Interview with John Borshoff, CEO of uranium company Deep Yellow Ltd (ASX:DYL)

A minnow turning into a shark? Alright, you have our attention.

Deep Yellow is a uranium explorer now entering a pre-development phase, listed on the ASX. Deep Yellow was founded with a focus on growing the existing uranium resources across its uranium projects in Namibia. However, the company emphasises M&A as a means of developing a geographically diverse asset portfolio, a "global multi-asset strategy." Deep Yellow promised an announcement of an acquisition last quarter, but this never materialised.

After listening to Borshoff's contrarian take on the uranium market, we wanted to hear about the main challenges faced by uranium juniors. Long-term uranium prices need to rise from the twilight zone of mid-US$30/lb to something more substantial that an industry can be built on: US$40-50/lb.

Borshoff is widely acknowledged as being the "father" of the uranium industry. His enormous US$4Bn success at Paladin Energy collapsed just as quickly as it was built after Fukushima, but we have no doubt of his expertise and experience. However, what will happen to the inexperienced uranium juniors who are currently hunkered down? What challenges will they face? Will they be take-out targets for larger uranium producers? The main issue for juniors, as Borshoff sees it, is a lack of "swallowers." There used to be a great deal of capital in the market, and many majors circling juniors ready to pounce. This has now changed, and while there are majors like Cameco and Kazatomprom that are still positioned strongly, juniors no longer have the safety net of being a near-guaranteed takeout target, and the majors that do exist are nowhere near as aggressive. The juniors are "eternal optimists," but, realistically, some of these companies are relying on "2+2" equalling "8." Juniors must think pragmatically. Borshoff thinks the uranium sector needs some of the juniors to act aggressively and grow in order to support the industry in a new bull market.

Moving onto Deep Yellow, specifically, the company promised global acquisitions but is today sat on just one asset developed asset. It is conducting a PFS and things are going well. The resource is large and has doubled initially indicated projected production. It has a +20-year life-of-mine, and this is only using a 20km radius of the 50km orebody. Any project that is adjacent will be supplementary added pounds. Borshoff argues he doesn't need to make acquisitions right now because he has enough lbs in the ground. He comments on Marenica Energy's' property, stating Deep Yellow withdrew from it because "it didn't suit" them.

Borshoff states that Namibia has its problems as a mining jurisdiction, but he states the Namibian authorities realise they need mining to improve their economy and try to minimise taxes as much as possible. He thinks Namibia is a genuine, honest jurisdiction with sophisticated dialogue paths. Nothing happens "at the whim." It appears stable. He thinks uranium will save the Namibian economy in the next 3-years.

Borshoff expects to have a PFS completed by September/October. It will be a platform for Deep Yellow to stand on, look at the market, and plan its entry point. Then it's a case of permitting and marketing. Hypothetically, by mid-2022, it will be a good time to make a development decision.

Why has Deep Yellow changed its tune on acquisitions? Can they deliver an acquisition in Q3/20. The company's Namibian play isn't the high-grade powerhouse most would expect to propel them into the global acquisition strategy. Borshoff disagrees. He thinks the Namibian asset, the Reptile Project, has a good chance to be a tier-1 asset. It's a solid project that, at the right price, will produce.

What did you make of John Borshoff? Does Deep Yellow stand out at all from the other uranium juniors?

Company page: https://deepyellow.com.au/

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