Deep Yellow taps investors for $250m

Uranium explorer Deep Yellow plans to raise up to $250 million in a bid to further enhance its projects in Namibia and Western Australia.

The John Borshoff-led company told the market it intends to generate $220 million, before costs, across two tranches following binding commitments from institutional investors.

Deep Yellow also intends to raise an extra $30 million courtesy of a share purchase plan to eligible shareholders of the company.

Monday's news follows a recent dip in the uranium spot price - currently $US91.25 per pound - after it spent a considerable amount of time north of $US100 per pound across the first two months of 2024.

During the rise, some analysts predicted the spot price had the potential to reach up to $US140 per pound by the end of the year. 

Under the placement, Deep Yellow said it would issue approximately 179.5 million shares at an offer price of $1.22 per share, which represents a 3.9 per cent discount of the Subiaco-based company's closing price prior to its launch.

Deep Yellow closed trade down 4 per cent, trading at $1.21 per share.

Primarily, proceeds from the placement will be put towards the company's flagship Tumas project in Namibia, including potential construction following a final investment decision.

In addition, Deep Yellow is keen to advance growth at its Mulga Rock project in WA. Following a uranium mining ban in 2017 by the state government, Mulga Rock was one of four projects across the state permitted to continue mining activities, following ministerial approval.

On February 26, Mr Borshoff revealed that two deposits at Mulga Rock had benefited from an upgraded mineral resource estimate, with total contained uranium at the site increasing by 26 per cent, from 56.7 million pounds to 71.2 million pounds. 

"The Mulga Rock project represents a world class uranium project," he said.

"It is located in our home state of WA, and we are excited to be developing this world class asset in our own backyard. 

"When we first reviewed this project, we recognised the value of the uranium and knew we had the right skills to bring this into production.  We knew there were base metals and magnetic rare earth elements associated with the deposits and saw this as offering a huge value add to the project economics.

"This has provided an opportunity to upscale what was already an economically attractive project.  We are excited to be commencing the revised DFS on the back of the recent resource upgrade and look forward to how this project will develop over the coming year."