CORPORATE DIRECTORY
BOARD OF DIRECTORS
REGISTERED OFFICE
Mr Rudolf Brunovs
Chairman (Non-executive)
Unit 17, Spectrum Building, Second Floor
Mr John Borshoff
Managing Director/CEO *
100-104 Railway Road
Ms Gillian Swaby
Executive Director
Subiaco, Western Australia, 6008
Mr Mervyn Greene
Non-executive Director
Telephone: + 61 8 9286 6999
Mr Justin Reid
Non-executive Director
Email: info@deepyellow.com.au
Mr Christophe Urtel
Non-executive Director
* referred to as Managing Director throughout this report
COMPANY SECRETARY
Mr Mark Pitts
POSTAL ADDRESS
PO Box 1770
Subiaco Western Australia 6904
STOCK EXCHANGE LISTINGS
Australian Securities Exchange (ASX)
Code: DYL
AUDITOR
Ernst & Young
OTC Markets Group
(OTCQX) Code: DYLLF
11 Mounts Bay Road
Namibian Stock Exchange
(NSX) Code: DYL
Perth Western Australia 6000
WEBSITE ADDRESS
www.deepyellow.com.au
AUSTRALIAN BUSINESS NUMBER
97 006 391 948
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 11
172 St George’s Terrace
Perth Western Australia 6000
Telephone: 1300 787 272
Facsimile: +61 8 9323 2033
CONTENTS
Summary Information
Chairman’s Letter
CEO Insights
Project Description and Review
Sustainability
Safety, Health, Environment & Radiation
Corporate Social Responsibility
Corporate Governance Statement
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
Schedule of Mineral Tenure
2
3
4
5
13
14
19
20
26
39
40
44
80
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SUMMARY INFORMATION
COMPANY PROFILE
Led by a proven and experienced management team with an exceptional track record of uranium success, Deep Yellow
Limited (Deep Yellow) (ASX:DYL) is focused on becoming a tier-one, low-cost uranium producer by establishing a multi-
project, globally diversified uranium portfolio.
The Company is advancing a bold, counter cyclical, dual-pillar growth strategy. The strategy is focused on organic growth
through the development of the Company’s existing asset base in Namibia and inorganic growth through a targeted merger
and acquisition program.
The long-term outlook for uranium is extremely positive underpinned by the integral role nuclear power will need to play in
meeting clean energy targets. Aside from growth already forecasted to meet electricity demand in regions such as Asia,
Middle East and Eastern Europe, the expectation is that additional nuclear demand will be driven by the requirement to
counter growing greenhouse gas emissions.
Deep Yellow is preparing itself to be in a position to provide a secure and reliable supply of uranium to this growing market.
CORPORATE STRATEGY
Since the appointment of John Borshoff as CEO and Managing Director in October 2016, the Company has set a new direction
built around a unique, counter-cyclical strategy focused on organic and inorganic growth to deliver a 5-10Mlb, Tier 1 uranium
producer with a low cost, multi-project global uranium platform.
Organic growth will be delivered through exploration and development of the Company’s Namibian project portfolio. Since
2016, exploration success has tripled the resource base at the Reptile Project, at an extremely low discovery cost of 11.5c/lb.
The Company’s “inorganic” growth plan is based on a targeted merger and acquisition program to establish a diversified
portfolio of uranium operations for development from 2023 onwards. Effective execution of this unique strategy requires a
leadership team with a proven track record, extensive industry knowledge and capability to deliver.
Deep Yellow has assembled a standout uranium team that brings strong project development, operational and corporate
capabilities. The majority of this team successfully worked together at Paladin Energy, which grew from a $2M explorer into
a $4B high-quality uranium producer pre-Fukushima.
The medium to long-term outlook for uranium is extremely positive, supported by the integral role nuclear power will play in
meeting global clean energy targets. Through the operational expertise of the Company’s Board and management team,
along with the execution of the unique and differentiated dual-pillar strategy, Deep Yellow is well placed to provide uranium
supply security and certainty into a growing market.
HIGHLIGHTS OF THE 2020 FINANCIAL YEAR
Key achievements in the Company have been as follows:
Continued drilling of the prospective Tumas palaeochannel system continued to increase the resource base on the
Reptile Project with 55km of this 125km target remaining to be adequately tested.
With the positive results, a Scoping Study (SS) was completed initiating commencement of a Pre-Feasibility Study
(PFS) to test viability of Langer Heinrich-style deposits which are found to occur on the Tumas Palaeochannel of the
Reptile Project.
Exploration on the on the Nova Joint Venture (NJV) Project funded 100% by JOGMEC continued testing for basement
associated mineralisation
(Husab/Rössing alaskite-associated mineralisation) and surficial calcrete-style
mineralisation (Langer Heinrich-style deposits) with highly encouraging results identified at the Barking Gecko
basement target.
Completion of a capital raising program in July 2019, involving both placements to selected parties to broaden the
shareholder base and a Share Purchase Plan. It jointly raised A$11.3M to support sector consolidation possibilities
and advancement of the feasibility studies on Reptile Project.
Against the uncertainty and volatility caused by the COVID-19 pandemic, the Company conducted a full review of
activities focused on adjusting workstreams to safeguard the Company’s key assets. Proceeded with re-adjusted work
programs to preserve cash, whilst maintaining and advancing the core key drivers of the Company’s strategy. This
included advancing the Tumas 3 PFS, carrying out critical exploration on the NJV and assessing M&A activities.
D e e p Y e l l o w L i m i t e d
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CHAIRMAN’S LETTER
Dear Shareholder
It has been another year of steady progress at Deep Yellow. Your company is continuing its
journey toward the goals articulated in our annual report last year.
We set a twin strategy for growth. Firstly, through the identification of additional resources in our
Namibian exploration licences. At the same time seeking expansion by way of acquisitions be they
via joint ventures or outright acquisition. Progress on both fronts has been achieved. The discovery
of additional resources and updates to our Mineral Resource Estimates (MRE) has been disclosed
via various ASX announcements. The recent infill drilling has resulted in a successful and
meaningful conversion of resources from Inferred to Indicated. We are all particularly pleased with
the progress. The ongoing work on acquisition opportunities is being conducted internally.
One area I particularly wish to acknowledge is the leadership of Deep Yellow in their overall
management of the COVID-19 issue. This came up for all of us very suddenly but management
responded with effective action on a timely basis. To make matters even more complicated we
have had to deal with the issue in both Namibia and Australia. Full marks go to the whole team and in particular the leadership
shown by John Borshoff and Gill Swaby for getting us through this. Albeit we recognise that it remains an issue.
The frustrating part is our inability to visit our operations in Namibia.
A concerted effort during the year was made to complete the SS. This gave us the confidence to progress to the PFS together
with the Environmental Impact Study. Both are currently underway. We have every expectation to follow this with the next
stage being the Feasibility Study. As part of this process we will be seeking a Mining Licence early next year.
Overall, another solid year for Deep Yellow. While this may be self-evident what does need to acknowledged is that this has
been achieved through the combined effort and energy of our teams of people in both Namibia and Perth. We are fortunate
to have highly experienced and motivated people across a wide range of skill sets.
Finally, the rerate of the uranium price is a matter we believe to be inevitable and in the not distant future.
Yours faithfully
Rudolf Brunovs
D e e p Y e l l o w L i m i t e d
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CEO INSIGHTS
URANIUM OUTLOOK STILL FAVOURS A CONTRARIAN APPROACH
FY20 has been an interesting year in the uranium world. Uranium price reached a low of
US$23.90/lb in late March 2020 and then a uranium price uplift occurred, mainly crystallised by
COVID-19 consequences moving price to a high of US$34.10/lb in late May 2020. COVID-19
caused more reaction than the relatively ineffective mine closures that occurred between early
2018 to early 2020. Ironically, although the uranium price still remains in the doldrums in relative
terms, there are positive signs that the price recovery that we need is coming closer to eventuating.
Analysts and general commentators in the industry have, in my opinion, overread the meaning of
this uranium price response in the period late March to May 2020, postulating a very near-term
continuation of uranium price escalation to signify the dawning of the next uranium boom. I think
these enthusiastic predictions have been premature as the current, post FY20 situation has prices
languishing and in fact falling somewhat finishing at $33.10/lb at the end of June 2020 and falling
further post this period to $31.40/lb in late August 2020. While there are positive signals, which
have been long awaited, the overall supply/demand dynamics for a full-scale return of nuclear
utilities to engage in long-term contracting, in my opinion, is not yet with us. Over-supply continues to dog the industry and
have negative effect. Nevertheless, the supply/demand tensions are becoming apparent and it is easier to see the crossover
to shortage occurring so we should remain very confident that the age of uranium price resurgently could be upon us in 15 to
18 months.
All this perfectly suits the Deep Yellow dual strategy for growth. Our Reptile Project in Namibia has moved from a positive
SS assessment completed mid FY20 resulting in the immediate start-up of a PFS for which ongoing results from this work
have been very positive confirming the assumptions made in the SS. It is anticipated that, with the conclusion and successful
outcome of our PFS by mid FY21, we should be able to commence our Definitive Feasibility Study on the Tumas Project in
quick succession and its completion will likely be in perfect timing with uranium price increases anticipated in the mid/late
2022.
Also, with our sector consolidation objectives still remaining strong, we are confident of acquiring one or two acquisition to
strengthen our project pipeline and improve the Company’s chances of becoming a premier uranium company by establishing
project diversity. This strategy has the added advantage of also having the required management and technical teams to
develop these projects when the price is right to move.
On top of all this we achieved some very encouraging results late in the year on our NJV project where JOGMEC has just
completed an A$4.5M earn-in obligation and we expect investigations on this JV project to continue.
So, as I mentioned last year, Deep Yellow continues to remain an excellent investment opportunity differentiated from its
competitors with an appropriate strategy in place to capitalise during this period of uranium downturn. Uranium will likely be
the surprise performance sector. This may take a little while longer, but this sector has the very real potential to reward
handsomely.
Yours faithfully
John Borshoff
D e e p Y e l l o w L i m i t e d
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PROJECT DESCRIPTION AND REVIEW
OVERVIEW
Activities for the 12-month period to 30 June 2020 significantly advanced the Company’s Namibian projects together with the
ongoing M&A effort. In addition, a successful capital raising was completed in July 2019 to boost cash reserves to support
future programs.
NAMIBIAN OPERATIONS
Deep Yellow continues to hold an interest in three key projects in Namibia; Reptile, the NJV and the Yellow Dune Joint Venture
(YDJV) (Figure 1). Reptile and NJV are active exploration projects, YDJV is inactive and these projects are described below.
Reptile Mineral Resources and Exploration (Pty) Ltd (RMR – wholly owned subsidiary of Deep Yellow) is the manager of all
projects. In three and a half years much has been accomplished with the uranium resource base associated with calcrete
deposits within the Tumas palaeochannel improved nearly three-fold, with much upside still remaining. Importantly, a SS was
completed on the Tumas 3 deposit with positive results. This has been followed by a PFS which is currently underway.
Figure 1: Locality map showing Deep Yellow’s interests in Namibia including
uranium mines and projects held by other companies in the region
D e e p Y e l l o w L i m i t e d
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PROJECT DESCRIPTION AND REVIEW
REPTILE URANIUM PROJECT (EPLs 3496, 3497) – 100%
Over the year 670 RC holes for 13,842m were drilled, 14 holes of which were for water bores to support the baseline studies
for the EIA that is in development. In addition, 30 diamond core holes were drilled for 601m to obtain samples for metallurgical
testing.
The highly prospective 125km Tumas palaeochannel, the main target for Langer Heinrich-type mineralisation across the
Reptile Project area, is the focus of the ongoing exploration. In addition to the discovery of the Tumas 3 uranium occurrence,
where new uranium resources were defined in the previous year, further deposits were discovered in the Tumas 1 East area
further expanding the Inferred Mineral Resource base. Infill drilling in Tumas 3 converted almost 100% of the 25Mlb Inferred
Resources block that was tested to Indicated status.
The Tumas 1 & 2 deposit, the Tubas Red Sands/calcrete deposits, the Tumas 3 deposit and the newly discovered Tumas 1
East tributary deposits have continued returning positive results in the Measured, Indicated and Inferred JORC resource
categories occurring within the extensive Tumas palaeodrainage system. The regionally prospective 125km palaeochannel
system has identified numerous prospective exploration targets of which only 75km has been adequately tested (see Figure
2) with approximately 50km remaining to be investigated.
Figure 2: EPLs 3496 and 3497 showing identified uranium deposits and prospects
within the extensive occurring palaeochannel system and the PFS focus area
Tumas 3 Pre-Feasibility Study
Prior to making a decision to proceed with a PFS, a SS was initiated which delivered a positive outcome recommending
completion of a PFS framed around the following core parameters:
Potential life-of-mine greater than 20 years.
Cash costs of sub US$30/lb U308.
Capital requirements of US$115M to US$130M per 1Mlb U308 per annum design capacity.
Minimum internal rate of return (IRR) of 20%.
Subsequently, Deep Yellow completed a successful metallurgical test-work program as part of the PFS, delivering highly
encouraging results, equal or better than the assumptions used in the SS. The test work utilised RC drill sample composites
and involved three beneficiation tests and seven leaching tests carried out on a composite of the 29kg of RC sample material.
This work was extended to include the testing of various reagent ratios and temperatures to provide some limited leach
condition optimisation work, prior to commencing the confirmatory test work on the diamond core composites. Results from
this work were positive and compare very well with the assumptions used in the SS indicating the following:
Mass rejection during the ore beneficiation step, greater than or equal to 35% (SS 35%).
Uranium recovery during beneficiation at or above 97.5% (SS 97.5%).
D e e p Y e l l o w L i m i t e d
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2 0 2 0 A n n u a l R e p o r t
PROJECT DESCRIPTION AND REVIEW
Leach extraction greater than 95% (SS 95%) for uranium.
Leach reagent concentrations and residence times at just half the respective levels assumed for the SS, also achieved
high leach extraction rates for uranium.
The updated metallurgical model indicates an overall higher recovery than that assumed for the SS (92.2% for
uranium), with lower overall reagent and consumable costs.
Vanadium performance remains at or above the assumptions used for the SS.
Metallurgical testing subsequently undertaken on the diamond core composites confirmed the positive results above and
importantly identified that RC chip samples are suitable for further leach and hydrometallurgical test-work. This will allow a
material reduction in future metallurgical sample collection costs for samples representative of the Tumas 3 Mineral Resource.
The successful outcomes from the test work program have allowed for finalisation of the Process Design Criteria for the PFS,
with work ongoing.
The process being developed for the Project is aimed at achieving operating costs for uranium (without vanadium credit) that
are in the lower quartile of producer operating costs (sub US$30/lb) while also minimising risk, site remediation and closure
costs.
EIA Baseline Studies
The development of the Tumas Project will require an Environmental Clearance Certificate (ECC) to be issued by the
Environmental Commissioner. The ECC is also required before the Mining Licence for the tenement will be granted. In order
to obtain an ECC, an Environmental Impact Assessment (EIA) will be required for the Project and submitted to the competent
authorities for approval before the ECC will be issued.
Baseline studies have commenced for the development of the EIA and this work is ongoing. Studies commenced to date
include initiation of groundwater, radiological, air quality, flora and fauna studies.
Tumas 3 Resource Upgrade to Indicated
A resource-infill RC drilling program, covering the central zone of the Tumas 3 deposit (Figure 2) targeted an area containing
25Mlb of Inferred Resources, grading 381ppm eU3O8 using a 200ppm cut off. The primary goal of the drilling program was
to convert approximately 50% of the total Inferred Resource at Tumas 3 (33.1Mlb) to Indicated Resource status to support
the Tumas PFS. Pleasingly, the drilling program successfully converted 96.4% of the Inferred Resource available within the
area drilled to an Indicated Resource category, whilst also identifying additional Inferred Resources.
Successful resource infill drilling led to an updated MRE at the Tumas 3 deposit of 24.1Mlb at 313ppm eU3O8 of Indicated
Resources using a 200ppm cut off. Additionally, this work identified a further 3.7Mlb of Inferred Resources in this same area.
This is a notable improvement in both resource quality and amount converted to Indicated from the original Inferred Resource
of 33.1Mlb. The Tumas 3 uranium resource upgrade tripled the overall Indicated and Measured Resource base associated
with the Tumas Channel from 13.1Mlb to a total of 37.2Mlb eU308.
The MRE was estimated by Ordinary Kriging. Cut-off grades used for the expanded MRE included 100, 150, 200, 250 and
300ppm eU3O8 and the Indicated Mineral Resources derived from these cut-off grades indicate the mineralisation remains
robust and consistent (Table 1).
Drilling also delineated an additional 3.7Mlb in the Inferred Resource category at a cut-off of 200ppm eU3O8 giving a combined
Mineral Resource of Tumas 1, 2 and 3, of 77.4Mlb at a grade of 324ppm eU3O8 at that cut-off. Total surficial Measured,
Indicated, and Inferred Resources in the overall Tumas palaeochannel are now 96.2Mlb at 292ppm eU3O8, as outlined in the
JORC Resource in Table 2.
Table 1 - Tumas 3 JORC 2012 MRE Indicated Resources at various cut-off grades
Cut-off
(ppm U3O8)
100
150
200
250
300
Tonnes
(M)
45.9
43.8
34.9
22.2
14.0
U3O8
(ppm)
279
286
313
364
418
U3O8
(Mlb)
28.3
27.6
24.1
17.8
12.9
Notes:
Figures have been rounded and totals may reflect small rounding errors.
eU3O8 - equivalent uranium grade as determined by downhole gamma logging.
Gamma probes were calibrated at the Langer Heinrich uranium mine test pit.
During drilling, probes were checked daily against a standard source.
The 200ppm eU3O8 cut-off has been selected as being the most appropriate for headline reporting of the resource estimations.
D e e p Y e l l o w L i m i t e d
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PROJECT DESCRIPTION AND REVIEW
Resource Upgrade at Tumas 1 East
An updated MRE for the Tumas 1 East deposit (Tumas 1 East) was completed resulting in a successful resource extension
increasing the existing resource by 34%. Inferred Mineral Resources at Tumas 1 East are now 24.8Mlb at 319ppm eU3O8 (at
a 200ppm eU3O8 cut-off).
Following the resource drilling carried out during the year at Tumas 1 and Tumas 3, the combined overall Tumas
palaeochannel resource totals 96.2Mlb eU3O8 at 292ppm over EPLs 3496/97 (Table 1). The overall total surficial calcrete-
related Mineral Resources across the Company’s Namibian projects, including the Aussinanis Deposit on MDRL3498, have
more than doubled since 2017 to 114.2Mlb U308. Table 2 shows the MRE results for the combined Tumas 1, 2 and 3 resource
at a 200ppm eU3O8 cut-off in conjunction with the overall RMR resource inventory.
NOVA JV, NAMIBIA (EPLS 3669, 3670) – 65% DEEP YELLOW
Over the year 235 RC holes were drilled on the project for 8,255m.
JOGMEC is currently earning a 39.5% equity interest in the Nova JV, with $4.5M required to be spent over a four-year period.
The balance of the earn in obligation is expected to be fulfilled during calendar year 2020.
Work on the NJV is focussing on follow-up drill testing on both the previously identified basement-related uranium targets
(Rössing/Husab style deposits) and the palaeochannel/calcrete-associated uranium targets (Langer Heinrich style deposits).
Exploration of the basement targets on EPL3669 has identified a promising zone of uranium anomalism at Barking Gecko
(Figure 1). Although grade and thickness of the mineralisation encountered at Barking Gecko is mostly low-level, some of the
higher grade and thicker intersections encountered required follow-up drilling.
This follow-up exploration drilling at the Barking Gecko prospect encountered highly encouraging uranium mineralisation and,
following this work, JOGMEC completed its A$4.5M earn-in obligation in August 2020.
The 2,041m RC drilling program focused on the testing of this target on three regional lines spaced 1 to 1.2km apart with
holes spaced at 200m. Eleven holes were completed with Figure 3 showing the Barking Gecko exploration target, drill hole
locations and geology.
Figure 3: Barking Gecko Prospect showing drill hole locations and prospective zone
D e e p Y e l l o w L i m i t e d
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PROJECT DESCRIPTION AND REVIEW
All seven holes drilled on the central section intersected mineralisation, with grades and thicknesses improving to the North.
The best intersections to date have been obtained in hole TN236RC, which returned a cumulative downhole thickness of 44m
with a maximum grade of 736ppm eU3O8 over 1m. This zone includes 24m averaging 297ppm eU3O8. The mineralised
intersections correspond to steeply south dipping alaskite (leucogranite) dykes intruding marble and biotite gneiss.
In-house portable XRF (pXRF) assaying showed that the very high grade eU3O8 intersections of 2m at 754ppm in TN233RC
and 7m at 1,115ppm in TN235RC are partly due to thorium enrichment. The corrected intersections are 2m of 309ppm and
7m at 415ppm U3O8 respectively. The thorium association in these two holes proved to be an exception, as all other
intersections are uranium-dominated. The encouraging results from Barking Gecko with the 200m wide drill spacing leave
the mineralisation intersected open both laterally and at depth.
This drilling completed the JOGMEC earn-in obligations and data evaluation is underway to determine continuation of this
joint venture. Should all parties elect to proceed and contribute, the equity positions will be - 39.5% Deep Yellow, 39.5%
JOGMEC, 15% Toro Energy Limited and 6% Sixzone Investments (Pty) Ltd.
Implication of Positive Results at Barking Gecko
The discovery of notably thicker uranium intersections is of great significance for Deep Yellow, as the Company holds a highly
underexplored grouping of three basement-related deposits (Ongolo, MS7 and Inca). These occur between 10km to 18km
to the East/North East of the Barking Gecko discovery, in its adjacent EPL3496 (Figure 1). These 3 deposits occur in the
100% owned Reptile Project and contain 45.1Mlb grading 420ppm U3O8 as shown in Table 2.
These deposits, combined with the emerging Barking Gecko results, provide a distinct opportunity to substantially improve
on the basement-related uranium resources. The combination of EPL3669 (part of the NJV project) and the adjacent
EPL3496 (100% owned Reptile Project) now forms a highly prospective land package that has already delivered substantial
uranium resources. The exploration results from the last drilling campaign at Barking Gecko reaffirm management's positive
expectation for additional discoveries to be made on both these projects.
YELLOW DUNE JOINT VENTURE (EPL 3498)
The parties to the YDJV are Yellow Dune Uranium Resources (Pty) Ltd, a wholly owned subsidiary of Reptile Uranium Namibia
(Pty) Ltd (RUN) (85%), Oponona Investments (Pty) Ltd (10%) and Epangelo Mining Company (Pty) Ltd (5%).
As previously reported, EPL3498 is considered fully explored and that there is no further potential for additional discovery to
add to the existing resources that have been defined. Due to the depressed uranium outlook, an application was made for a
Mineral Deposit Retention Licence (MDRL) to secure the area containing the resource within EPL3498. Economic studies
show that a mining operation at the current prevailing low uranium prices is not viable. Approval for grant of the MDRL was
given, valid through to January 2025.
OVERALL MINERAL RESOURCE ESTIMATES
The overall resource base of Deep Yellow incorporating the latest MRE classified under JORC 2012 is indicated in the Annual
Mineral Resource Statement (refer Table 2). Since the new exploration approach was applied from November 2016, the
overall palaeochannel-hosted resources have more than doubled over its Namibian projects totalling 114.2Mlb U308, fully
vindicating the change of focus to achieving uranium resource increase within the expanded, extensive, regionally-occurring
palaeochannel-related exploration target.
