NEWS RELEASE
24 September 2021
2021 ANNUAL REPORT
Attached is the 2021 Annual Report including audited financial statements for the year ended
30 June 2021.
Yours faithfully
JOHN BORSHOFF
Managing Director/CEO
Deep Yellow Limited
This ASX announcement was authorised for release by Mr John Borshoff, Managing
Director/CEO, for and on behalf of the Board of Deep Yellow Limited.
For further information contact:
John Borshoff
Managing Director/CEO
+61 8 9286 6999
T:
john.borshoff@deepyellow.com.au
E:
About Deep Yellow Limited
Deep Yellow Limited is a differentiated, advanced uranium exploration company, in pre-development
phase, implementing a contrarian strategy to grow shareholder wealth. This strategy is founded upon
growing the existing uranium resources across the Company’s uranium projects in Namibia and the
pursuit of accretive, counter-cyclical acquisitions to build a global, geographically diverse asset portfolio.
A PFS was completed in early 2021 on its Tumas Project in Namibia and a Definitive Feasibility Study
commenced February 2021. The Company’s cornerstone suite of projects in Namibia is situated within
a top-ranked African mining destination in a jurisdiction that has a long, well-regarded history of safely
and effectively developing and regulating its considerable uranium mining industry.
ABN 97 006 391 948
Unit 17, Spectrum Building
100–104 Railway Road
Subiaco, Western Australia 6008
PO Box 1770
Subiaco, Western Australia 6904
DYL: ASX & NSX (Namibia)
DYLLF: OTCQX
www.deepyellow.com.au
@deepyellowltd
deep-yellow-limited
CORPORATE DIRECTORY
BOARD OF DIRECTORS
REGISTERED OFFICE
Mr Chris Salisbury
Chairman (Non-executive)
Unit 17, Spectrum Building, Second Floor
Mr John Borshoff
Managing Director/CEO *
100-104 Railway Road
Ms Gillian Swaby
Executive Director
Mr Rudolf Brunovs
Non-executive Director
Mr Mervyn Greene
Non-executive Director
Mr Justin Reid
Non-executive Director
Mr Christophe Urtel
Non-executive Director
* referred to as Managing Director throughout this report
COMPANY SECRETARY
Mr Mark Pitts
Subiaco, Western Australia, 6008
Telephone: + 61 8 9286 6999
Email: info@deepyellow.com.au
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
Project Description and Review
Sustainability
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
13
14
15
22
34
35
39
72
73
78
80
D e e p Y e l l o w L i m i t e d
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SUMMARY INFORMATION
COMPANY PROFILE
Deep Yellow Limited (Deep Yellow) is a differentiated, advanced uranium exploration company, in pre-development phase,
implementing a contrarian strategy to grow shareholder wealth. This strategy is founded upon growing the existing uranium
resources across the Company’s uranium projects in Namibia and the pursuit of accretive, counter-cyclical acquisitions to
build a global, geographically diverse asset portfolio. A Pre-Feasibility Study was completed in early 2021 on its Tumas
Project in Namibia and a Definitive Feasibility Study commenced February 2021. The Company’s cornerstone suite of
projects in Namibia is situated within a top-ranked African mining destination in a jurisdiction that has a long, well-regarded
history of safely and effectively developing and regulating its considerable uranium mining industry.
The long-term outlook for uranium is very positive underpinned by the integral role nuclear power will need to play in meeting
clean energy targets and overcoming a supply shortage. 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 the
move by many countries now adopting zero emission targets to be met by 2050.
Deep Yellow is focused on becoming a tier-one uranium producer by establishing a multi-project, globally diversified uranium
portfolio and 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 set a new direction
built around a unique, counter-cyclical strategy focused on organic and inorganic growth to deliver a 5-10Mlb annually 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 nearly quadrupled the resource base at the Reptile Project, at an extremely low discovery cost
of 9.4c/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.
To service the Company’s growth strategy, Deep Yellow has assembled a highly credible, proven 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.
HIGHLIGHTS OF THE 2021 FINANCIAL YEAR
•
•
•
•
•
•
Tumas DFS focussed on evaluation of a 20+ year LOM commenced in March after a successful PFS completed in
February 2021, evaluating viability of palaeochannel-related Langer Heinrich-style deposits.
Tumas PFS incorporated uranium resources from only a portion of the available Inferred Resources on Tumas 1, 2
and 3 ore bodies producing positive economics for a 11.5-year LOM.
Infill resource upgrade drilling in support of the expanded DFS completed at Tumas 1 East (Tumas 1E) and Tumas 3
deposits with impressive conversion from Inferred to Indicated Resource JORC 2012 category giving confidence that
this will achieve sufficient Ore Reserves to satisfy a 20+ year LOM at a production rate of circa 3Mlb pa.
JOGMEC completed A$4.5M earn-in obligation in September 2020 with drilling identifying a prospect of significance
at Barking Gecko, a basement alaskite associated Husab/Rössing-style target. All Nova JV partners are now
contributing, and follow-up drilling continues to return positive results.
Completion of a successful capital raising program in July 2021, involving both a placement and Share Purchase Plan.
This raised A$42M to support advancement of the feasibility studies on the Reptile Project and M&A activities.
The Company successfully carried out its activities despite the uncertainties and volatility caused by the COVID-19
pandemic. The adoption of a strict regimen of health and hygiene practices and social distancing enabled workstreams
to be undertaken to safeguard the Company’s key assets while protecting the wellbeing of staff.
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
Despite the challenges of Covid and the uranium price remaining at a low level, Deep Yellow has
made excellent progress on creating value, and remains focused on its long-term strategy.
Starting first with Health and Safety. Despite the pandemic continuing to disrupt society and
business globally, I am pleased to report that the company continued to make progress. Our
employees, especially those based in Namibia, applied strict health controls to all aspects of their
work, protecting their health whilst ensuring all business activities progressed, on the whole, to
schedule. Electronic communication replaced face to face engagement between Australia and
Namibia, which again allowed normal business progression.
On safety, I was also pleased to see that all on the ground exploration and other project activities
were achieved with no recordable injuries. This is attributable to our health and safety systems
and the strong safety culture of our extended teams.
Deep Yellow’s credentials in Environment Social and Governance (ESG) were recognised
externally in September 2021, when the Company was awarded Emerging ESG Leader by the
Australia Africa Minerals and Energy Group (AAMEG).
Your Company remained focused on the three strategic levers for value creation
•
•
•
further exploration of the Namibian mineral leases
progressing engineering studies on the Tumas Project
inorganic growth through merger and acquisition
Excellent results were achieved in exploration. Infill resource drilling at Tumas 1E and Tumas 3 deposits exceeded
expectations, which will ensure sufficient reserves will be available to support a twenty-year plus mine life. The joint venture
with JOGMEC at Barking Gecko was also very positive with initial drilling identifying a prospect of significance.
The DFS on the Tumas Project commenced following the earlier PFS study completed in February 2021. The study work,
along with environmental and other work, is all progressing to schedule.
Finally, on merger and acquisitions, a dedicated senior executive has been recruited to the role of business development and
a strategy refresh has been completed. This strategic lever will be a major focus in FY2022.
The long-term outlook remains very positive - the ramping of clean energy targets globally will mean that nuclear power will
play an even more important part in meeting the worlds future energy demand.
I was pleased to be asked to Chair the Board of your Company and I want to ensure all shareholders that the board and
management team remain focused on continuing to grow shareholder value in the years ahead. On behalf of the Board, I
would like to acknowledge Rudolf’s contribution in his role as Chair and thank him for his service in that role.
Finally, I would like to thank John Borshoff for his leadership and the efforts of the team he is building in anticipation of the
growth of the Company.
Chris Salisbury
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
Activities for the full year to 30 June 2021 continued advancing the Company’s Namibian Projects including the completion
of the Tumas Pre-Feasibility Study (PFS) and the commencement of the Definitive Feasibility Study (DFS), together with
continued M&A efforts.
REPTILE PROJECT, NAMIBIA (EPLs 3496, 3497) – 95% DEEP YELLOW
In total 1,072 RC holes were drilled for 21,467m over the year. The drill programs at Tumas 3 were aimed to infill previous
drilling in order to provide indicated resource status in support of the PFS and DFS.
Additional exploration drilling was focused on the Tubas calcrete deposit, about 10km west of Tumas 3. The drilling confirmed
the wide-spaced historical drilling data and provided additional information to plan further drilling to determine the potential
for future resource enhancements in this area.
Only 60% of the 125km of highly prospective palaeochannels have been sufficiently explored over the past four years with
approximately 55km of this palaeochannel system, which deepens to the west, remaining to be tested.
Tumas Resource Upgrade
An updated Mineral Resource Estimate (MRE) for the Tumas 1, 2, 3 and 1E deposits, located within the Reptile Project, was
completed during the year. The update was required due to the Ore Reserve estimate indicating that the production costs of
the Project were trending lower than previously assumed and that the marginal cut-off grade for reserve estimation, using the
Measured and Indicated Resources, could be decreased to 100ppm eU3O8 from the 200ppm previously used.
The Company, based on previous results, was confident that with further resource upgrade drilling, sufficient Inferred
Resources would be converted to Indicated Resources to allow Ore Reserves sufficient for a +20-year mine life to be defined.
Subsequent to end of June 2021, all DFS reserve infill drilling was completed, and an updated Mineral Resource Estimate
was released featuring increased Indicated Resources for Tumas 1E and Tumas 3 deposits. The updated resource numbers,
as announced 2 September 2021, are set out in Table 2.
The JORC table set out in the Annual Mineral Resource and Ore Reserve Statement summarises all JORC resources current
as at the date of this report and as announced on 2 September 2021.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
PROJECT DESCRIPTION AND REVIEW
Figure 1: Namibian locality map showing position of the Tumas Project.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
PROJECT DESCRIPTION AND REVIEW
TUMAS PRE-FEASIBILITY STUDY
The PFS, which commenced in February 2020 on the Tumas Project, was completed in January 2021 with positive outcomes.
The Tumas PFS delivered encouraging results, based around a strategically located 3Mlb per annum process facility to mine
deposits similar to those processed at the nearby Langer Heinrich mining operation. The PFS confirmed the technical and
commercial viability of the development concept assumed in the preceding Scoping Study, completed in January 2020. Key
results include:
-
-
-
-
-
-
11.5 years Life of Mine (LOM)
post tax, ungeared NPV8.6 of US$208M (A$277M) and US$223M 50% geared (A$297M)
2.5Mlb U3O8 pa average LOM production
post tax, real, ungeared IRR 21.2% and 28.9% 50% geared
C1 Costs US$27.18/lb after biproduct vanadium credit
total initial CAPEX US$98M per 1Mlb design capacity
The reserves detailed in the maiden Ore Reserve (OR) statement are a product of the work completed as part of the PFS
(Table 1). The OR states 40Mt of ore at an average grade of 344ppm U3O8 containing 31Mlb U3O8 of Probable Reserves
which is sufficient for + 11 years mine life.
Table 1 – Tumas Ore Reserve.
Probable Reserves
Tumas 1 & 2
Tumas 3
Total
U3O8 Cut-off
ppm
150
150
150
Tonnes
Mt
13.9
26.9
40.9
U3O8
ppm
292
371
344
U3O8 Metal
Mlb
9.0
22.0
31.0
The PFS utilises only 50% of the total Mineral Resources available on Tumas giving upside to the eventual project that is
expected to be identified in the forthcoming DFS.
The Company, based on previous results, was confident that with further resource upgrade drilling, sufficient Inferred
Resources would be converted to Indicated Resources to allow Ore Reserves sufficient for a +20-year mine life to be defined.
Subsequent to end of June 2021, all DFS reserve infill drilling was completed, and an updated Mineral Resource Estimate
was released featuring increased Indicated Resources for Tumas 1E and Tumas 3 deposits. The updated resource numbers,
as announced 2 September 2021, are set out in Table 2 below.
