or U.S. $1.52/sh.

One thing is for certain, Namibian lbs. are being acquired at fire sale prices. It will be interesting to see if CNUC continues its regional uranium rollup strategy.