Active Member Straws

×

Add a Straw

Note: Maximum file size should not exceed 2 MB and file type should be JPG, PNG, PDF or DOC.
Private — only you will be able to see this Straw
Last edited 6 months ago
#Business Model/Strategy

Deep Yellow is an interesting company.  You can view their latest company presentation here and their website can be accessed here.

John Borshoff, Managing Director / CEO of Deep Yellow 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 the 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.

His team at Deep Yellow are almost all ex-Paladin:

 

  • Perth:
    • John Borshoff * - Managing Director/CEO
    • Gillian Swaby * - Corporate/Finance
    • Ed Becker * - Head of Exploration
    • Dr Andy Wilde * - Chief Geologist
    • Ursula Pretorius - Financial Controller
  • Namibia:
    • Martin Hirsch - Exploration Manager
    • Dr J C Corbin * - Senior Geologist-Specialist

* = Ex-Paladin Executive/Technical team.

All but 2 are ex-Paladin.

Skin in the game:

  • John Borshoff owns 4.3% of the company - 8,378,021 shares
  • Mr Rudolf Brunovs, DYL Chairman & Non-Executive Director, owns 11,488,107 DYL shares (5.9% of DYL)
  • Ms Gillian Swaby, an Executive Director, owns 4,829,006 DYL shares (2.5%)
  • Mr Christophe Urtel, DYL Non-Executive Director and current Group Head of Corporate Development for Anglo American, owns 16,856,647 DYL shares (8.6%)
  • Mr Mervyn Greene, DYL Non-Executive Director, owns at least 29,546,667 DYL shares (15%) and - if Commsec is correct - as much as 55,483,833 shares (28.5% of VMY) - although I suspect they have counted some of his indirect holdings again in his direct holdings (or vice versa).  Either way, Merv owns at least 15% of VMY.

Mervyn Greene is an experienced investment banker and entrepreneur who has been working in investment markets in Africa, Europe and the United States for more than 30 years. His most recent experience has focussed on private equity investment in a range of sectors, including property and he currently serves as Managing and Museum Director of EPIC - The Irish Emigration Museum - and is co-founder and Chairman of Dogpatch Labs, Ireland’s leading tech start-up hub. Both businesses are located in Dublin, Ireland.

From 1997 – 2005 Mr Greene was the London-based partner of Irwin Jacobs Greene, one of Namibia’s premier stockbroking, private equity and corporate finance advisory firms. Prior to this Mr Greene worked for investment bank Morgan Stanley in New York and London.

Mr Greene has a Masters in Mathematics and Bachelor in Engineering from Trinity College in Dublin. Mr Greene also has a Masters of Business Administration from London Business School.

Mr Greene was appointed to the Deep Yellow Board in November 2006 and was Chairman from August 2007 to August 2013.

For details about their other board members, click on their names (or faces) from this webpage.

For details of the suite of uranium assets they have assembled, check out the presso or their website (links at the top of this straw).

 

Disclosure:  I hold DYL shares.

 

Warning:  Very Speculative.  You would want to be positive on the uranium price outlook to be investing in a company like this, and they are explorers and developers, not producers, so while they will most certainly benefit from a higher uranium price, they may not benefit as much as others who have infrastructure already in place and who are better positioned to start producing sooner.

 

 
Added 4 months ago
#Business Model/Strategy

Recent Capital Raise: to raise approximately $9 million (before costs) @$0.31 (29,032,258 shares)

Aimed at promoting its two-limbed growth strategy

  1.  to further expand the existing uranium resource base of its Namibian projects; and
  2.  to evaluate the best approach to advance its project acquisition growth strategy, taking advantage of the current uranium downturn (counter-cyclical acquisitions to create a multi-project uranium platform.)

John Borshoff, founder of Paladin, became DYL CEO in October 2016

SP currently (June '19) hitting 52 week lows

Uranium sector turnaround likely (*DYL sees it as inevitable)

ASX Australia (6 listed Uranium) July '18 Market Cap $649M April '19 $462M -29%

Spot U price July ?18 (US$23/lb) & April ?19 (US$24.5/lb) - increase of +7%

Nambian resources: 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.