The JORC 2004 classified resources have not been updated to comply with the JORC Code 2012 on the basis that the
information has not materially changed since it was last reported, however they are being progressively reviewed to bring all
resources up to JORC 2012 standards.
D e e p Y e l l o w L i m i t e d
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PROJECT DESCRIPTION AND REVIEW
ANNUAL MINERAL RESOURCE STATEMENT
Table 2 - JORC 2004 AND 2012 MINERAL RESOURCE ESTIMATE
Cut-off Tonnes U3O8
U3O8
U3O8 Resource Categories (Mlb U3O8)
Deposit
Category
(ppm
U3O8)
(M)
(ppm)
(t)
(Mlb) Measured Indicated
Inferred
BASEMENT MINERALISATION
Omahola Project - JORC 2004
INCA Deposit ♦
INCA Deposit ♦
Ongolo Deposit #
Ongolo Deposit #
Ongolo Deposit #
MS7 Deposit #
MS7 Deposit #
MS7 Deposit #
Indicated
Inferred
Measured
Indicated
Inferred
Measured
Indicated
Inferred
250
250
250
250
250
250
250
250
Omahola Project Sub-Total
7.0
5.4
7.7
9.5
12.4
4.4
1.0
1.3
48.7
470
520
395
372
387
441
433
449
420
CALCRETE MINERALISATION Tumas 3 Deposit - JORC 2012
313
Tumas 3 Deposits ♦
Indicated
34.9
200
Tumas 3 Deposits Total
Inferred
200
16.1
51.0
358
328
Tumas 1, 1 East & 2 Project – JORC 2012
Tumas 1 & 2 Deposit ♦ Measured
Tumas 1 & 2 Deposit ♦ Indicated
Tumas 1 & 2 Deposit ♦ Inferred
200
200
200
Tumas 1 & 2 Project Total
10.8
5.5
40.9
57.2
383
333
304
322
Sub-Total of Tumas 1, 2 and 3
Tubas Sand Deposit #
Tubas Sand Deposit #
Tubas Red Sand Project Total
108.2
324
Tubas Red Sand Project - JORC 2012
187
163
Indicated
Inferred
10.0
24.0
100
100
170
Tubas Calcrete Resource - JORC 2004
374
Inferred
34.0
100
7.4
Tubas Calcrete Deposit
Tubas Calcrete Total
Total for overall Tumas channel
7.4
149.6
374
292
Aussinanis Deposit ♦
Aussinanis Deposit ♦
Aussinanis Project - JORC 2004
Indicated
Inferred
5.6
29.0
150
150
222
240
Aussinanis Project Total
34.6
237
3,300
2,800
3,000
3,500
4,800
2,000
400
600
20,400
10,900
5,500
16,400
4,100
1,800
12,400
18,300
34,700
1,900
3,900
5,800
7.2
6.2
6.7
7.8
10.6
4.3
1
1.3
45.1
24.1
12.7
36.8
9.1
4.0
27.5
40.6
77.4
4.1
8.6
12.7
2,800
2,800
6.1
6.1
43,300
96.2
1,200
7,000
8,200
2.7
15.3
18.0
-
-
6.7
-
-
4.3
-
-
7.2
-
-
7.8
-
-
1
-
11.0
16.0
24.1
-
-
4.0
-
4.1
-
-
9.1
-
-
-
-
-
-
-
Calcrete Projects Sub-Total
184
281
51,500
114.2
9.1
GRAND TOTAL RESOURCES
233
310
71,900
159.3
20.1
Notes: Figures have been rounded and totals may reflect small rounding errors.
XRF chemical analysis unless annotated otherwise.
♦ eU3O8 - equivalent uranium grade as determined by downhole gamma logging.
# Combined XRF Fusion Chemical Assays and eU3O8 values.
-
6.2
-
-
10.6
-
-
1.3
18.1
-
12.7
-
-
27.5
-
8.6
-
6.1
2.7
-
34.9
50.9
-
15.3
70.2
88.3
Where eU3O8 values are reported it relates to values attained from radiometrically logging boreholes.
Gamma probes were calibrated at Pelindaba, South Africa in 2007. Recent calibrations were carried out at the
Langer Heinrich Mine calibration facility in July 2018 and September 2019.
During drilling, probes are checked daily against standard source.
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PROJECT DESCRIPTION AND REVIEW
Review of Material Changes
The total mineral resources at 30 June 2020 are now 233Mt at 310ppm for 159.3Mlb of U3O8 up from 211Mt at 323ppm for
149.3Mlb of U3O8 at 30 June 2019. As outlined on pages 7 and 8, in May 2020 the Company confirmed changes to existing
mineral resources at Tumas 3 and Tumas 1 East during the year.
An exceptionally pleasing result from a resource infill drilling campaign at Tumas 3 delivered a conversion of 96.4% of existing
Inferred resources to the Indicated category whilst also identifying additional Inferred resources. At June 2019 the mineral
resource estimate for Tumas 3 was 39.7Mt at 378ppm for 33.1Mlb of U3O8, all in the Inferred category. At 30 June 2020 the
mineral resource estimate for Tumas 3 totalled 51Mt at 328ppm for 36.8Mlb of U3O8 with 24.1Mlb in the Indicated category.
(refer Table 2)
In addition, an updated mineral resource estimate at the Tumas 1 East deposit resulted in an increase to the existing resource
by 34%. At June 2019 the mineral resource estimate for Tumas 1 and 2 was 46.8Mt at 332ppm for 34.3Mlb of U3O8. At 30
June 2020 the mineral resource estimate for Tumas 1 and 2 totalled 57.2Mt at 322ppm for 40.6Mlb of U3O8. (refer Table 2).
Other than the above noted change there were no material changes from the prior year.
Governance and Internal Controls
The Company maintains thorough QAQC protocols for conducting exploration, site practice, sampling, safety, monitoring and
rehabilitation which are documented in the company’s various standard operating procedure manuals (SOPs).
Drilling methods vary according to the nature of the prospect under evaluation. These can include auger, sonic, air core or
reverse circulation drilling for unconsolidated formations; to reverse circulation (hammer) and diamond core drilling (HQ &
NQ) for hard rock formations. Typically, resource estimations are based on a mix of downhole radiometric sampling and
chemical assaying. Assay samples are collected over one metre intervals. Radiometric data is acquired at 5 cm intervals and
composited to one metre intervals. Where statistical validation confirms radiometric and chemical assay equivalence, the
resource estimate is primarily based on the radiometric data.
All radiometric data is acquired digitally by in-house personnel trained to operate the Company’s fleet of Auslog downhole
probes. These probes are calibrated at the Pelindaba pits in South Africa. QAQC controls for radiometrically acquired data
comprises daily calibration sleeve checks and periodic comparison at a Reptile Uranium Namibia (Pty) Ltd test hole in
Namibia. Assay samples are acquired by a three-tier riffle splitter or cone splitter at the drill site. Duplicate samples are
inserted at 1:20 frequency. Diamond core samples are assayed as quarter-core over one metre intervals. External
laboratories (ALS South Africa) assay for uranium by either pressed powder XRF or fused bead XRF. Characterisation of
radiometric equilibrium is periodically assessed by submission of samples to ANSTO Minerals Laboratory in Sydney,
Australia.
Drill hole collars are DGPS-surveyed by in-house operators, after an initial pick-up by hand-held GPS. Downhole directional
surveys are outsourced to independent contractors.
Drill hole sample logging captures a suite of lithologic, alteration, mineralogic and hand-held radiometric data, at one metre
intervals. This data is captured as permanent hard copy prior to digital input onto an in-house GBIS database. The parallel
collection of drill sample and wireline probe data enables error recognition in depth discrepancies and confirmation of sampling
accuracy.
Drill plans and sections generated from drilling and surface mapping are used to constrain wireframe mineralisation models;
upon which resource estimations are made. Resource estimations for currently quoted prospects have been calculated by
internal qualified staff or independent third-party consultants.
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PROJECT DESCRIPTION AND REVIEW
Competent Person’s Statements
Exploration
The information in this Report as it relates to exploration results was compiled by Dr Katrin Kärner, a Competent Person who
is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Dr Kärner, who is currently the Exploration
Manager for RMR, has sufficient experience which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which she is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of
the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Kärner consents to
the inclusion in this Report of the matters based on the information in the form and context in which it appears. Dr Kärner
holds shares in the Company.
Mineral Resource Estimate
The information in this Annual Mineral Resource Statement is based on and fairly represents information and supporting
documentation prepared or reviewed and compiled by Mr. Martin Hirsch, M.Sc. Geology, who 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
Manager for Resources and Pre-Development for Reptile Mineral Resources (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 this announcement of the matters
based on his information in the form and context in which it appears.
Geophysics Component
Deconvolution was used to convert the current down-hole gamma data from the Tumas 3 project to equivalent uranium values
(eU3O8) and was performed by experienced in-house personnel from Deep Yellow. The data conversion was checked and
validated by Matt Owers up to October 2019, a geophysicist who is knowledgeable in this process and worked as a consultant
for Resource Potentials with over 5 years of relevant experience in the industry. Mr Owers is a member of Australian Institute
of Geoscientists and has sufficient experience with this type of processes 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 Owers consents to the inclusion in this Report of the matters based on his information in the form and context in which it
appears. Subsequently this work was done by Dr. Doug Barrett, a geophysicist who works as a consultant with over 10 years
of relevant experience in the industry. Dr. Barrett has sufficient experience with this type of processes 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). Dr. Barrett consents to the inclusion in the Report of the matters based on his
information in the form and context in which it appears.
Project and Technical Expertise
Mr Darryl Butcher is a process engineer/metallurgist working for Deep Yellow and has sufficient relevant experience to advise
the Company on matters relating to mine development and uranium processing, project scheduling, processing methodology
and project capital and operating costs. Mr Butcher is satisfied and consents to the information provided in this Report with
regard to the Tumas PFS progress.
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SUSTAINABILITY
OUR APPROACH TO SUSTAINABILITY
Deep Yellow is focused on creating long-term value for its shareholders, stakeholders and the
communities in which we operate. A key pillar to successfully achieving this goal is through the efficient,
effective and ongoing implementation of environmental, social and governance (ESG) pillars.
With a management team that has a proven and successful history in the uranium sector, we understand
the importance of sustainably and making it core to how we operate, as we move into pre-development
and beyond. By taking an early approach to the implementation of key ESG practices and principles,
Deep Yellow is focused on creating a company-wide approach to sustainable practices and developing
the Company and our projects in the right manner.
Our commitment to managing the ESG pillars key to Deep Yellow is evident by the release of our first
Sustainability Report providing the foundation of activities as the Group develops. This will provide
transparency around advancing Deep Yellow in a sustainable manner. As an aspiring mining company,
we believe we can and should progressively integrate our focus on ESG from early stages of exploration
and development, positively influencing our culture and communities, with sustainability integral to our
growth.
OVERVIEW
Below is an overview of the Group’s SHER and CSR activity for the past year. As mentioned above, our first Sustainability
https://deepyellow.com.au/wp-
can
Report
content/uploads/SustainabilityReportSep20.pdf providing a base from which to grow as we develop the Company.
accessed
released
been
and
has
be
at
SAFETY, HEALTH, ENVIRONMENT & RADIATION
Safety and Health
Deep Yellow and each of its subsidiaries is committed to provide and maintain a safe and healthy work environment, with the
target of “zero” harm in the workplace. The Company believes that attaining a high level of performance in occupational health
and safety is critical to the long-term success of its business.
Safety is prioritised in the working environment by implementing control measures to prevent any injury or even fatality.
Employees are encouraged to report all near misses in order to eliminate risks and this is a recurring theme for the regular
tool-box talks. Employees’ and contractors’ working hours accumulated to almost 78,000 hours (2019: 65,000) in the reporting
period with no lost time injury or fatality recorded.
Our focused approach is already delivering on its stated goals with RMR (the operating Namibian subsidiary) awarded the
Inter-Mining Safety Certificate (Category 2 - Exploration Companies) by the Chamber of Mines for 2019. This was the second
year in a row it was the proud recipient.
COVID-19 figured heavily in the conduct of our operations from March 2020 onwards, ensuring the safety and health of our
workforce was a priority. Stringent controls were implemented, with the Australian workforce operating from home for a period
of time in accordance with government requirements. In Namibia, management was fortunate to be able to take the lead from
Australia and ensure high-level controls were put in place with appropriate procedures implemented prior to being mandated
by the Namibian government. As the resources industry was deemed an essential service in Namibia, exploration activity was
able to continue although at a slightly reduced capacity. A strict health and hygiene regime and appropriate protocols were
put in place to ensure the safety of our personnel. These remain in place.
Environment
Environmental management remains integral to the Namibian operations in accordance with the Namibian Environmental
Management Act No 7 of 2007 and RMR’s Environmental Management Plan. As the operations are carried out in the Namib-
Naukluft National Park (NNNP) in Namibia, environmental responsibility is of particular significance. The Company has taken
a structured and organised approach with well-defined programmes, training, responsibilities and commitment aimed at
effectively protecting the environment and minimising the impacts of its operations on the environment. Education and training
of personnel highlights the importance of responsible activity withing the NNNP.
The Environmental Control Officer ensured that these programmes were effectively implemented with the results reported bi-
annually to Ministry of Environment in a timely manner. RMR’s exploration licences are in good standing with all having valid
Environmental Clearances Certificates issued.
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SUSTAINABILITY
(continued)
Radiation
As a specialist uranium company, Deep Yellow adopts the ALARA (As Low as Reasonably Achievable) principle to ensure
that exposure of ionizing radiation to its employees, contractors, the public and the environment are minimised.
RMR’s Radiation Safety Officer ensured compliance with the Atomic Energy and Radiation Protection Act 5 of 2005 and
adherence to its Radiation Management Plan (RMP), which details the radiation safety requirements including:
radiation induction for all employees, contractors, and visitors;
Personal Protective Equipment and behavioural measures;
occupational radiation exposure monitoring;
area gamma exposure monitoring;
surface contamination monitoring;
public exposure monitoring; and
environmental monitoring.
All radiation safety matters and monitoring results were reported to the Namibian Radiation Protection Authority in March
2020. RMR also participated in a training exercise in Walvis Bay simulating a spill with participation of all the uranium
companies in Namibia.
The highest recorded radiation exposure dose of RMR workers due to inhalation of LLRD and direct gamma radiation was
1.00 mSv/a for a contract driller. No cases of radiation over-exposure occurred during the reporting period as all recorded
doses were well below both RMR’s internal dose limit of 5mSv/a and the legal occupational dose limit of 20mSv/a.
Throughout the year, RMR was fully compliant with its RMP, thereby ensuring that workers, the general public and the
environment were effectively safeguarded against potential harmful effects that may have been caused by any incremental
exposure to ionising radiation due to operational activities. In this regard, no radiation incidents were recorded.
CORPORATE SOCIAL RESPONSIBILITY
It is vitally important that the Group contributes to the growth and prosperity of those countries in which it operates and, within
the capacity that is possible, responds to the needs of its communities.
The Group’s operations are currently centred in Namibia and therefore the CSR activity is focussed in that country under the
RMR banner. A detailed report for the year ended June 2020 can be found on the Deep Yellow website at
https://deepyellow.com.au/wp-content/uploads/CSRReportSep20.pdf.
Overview
RMR’s CSR activities were aligned with Namibia’s Fifth National Development Plan (NDP5) and the Harambee Prosperity
Plan covering varied needs and primarily focussed on:
fostering early childhood development through educational support;
empowering communities through sport;
promoting a sustainable environment; and
community support through COVID-19 aid initiatives.
In the reporting period, RMR invested close to N$500,000 into community initiatives, a clear commitment to working with
those communities in which the Company operates. A summary of the various projects follows.
Early Childhood Development
Mondesa Youth Opportunities (MYO)
MYO is a non-profit, registered Namibian Trust that operates entirely on donations.
120 learners, ranging from Grades 4 to 8, receive extra instruction in English, Mathematics, Reading, Life Skills, Computers,
Sports and Music, every day after school, for a period of 5 continuous years. MYO targets high-achieving learners from
disadvantaged socioeconomic backgrounds and cultivates positive thinking and high self-esteem to lay the path for a future
generation of forward-thinking Namibian leaders. In addition to cash donations, staff from Perth and Namibia collected
stationery and personal hygiene supplies for distribution to the students.
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SUSTAINABILITY
(continued)
“Your donation allows MYO to offer free intensive education intervention for students from underprivileged schools here in
Swakopmund. Our students can maximize their academic potential this year due to your generous donation and for that we
are truly grateful.”, Neels Strijdom, Manager at MYO said.
Music Class.
Maths Class.
Children with Handicap Action in Namibia (C.H.A.I.N.)
C.H.A.I.N. in Swakopmund is currently looking after 20 handicapped children (i.e., mainly down syndrome and cerebral palsy),
3 to 12 years of age. C.H.A.I.N. collects the children from their homes in the morning and takes them to the centre. Here, they
follow an educational programme, teaching them not only basic education but also physical movement and mobility. C.H.A.I.N.
also provides a nutritious meal to the children.
C.H.A.I.N. day care centre.
Symbolic cheque handover.
Empowering Communities Through Sports
Albertus Tsamaseb Boxing Academy (ATBA)
ATBA is a registered non-profit organisation in Swakopmund serving previously disadvantaged community members. It
provides a safe training environment that instils co-operation, athleticism, sportsmanship, commitment and self-confidence in
its members.
Over the years ATBA has produced both national and international champions including Jonas Junias Jonas who won a gold
medal at the 2018 Commonwealth Games and has been training at the academy since the age of 10. Jonas had qualified for
the 2020 Olympic Games in Japan although these were cancelled due to the global pandemic.
RMR continues to support the academy with the upgrading of its training facility and the provision of uniforms and
administrative support. During the year, a boxing ring was procured and donated to ABTA. Due to Covid-19 related trade
restrictions the delivery of the boxing ring was delayed and will be assembled as soon as local lockdown restrictions are lifted.
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SUSTAINABILITY
(continued)
Tricot handover. Left: Owner and coach Albertus
Tsamaseb, right: Gillian Swaby, Executive Director,
Deep Yellow Ltd.
Jonas Junias Jonas presenting his gold medal won at the
African Olympic qualifiers in Dakar, Senegal in early 2020.
Supporting a Sustainable Environment
Vultures of Namibia
Vultures of Namibia was established in 1997 and focusses on Lappet-faced vulture ringing in the NNNP, vulture ringing on
commercial farms and visiting farming communities to promote vulture conservation.
All six vulture species still found in Namibia are under pressure from several sources, with poison as the number one killer.
Like vultures throughout Africa and other parts of the world, vultures continue to decline in numbers. In Namibia, the status
of vultures, as defined by the International Union for conservation of Nature (IUCN), is as follows:
Egyptian Vulture
Hooded Vulture
White-backed Vulture
Cape Vulture
Lappet-faced Vulture
White-headed Vulture
Extinct as a breeding species
Endangered
Endangered
Critically endangered
Vulnerable
Vulnerable.
Although many vultures breed in national parks, game reserves and protected areas, they often feed on farms and communal
areas. Here they become victims of the unrelenting struggle between farmers and predatory mammals attacking domestic
livestock.
RMR adopted a vulture and sponsored satellite tracking equipment to promote nature conservation and help to raise
awareness of the endangered species breeding in the NNNP, where RMR operates.
Climbing small tree to ring chick.
Chick with satellite tracker.
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SUSTAINABILITY
(continued)
Cacti Eradication
Invasive cacti are taking over habitats of native vegetation (Figure 29) and spreading throughout Namibia at an incredibly
rapid pace.
Friedhelm and Gunhild Voigts from Windhoek founded “Cactus Clean-up” to prevent an entire collapse of the native
vegetation. They employ jobless workers to do the clean-ups who are paid by donations only. All equipment used by them is
also donated and RMR provided rakes and wheelbarrows to support this initiative.
Aloes losing their habitat.
Photo by G. Voigts.
Cacti eradication in Windhoek using tools donated by RMR.
Photo by G. Voigts.
Community Support – COVID-19 Initiatives
Hands of Hope
Hands of Hope (HoH) is a voluntary organization that started off in 2013 and has recently registered as a non-profit
organization. The organization has volunteers in various towns who assist with all funding from their own pockets and time.
Since the outbreak of Covid-19 HoH efforts have been focused on supplying food parcels to those who are financially severely
affected by the pandemic. HoH concentrates its efforts mainly on families with disabled children, single mothers as well as
the elderly and those who have ill family members with illnesses such as severe diabetes or others who need specialised
diets.
The funds donated by RMR were utilised for food and basic hygiene articles. RMR also assisted the organisation with its staff
packing and distributing the food parcels in Swakopmund. In addition, RMR’s employees donated second-hand clothes and
other household items to the organisation. This support continued in August 2020 with further funding.
Packing of food parcels at RMR’s office premises.
Distribution of food parcels in Swakopmund.
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SUSTAINABILITY
(continued)
Grow Together Kindergarten
The Grow Together Kindergarten is located in the Democratic Resettlement Community (DRC) at the outskirts of
Swakopmund and was originally created in support of the DRC Women’s Project to supervise the children of the women
working at the centre. Today, the kindergarten is open for all children of the DRC community.
The kindergarten currently caters for 64 children between 3 and 6 years of age taught in three separate classes.
Due to the outbreak of the Covid-19 pandemic RMR assisted the kindergarten with disinfectant, sanitisers and other cleaning
reagents to ensure that children could continue learning in a safe environment.
Classroom of the DRC kindergarten (before the pandemic). Handover of cleaning reagents to the DRC kindergarten.
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CORPORATE GOVERNANCE STATEMENT
GOVERNANCE FRAMEWORK
The Board of Deep Yellow has responsibility for corporate governance for the Company and its subsidiaries (the Group) and
has implemented policies, procedures and systems of control with the intent of providing a strong framework and practical
means for ensuring good governance outcomes which meet the expectations of all stakeholders.
The Corporate Governance Statement, dated 30 June 2020 and approved by the Board on 23 September 2020, sets out
corporate governance practices of the Group which, taken as a whole, represents the system of governance.
The framework for corporate governance follows the 4th Edition of the ASX Corporate Governance Council’s Principles and
Guidelines. The Directors have implemented policies and practices which they believe will focus their attention and that of
their Executives on accountability, risk management and ethical conduct. DYL will continue to review its policies to ensure
they reflect any changes within the Group, or to accepted principles and good practice. The updated policies are available on
the Company’s website.
Where the Board considers the Group is not of sufficient size or complexity to warrant adoption of all the recommendations
set out in the ASX Corporate Governance Council’s published guidelines, these instances have been highlighted.
This statement is available on our website, along with the ASX Appendix 4G, a checklist cross-referencing the ASX Principles
and Recommendations to disclosures in this statement and copies and summaries of charters, principles and policies referred
to in this statement.
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DIRECTORS’ REPORT
The Directors present their report on Deep Yellow and the entities it controlled at the end of, and during, the year ended 30
June 2020 (the Group).
DIRECTORS
The names and details of the Directors of the Company in office during the financial year and until the date of this report are
as set out below. Directors were in office for this entire period.
Names, qualifications, experience and special responsibilities
Rudolf Brunovs MBA, FCA, FAICD
Non-executive Chair
Mr Brunovs is a highly experienced Chartered Accountant and Director with more than 35 years of experience in business.
