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 1 2 0 2 1 A n n u a l R e p o r t 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 2 2 0 2 1 A n n u a l R e p o r t 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 3 2 0 2 1 A n n u a l R e p o r t 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 4 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 5 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 6 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 7 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 8 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 9 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. D e e p Y e l l o w L i m i t e d 1 0 2 0 2 1 A n n u a l R e p o r t 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. D e e p Y e l l o w L i m i t e d 1 1 2 0 2 1 A n n u a l R e p o r t 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. D e e p Y e l l o w L i m i t e d 1 2 2 0 2 1 A n n u a l R e p o r t 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. D e e p Y e l l o w L i m i t e d 1 3 2 0 2 1 A n n u a l R e p o r t 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. D e e p Y e l l o w L i m i t e d 1 4 2 0 2 1 A n n u a l R e p o r t 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 D e e p Y e l l o w L i m i t e d 1 5 2 0 2 1 A n n u a l R e p o r t 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. D e e p Y e l l o w L i m i t e d 1 6 2 0 2 1 A n n u a l R e p o r t 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. D e e p Y e l l o w L i m i t e d 1 7 2 0 2 1 A n n u a l R e p o r t 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 1 8 2 0 2 1 A n n u a l R e p o r t 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 1 9 2 0 2 1 A n n u a l R e p o r t 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 2 0 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 2 1 2 0 2 1 A n n u a l R e p o r t 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 2 2 2 0 2 1 A n n u a l R e p o r t 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 2 3 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 2 4 2 0 2 1 A n n u a l R e p o r t 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 2 5 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 2 6 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 2 7 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 2 8 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 RK:DA:DYL:008 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 RK:DA:DYL:008 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 LTDBNP PARIBAS NOMINEES PTY LTD MR JOHN BORSHOFF MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM MS GILLIAN SWABY BNP PARIBAS NOMS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 MR ED BECKER HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED ELEGANT WORLD PTY LTD MCNEIL NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED URSULA PRETORIUS J P MORGAN NOMINEES AUSTRALIA PTY LIMITED MR JEAN CORBIN RAVELLO GROUP PTY LIMITED 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 LIMITEDCITICORP NOMINEES PTY LIMITED BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD BNP PARIBAS NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED EQUITAS NOMINEES PTY LIMITED BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM MRS CATHERINE JANINE DENTRINOS + MR NICKOLAS DENTRINOS ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD MR GERARD MEEHAN MR PHILIP BOMFORD BASIL LADYMAN PTY LTD MR BENJAMIN PETER GRILLS MR COLIN MACKAY MR ANTHONY JOHN VETTER + MRS JEANNETTE VETTER MR BENJAMIN PETER GRILLS + MRS JESSICA LEE NAY-GRILLS UBS NOMINEES PTY LTD MR KIRK PETER LINDESAY MR BRENDON TONY DUNSTAN MRS SHAMIMA FARZANA PPF ADVISORY PTY LTD MR STOJCE SULESKI MR POH SENG TAN Totals Options Number 11,600,000 9,009,537 6,412,744 2,604,578 1,999,357 1,623,721 1,053,904 1,039,603 800,000 740,645 475,000 464,000 453,316 377,954 310,000 299,999 296,774 295,300 215,000 200,000 200,000 200,000 200,000 200,000 41,071,432 Percentage 22.81 17.72 12.61 5.12 3.93 3.19 2.07 2.04 1.57 1.46 0.93 0.91 0.89 0.74 0.61 0.59 0.58 0.58 0.42 0.39 0.39 0.39 0.39 0.39 80.77 (e) Restricted Securities As at 30 June 2021 there were no restricted securities. D e e p Y e l l o w L i m i t e d 7 9 2 0 2 1 A n n u a l R e p o r t SCHEDULE OF MINERAL TENURE As at 10 September 2021 NAMIBIA Number Name Interest Expiry Date JV Parties EPL 3496#1 EPL 3497#1 MDRL 3498#2 Tubas Tumas Aussinanis 100% 100% 85% 04.08.2021 04.08.2021 05.01.2025 - - [5% Epangelo #4 10% Oponona#5] EPL 3669 EPL 3670 Tumas North Chungochoab 65% 65% 30.03.2022 30.03.2022 [25% Nova (Africa) #6 10% Sixzone #7] ML 176 #3 Shiyela 95% 05.12.2027 5% Oponona #5 EPL 6820#1 Rooikop East 100% 02.08.2023 - Approx. Area (km2) 672 287 142 122 477 54 109 #1 5% right granted to Oponona#5 in 2009 to participate in any projects which develop from these EPLs #2 A Mineral Deposit Retention Licence (MDRL) to secure the uranium resource within EPL3498 was granted on 6 January 2020. #3 Located entirely within EPL3496 #4 Epangelo Mining (Pty) Ltd #5 Oponona Investments (Pty) Ltd #6 Nova Energy (Africa) Pty Ltd #7 Sixzone Investments (Pty) Ltd #8 Equity interest 65%, however JOGMEC currently hold a right to equity of 39.5%, which if exercised would amend the JV Parties' interests. Whilst JOGMEC has not yet exercised its option, the JV parties are contributing in those proportions as though the interest had been exercised as indicated below: Reptile Mineral Resources and Exploration (Pty) Ltd Japan Oil, Gas and Metals National Corporation (JOGMEC) Nova Energy (Africa) Pty Ltd (Subsidiary of Toro Energy Ltd) Sixzone Investments (Pty) Ltd 39.5% 39.5% 15% 6% (free carried) AGREEMENTS ABM Resources NL - Northern Territory (100% uranium rights stay with DYL) 1,959 Approx. Area (km2) 5,257 5,257 D e e p Y e l l o w L i m i t e d 8 0 2 0 2 1 A n n u a l R e p o r t Unit 17, Second Floor, Spectrum Building, 100-104 Railway Road, Subiaco, Western Australia 6008 Tel: +61 8 9286 6999 Email: info@deepyellow.com.au www.deepyellow.com.au