Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on High-Grade Results from the Moore Uranium Project & the Key Drivers for a Higher Uranium Price in 2019

December 18, 2018

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Skyharbour Resources (TSX-V: SYH)(OTC: SYHBF), Mr. Jordan Trimble. Jordan, good morning to you.

Jordan Trimble: Good morning. Thanks for having me again.

Gerardo Del Real: It's been a little bit. I think that last time we chatted was about a month or so ago. I was anticipating assays from the 100%-owned flagship Moore Uranium Project. You had some really solid news this morning, a couple of surprises. Let me go over some of the highlights. You intersected one of the broadest zones of uranium mineralization at the property to date and you also have found some nickel and some cobalt in there to throw in there.

Let's talk about that and let's talk about the mineralization below the unconformity or the discovery potential because I know that's something that you've got to be keen on for 2019.

Jordan Trimble: Yeah, it absolutely is and we have spoken about this before. The flagship project of ours, Moore, is ripe for discovery in the basement rocks. A lot of historical drilling in the sandstone at the unconformity, not a lot in the underlying basement rocks. That's one of the big reasons we get so excited about this project. As we know this program was really one of the first programs that has ever been carried out on the project for that matter. The majority of the drilling was drilled looking for basement-hosted mineralization.

We hit in the basement rock. You'll see the highlight hole there, Hole ML1814, one of broadest zones of uranium mineralization we've hit, 15.2 meters of over 0.50%. There's some high-grade zone of 1.8 meters at 3.11% U308. And of note, that 15.2 meter zone, the majority of that is in the basement rock. So we now know the basement has the potential to host high-grade uranium mineralization. That's at the Maverick corridor. This will continue to be a theme and a strategy that we pursue with the future drill programs. This program was slated to be 3,000 meters. We bumped it up to 3,800 because we were obviously happy with what we were seeing. And in this news release you saw we've announced a minimum 3,000-meter winter drill program to commence in the new year.

That $600,000 flow-through financing we just completed with basically one fund, one institutional strategic shareholder will cover the majority of that. So fully funded for that upcoming program which again, will look for more basement-hosted mineralization and continue to drill along strike.

As you know, with the Moore Project at the Maverick Zone, we have high-grade mineralization in these pods at the unconformity in the sandstone and now with these results here, we can see there is high-grade in the basement as well. So it's very exciting. It really is a relatively untested target type on the project and we think there is a lot more to be found in the underlying basement rocks.

Gerardo Del Real: You highlighted Hole ML1814 but Hole ML1815 actually gave you a 7.8 meter intercept that, of course, had some great U308 numbers. But you had some copper and some nickel in there. Was that a bit of a surprise?

Jordan Trimble: Yeah, it was. The uranium intersection there is definitely worth noting, 7.8 meters at 1.33% at about 265 meters depth. But surprised to see the high-grade nickel and the cobalt credit as well. So within that 7.8 meters, there was 0.44% cobalt and 1.62% nickel. We knew there were other metals, other credits if you will, in the high-grade uranium zones. In the historical drilling we saw that. But this was a pleasant surprise to see that kind of grade. It is something we'll look out for going forward. Not to take away from the uranium focus, but when you get those kinds of kickers in the high-grade uranium mineralization, it's definitely worth noting and hence why we have it in the highlights of the news release.

Gerardo Del Real: You mentioned the flow-through financing that went to a strategic, a fund that came in and took, I believe, all of it, if I'm not mistaken. What's your take right now on the disconnect between the uranium spot price, which has held up well and obviously surged in 2018 and looks poised to do the same in 2019 and the juniors that have kind of pulled back, frankly, to early 2018 levels.

Jordan Trimble: Yeah, you know what, it's something that's getting a lot of attention, right. We're seeing the spot price having built some momentum, and kept that momentum through 2018. Mind you it has been a bit flat in the last month but we have seen the equities pull back. I think it's a combination of obviously the timing, tax-loss selling. We're seeing it across the board with mineral exploration development companies and mining companies in general.

