Friday, 16 February, 2007

by Robin Bromby
The Australian

URANIUM in the Northern Territory seems to have become too much for junior explorer Deep Yellow.

So it is selling the advanced Napperby project to Toro Energy, the company controlled by Minotaur Resources and Oxiana.

Deep Yellow executive chairman Leon Pretorius made it clear that the project needed an owner with more clout.

"While (Deep Yellow) has a team of experienced uranium exploration personnel, the (Deep Yellow) board recognises that Toro and its major shareholders have appropriate development expertise," he said.

Selling Napperby would allow Mr Pretorius's company to focus on its projects in Namibia and Queensland.

Surprisingly, in view of the uranium frenzy, both company's shares barely moved and volume was modest. Deep Yellow closed down 1c to 45c and Toro closed down 0.5c to 79.5c.

Toro can buy Napperby, 150km northwest of Alice Springs, by making an upfront payment of $2.3 million in cash and just over 3 million shares, and after three years making a further payment based on the proven resource.

At present, Napperby has an inferred resource of 1.9 million tonnes at 0.036 per cent, or 670 tonnes.

It is yet another turn in the life of Deep Yellow, which, although still very much a grassroots explorer, has truly ridden the uranium wave to have a market capitalisation of more than $440 million.

That makes it worth about two-thirds of established metal producers like Mincor Resources and Straits Resources and puts it on the same pegging as Allegiance Mining, which now has a producing nickel operation.

Deep Yellow was resurrected in 2004 as a uranium play after it hit the wall with a failed gold mine in Western Australia.

Napperby was its flagship project, bought from Paladin Resources on the basis of German drilling in 1979 which showed a resource of 6000 tonnes of uranium.

Deep Yellow took a large hit in late 2005 when drilling results from Napperby came back showing the resource could be considerably smaller than the Germans had calculated.

The 670-tonne resource is based on a 1km strike length, but Deep Yellow said the mineral resource could be as long as 14km.

The move is an important diversification for Toro, adding the Northern Territory to its portfolio and widening its base beyond South Australia.

Toro managing director Greg Hall said Napperby fitted his strategy of acquiring advanced projects that had potential to be mined.