He is a former audit partner of the international accounting firm Ernst & Young and for 12 years held the position of Managing
Partner, first of the firm’s Parramatta office and followed by the Perth office. He was also a member of the Minerals and
Energy Division within Ernst & Young. Mr Brunovs has been a Director of Lions Eye Institute, a major WA based not for profit
organisation, for more than 10 years and is a director of a privately-owned biotechnology company based in Perth. He holds
a Masters of Business Administration from Bowling Green State University in Ohio and is a Fellow of both the Institute of
Chartered Accountants of Australia and New Zealand and the Australian Institute of Company Directors.
Mr Brunovs joined the Deep Yellow Board in August 2007 and was elected Non-executive Chairman in January 2016.
Mr Brunovs is the Chair of the Audit Committee.
John Borshoff BSc, FAusIMM, FAICD
Managing Director/CEO
Mr Borshoff is an experienced mining executive and geologist with more than 30 years of uranium industry experience. He
spent more than a decade at the start of his career as a senior geologist and manager of the Australian activities of German
uranium miner Uranerz. In 1993, following the withdrawal of Uranerz from Australia, Mr Borshoff founded Paladin Energy Ltd
(Paladin). He built that company from a junior explorer into a multi-mine uranium producer with a global asset base and
valuation of more than US$4.5 billion at its peak.
At Paladin, Mr Borshoff led the team that completed the drill out, feasibility studies, financing, construction, commissioning
and safe operation of the first two conventional uranium mines built in the world for 20 years. He also oversaw numerous
successful, large public market transactions including acquisitions and major capital raisings before leaving Paladin in 2015.
Mr Borshoff is recognised as a global uranium industry expert and has a vast international network across the uranium and
nuclear industries, as well as the mining investment market. He has a Bachelor of Science (Geology) from the University of
Western Australia and is a Fellow of both the Australian Institute of Company Directors and the Australasian Institute of Mining
and Metallurgy.
He is a member of the Uranium Forum within the Minerals Council of Australia (of which he is a former Board member), sits
on the Council of the Namibian Chamber of Mines and is a member of the Supply/Demand Working Group of the World
Nuclear Association.
Mr Borshoff serves on the Risk Committee (appointed 29 June 2017).
Gillian Swaby BBus, FCIS, FAICD, AAusIMM
Executive Director
Ms Swaby is an experienced mining executive with a broad skillset across a range of corporate, finance and governance
areas.
She has spent more than 35 years working with natural resources companies in numerous roles including Chief Financial
Officer, Company Secretary, Director and corporate advisor. Ms Swaby worked at Paladin for the period 1993 – 2015 in the
capacity as Executive Director for 10 years and as GM – Corporate Affairs. She had a key role in managing that company’s
growth through mine development, operation, acquisition and exploration. This role included responsibility for the company’s
complex corporate, legal, human relations and corporate social responsibility programs as an operating uranium miner in
multiple African countries.
Ms Swaby holds a Bachelor of Business (Accounting) and is a Fellow of the Australian Institute of Company Directors (AICD),
the Institute of Chartered Secretaries and Administrators, and the Governance Institute of Australia. She is a member of the
WA Council of the Australian Institute of Company Directors.
Ms Swaby serves on the Risk Committee (appointed 29 June 2017).
During the past three years Ms Swaby has also served as a Director of the following listed companies:
Comet Ridge Limited - appointed 9 January 2004. * Panoramic Resources Limited – appointed 8 October 2019. *
Birimian Limited – appointed 26 April 2017; resigned 13 November 2018.
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DIRECTORS’ REPORT
(continued)
Mervyn Greene MA (Maths), BAI (Engineering), MBA
Non-executive Director
Mr Greene is an experienced investment banker and entrepreneur who has been working in investment markets in Africa,
Europe and the United States for more than 35 years. His most recent experience has focussed on private equity investment
in a range of sectors, including property. He currently serves as Director of EPIC, The Irish Emigration Museum and is co-
founder and Chairman of Dogpatch Labs, Ireland’s leading tech start-up hub, as well as the Managing Director of CHQ Dublin
Limited, a leading Irish property developer. All these businesses are located in Dublin, Ireland.
From 1997 – 2005 Mr Greene was the London-based partner of Irwin Jacobs Greene, one of Namibia's premier stockbroking,
private equity and corporate finance advisory firms. Prior to this Mr Greene worked for investment bank Morgan Stanley in
New York and London.
Mr Greene has a Masters in Mathematics and Bachelor degree of Civil Engineering from Trinity College in Dublin. Mr Greene
also has a Masters of Business Administration from London Business School.
Mr Greene was appointed to the Deep Yellow Board in November 2006 and was Chairman from August 2007 to August 2013.
Mr Greene serves on the Audit Committee and Remuneration Committee (appointed 1 January 2017).
Christophe Urtel MSc, BSc
Non-executive Director
Mr Urtel has 20 years of experience in the natural resources sector and is currently Group Head of Corporate Development
for Anglo American.
Prior to joining Anglo American he was Head of Strategy and Capital (EMEA) for commodity trader Noble Group Limited, a
Fund Manager at Laurium LP and an Executive Director in J.P. Morgan’s Principal Investment franchise in London,
responsible for natural resources investments. Previously Mr Urtel worked in J.P. Morgan and its predecessor organisations
from 1999 – 2008, specialising in providing M&A, equity capital market and debt capital market advice to companies in the
metals and mining sector.
Mr Urtel graduated with a Masters in Mining and Finance and Bachelor of Science (Geology with Engineering Geology) from
the Royal School of Mines, Imperial College, London.
Mr Urtel joined the Deep Yellow Board in October 2012.
Mr Urtel serves on the Remuneration Committee and has been the Chair since 1 January 2017.
Justin Reid BSc, MSc, MBA
Non-executive Director
Mr Reid is a geologist and capital markets executive with more than 20 years of experience focused exclusively in the mineral
resources sector. He has held a number of senior executive roles, including President and Director of Sulliden Gold
Corporation, until its acquisition of Rio Alto Mining in 2014, President and CEO of Toronto-listed Sulliden Mining Capital Inc
which acquires and develops mining projects in the Americas. He is now CEO of Troilus Gold a Canadian development stage
resource company focusing in Northern Quebec.
Mr Reid started his career as a geologist with SGS and Cominco Limited, before becoming a partner and senior mining analyst
at Cormark Securities in Toronto and then Managing Director Global Mining Sales at the National Bank of Canada.
Mr Reid holds a Bachelor of Science (Geology) from the University of Regina, a Masters from the University of Toronto and
a Masters of Business Administration from the Kellogg School of Management at Northwestern University.
Mr Reid joined the Deep Yellow Board in October 2016.
Mr Reid serves on the Audit Committee and Remuneration Committee (appointed 1 January 2017 to both) and is Chair of the
Risk Committee (appointed 29 June 2017).
During the past three years Mr Reid has also served as a Director of the following listed company:
Aguia Resources Ltd - appointed 7 April 2015 resigned 5 August 2019
* Denotes current directorship
Dividends
No dividend has been paid since the end of the previous financial year and no dividend is recommended for the current year.
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DIRECTORS’ REPORT
(continued)
Interests in the Shares and Options of the Company
As at the date of this report, the Directors’ interests in shares and Options of the Company were:
Director
Rudolf Brunovs
John Borshoff
Gillian Swaby
Mervyn Greene
Justin Reid
Christophe Urtel
Number of Ordinary
Shares
Number of Options over
Ordinary Shares *
484,370
9,842,040
6,551,943
2,774,192
-
842,832
92,593
-
-
92,593
92,593
92,593
*Non-executive directors were issued with Zero Priced Options on 18 December 2019 with a 1 July 2020 vest date and 1 July
2024 expiry date.
Company Secretary
Mark Pitts BBus, FCA, GAICD
Mr Pitts is a partner in corporate advisory firm Endeavour Corporate and has over 30 years’ experience in business
administration, statutory reporting and corporate compliance. Having started his career with KPMG in Perth, he has worked
at a senior management level in a variety of commercial and consulting roles including mining services, healthcare and
property development.
The majority of the past 20 years has been spent working for, or providing company secretarial, accounting, finance and
compliance services to, publicly listed companies in the resources sector.
He is a registered company auditor and holds a Bachelor of Business Degree from Curtin University, is a Fellow of Chartered
Accountants Australia and New Zealand and is a graduate of the Australian Institute of Company Directors.
Principal Activities
The principal activities during the financial year of entities within the Group were:
Exploration activities to progress the 100% owned Reptile Project in Namibia with the emphasis to explore for the
existence of larger uranium deposits that can be developed as standalone operations.
Completion of a SS and commencement of a PFS on its Tumas Project (part of its Reptile Project).
Exploration activities on the NJV Project adjacent to the Reptile Project in Namibia.
Evaluating uranium projects for growth opportunities.
Operating and Financial Review
Review of Operations
A detailed review of the Group’s operations by project is set out in the ‘Review of Operations’ on pages 5 to 12.
Operating Results for the Year
The Group’s net profit after income tax for the financial year is $2,874,863 (2019: loss $3,814,328).
Financial Position
At the end of the financial year the Group had $12,116,972 (2019: $14,975,063) in cash and at-call deposits. Capitalised
mineral exploration and evaluation expenditure carried forward was $35,415,745 (2019: $31,831,939).
The Group has net assets of $47,919,615 (2019: $47,489,320).
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
COVID-19
The Group reacted promptly to the COVID-19 pandemic and conducted a full review of its activities during March 2020. It
focussed on adjusting workstreams to safeguard the Group’s key assets against the growing uncertainty and volatility. The
adjustment of workstreams brought about a change in remuneration for Directors, employees and consultants as detailed in
the Remuneration Report.
The pandemic had minimal impact on the Group’s operations in Namibia as mining and related industries were declared as
critical services during periods of lockdown. Management understood the severity of COVID-19 and acted quickly to
implement protocols and procedures to ensure the safety and well-being of its personnel in both Namibia and Australia.
The uranium spot price has moved from US$24.60 at 30 June 2019 to US$32.80 at 30 June 2020. This was partly brought
about by both Cameco and Kazatomprom either suspending or reducing mine activity due to COVID-19. The price movement,
although significant, is not sufficient to incentivise new production as it is still well below production costs of most mines. The
price recovery, although minor, has reactivated investor interest to some degree reviving value of uranium projects from
historical lows.
The Namibian Dollar (NAD), pegged to the South African Rand (ZAR), has continued to weaken against the AU$ during the
COVID-19 pandemic. This provides the Group with stronger buying power at its operations in Namibia.
The Group has received temporary cash flow support from the Australian Government through tax-free cash flow boosts
delivered through credits in the Business Activity Statement system. The cash flow boosts are equivalent to the amount of
monthly tax withheld from wages paid to employees for period March to June 2020. Refer Note 7(a) for details. An additional
cash flow boost will be applied when monthly activity statements for the period June to September 2020 are lodged and will
be paid out after 30 June 2020.
Business Strategies and Prospects for Future Financial Years
Deep Yellow Limited is a clearly differentiated, uranium focused, advanced exploration company in pre-development phase
that was rejuvenated by the appointment of John Borshoff, founder of Paladin Energy Ltd, as CEO in October 2016. The
Company then set a new direction built around a unique, counter-cyclical strategy focused on organic and inorganic growth
to deliver a Tier 1 uranium producer with a low cost, multi project global uranium platform.
Organic growth is delivered through exploration and development of the Company’s Namibian project portfolio. Since 2016,
exploration success has tripled the resource base at the Reptile Project, at an extremely low discovery cost. Namibia is a top
ranked uranium mining jurisdiction where Deep Yellow holds four large cornerstone tenements situated in the heart of what
is a world recognised, prospective uranium province containing major uranium deposits which includes the three largest open
cut uranium mines worldwide.
The Company’s inorganic growth plan is based on a targeted merger and acquisition program to establish a diversified
portfolio of uranium operations for development.
Effective execution of this unique strategy requires a leadership team with a proven track record, extensive industry knowledge
and capability to deliver. Deep yellow has assembled a standout uranium team that brings strong project development,
operational and corporate capabilities. The majority of this team successfully worked together at Paladin Energy Ltd, which
grew from a US$2M explorer into a US$4.5B high-quality uranium producer pre-Fukushima.
The medium to long-term outlook for uranium is extremely positive, supported by the integral role nuclear power will play in
meeting global clean energy targets. Through the operational expertise of the Company’s Board and management team,
along with the execution of the unique and differentiated dual-pillar strategy, Deep Yellow is well placed to provide uranium
supply security and certainty into a growing market.
Significant achievements in FY20 include an increase to the resource base on the Reptile project with 55km of the 125km
target remaining to be adequately tested. A SS was completed, initiating commencement of a PFS to test the viability of
Langer Heinrich-style deposits which are found to occur on the Tumas Palaeochannel of the Reptile Project. Exploration on
the NJV Project funded 100% by JOGMEC continued testing for basement associated mineralisation (Husab/Rössing
alaskite-associated mineralisation) and surficial calcrete-style mineralisation (Langer Heinrich-style deposits) with highly
encouraging results identified at the Barking Gecko basement target. Completion of a capital raising program in July 2019,
involving both placements to selected parties to broaden the shareholder base and a Share Purchase Plan. It jointly raised
A$11.3M to support sector consolidation possibilities and advancement of the feasibility studies on Reptile Project.
Significant Events after the Balance Date
There have been no events or circumstances which materially affect the Annual Financial Statements of the Group between
30 June 2020 and the date of this report.
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
Environmental Regulation and Performance
The Group holds Exclusive Prospecting Licences (EPLs) issued by the relevant authorities of the country in which the Group
operates. These EPLs require the holder to observe any requirements, limitations or prohibitions on its exploration operations
as may in the interest of the environmental protection, as imposed by the relevant authorities.
The Group needs to undertake an EIA scoping study over the area covered by a relevant EPL and formulate and forward an
Environmental Management Plan Report to the relevant authorities.
There have been no known breaches of the Group’s EPL conditions or any environmental regulations to which it is subject.
Share Options
Unissued shares
As at the date of this report, there were 62,834,990 unissued ordinary shares under option (62,464,618 at 30 June 2020 (the
reporting date)). This includes 370,372 Options outstanding for Key Management Personnel (KMP) for which further details
can be found in the Remuneration Report.
There are no participating rights or entitlements inherent in the Options and Option holders will not be entitled to participate
in new issues of capital that may be offered to shareholders during the currency of the Options.
Shares issued as a result of the exercise of options
No Options have been exercised to acquire fully paid ordinary shares in the Company during the year.
Performance Rights
As at the date of this report, there were 802,973 Performance Rights outstanding (604,561 at the reporting date). Refer to
Note 20 for further details of the Performance Rights outstanding.
There are no participating rights or entitlements inherent in the Performance Rights and Performance Right holders will not
be entitled to participate in new issues of capital that may be offered to shareholders during the currency of the Performance
Rights.
During the financial year, 531,363 shares have been issued at a weighted average issue price of 23.75 cents per share in
relation to Performance Rights that vested.
Indemnification and Insurance of Directors and Officers
During or since the financial year, the Company has paid premiums to insure certain officers of the Company. The officers
of the Company covered by the insurance policy include the Directors and the Company Secretary named in this report.
The Directors’ and Officers’ Liability insurance provides cover against all costs and expenses that may be incurred in
defending civil proceedings that fall within the scope of the indemnity and that may be brought against the officers in their
capacity as officers of the Company. The insurance policy does not contain details of the premium paid in respect of individual
officers of the Company. Disclosure of the nature of the liability cover and the amount of the premium is subject to a
confidentiality clause under the insurance policy.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit. No payment has been made
to indemnify Ernst & Young during or since the financial year.
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DIRECTORS’ REPORT
(continued)
Directors’ Meetings
The number of meetings of Directors (including meetings of Committees of Directors) held during the year ended
30 June 2020, whilst each Director was in office, and the number of meetings attended by each Director was:
Directors’ meetings
Board
Eligible Attended
13
Audit
Meetings of Committees
Remuneration
Risk
Eligible
Attended
Eligible
Attended
Eligible
Attended
2
2
1
13
13
13
13
13
13
12
13
13
12
12
13
2
-
-
2
2
-
2
-
-
2
2
-
-
-
-
2
2
2
-
-
-
2
2
2
-
1
1
-
1
-
-
1
1
-
1
-
Number of meetings held:
Number of meetings eligible
and attended:
Rudolf Brunovs
John Borshoff
Gillian Swaby
Mervyn Greene
Justin Reid
Christophe Urtel
Committee Membership
As at the date of this report, the Company had Audit, Remuneration and Risk Committees as detailed below:
Audit
Rudolf Brunovs (c)
Mervyn Greene
Justin Reid
Remuneration
Christophe Urtel (c)
Mervyn Greene
Justin Reid
Risk
Justin Reid (c)
John Borshoff
Gillian Swaby
Notes
(c) designates the Chair of the Committee
Non-audit Services and Auditor’s Independence Declaration
During the 2020 financial year Ernst & Young, the Group’s auditor, has not provided any non-audit services in addition to their
statutory duties.
A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act is set out on
page 39.
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED)
Contents of the Remuneration Report:
1.
2.
3.
4.
5.
6.
7.
1.
Executive remuneration policies, processes and practices
Remuneration structures
Remuneration mix
Elements of remuneration
Remuneration Report overview
Overview of Executive remuneration
(a)
(b)
(c)
(d)
Group performance and Executive remuneration outcomes for FY20
Remuneration governance
Non-executive Director (NED) fee arrangements
Statutory and share-based reporting
(a)
(b)
(c)
(d)
Actual remuneration paid to KMP in FY20
Executive remuneration for FY19 and FY20
NED remuneration for FY19 and FY20
Disclosures relating to loan plan and ordinary shares
Other transactions and balances with KMP and their related parties
Remuneration Report Overview
The Directors present the Remuneration Report (the Report) for the Group for the year ended 30 June 2020 (FY20). This
Report forms part of the Directors’ Report and has been audited in accordance with section 300A of the Corporations Act
2001 (the ACT). Any non-IFRS financial information contained in the Remuneration Report has not been audited or reviewed
in accordance with Australian Auditing Standards. The Report details the remuneration arrangements of the Group’s KMP:
Non-executive directors (NEDs); and
Executive directors
KMP of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the
major activities of the Group, whether it be directly or indirectly.
The table below outlines the KMP of the Group and their movements during FY20.
Name
Position
Executive Director
John Borshoff
Gillian Swaby
Non-executive Directors (NEDs)
Managing Director (MD) / Chief Executive Officer (CEO)
Executive Director
Rudolf Brunovs
Mervyn Greene
Justin Reid
Christophe Urtel
Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Term as KMP
Full financial year
Full financial year
Full financial year
Full financial year
Full financial year
Full financial year
There were no changes to KMP after the reporting date and before the date the financial report was authorised for issue.
2.
Overview of Executive Remuneration
(a)
Executive Remuneration Policies, Processes and Practices
Four principles guide the Group’s decisions about executive remuneration:
Fairness: provide a fair level of reward to all employees, benchmarked against peer groups;
Value adding: build a culture of achievement by attracting, motivating and retaining high performing individuals who
will add value to the Group;
Alignment: promote mutually beneficial outcomes by aligning the interests of Executives with shareholder objectives;
and
Group Culture: drive leadership performance that create a culture that promotes safety, diversity and stakeholder
satisfaction.
The key objectives of the Group’s award framework therefore ensure that remuneration practices are based on the above
principles, in compliance with the Corporations Act, the ASX Listing Rules and are also in accordance with principles of good
corporate governance.
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
(b)
Remuneration Structures
The Group aims to reward Executives with a level and mix of remuneration appropriate to their position, responsibilities and
performance, in a way that aligns with business strategy and shareholder objectives.
Executives receive fixed remuneration and variable remuneration consisting of short- and long-term incentive opportunities.
The remuneration offered is competitive for companies of a similar industry, size and complexity with longer term remuneration
encouraging retention and multi-year performance. Executive remuneration levels are reviewed annually by the
Remuneration Committee with reference to the remuneration guiding principles.
The Group’s remuneration structure for Executives can include a mix of:
Fixed remuneration
Variable remuneration
-
-
Short term incentive
Long term incentive
The chart below provides a summary of the structure of remuneration that applied to the Managing Director and Executive
Director in FY20:
Managing Director
Fixed remuneration
Service fee
Executive Director
Fixed remuneration
Service fee
Variable remuneration
Variable remuneration
Short term incentive
(STI)
Long term incentive
(LTI)
Short term incentive
(STI)
Long term incentive
(LTI)
Cash
Loan Plan Shares
(vest equally over
3 years)
Service and KPI milestones
100% non-financial performance
(c)
Remuneration Mix
Loan Plan Shares
(vest after 3 years)
Service and Share price
milestones
25% non-financial
75% financial performance
Loan Plan Shares
(vest equally over
2 years)
Service milestone
100% non-financial
Loan Plan Shares
(vest over 3 years)
Service and Share price
milestones
25% non-financial
75% financial performance
*based on the value expensed during FY20 of issued Loan Plan Shares
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
(d)
Elements of Remuneration
Fixed remuneration
The fixed remuneration component is comprised of a service fee, statutory superannuation contributions (where applicable)
and other benefits (where applicable). It is paid by the Group to compensate fully for:
The scope of the Executive’s role;
The Executive’s skills, experience and qualifications; and
Individual performance
Executive contracts do not include any guaranteed increases. The Group benchmarks the fixed component against
appropriate market comparisons with its peer groups.
Short Term Incentive
Executives have the opportunity to earn an annual incentive award which recognises annual performance. It is delivered in
cash and Loan Plan Shares as summarised below:
How is it paid?
Managing Director
36% of STI delivered as cash with 64%
deferred into Loan Plan Shares vesting
equally over three years.
The deferred component was introduced in FY19 to align with Australian market practice.
Executive Director
100% of STI deferred into Loan Plan
Shares vesting equally over two years
How much can be earned? A maximum STI opportunity of 70% of
annual service fee can be earned as
follows:
Payment of any STI is entirely discretionary and the mix of cash and Loan Plan Shares
can be adjusted as per Board discretion. The governance process and principles adopted
by the Board in making the executive pay decisions, specifically during the COVID-19
pandemic, are based on but not limited to:
A maximum STI opportunity of 30% of
annual service fee can be earned as
Deferred Loan Plan Shares
25% Cash
45% Deferred into Loan Plan Shares
Proactively considering whether discretion needs to be exercised due to the rapid
change in operating environment arising from the COVID-19 pandemic
Receiving structured and broader insights and independent information from control
functions such as finance, risk and human resources;
The Remuneration Committee maintaining an independent role in overseeing the
function of proposing remuneration decisions to the Board; and
Transparently record and communicate the inputs received that led to discretion
being applied.
Only service milestones are applicable
How is performance
measured?
The STI performance measures were
chosen as they provide a framework for
delivering short term success and long-term
value to the Group and its shareholders.
They reflect the core drivers of short-term
performance and recognises and rewards
the Managing Director’s contribution to that
performance.
Performance indicators (KPIs) cover only
non-financial measures of performance as
listed below:
Growth initiatives
i) Mergers and Acquisitions
ii) Organic
Capital resources
Succession planning
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
When is it paid?
Remuneration
for Board approval
Committee
The
recommends
the
amount of Cash and vesting of Loan Plan
Shares following a review of performance
over the financial year against the STI
performance measures.
No cash component and only service
milestones applicable for the vesting of
Loan Plan Shares
The Board approves the final STI award
from the recommendation made by the
Remuneration Committee.
This is usually determined within three
months of the end of the financial year. The
cash component is therefore paid in the
following financial year.
Deferral terms
Long Term Incentive
The vesting of the Loan Plan Shares is
deferred and subject to a further three-year
service period.