Japanese government JOGMEC joint venture (JOGMEC approves annual Joint Venture budget of A$1.05M for year end March 2020)

 

NOTE: High risk speculative play  - Operating at a loss and significant attrition of companies involved in Uranium post Fukushima (0ver 420 uranium companies 2008 worldwide now approx 64 companies. 

SP turnaround would be on the Spot price increasing significantly.

There are sharp disparities between supply and demand in the long run 

 

 
Last edited 6 months ago
#Bull Case

Deep Yellow is an obvious but overlooked opportunity on the ASX. I have seldom seen a better risk-reward proposition in my investing career, and while I entered heavily at 0.26 cents, the value is still apparent at 0.39 today. The investment will likely require patience, however, because multi-bag share price growth will be contingent on uranium prices reverting to their long-term mean.

Bull case is as follows:

- CEO John Borshoff, who took Paladin from a few cents to $11 dollars and back again - is one of the most renowned (if controversial) uranium entrepreneurs in the world - has a clear strategy and holds a lot of stock

- more significantly still, DYL's major shareholder is Rick Rule of Sprott Group, arguably the most successful mining investor of all time (look him up - it's an incredible story)

- uranium prices had been wallowing at all time lows around US$20/lb uranium for the last 18 months, despite many operators curbing production to reduce oversupply in the market

- supply destruction has resulted from big mines in Kazakhstan and Canada shutting down production; the spot price of uranium has hovered below the cost of production for some time

- fears of uranium being passed over for renewables are premature (don't believe the scare campaign: uranium remains a far superior option environmentally than fossil fuels)

- hundreds of millions of US, Chinese, Japanese and European households still require uranium to keep the lights on and that's not going to change over the medium term

- in fact, uranium plant building is accelerating not declining as many assume, with new projects being taking forward in China and the Middle East in particular:

https://www.statista.com/statistics/268154/number-of-planned-nuclear-reactors-in-various-countries/

- these plants require long-term contracts for operational certainty - DYL believes that uranium shortages will begin from 2022 onwards, which will propel the price higher again

- DYL's strategy is to pursue accretive, counter-cyclical acquisitions to build a global, geographically diverse asset portfolio, with Namibia as centrepiece (Africa's most stable mining jurisdiction). When prices spike, it will then take advantage of its high-quality yellow cake hoard

- in July, DYL announced a 32 percent increase in its Tumas 3 deposit

- DYL is reasonably well capitalised following a $16.5 million capital raise in June 2017.

 
Added 3 months ago
#Company Reports

24 July 2019:  Deep Yellow (DYL) June 2019 Quarterly Activities Report

This is a play on a recovery in the price of Uranium.  DYL was founded by and is run by John Borshoff (their MD & CEO).  

Mr Borshoff is an experienced mining executive and geologist with more than 30 years of uranium industry experience. He spent more than a decade at the start of his career as a senior geologist and manager of the Australian activities of German uranium miner Uranerz.

In 1993, following the withdrawal of Uranerz from Australia, Mr Borshoff founded Paladin Energy Ltd.  He built the 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.

Deep Yellow has accumulated a number of uranium assets and is in a really good position to make some big money when the price rises and sentiment turns more positive.

As always with single commodity exposure companies, you need to have formed a view as to the likely future direction of the price of the commodity - uranium in this case, so this is one for people who are bullish on uranium over the next year or three, and I'm one of those people, so I do own some DYL.  

However, it's not a large position, because you have to view such companies as speculative.  They don't have any operating mines, due to the low price of uranium over the past few years predominantly, and they are obviously loss-making at this point (having no sales or other reliable income), so by going long DYL you are betting that the environment they operate in will improve and they will be viewed as being worth more by the market in the future than they are today (and will be priced accordingly).

 
Added 4 months ago
#Capital Raising