The JORC table set out further in this Review summarises all JORC resources current as at the date of this report and as
announced on 2 September 2021.
Table 2 – Tumas 1, 1E, 2 and 3 - JORC 2012 MRE - Indicated and Inferred Mineral Resources at various cut-off grades.
Tonnes
Tonnes
Cut-off
200
150
100
200
150
100
200
150
100
200
150
100
Deposit
Tumas 1E
Tumas 1
Tumas 2
Tumas 3
M
22.35
31.25
36.27
11.84
19.70
33.76
4.85
8.69
20.33
45.32
63.17
77.99
Indicated
Grade
ppm
298
263
245
343
275
212
367
281
189
440
364
320
Metal
M lb
14.69
18.14
19.56
8.96
11.95
15.76
3.92
5.38
8.47
43.91
50.76
54.94
M
10.13
16.53
19.42
0.71
1.15
2.09
0.06
0.13
0.39
3.51
6.25
10.36
Inferred
Grade
ppm
265
231
216
357
286
212
350
262
166
364
280
219
Metal
M lb
5.92
8.40
9.23
0.56
0.73
0.98
0.05
0.07
0.14
2.81
3.85
4.99
Note: 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.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
PROJECT DESCRIPTION AND REVIEW
Figure 2: Tumas Project showing DFS area, orebodies and relationship to MLA 237.
Tumas Definitive Feasibility Study
The DFS has commenced and is progressing well, further evaluating the economic feasibility of mining the calcrete-associated
uranium deposits located within the Tumas palaeochannel, (see Figure 2).
The Company appointed Ausenco Services Pty Ltd (Ausenco) to provide relevant assistance to the Company during the
early works phase of the DFS, maintaining the association developed between Ausenco and Deep Yellow during the PFS.
The Company expects that the DFS will define a project of similar CAPEX and OPEX to the PFS, but with at least 20-years’
operating life. In achieving this anticipated outcome, the DFS will consider the Ore Reserves available to the Project following
completion of the resource upgrade drilling program and will include the Tumas 1, Tumas 1E, Tumas 2 and Tumas 3 orebodies
as depicted in Figure 2.
The Company has successfully lodged and supplied all the necessary documentation for a Mining Licence Application (MLA)
for the Tumas Project. The successful and positive Tumas PFS is being used as the key foundation document for the MLA,
outlining the technical and commercial viability of the Project within the development paradigm assumed by the Company.
The DFS work program to date and for the rest of 2021 is focussed on completion of the optimisation and trade-off studies
recommended in the PFS, additional metallurgical testwork and any further work required as part of the MLA or Environmental
Impact Assessment (EIA) programs.
The DFS remains on track for completion in the December quarter 2022. The Company is focused on progressing Tumas
towards a development decision, in preparation for the anticipated uranium price increase expected around this time.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
PROJECT DESCRIPTION AND REVIEW
EIA Progress
The Company continues to work with its expert advisers and sub-consultants on the tasks required to complete the EIA
process for the Tumas Project.
Despite the restrictions caused by COVID-19, the initial and final consultations with Interested and Affected Parties (IAPs),
as required by the Namibian EIA regulations, was completed successfully and the draft EIA Scoping Report was released for
review by the IAPs. The EIA Scoping Report was subsequently finalised and submitted post quarter on 15 July to the required
Namibian Government agencies.
NOVA JOINT VENTURE (EPLS 3669, 3670) – 39.5% DEEP YELLOW
JOGMEC completed its A$4.5M earn-in obligation in the Nova Joint Venture (NJV) during September 2020.
The equity position of the parties in the NJV post earn is as follows:
Reptile Mineral Resources & Exploration (Pty) Ltd
Subsidiary of Deep Yellow Limited
39.5% (and Manager)
Japanese Oil, Gas and Metals National Corporation (JOGMEC)
39.5% (right to equity)
Nova Energy (Africa) Pty Ltd (Subsidiary of Toro Energy Ltd)
15%
Sixzone Investments (Pty) Ltd
Namibia
6% (carried interest)
The follow-up drill program being carried out post the JOGMEC earn-in is being funded by all joint venture partners on a pro-
rata basis.
The early results are confirming the prospectivity for alaskite-type basement deposits similar to Rössing and Husab uranium
deposits at the 4km by 1km Barking Gecko prospect. Two drill programs delineated a highly prospective target at Barking
Gecko (see Figure 1) with thick 17m to 27m zones of uranium mineralisation intersected.
Drilling showed that the north-westerly trend does not extend over more than 200m. However, the possibility of a swarm of
north-westerly trending dykes within an east-west trending 200 to 300m wide corridor extending 1.5km to the East, where
there is no outcrop, is still a material possibility.
DEEP YELLOW GROWTH STRATEGY
The Deep Yellow strategic growth plan is focused on establishing the Company as a low-cost, tier-one global uranium
platform. The dual-pillar strategy has been developed to deliver organic and inorganic growth through firstly, advancing the
development of its Namibian projects and secondly, via sector consolidation, to acquire additional projects through merger
and acquisition. This utilises the strong uranium project development, operational and corporate capabilities and proven track
record of the Deep Yellow management team.
The Company remains well-funded to continue the execution of this strategy over the next 12 months.
ANNUAL MINERAL RESOURCE AND ORE RESERVE STATEMENT
The Mineral Resource estimate and Ore Reserve tables shown in Tables 3 and 4 incorporate a number of positive changes
during the year including:
-
-
-
the completion of the Tumas Project PFS and maiden Ore Reserve (February 2021);
a significant upgrade to Tumas 3 from Mineral Resource infill drilling (July 2021); and
a maiden Indicated Mineral Resource at Tumas 1E (September 2021).
The results achieved to date vindicate the modelling and planning carried out by the geological team and auger well for the
DFS currently on foot.
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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2 0 2 1 A n n u a l R e p o r t
PROJECT DESCRIPTION AND REVIEW
Table 3 - Mineral Resource Estimate – Current as at 2 September 2021
Deposit
Category
(ppm
U3O8)
BASEMENT MINERALISATION
(M)
(ppm)
(t)
(Mlb)
Measured
Indicated
Inferred
Cut-off
Tonnes
U3O8
U3O8
U3O8
Resource Categories (Mlb U3O8)
INCA Deposit ♦
INCA Deposit ♦
Ongolo Deposit #
Ongolo Deposit #
Ongolo Deposit #
MS7 Deposit #
MS7 Deposit #
MS7 Deposit #
Omahola Project Sub-Total
Omahola Project - JORC 2004
Indicated
Inferred
Measured
Indicated
Inferred
Measured
Indicated
Inferred
250
250
250
250
250
250
250
250
7.0
5.4
7.7
9.5
12.4
4.4
1.0
1.3
48.7
CALCRETE MINERALISATION Tumas 3 Deposit - JORC 2012
78.0
Tumas 3 Deposits ♦
Indicated
100
Tumas 3 Deposits Total
Inferred
100
10.4
88.3
Tumas 1 & 2 Project – JORC 2012
Tumas 1 & 2 Deposit ♦ Indicated
Tumas 1 & 2 Deposit ♦ Inferred
Tumas 1 & 2 Project Total
100
100
54.1
2.4
56.5
Tumas 1E Project – JORC 2012
Tumas 1E Deposit ♦ Indicated
Tumas 1E Deposit ♦ Inferred
Tumas 1E Deposit Total
Sub-Total of Tumas 1, 2 and 3
100
100
36.3
19.4
55.7
200.6
Tubas Red Sand Project - JORC 2012
Tubas Sand Deposit #
Tubas Sand Deposit #
Tubas Red Sand Project Total
Indicated
Inferred
100
100
10.0
24.0
34.0
Tubas Calcrete Deposit
Tubas Calcrete Total
Tubas Calcrete Resource - JORC 2004
Inferred
100
7.4
Aussinanis Project - JORC 2004
7.4
Aussinanis Deposit ♦
Aussinanis Deposit ♦
Indicated
Inferred
150
150
Aussinanis Project Total
Calcrete Projects Sub-Total
GRAND TOTAL RESOURCES
5.6
29.0
34.6
276.6
325.3
470
520
395
372
387
441
433
449
420
320
219
308
203
206
203
245
216
235
258
187
163
170
374
374
222
240
237
248
273
3,300
2,800
3,000
3,500
4,800
2,000
400
600
20,400
24,900
2,265
27,170
10,987
503
11,499
8,873
4,189
13,061
51,736
1,900
3,900
5,800
2,800
2,800
1,200
7,000
8,200
7.2
6.2
6.7
7.8
10.6
4.3
1
1.3
45.1
54.9
5.0
59.9
24.2
1.1
25.3
19.6
9.2
28.8
114.1
4.1
8.6
12.7
6.1
6.1
2.7
15.3
18.0
68,536
150.9
-
-
6.7
-
-
4.3
-
-
11.0
-
-
-
-
-
-
-
-
-
88,936
196.0
11.0
7.2
-
-
7.8
-
-
1
-
16.0
54.9
-
24.2
-
19.6
4.1
-
-
6.2
-
-
10.6
-
-
1.3
18.1
-
5.0
-
1.1
9.2
-
8.6
-
6.1
2.7
-
105.5
121.5
-
15.3
45.3
63.4
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.
Where eU3O8 values are reported it relates to values attained from radiometrically logging boreholes.
Gamma probes were originally 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.
Sensitivity checks are conducted by periodic re-logging of a test hole to confirm operations.
During drilling, probes are checked daily against standard source.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
PROJECT DESCRIPTION AND REVIEW
Table 4 – Tumas Ore Reserve (February 2021)
Probable Reserves
Tumas 1 & 2
Tumas 3
Total
U3O8 Cut-off
ppm
150
150
150
Tonnes
Mt
13.9
26.9
40.9
U3O8
ppm
292
371
344
U3O8 Metal
Mlb
9.0
22.0
31.0
Review of Material Changes
The total Mineral Resources (MRE) summarised in Table 3 are as at 2 September 2021 and comprise 325Mt at 273ppm for
196Mlb of U3O8. up from 315Mt at 261ppm for 185Mlb of U3O8 at 30 June 2021 and 233Mt at 310ppm for 159.3Mlb of U3O8
at 30 June 2020.
The material changes occurred on completion of the PFS (as announced in February 2021) and subsequently on completing
upgrades to both Tumas 3 (July 2021) and Tumas 1E (September 2021).
As outlined the Tumas PFS delivered encouraging results including the Company’s maiden Ore Reserve as shown at Table
4. The PFS confirmed costs of the Project were trending lower than previously assumed and that the marginal cut-off grade
for reserve estimation, using the Measured and Indicated Resources, could be decreased to 100ppm eU3O8 from the 200ppm
previously used.
The lower cut-off encouraged the team to review the MREs for both Tumas 3 and Tumas 1E which, together with additional
infill drilling, both yielded substantial increases in classification from inferred to indicated. These increases were advised to
the market in July 2021 for Tumas 3 and September 2021 for Tumas 1E.
Table 5 – Change in MRE for Tumas 3 (July 2021) and Tumas 1E (September 2021)
TUMAS 3
**Previous
MRE
Updated
MRE
CLASS
Indicated
Inferred
Total
M tonnes
43.18
39.58
82.76
Grade
ppm
299
245
273
Mlb
M tonnes
28.43
77.89
21.35
10.36
49.78
88.35
Grade
ppm
320
219
308
TUMAS 1 EAST
**Previous
MRE
Updated
MRE
CLASS
Indicated
Inferred
Total
M tonnes
-
51.47
51.47
Grade
ppm
-
253
253
Mlb
M tonnes
-
36.27
28.71
19.42
28.71
55.69
Grade
ppm
245
216
235
Mlb
54.94
4.99
59.93
Mlb
19.56
9.23
28.80
** Previous MRE as shown is at 30 June 2020
Material changes from the prior year are as shown above.