The vesting of the Loan Plan Shares is
deferred and subject to a further two-year
service period
Annual grants of Loan Plan Shares are made to the Managing Director and Executive Director to reward them for their
contribution to the creation of shareholder value over the long term.
How is it paid?
Managing Director
The Loan Plan Shares rewards and incentivises the participants through an arrangement
where shares are offered subject to long term performance conditions in the form of share
price target and time-based vesting conditions.
Executive Director
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 to avoid compulsory divestment of
Loan Plan Shares, the loan must be repaid on the earlier of periods ranging between 5-10
years (determined with each issue) after the issuance of the shares and the occurrence
of:
(a)
(b)
in the case of vested shares, the date being 12 months after cessation of
employment or service contract for any reason; or
pre-determined occurrences as per the Loan Share Plan including but not limited
to a Control Event or material breach by the Participant.
Loan Plan Shares were deliberately chosen because they provide an appropriate level of
incentive in a competitive environment and are cost effective in that there is no cash outlay
for the Group which is appropriate given the Group’s exploration status.
How much can be earned? A maximum LTI opportunity of 110% of
annual service fee can be earned through
Loan Plan Shares with the following vesting
conditions:
A maximum LTI opportunity of 95% of
annual service fee can be earned through
Loan Plan Shares with the following vesting
conditions:
non-market (time-based) – 27%
market (price target) – 83%
non-market (time-based) – 24%
market (price target) – 71%
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
How is performance
measured?
The number of Loan Plan Shares granted is determined using the fair value at the date of
formalising the Notice of Meeting to obtain shareholder approval for the grant. Those Loan
Plan Shares with non-market-based vesting conditions are valued using a Black Scholes
option pricing model whilst those with market based vesting conditions are valued using a
Monte Carlo simulation.
Loan Plan Shares vest over a period of time if certain Company share price targets are
met and the holder of the Loan Plan Shares remains employed with the Company (time-
based) during the measurement period. Awards made to the Managing Director and
Executive Director contained both share price target and time-based vesting conditions.
These conditions were chosen as it reflects an appropriate balance between individual
reward and market performance. Those awards with time-based vesting conditions were
issued to encourage long-term retention. If these vesting conditions are not met the shares
are forfeited and the forfeited shares are treated as full consideration for the repayment of
the loan. Financial based performance conditions such as Total Shareholder Return and
Return on Equity Earnings are not chosen as a performance measure for the Loan Share
Plan as these are difficult to measure in the present operating environment. Loan Plan
Shares were granted under the Loan Share Plan to the Managing Director and Executive
Director in December 2019 and have been accounted for as a share-based payment.
Details in respect of the award are provided in Table 1(a).
When is performance
measured?
All Loan Plan Shares are tested three years
after grant.
Non-market-based Loan Plan Shares vest
equally over three years with the first testing
date a year after grant.
Market based Loan Plan Shares are tested
three years after grant.
What happens if an
executive leaves?
Where an Executive ceases providing services prior to the vesting of their Loan Plan
Shares, all unvested shares will be compulsorily divested on a date determined by the
Board unless the Board exercises its discretion to allow vesting at or post cessation of
employment.
What happens if there is a
change of control?
In the event of a change of control of the Group, the Board may determine, in its absolute
discretion, that some or all of the unvested Loan Plan Shares will automatically vest in a
manner that allows the Executive to participate in and/or benefit from any transaction from
or in connection with the Change of Control Event.
Are executives eligible for
dividends?
The Executive is entitled to receive dividends on unvested Loan Plan Shares. For so long
as there is an outstanding loan balance in relation to the Loan Plan Shares, the Executive
irrevocably and unconditionally directs the Company to withhold all after-tax dividends in
respect of the participants Loan Plan Shares and apply all amounts so withheld in
repayment of the outstanding loan balance.
Sign-on Payments
In addition to fixed remuneration, STI and LTI, the Board may determine, from time to time, to award sign-on payments to
new executives. There were no sign-on payments made in FY20.
3. Group Performance and Executive Remuneration Outcomes for FY20
Group Performance
The table below shows the performance of the Group as measured by its earnings per share and its share price over the past
five years.
30 June 2020
Cents
30 June 2019
Cents*
30 June 2018
Cents
30 June 2017
Cents
30 June 2016
Cents **
Share price
U3O8 spot price (US$/lb)
Profit/(Loss per share)
20.5
32.80
1.19
32.0
24.60
(1.98)
34.0
22.65
(1.29)
28.0
20.15
(22.51)
8.0
26.7
(1.82)
* Comparatives have not been restated for the adoption of AASB16: Leases
**Prior to 1:20 share consolidation completed in March 2017
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
COVID-19
The Group reacted promptly to the COVID-19 pandemic and conducted a full review of its activities during March 2020. It
focussed on adjusting workstreams to safeguard the Group’s key assets against the growing uncertainty and volatility. The
adjustment of workstreams brought about a change in remuneration for Directors, employees and consultants of the Group
as detailed below:
Period 1 April to 30 June 2020
Non-executive director fees reduced by 50% of which 20% was foregone and 30% deferred until 1 January 2021;
Scomac personnel days reduced together with a 10% rate reduction;
Australian employees’ salaries and Executive Director’s fees reduced by 10%; and
Namibian employees’ reduced work hours and corresponding remuneration by 20%.
Period 1 July to 31 December 2020 (next review date)
Non-executive director fees reduced by 10%;
Scomac personnel rate reduction of 10% continues;
Australian employees’ salaries and Executive director’s fee reduction of 10% continues; and
Namibian employees’ return to normal work hours with a salary reduction of 10%.
Actual Remuneration Paid
The actual remuneration paid to KMP in FY20 is set out in section 7 below. This provides shareholders with a view of the
remuneration actually paid to KMP for performance in FY20 and the value of LTIs that vested during the period.
STI Vesting Outcomes
Non-financial measures are used to measure performance for STI awards to the CEO as indicated on page 28. Based on an
assessment, the average STI award to the CEO as a percentage of target for FY20 was 84%. Included in the assessment
was a special allowance through which the CEO was acknowledged for his leadership with and management of the COVID-
19 pandemic. The CEO responded with effective action on a timely basis even though matters were complex, dealing with
the pandemic in both Namibia and Australia. Furthermore, the Board exercised discretion by maximising the cash component
to 100% and adjusting the number of Loan Plan Shares to vest accordingly.
This resulted in the following awards being made:
$102,500 cash which will be paid during FY21; and
605,153 of 806,677 Loan Plan Shares granted on 18 December 2019 would vest equally over a three-year service
period starting 30 November 2020 and have a 5-year life (from issuance). The balance would be forfeited unvested.
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
LTI Vesting Outcomes
Loan Plan Shares
The vesting of Loan Plan Shares issued to Executives is driven by time and market price vesting conditions.
The table below outlines current and expected outcomes for the vesting of issued Loan Plan Shares as LTI at 30 June 2020.
Projected outcomes for the future vesting of issued Loan Plan Shares as LTI with market price vesting conditions are based
on the assumption that the current 52-week high share price will be reached at the future testing date.
FY 2018 grant
75 cents *
Market Price and Time-Based Tests – Loan Plan Shares as LTI
FY 2019 grant
74.3 *
14% of awards will vest during FY22 if
time-based vesting conditions are met.
FY 2020 grant
45.9*
3% of awards will vest during FY21 if
time-based vesting conditions are met.
10% of awards vested during FY19
4% of awards vested during FY20 as
time-based vesting conditions were
met.
16% of awards have been forfeited
unexercised during FY20 as market
price test was not met.
14% of awards will vest during FY21 if
time-based vesting conditions are met
56% of awards will be
forfeited
unexercised during FY 21 if the market
price test of 75 cents is not met or if not
vested by Board determination.
86% of awards will be
forfeited
unexercised during FY22 if the market
price test of 74.3 cents is not met or if
not vested by Board determination.
3% of awards will vest during FY22 if
time-based vesting conditions are met.
18% of awards will vest during FY23 if
time-based vesting conditions are met.
75% of awards will be
forfeited
unexercised during FY23 if the market
price test of 45.9 cents is not met or if
not vested by Board determination.
75 cents at 12 October 20
74.3 cents at 30 November 2021
45.9 cents at 30 November 2022
4.
Remuneration Governance
Remuneration Decision Making
The Board operates within a remuneration decision making framework whereby:
management implement general employee remuneration policies approved by the Managing Director;
the Managing Director makes recommendations on remuneration outcomes for senior executives;
a Board appointed Remuneration Committee reviews the Group’s remuneration framework and policy and make
recommendations to the Board on remuneration packages for NEDs and Executive Directors and incentive and equity-
based remuneration plans for Senior Executives and other employees; and
the Board review and approve the above
The composition of the Remuneration Committee is set out on page 26 of this Annual Report.
Further information on the Remuneration Committee’s role, composition, operation, responsibilities and authority can be found
in the Remuneration Committee Charter available on the Company’s website.
Use of Remuneration Advisors
To ensure the Remuneration Committee is fully informed when making remuneration decisions, it from time to time obtains
external advice from an independent consultant. During the financial year, the Remuneration Committee did not engage a
remuneration consultant to make any remuneration recommendation (as defined in the Corporations Act) in relation to any of
the KMP for the Group. General advice was sought and obtained in relation to market conditions and parity reviews.
D e e p Y e l l o w L i m i t e d
3 2
2 0 2 0 A n n u a l R e p o r t
DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
Clawback of Remuneration
The Board has the discretion to reduce or cancel any unvested STI and LTI including the compulsory divestment of unvested
or vested Loan Plan Shares under the Deep Yellow Limited Loan Share Plan if a KMP acts in a manner of:
wilful misconduct bringing disrepute to the Group;
repeated disobedience or incompetence in the performance of duties, after prior written warning; or
fraud, dishonesty or a material breach of their obligations to the Group.
Securities Trading Policy
The Group’s Securities Trading Policy applies to all KMP. The policy prohibits employees from dealing in the Company’s
securities while in possession of material non-public information relevant to the Group. Additional restrictions are placed on
Restricted Employees whereby they are prohibited from dealing in the Company’s securities during prescribed closed periods.
Directors and employees are further prohibited from engaging in hedging arrangements over unvested securities to protect
the value of their unvested STI and LTI awards. Breach of the Securities Trading Policy will also be regarded by the Group
as serious misconduct which may lead to disciplinary action and/or dismissal.
Executive Contracts
Remuneration arrangements for KMP are formalised in service agreements. Details of these agreements are provided below:
Mr J Borshoff – Managing Director/CEO
Scomac Management Services Pty Ltd as trustee for the Scomac Unit Trust (Scomac) has been appointed on a non-exclusive
basis to provide the Company with management, strategic, technical and geological expertise and services through Scomac
personnel which they employ or have access to (Scomac agreement).
Consultant personnel who Scomac employ or have access to include Mr John Borshoff, the Company’s Managing Director
and Chief Executive Officer, who has been appointed pursuant to the Scomac agreement.
The terms of the Scomac agreement as it relates to Mr Borshoff as an employee of Scomac are formalised in the Scomac
agreement and were disclosed to the ASX on 24 October 2016. The current terms are as follows:
No fixed term, duration subject to termination provisions;
Fee for services rendered of $410,000 per annum (plus GST);
The service fee and/or structure to be reviewed annually;
Eligibility to receive an annual short-term incentive of up to 25% of the Service Fee, at the discretion of the Company,
which can be paid in shares and/or cash; and
Eligibility to participate in the Company’s Loan funded share plan as long and short-term incentive on terms determined
by the Board, subject to receiving any required or appropriate shareholder approval (details provided in Section 6(c)
and Table 1(a)).
Termination provisions:
1. Scomac may terminate the agreement on 6 months’ prior notice to the Company;
2.
3. Where either party has terminated the agreement, the Company may pay Scomac an amount in lieu of the notice
The Company may terminate the agreement on 12 months’ prior notice to Scomac;
in which case the agreement shall be at an end on such a payment; and
4. No notice of termination required by the Company for breach of a material term by Scomac.
Ms G Swaby – Executive Director
The Company has entered into a Consultancy Agreement with Strategic Consultants Pty Ltd (Strategic) for consultancy
services provided by Ms Swaby. The current terms are as follows:
Commenced 24 October 2016 and continues until such time as terminated by either party;
Consulting fee of $1,850 per day to a maximum of $300,000 per annum unless otherwise determined in accordance
with business needs;
The fee and/or structure to be reviewed from time to time having regard to the performance of Ms Swaby and the
Company;
Either party may terminate the agreement on one month’s notice to the other party; and
Eligibility to participate in the Company’s Loan Share Plan as long and short-term incentive on terms determined by
the Board, subject to receiving any required or appropriate shareholder approval (details provided in Section 6(c) and
Table 1(a)).
Both Mr Borshoff and Ms Swaby agreed to a 10% reduction in monthly fees for the period 1 April 2020 to 30 June 2020 as
part of a full review of the Company’s activities. The review focussed on adjusting current workstreams to safeguard the
Company’s key assets against the growing uncertainty and volatility caused by the COVID-19 pandemic. The 10% monthly
reduction has been extended to 31 December 2020.
D e e p Y e l l o w L i m i t e d
3 3
2 0 2 0 A n n u a l R e p o r t
DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
5. Non-executive Director (NED) Fee Arrangements
Remuneration Structure
The structural component of NED fees is separate and distinct from Executive remuneration. It is designed to attract and
retain directors of the highest calibre who can discharge the roles and responsibilities required in terms of good governance,
strong oversight, independence and objectivity whilst incurring a cost that is acceptable to shareholders. NEDs do not
participate in any performance-related incentive awards.
Fee Policy
The Remuneration Committee reviews NED fees annually against comparable companies. The Board also considers advice
from external advisors when undertaking the review process, where applicable.
NED fees consist of base fees and committee fees. The payment of additional fees for serving as Chair of a committee
recognises the additional time commitment required by NEDs who act as Chair of a Board Committee.
REMUNERATION REPORT (AUDITED) (continued)
The table below summarises Board and Committee fees payable to NEDs for FY20 (inclusive of superannuation, where
applicable):
Board fees
Chair
NED
Committee fees
Total $
90,000
60,000
Chair
Audit, Remuneration and Risk Committees
5,000
NEDs agreed to a 20% reduction and 30% deferral in monthly fees for the period 1 April 2020 to 30 June 2020 as part of a
full review of the Company’s activities. The review focussed on adjusting current workstreams to safeguard the Company’s
key assets against the growing uncertainty and volatility caused by the COVID-19 pandemic. The NEDs agreed on the
reduction to be extended to 31 December 2020 at a rate of 10%.
NEDs may be reimbursed for expenses reasonably incurred in attending to the Group’s affairs. NEDs do not receive retirement
benefits, nor do they participate in any incentive programs.
Shareholder approval was obtained during November 2019 to provide the NEDs with a component of equity-based
remuneration in the form of Zero Exercise Price Options (ZEPOs) in addition to the fees summarised in the table above. On
18 December 2019 each NED was issued with 92,593 ZEPOs at an issue price of 27.5c for a total value of $25,463 per NED.
Determination of Fees and Maximum Aggregate NED Fee Pool
NED fees are determined within an aggregate NED fee pool limit, which is periodically determined by a general meeting. The
latest determination was at the Annual General Meeting held on 19 November 2009 when shareholders approved a maximum
amount which could be paid as NED fees of $450,000 per annum to be apportioned between the NEDs as determined by the
Board. The maximum aggregate fee pool and the fee structure are reviewed on a periodic basis against fees paid to NEDs
of comparable companies.
The Board will not seek any increase for the NED pool at the 2020 AGM.
D e e p Y e l l o w L i m i t e d
3 4
2 0 2 0 A n n u a l R e p o r t
DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
6. Statutory and Share-based Reporting
(a)
Executive KMP remuneration for FY19 and FY20
Short-term benefits
Financial
year
Fees
Cash bonus (i)
Post-employment
Superannuation
contributions
Long-term benefits
Share-based
payments
Total remuneration
Performance Related
(iii)
%
Long service leave
Loan Plan Shares (ii)
Executive Directors
J Borshoff
G Swaby (iv)
Total Executive KMP
2020
2019
2020
2019
2020
2019
399,753
410,000
326,248
302,475
726,001
712,475
102,500
102,500
-
102,500
102,500
-
-
-
-
-
-
-
-
359,511
386,110
262,975
180,235
622,486
566,345
861,764
898,610
589,223
482,710
1,450,987
1,381,320
37.9
45.1
23.2
20.7
(i) Mr Borshoff earned 100% of his maximum cash STI opportunity for FY19 and FY20.
(ii) Details in respect of the awards are provided in Table 1(a).
(iii) Performance measures are based on the cash bonus and the market and participant performance vesting hurdles of Loan Plan Shares.
(iv)
Included in Ms Swaby remuneration of $302,475 for FY19 and $326,248 for FY20 are amounts of $32,000 and $26,000 respectively for services rendered in relation to incremental project work. There has been an
increase in fees as a result of increase in days worked from the prior year.
D e e p Y e l l o w L i m i t e d
3 5
2 0 1 9 A n n u a l R e p o r t
DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
(b)
NED Remuneration for FY19 and FY20
Short term benefits
Post-employment
Share-based
payments
Financial
year
Board and
Committee fees
Superannuation
contributions
Non-executive Directors
R Brunovs
M Greene
J Reid (i)
C Urtel
Total NED
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
82,423
86,758
57,000
60,000
61,750
70,000
61,754
65,000
262,927
281,758
7,830
8,242
-
-
-
-
-
-
7,830
8,242
25,463
-
25,463
-
25,463
-
25,463
-
101,852
-
Total
115,716
95,000
82,463
60,000
87,213
70,000
87,217
65,000
372,609
290,000
(i)
In line with annual remuneration of the Chair of the Audit and Remuneration Committees, Mr Reid received a back payment of $5,000
during FY19 as Chair of the Risk Committee for FY18.
(c)
Disclosures Relating to Loan Plan Shares, Options and Ordinary Shares
This section sets out the additional disclosures required under the Corporations Act 2001.
The table below disclose the Loan Plan Shares granted, vested and lapsed in relation to KMP during FY20. Loan Plan Shares
carry voting rights and participants are entitled to dividends on unvested Loan Plan Shares. For so long as there is an
outstanding loan balance in relation to the Loan Plan Shares, the participant irrevocably and unconditionally directs the
Company to withhold all after-tax dividends in respect of the participants Loan Plan Shares and apply all amounts so withheld
in repayment of the outstanding loan balance.
Table 1(a): Loan Plan Shares: Granted, Vested and Divested during FY20
Financial
year
Number
issued
Issue date
Fair Value
per share
at issue
date
(cents)
Executive directors
J Borshoff
2018
2018
2019
2019
2019
2020
2020
2020
2020
240,000
6-Dec-17
60,000
6-Dec-17
184,685
19-Nov-18
184,685
19-Nov-18
184,685
19-Nov-18
268,559
18-Dec-19
268,559
18-Dec-19
268,559
18-Dec-19
530,588
18-Dec-19
G Swaby
2020
1,610,714
18-Dec-19
2018
2018
2019
2020
2020
2020
120,000
6-Dec-17
30,000
6-Dec-17
175,676
19-Nov-18
308,271
18-Dec-19
308,272
18-Dec-19
111,765
18-Dec-19
2020
1,017,857
18-Dec-19
20.9
29.7
37.6
37.6
37.6
15.9
15.9
15.9
18.1
12.9
20.9
20.9
37.6
15.9
15.9
15.9
12.3
Vesting
date
12-Oct-19
12-Oct-19
30-Nov-19
30-Nov-20
30-Nov-21
30-Nov-20
30-Nov-21
30-Nov-22
30-Nov-22
30-Nov-22
12-Oct-19
12-Oct-19
30-Nov-19
30-Nov-20
30-Nov-21
30-Nov-22
30-Nov-22
Number
Value
Exercise
price
(cents)
Expiry date
(i)
Vested
during
year
Lapsed
during year
(ii)
Issued
during year
$A
Vested
during year
A$ (iii)
-
240,000
32.4
32.4
46.5
46.5
46.5
27.0
27.0
27.0
27.0
27.0
32.4
32.4
46.5
27.0
27.0
27.0
27.0
5-Dec-27
5-Dec-27
60,000
19-Nov-23
104,235
19-Nov-23
19-Nov-23
18-Dec-24
18-Dec-24
18-Dec-24
18-Dec-26
18-Dec-26
5-Dec-27
5-Dec-27
-
-
-
-
-
-
-
-
30,000
19-Nov-23
175,676
18-Dec-24
18-Dec-24
18-Dec-24
18-Dec-24
-
-
-
-
-
80,449
80,448
80,449
-
-
-
-
-
120,000
-
-
-
-
-
-
-
-
-
-
-
42,701
42,701
42,701
96,036
207,782
-
-
-
49,015
49,015
17,771
125,196
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
(ii)
(iii)
Loan Plan Shares do not have an expiry date. The limited recourse loan in respect of the Loan Plan Shares has to be
fully paid between 5-10 years (determined with each issue) after grant date of the Loan Plan Shares.
Shares forfeited as market price vesting conditions were not met.
The value is based on the number of Loan Plan Shares vested multiplied by the share price on vesting dates and
reduced by the outstanding loan in relation to the Loan Plan Shares that vested. The outstanding loans were both in
excess of the value obtained on vesting date.
D e e p Y e l l o w L i m i t e d
3 6
2 0 2 0 A n n u a l R e p o r t
DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
Table 1(b): Share Options: Granted, Vested and Divested during FY20
Financial
year
Number
issued
Issue Date
Fair Value
per option
at issue
date
(cents)
Expiry date
Exercise
price
(cents)
Vesting
date
Number
Vested
during
year
Value
Issued
during year
$A
Vested
during year
A$ (ii)
Non-executive
Directors
R Brunovs
M Greene
J Reid (i)
C Urtel
2020
2020
2020
2020
92,593
92,593
92,593
92,593
18-Dec-19
18-Dec-19
18-Dec-19
18-Dec-19
27.5
27.5
27.5
27.5
1-Jul-20
1-Jul-20
1-Jul-20
1-Jul-20
-
-
-
-
1-Jul-24
1-Jul-24
1-Jul-24
1-Jul-24
-
-
-
-
25,463
25,463
25,463
25,463
-
-
-
-
For details on the valuation of Loan Plan Shares and Options, including models and assumptions used, please refer to Note
20.
The Loan Plan Shares and Options were provided at no cost to the recipients. There were no alterations to the terms and
conditions of Loan Plan Shares or Options issued as remuneration since their grant/issue dates.
Table 1(c): Shareholdings *
2020
Name
Balance at
start of the year
Granted as
remuneration (i)
Lapsed (ii)(iii)
Net change other
Executive directors
J Borshoff (ii)
G Swaby (iii)
Non-executive Directors
R Brunovs
M Greene
J Reid
C Urtel
8,378,020
4,829,005
484,370
2,774,192
-
842,832
2,946,979
1,746,165
(1,531,346)
(120,000)
48,387
96,774
-
-
-
-
-
-
-
-
-
-
-
-
Balance at the
end of the year
(iv)
9,842,040
6,551,944
484,370
2,774,192
-
842,832
* Includes shares held directly, indirectly and beneficially by KMP
(i)
(ii)
(iii)
On 18 December 2019 Mr Borshoff and Ms Swaby were issued with Loan Plan Shares. Details in respect of the awards are provided
in Table 1(a).
During FY20 1,290,000 shares were forfeited as market price vesting conditions were not met and 241,346 shares were forfeited as
only 72% of performance measures were met during FY19. At reporting date, 5,529,416 shares have not vested.
