Discussions with Rio Tinto on some of its Namibian uranium tenements; the decision to divest its Australian properties, probably by hiving them off into an initial public offering; a capital raising; and another agreement for three other tenements in Namibia with Toro Energy – have all the ingredients of a sale, or at least a strategy to position the company as a more attractive proposition for investors and “large strategic players”

Managing director Greg Cochran wasted little time tidying up a company that has had a number of ups and downs since it listed on the Australian Securities Exchange as Julia Mines NL in 1985.

Cochran joined Deep Yellow in January 2011 and quickly realised the company had a lot of diverse properties and very little strategic focus, so he set about changing all that.

“In my time here since January last year our presentations have always been a focus around two key uranium projects, Omahola and Tubas Sands, and a third one Shiyela, an iron ore project,” he pointed out.

“Shiyela has been about assessing it and then making a decision about what to with it.

“But it has always been about the uranium.”

Deep Yellow’s 2875sq.km of uranium tenements are located in the prime Namibian uranium region with eminent neighbours including Extracts’ Husab and Ida Dome, Rio’s Rossing and Paladin’s Langer Heinrich deposits.

But while Cochran spent plenty of time extolling the virtues of uranium demand despite the Fukushima disaster and the virtues of Omahola, it was his rundown on the global uranium business that was interesting.

“We’ve seen a whole host of mines struggling to deliver and I’m talking about the Rio Tintos and the Camecos of the world,” he said.

“Look at Ranger and where it’s at and look at Rossing.

“It’s a tough business but that takes nothing away from the preparedness of large strategic players who have stepped in and acquired some juniors or a larger company in the uranium space, at significant premiums.”

It was an interesting topic, acquisitions in the uranium sector.

“And if you walk away with one lasting impression, it is the leverage that comes with the takeout in a uranium play,” he continued.

“Think about the published NPV [net present value] of the Husab deposits from Extracts,” he said.

“The published NPV by the company on the back of the feasibility study was $A200 million.

“Of course history shows that the Chinese have taken it out for well over $2 billion.

“That’s the sort of leverage that comes and the recognition by the industry players of the real value of credible, attractive and high grade projects.”

Well, he sold me.

Good location, plenty of prospective ground, excellent grades at 441 parts per million, an expected resource of about 50 million tonnes and plenty of options for processing makes the Namibian uranium projects highly appealing.

Throw in a number of joint ventures, one potentially with Rio Tinto and another with Toro Energy, plus the divestment of secondary projects and you have an interesting prospect for anyone interested in a promising uranium play.

Unfortunately I don’t quite have the spare cash at the moment to consider any acquisitions.