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PROJECT DESCRIPTION AND REVIEW
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 Persons’ 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 and Ore Reserve
The information in this Report including the Annual Mineral Resource and Ore Reserve 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 David Princep who is a Fellow and Chartered Professional of the AusIMM and Mr Eduard Becker
who is a member of the AusIMM, respectively. Mr Hirsch is the Manager for Resources and Pre-Development for Reptile
Mineral Resources (Pty) Ltd, Mr Princep is an independent consultant and Mr Becker is Head of Exploration/Resources
Development for Deep Yellow. Messr’s Hirsch, Princep and Becker have sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to the activity which they are 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). Messrs Hirsch, Princep and Becker consent to the inclusion in this report of the matters
based on their 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 Mr 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
regarding the Tumas PFS and Tumas DFS 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 in 2020 providing the foundation of
activities as the Group develops. This provides 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.
The 2021 Sustainability Report will become available on our website. This builds on our
maiden 2020 report and provides greater depth with the past year seeing the
commencement of a Definitive Feasibility Study on the Namibian Tumas Project together
with the associated Environmental Impact Assessment and lodgement of the Mining
Licence application shortly after year-end.
Details on Safety and Health are also covered in the Sustainability Report. Pleasingly
the Company won two awards: Chamber of Mines - Inter-Mining Competition Award for
safe operations in 2020 and the AAMEG Emerging ESG Leader Award 2021.
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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 2021 and approved by the Board on 22 September 2021, 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 2021 (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 unless stated otherwise.
Names, qualifications, experience and special responsibilities
Chris Salisbury B.Eng, FAICD
Non-executive Chair (appointed 12 May 2021)
Mr Salisbury is a highly experienced mining executive, with over 30 years of global experience across senior strategic and
operational roles for the Rio Tinto Group. He is a qualified metallurgical engineer and Fellow of the Australian Institute of
Company Directors. He brings extensive uranium experience having led operating companies in Australia and in Namibia.
He was Chief Executive of Energy Resources Australia (ERA) between 2004-2008, a significant global uranium business and
during his time an ASX 100 company. Mr Salisbury also served as Non-Executive Director of ERA. From 2011-2013 Mr
Salisbury was Managing Director/Head of Country for Rio Tinto’s Rössing Uranium Mine and was based in Swakopmund
Namibia. During his long career with Rio Tinto, Mr Salisbury also held executive roles across a diverse range of commodities
including Chief Operating Officer – Pacific Bauxite and Alumina (2008-11), Chief Operating Officer – Rio Tinto Coal (2013-
16) and most recently Chief Executive – Iron Ore (2016-20).
Mr Salisbury is recognised as a transformational leader delivering significant improvements across safety, productivity and
culture. He has board experience beyond ERA including chair of the Robe River Mining joint venture, director of the Minerals
Council of Australia and Australia Japan Business Cooperation Committee and was director of a number of non-listed Rio
Tinto entities and joint ventures.
Mr Salisbury is the Chair of the Remuneration Committee (appointed 1 June 2021).
During the past three years Mr Salisbury has also served as a Director of the following listed companies:
BCI Minerals Limited - appointed 28 May 2021*
John Borshoff BSc, FAusIMM, FAICD
Managing Director/CEO
Mr Borshoff joined the Deep Yellow Board in 2016. He 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$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) and
sits on the Council of the Namibian Chamber of Mines.
Mr Borshoff serves on the Risk Committee
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DIRECTORS’ REPORT
(continued)
Gillian Swaby BBus, FCIS, FAICD, AAusIMM
Executive Director
Ms Swaby joined the Deep Yellow Board in 2005 as Non-executive director and became an Executive director in 2016. She
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, 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.
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 *
Firefinch Limited (formerly Birimian Limited) – appointed 26 April 2017; resigned 13 November 2018.
Rudolf Brunovs MBA, FCA, FAICD
Non-executive Director
Mr Brunovs joined the Deep Yellow Board in 2007. He is a highly experienced 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 is the Chair of the Audit Committee.
Mervyn Greene MA (Maths), BAI (Engineering), MBA
Non-executive Director
Mr Greene joined the Deep Yellow Board in November 2006 and was Chairman from August 2007 to August 2013. He 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, specialising in fin-tech, construction, general technology and property. He currently serves as co-founder and
Director of EPIC, The Irish Emigration Museum and is co-founder and Chairman of Dogpatch Labs, Ireland’s leading tech
start-up hub and recently became the Chairman of the NDRC, the Irish government’s national tech start-up accelerator. He
leads, as managing director, both CHQ Dublin Limited and MGR Properties, specialised Irish property development
companies. All these businesses are located in Dublin, Ireland.
From 1997 – 2005 Mr Greene was co-founder and 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 serves on the Audit Committee and Remuneration Committee.
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DIRECTORS’ REPORT
(continued)
Christophe Urtel MSc, BSc
Non-executive Director
Mr Urtel joined the Deep Yellow Board in October 2012. He has over 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.
Justin Reid BSc, MSc, MBA
Non-executive Director
Mr Reid joined the Deep Yellow Board in 2016. He 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 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 serves on the Audit Committee and Remuneration Committee and is Chair of the Risk Committee.
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
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
Chris Salisbury
John Borshoff
Gillian Swaby
Rudolf Brunovs
Mervyn Greene
Justin Reid
Christophe Urtel
Number of Ordinary
Shares
Number of Options over
Ordinary Shares *
-
12,297,037
8,131,445
484,370
2,778,336
-
-
-
-
-
150,064
150,064
150,064
57,471
*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; and
27 November 2020 with a 1 July 2021 vest date and 1 July 2025 expiry date
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)
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 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 PFS and commencement of a DFS on its Tumas Project (part of the Reptile Project).
Continuation of an Environmental Impact Assessment (EIA) and Environmental Management Plan required for the
grant of an Environmental Clearance Certificate by the Ministry of Environment, Forestry and Tourism (MEFT)
Preparation of a Mining Licence application for submission to the Namibian Ministry of Mines and Energy (MME)
Exploration activities on the Nova JV Project adjacent to the Reptile Project in Namibia.
Evaluating uranium projects for growth opportunities.
Other than the foregoing, there has been no significant changes in the nature of activities during the year.
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 4 to 12.
Operating Results for the Year
The Group’s net loss after income tax for the financial year is $4,787,324 (2020: profit $2,874,863).
Financial Position
At the end of the financial year the Group had $52,448,274 (2020: $12,116,972) in cash and at-call deposits. Capitalised
mineral exploration and evaluation expenditure carried forward was $43,420,220 (2020: $35,415,745).
The Group has net assets of $96,295,744 (2020: $47,919,615).
COVID-19
From the onset of the COVID-19 pandemic the Group reacted promptly by conducting a full review of its activities commencing
March 2020 to minimise chances of infection. The focus was on adjusting workstreams to safeguard against the growing
uncertainty and volatility. The reduction in productivity brought about a change in remuneration for the financial year for
Directors, employees and consultants for the period 1 July 2020 to 31 December 2020 as detailed in the Remuneration
Report. Remuneration returned to pre-COVID-19 level with effect from 1 January 2021.
Due largely to the strict health protocols adopted, the pandemic had minimal impact on the Group’s operations in Namibia.
The mining and related industries were declared as critical services during periods of lockdown. Management foresaw the
likely 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. These protocols and procedures are reviewed and updated regularly in line with
the latest guidance as published by the Ministries of Health and/or other experts in the countries where the Group operates.
D e e p Y e l l o w L i m i t e d
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DIRECTORS’ REPORT
(continued)
The COVID-19 pandemic has had little impact during the financial year on:
•
•
•
the recognition and/or measurement of the value of the Group’s assets and liabilities;
disclosures relating to estimation uncertainty, key assumptions and sensitivity analysis and/or underlying drivers of
results, business strategies, risks and future prospects; and/or
going concern assessments and solvency or subsequent events
The Group has received cash flow boosts (Australian Government COVID-relief) with the initial boost payment equivalent to
the amount of monthly tax withheld from wages paid to employees for period March to June 2020 up to a maximum of $50,000.
An additional cash flow boost to the value of 100% of the initial cash flow boost was paid equally over four months for the
period June to September 2020. Refer Note 7(a) for details.
Travel restrictions have impacted the Group, however this was overcome to a large extent by technology. Improved intergroup
conference and on-line communication facilities reduced any negative impact that travel restrictions could have had. Although
the COVID-19 pandemic had a general and world-wide impact on supply chains, the impact on the Group has been minimal
to this stage, however with the situation continuing this could have an increased impact.
Although in limited supply, COVID-19 vaccines were available in all jurisdictions with take-up rate by all employees,
consultants and Directors slowly increasing.
Even with the COVID-19 pandemic prevailing, the Group raised $42,799,690 during February and March 2021 strengthening
its cash position to $52,448,274 at 30 June 2021.
The uranium spot price, apart from one appreciable up-tick, has stayed almost unchanged during the COVID-19 pandemic
being US$33.25 on 30 April 2020, US$32.80 at 30 June 2020 and US$32.25 at 30 June 2021.
The Namibian Dollar (NAD), pegged to the South African Rand (ZAR), has continued to weaken against the AU$ during the
COVID-19 pandemic. This provided the Group with stronger buying power at its operations in Namibia during the financial
year. Commencing during the June 2021 quarter, the exchange rate is recovering to pre-COVID-19 levels.
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 quadrupled the resource base at the Reptile Project, at a very 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,
Deep Yellow is well placed to provide uranium supply security and certainty into a growing market.
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 2021 and the date of this report other than the following:
3,830,646 options have been exercised since 30 June 2021 and up to 21 September 2021 for a total value of $1,915,323. At
21 September 2021 there were 47,708,171 unissued ordinary shares under option. This includes 507,663 Options
outstanding for Key Management Personnel (KMP) for which further details can be found in the Remuneration 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
in the interest of the environmental protection, as imposed by the relevant authorities.
The Group is in the process of undertaking an EIA in connection with the current Tumas Mining Licence Application.
There have been no known breaches of the Group’s EPL conditions or any environmental regulations to which it is subject.
Share Options
Granted
During the financial year and up to the date of this report, 229,884 options have been issued to Key Management Personnel
(KMP) as part of their remuneration. Refer to Table 1(e) in the Remuneration report for further details of the options issued.
Unissued shares
As at the date of this report, there were 51,465,190 unissued ordinary shares under option (51,538,817 at 30 June 2021 - the
reporting date) for which further details can be found in the ASX Additional Information. This includes 507,663 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
During the financial year, 11,526,057 Options have been exercised to acquire fully paid ordinary shares in the Company at a
weighted average exercise price of 50 cents per share.
Performance Rights
As at the date of this report, there were 775,809 Performance Rights outstanding (775,809 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 Rights’ 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, 911,728 shares have been issued at a weighted average issue price of 28.82 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.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
DIRECTORS’ REPORT
(continued)
Non-audit Services and Auditor’s Independence Declaration
The following non-audit services were provided by the Group’s auditor, Ernst & Young Australia. The Directors are satisfied
that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence
was not compromised.
Ernst & Young Australia received or are due to receive the following amounts for the provision of non-audit services:
Tax advisory services
A$
15,984
A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act is set out on
page 34.