During FY20 120,000 shares were forfeited as market price vesting conditions were not met. At reporting date, 3,250,895 shares
have not vested
A participant may not trade shares acquired under the Loan Share 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.
Table 1(d): Option holdings
2020
Name
Non-executive Directors
R Brunovs
M Greene
J Reid
C Urtel
Balance at
start of the year
Granted as
remuneration
Balance at the end of
the year
Vested and exercisable
-
-
-
-
92,593
92,593
92,593
92,593
92,593
92,593
92,593
92,593
92,593
92,593
92,593
92,593
(d)
Other Transactions and Balances with KMP and their Related Parties
Details and terms and conditions of other transactions with KMP and their related parties:
Scomac Management Services Pty Ltd as trustee for the Scomac Unit Trust (Scomac or Consultant) has been appointed on
a non-exclusive basis to provide the Group with management, strategic, technical and geological expertise and services
through the Consultant personnel they employ or have access to (Scomac agreement). Mr Borshoff has a financial interest
in Scomac.
During the year ended 30 June 2020 Scomac billed the Company $1,035,968, inclusive of GST and on-costs (2019:$737,113),
for technical and geological services (excluding Mr Borshoff) on normal commercial terms and conditions. These amounts
are not included in the remuneration tables above. Fees paid to Scomac in relation to services provided by Mr Borshoff as
Managing Director are detailed in section 6(a). An amount of $81,687 was outstanding at 30 June 2020 (2019:$54,486). The
amount for other services was recognised as non-current asset: capitalised mineral exploration and evaluation expenditure.
D e e p Y e l l o w L i m i t e d
3 7
2 0 2 0 A n n u a l R e p o r t
DIRECTORS’ REPORT
(continued)
REMUNERATION REPORT (AUDITED) (continued)
7. Actual Remuneration Paid to KMP in FY20
The actual remuneration paid to executives in FY20 is set out below. This information is considered to be relevant as it
provides shareholders with a view of the remuneration actually paid to KMP for performance in FY20 and the value of LTIs
that vested during the period. This differs from the remuneration details prepared in accordance with statutory obligations and
accounting standards on pages 35 and 36 of this report, as those details include the values of Performance Rights that have
been awarded but which may or may not vest.
2020
Name
Fixed cash
remuneration (i)
STI (FY19
performance) (ii)
LTI award vested (iii)
Total remuneration
received
Executive director
J Borshoff
G Swaby
Non-executive Directors
R Brunovs
M Greene
J Reid
C Urtel
399,753
326,248
83,128
52,500
56,875
56,875
102,500
-
-
-
-
-
-
-
-
-
-
-
502,253
326,248
83,128
52,500
56,875
56,875
(i)
(ii)
(iii)
Service fee.
The maximum STI was awarded to the Managing Director for FY19 but only paid during FY20.
The value is based on the number of Loan Plan Shares vested multiplied by the share price on vesting dates and reduced by the
outstanding loan in relation to the Loan Plan Shares that vested. The outstanding loans were both in excess of the value obtained
on vesting date, therefore no remuneration was earned.
End of Remuneration Report (Audited)
This report is made in accordance with a resolution of the Directors.
DATED at Perth this 25th day of September 2020.
John Borshoff
Managing Director
D e e p Y e l l o w L i m i t e d
3 8
2 0 2 0 A n n u a l R e p o r t
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the directors of Deep Yellow
Limited
As lead auditor for the audit of the financial report of Deep Yellow Limited for the financial year ended
30 June 2020, 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 in
relation to the audit; and
b. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Deep Yellow Limited and the entities it controlled during the financial
year.
Ernst & Young
Robert A Kirkby
Partner
Perth
25 September 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
39
RK:DA:DYL:008
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated
Note
2020
$
2019
$
Interest and other income
Revenue from contracts with customers
7(a)
7(b)
257,455
77,199
225,332
119,315
Revenue
Depreciation and amortisation expenses
Interest expense
Marketing expenses
Occupancy expenses
Administrative expenses
Employee expenses
Reversal of prior year impairment of capitalised mineral exploration
and evaluation expenditure
Impairment of capitalised mineral exploration and evaluation
expenditure
8
8
8
8
14
14
Profit/(Loss) before income tax
334,654
344,647
(215,812)
(26,697)
(222,461)
(94,324)
(1,930,685)
(2,033,839)
(92,911)
-
(142,177)
(209,486)
(2,068,920)
(1,626,841)
7,100,920
-
(36,893)
(18,640)
2,874,863
(3,814,328)
Income tax expense
9(a)(b)
-
-
Profit/(Loss) for the year after income tax
2,874,863
(3,814,328)
Other comprehensive income
Items to be reclassified to profit and loss in subsequent periods,
net of tax
Foreign currency translation (loss)/gain
17(d)
(6,269,172)
921,147
Other comprehensive (loss)/income for the year, net of tax
(6,269,172)
921,147
Total comprehensive loss for the year, net of tax
(3,394,309)
(2,893,181)
Earnings per share for loss attributable to the ordinary equity holders
of the Company.
Cents
Cents
Basic profit/(loss) per share
Diluted profit/(loss) per share
10
10
1.19
1.19
(1.90)
(1.90)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
D e e p Y e l l o w L i m i t e d
4 0
2 0 2 0 A n n u a l R e p o r t
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
ASSETS
Current assets
Cash and cash equivalents
Receivables
Other assets
Total current assets
Non-current assets
Right-of-use asset
Property, plant and equipment
Capitalised mineral exploration and evaluation expenditure
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Employee provisions
Lease liabilities
Total current liabilities
Non-current liabilities
Employee provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued equity
Accumulated losses
Employee equity benefits reserve
Foreign currency translation reserve
Consolidated
Note
2020
$
2019
$
11
12(a)
12(b)
12,116,972
298,265
187,567
14,975,063
461,989
255,707
12,602,804
15,692,759
16
13
14
617,015
518,897
35,415,745
-
592,797
31,831,939
36,551,657
32,424,736
49,154,461
48,117,495
15
19
19
492,605
57,562
99,221
509,661
64,360
-
649,388
574,021
48,794
536,664
585,458
54,154
-
54,154
1,234,846
628,175
47,919,615
47,489,320
17(a)
17(d)
17(d)
17(d)
249,753,196
(193,266,333)
13,476,273
(22,043,521)
247,264,524
(196,141,196)
12,140,341
(15,774,349)
Total equity
47,919,615
47,489,320
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
D e e p Y e l l o w L i m i t e d
4 1
2 0 2 0 A n n u a l R e p o r t
STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL
YEAR ENDED 30 JUNE 2020
Issued Equity
$
247,264,524
-
-
Accumulated
losses
$
(196,141,196)
2,874,863
-
Employee
equity benefits’
reserve
$
12,140,341
-
-
Foreign currency
translation
reserve
$
(15,774,349)
-
(6,269,172)
Total Equity
$
47,489,320
2,874,863
(6,269,172)
-
2,874,863
-
(6,269,172)
(3,394,309)
2,289,507
(26,540)
225,705
-
249,753,196
-
-
-
-
(193,266,333)
-
-
(225,705)
1,561,637
13,476,273
-
-
-
-
(22,043,521)
2,289,507
(26,540)
-
1,561,637
47,919,615
At 1 July 2019
Profit for the period
Other comprehensive loss
Total comprehensive loss for
the period
Issue of share capital
Capital raising costs
Vesting of Performance Rights
Share-based payments
At 30 June 2020
Issued Equity
$
238,722,162
-
-
Accumulated
losses
$
(192,326,868)
(3,814,328)
-
Employee
equity benefits’
reserve
$
11,086,143
-
-
Foreign currency
translation
reserve
$
(16,695,496)
-
921,147
Total Equity
$
40,785,941
(3,814,328)
921,147
-
(3,814,328)
-
921,147
(2,893,181)
9,000,000
2,500
(562,023)
101,885
-
247,264,524
-
-
-
-
-
(196,141,196)
-
-
-
(101,885)
1,038,359
12,140,341
-
-
-
-
-
(15,774,349)
9,000,000
2,500
(562,023)
-
1,156,083
47,489,320
At 1 July 2018
Loss for the period
Other comprehensive income
Total comprehensive loss for
the period
Issue of share capital
Exercise of Options
Capital raising costs
Vesting of Performance Rights
Share-based payments
At 30 June 2019
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
D e e p Y e l l o w L i m i t e d
4 2
2 0 2 0 A n n u a l R e p o r t
CASH FLOW STATEMENT FOR THE FINANCIAL
YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Interest received
Payments to suppliers and employees
Research and development tax incentive
COVID-19 employer stimulus
Other receipts
Interest paid
Consolidated
Note
2020
$
2019
$
245,789
(2,549,322)
-
36,205
77
(26,697)
270,131
(2,827,139)
43,577
-
119,476
-
7(a)(b)
7(a)(b)
7(a)(b)
8
Net cash used in operating activities
11
(2,293,948)
(2,393,955)
Cash flows from investing activities
Exploration expenditure
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Other (JV earn-in contribution)
(3,068,655)
(133,848)
-
996,761
(2,949,508)
(96,978)
4,308
1,155,715
Net cash used in investing activities
(2,205,742)
(1,886,463)
Cash flows from financing activities
Proceeds from the issue of shares
Other (capital raising costs)
Payment of lease liabilities
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Effects on cash of foreign exchange
Cash and cash equivalents at the beginning of the financial year
2,289,507
(57,131)
(95,041)
9,002,500
(531,432)
-
2,137,335
8,471,068
(2,362,355)
(495,736)
14,975,063
4,190,650
94,160
10,690,253
Cash and cash equivalents at the end of the financial year
11
12,116,972
14,975,063
The above Cash Flow Statement should be read in conjunction with the accompanying notes.
D e e p Y e l l o w L i m i t e d
4 3
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 1 Corporation information
The consolidated financial statements of Deep Yellow Limited and its subsidiaries (the Group) for the year ended 30 June
2020 were authorised for issue in accordance with a resolution of Directors on 23 September 2020, subject to minor changes.
Deep Yellow Limited is a for profit company limited by shares incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Securities Exchange.
Information on the nature of the operations and principal activities of the Group are described in the Directors’ Report.
Information on the Group’s structure is provided in Note 6 and information on other related party relationships is provided in
Note 22.
Note 2 Significant accounting policies
(a)
Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of
the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. The financial report also complies with International Financial reporting Standards (IFRS) as
issued by the International Accounting Standards Board.
The financial report has been prepared on a historical cost basis. The financial report is presented in Australian dollars and
all values are rounded to the nearest dollar.
The consolidated financial statements provide comparative information in respect of the previous period. There has been no
retrospective application of accounting policies as a result of the adoption of new accounting standards therefore no
restatement of financial statements required for the previous period.
(b)
Basis of consolidation
The consolidated financial statements comprise the financial statements of Deep Yellow Limited and its subsidiaries as at
and for the year ended 30 June 2020 (the Group). Control is achieved when the Group is exposed, or has the rights, to
variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if and only if the Group has:
►
►
►
power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
exposure, or rights, to variable returns from its involvement with the investee; and
the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption, and when the
Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
►
►
►
the contractual arrangement with the other vote holders of the investee;
rights arising from other contractual arrangements; and
the Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of Other Comprehensive Income (OCI) are attributed to the equity holders of the Group
and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with
the Group’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
A change in ownership interest in a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling
interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained
is recognised at fair value.
D e e p Y e l l o w L i m i t e d
4 4
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
(i)
Summary of significant accounting policies
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-
controlling interests in the acquire. For each business combination, the Group elects whether to measure the non-controlling
interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related
costs are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the
acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial
Instruments, is measured at fair value with the changes in fair value recognised in the statement of profit and loss in
accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at
each reporting date with changes in fair value recognised in profit or loss.
(ii)
Current versus non-current classification
The Group presents assets and liabilities in the Statement of Financial Position based on current/non-current classification.
An asset is current when it is:
Expected to be realised or intended to sold or consumed in the Group’s normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realised within twelve months after the reporting period; or
Cash or a cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting period.
The Group classifies all other assets as non-current.
A liability is current when:
It is expected to be settled in the Group’s normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(iii)
Revenue from Contracts with Customers
The Group manages the NJV to which they provide administration services and the right to use the Group’s assets for
exploration-related activities.
Asset recharges and administration fee earned
Revenue from asset recharges and administration fee is recognised at a point in time were the assets were provided for use
and administration services rendered. This signifies complete satisfaction of the service as the benefits were received and
consumed throughout the month.
The consideration on the contract includes a fixed amount per asset category made available for use through-out a service
month. It is also entitled to a fixed percentage of administration fee based on the monthly direct costs of operations to which
the administration service is provided.
The normal credit term is usually 30 days from complete satisfaction of the service, ie. last day of the month. This results in a
receivable that represents the Group’s right to an amount that is unconditional. Refer Note 2(c)(x) Financial instruments –
Financial assets.
Contract balances
Trade receivables – A receivable is recognised if an amount of consideration that is unconditional is due from the customer
(i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial
assets in Note 2(c)(x).
D e e p Y e l l o w L i m i t e d
4 5
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
Summary of significant accounting policies (continued)
(iv)
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached
conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis
over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an
asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and
released to profit or loss over the expected useful life of the asset, based on the pattern of consumption of the benefits of the
underlying asset by equal annual instalments.
(v)
Interest income
Interest income is recognised as it accrues using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is
the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying
amount of the financial asset.
(vi)
Income Tax
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at
the reporting date in the countries where the Group operates and generates taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations
are subject to interpretation and assess if appropriate provisions are required.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all
taxable temporary differences, except:
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; and
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in
joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can
be utilised, except:
When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in
joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that
future taxable profits will allow the deferred tax asset to be recovered
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in OCI or directly in equity.
D e e p Y e l l o w L i m i t e d
4 6
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
Summary of significant accounting policies (continued)
The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current
tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by
the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current
tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period
in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
Tax consolidation
(i)
Members of the tax consolidated group and the tax sharing arrangement
Deep Yellow Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect from
2 February 2007. Deep Yellow Limited is the head entity of the tax consolidated group.
Members of the group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities
between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the
financial statements in respect of this agreement on the basis that the possibility of default is remote.
The amounts receivable or payable under the tax funding agreement are due upon receipt of the funding advice from the
head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require
payment of interim funding amounts to assist with its obligations to pay tax instalments.
(ii)
Tax effect accounting by members of the tax consolidated group
Measurement method adopted under UIG 1052 Tax Consolidated Accounting
The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred
tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of current taxes
and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured
in a systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as a part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Statement of
Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to, the taxation authority, are presented as operating cash flows. Commitments and
contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(vii)
Foreign currency translation
The functional currencies of Deep Yellow Limited and its overseas controlled entities are Australian dollars, Namibian dollars
and US dollars. These consolidated financial statements are presented in Australian dollars being the functional currency of
the parent entity.
Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange prevailing at balance date. Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rate as at the date of the initial transaction. Exchange differences arising from these
procedures are recognised in profit and loss for the year.
Group companies
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate prevailing at
the reporting date and their statements of profit or loss are translated at the average exchange rate for the year. The exchange
differences arising on translation for consolidation purposes are recognised in other comprehensive income. On disposal of
a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised
in profit or loss.
D e e p Y e l l o w L i m i t e d
4 7
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
Summary of significant accounting policies (continued)
(viii)
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses, if any.
Historical cost includes expenditure that is directly attributable to the acquisition of the assets.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial period in which
they are incurred.
Depreciation of property, plant and equipment is calculated using the written down value method or straight-line method to
allocate their cost, net of residual values, over their estimated useful lives, as follows:
Office equipment and fittings
Motor vehicles
12.5% – 33% of cost
25% of cost
Site equipment
Leasehold property and buildings
25% of cost
5% of cost
The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (Note 2 (c)(xii)).
An item of property, plant and equipment is derecognised on disposal or when no further future economic benefits are
expected from its use. Any gain or loss arising on derecognition of an asset (calculated as the difference between net disposal
proceeds and the carrying amount of the asset) is included in profit and loss in the year the asset is derecognised.
(ix)
Leases
The Group has in prior years classified its leases at inception date either as a finance lease or an operating lease. A lease
that transferred substantially all the risks and rewards incidental to ownership to the Group was classified as a finance lease.
A lease other than a finance lease where substantially all the risks and benefits remained with the lessor was classified as an
operating lease. Finance leases were capitalised at the commencement of the lease at the inception date fair value of the
leased property or, if lower, at the present value of the minimum lease payments. Lease payments were apportioned between
interest (recognised as finance costs) and reduction of the lease liability. In an operating lease, the leased property was not
capitalised, and the lease payments were recognised as rent expense in the statement of profit or loss on a straight-line basis
over the lease term. Lease incentives under operating leases were recognised in the profit and loss on a straight-line basis
as an integral part of the total lease expense. Any prepaid rent and accrued rent were recognised under Prepayments and
Trade and other payables, respectively.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of
low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the
right to use the underlying assets
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets. If ownership of the leased asset transfers to the Group at the end of the lease term or
the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The
right-of-use assets are also subject to impairment. Refer Note 2(c)(xii) Impairment of non-financial assets.
ii) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term
reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are
recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the
carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease
payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the underlying asset. (see Note 16).
D e e p Y e l l o w L i m i t e d
4 8
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
Summary of significant accounting policies (continued)
i) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It
also applies the lease of low-value assets recognition exemption to leases of office equipment that are low value. Lease
payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the
lease term.
(x)
Financial instruments – Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics
and the Group’s business model for managing them. The Group initially measures a financial asset at its fair value plus
transactions costs. Trade receivables that do not contain a significant financing component or for which the Group has applied
the practical expedient are measured at the transaction price determined under AASB 15. Refer to the accounting policies in
Note 2(c)(iii) Revenue from Contracts with Customers. They are measured, at initial recognition, at fair value plus transaction
costs, if any.
In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows that are ‘solely
payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI
test and is performed at an instrument level.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified at amortised cost (debt instrument), fair value
through OCI with recycling of cumulative gains and losses (debt instruments), designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity instruments) or at fair value through profit or loss.
Other receivables are measured at amortised cost if both of the following conditions are met:
it is held within a business model with the objective to collect contractual cash flows; and
the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding, where applicable.
It is subsequently measured using the effective interest (EIR) method and are subject to impairment with gains and losses
recognised in profit and loss when the asset is derecognised, modified or impaired.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e. removed from the Group’s Consolidated Statement of Financial Position) when:
the right to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a)
the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement,
it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to
recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an
associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay
Impairment of financial assets
The Company recognises a loss allowance for expected credit losses on other receivables, if any. At each reporting date, the
Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired
when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have
occurred.
D e e p Y e l l o w L i m i t e d
4 9
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
Summary of significant accounting policies (continued)
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to
the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For other receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track
changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has
established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific
to the debtors and the economic environment.
The Group considers a financial asset in default when contractual payments are 90 days past due, excluding amounts owed
from Government Departments where other information are also considered. However, in certain cases, the Group may also
consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive
the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial
asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
(xi)
Financial instruments – Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs. The Group’s financial liabilities consist of trade and other payables.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified at fair value through profit or loss or loans and
borrowings.
After initial recognition trade and other payables are subsequently measured at amortised cost using the effective interest
rate (EIR) method, if applicable. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well
as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. For more
information, refer to Note 19: Financial Assets and Liabilities.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement
of comprehensive income.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a
net basis, to realise the assets and settle the liabilities simultaneously.
D e e p Y e l l o w L i m i t e d
5 0
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
Summary of significant accounting policies (continued)
(xii)
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those
from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such
cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount
of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired
and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses
relating to continuing operations are recognised in the expense categories consistent with the function of the impaired asset
unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A
previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the
asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is
recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation
increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
Further disclosures relating to impairment of non-financial assets are also provided in the following notes:
Disclosures for significant assumptions
Property, plant and equipment
Capitalised mineral exploration and evaluation expenditure
Note 3
Note 13
Note 14
(xiii)
Cash and cash equivalents
For Cash Flow Statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
(xiv) Mineral exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable Area of Interest. An Area of
Interest is generally defined by the Group as a number of geographically proximate exploration permits which could form the
basis of a project. These costs are only carried forward to the extent that the Group’s rights of tenure to that Area of Interest
are current and that the costs are expected to be recouped through the successful development of the area or where activities
in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable
reserves.
Accumulated costs in relation to an abandoned area of interest are written-off in full in the Statement of Comprehensive
Income in the year in which the decision to abandon the area is made.
A bi-annual review is undertaken of each Area of Interest to determine the appropriateness of continuing to carry forward
costs in relation to that Area of Interest or to reverse any previous impairment.
(xv)
Joint arrangements
The Group has interests in joint arrangements that are joint operations. A joint operation is a type of joint arrangement whereby
the parties have a contractual agreement to undertake an economic activity that is subject to joint control. A joint operation
involves use of assets and other resources of the ventures rather than the establishment of a separate entity. The Company
recognises its interest in the joint operations by recognising its interest in the assets and liabilities of the joint operation,
including its share of any assets held any liabilities incurred jointly. The Group also recognises the expenses that it incurs and
its share of the income that it earns from the sale of goods and services by the joint operations, including any expenses
incurred and revenue received jointly. Details relating to the joint operations, are set out in Note 26.
D e e p Y e l l o w L i m i t e d
5 1
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
Summary of significant accounting policies (continued)
(xvi)
Provisions
General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed,
for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the
reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit or Loss net of
any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of
time is recognised as a finance cost.
Wages, salaries and sick leave
Liabilities for wages and salaries, including non-monetary benefits, which are expected to be settled within 12 months of the
reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts
expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave
is taken and are measured at the rates paid or payable.
Long service leave and annual leave
The Group does not expect its long service leave or annual leave benefits to be settled wholly within 12 months of each
reporting date. The Group recognises a liability for long service leave and annual leave measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high
quality corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash
outflows.
(xvii)
Issued equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity
as a deduction, net of tax, from the proceeds.
(xviii) Share-based payments
Share-based compensation payments are made available to Directors, consultants and employees (Participants) of the
Group, whereby they render services in exchange for a share-based payment.
The fair value of these equity-settled transactions is recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant date and recognised over the period during which the Participants
become unconditionally entitled to the award.
At each subsequent reporting date until vesting, the cumulative charge to the Statement of Comprehensive Income or
Statement of Financial position where the cost is capitalise as Mineral exploration and evaluation expenditure is the product
of:
i.
ii.
iii.
the grant date fair value of the award;
the current best estimate of the number of Options, rights or shares that will vest, taking into account such factors as
the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions
being met; and
the expired portion of the vesting period.
The charge to the Statement of Comprehensive Income or Statement of Financial position as Capitalised mineral exploration
and evaluation expenditure for the period is the cumulative amount as calculated above less the amounts already charged in
previous periods. There is a corresponding entry to equity.
Share-based compensation payments are granted by the parent company to Participants. The expense recognised by the
Group is the total expense associated with all such awards.
The fair value at grant date is independently determined using a binomial option pricing model or the Monte-Carlo simulation
model, as appropriate, that takes into account the exercise price, the term of the option, right or share, the impact of dilution,
the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk free
rate for the term of the option and the probability of market based vesting conditions being realised.
D e e p Y e l l o w L i m i t e d
5 2
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(c)
Summary of significant accounting policies (continued)
The fair value of the award granted is adjusted to reflect market vesting conditions. Non-market vesting conditions are
included in assumptions about the number of awards that are expected to become exercisable. At each balance date, the
entity revises its estimate of the number of awards that are expected to become exercisable. The employee benefit expense
recognised each period, takes into account the most recent estimate.
