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Date : 23/06/2022

Why did the Deep Yellow Limited (ASX: DYL) share price shed 5% on Monday?

Deep Yellow Limited (ASX: DYL) is an ASX-listed uranium exploration and production company focusing on uranium projects in Namibia. The company is aspiring to be a tier-one uranium producer. The company aims to deliver positive results once the exploration and development of the Namibian project are completed.

Deep Yellow Limited aims to diversify its portfolio by acquiring different uranium businesses. The company hopes to have a prominent portfolio of different acquisitions and mergers, which will eventually start to deliver positive results from 2023.

The company’s Namibian project portfolio is managed by a wholly-owned subsidiary Reptile Mineral and Exploration (Pty) Limited (RMR).

Deep Yellow Limited (ASX: DYL) is currently in the process of acquiring Vimy Resources Limited (ASX: VMY).

DYL: 1H22 Key Financials

DYL stock was down 4.8% when Monday’s intraday trading session closed. The DYL stock closed at $0.60. The current market cap of the company is around 228.55 Million AUD.

DYL ASX

  1. The company’s revenue in the first half of 2022 was $288K.
  2. The company’s operating expense was $3.14, gaining 42% y-o-y.
  3. DYL recorded a net loss after tax of $2.8 million in 1H22. Its net loss increased by 36% y-o-y.
  4. The basic and diluted loss per share was $0.80.
  5. No dividends were announced for the period.
  6. As of 31 December 2021, the company had cash and cash equivalents of around $71.98 million.

DYL: Uranium is the Talk of the Town

A few weeks ago, when Australia faced an energy crisis, uranium became the talk of the town to utilise for energy production. The energy market fell due to the collapse of gas and electricity retailers. The world is going through disruption in the global supply chain of oil and gas.

During this time, a debate has been raised on whether Australia should consider utilising nuclear energy as an alternative energy source. It could solve the energy crisis in Australia.

Another news that hit the market during this time was that the Biden Administration had decided to not rely on the Russian Uranium Imports. The Biden Administration is pushing the lawmakers to approve a bill of $4.3 billion plan that will be used to boost the domestic production of Uranium in the United States.

This created a perception that ASX-listed uranium stocks would likely benefit from it. As a result, ASX-listed uranium stock was boosted last week, hoping that developed countries will turn towards Australia’s uranium supply. But today, this bubble has busted with the decline of ASX-listed uranium stock.

DYL Proposed to Acquire VMY

Deep Yellow Limited (ASX: DYL) and Vimy Resources Limited (ASX: VMY) are currently in talks in which DYL has proposed to acquire all shares of VMY by way of a scheme of arrangement.

The court has ordered Vimy Resources to hold a meeting of shareholders and vote on the scheme.

The Scheme Meeting, at which Vimy Shareholders will vote on the proposed scheme, is expected to be held at 10:00 am (AWST) on Wednesday, 20 July 2022.

Conclusion

Investors were quite optimistic about the Australian uranium stocks when the Biden Administration decided to stop buying uranium from Russia and promote domestic production. But today, all the expectations shattered when the uranium stocks on ASX crashed. It can’t be said whether the US will turn to buy Uranium from Australian companies, but one thing is certain: the US can’t fulfil its demand through domestic production.

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