Directors’ Meetings
The number of meetings of Directors (including meetings of Committees of Directors) held during the year ended
30 June 2021, whilst each Director was in office, and the number of meetings attended by each Director was:
Directors’ meetings
Board
Eligible Attended
14
Audit
Meetings of Committees
Remuneration
Risk
Eligible
Attended
Eligible
Attended
Eligible
Attended
2
4
1
2
14
14
14
14
14
14
2
14
14
14
14
14
14
-
-
-
2
2
2
-
-
-
-
2
2
1
-
1
-
-
-
4
3
3
1
-
-
-
4
3
3
-
1
1
-
-
1
-
-
1
1
-
-
1
-
Number of meetings held:
Number of meetings eligible
and attended:
Chris Salisbury
John Borshoff
Gillian Swaby
Rudolf Brunovs
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
Chris Salisbury (c)
Mervyn Greene
Risk
Justin Reid (c)
John Borshoff
Gillian Swaby
Notes
(c) designates the Chair of the Committee
D e e p Y e l l o w L i m i t e d
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REMUNERATION REPORT
(Audited)
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 FY21
Remuneration governance
Non-executive Director (NED) fee arrangements
Statutory and share-based reporting
(a)
(b)
(c)
(d)
Actual remuneration paid to KMP in FY21
Executive remuneration for FY20 and FY21
NED remuneration for FY20 and FY21
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 2021 (FY21). 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 FY21.
Name
Position
Term as KMP
Executive Director
John Borshoff
Gillian Swaby
Non-executive Directors (NEDs)
Chris Salisbury
Rudolf Brunovs
Mervyn Greene
Justin Reid
Christophe Urtel
Managing Director (MD) / Chief Executive Officer (CEO)
Executive Director
Full financial year
Full financial year
Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Apppointed12 May 2021
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:
∗
∗
∗
∗
Reasonable and fair: provide a fair level of reward to all employees, taking into account the Group’s legal and
industrial obligations, labour market conditions, relativity to the scale of the business and peer group comparison;
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 and behaviours 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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REMUNERATION REPORT
(Audited)
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 comparator companies based on criteria which may include stage of development,
market capitalisation, comparable sector and geography 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 FY21:
Managing Director
Fixed remuneration
Service fee
Variable remuneration
Executive Director
Fixed remuneration
Service fee
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
31% non-financial
69% 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
30% non-financial
70% financial performance
*based on the value expensed during FY21 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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2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
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 and incentivises the achievement of
annual objectives and sustained business value. It is delivered in cash and/or deferred into Loan Plan Shares and reflects
“pay for performance” as summarised below.
How is it paid?
Managing Director
Following
the assessment of annual
performance, approximately 32% of STI is
delivered as cash and 68% as previously
issued Loan Plan Shares of which a third
vest
remainder
continue with a two-year deferral period
over which it vests equally.
immediately and
the
Executive Director
100% of STI deferred into Loan Plan
Shares vesting equally over two years
The Loan Plan Shares rewards and incentivises the participants through an arrangement
where shares are offered subject to the achievement of annual objectives and time-based
vesting conditions.
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 5 years 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.
The deferred component was introduced in FY19 to align with Australian market practice.
How much can be earned? A maximum STI opportunity of 77% of
annual service fee can be earned as
follows:
∗
∗
25% Cash
52% Deferred into Loan Plan Shares
A maximum STI opportunity of 30% of
annual service fee can be earned as
Deferred Loan Plan Shares vesting equally
over two years.
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:
∗
Proactively considering whether discretion needs to be exercised due to the
continued 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.
∗
∗
∗
D e e p Y e l l o w L i m i t e d
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REMUNERATION REPORT
(Audited)
REMUNERATION REPORT (AUDITED) (continued)
Executive Director
Only service milestones are applicable to
encourage retention of talented individuals,
with their performance aligned with the
Managing Director’s KPIs.
Remuneration
Committee
The
recommends for Board approval number of
deferred Loan Plan Shares vesting equally
over two years
This is usually done prior to the Annual
General Meeting whereby shareholder
approval is sought for the grant of Loan
Plan Shares.
How is performance
measured?
When is it paid?
Managing Director
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 recognise and reward 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 –
Project Portfolio
ii) Organic – Mineral Resources
and Feasibility studies
∗
∗
Capital resources
Succession planning - quality
management team and adequate
staff
At the start of the financial year, the
Remuneration Committee recommends for
Board approval
the maximum STI
opportunity consisting of a grant of Loan
Plan Shares and Cash component
available for payment at the end of the
financial year.
the
the end of
At
financial year the
Remuneration Committee recommends for
Board approval the amount of Cash to be
paid and number of Loan Plan Shares to
vest. A third of the recommended Loan Plan
Shares vest immediately and the remainder
continues with a two-year deferral period
vests equally. The
over which
recommendation is made following a review
of performance over the financial year
against the STI performance measures.
it
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
What happens if an
executive leaves?
What happens if there is a
change of control?
Are executives eligible for
dividends?
The Loan Plan Shares have a three-year
deferral period over which it vests equally.
The Loan Plan Shares have a two-year
deferral period over which it vests equally.
Where an Executive ceases to provide 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.
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.
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.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
REMUNERATION REPORT (AUDITED) (continued)
Long Term Incentive
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 and is therefore linked partly to shareholder returns and
reflects “pay for results” opposed to “pay for performance” as is the case with short term incentives. The incentives are
summarised below.
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 120% 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:
How is performance
measured?
∗ non-market (time-based) – 37%
∗ market (price target) – 83%
∗ non-market (time-based) – 29%
∗ market (price target) – 66%
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 contain both share price target and time-based vesting conditions.
These conditions are chosen as it reflects an appropriate balance between individual
reward and market performance. Those awards with time-based vesting conditions are
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 November 2020 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 to provide 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. The divested shares are treated as full consideration for the repayment of
the loan.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
REMUNERATION REPORT (AUDITED) (continued)
What happens if there is a
change of control?
Are executives eligible for
dividends?
Managing Director
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.
Executive Director
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 FY21.
3. Group Performance and Executive Remuneration Outcomes for FY21
Actual Remuneration Paid
The actual remuneration paid to KMP in FY21 is set out in section 7 below. This provides shareholders with a view of the
remuneration actually paid to KMP for performance in FY21 and the value of STIs, LTIs and other equity-based instruments
that vested during the period.
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.
Share price
U3O8 spot price (US$/lb)
(Loss)/Profit per share
30 June 2021
Cents
71.0
32.25
(1.74)
30 June 2020
Cents
20.5
32.80
1.19
30 June 2019
Cents*
32.0
24.60
(1.98)
30 June 2018
Cents
34.0
22.65
(1.29)
30 June 2017
Cents
28.0
20.15
(22.51)
* Comparatives have not been restated for the adoption of AASB16: Leases
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 2021.
FY 2019 grant
74.3cents *
14% of awards will vest during FY22 if
time-based vesting conditions are met.
Market Price and Time-Based Tests – Loan Plan Shares as LTI
FY 2020 grant
45.9cents**
3% of awards vested during FY21 as
time-based vesting conditions were
met
FY 2021 grant
60.9cents***
3% of awards will vest during FY22 if
time-based vesting conditions are met.
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.
3% of awards will vest during FY23 if
time-based vesting conditions are met
19% of awards will vest during FY23 if
time-based vesting conditions are met.
19% of awards will vest during FY24 if
time-based vesting conditions are met.
forfeited
75% of awards will be
unexercised during FY23 if the market
price test of 45.9** cents is not met or
if not vested by Board determination.
forfeited
75% of awards will be
unexercised during FY24 if the market
price test of 60.9** cents is not met or
if not vested by Board determination.
*74.3 cents at 30 November 2021
**45.9 cents at 30 November 2022
***60.9 cents at 30 November 2023
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
REMUNERATION REPORT (AUDITED) (continued)
STI Vesting Outcomes
Non-financial measures are used to measure performance for STI awards to the CEO as indicated on page 29. Based on an
assessment, the CEO achieved 100% of his targeted STI award for FY21.
This resulted in the following awards being made:
∗
∗
$102,500 cash which will be paid during FY22; and
1,020,096 Loan Plan Shares granted on 27 November 2020 will vest equally over a three-year service period starting
30 November 2021 with the loan being payable within 5-years from grant date.
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 and paid in January 2021;
Scomac personnel days reduced together with a 10% rate reduction;
Australian employees’ salaries and Executive Directors fees reduced by 10%; and
Namibian employees’ reduced work hours and corresponding remuneration by 20%.
Period 1 July to 31 December 2020
∗
∗
∗
∗
Non-executive director fees reduced by 10%;
Scomac personnel rate reduction of 10% continued;
Australian employees’ salaries and Executive directors' fee reduction of 10% continued; and
Namibian employees’ return to normal work hours with a salary reduction of 10%.
Effective from 1 January 2021
∗
All fees and salaries returned to pre-COVID (March 2020) rates
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 FY21, 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 from BDO Rewards Pty Ltd in relation to general employment related
matters.
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.
D e e p Y e l l o w L i m i t e d
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2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
REMUNERATION REPORT (AUDITED) (continued)
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
and as determined by the Board.
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, who has offered himself as managing
director and/or chief executive officer of the Group. Where any of the Scomac personnel acts as an officer of the Group,
neither Scomac or the personnel receive any additional payment or increase in fee for discharging the duties and
responsibilities as an officer of the Group.
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,
paid in cash; and
Eligibility to participate in the Company’s Loan funded share plan as both 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 $316,000 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 the continuation of a 10% reduction in monthly fees for the period 1 July 2020 to
31 December 2020 as part of the continued focus on adjusting workstreams to safeguard the Company’s key assets against
the uncertainty and volatility caused by the COVID-19 pandemic.
Fees returned to 100% with effect from 1 January 2021.
D e e p Y e l l o w L i m i t e d
2 9
2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
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.
The table below summarises Board and Committee fees payable to NEDs for FY21 (inclusive of superannuation, where
applicable):
Board fees
Chair up to 11 May 2021
Chair from 12 May 2021
NED
Committee fees
Chair
Total $
90,000
98,000
60,000
Audit, Remuneration and Risk Committees
5,000
NEDs agreed to 10% reduction in monthly fees for the period 1 July 2020 to 31 December 2020 as part of the continued focus
on adjusting workstreams to safeguard the Company’s key assets against uncertainty and volatility caused by the COVID-19
pandemic.
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 2020 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
27 November 2020 each NED was issued with 57,471 ZEPOs at an issue price of 43.5c for a total value of $25,000 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 2021 AGM.
6. Statutory and Share-based Reporting
(a)
Executive KMP remuneration for FY20 and FY21
Short-term benefits
Share-based
payments
Total
remuneration
Financial year Fees
Cash bonus (i) Loan Plan Shares (ii)
Performance
Related (iii)
%
Executive Directors
J Borshoff
G Swaby (iv)
Total Executive KMP
2021
2020
2021
2020
2021
2020
389,500
399,753
102,500
102,500
322,455
326,248
711,955
726,001
-
-
102,500
102,500
548,480
359,511
349,559
262,975
898,039
622,486
1,040,480
861,764
672,014
589,223
1,712,494
1,450,987
51.9
37.9
27.1
23.2
(i) Mr Borshoff earned 100% of his maximum cash STI opportunity for FY20 and FY21.
(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.
Included in Ms Swaby remuneration of $322,455 and $326,248 for FY21 and FY20 are amounts of $6,000 and $26,000 for services
(iv)
rendered in relation to incremental project work.
D e e p Y e l l o w L i m i t e d
3 0
2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
REMUNERATION REPORT (AUDITED) (continued)
(b)
NED Remuneration for FY20 and FY21
Short term benefits
Post-employment
Share-based payments
Financial
year
Board and
Committee fees
Superannuation
contributions
(i)
Non-executive Directors
C Salisbury (ii)
R Brunovs
M Greene
J Reid
C Urtel
Total NED
2021
2021
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
12,650
-
78,666
82,423
57,000
57,000
61,750
61,750
61,336
61,754
271,402
262,927
1,202
-
7,473
7,830
-
-
-
-
-
-
8,675
7,830
-
-
25,000
25,463
25,000
25,463
25,000
25,463
25,000
25,463
100,000
101,852
Total
13,852
-
111,139
115,716
82,000
82,463
86,750
87,213
86,336
87,217
380,077
372,609
Details in respect of the awards are provided in Table 1(b).