Upon the exercise of awards, the balance of the share-based payments reserve relating to those awards is transferred to
share capital and the proceeds received, net of any directly attributable transaction costs, are credited to share capital.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a
market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and
designated as a replacement award on the date that is granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding Options and rights is reflected as additional share dilution in the computation of
diluted earnings per share.
(d)
(i)
Changes in accounting policies, disclosures, standards and interpretations
Changes in accounting policies, new and amended standards and interpretations
From 1 July 2019, Deep Yellow Limited has adopted and applied, where relevant, all Australian Accounting Standards and
Interpretations effective from 1 July 2019.
The accounting policies adopted are consistent with those of the previous financial year except for AASB 16.
The Group applied AASB 16 and Interpretation 23 for the first time. The nature and effect of the changes as a result of
adoption of this new standard and Interpretation are described below.
AASB 16 Leases
AASB 16 Leases replaces AASB 117 Leases for annual periods beginning on or after 1 January 2019. The standard sets out
the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all
leases under a single on-balance sheet model.
Lessor accounting under AASB16 is substantially unchanged from AASB 117. Lessors will continue to classify leases as
either operating or financial leases using similar principles as in AASB 117.
The Group adopted AASB 16 using the modified retrospective method of adoption with the date of initial application of 1 July
2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard
recognised at the date of initial application. The Group elected to use the “transition practical expedient” allowing the standard
to be applied only to contracts that were previously identified as leases therefore applying AASB 117 at the date of initial
application. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date,
have a lease term of 12 months or less and do not contain a purchase option (‘short term leases’), and lease contracts for
which the underlying asset is low value (‘low-value assets’).
The effect of adopting AASB 16 as at 1 July 2019 (increase/(decrease)) is as follows:
Assets
Right-of-use assets
Total assets
Current Liabilities
Lease liabilities
Non-Current Liabilities
Lease liabilities
Total liabilities
$
749,560
749,560
94,599
654,961
749,560
D e e p Y e l l o w L i m i t e d
5 3
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(d)
(i)
Changes in accounting policies, disclosures, standards and interpretations (continued)
Changes in accounting policies, new and amended standards and interpretations
Nature of the effect of adoption of AASB 16
The Group has a property lease contract. Before the adoption of AASB 16, the Group classified its property lease as an
operating lease as it did not transfer substantially all of the risks and rewards incidental to ownership of the leased asset to
the Group. The leased property was not capitalised and the lease payments were recognised as rent expense in profit or loss
on a straight-line basis over the lease term. Upon adoption of AASB 16, the Group applied a single recognition and
measurement approach for all leases, except for short-term leases and leases of low-value assets. The Standard provides
specific transition requirements and practical expedients, which has been applied by the Group.
The Group recognised right-of-use assets and lease liabilities for the property lease previously classified as an operating
lease. The right-of-use asset was recognised based on the amount equal to the lease liability at the initial application date.
Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the
incremental borrowing rate at the date of initial application.
The Group also applied the available practical expedients, where applicable, wherein it:
► Recognised lease liabilities based on the present value of the remaining lease payments, discounted using the
incremental borrowing rate at the date of initial application;
► Relied on its assessment of whether leases are onerous immediately before the date of initial application;
► Applied the short-term lease exemptions to leases with a term that ends within 12 months at the date of initial
application;
► Excluded initial direct costs from the measurement of the right-of-use asset at the date of initial application; and
► Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
Based on the foregoing, as at 1 July 2019 right-of-use assets and lease liabilities of $730,926 were recognised and presented
separately in the Statement of Financial Position.
The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as at 30 June 2019 as follows:
Operating lease commitments as at 30 June 2019 – Note 21 of 2019 Annual Financial
Statements
Option to extend and removal of variable lease payments
Operating lease commitments as at 30 June 2019
Weighted average incremental borrowing rate
Lease liability recognised at 1 July 2019
Summary of new accounting policies
$
645,521
204,468
849,989
4%
749,560
Set out below are the new accounting policies of the Group upon adoption of AASB 16, which have been applied from the
date of initial application:
► Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, adjusted for any remeasurement of lease liabilities. The cost of right-to-use assets includes the
amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the
commencement date less and lease incentives received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on
a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject
to impairment.
►
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid
under residual value guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term
reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index
or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
D e e p Y e l l o w L i m i t e d
5 4
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(d)
(i)
Changes in accounting policies, disclosures, standards and interpretations (continued)
Changes in accounting policies, new and amended standards and interpretations
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-
substance fixed lease payments or a change in the assessment to purchase the underlying asset.
►
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment, if any
(i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption to lease of office equipment that are considered
of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a
straight-line basis over the lease term.
►
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised.
The Group has the option, under its property lease, to lease the property for an additional term of 3 years. The Group applies
judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant
factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses
the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise
(or not to exercise) the option to renew (e.g. a change in business strategy).
The Group included the renewal period as part of the lease term for the property lease due to being reasonably certain that
the lease property will continue to suit the Group’s occupation needs at time of the extension option is able to be exercised.
Amounts recognised in the Statement of Financial Position and Profit or Loss
Set out below are the carrying amounts of the Group’s right-of-use assets and lease liabilities and the movements during the
period:
The right-of-use asset is depreciated over a period of 77 months from July 2019 to November 2025.
As at 1 July 2019
Interest expense
Concessions
Payments
As at 30 June 2020
Current
Non-current
Total lease liability
Maturity analysis – contractual undiscounted cash flows
Less than one year
One to five years
Total undiscounted cash flows
Lease liability
Property lease
$
749,560
26,697
(18,635)
(121,737)
635,885
99,221
536,664
635,885
122,043
584,701
706,744
The Group recognised variable lease payments of $47,494 for the financial year. The variable lease payments primarily
relate to operating costs within the framework of the property lease agreement.
D e e p Y e l l o w L i m i t e d
5 5
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(d)
(i)
Changes in accounting policies, disclosures, standards and interpretations (continued)
Changes in accounting policies, new and amended standards and interpretations
Interpretation 23 Uncertainty over Income Tax Treatment
The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the
application of AASB 112 Income Taxes. It does not apply to taxes or levies outside the scope of AASB 112, nor does it
specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation
specifically addresses the following:
► Whether an entity considers uncertain tax treatments separately.
► The assumptions an entity makes about the examination of tax treatments by taxation authorities.
► How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.
► How an entity considers changes in facts and circumstances.
An entity has to determine whether to consider each uncertain tax treatment separately or together with one or more other
uncertain tax treatments. The approach that better predicts the resolution of the uncertainty needs to be followed.
The Group applies significant judgement in identifying uncertainties over income tax treatments. Since the Group operates in
a complex multinational environment, it assessed whether the Interpretation had an impact on its consolidated financial
statements.
Upon adoption of the Interpretation, the Group considered whether it had any uncertain tax positions, particularly those relating
to transfer pricing. The Company’s and the subsidiaries’ tax filings in different jurisdictions include deductions related to
transfer pricing and the taxation authorities may challenge those tax treatments. The Group determined, based on its tax
compliance and transfer pricing review, that it is probable that its tax treatments (including those for the subsidiaries) will be
accepted by the taxation authorities. The interpretation did not have an impact on the consolidated financial statements of the
Group.
Several other amendments and interpretations (listed below) apply for the first time in 2020, but do not have an impact on the
consolidated financial statements of the Group. The Group has not early adopted any standards, interpretations or
amendments that have been issued but are not yet effective.
D e e p Y e l l o w L i m i t e d
5 6
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
(d)
(i)
Changes in accounting policies, disclosures, standards and interpretations (continued)
Changes in accounting policies, new and amended standards and interpretations
Reference
AASB 2017-6
Title and Summary
Amendments to Australian Accounting Standards – Prepayment
Features with Negative Compensation
Application date
of standard*
Application date
for Group*
1 January 2019 1 July 2019
This Standard amends AASB 9 Financial Instruments to permit
entities to measure at amortised cost or fair value through other
comprehensive income particular financial assets that would
otherwise have contractual cash flows that are solely payments of
principal and interest but do not meet that condition only as a result of
a prepayment feature. This is subject to meeting other conditions,
such as the nature of the business model relevant to the financial
asset. Otherwise, the financial assets would be measured at fair value
through profit or loss.
The Standard also clarifies in the Basis for Conclusion that, under
AASB 9, gains and losses arising on modifications of financial
liabilities that do not result in derecognition should be recognised in
profit or loss.
AASB 2017-7
Amendments to Australian Accounting Standards – Long-term
Interests in Associates and Joint Ventures
1 January 2019 1 July 2019
This Standard amends AASB 128 Investments in Associates and
Joint Ventures to clarify that an entity is required to account for long-
term interests in an associate or joint venture, which in substance form
part of the net investment in the associate or joint venture but to which
the equity method is not applied, using AASB 9 Financial Instruments
before applying the loss allocation and impairment requirements in
AASB 128.
AASB 2018-1
Annual Improvements to IFRS Standards 2015-2017 Cycle***
1 January 2019 1 July 2019
The amendments clarify certain requirements in:
► AASB 3 Business Combinations and AASB 11 Joint Arrangements
- previously held interest in a joint operation
► AASB 112 Income Taxes - income tax consequences of payments
on financial instruments classified as equity
► AASB 123 Borrowing Costs - borrowing costs eligible for
capitalisation.
AASB 2018-2
Amendments to Australian Accounting Standards – Plan
Amendment, Curtailment or Settlement
1 January 2019 1 July 2019
This Standards amends AASB 119 Employee Benefits to specific
how an entity accounts for defined benefit plans when a plan
amendment, curtailment or settlement occurs during a reporting
period. The amendments:
► Require entities to use the updated actuarial assumptions to
determine current service cost and net interest for the remainder of
the annual reporting period after such an event occurs
► Clarify that when such an event occurs, an entity recognises the
past service cost or a gain or loss on settlement separately from its
assessment of the asset ceiling.
*
**
***
****
Designates the beginning of the applicable annual reporting period unless otherwise stated.
Early adoption is permitted provided that AASB 15 is applied on or before the date of initial application of AASB 16.
The IASB issued the mending Standard on 12 December 2017. As at the date of the issuance of this publication,
the AASB are yet to issue the equivalent Australian Accounting Standard.
In December 2015, the IASB postponed the effective date of the amendments indefinitely pending the outcome of
its research project on the equity method of accounting.
D e e p Y e l l o w L i m i t e d
5 7
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Accounting Standards and Interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective, up
to the date of issuance of the Group’s financial statements are disclosed below.
Reference
Conceptual Framework
AASB 2019-1
Title and Summary
Conceptual Framework for Financial Reporting Amendments to
Australian Accounting Standards –Reference to the Conceptual
Framework **
Application date
of standard *
Application date
for Group *
1 January 2020 1 July 2020
The revised Conceptual Framework includes some new concepts,
provides updated definitions and recognition criteria for assets and
liabilities and clarifies some important concepts. It is arranged in
eight chapters, as follows:
► Chapter 1 – The objective of financial reporting
► Chapter 2 – Qualitative characteristics of useful financial
information
► Chapter 3 – Financial statements and the reporting entity
► Chapter 4 – The elements of financial statements
► Chapter 5 –Recognition and derecognition
► Chapter 6 –Measurement
► Chapter 7 –Presentation and disclosure
► Chapter 8 –Concepts of capital and capital maintenance
AASB 2019-1has also been issued, which sets out the
amendments to other pronouncements for references to the
revised Conceptual Framework. The changes to the Conceptual
Framework may affect the application of accounting standards in
situations where no standard applies to a particular transaction or
event. In addition, relief has been provided in applying AASB 3 and
developing accounting policies for regulatory account balances
using AASB 108, such that entities must continue to apply the
definitions of an asset and a liability (and supporting concepts) in
the Framework for the Preparation and Presentation of Financial
Statements (July 2004), and not the definitions in the revised
Conceptual Framework.
AASB 2018-6
Amendments to Australian Accounting Standards – Definition of a
Business
1 January 2020 1 July 2020
The Standard amends the definition of a business in AASB 3
Business Combinations. The amendments clarify the minimum
requirements for a business, remove the assessment of whether
market participants are capable of replacing missing elements, add
guidance to help entities assess whether an acquired process is
substantive, narrow the definitions of a business and of outputs,
and introduce an optional fair value concentration test.
AASB 2018-7
Amendments to Australian Accounting Standards – Definition of a
Material
This Standard amends AASB 101 Presentation of Financial
Statements and AAS 108 Accounting Policies, Changes in
Accounting Estimates and Errors to align the definition of ‘material’
across the standards and to clarify certain aspects of the definition.
The amendments clarify that materiality will depend on the nature
or magnitude of information. An entity will need to assess whether
the information, either individually or in combination with other
information, is material in the context of the financial statements. A
misstatement of information is material if it could reasonably be
expected to influence decisions made by the primary user
D e e p Y e l l o w L i m i t e d
5 8
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Reference
AASB 2014-10
Title and Summary
Amendments to Australian Accounting Standards – Sale or
Contribution of Assets between an Investor and its Associate or
Joint Venture
Application date
of standard *
Application date
for Group *
1 January 2022 1 July 2022
The amendments clarify that a full gain or loss is recognised when
a transfer to an associate or joint venture involves a business as
defined in AASB 3 Business Combinations. Any gain or loss
resulting from the sale or contribution of assets that does not
constitute a business, however, is recognised only to the extent of
unrelated investors’ interests in the associate or joint venture.
AASB 2015-10 deferred the mandatory effective date (application
date) of AASB 2014-10 so that the amendments were required to
be applied for annual reporting periods beginning on or after 1
January 2018 instead of 1 January 2016. AASB 2017-5 further
defers the effective date of the amendments made in AASB 2014-
10 to periods beginning on or after 1 January 2022.***
*
**
***
Designates the beginning of the applicable annual reporting period unless otherwise stated.
AASB 2019-1 currently limits the application of the Conceptual Framework to: (a) for-profit private sector entities
that have public accountability and are required by legislation to comply with Australian Accounting Standards; and
(b) other for-profit entities that voluntarily elect to apply the Conceptual Framework, which would permit compliance
with Australian Accounting Standards (Tier 1) and IFRS Standards.
AASB 2017-5 deferred the effective date of AASB 2014-10 to from 1 January 2018 to 1 January 2022
The Group has not yet determined the likely impact of each of the above amendments, if any, on the Group.
Note 3 Significant accounting judgements, estimates and assumptions
The preparation of the Group’s Consolidated Financial Statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. COVID-
19 has not impacted any of the Group’s key judgments or estimates.
Other disclosures relating to the Group’s exposure to risks and uncertainties includes:
Capital management
Financial risk management objectives and policies
Sensitivity analysis disclosures
Note 5
Note 19
Note 19
Judgements
In the process of applying the Group’s accounting policies, management has made the following judgments, which have the
most significant effect on the amount recognised in the consolidated financial statements:
Determining the lease term of contracts with renewal and termination options – Group as lessee
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised.
The Group has a property lease contract that include an extension option. The Group applies judgement in evaluating whether
it is reasonably certain whether or not to exercise the option to renew the lease. That is, it considers all relevant factors that
create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease
term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not
to exercise the option to renew. (e.g., operational requirements).
The Group included the renewal period as part of the lease term of the property lease contract based on its operational
requirements, location of the lease property and recent leasehold improvements.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year,
are described below. The Group based its assumptions and estimates on parameters available when the Consolidated
Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may
change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the
assumptions when they occur.
D e e p Y e l l o w L i m i t e d
5 9
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 3 Significant accounting judgements, estimates and assumptions
Accounting for capitalised mineral exploration and evaluation expenditure
The Group’s accounting policy is stated at Note 3(c)(xiv). A regular review is undertaken of each Project Area to determine
the reasonableness of the continuing carrying forward of costs in relation to that Project Area or reversal of previously
recognised impairment losses. In determining the costs to be carried forward, the fair value is determined based on the mineral
resource estimate multiplied by a resource multiple. Management makes assumptions regarding the Uranium resource
multiple that should be used in calculating fair value of the expenditure to determine if costs can continue to be carried forward.
Factors that could impact the uranium resource multiple and therefore the continuing carrying forward of costs include the
status of resources and exploration targets, changes in legal frameworks and sovereign risk in the countries where the Group
operates, changes to commodity prices and foreign exchange rates.
Share-based payments
The Group’s accounting policy is stated at Note 3(c)(xviii). The Group uses independent advisors to assist in valuing share-
based payments. Refer Note 20 for details of estimates and assumptions used.
Lease – estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate
(IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar
term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar
economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no
observable rates are available as the Group do not enter into financing transactions. The Group estimates the IBR using
observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates.
Note 4 Segment information
An operating segment is a distinguishable component of an entity that engages in business activities from which it may earn
revenue and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating decision maker to
make decisions about how resources should be allocated to the segment and assess its performance and for which discrete
financial information is available.
Operating segments have been identified based on the information provided to the chief operating decision maker – being
the Group Managing Director and Executive management team.
The Group has identified its operating segments based on internal reports that are used by the Group Managing Director and
Executive management team in assessing performance and in determining the allocation of resources. The operating
segments are identified based on activities as this is the area that has the most effect on allocation of resources. The Group
conducts uranium exploration and pre-development activities in Namibia whilst Australia is responsible for capital raising and
corporate activities, including project evaluation and acquisition. Mauritius as country of operation has been aggregated to
form the reportable operating segment for Australia due to its corporate activities.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third
parties.
Year Ended 30 June 2020
Revenue and other income **
Unallocated
Interest income
COVID-19 employer stimulus grant
Total revenue and other income
Expenses
Impairment of capitalised mineral exploration and
evaluation expenditure
Reversal of prior year impairment of capitalised
mineral exploration and evaluation expenditure
Profit and Loss
Pre-tax segment (loss)/profit
Unallocated
Interest income
COVID-19 employer stimulus grant
Profit from continuing operations after income tax
Australia
$
-
-
-
Namibia
$
77,276
36,893
Total
$
77,276
221,173
36,205
334,654
36,893
(7,100,920)
(7,100,920)
(4,137,570)
6,755,055
(2,617,485)
221,173
36,205
2,874,863
D e e p Y e l l o w L i m i t e d
6 0
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 4 Segment information (continued)
Year Ended 30 June 2020
Segment Assets
Segment operating assets
Unallocated assets
Cash
Receivables
Total assets
Australia
$
Namibia
$
Total
$
837,308
35,901,916
36,739,224
12,116,972
298,265
49,154,461
Total additions to non-current assets*
775,160
2,220,683
2,995,843
Year Ended 30 June 2019
Revenue and other income **
Unallocated
Interest income
Research and development tax incentive
Total revenue and other income
Expenses
Impairment of capitalised mineral exploration and
evaluation expenditure
Profit and Loss
Pre-tax segment loss
Unallocated
Interest income
Research and development tax incentive
Loss from continuing operations after income tax
Year Ended 30 June 2019
Segment Assets
Segment operating assets
Unallocated assets
Cash
Receivables
Total assets
Australia
$
-
-
Namibia
$
119,476
18,640
Total
$
119,476
181,594
43,577
344,647
18,640
(3,787,796)
(251,703)
(4,039,499)
181,594
43,577
(3,814,328)
255,500
32,424,943
32,680,443
14,975,063
461,989
48,117,495
Total additions to non-current assets*
19,159
1,841,973
1,861,132
*Non-current assets for this purpose consist of property, plant and equipment and capitalised mineral exploration and
evaluation expenditure
**NJV revenue amounted to $77,199 (2019: $119,315), from services provided in the Namibia segment.
Adjustments and eliminations
The following items and associated assets and liabilities are not allocated to operating segments as the underlying instruments
are managed on a Group basis and are not considered as part of the core operations of both segments:
Interest income.
Research and development tax incentive.
COVID-19 employer stimulus grant
Foreign currency gains and losses.
Liabilities are not allocated to the segments as they are not monitored by the executive management team on a segment
by segment basis.
D e e p Y e l l o w L i m i t e d
6 1
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 5 Capital management
The Group’s approach to capital management has not changed during the financial year. For the purpose of the Group’s
capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of the
parent as disclosed in the Statement of Financial Position. The primary objective of the Group’s capital management is to
maximise the shareholder value.
The Board’s policy is to maintain an adequate capital base to maintain investor and creditor confidence, and to sustain future
development of the business. The Group does not actively issue dividends; repurchase its own shares or any other form of
capital return to shareholders at the current exploration stage of the Group’s activities. It does however from time to time
cancel ordinary shares issued under the Loan Share Plan where relevant vesting criteria are not met. The Group does not
monitor returns on capital or any other financial performance measure as the indicators of success are quantifiable by physical
results from operations. The Group manages its funding by way of issue of shares.
The Group does not have capital requirements imposed on it by any external party. It is, however, exposed to Namibian
Exchange Controls which has an influence on debt to equity ratios at the Namibian subsidiary level, which are monitored by
management and the treatment of investments or other advances for the funding of operations are executed within these
guidelines.
Unissued shares under option
The outstanding balance of unissued ordinary shares under option at date of this report is 62,834,990 as follows:
62,464,618 Options exercisable at 50 cents and expiring 1 June 2022.
The expiry date could be accelerated 22 ASX Business Days after Notification Date. The Notification Date means
the date (being any date within 5 ASX Business Days of the Acceleration Trigger Date) on which Option holders are
notified of the Acceleration Trigger Date” with such notification to be released on the Exchange. The Acceleration
Trigger Date means that date, that the closing price of the Shares on ASX is higher than A$0.78 for any 20
consecutive ASX Business Day period, then on the 20th consecutive ASX Business Day of any such period.
370,372 zero exercise price Options expiring at 1 July 2024.
Each option entitles the holder to one fully paid ordinary share in the Company at any time up to expiry date.
No Options have been exercised to acquire fully paid ordinary shares in the Company during the year.
Note 6
Information about subsidiaries
The Consolidated Financial Statements of the Group include:
Name
Principal activities
Country of
incorporation
Equity interest %
2019
2020
Investment
Deep Yellow Namibia (Pty) Ltd
Uranium exploration
Superior Uranium Pty Ltd
Investment
Reptile Mineral Resources and Exploration (Pty) Ltd
Uranium exploration
Reptile Uranium Namibia (Pty) Ltd
Uranium exploration
Omahola Uranium (Pty) Ltd
Uranium exploration
Nova Energy (Namibia)(Pty) Ltd
Iron ore exploration
Shiyela Iron (Pty) Ltd
Sand and Sea Property Number Twenty Four (Pty) Ltd Property investment
Property investment
Tarquin Investments (Pty) Ltd
Property investment
QE Investments (Pty) Ltd
Uranium exploration
Inca Mining (Pty) Ltd
Uranium exploration
TRS Mining Namibia (Pty) Ltd
Uranium exploration
Yellow Dune Uranium (Pty) Ltd
Mauritius
Australia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
100
100
100
100
100
65
95
100
100
100
95
95
85
100
100
100
100
100
65
95
100
100
100
95
95
85
D e e p Y e l l o w L i m i t e d
6 2
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 7 Revenue, interest and other income
a) Interest and other income
Interest received and receivable
Research and development tax incentive
COVID-19 employer stimulus grant
Other
b) Revenue from contracts with customers
Asset recharges and administration fee earned
Timing of revenue recognition
Services transferred over time *
Contract balances
Trade receivables
Consolidated
2020
$
221,173
-
36,205
77
257,455
77,199
77,199
2019
$
181,594
43,577
-
161
225,332
119,315
119,315
77,199
119,315
7,654
17,931
*Revenue relates to Namibia as geographical market with services transferred over time and up to 31 August 2020 when the
contract comes to an end.
