Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble: Robust Drill Results from Winter Drill Program at the Moore Uranium Project Exceeded our Expectations
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of Skyharbour Resources (TSX-V: SYH)(OTC: SYHBF), Mr. Jordan Trimble. Jordan, thank you for coming on.
Jordan Trimble: Thanks for having me.
Gerardo Del Real: Well you had some excellent news this morning from the Moore Uranium Project. Could you give us the details on it? Some high-grade stuff, near surface and a long, long, long strike length, so really exciting. Can you break it down for us?
Jordan Trimble: Sure. The news this morning, we announced the results from the 15 hole drill program. We finished up our first phase of drilling at the project since the option deal was signed with Denison Mines last August. Our first pass at this project, we sunk 15 holes just under 5,500 meters, which we had bumped up from 3,500 meters, given what we were seeing in the program. Very, very pleased. Exceeded our expectations. The results, as you can see in the news release, some very high-grade results. It's shallow mineralization within 300 meters vertical depth. Seven of the 15 holes had high-grade mineralization over 1%. All of the holes that were drilled to the target zone intersected mineralization, uranium mineralization. That's important to note. There were two holes that deviated and those were the only two holes that did not have uranium mineralization in them.
What that's showing us is that geologically this project is quite robust. There's a lot going on there geologically, which is good. You want to see those reactivation events. You want to see strong mineralization. We're seeing that. The highest grade of hole being 21% U308 uranium over a meter and a half. We had 9% over 1.4 meters. These are all within broader zones. That one, 9% over a meter and a half, within a zone of about 4.2% over 4 and a half meters. The 21% over a meter and a half, over a 6 meter zone of 6%. So very pleased with what we're seeing.
Another note too is we are discovering new high-grade lenses. The project has a lot of history. There was a fair bit of historical drilling, relatively shallow drilling along the four kilometer, along Maverick corridor, as we call it, conductor corridor. Really only a kilometer and a half though has been systematically drilled. Even within that we're finding new high-grade pods. That 9% over 1.4 meters, that's a new high-grade pod about 100 meters away from the known Maverick high-grade pod that had the 21% over a meter and a half. There's a lot of room to move along strike. As I said, really only a kilometer and a half has been systematically drilled, so you've got two, two and a half kilometers where there's the potential for high-grade uranium mineralization, additional high-grade lenses or even a much, much bigger zone of mineralization. This is a model that we see very often in the basin. We see it at McClean Lake, the Sue deposits. Even at McArthur River, where there's the pearls on a string and then what you hope to find at the end of the day is a much bigger deposit, higher grade from either the feeder zones in the basement rock or along strike on the corridor. So excellent results early on with the drilling of this project for Skyharbour, more to come.
We're going to be now expediting this summer program, summer drill program, which we're fully funded for. We're also fully funded for next winter's drill program in 2018, call it January through March. We just closed, as you probably saw, 2.7 million total. Most of that flow through at 60 cents with no warrant, mainly institutional and placed as well, so we're in good shape financially and we're very pleased with this first round of drilling.
Gerardo Del Real: Excellent. Well you provided some very good links here in the news release. I encourage everybody to go to the website. It's skyharbourltd.com. That's s-k-y-h-a-r-b-o-u-r-l-t-d.com. A lot of good maps on there and a lot of good detail as far as the program, and obviously it's going to be an exciting time in the next couple of months. Your model thus far, it seems to be holding up. The continuity, we talked a bit off air, Jordan. How is that coming along? Is it pretty consistent with what you expected?
Jordan Trimble: Yeah it is. As I mentioned earlier, we see these pods, these lenses along this main corridor. That's what we're trying to tap into, right. You want to find additional pods and lenses and then ultimately we do believe there's a much larger mineralized zone, high-grade that we can tap into. There's really two main target types. It's important to emphasize this point. There's the unconformity or above the unconformity, the sandstone host mineralization. Most of the mineralization that we have here is within that. Below, in the basement rock, below the unconformity, you've got the basement hosted mineralization.
Now, this is what we see at NexGen's Arrow deposit. It's what we see at Fission. This is even what we see at Denison's Gryphon deposit as well. In the last 15 years, that's been something that's kind of changed in the basin, the thinking exploration methodology is to drill a bit deeper or drill even outside the basin itself, outside the sandstone cover and looking for these basement hosted deposits that come up in these structures and these feeder zones. The Moore project has had a lot of historical drilling but most of that drilling carried out 15, almost 20 years ago, was focused at, in and around the unconformity, so there's still a lot of upside potential in the basement rock, both at the Maverick zone, along the Maverick corridor and at other regional targets on the project.
It's important to note as well that four kilometer long Maverick corridor, that's one of several corridors on this project. There's other regional targets on the project that we would like to go drill test at some point in the next 12 months, with either the summer or the winter drill program that have a lot of potential. On this project most of the holes that have been drilled have mineralization in them. As I highlighted earlier, very strong geology, geological system there, which shows the potential for additional high-grade uranium mineralization to be discovered, and that's what really we're trying to uncover here with the drilling.
As I said, we will be starting a summer drill program soon. That will result in news to follow there, as well as a winter program next year. The project is on the east side of the basin. It's about 35,000 hectors, big property, but it's important that it's on the east side of the basin near infrastructure. It's beside the road that goes up to McArthur River. We're about 15 kilometers east of Denison's flagship project, the Wheeler project. Denison is our largest strategic shareholder. The President and CEO, Dave Cates, is on our board so we have a strategic partnership with them. It's quite close to their main project, so you're on the east side where there's infrastructure. Your drill costs come down and because the mineralization is shallow, that's also important, not just because it's cheaper to drill. You have a higher potential success rate with the drilling because you're not having to drill deep holes to thread the needle, but also down the road, this will help with the economics of the project as well. So a couple of key points there to highlight as well.
