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Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Completing the 100% Earn-in at the Moore Uranium Project, Upcoming Drill Campaign & Increased Institutional Interest in Recent Financing

August 21, 2018

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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, how are you this morning?

Jordan Trimble: I'm doing well, thanks.

Gerardo Del Real: Busy as always, you completed – ahead of schedule I should say – the 100% earn-in into the flagship Moore uranium project. That's important. You recently closed a financing, which I want to talk about what you're going to do with the funds, obviously, and you also raised an additional $450,000 from warrant exercises. So a lot going on. You have some drilling coming up, let's start there. Give us your thoughts, Jordan.

Jordan Trimble: Yeah, absolutely. We're just about to commence our summer 2018 drill program. We have planned a minimum 3,000 meters of diamond drilling at our flagship high-grade Moore project. The exciting thing about this program, it's really our first program almost exclusively focused in the basement rock. So as you're well aware, this project, the Moore project, when we acquired it from Denison, or the option from Denison, a couple years ago, which is now complete, in that we have earned in 100%.

The project had a lot of historical drilling on it, as we've discussed many times in the past. But a lot of that drilling was done relatively shallow into the sandstone to the unconformity, not really testing many deeper targets in the underlying basement rocks.

We know from recent discoveries like NexGen, like Fission, like Denison's Gryphon deposit, that some of the highest grade mineralization uranium in the basin is in the basement rock in these feeder zones and these structures in the basement rock. So we now have the targets refined and new targets to actually go down there with confidence and test these potential feeder zones in the basement rock. It's going to be, again, like I said, really our first shot at these targets.

With any success, we can tap into something much larger, much bigger. We know that we have high grade, very high grade, at the unconformity, some of our best drill results historically include 21% U308 over 1.5 meters within 6% over 6 meters. Again, this is at the unconformity. So where did that mineralization come from? It's likely come from these feeder zones in the basement rock, and that's what we're going to be looking for.

That will be starting shortly. If we have success, we may look to bump it up. We're fully funded for the program, and it will take us well into the fall news flow and updates to come out. So lots of catalysts on the near term for the company as we go back and test these feeder zones, the basement-hosted targets.

Gerardo Del Real: Can you talk about other recent basement-hosted discoveries? Because they're massive.

Jordan Trimble: Yeah, they are. The two most notable and recent ones are Fission and NexGen. So if you look at these two deposits, multi-hundred million pound deposits, very rich, very high grade, all hosted in the basement rock. But it's important to note, a lot of the historical deposits that have been found, that have been mined, you look at McArthur for example, a lot of the high grade at McArthur River, the richest uranium deposit in the world, is actually hosted in the basement rock.

A lot of mineralization that's been found in the basement rock, it's really just been in the last 20 or 30 years that the geological model and thinking has changed. Historically, a lot of the exploration was focused in the sandstone and at the unconformity, which is the contact between the sandstone and the basement rock. It's really just been in the last few decades where you've seen companies test a little bit deeper into the underlying basement rock and it's yielded some major, major discoveries, like those two companies and others as well.

We are pursuing that. Again, at this project, it's had a fair bit of drilling and we know there's high grade, but again, very limited testing into the underlying basement rock. It's important to note, too, the unconformity, the contact on our project, is relatively shallow at about 250 to 270 meters vertical. So even looking a little bit deeper in the basement rock, 300 to 400, maybe 500 meters at most, still relatively shallow compared to other Athabasca Basin deposits.

Gerardo Del Real: You recently financed and closed, I want to say that you're currently financed with over $3.2 million. This drill program, I believe, is budgeted for $1 million, and you also just made the final payment for the earn-in into Moore. Can you explain why that was important and what the cash position looks like now? I think it's at $3.2 million, but I just want to make sure I'm clear on that.

Jordan Trimble: Yeah, that's correct. And that's after we've made this final $300,000 cash payment to earn-in the full 100% interest in Moore. The deal we did with Denison a couple years ago – and it's important to note Denison is our largest strategic shareholder, they're an important partner for us, we've been working very closely with their team and their president CEO Dave Cates is on our board, on Skyharbour's board – but the deal we did with them a couple years back to acquire our flagship Moore project was an earn-in, an option earn-in for 100% of the project. We had five years to complete it and it included a share issuance, a cash payment of $500,000. So we've now completed that with this remaining $300,000 we've just paid. As well as $3.5 million dollars in exploration expenditures. Almost all of that was in drilling over the last several years in multiple drill programs.

We've now completed that. Denison had a buy-back option for 51% for just under $7 million, which they have elected not to exercise at this stage, which is good for us because now it pushes that option earn-in, we have 100%, but it pushes the option into this next 3-year period where we can either elect to spend another $3 million dollars at the project in exploration, which we've spent some money already and will continue to do that with this upcoming drill program. And if we spend that $3 million in the 5 years, we then essentially force Denison's hand on that buy-back option, and in order for them to buy back 51% at that point, they'd have to spend $17 million dollars, obviously substantially more.

So we're in a good place right now, in a good situation. This project really is the focus for us. We think there's a lot more value to be unlocked there, a lot more uranium to be found. As you mentioned, fully funded for this upcoming drill program and several other exploration programs going forward with $3.2 million in the treasury. We had some warrants exercise recently at $0.40 that were expiring just last week, so we saw a bunch of those come in as well, raised another $450,000 there. And then the financing that we closed a few weeks back for about $2.6 million, some of that flow through and some of that hard dollar.

We did see more institutional interest in that financing. Some of the larger orders were funds that came in, and I think that speaks to the improving health of the uranium market and improving investor sentiment in the uranium market. We are starting to see small funds and family offices come back. They're looking at it from a contrarian standpoint. But now we are seeing the price of uranium ticking up. It's started to build, get a little bit of momentum over the last few months. We've talked in the past about some of the recent developments including these supply cuts with Cameco and Kazatomprom and new purchasers coming into the spot market and new funds being set up to buy material like Yellow Cake out of London.

So we're seeing a confluence of factors right now that are positive from a macro standpoint. For Skyharbour, it's all about generating and having these catalysts on the horizon to really be poised for that move-up in the uranium market as we're starting to see. I really do think it's still the early days. At $26 a pound, there's a long way to go from here, given the average global cost of production's well above $40 a pound. And the price needed, again, to incentivize new mines and new development projects to come online is well over $60 a pound. So I do see a lot of upside still from here.

Gerardo Del Real: Fantastic. Well said as always. Jordan, I can't wait for this program to start and have you back on when we start getting assays in.

Jordan Trimble: Absolutely. Yeah, we'll have news coming out on the program over the next several months, and we also do have, as you're well aware, partner companies at other projects we have, in particular over on the west side at Preston with Orano out of France and Azincourt, both companies planning further exploration at that project in the coming months and early in the new year as well. So lots of news flow, lots of catalysts, and a rising uranium market.

Gerardo Del Real: Fantastic. Good stuff, Jordan. Thanks again for your time today.

Jordan Trimble: Thanks, Gerardo.

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