Key terms and conditions for revenue from contracts with customers are detailed in Note 2(c)(iii).
Note 8 Expenses
Consolidated
Profit/(Loss) before income tax includes the following specific expenses:
Depreciation expense:
Buildings
Office equipment and fittings
Motor vehicles
Site equipment
Right-of-use asset
Total depreciation and amortisation expense reflected in Notes 13,16
Occupancy expenses
Rental expenses on operating leases
Variable expenses not capitalised under property lease
Other
Administrative expenses
Consultancy fees: Executive directors*
Technical and other consultants: Project evaluation
Professional fees
IT expenses
Non-executive directors’ fees
Corporate and listing costs
Other costs
2020
$
17,570
53,149
2,544
28,639
113,910
215,812
-
47,494
46,830
94,324
403,283
473,370
31,898
131,651
279,916
313,145
297,422
1,930,685
2019
$
22,391
45,190
2,947
22,383
-
92,911
164,633
-
44,853
209,486
301,559
705,967
41,879
74,041
299,646
278,629
367,199
2,068,920
*Excludes costs included in capitalised mineral exploration and evaluation expenditure and project evaluation
activities. Last mentioned is included under Professional fees.
D e e p Y e l l o w L i m i t e d
6 3
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 8 Expenses (continued)
Employee expenses:
Wages, salaries and fees
Superannuation
Share-based payments
Total employee expenses
Finance costs:
Interest on lease liabilities
Note 9
Income tax
Consolidated
2020
$
2019
$
509,475
21,186
1,503,178
2,033,839
522,680
20,216
1,083,945
1,626,841
26,697
-
The major components of income tax expense for the years ended 30 June 2020 and 30 June 2019 are:
a) Income tax expense
Current income tax:
Current income tax charge/(benefit)
Adjustments in respect of current income tax of previous year
Deferred income tax:
Relating to origination and reversal of timing differences
Over/(Under) provision in prior year
Carry forward tax losses not brought to account
Income tax expense reported in the Statement of Comprehensive Income
Consolidated
2020
$
2019
$
-
-
1,466,928
168,344
(1,635,272)
-
-
-
(889,221)
(149,297)
1,038,518
-
b) Reconciliation of income tax expense to prima facie tax payable
Profit/(Loss) before income tax expense
2,874,863
(3,814,328)
Tax at the Australian rate of 30% (2019: 30%)
Effect of tax rates in foreign jurisdictions*
Tax effect:
Non-deductible share-based payment
Other expenditure not deductible
Over/(Under) provision in prior year
Non-assessable income: Research and development incentive
Non-assessable income: COVID-19 employer stimulus grant
Carry forward tax losses and deductible temporary differences not brought
to account
Tax expense
862,459
138,755
451,279
25,297
168,344
-
(10,862)
(1,635,272)
-
(1,144,298)
133,686
126,785
7,679
(149,297)
(13,073)
-
1,038,518
-
D e e p Y e l l o w L i m i t e d
6 4
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 9
Income tax (continued)
c) Deferred tax – Statement of Financial Position
Liabilities
Prepayments
Accrued Income
Assets
Revenue losses available to offset against future taxable income
Accrued expenses
Deductible equity raising costs
Capitalised exploration and evaluation expenditure
Deferred tax assets not brought to account
Net deferred tax asset/(liability)
d) Deferred tax – Statement of Comprehensive Income
Liabilities
Prepayments
Accrued Income
Assets
Decrease in tax losses carried forward
Accruals
Deductible equity raising costs
Capitalised exploration expenses
Deferred tax assets not brought to account
Deferred tax expense/(benefit)
e) Unrecognised temporary differences
Consolidated
2020
$
21,637
-
21,637
16,392,751
30,057
346,800
17,695,479
(34,443,450)
21,637
-
2019
$
37,763
7,385
45,148
13,835,219
28,699
324,443
18,664,965
(32,808,178)
45,148
-
16,126
7,385
(33,242)
26,561
2,557,532
1,358
22,357
(969,486)
(1,635,272)
-
720,458
4,606
314,543
5,592
(1,038,518)
-
At 30 June 2020, there are temporary differences to the value of $17,695,479 in relation to capitalised exploration and
evaluation expenditure associated with subsidiaries. It represents a deferred tax asset which would be realised once the
subsidiary is in a tax paying position. (2019: $18,664,965).
*The Namibian subsidiaries operate in a jurisdiction with higher corporate tax rates.
Note 10 Earnings per share (EPS)
Basic earnings per share
Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary equity holders of the
Company, excluding any costs of servicing equity other than dividends, by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity holders of the Company,
excluding any costs of servicing equity other than dividends, by the weighted average number of ordinary shares outstanding
during the financial year plus the weighted average number of ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares.
D e e p Y e l l o w L i m i t e d
6 5
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 10 Earnings per share (EPS) (continued)
The following reflects the income and share data used in the basic and diluted EPS computations:
Consolidated
2020
$
2019*
$
a) Profit/(Loss) attributable to ordinary equity holders of the Company
Continuing operations
2,874,863
(3,814,328)
b) Weighted average number of ordinary shares for basic EPS
241,748,437
200,315,114
Effects of dilution from:
Share Options
Performance Rights
197,870
456,071
Weighted average number of ordinary shares adjusted for effect of dilution
242,402,378
*Diluted EPS is the same as basic EPS in 2019 as the Group was in a loss position.
c) Information concerning the classification of securities
-
-
-
The weighted average number of ordinary shares includes 21,936,800 Loan Plan Shares that were issued under the Loan
Share Plan and are subject to short and long-term performance conditions.
Note 11 Current assets - cash and cash equivalents
Cash at bank and on hand
Short term deposits
Consolidated
2020
$
3,449,063
8,667,909
12,116,972
2019
$
10,975,063
4,000,000
14,975,063
The carrying amounts of cash and cash equivalents represent fair value. See Note 19 for the Group’s fair value disclosures.
Cash at banks earns interest at floating rates based on daily bank notice deposit rates. Deposits are made for varying notice
periods of between one and three months, depending on the immediate cash requirements of the Group and earn interest at
the respective deposit rates. At 30 June 2020 the deposit rates on the 30-day and 90-day notice deposits were 1% and 1.1%
respectively.
Cash flow reconciliation:
Profit/(Loss) after income tax
Depreciation and amortisation
Loss on sale of non-current assets
Impairment of capitalised mineral exploration and evaluation expenditure
Reversal of prior year impairment of capitalised mineral exploration and
evaluation expenditure
Share-based payments expense
Change in operating assets and liabilities:
Decrease in receivables
Increase in payables
Net cash flows used in operating activities
Consolidated
2020
2019
2,874,863
215,812
10,079
36,893
(7,100,920)
(3,814,328)
92,911
506
18,640
-
1,503,178
1,083,945
127,022
39,125
(2,293,948)
84,309
140,062
(2,393,955)
D e e p Y e l l o w L i m i t e d
6 6
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 11 Current assets - cash and cash equivalents (continued)
Non-cash financing and investing activities
The Group has not entered into any transaction during the current or prior financial year which had material non-cash
components.
Note 12 Current assets – receivables and other assets
a) Receivables
GST recoverable
Other receivables
b) Other assets
Tenement and property bonds
Prepayments
Consolidated
2020
$
76,830
221,435
298,265
89,101
98,466
187,567
2019
$
135,103
326,886
461,989
89,581
166,126
255,707
GST recoverable relates to Australia and Namibia. Interest is not normally charged and collateral is not normally obtained.
Note 13 Non-current assets – property, plant and equipment
Cost
At 1 July 2018
Additions
Disposals
Exchange adjustment
At 30 June 2019
Additions
Disposals
Exchange adjustment
Buildings
$
463,592
38,621
-
5,843
508,056
30,560
-
(42,953)
Office
Equipment
and Fittings
$
Motor vehicles
Site
Equipment
Total
$
$
$
321,951
41,390
(1,574)
2,186
363,953
56,890
(13,620)
(12,149)
129,158
505
(2,769)
1,996
128,890
-
-
(11,976)
358,644
15,376
-
5,093
379,113
48,893
(25,891)
(31,981)
1,273,345
95,892
(4,343)
15,118
1,380,012
136,343
(39,511)
(99,059)
At 30 June 2020
495,663
395,074
116,914
370,134
1,377,785
Depreciation
At 1 July 2018
Depreciation charge
Disposals
Exchange adjustment
At 30 June 2019
Depreciation charge
Disposals
Exchange adjustment
251,519
22,391
-
395
274,305
17,570
-
(249)
216,195
45,190
(549)
563
261,399
53,149
(13,278)
(432)
56,696
2,947
-
52
59,695
2,544
-
(36)
169,077
22,383
-
356
191,816
28,639
(15,857)
(377)
693,487
92,911
(549)
1,366
787,215
101,902
(29,135)
(1,094)
At 30 June 2020
291,626
300,838
62,203
204,221
858,888
Net book value
At 30 June 2019
233,751
102,554
69,195
187,297
592,797
At 30 June 2020
204,037
94,236
54,711
165,913
518,897
D e e p Y e l l o w L i m i t e d
6 7
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 13 Non-current assets – property, plant and equipment (continued)
Security
No items of property, plant and equipment have been pledged as security by the Group.
Note 14 Non-current assets – Capitalised mineral exploration and evaluation expenditure
In the exploration and evaluation phase
Cost brought forward (net of accumulated impairment)
Exploration expenditure incurred during the year at cost
Exchange adjustment
Reversal of impairment loss
Impairment loss
Cost carried forward (net of accumulated impairment)
Consolidated
2020
$
31,831,939
2,128,575
(5,608,796)
7,100,920
(36,893)
35,415,745
2019
$
29,279,061
1,765,240
806,278
-
(18,640)
31,831,939
Impairment of capitalised mineral exploration and evaluation expenditure relates to assets for which the expenditure are not
expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale.
The Group’s areas of interest are defined in Note 2(c)(xiv). Impairment write-down in FY19 and FY20 relate to other projects
which are fully impaired. The impairment reversal in FY20 relate to the Reptile Project. All other areas of interest have been
fully impaired in the past.
The recoverable amount of the Group’s capitalised mineral exploration and evaluation assets at 30 June 2020 determined
using the fair value less cost to dispose (FVLCD) method is estimated to be $35.6 million (30 June 2019: $32.6 million). It’s
fair value has been determined based on comparable market transactions. The fair value methodology adopted at 30 June
2020 is categorised as Level 3 in the fair value hierarchy.
The fair value less cost of disposal was determined using a range of resource multiples between $0.15 and $0.30. Any
changes in these estimates could impact the FVLCD of the underlying asset:
In determining the fair value of the project, to assess whether any further impairment write-downs or reversals of impairment
are required the Board took into consideration:
current and forecast uranium spot and term prices;
share price of mid to small cap uranium companies; and
combination of differentiated mineralisation of its resource-based assets.
The impairment reversal was therefore driven by an increase in resources, depreciation of the Namibian dollar against the
Australian dollar and improvements in the uranium spot price.
A summary of capitalised mineral exploration and evaluation expenditure by country of operation is as follows:
Namibia
Note 15 Current liabilities – trade and other payables
Trade payables and accruals
Other payables
Consolidated
2020
$
2019
$
35,415,745
31,831,939
Consolidated
2020
$
465,417
27,188
492,605
2019
$
477,538
32,123
509,661
Trade payables and accruals are non-interest bearing and normally settled on 30 day terms. There are no secured liabilities
as at 30 June 2020.
Details of the Group’s exposure to interest rate risk and fair value in respect of its liabilities are set out in Note 19.
D e e p Y e l l o w L i m i t e d
6 8
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 16 Leases
Group as a lessee
The Group has a property lease contract has a term of 5.5 years inclusive of an option to renew for 3 years. The Group is
restricted from subleasing the property without the owner’s approval. The lease contains variable lease payments, which are
further discussed below.
Set out below is the carrying amount of the right-of-use asset recognised and the movements during the period:
Cost
At 1 July 2019
Concessions
At 30 June 2020
Depreciation
At 1 July 2019
Depreciation charge for the year
At 30 June 2020
Net book value
At 30 June 2020
Right-of-use asset
Property lease
$
749,560
(18,635)
730,925
-
113,910
113,910
617,015
The interest expense, carrying amount and maturity analysis of the lease liability are disclosed in Note 2(d)(i) and Note 19.
The amount recognised in profit or loss in relation to variable lease payments not included in the measurement of the lease
liability is disclosed in Note 8.
The Group had total cash outflows for its property lease of $169,232 in 2020 (2019:Nil)
Note 17 Issued capital and reserves
a) Share capital
Issued and fully paid share capital
b) Share movements during the year
Issue price
(cents)
At the beginning of the year
Issued on vesting of Performance Rights
Issued under Loan Share Plan (i)
Share buyback (ii)
Issued under capital raising
0.31
0.50
Exercise of Options
Less: Transaction costs attributable to issuance of
shares-
At the end of the year
Consolidated
Consolidated
2020
No.
2019
No.
2020
$
2019
$
227,949,263
219,991,857
249,753,196
247,264,524
230,325,798
571,850
8,631,205
(2,028,346)
7,385,556
-
-
194,590,276
414,323
6,283,941
-
29,032,258
5,000
-
247,264,524
225,705
-
-
2,289,507
-
(26,540)
238,722,162
101,885
-
-
9,000,000
2,500
(562,023)
244,886,063
230,325,798
249,753,196
247,264,524
(i) Shares issued under the Loan Share Plan to Managing Director, Executive Director, employees and contractors and
subject to long term performance conditions and repayment of limited recourse loan made to the participant to purchase
the shares. The shares may not be traded 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.
(ii) Ordinary shares previously issued under the Loan Share Plan were cancelled as relevant vesting criteria were not met.
D e e p Y e l l o w L i m i t e d
6 9
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 17 Issued capital and reserves (continued)
c) Ordinary shares
The holding company, Deep Yellow Limited, is incorporated in Perth, Western Australia.
The holding company’s shares are limited and entitle the holder to participate in dividends and the proceeds on winding up
of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of
ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to
one vote.
d) Other reserves
2020
Accumulated
losses
$
Consolidated
Employee equity
benefits’ reserve
(i)
$
Foreign Currency
Translation
Reserve (ii)
$
Balance at 1 July 2019
(196,141,196)
12,140,341
(15,774,349)
Profit for year
Transfer to issued capital in respect of Performance
Rights vested
Recognition of share-based payments
Movement for the year
Balance at 30 June 2020
2,874,863
-
-
(225,705)
-
-
-
-
(193,266,333)
1,561,637
-
13,476,273
-
(6,269,172)
(22,043,521)
2019
Balance at 1 July 2018
Loss for year
Transfer to issued capital in respect of Performance
Rights vested
Recognition of share-based payments
Movement for the year
Balance at 30 June 2019
(i)
Employee equity benefits’ reserve
Accumulated
losses
$
(192,326,868)
(3,814,328)
Consolidated
Employee equity
benefits’ reserve
(i)
$
Foreign Currency
Translation
Reserve (ii)
$
11,086,143
(16,695,496)
-
-
(101,885)
-
-
-
-
(196,141,196)
1,156,083
-
12,140,341
-
921,147
(15,774,349)
The previous Option Plan was replaced by an Awards Plan which allows the offer of either Options or Performance Rights.
Options over unissued shares are issued and Performance Rights are granted at the discretion of the Board. Information
relating to Options issued and Performance Rights granted are set out in Note 20.
The Group has a Loan Share Plan which allows the offer of Loan Plan Shares to qualifying employees and/or consultants.
Loan Plan Shares are issued at the discretion of the Board. Information relating to Loan Plan Shares are set out in Note 20.
(ii) Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries. The movement arises from the translation of foreign subsidiaries and opening balance of
equity.
Note 18 Dividends
No dividends were paid or proposed during the financial year (2019: Nil).
The Company has no franking credits available as at 30 June 2020 (2019: Nil).
D e e p Y e l l o w L i m i t e d
7 0
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 19 Financial assets and liabilities
Financial assets
Financial assets at amortised cost
Cash and cash equivalents
Trade and other receivables (Note 12(a)
Total current
Financial liabilities: Lease liabilities
Current liabilities
Lease liabilities (Note 2(d)(i))
Total current liabilities
Non-current liabilities
Lease liabilities (Note 2(d)(i))
Total non-current liabilities
Total liabilities
Other financial liabilities
Financial liabilities at amortised cost
Trade and other payables (Note 15)
Total current
Maturity analysis of financial liabilities
As at 30 June 2020
Lease liabilities
Trade and other payables
As at 30 June 2019
Trade and other payables
Fair values
Consolidated
2020
$
12,116,972
298,265
12,415,237
2019
$
14,975,063
461,989
15,437,052
Borrowing
rate
Maturity
2020
2019
Consolidated
$
$
4%
2021
99,221
99,221
4%
2025
536,664
536,664
-
-
-
-
635,885
635,885
Consolidated
2020
$
492,605
492,605
1-5 years
$
536,664
-
2019
$
509,661
509,661
Total
$
635,885
492,605
0-12 months
99,221
492,605
509,661
-
509,661
Apart from lease liabilities, the fair value of financial assets and liabilities approximates their carrying amounts largely due to
the short-term maturities of these instruments.
D e e p Y e l l o w L i m i t e d
7 1
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 19 Financial assets and liabilities (continued)
Financial instruments risk management objectives and policies
The Group’s financial liabilities comprise lease liabilities, and trade and other payables. The main purpose of these financial
liabilities is to finance the Group’s operations. The Group’s principal financial assets include trade and other receivables, and
cash and short-term deposits that derive directly from its operations.
The Group is exposed to market risk, credit risk and liquidity risk from its use of financial instruments which are summarised
below. This note presents information about the Group’s exposure to the specific risks, and the policies and processes for
measuring and managing those risks. The Board has the overall responsibility for the risk management framework while
senior management oversees the management of these risks.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity
price risk and commodity risk. The Group is only exposed to interest rate and currency risk.
The financial instrument affected by market risk is deposits. The sensitivity analyses in the following sections relate to the
position as at 30 June 2020 and 2019.
(a)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group has cash assets which may be susceptible to fluctuations in changes in
interest rates. The Group requires the cash assets to be sufficiently liquid to cover any planned or unforeseen future
expenditure, which prevents the cash assets being committed to long term fixed interest arrangements. The Group
enters into notice deposit arrangements of between one and three months to obtain flexible liquidity whilst fixing interest
rate for a short period of time only. The Group does not employ interest rate swaps or enter into any other hedging
activity with regards to its interest bearing investments.
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Cash at bank
Other short-term bank/notice deposits
Interest rate sensitivity
Consolidated
2019
$
3,449,063
8,667,909
12,116,972
2019
$
10,975,063
4,000,000
14,975,063
A change of 1% in interest rates at the reporting date as per management’s best estimate would have
increased/(decreased) other comprehensive income and profit and loss by the amounts shown below. This analysis
assumes all other variables remain constant. The same sensitivity analysis has been performed for the comparative
reporting date.
30 June 2020
Cash and cash equivalents
30 June 2019
Cash and cash equivalents
Profit and Loss
Other Comprehensive
Income
1%
Increase
1%
Decrease
1%
increase
1%
Decrease
121,170
(121,170)
149,751
(149,751)
-
-
-
-
D e e p Y e l l o w L i m i t e d
7 2
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 19 Financial assets and liabilities (continued)
(b)
Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. Financial assets in overseas Group companies are not generally material in the
context of financial instruments entered into by the Group as a whole, as they generally relate to funds advanced to
fund short term exploration and administration activities of the overseas operations. Once the funds are expended,
they are no longer classified as financial assets. Advancing of funds to overseas operations on a needs basis, is an
effective method for the management of currency risk. The Group’s investments in overseas subsidiary companies
are not hedged as they are considered to be long term in nature.
As a result of significant investment in Namibia, the Group’s Statement of Financial Position can be affected by
movements in the Namibian dollar/Australian dollar/US dollar exchange rates. The Group does not consider there to
be a significant exposure to the Namibian dollar or US dollar as they represent the functional currencies of controlled
entities.
Foreign currency sensitivity
A change of 5% in the Namibian dollar at the reporting date as per management’s best estimate would have
increased/(decreased) profit and loss before tax and pre-tax equity by the amounts shown below. This analysis
assumes all other variables remain constant. The same sensitivity analysis has been performed for the comparative
reporting date. The Group’s exposure to foreign currency changes for all other currencies is not material.
Change in Namibian dollar
+5%
Decrease
-5%
Increase
+5%
Increase
-5%
Decrease
Profit and Loss before tax
Pre-tax Equity
(31,188)
34,471
31,992
(28,945)
-
-
-
-
30 June 2020
30 June 2019
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from transactions with customers. The Group is exposed to credit risk from its
operating activities and from its financing activities, including deposits with banks and foreign exchange transactions.
Trade and other receivables
The majority of the receivables that materialise through the Group’s normal course of business is in relation to the
NJV, for which Reptile Mineral Resources and Exploration (Pty) Ltd, a controlled entity, is the appointed Manager and
has during the term of the Joint Venture always received funds timeously from the major funding partner, JOGMEC.
The risk of non-recovery of receivables is therefore considered to be negligible. The Board does not consider there to
be a significant exposure to credit risk in relation to trade and other receivables.
Cash at bank
Credit risk from balances with banks and financial institutions is managed by the Group Financial Controller and
reviewed by the Board. Investments of surplus funds are made only with approved counterparties. The Group’s
primary banker is Westpac Banking Corporation Limited (Westpac). At reporting date all current accounts are with this
bank, other than funds transferred to Namibia to meet the working capital needs of the controlled entity, Reptile Mineral
Resources and Exploration (Pty) Ltd. The cash needs of the controlled entity’s operations are monitored by the parent
company and funds are advanced to the Namibian operations as required.
The Directors believe this is the most efficient method of combining the monitoring and mitigation of potential credit
risks arising out of holding cash assets in overseas jurisdictions, and the funding mechanisms required by the Group.
Deposits at call
In addition, the Group has cash assets on notice (30 and 90-day) deposit with Westpac. The Board considers this
financial institution, which have a short-term credit rating of A-1+ and long-term rating of AA- from Standard & Poor’s,
to be appropriate for the management of credit risk with regards to funds on deposit.
Except for the matters above, the Group currently has no significant concentrations of credit risk.
D e e p Y e l l o w L i m i t e d
7 3
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 19 Financial assets and liabilities (continued)
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum
exposure to credit risk at the reporting date was:
Cash and cash equivalents
Other short-term bank/notice deposits
Other receivables
Liquidity risk
Consolidated
2020
$
3,449,063
8,667,909
298,265
12,415,237
2019
$
10,975,063
4,000,000
461,989
15,437,052
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s only
liabilities are short term trade and other payables and lease liabilities.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group’s reputation.
Management manages its liquidity risk by monitoring its cash reserves and forecast spending, and is cognisant of the future
demands for liquid financial resources to finance the Group’s current and future operations, and consideration is given to the
liquid assets available to the Group before commitment is made to future expenditure or investment.
The Group’s expenditure commitments are taken into account before entering into notice deposit investments and short and
medium term exploration programs are tailored within current cash resources.
The Group’s trade and other payables of $492,605 (2019: $509,661) are settled on 30-day trading terms.
The maturity analysis for contractual undiscounted cash flows of lease liabilities are indicated in Note 2(d)(i).