Gerardo Del Real: Excellent. Well, obviously Moore is the flagship and deservedly so, the results speak for themselves, but you do have other irons in the fire. I know you recently announced that your partner on the East Preston uranium property, your partner Azincort, has announced a summer/fall program if I'm not mistaken.
Jordan Trimble: Yeah, so we announced, just in the last few months, two separate option deals. One with Azincourt, as you just mentioned at East Preston, as well as a larger option deal with industry leader AREVA, based in France. AREVA is coming in. There's an option agreement with them, whereby they can earn in 70% on the central portion of the Preston project, by spending $8 million dollars total, over the next six years, most of that in exploration. Azincourt to earn in on their portion of the project, 70%, has to spend a total of $3.5 million dollars over the next three years. That's $2.5 million exploration, $1 million in cash. They also issued us shares in the company. Two partners coming in, earning in 70%. This is over on the west side of the basin, proximal to Fission and NexGen.
They're going to be starting their exploration programs this summer, as you saw the news from Azincourt. AREVA, as well, planning exploration for this year, so it's good to note that it's not just about our drilling at Moore. That's obviously the flagship. That will be the main catalyst for the company but we have several irons in the fire. We'll be using this prospect generator model on our secondary projects like Preston. We have partner companies coming, spending the money, carrying out the exploration. We'll benefit from the news flow from that, so for the remainder of this year you have drilling that we'll be carrying out at Moore, but you'll also have exploration that Azincourt and AREVA will be carrying out as well, so you'll have lots of news flow from three programs for the remainder of the year, which I think the market will react positively to.
There's also a lot happening on the macro side of things with uranium right now. We've spoken about this is the past but just about a month ago you had the World Nuclear Fuels Conference in Toronto. Kazakhstan, there's talks there of an additional cut in production, which would be, we saw the impact that had in the market back in January and February of this year, so if we do see additional cuts from Kazakhstan, that'll be very positive. We also have Japan, the nuclear restarts there. The two Takahama reactors, fuel being loaded into those reactors, expecting those to come online shortly.
We have several other reactors that are basically at the one yard line with the restart process and if we see additional reactors come back online between now and the end of the year, that will be very positive for the space as a whole.
Gerardo Del Real: Excellent. Well, you're fully funded for multiple drill programs. You have some excellent, committed long-term strategic shareholders. Jordan, what's the market cap at right now because I think if you're a contrarian at all, I consider myself a contrarian, there's very few speculations out there that are as compelling as Skyharbour. Can you just provide an update on the actual market cap?
Jordan Trimble: Yeah. It's about $20 million dollars, just over $20 million dollars Canadian, so call it $15, $16 million dollars US. We have just under $4 million dollars in the treasury, so enterprise value of about $12, $13 million. It's exciting for us. I think you hit the nail on the head there. This is still a small cap but we're already with the first phase of drilling, hitting high-grade uranium mineralization. There's very strong potential for additional discoveries at Moore with these drill programs we're planning to carry out over the next 12 months, which we're fully funded for, but now you also do have the other partner companies, AREVA, Azincourt coming in and they'll be commencing exploration programs this year as well at Preston. You'll have a lot of news flow. You have the potential for positive macro news as well, both on the demand side with new reactors coming online in China, India, and other parts of the world, the Japanese restart.
Also, on the supply side, if you see additional supply cuts, production cuts, that will be very positive. We saw in January, February, how the market reacted initially to those production cuts. A lot of the companies, a lot of the stocks performed quite well early on in the year so there is still, I think, a strong contrarian opportunity here given that the valuations are still very low. There's not a lot of companies left. We've talked about this point before. It's a sector that's really been beat up. It's created an opportunity, I think, to invest in companies, uranium companies near all-time lows, commodity price still at $22, $23 US a pound in the spot market. There's only one mine in the world that makes a profit at those prices, the lowest cost producing mine in Kazakhstan. I think there's a lot of upside on the commodity itself. Timing, that's the million dollar question, but if we see additional supply cuts, I think that will expedite the timing of that price increase.
Gerardo Del Real: I agree. I agree. You mentioned the contrarian opportunity. I mentioned some of the long term strategic shareholders. Can you just provide us like a brief list of the top three or four names that have invested the so-called smart money in the business that are in on Skyharbour at these prices?
Jordan Trimble: Yeah, absolutely. Denison Mines is our largest strategic shareholder. They actually put some more money in this recent financing we just closed. As I mentioned, the strategic partnership with them, with Moore being on the east side near Wheeler. David Cates, the President and CEO on our board. Marin Katusa, the KCR Fund, has been a cornerstone investment for us for years now. Another contrarian like yourself. We've had a few institutional investors funds out of China, the US, Canada, in this recent financing that we just closed. Jeff Phillips, who you know quite well, down in San Diego. A few other notable names in the industry. So it's important to have, obviously, a strong management and technical team as we do, Rick Kusmirski, being our head geologist. Radioactive Rick as we call him, previously with Cameco and then sold his company, JNR, to Denison a few years back, and then he came on with us at Skyharbour. But it's also important to have long-term shareholders who understand the industry, who are value add, and we have that at Skyharbour.
Gerardo Del Real: Fantastic. Jordan, I want to thank you so much for your time. Hopefully we have you back on soon to get the details of the upcoming drill program as you put that together.
Jordan Trimble: Sounds good, Gerardo. I really appreciate it.
Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.
Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.
@RSDigest ON TWITTER
Small Cap Stock Digest