(i)
(ii) Mr Salisbury was appointed on 12 May 2021.
(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 FY21. 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 FY21
Financial
year
Number
issued
Issue
date
Fair Value per
share at issue
date (cents)
Vesting
date
Exercise
price
(cents)
Expiry
date (i)
Vested
during year
Lapsed
during year
(ii)
Issued
during year
$A
Vested
during year
A$ (iii)
Number
Value
Executive directors
J Borshoff
2018
2018
2019
2020
2020
2020
2021
2021
2021
2021
840,000
210,000
6-Dec-17
6-Dec-17
184,685
19-Nov-18
268,559
18-Dec-19
268,559
18-Dec-19
268,559
18-Dec-19
340,032
27-Nov-20
340,032
27-Nov-20
340,032
27-Nov-20
625,424
27-Nov-20
G Swaby
2021
1,841,711
27-Nov-20
2018
2018
2019
2020
2021
2021
2021
420,000
105,000
6-Dec-17
6-Dec-17
175,676
19-Nov-18
308,271
18-Dec-19
349,282
27-Nov-20
349,282
27-Nov-20
133,972
27-Nov-20
2021
1,135,593
27-Nov-20
22.7
29.7
37.6
15.9
15.9
15.9
27.4
27.4
27.4
30.5
23.6
22.7
29.7
37.6
15.9
27.4
27.4
27.4
22.6
12-Oct-20
12-Oct-20
30-Nov-20
30-Nov-20
30-Nov-21
30-Nov-22
30-Nov-21
30-Nov-22
30-Nov-23
30-Nov-23
30-Nov-23
12-Oct-20
12-Oct-20
30-Nov-20
30-Nov-20
30-Nov-21
30-Nov-22
30-Nov-23
30-Nov-23
32.4
32.4
46.5
27.0
27.0
27.0
35.5
35.5
35.5
35.5
35.5
32.4
32.4
46.5
27.0
35.5
35.5
35.5
35.5
5-Dec-27
-
840,000
5-Dec-27
210,000
19-Nov-23
104,236
18-Dec-24
201,718
18-Dec-24
18-Dec-24
30-Nov-25
30-Nov-25
30-Nov-25
30-Nov-27
30-Nov-27
5-Dec-27
-
-
-
-
-
-
-
-
5-Dec-27
105,000
19-Nov-23
175,676
18-Dec-24
308,271
30-Nov-25
30-Nov-25
30-Nov-25
30-Nov-25
-
-
-
-
-
-
66,841
66,841
66,841
-
-
-
-
-
420,000
-
-
-
-
-
-
-
-
-
-
-
-
-
93,169
93,169
93,169
190,754
434,644
-
-
-
-
95,703
95,703
36,708
256,644
-
1,260
-
32,275
-
-
-
-
-
-
-
-
630
-
49,323
-
-
-
-
(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 and/or participant performance 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.
D e e p Y e l l o w L i m i t e d
3 1
2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
(iv) REMUNERATION REPORT (AUDITED) (continued)
Table 1(b): Share Options: Granted, Vested and Divested during FY21
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
$A
Vested
during year
A$ (i)
2020
2020
2020
Non-executive Directors
R Brunovs
M Greene
J Reid
C Urtel
R Brunovs
M Greene
J Reid
C Urtel
2021
2021
2021
2020
2021
92,593
92,593
92,593
92,593
57,471
57,471
57,471
57,471
18-Dec-19
18-Dec-19
18-Dec-19
18-Dec-19
27-Nov-20
27-Nov-20
27-Nov-20
27-Nov-20
27.5
27.5
27.5
27.5
43.5
43.5
43.5
43.5
1-Jul-20
1-Jul-20
1-Jul-20
1-Jul-20
1-Jul-21
1-Jul-21
1-Jul-21
1-Jul-21
-
-
-
-
-
-
-
-
1-Jul-24
1-Jul-24
1-Jul-24
1-Jul-24
1-Jul-25
1-Jul-25
1-Jul-25
1-Jul-25
92,593
92,593
92,593
92,593
-
-
-
-
-
-
-
-
25,000
25,000
25,000
25,000
20,370
20,370
20,370
20,370
-
-
-
-
(i)
The value is based on the number of Options vested multiplied by the share price on vesting date.
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): Shares issued on exercise of Options
2 March 2021
C Urtel
Total
Table 1(d): Shareholdings *
Shares issued
No.
92,593
92,593
Paid per share
(cents)
-
2021
Name
Balance at
start of the year
Granted as
remuneration (i)
On exercise of
options
Lapsed (ii)(iii)
Net change
other
Balance at the
end of the year
(iv)
3,487,231
1,968,129
-
-
(1,040,524)
(420,000)
8,290
31,372
12,297,037
8,131,445
9,842,040
6,551,944
Executive directors
J Borshoff (ii)
G Swaby (iii)
Non-executive Directors
C Salisbury
R Brunovs
M Greene
J Reid
C Urtel
-
484,370
2,774,192
-
842,832
* Includes shares held directly, indirectly and beneficially by KMP
(i)
-
-
-
-
-
-
-
-
-
92,593
-
-
-
-
-
-
-
4,145
-
(935,011)
-
484,370
2,778,337
-
414
(ii)
(iii)
On 27 November 2020 Mr Borshoff and Ms Swaby were issued with Loan Plan Shares. Details in respect of the awards are provided
in Table 1(a).
During FY21 840,000 shares were forfeited as market price vesting conditions were not met and 200,524 shares were forfeited as
only 84% of performance measures were met during FY20. At reporting date, 7,460,169 shares have not vested.
During FY21 420,000 shares were forfeited as market price vesting conditions were not met. At reporting date, 4,210,077 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(e): Option holdings
2021
Name
Balance at
start of the year
Granted as
remuneration
Options exercised
Balance at the end
of the year
Vested and
exercisable
Non-executive Directors
C Salisbury
R Brunovs
M Greene
J Reid
C Urtel
-
92,593
92,593
92,593
92,593
-
57,471
57,471
57,471
57,471
-
-
-
-
(92,593)
-
150,064
150,064
150,064
57,471
-
150,064
150,064
150,064
57,471
D e e p Y e l l o w L i m i t e d
3 2
2 0 2 1 A n n u a l R e p o r t
REMUNERATION REPORT
(Audited)
REMUNERATION REPORT (AUDITED) (continued)
(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).
Consultant personnel who Scomac employ or have access to include Mr John Borshoff, who has offered himself as managing
director and/or chief executive officer of the Group. Where any of the Scomac personnel acts as an officer of the Group,
neither Scomac or the personnel receive any additional payment or increase in fee for discharging the duties and
responsibilities as an officer of the Group.
Mr Borshoff has a financial interest in Scomac. During the year ended 30 June 2021 Scomac billed the Company $1,078,897,
inclusive of GST and on-costs (2020: $1,035,968), 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 $116,412 was
outstanding at 30 June 2021 (2020: $81,687). The amount for other services was recognised as non-current asset: capitalised
mineral exploration and evaluation expenditure.
7. Actual Remuneration Paid to KMP in FY21
The actual remuneration paid to executives in FY21 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 FY21 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.
2021
Name
Fixed cash
remuneration
(i)
Equity based
remuneration
(ii)
STI (FY21
performance)
(iii)
STI award
vested
(iv)
LTI award
vested
(iv)
Total
remuneration
received
Executive director
J Borshoff
G Swaby
Non-executive Directors
C Salisbury (v)
R Brunovs
M Greene
J Reid
C Urtel
389,500
322,455
13,852
93,264
61,500
66,625
66,211
-
-
-
20,370
20,370
20,370
20,370
102,500
-
32,275
31,441
1,260
18,512
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
525,535
372,408
13,852
113,634
81,870
86,995
86,581
(i)
(ii)
(iii)
(iv)
(v)
Service fee.
Equity-based remuneration in the form of Zero Exercise Price Options (ZEPOs). The value is based on the numbers of ZEPOs vested
multiplied by the share price on vesting date.
The maximum STI was awarded to the Managing Director for FY20 but only paid during FY21.
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.
Mr Salisbury was appointed on 12 May 2021.
End of Remuneration Report (Audited)
This report is made in accordance with a resolution of the Directors.
DATED at Perth this 23rd day of September 2021.
John Borshoff
Managing Director
D e e p Y e l l o w L i m i t e d
3 3
2 0 2 1 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 2021, 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
23 September 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:DA:DYL:009
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Consolidated
Note
2021
$
2020
$
Interest and other income
Revenue from contracts with customers
7(a)
7(b)
227,443
56,126
257,455
77,199
Income
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
283,569
334,654
(225,964)
(22,822)
(198,811)
(90,611)
(1,933,039)
(2,609,231)
(215,812)
(26,697)
(222,461)
(94,324)
(1,930,685)
(2,033,839)
-
7,100,920
(18,297)
(36,893)
(Loss)/Profit before income tax
Income tax expense
9(a)(b)
(4,815,206)
-
2,874,863
-
(Loss)/Profit for the year after income tax
(4,815,206)
2,874,863
Other comprehensive income
Items to be reclassified to profit and loss in subsequent periods,
net of tax
Foreign currency translation gain/(loss)
17(d)
4,603,067
(6,269,172)
Other comprehensive income/(loss) for the year, net of tax
4,603,067
(6,269,172)
Total comprehensive loss for the year, net of tax
(212,139)
(3,394,309)
Earnings per share for loss attributable to the ordinary equity holders
of the Company.
Cents
Cents
Basic (loss)/profit per share
Diluted (loss)/profit per share
10
10
(1.75)
(1.75)
1.19
1.19
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
3 5
2 0 2 1 A n n u a l R e p o r t
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
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
2021
$
2020
$
11
12(a)
12(b)
52,448,274
534,763
224,419
12,116,972
298,265
187,567
53,207,456
12,602,804
16
13
14
15
19
19
503,105
738,076
43,420,220
617,015
518,897
35,415,745
44,661,401
36,551,657
97,868,857
49,154,461
880,431
117,658
106,929
492,605
57,562
99,221
1,105,018
649,388
38,360
429,735
48,794
536,664
468,095
585,458
1,573,113
1,234,846
96,295,744
47,919,615
17(a)
17(d)
17(d)
17(d)
296,373,482
(198,081,539)
15,444,255
(17,440,454)
249,753,196
(193,266,333)
13,476,273
(22,043,521)
Total equity
96,295,744
47,919,615
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
3 6
2 0 2 1 A n n u a l R e p o r t
STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL
YEAR ENDED 30 JUNE 2021
Issued Equity
$
249,753,196
-
-
Accumulated
losses
$
(193,266,333)
(4,815,206)
-
Employee
equity benefits’
reserve
$
13,476,273
-
-
Foreign currency
translation
reserve
$
(22,043,521)
4,603,067
Total Equity
$
47,919,615
(4,815,206)
4,603,067
-
(4,815,206)
-
4,603,067
(212,139)
42,799,690
(2,184,356)
262,757
5,742,195
-
296,373,482
(198,081,539)
-
-
-
-
-
(17,440,454)
42,799,690
(2,184,356)
-
5,716,732
2,256,202
96,295,744
(262,757)
(25,463)
2,256,202
15,444,255
At 1 July 2020
Loss for the period
Other comprehensive profit
Total comprehensive loss for
the period
Issue of share capital
Capital raising costs
Vesting of Performance Rights
Exercise of options
Share-based payments
At 30 June 2021
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
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
3 7
2 0 2 1 A n n u a l R e p o r t
CASH FLOW STATEMENT FOR THE FINANCIAL
YEAR ENDED 30 JUNE 2021
Cash flows from operating activities
Interest received
Funds received from JV Partners
Payments to suppliers and employees
Funds spent by JV Manager
COVID-19 employer stimulus received
Other receipts
Interest paid
Consolidated
Note
2021
$
2020
$
26
26
7(a)(b)
7(a)(b)
8
176,227
387,007
(2,601,331)
(539,372)
51,085
56,257
(22,822)
245,789
996,761
(2,549,322)
(996,761)
36,205
77
(26,697)
Net cash used in operating activities
11
(2,492,949)
(2,293,948)
Cash flows from investing activities
Exploration expenditure
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
(3,635,127)
(296,807)
14,454
(2,071,894)
(133,848)
-
Net cash used in investing activities
(3,917,480)
(2,205,742)
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 increase/(decrease) in cash and cash equivalents
Effects on cash of foreign exchange
Cash and cash equivalents at the beginning of the financial year
48,516,440
(2,184,356)
(99,221)
2,289,507
(57,131)
(95,041)
46,232,863
2,137,335
39,822,434
508,868
12,116,972
(2,362,355)
(495,736)
14,975,063
Cash and cash equivalents at the end of the financial year
11
52,448,274
12,116,972
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
3 8
2 0 2 1 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 2021
Note 1 Corporation information
The consolidated financial statements of Deep Yellow Limited and its subsidiaries (the Group) for the year ended 30 June
2021 were authorised for issue in accordance with a resolution of Directors on 22 September 2021, 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 2021 (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, except for when the retain investment is an interest in a joint operation. Where the group loses
control over a subsidiary but retains an interest in a joint operation the retained investment is measured based on the carrying
value of the investment in the subsidiary, except for when the retain investment is an interest in a joint operation. Where the
group loses control over a subsidiary but retains an interest in a joint operation the retained investment is measured based
on the carrying value of the investment in the subsidiary.