Note 20 Share-based payment plans
(a)
Types of share-based payments
Performance Rights
Under the Awards Plan, Performance Rights can be granted to Executives and other qualifying employees in order to align
remuneration with shareholder wealth over the long-term and assist in attracting and retaining talented employees. These are
granted for no consideration and each right upon vesting entitles the holder to one fully paid ordinary share in the capital of
the Company if certain time and market price measures are met in the measurement period.
During the 2020 financial year, The Group continued to issue Performance Rights to employees which were subject to time-
based vesting conditions which prescribe periods of time that the employee must stay employed by the Company prior to
automatic vesting. Prior year issues also included market price vesting conditions which measures the increase in share price
of the Company. Unvested Performance Rights subject to the Market Price Condition will vest if, at the end of the
measurement period, the share price of the Company has reached a pre-determined market price.
If at any time prior to the Vesting Date an employee voluntarily resigns from employment with the Group or is terminated, the
Performance Rights automatically lapse and are forfeited, subject to the discretion of the Board. The Board can at any time
make a determination, including amended vesting conditions, that Performance Rights for which performance hurdles have
not been met, continue as Unvested Performance Rights. They will lapse, if they have not already lapsed or vested for any
other reason, 15 years after the date of grant.
D e e p Y e l l o w L i m i t e d
7 4
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 20 Share-based payment plans (continued)
Loan Plan Shares
During the 2020 financial year shares were granted to the Managing Director, Executive Director, employees and contractors
under the Deep Yellow Limited Loan Share Plan (Loan Share Plan). The Loan Share Plan rewards and incentivises
employees (including Directors who are employees of the Company) and contractors (Participant), where shareholder
approval has been granted (if required), 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. A Participant may not trade shares acquired under the Loan Share 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. For so long as there is an outstanding loan balance, the Participant irrevocably and unconditionally directs the
Company to withhold all after tax dividends in respect of the Participants Loan Plans Shares and apply all amounts so withheld
in repayment of the outstanding loan balance. The loan can be repaid at any time, however to avoid compulsory divestment
of Loan Plan Shares, the loan must be repaid on the earlier of periods ranging between 5-10 years (determined with each
issue) after the issuance of the shares and the occurrence of:
(a)
(b)
in the case of vested shares, the date being 12 months after cessation of employment or service contract for any
reason; or
pre-determined occurrences as per the Loan 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 and clearly defined business goals (where applicable) covering non-
financial performance measures 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. 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.
(a)
Summaries of Performance Rights and Loan Plan Shares granted
The table below illustrates the number (No.) and weighted average exercise price (WAEP) of, and movements in, Loan Plan
Shares during the year:
Outstanding at the start of the year
Granted during the year
Forfeited during the year
Outstanding at the end of the year
2020
No.
14,283,941
8,631,205
(978,346)
21,936,800
2020
WAEP (cents)
32.4
27.0
-
31.9
2019
No.
9,050,000
6,283,941
(1,050,000)
14,283,941
2019
WAEP (cents)
25.4
46.5
-
32.4
The table below illustrates the number (No.) and movements in Performance Rights during the year:
Outstanding at the start of the year
Granted during the year
Expired during the year
Exercised during the year
Outstanding at the end of the year
2020
No.
750,048
531,363
(105,000)
(571,850)
604,561
2019
No.
837,934
447,437
(121,000)
(414,323)
750,048
(b)
Summaries of Loan Plan Shares exercised during the year
No Loan Plan Shares were exercised during the year. The limited recourse loans outstanding in relation to Loan Plan Shares
at 30 June 2020 was $7,089,087 (2019: $5,219,033). 8,631,205 Loan Plan Shares were granted and 746,624 vested during
the year.
(c) Weighted average remaining contractual life
The Loan Plan Shares outstanding at the end of the year have exercise prices between 22.0 and 46.5 cents. The weighted
average remaining contractual life for the limited recourse loans outstanding in relation to Loan Plan Shares at 30 June 2019
is 5.45 years (2019: 6.83 years)
The weighted average remaining contractual life for the Performance Rights outstanding as at 30 June 2020 is 10.78 months
(2019: 7.05 months).
D e e p Y e l l o w L i m i t e d
7 5
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 20 Share-based payment plans (continued)
(d)
Recognised share-based payment expenses
The expense recognised for employee services during the year, arising from equity-settled share-based payment transactions
in the form of Performance Rights and Loan Plan Shares is shown in the table below:
Amount recognised as employee expenses in the Consolidated Statement
of Comprehensive Income
Amount recognised as capitalised mineral exploration and evaluation
expenditure
Consolidated
2020
$
2019
$
1,503,178
1,083,945
58,460
72,139
1,561,638
1,156,084
There have been no modifications to share-based payment arrangements during the 2020 financial year.
(e)
Loan Plan Shares and Performance Rights pricing models
The fair value of the Performance Rights and Loan Plan Shares granted under their respective plans are estimated as at
the grant date.
The following tables lists the inputs to the models used for the years ended 30 June 2020 and 30 June 2019.
Pricing model
Loan Plan Shares
Grants
2020
18 Dec 19
Black Scholes (i)
Monte-Carlo
simulation using
hybrid pricing model
(ii)
Black Scholes (i)
Monte-Carlo
simulation using
hybrid pricing model
(ii)
2019
19 Nov 18
Black Scholes (i)
Monte-Carlo
simulation using
hybrid pricing model
(ii)
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected repayment term of limited recourse loan in
relation to Loan Plan Shares (years)
Closing share price at grant date (cents)
Fair value per right at grant date (cents)
- Time-based vesting conditions
- Time and non-market price vesting conditions
- Time and market price vesting conditions
Zero
70
0.86
7
27.5
18.1
-
12.9
Zero
70
0.86
5
27.5
15.9
15.9
12.3
Zero
100
2.32
5
49.5
37.6
32.4
The expected life of the limited recourse loan in relation to Loan Plan Shares is based on current expectations and is not
necessarily indicative of repayment patterns that may occur. The expected volatility reflects the assumption that the historical
volatility over a period similar to the life of the rights and repayment term of the limited recourse loan in relation to the Loan
Plan Shares is indicative of future trends, which may not necessarily be the actual outcome.
D e e p Y e l l o w L i m i t e d
7 6
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 20 Share-based payment plans (continued)
Pricing model
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of rights
Closing share price at grant date (cents)
Fair value per right at grant date (cents)
Performance Rights
Grants
2019
17 May 19
19 Nov 18
2020
11 Oct 19
Black Scholes (i)
Zero
-
-
15
27.5
Black Scholes (i)
Zero
-
-
15
34.5
Black Scholes (i)
Zero
-
-
5
49.5
Time-based vesting conditions
Time and market price vesting conditions
27.5
N/A
34.5
N/A
49.5
N/A
(i)
(ii)
Share-based payments subject to non-market based vesting conditions; and
Share-based payments subject to market-based vesting conditions.
Note 21 Commitments and contingencies
(a)
Exploration
The Group has certain obligations to perform minimum exploration work on mineral leases held. These obligations may vary
over time, depending on the Group’s exploration programs and priorities and may be reduced by the surrendering of
tenements. These obligations are also subject to variations by farm-out arrangements or sale of the relevant tenements. This
commitment does not include the expenditure commitments which are the responsibility of the joint venture partners. As at
balance date, the Group has no outstanding commitment for exploration expenditure.
(b)
Contractual commitments
There are no contracted commitments other than those disclosed above.
(c)
Contingent liabilities
There were no material contingent liabilities as at 30 June 2020.
Note 22 Related party disclosures
Compensation of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share-based payment
Total compensation paid to Key Management Personnel
Consolidated
2020
$
1,091,428
7,830
724,338
1,823,596
2019
$
1,096,733
8,242
566,345
1,671,320
The amounts disclosed in the table are the amounts recognised as a cost during the reporting period related to Key
Management Personnel.
D e e p Y e l l o w L i m i t e d
7 7
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 22 Related party disclosures (continued)
Other transactions with Key Management Personnel
Scomac Management Services Pty Ltd as trustee for the Scomac Unit Trust (“Scomac” or “Consultant”) has been appointed
on a non-exclusive basis to provide the Group with management, strategic, technical and geological expertise and services
through the Consultant personnel they employ or have access to (“Scomac agreement”). Mr Borshoff has a financial interest
in and control over Scomac.
During the year ended 30 June 2020 Scomac billed the Company $1,035,968, inclusive of GST and on-costs (2019:
$$737,113), for technical and geological services (excluding Mr Borshoff) on normal commercial terms and conditions. These
amounts are not included in the Compensation of Key Management Personnel table above. Fees paid to Scomac in relation
to services provided by Mr Borshoff as Managing Director are detailed in section 6(a). An amount of $81,687 was outstanding
at 30 June 2020 (2019: $54,486). The majority of cost for other services was recognised as non-current asset: capitalised
mineral exploration and evaluation expenditure.
There were no other related party transactions during the year other than those disclosed above in relation to Key
Management Personnel.
Note 23 Events Occurring After Balance Date
There have been no events or circumstances which materially affect the Annual Financial Statements of the Group between
30 June 2020 and the date of this report.
Note 24 Remuneration of Auditors
The auditor of the Deep Yellow Limited Group is Ernst & Young
Fees to Ernst & Young (Australia)
Fees for auditing the statutory financial report of the parent covering the
group and auditing the statutory financial reports of any controlled entities
Consolidated
2020
$
2019
$
49,125
43,260
Fees for assurance services that are required by legislation to be provided by
the auditor – ASIC audit levy
368
552
Fees for other assurance and agreed-upon-procedures services under other
legislation or contractual arrangements where there is discretion as to
whether the service is provided by the auditor or another firm
Fees for other services
-
-
-
-
Total fees to Ernst & Young (Australia)
49,493
43,812
Fees to other overseas member firms of Ernst & Young (Australia)
Fees for auditing the financial report of any controlled entities
27,762
27,438
Fees for assurance services that are required by legislation to be provided by
the auditor
Fees for other assurance and agreed-upon-procedures services under other
legislation or contractual arrangements where there is discretion as to
whether the service is provided by the auditor or another firm
Fees for other services
- Audit of internal procedures
-
-
-
Total Fees to other overseas member firms of Ernst & Young (Australia)
27,762
Total auditor’s remuneration
77,255
-
-
3,007
30,445
74,257
D e e p Y e l l o w L i m i t e d
7 8
2 0 2 0 A n n u a l R e p o r t
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020 (continued)
Note 25 Parent entity Information
Information relating to Deep Yellow Limited:
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated losses
Equity compensation reserve
Total shareholders’ equity
Loss of the parent entity
Total comprehensive loss of the parent entity
Contingent liabilities of the parent entity
2020
$
11,882,974
48,792,526
(584,727)
(1,121,390)
249,753,196
(215,558,334)
13,476,273
47,671,135
(3,669,563)
(3,669,563)
2019
$
14,993,355
48,025,357
(509,262)
(509,262)
247,264,524
(211,888,770)
12,140,341
47,516,095
(5,372,073)
(5,372,073)
Deep Yellow Limited has entered into a Subordination Agreement on 31 March 2017. The agreement has subsequently been
updated on 21 August 2018 and recently on 12 August 2020. The effect of the agreement is that Deep Yellow Limited has
agreed to assist Reptile Uranium Namibia (Pty) Ltd, a Namibian subsidiary, by subordinating subject to certain terms and
conditions, its non-current claims against Reptile Uranium Namibia (Pty) Ltd and in favour and for the benefit of other creditors
of Reptile Uranium Namibia (Pty) Ltd. No liability is expected to arise.
Note 26 Interests in Joint Operations
Joint arrangements have been entered into with third parties, whereby the Group or the third parties can earn an interest in
exploration areas by expending specified amounts in the exploration areas.
There are no assets employed by these joint operations and the Group’s expenditure in respect of them is brought to account
initially as capitalised exploration and evaluation expenditure. The Group is currently in the earn-in phase of its joint
operations.
The Group’s interest in joint operations is as follows:
On 22 January 2013 the Company announced the execution of a Heads of Agreement with Epangelo Mining Company
(Pty) Ltd (Epangelo) to progress the Aussinanis project (Aussinanis) in Namibia. Epangelo, a private company owned
by the Government of the Republic of Namibia has acquired 5% of Aussinanis by funding testwork. Epangelo can earn
up to 50% of the project by funding the Project through to a bankable feasibility study.
D e e p Y e l l o w L i m i t e d
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2 0 2 0 A n n u a l R e p o r t
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Deep Yellow Limited (‘the Company’), I state that:
1.
In the opinion of the Directors:
(a)
the financial statements and notes of the consolidated entity for the financial year ended 30 June 2020 are in
accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its
performance for the year ended on that date;
(b)
(c)
2.
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note
1; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
This declaration has been made after receiving the declarations to be made to the Directors in accordance with Section
295A of the Corporations Act 2001 for the financial year ended 30 June 2020.
On behalf of the Board
John Borshoff
Managing Director
25th day of September 2020
D e e p Y e l l o w L i m i t e d
8 0
2 0 2 0 A n n u a l R e p o r t
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of Deep Yellow Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Deep Yellow Limited (the Company) and its subsidiaries (collectively the
Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit and or loss and other comprehensive income, consolidated statement
of changes in equity and consolidated cash flows statement for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:DA:DYL:009
81
Carrying value of capitalised exploration and evaluation assets
Why significant
How our audit addressed the key audit matter
In performing our procedures, we:
►
►
►
►
►
►
Considered the Group’s right to explore in the
relevant areas of interest, which included
obtaining and assessing supporting
documentation such as tenure documents
Considered the Group’s intention to carry out
significant exploration and evaluation activity in
the relevant areas of interest, which included
assessment of the Group’s cash-flow forecast
models, discussions with senior management
and directors as to the intentions and strategy
of the Group
Evaluated the scope, competency and
objectivity of the Group’s experts who
determined resources estimates used in
estimating the recoverable amount by
considering the work that they were engaged to
perform, their professional qualifications,
experience and use of industry accepted
methodology
Involved our valuation specialists in assessing
whether the resource multiples used in the
estimation the recoverable amount was within a
reasonable range based on comparable market
transactions
Evaluated changes in uranium prices, foreign
exchange rates and other external market
conditions in considering the impact that this
would have on the recoverable amount
Assessed the adequacy of the disclosure
included in the financial report
As disclosed in Note 14, at 30 June 2020, the Group
held capitalised exploration and evaluation
expenditure assets of $35.4 million.
The carrying value of exploration and evaluation
expenditure is assessed for impairment by the Group
when facts and circumstances indicate that the
carrying value of exploration and evaluation
expenditure assets may exceed their recoverable
amount. Previously recognised impairment write-
downs on capitalised mineral exploration and
evaluation expenditure are also required to be
assessed for reversals of impairment.
The determination as to whether there are any
indicators to require an exploration and evaluation
asset to be assessed for impairment or for reversals
of impairment, involves a number of judgments
including whether the Group has tenure, will be able
to perform ongoing expenditure and whether there is
market evidence to indicate that the fair value of the
exploration and evaluation asset has changed
substantially from when previous impairment write-
downs were recognised.
As at reporting date, the Group concluded that there
were indicators that the recoverable amount of the
Reptile exploration and evaluation assets had
increased from when impairment write-downs were
recognised in prior years, due to the discovery of
additional resources, increases in uranium prices and
overall improved market sentiment for uranium. The
Group determined that the fair value less cost of
disposal of the Reptile project, as at reporting date,
based on comparable transactions resulting in an
impairment reversal of $7.1 million being recognised
in the statement of profit or loss.
Given the size of the balance, the judgmental nature
in identifying indicators of impairment or reversals of
impairment and the estimation involved in the
determination of the fair value less cost of disposal of
exploration and evaluation assets, we considered this
a key audit matter.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:DA:DYL:009
82
Performance rights and loan plan shares
Why significant
How our audit addressed the key audit matter
As disclosed in Note 20, at 30 June 2020 the Group
had granted share based payment awards in the form
of loan plan shares and performance share rights
(both valued as share options). The awards vest
subject to the achievement of certain vesting
conditions.
In determining the fair value of the awards and
related expense the Group uses assumptions in
respect of future market and economic conditions.
The Group used the Black Scholes and Monte Carlo
Simulation models in valuing the share-based
payment awards.
Due to the complex and judgmental estimates used in
determining the valuation of the share based
payments and vesting expense, we considered the
Group’s calculation of the share based payment
expense to be a key audit matter.
In performing our audit procedures, we:
►
►
►
►
Assessed the third party expert engaged by the
Group for the purposes of performing an
independent valuation on the awards that have
share price target vesting conditions. This
included assessing the objectivity and
competence of the third party expert
Involved our valuation specialists to assess the
assumptions used in the third party expert’s
valuation, being the share price of the
underlying equity, interest rate, volatility,
dividend yield, time to maturity (expected life)
and grant date.
Recalculated the vesting expense, based on
the service vesting periods of the share based
payment awards and the likelihood of any non
market vesting condition being achieved.
Assessed the adequacy of the disclosure
included in the financial report
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 30 June 2020 Annual Report, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:DA:DYL:009
83
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
►
►
►
►
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
84
RK:DA:DYL:009
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 38 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Deep Yellow Limited for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Robert A Kirkby
Partner
Perth
25 September 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
85
RK:DA:DYL:009
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 11 September 2020.
(a)
Distribution of Equity Securities
Ordinary share capital
245,052,016 fully paid ordinary shares are held by 6,835 individual shareholders
In accordance with the Company’s Constitution, voting rights in respect of ordinary shares are on a show of hands whereby
each member present in person or by proxy shall have one vote and upon a poll, each share will have one vote. All issued
ordinary shares carry the rights to dividends.
Options
62,464,618 Options are held by 414 individual option holders with each option having an exercise price of $0.50 and expiring
on the earlier of:
(i)
(ii)
1 June 2022; and
22 ASX Business Days after the Notification Date
The Notification Date means the date (being any date within 5 ASX Business Days of the Acceleration Trigger
Date) on which Option holders are notified of the Acceleration Trigger Date” with such notification to be released on
the Exchange.
The Acceleration Trigger Date means that date, that the closing price of the Shares on ASX is higher than A$0.78
for any 20 consecutive ASX Business Day period, then on the 20th consecutive ASX Business Day of any such period.
Options do not carry a right to vote.
The number of shareholders, by size of holding, in each class are:
Distribution
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001- 100,000
More than 100,000
Totals
Holding less than a marketable parcel
(b)
Substantial Shareholders
Fully paid ordinary shares
Options
3,185
2,022
537
928
163
6,835
3,906
84
136
46
104
44
414
263
The following information is extracted from the Company’s Register of Substantial Shareholders:
Shareholder Name
SPROTT, EXPLORATION CAPITAL PARTNERS 2014 LP AND ASSOCIATED ENTITIES
COLLINES INVESTMENTS LIMITED
PARADICE INVESTMENT MANAGEMENT PTY LTD
Totals
Issued Ordinary Shares
Number
25,715,898
19,680,292
17,741,935
63,138,125
Percentage
10.50
8.54
7.70
26.74
The above shareholdings are disclosed pursuant to section 671B (3) of the Corporations Act 2001 but the relevant interests
shown do not necessarily represent the beneficial interest in the share capital of the Company or the parties concerned.
D e e p Y e l l o w L i m i t e d
8 6
2 0 2 0 A n n u a l R e p o r t
ASX ADDITIONAL INFORMATION (continued)
(c)
Twenty Largest Shareholders
The names of the twenty largest holders of ordinary shares are listed below:
Shareholder Name
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR JOHN BORSHOFF
BNP PARIBAS NOMINEES PTY LTD
MS GILLIAN SWABY
SANDHURST TRUSTEES LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR ED BECKER
ELEGANT WORLD PTY LTD
MCNEIL NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
RAVELLO GROUP PTY LIMITED
URSULA PRETORIUS
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR JEAN CORBIN
MR ANDREW WILDE
MR MERVYN PATRICK GREENE
TIERRA DE SUENOS SA
Totals
Ordinary Shares
Number
43,655,875
38,500,942
31,831,273
9,842,040
8,890,368
6,271,093
4,211,915
4,206,912
3,697,570
2,659,564
2,500,000
2,481,221
2,279,739
1,612,904
1,570,675
1,483,779
1,369,998
1,325,981
1,296,858
870,566
170,559,273
Percentage
17.81
15.71
12.99
4.02
3.63
2.56
1.72
1.72
1.51
1.09
1.02
1.01
0.93
0.66
0.64
0.61
0.56
0.54
0.53
0.36
69.60
(d)
Twenty Largest Option Holders
The names of the twenty largest holders of Options are listed below:
Option Holder Name
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
MR BENJAMIN PETER GRILLS
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR BENJAMIN PETER GRILLS + MRS JESSICA LEE NAY-GRILLS
MS MEI-LING FU
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
MRS CATHERINE JANINE DENTRINOS + MR NICKOLAS DENTRINOS
M & K KORKIDAS PTY LTD
MR PHILIP BOMFORD
MR DOMINIC CAELIN TANGNEY
TESANO PTY LTD
MR GERARD MEEHAN
SCARF FAMILY SUPERANNUATION PTY LIMITED
MR KELVINDER SINGH
MR POH SENG TAN
PPF ADVISORY PTY LTD
MS KIM LIAN CHOO
GECKO RESOURCES PTY LTD
Totals
Options
Number
28,210,029
7,637,221
5,015,646
2,550,821
2,142,690
1,153,733
Percentage
45.16
12.23
8.03
4.08
3.43
1.85
1,000,000
1,000,000
800,000
756,191
660,000
500,000
500,000
400,000
400,000
370,000
300,000
250,000
231,000
210,000
54,087,331
1.60
1.60
1.28
1.21
1.06
0.80
0.80
0.64
0.64
0.59
0.48
0.40
0.37
0.34
86.59
(e)
Restricted Securities
As at 30 June 2020 there were no restricted securities.
D e e p Y e l l o w L i m i t e d
8 7
2 0 2 0 A n n u a l R e p o r t
SCHEDULE OF MINERAL TENURE
As at 11 September 2020
NAMIBIA
Number
Name
Interest
Expiry Date
JV Parties
EPL 3496#1
EPL 3497#1
MDRL 3498#2
Tubas
Tumas
Aussinanis
100%
100%
85%
04.08.2021
04.08.2021
05.01.2025
-
-
[5% Epangelo #4
10% Oponona#5]
Approx. Area
(km2)
672
287
142
EPL 3669
EPL 3670
Tumas North
Chungochoab
65%
65%
30.03.2022
30.03.2022
[25% Nova (Africa) #6
10% Sixzone #7]
ML 176 #3
Shiyela
95%
05.12.2027
5% Oponona #5
EPL 6820#1
Rooikop East
100%
02.08.2023
-
#1 5% right granted to Oponona#5 in 2009 to participate in any projects which develop from these EPLs
#2 A MDRL to secure the uranium resource within EPL3498 was granted on 6 January 2020.
#3 Located entirely within EPL3496
#4 Epangelo Mining (Pty) Ltd
#5 Oponona Investments (Pty) Ltd
#6 Nova (Africa) Pty Ltd
#7 Sixzone Investments (Pty) Ltd
122
477
54
109
1,959
AGREEMENTS
ABM Resources NL - Northern Territory (100% uranium rights stay with DYL)
Approx. Area (km2)
5,257
5,257
D e e p Y e l l o w L i m i t e d
8 8
2 0 1 9 A n n u a l R e p o r t
Unit 17, Second Floor, Spectrum Building, 100-104 Railway Road, Subiaco, Western Australia 6008
Tel: +61 8 9286 6999 Email: info@deepyellow.com.au
www.deepyellow.com.au