 I think the uranium companies are being kind of swept up in that as well. I think the market – we've spoken at length about this – I think the market that's out there looking to get exposure to uranium as an investment is looking for a breakout. They are looking for that bona fide big move in the price, in the spot price. We have seen it move up from the low $20s to the high $20s. We're still just hovering below that $30 a pound mark. I think that is an important price to break through and as we have spoken before, I think that'll happen here shortly. These things don't go straight up. We have seen a pretty significant move in the last, call it, 8 months but we are still trading well below the average global cost of production. And just getting back to the uranium market fundamentals, there is still a lot of tailwinds and a lot of catalysts coming up, right.

We have seen the supply side respond to the low-price environment. I think we will see continued supply cuts which will be positive for the price. We'll see these supply cuts happen as these long-term contracts and higher price contract expire, roll off, a lot of which expire in the next few years. And then on the demand side, we continue to see growth in demand in the developing world.

But one big theme this year has been these new funds, right. These new holding companies and funds that have come into the market, Yellow Cake raising over $200 million earlier this year to buy over 8 million pounds from Kazatomprom. Keep in mind, they can raise and buy $100 million dollars worth of Yellow Cake each year for the next 9 years. So that's many millions more pounds that potentially could come out of the market. You have Tribeca in Australia just recently, Uranium Trading Corp. raising some money. So there's new funds, there's new investor interest coming into this space. That'll help propel prices even higher.

And then last but not least, Cameco. This is one of the biggest spot market purchasing programs that we have ever seen. Cameco coming in to buy 11 to 15 million pounds directly in the spot market in 2018 and 2019. They have a number of larger deliveries early in the new year so they will be buying aggressively in the spot market. That very well could be the catalyst that drives the price through $30 a pound on its way higher.

So there is still a lot happening that will drive, I think, a higher uranium price and that's, I think, when you will see the equities respond. There is a lot of catching up to do, given the valuations have all pulled back. So I think when you see the price of uranium moving, breaking up, moving in the right direction, you'll see the equities move multiples of that.

And one of the last things to talk about, too, as I mentioned, these contracts. This has always been really the main driver for the price of uranium. New contracting cycle we're coming into, 232 down in the States, Section 232 the investigation. I think once that's resolved, once the U.S. utilities, who are the largest consumer of uranium globally, know how much they have to buy domestically, they'll get off their hands. They'll start contracting again. So the largest buyer of uranium comes back into the market because they have not been contracting while this investigation has been ongoing. So that will be resolved in the new year and I think that could be another catalyst to bring the utilities back to the contract market which will drive a higher uranium price.

Gerardo Del Real: Excellent, excellent. Now, Jordan, aside from the drilling at Moore which I believe you mentioned, you're planning approximately 3,000 meters. Is that accurate?

Jordan Trimble: Correct, yeah.

Gerardo Del Real: Perfect. And you'll also have partner company-funded exploration programs. Can we talk about that a bit?

Jordan Trimble: Yeah, so we have, and this is all recently announced, industry leader and partner of ours, Orano Canada, they announced a $2.2 million dollar budget for 2019. A very aggressive program, well ahead of their earn-in schedule, which is great. They like what they are seeing at our Preston Project. Within that $2.2 million, there will be a 4,850 meter drill program commencing shortly in January. They have crews in the field now getting ready for that. So that's great. That'll provide ample news flow for us as they advance that project. Again, that's a part of a larger $8 million dollar earn-in over a 6-year period, a deal we did with them a couple of years ago.

Then at our East Preston Project, our partner Azincourt, they just announced recently a geophysical program that they are carrying out right now to prepare for a drill program early in the new year as well. So you'll have three simultaneous programs, exploration programs ongoing early in the new year. Our drilling at Moore and our partners working at Preston and East Preston.

So a lot of news flow, a lot of that funded by partner companies. So we're in good shape. We will have ample news flow and catalysts in the new year, hopefully as we continue to see the uranium price moving in the right direction.

Gerardo Del Real: Jordan, always a pleasure catching up. Anything else that you would like to add?

Jordan Trimble: No, I think that covers it. Looking forward to the new year and I think this will be the year where we finally see the equities move in in lock step with the uranium price.

Gerardo Del Real: Let's hope so. We've been telling everybody that all year long, that 2019 is it. So keep our fingers crossed that we are correct.

Jordan Trimble: Absolutely.

Gerardo Del Real: Thanks, Jordan.

Jordan Trimble: Thank, Gerardo.

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