D e e p Y e l l o w L i m i t e d
3 9
2 0 2 1 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 2021
(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 AASB 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 AASB 9. Other contingent consideration that is not within the scope of AASB 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 Nova JV 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 over time. The output method is used to recognise
revenue as that looks at the measure of progress of the service being transferred with the Group recognising revenue based
on the amount to which the Group has a right to invoice. 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 0
2 0 2 1 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 2021
(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 Other Comprehensive Income or directly in equity.
D e e p Y e l l o w L i m i t e d
4 1
2 0 2 1 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 2021
(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. Exchange differences arising from these procedures are recognised in profit and loss
for the year. 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.
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 2
2 0 2 1 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 2021
(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 diminishing balance method or straight-line method to
allocate their cost over their estimated useful lives using the following depreciation rates:
Office equipment and fittings
Motor vehicles
12.5% – 33% of cost
25% of cost
Site equipment
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 assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right
to control use of an identified asset for a period of time in exchange for consideration.
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 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 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).
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.
D e e p Y e l l o w L i m i t e d
4 3
2 0 2 1 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 2021
(c)
(x)
Summary of significant accounting policies (continued)
Financial instruments – Financial assets
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through Other
Comprehensive Income, 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 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).
D e e p Y e l l o w L i m i t e d
4 4
2 0 2 1 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 2021
(c)
Summary of significant accounting policies (continued)
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 Australian and Namibian 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, financial liabilities
at amortised cost, 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 initial recognition 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 Profit or Loss and Other 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.
(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.
D e e p Y e l l o w L i m i t e d
4 5
2 0 2 1 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 2021
(c)
Summary of significant accounting policies (continued)
(xiii)
Impairment of non-financial assets
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. 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
(xiv)
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.
(xv)
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 Profit or Loss and
Other 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.
(xvi)
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.
(xvii) 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.
D e e p Y e l l o w L i m i t e d
4 6
2 0 2 1 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 2021
(c)
Summary of significant accounting policies (continued)
(xviii) Provisions
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.
(xix)
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.
(xx)
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 Profit or Loss and Other
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 Profit or Loss and Other 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 risk-free interest rate, the expected
dividend yield and the probability of market based vesting conditions being realised.
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.
D e e p Y e l l o w L i m i t e d
4 7
2 0 2 1 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 2021
(c)
Summary of significant accounting policies (continued)
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 2020, Deep Yellow Limited has adopted and applied, where relevant, all Australian Accounting Standards and
Interpretations effective from 1 July 2020.
The accounting policies adopted are consistent with those of the previous financial year.
Several other amendments and interpretations (listed below) apply for the first time in 2021, 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.
Application date
of standard
Application date
for Group*
1 January 2020 1 July 2020
Reference
Conceptual
Framework
AASB 2019-1
Title and Summary
Conceptual Framework for Financial Reporting Amendments to
Australian Accounting Standards –Reference to the Conceptual
Framework **
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 2019-1 has 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.
D e e p Y e l l o w L i m i t e d
4 8
2 0 2 1 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 2021
(e)
(ii)
Changes in accounting policies, disclosures, standards and interpretations
Changes in accounting policies, new and amended standards and interpretations
Reference
Title and Summary
AASB 2018-6
Amendments to Australian Accounting Standards – Definition of a
Business
Application date
Application date
for Group*
of standard
1 January 2020 1 July 2020
The definition of a business helps entities to distinguish business
combinations from asset purchases. Business combinations are
accounted for using the acquisition method, which, among other
things, may give rise to goodwill. Accounting treatments for other
types of transactions may also be affected, depending on whether the
transaction involves a business (e.g., A loss of control transaction
where a retained interest is accounted for using the equity method).
With the aim of helping companies determine whether an acquired set
of activities and assets is a business, the amendments to AASB 3
Business Combinations:
► Clarify the minimum requirements for a business to exist
► Remove the assessment of whether market participants are
capable of replacing missing elements of a business
► Provide guidance to help entities assess whether an acquired
process is substantive
► Narrow the definitions of a business and of outputs
► Introduce an optional fair value concentration test to identify a
business
AASB 2018-7
Amendments to Australian Accounting Standards – Definition of
Material
1 January 2020 1 July 2020
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
AASB 2020-4
Amendments to Australian Accounting Standards – Covid-19-Related
Rent Concessions
1 June 2020
1 July 2020
As a result of the Covid-19 pandemic, rent concessions have been
granted to lessees. AASB 2020-4 provides an optional practical
expedient where lessees receiving rent concessions may account for
the benefit in the period in which they are granted. The expedient was
originally limited to reductions in lease payments that were due on or
before 30 June 2021. However, the amendment has subsequently
been extended to reduction in lease payments due on or before 30
June 2022 as per AASB 2021-3
*
Designates the beginning of the applicable annual reporting period unless otherwise stated.
D e e p Y e l l o w L i m i t e d
4 9
2 0 2 1 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 2021
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. Only those Standards and Interpretations
relevant to the Group have been included.
Reference
AASB 2021-3
AASB 2014-10
AASB 2020-1
AASB 2021-2
AASB 2021-2
Title
Amendments to Australian Accounting Standards - Covid-19-
Related Rent Concessions beyond 30 June 2021
Amendments to Australian Accounting Standards – Sale or
Contribution of Assets between an Investor and its Associate or
Joint Venture
Amendments to Australian Accounting Standards –Classification of
Liabilities as Current or Non-current
Amendments to Australian Accounting Standards - –Disclosure of
Accounting Policies and Definition of Accounting Estimates
Amendments to AASB 7, AASB 101, AASB 134 and AASB
Practice Statement 2
Amendments to Australian Accounting Standards - –Disclosure of
Accounting Policies and Definition of Accounting Estimates
Amendments to AASB 108 – Definition of Accounting Estimates
Application date
of standard *
Application date
for Group *
1 April 2021
1 July 2021
1 January 2022 1 July 2022
1 January 2023 1 July 2023
1 January 2023 1 July 2023
1 January 2023 1 July 2023
AASB 2021-5
Amendments to Australian Accounting Standards –Deferred Tax
related to Assets and Liabilities arising from a Single Transaction
1 January 2023 1 July 2023
*
Designates the beginning of the applicable annual reporting period unless otherwise stated.
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.
D e e p Y e l l o w L i m i t e d
5 0
2 0 2 1 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 2021
Note 3 Significant accounting judgements, estimates and assumptions (continued)
Lease – estimating the incremental borrowing rate
If the Group cannot readily determine the interest rate implicit in the lease, 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.
Joint arrangements
The Group must determine if the below key criteria are met for an arrangement to be classified as a joint arrangement:
•
•
The parties are bound by a contractual arrangement;
The contractual arrangement gives all the parties, or a group of the parties, control of the arrangement collectively;
and
• Decisions about the relevant activities that significantly affect the operations of the arrangement require unanimous
consent of all parties, or group of the parties, that collectively control the arrangement.
Upon consideration of the above criteria, the Group has determined that its Nova Energy JV arrangement is jointly controlled
therefore the arrangement is a joint arrangement.
For all joint arrangements structured in separate vehicles the Group must assess the substance of the joint arrangement in
determining whether it is classified as a joint venture or joint operation. This assessment requires the Group to consider
whether it has rights to the joint arrangement’s net assets (in which case it is classified as a joint venture), or rights to and
obligations for specific assets, liabilities, expenses, and revenues (in which case it is classified as a joint operation). Factors
the group must consider include:
Legal form;
• Structure;
•
• Contractual agreement; and
• Other facts and circumstances
Upon consideration of these factors, the Group has determined that all of its joint arrangements structured through separate
vehicles give it rights to and obligations for specific assets, liabilities, expenses and revenues and are therefore classified as
joint operations.
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.
Accounting for capitalised mineral exploration and evaluation expenditure
The Group’s accounting policy is stated at Note 2(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. Where there are impairment indicators or indicators of impairment reversal, the fair value of
the project 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 2(c)(xviii). The Group uses independent advisors to assist in valuing share-
based payments. Refer Note 20 for details of estimates and assumptions used.
D e e p Y e l l o w L i m i t e d
5 1
2 0 2 1 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 2021
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 2021
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
Profit and Loss
Pre-tax segment profit/(loss)
Unallocated
Interest income
COVID-19 employer stimulus grant
Loss from continuing operations after income tax
Australia
$
-
-
Namibia
$
56,257
18,297
Total
$
56,257
176,227
51,085
283,569
18,297
(4,736,501)
(306,017)
(5,042,518)
176,227
51,085
(4,815,206)
Year Ended 30 June 2021
Segment Assets
Segment operating assets
Unallocated assets
Cash
Receivables
Total assets
717,440
44,168,380
44,885,820
52,448,274
534,763
97,868,857
Total additions to non-current assets*
5,197
4,309,190
4,314,387
D e e p Y e l l o w L i m i t e d
5 2
2 0 2 1 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 2021
Note 4 Segment information (continued)
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
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
Year Ended 30 June 2020
Segment Assets
Segment operating assets
Unallocated assets
Cash
Receivables
Total assets
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
*Non-current assets for this purpose consist of property, plant and equipment and capitalised mineral exploration and
evaluation expenditure
**Revenue from the NJV amounted to $56,126 (2020: $77,199), 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.
COVID-19 employer stimulus grant
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
5 3
2 0 2 1 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 2021
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:
•
51,031,154 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.
•
•
277,779 zero exercise price Options expiring at 1 July 2024.
299,884 zero exercise price Options expiring at 1 July 2025
Each option entitles the holder to one fully paid ordinary share in the Company at any time up to expiry date.
Note 6
Information about subsidiaries
The Consolidated Financial Statements of the Group include:
Name
Deep Yellow Namibia (Pty) Ltd
Superior Uranium Pty Ltd
Deep Yellow Custodian Pty Ltd
Reptile Mineral Resources and Exploration (Pty) Ltd
Reptile Uranium Namibia (Pty) Ltd
Nova Energy Namibia (Pty) Ltd *
Omahola Uranium (Pty) Ltd
Shiyela Iron (Pty) Ltd
Sand and Sea Property Number Twenty Four (Pty) Ltd
Tarquin Investments (Pty) Ltd
QE Investments (Pty) Ltd
Inca Mining (Pty) Ltd**
TRS Mining Namibia (Pty) Ltd**
Yellow Dune Uranium (Pty) Ltd
Principal activities
Investment
Uranium exploration
Trustee of Share Trust
Investment
Uranium exploration
Uranium exploration
Uranium exploration
Iron ore exploration
Property investment
Property investment
Property investment
Uranium exploration
Uranium exploration
Uranium exploration
Country of
incorporation
Mauritius
Australia
Australia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Namibia
Equity interest %
2020
100
100
100
100
100
65
100
95
100
100
100
95
95
85
2021
100
100
100
100
100
-
100
95
100
100
100
95
95
85
* In the current period, as part of JOGMEC completing its farm-in and earning the right to acquire a 39.5% interest in Nova
Energy Namibia (Pty) Ltd, the Group no longer controls Nova Energy Namibia (Pty) Ltd and instead accounts for its interest
in Nova Energy Namibia (Pty) Ltd as a Joint Operation. Refer to Note 26 for further details.
** In the process of being wound up and deregistered with notification received from the Business and Intellectual Property
Authority in Namibia that the Registrar of Companies is proceeding to cancel the Memorandum and Articles of Association,
subject to no objection being received from the Receiver of Revenue and/or Social Security Commission. Confirmation of last
mentioned is being awaited.
D e e p Y e l l o w L i m i t e d
5 4
2 0 2 1 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 2021
Note 7 Revenue, interest and other income
a) Interest and other income
Interest received and receivable
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
2021
$
176,227
51,085
131
227,443
56,126
56,126
2020
$
221,173
36,205
77
257,455
77,199
77,199
56,126
77,199
26,442
7,654
*Revenue relates to Namibia as geographical market with services transferred over time
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
Variable expenses not capitalised under property lease
Other
Administrative expenses
Consultancy fees: Executive directors*
Technical and other consultants: Project evaluation
Professional fees
IT expenses
Legal fees
Non-executive Directors’ fees
Corporate and listing costs
Other costs
2021
$
26,193
48,086
5,687
32,088
113,910
225,964
42,165
48,446
90,611
422,824
308,521
16,479
102,580
112,318
290,008
320,324
359,985
1,933,039
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
2,654
279,916
313,145
294,768
1,930,685
*Excludes costs included in capitalised mineral exploration and evaluation expenditure and project evaluation
activities. Expenditure relating to project evaluation activities forms part of Technical and other consultants: Project
evaluation.
D e e p Y e l l o w L i m i t e d
5 5
2 0 2 1 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 2021
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
2021
$
2020
$
400,104
23,617
2,185,510
2,609,231
509,475
21,186
1,503,178
2,033,839
22,822
26,697
The major components of income tax expense for the years ended 30 June 2021 and 30 June 2020 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 provision in prior year
Carry forward tax losses not brought to account
Income tax expense reported in the Statement of Profit or Loss and Other
Comprehensive Income
Consolidated
2021
$
2020
$
-
-
-
-
-
-
-
-
-
-
-
-
b) Reconciliation of income tax expense to prima facie tax payable
(Loss)/Profit before income tax expense
(4,815,206)
2,874,863
Tax at the Australian rate of 30% (2020: 30%)
Effect of tax rates in foreign jurisdictions*
Tax effect:
Non-deductible share-based payment
Other expenditure not deductible/(deductible)
Over/(under) provision in prior year
Non-assessable income: COVID-19 employer stimulus grant
Carry forward tax losses and deductible temporary differences not brought
to account
Tax expense
(1,444,562)
(350,277)
648,660
143,045
-
(15,326)
862,459
138,755
451,279
25,297
-
(10,862)
1,018,460
-
(1,466,928)
-
D e e p Y e l l o w L i m i t e d
5 6
2 0 2 1 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 2021
Note 9
Income tax (continued)
c) Deferred tax – Statement of Financial Position
Liabilities
Prepayments
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 Profit or Loss and Other Comprehensive
Income
Liabilities
Prepayments
Accrued Income
Assets
Increase 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
2021
$
21,897
21,897
17,861,419
33,285
376,398
1,719,311
(19,968,516)
21,897
-
2020
$
21,637
21,637
16,988,886
30,057
346,800
1,447,526
(18,791,632)
21,637
-
260
-
(16,126)
(7,385)
(872,533)
(3,228)
(29,598)
(271,785)
1,176,884
-
(218,041)
(1,358)
(22,357)
2,778,045
(2,512,778)
-
At 30 June 2021, there are temporary differences to the value of $1,719,311 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. (2020: $1,447,526).
*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
5 7
2 0 2 1 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 2021
Note 10 Earnings per share (EPS) (continued)
The following reflects the income and share data used in the basic and diluted EPS computations:
Consolidated
2021*
$
2020
$
a) Profit/(Loss) attributable to ordinary equity holders of the Company
• Continuing operations
(4,815,206)
2,874,863
b) Weighted average number of ordinary shares for basic EPS
275,681,267
241,748,437
Effects of dilution from:
Zero Price Share Options
Performance Rights
-
-
197,870
456,071
Weighted average number of ordinary shares adjusted for effect of dilution
275,681,267
242,402,378
*Diluted EPS is the same as basic EPS in 2021 as the Group was in a loss position.
c) Information concerning the classification of securities
The weighted average number of ordinary shares includes 25,513,983 Loan Plan Shares that were issued under the Loan
Share Plan and are subject to short and long-term performance conditions.
c) Information concerning antidilutive securities for the periods
62,464,618 and 52,324,257, 50c Share options were anti-dilutive in 2020 and 2021 respectively as the exercise price was
higher than the average annual share price.
415,070 Zero Price Share options and 775,809 Performance Share Rights were anti-dilutive in 2021 as the Group was in a
loss position
Note 11 Current assets - cash and cash equivalents
Cash at bank and on hand
Short term deposits
Consolidated
2021
$
2,888,802
49,559,472
52,448,274
2020
$
3,449,063
8,667,909
12,116,972
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 2021 the deposit rates on the 30-day and 90-day notice deposits were 0.25% and
0.35% respectively.
Cash flow reconciliation:
Profit/(Loss) after income tax
Depreciation and amortisation
Loss/(Profit) 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:
(Increase)/Decrease in receivables
Increase in payables
Net cash flows used in operating activities
Consolidated
2021
2020
(4,815,206)
225,964
(3,580)
18,297
-
2,874,863
215,812
10,079
36,893
(7,100,920)
2,185,510
1,503,178
(13,778)
62,209
(2,340,584)
127,022
39,125
(2,293,948)
D e e p Y e l l o w L i m i t e d
5 8
2 0 2 1 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 2021
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
2021
$
318,403
216,360
534,763
89,363
135,056
224,419
2020
$
76,830
221,435
298,265
89,101
98,466
187,567
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 2019
Additions
Disposals
Exchange adjustment
At 30 June 2020
Additions
Disposals
Exchange adjustment
Buildings
$
508,056
30,560
-
(42,953)
495,663
8,012
-
16,728
Office
Equipment
and Fittings
$
Motor vehicles
Site
Equipment
Total
$
$
$
363,953
56,890
(13,620)
(12,149)
395,074
62,677
(74,949)
4,615
128,890
-
-
(11,976)
116,914
75,238
-
6,257
379,113
48,893
(25,891)
(31,981)
370,134
150,880
(21,490)
18,934
1,380,012
136,343
(39,511)
(99,059)
1,377,785
296,807
(96,439)
46,534
At 30 June 2021
520,403
387,417
198,409
518,458
1,624,687
Depreciation
At 1 July 2019
Depreciation charge
Disposals
Exchange adjustment
At 30 June 2020
Depreciation charge
Disposals
Exchange adjustment
274,305
17,570
-
(249)
291,626
26,193
-
347
261,399
53,149
(13,278)
(432)
300,838
48,086
(72,324)
393
59,695
2,544
-
(36)
62,203
5,687
-
75
191,816
28,639
(15,857)
(377)
204,221
32,088
(13,241)
419
787,215
101,902
(29,135)
(1,094)
858,888
112,054
(85,565)
1,234
At 30 June 2021
318,166
276,993
67,965
223,487
886,611
Net book value
At 30 June 2020
204,037
94,236
54,711
165,913
518,897
At 30 June 2021
202,237
110,424
130,444
294,971
738,076
D e e p Y e l l o w L i m i t e d
5 9
2 0 2 1 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 2021
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
2021
$
35,415,745
4,017,580
4,005,192
-
(18,297)
43,420,220
2020
$
31,831,939
2,128,575
(5,608,796)
7,100,920
(36,893)
35,415,745
The Group continues to hold tenure over all its Exclusive Prospecting Licences with renewal extension applications having
been submitted to the MME for EPLs 3496 and 3497. As per the Minerals Act theses licences remain valid during a period
during which an application for renewal of a licence is being considered.
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 FY20 and FY21 relates to other projects
which are fully impaired. The impairment reversal in FY20 relates to the Reptile Project where resources have increased
from 77.2 U3O8 Mlb to 141.3 U3O8 as at 30 June 2020 and some converted from inferred to indicated category. The
recoverable value in FY21 was determined based on resource multiples for comparable transactions and the fair value
adopted was categorised as level 3 in the fair value hierarchy.
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
2021
$
43,420,220
2020
$
35,415,745
Consolidated
2021
$
880,431
-
880,431
2020
$
465,417
27,188
492,605
Trade payables and accruals are non-interest bearing and normally settled on 30 day terms. There are no secured liabilities
as at 30 June 2021.
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 0
2 0 2 1 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 2021
Note 16 Leases
Group as a lessee
The Group’s 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 the beginning of the year
Concessions
At the end of the year
Depreciation
At the beginning of the year
Depreciation charge for the year
At the end of the year
2021
$
2020
$
730,925
-
730,925
113,910
113,910
227,820
749,560
(18,635)
730,925
-
113,910
113,910
Net book value
503,105
617,015
The carrying amount and maturity analysis of the lease liability are disclosed in 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 $164,208 in 2021 (2020: $169,232)
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
Exercise of Options
Exercise of Zero price options
Less: Transaction costs attributable to issuance of
shares-
At the end of the year
0.65
0.50
Consolidated
Consolidated
2021
No.
2020
No.
2021
$
2020
$
306,232,725
227,949,263
296,373,482
249,753,196
244,886,063
911,728
10,918,707
(2,341,524)
65,845,677
11,433,464
92,593
-
230,325,798
571,850
8,631,205
(2,028,346)
7,385,556
-
-
-
249,753,196
262,757
-
-
42,799,690
5,716,732
25,463
(2,184,356)
247,264,524
225,705
-
-
2,289,507
-
-
(26,540)
331,746,708
244,886,063
296,373,482
249,753,196
(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 1
2 0 2 1 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 2021
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
2021
Balance at 1 July 2020
Loss for year
Transfer to issued capital in respect of Performance
Rights vested
Transfer to issued capital in respect of Zero price
options exercised
Recognition of share-based payments
Movement for the year
Balance at 30 June 2021
2020
Accumulated
Losses
$
(193,266,333)
(4,815,206)
-
-
-
-
(198,081,539)
Consolidated
Employee Equity
Benefits’ Reserve
(i)
$
13,476,273
-
(262,757)
(25,463)
2,256,202
-
15,444,255
Foreign Currency
Translation
Reserve (ii)
$
(22,043,521)
-
-
-
-
4,603,067
(17,440,454)
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)
(i)
Employee equity benefits’ reserve
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 (2020: Nil).
The Company has no franking credits available as at 30 June 2021 (2020: Nil).
D e e p Y e l l o w L i m i t e d
6 2
2 0 2 1 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 2021
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
Total current liabilities
Non-current liabilities
Lease liabilities
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 2021
Lease liabilities
Trade and other payables
As at 30 June 2020
Lease liabilities
Trade and other payables
Fair values
Consolidated
2021
$
52,448,274
534,763
53,983,037
2020
$
12,116,972
298,265
12,415,237
Borrowing
rate
Maturity
2021
2020
Consolidated
$
$
4%
2022
106,929
106,929
99,221
99,221
4%
2025
429,735
536,664
429,735
536,664
536,664
635,885
Consolidated
2021
$
880,431
880,431
1-5 years
$
458,998
-
584,702
-
2020
$
492,605
492,605
Total
$
584,702
880,431
706,745
492,605
0-12 months
125,704
880,431
122,043
492,605
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
6 3
2 0 2 1 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 2021
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 2021 and 2020.
(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
2021
$
2,888,802
49,559,472
52,448,274
2020
$
3,449,063
8,667,909
12,116,972
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 2021
Cash and cash equivalents
30 June 2020
Cash and cash equivalents
Profit and Loss
Other Comprehensive
Income
1%
Increase
1%
Decrease
1%
increase
1%
Decrease
524,483
(524,483)
121,170
(121,170)
-
-
-
-
D e e p Y e l l o w L i m i t e d
6 4
2 0 2 1 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 2021
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
The Group has no exposure to foreign currency changes as the Company and none of its subsidiaries carry financial
assets and/or liabilities in another currency than their functional currency. The exposure on translating the foreign
subsidiaries’ financial statements into the presentation currency is not analysed for sensitivity.
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). 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. 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.
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
6 5
2 0 2 1 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 2021
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
2021
$
2,888,802
49,559,472
216,360
52,664,634
2020
$
3,449,063
8,667,909
221,435
12,338,407
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 $880,431 (2020: $492,605) are settled on 30-day trading terms.
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 with a nil exercise price 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 2021 financial year, the Group continued to issue Performance Rights to employees which were subject to clearly
defined business goals (where applicable), covering non-financial performance measures, and the holder of the awards
remaining employed with the Company during the measurement period. 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
6 6
2 0 2 1 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 2021
Note 20 Share-based payment plans (continued)
Loan Plan Shares
During the 2021 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*
2021
2020
No.
21,936,800
10,918,707
(2,413,700)
30,441,807
WAEP (cents)
31.9
35.5
-
33.3
No.
14,283,941
8,631,205
(978,346)
21,936,800
WAEP (cents)
32.4
27.0
-
31.9
The table below illustrates the number (No.) and weighted average share price (WASP) at vesting date, and movements in,
Performance Rights during the year:
Outstanding at the start of the year
Granted during the year
Expired during the year
Vested during the year
Outstanding at the end of the year
2021
2020
No.
604,561
1,152,365
(69,389)
(911,728)
775,809
WASP (cents)
-
-
-
45.5
No.
750,048
531,363
(105,000)
(571,850)
604,561
WASP (cents)
-
-
-
23.8
-
(b)
Summaries of Loan Plan Shares exercised during the year
No Loan Plan Shares were exercised during the year. 10,918,707 (2020: 8,631,205) Loan Plan Shares were granted and
2,360,834 (2020: 746,624) vested during the year. 7,282,458 (2020: 4,921,624) of the outstanding Loan Plan Shares were
exercisable at year end.
(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 2021
is 4.70 years (2020: 5.45 years)
D e e p Y e l l o w L i m i t e d
6 7
2 0 2 1 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 2021
Note 20 Share-based payment plans (continued)
(d)
Recognised share-based payment expenses
The weighted average remaining contractual life for the Performance Rights outstanding as at 30 June 2021 is 7.71 months
(2020: 10.78 months).
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 Profit or Loss and Other Comprehensive Income
Amount recognised as capitalised mineral exploration and evaluation
expenditure
Consolidated
2021
$
2,082,943
2020
$
1,503,178
73,263
58,460
2,156,206
1,561,638
There have been no modifications to share-based payment arrangements during the 2021 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 2021 and 30 June 2020.
Pricing model
term of
repayment
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected
limited
recourse loan in relation to Loan Plan
Shares (years)
Closing share price at grant date (cents)
Fair value per Loan Plan Share at grant date
(cents)
- Time-based vesting conditions
- Time and non-market based vesting
conditions
- Time and market based vesting conditions
Loan Plan Shares
Grants
2021
27 Nov 20
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)
Black Scholes
(i)
Monte-Carlo
simulation using
hybrid pricing
model
(ii)
Black Scholes
(i)
Monte-Carlo
simulation using
hybrid pricing
model
(ii)
Zero
80
0.29
7
41.5
30.5
-
23.6
Zero
80
0.29
5
41.5
27.4
27.4
22.6
Zero
70
0.86
7
27.5
18.1
-
12.9
Zero
70
0.86
5
27.5
15.9
15.9
12.3
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 Loan Plan Shares 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
6 8
2 0 2 1 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 2021
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)
∗ Time-based vesting conditions
∗ Time and market based vesting conditions
Performance Rights
Grants
10 Aug 20
2021
27 Nov 20
1 Jun 21
2020
11 Oct 19
Not applicable (i) Not applicable (i) Not applicable (i) Not applicable (i)
Zero
-
-
15
23.5
23.5
N/A
Zero
-
-
2
43.0
43.0
N/A
Zero
-
-
15
84.0
84.0
N/A
Zero
-
-
15
27.5
27.5
N/A
(i)
(ii)
Share-based payments subject to non-market based vesting conditions – Fair value equates to closing share price at
grant date; 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 2021.
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
2021
$
1,085,857
8,675
998,039
2,092,571
2020
$
1,091,428
7,830
724,338
1,823,596
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
6 9
2 0 2 1 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 2021
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).
Consultant personnel who Scomac employ or have access to include Mr John Borshoff, who has offered himself as managing
director and/or chief executive officer of the Group. Where any of the Scomac personnel acts as an officer of the Group,
neither Scomac or the personnel receive any additional payment or increase in fee for discharging the duties and
responsibilities as an officer of the Group.
Mr Borshoff has a financial interest in Scomac. During the year ended 30 June 2021 Scomac billed the Company $1,078,897,
inclusive of GST and on-costs (2020: $1,035,968), 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) of the Remuneration Report.
An amount of $116,412 was outstanding at 30 June 2021 (2020: $81,687). 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 2021 and the date of this report other than the following:
3,830,646 options have been exercised since 30 June 2021 and up to 21 September 2021 for a total value of $1,915,323. At
21 September 2021 there were 47,708,171 unissued ordinary shares under option. This includes 507,663 Options outstanding
for Key Management Personnel (KMP) for which further details can be found in the Remuneration 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
Fees required by legislation to be provided – ASIC audit levy
Fees for other services – Tax advisory
Total fees to Ernst & Young (Australia)
Consolidated
2021
$
2020
$
45,008
49,125
615
15,984
61,607
368
-
49,493
Fees to other overseas member firms of Ernst & Young (Australia)
Fees for auditing the financial report of any controlled entities
44,303
27,762
Fees for assurance services that are required by legislation to be provided
Fees for other services
-
-
Total fees to other overseas member firms of Ernst & Young (Australia)
44,303
Total auditor’s remuneration
105,910
-
-
27,762
77,255
D e e p Y e l l o w L i m i t e d
7 0
2 0 2 1 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 2021
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
2021
$
50,210,348
93,088,783
(774,275)
(1,204,010)
296,373,482
(219,932,964)
15,444,255
91,884,773
(4,374,630)
(4,374,630)
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)
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
In the current period, as part of Japan Oil, Gas and Metals National Corporation (“JOGMEC”) completing its farm-in and
earning the right to acquire a 39.5% interest in Nova Energy Namibia (Pty) Ltd (“Nova Energy”) the Group no longer controls
Nova Energy and instead under the contractual arrangements jointly controls Nova Energy. The Group accounts for its
retained interest in Nova Energy as a Joint Operation as the Group has both rights to the assets and obligations for the
liabilities of the joint arrangement.
No gain or loss was recognised upon loss of control of Nova Energy as the Group has made an accounting policy choice to
measure retained interest in the joint operation at its carrying amount.
Reptile Mineral Resources and Exploration (Pty) Ltd is the manager of the Nova joint arrangement, incurs expenditure on
behalf of the joint arrangement and cash calls each participant of the joint operation for their share of the expenditure.
As at 30 June 2021, the Group’s interest in joint operations is as follows:
Total assets
Nova Energy Exploration Project
Namibia
65%*
39.5%
788,198
453,412
Principal place
of business
Ownership
Voting rights
2021
2020
* Reducing to 39.5% on exercise of right to equity by joint venture partner JOGMEC.
D e e p Y e l l o w L i m i t e d
7 1
2 0 2 1 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 2021 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 2021 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
2; 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 2021.
On behalf of the Board
John Borshoff
Managing Director
23rd day of September 2021
D e e p Y e l l o w L i m i t e d
7 2
2 0 2 1 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 2021, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated cash flow 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
2021 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:008
1. Carrying value of capitalised mineral exploration and evaluation expenditure
Why significant
How our audit addressed the key audit matter
As disclosed in Note 14 to the financial statements, at
30 June 2021, the Group held capitalised exploration
and evaluation expenditure assets of $43.4 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.
Given the size of the balance and the judgment
involved in identifying indicators of impairment or
reversals of impairment associated with exploration
and evaluation assets, we considered this a key audit
matter.
2. Share based payments – share options
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 determine resource
estimates by considering the work that they were
engaged to perform, their professional qualifications,
experience and use of industry accepted methodology
Considered resource multiples from other comparable
market transactions and the Group’s reported
resources for each area of interest to assess whether
resource multiples provided any indicator of an
impairment loss or a reversal of a previously
recognised impairment
►
Assessed the adequacy of the disclosures included in
the financial report.
Why significant
How our audit addressed the key audit matter
As disclosed in Note 20 to the financial statements, at
30 June 2021 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 objectivity and competence of 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
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
►
Assessed the adequacy of the disclosures included in
the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:DA:DYL:008
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 2021 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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Report on the audit of the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 22 to 33 of the directors' report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Deep Yellow Limited for the year ended 30 June 2021,
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
23 September 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:DA:DYL:008
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 10 September 2021.
(a)
Distribution of Equity Securities
Ordinary share capital
330,763,558 fully paid ordinary shares are held by 8,167 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
50,851,527 Options are held by 489 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
3,312
2,570
848
1,251
186
8,167
2,164
77
149
65
148
50
489
81
The following information is extracted from the Company’s Register of Substantial Shareholders:
Shareholder Name
COLLINES INVESTMENTS LIMITED
PARADICE INVESTMENT MANAGEMENT PTY LTD
Totals
Issued Ordinary Shares
Number
22,680,292
31,377,853
54,058,145
Percentage
7.11
9.84
16.95
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 for the parties concerned.
D e e p Y e l l o w L i m i t e d
7 8
2 0 2 1 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
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
Totals
Ordinary Shares
Number
67,305,270
46,192,082
28,602,713
13,883,203
12,297,037
10,531,761
9,717,820
7,831,658
5,760,003
3,717,308
3,565,705
3,495,266
2,819,338
2,658,984
2,497,947
2,190,580
2,163,017
1,969,395
1,835,520
1,612,904
230,647,511
Percentage
20.35
13.97
8.65
4.20
3.72
3.18
2.94
2.37
1.74
1.12
1.08
1.06
0.85
0.80
0.76
0.66
0.65
0.60
0.55
0.49
69.74
(d)
Twenty Largest Option Holders
The names of the twenty largest holders of Options are listed below:
Option Holder Name
CS THIRD NOMINEES PTY LIMITED
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