Categories: Energy
Topics: General Energy

Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Option Deal with Pitchblende Energy at the North Falcon Point Uranium Property in Saskatchewan

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, how are you?

Jordan Trimble: I'm doing great. Thanks for having me again.

Gerardo Del Real: It's been a few weeks. You had some pretty important news, something that I know you've been working hard on for, I want to say, months and possibly years. You signed a letter of intent to option out 80% of the North Falcon Point uranium property. Can you give us some details? A lot of really, really well-executed and structured deals here lately with you, Jordan. Obviously, you follow the prospect generator model, and this is good work.

Jordan Trimble: Yeah. As you know, it has been a work in progress and this is a part of our prospect generation business, the third partner that we brought in now. What's great about this is it's an Australian company, so we'll have some more exposure in Australia with this deal going through the LOI. We just announced we're working towards completing the deal with the definitive agreement being signed, but very exciting news. You saw in the news release the terms of the deal. This is what I think is noteworthy.

We have a deal whereby they can earn 80% of the North Falcon Point. I'll just note that that's the northern, essentially half, of our Falcon Point project. So we still retain the southern half, which has the deposit on it. The northern half, we will option out to Valor here. The terms of the deal, $3.5 million in exploration expenditures over a 3-year period and just under half a million in cash payments, as well as 250 million shares. Now we'll note that those shares, they closed at just over half a cent on the ASX. So it works out to, at the closing today, the price works out to about $1.5 million worth of stock.

So a very accretive deal for us and our shareholders. It's very exciting getting to work with this new group. And just some notables that are going to be involved and running the company going forward, a gentleman by the name of George Bauk, based in Perth. George is a well-known mining executive in Perth. He's been involved with several companies, has 30 years of experience under his belt. He's built several hundred-plus million dollar mining companies over his tenure, and recently a company called Northern Minerals that he had success with. And then before that, he was the managing director of a uranium company called Northern Uranium. So excited to be working with George and his team.

And then a gentleman actually based in Saskatoon, who I had the pleasure of meeting a couple of weeks back when I was there with my geological team, a guy by the name of Gary Billingsley, who is a geologist based in Saskatoon, a 48-year seasoned veteran. He's worked on many mineral projects in Saskatchewan. Knows the province very well. So he'll be spearheading the exploration programs at the project.

Just on that note, they have plans to get to work there in January and February. We're putting together helping them with a proposal on an initial work program. So you'll start to see the news flow ramp up in the new year, which is great. And that's a big part of working with these partner companies. In addition to the funding that comes in for the exploration, we we benefit with added news flow over the course of several years. We've seen that with our other two partner companies, Azincourt and Orano. So great complement to what we already have with our two other partners at Preston and East Preston. It'll just add to the news flow and add to the treasury going forward.

Gerardo Del Real: I continue to describe the uranium space as a rusty coiled spring, but a coiled spring nonetheless. Right? And so I think all of us are ready to see the utilities step off the sidelines and come into the market and really set things off the way that, frankly, I thought would happen this year. You and I talked about this a couple of weeks ago, but where do you see the uranium space headed here as we work towards the end of this year and into 2021?

Jordan Trimble: Yeah, I mean, look, right now it's at an interesting point because, as we spoke earlier in the year, in particular in April right after we saw some major supply disruption and production curtailment because of the virus, we saw a pop in the price, and we saw a very quick increase from the mid- twenties to the low to mid-thirties. It's settled in around $30 a pound. It has been trading sideways through the summer and into the fall, which isn't unusual given the time of year. But it would be good to see that next leg up.

And I think there are a number of key catalysts that will bring that to fruition here over the next several months. Right? One, first and foremost, we have seen a major supply side response continue to play out exacerbated by the virus. You have 180 million pounds of annual demand, and this year likely going to see less than 110 million pounds of supply based off of the supply disruption caused by the virus. And on that note, the supply side, there's still a lot of risk to the supply side going forward. Right? If we see second waves, if we see additional mines shut down even for short periods of time, that will have a major impact on the supply side. And that will force utilities to come back to the market sooner than later. So that's something to keep an eye out for, this supply deficit that we've seen exacerbated over the course of the year.

With regards to the utilities, they have been slow to come back and that is going to be the main driver for a higher price going forward. We've seen that in previous cycles. I have been hearing there's been some pretty significant off-market discussions and potential deals that could get done here sooner than later. And I think those are the deals that will be at the higher prices that everyone's expecting.

And at some point, look, that will transition into what we've seen in previous cycles, which is this herd mentality with the utilities, with the purchasing managers buying as much as they can, especially in the backdrop of a strained supply side. And I think that that's going to be coming sooner than later. And look, at $30 a pound, we're still well below the average, well below the global cost of production, well below the price needed to incentivize new production, new development. And so I think that that's just a matter of time.

You've had now some resolution to the Russian suspension agreement, which I think will help drive utilities back to the market. They have some clarity now on where they're going to have to source uranium from. So all of these factors, I think, this confluence of factors, will eventually lead to major utility buying. And again, there's also producers having to make up for the loss of production or for their curtailed production, including chemical. We saw Kazatomprom have to step into the market.

So again, just a whole confluence of factors. And I really do think, as you point out, it is a coiled spring scenario that's ready to go. And when it does, it moves quickly. And that is the one thing, we saw this in April, the price of the metal can move in the span of a few weeks very quickly.

Gerardo Del Real: And we saw the response with the few quality uranium names that exist, right?

Jordan Trimble: Yeah, absolutely. We saw that translate into higher share prices almost immediately. And that is something that I like to highlight with this sector. I want to emphasize that there really aren't that many ways to play the uranium space. There aren't a bunch of ETFs. There's just a handful of active mining companies left. And there's not many holding companies that can go out and buy physical uranium. The combined market cap of all publicly traded uranium companies is less than $15 billion, right? So if you want exposure to this commodity, to that eventual, inevitable price rise in the metal price, you're going to have to buy and look at a portfolio of mining companies in the space, and there aren't many left. And so I think eventually you will see that translate into much higher share prices. 

And getting back to the deal we announced today, I think that that's a small microcosm of what's happening. You're seeing investor interest in new companies that are coming into the space that want exposure to this commodity, because it's been so overlooked and under-loved for such a long period of time.

Gerardo Del Real: Not a lot of quality plays out there. It's not a coincidence that every time you are on a uranium panel, it's you and the same five other guys, right?

Jordan Trimble: Yeah. Absolutely. It's a very small community. And keep in mind back in 2007, there were over 500 publicly-listed uranium companies. It does show you how the pendulum can swing in this space.

Gerardo Del Real: Well, and they'll be back. Let's be clear. And I think that's why the work that you're doing now in setting up Skyharbour the way you have is critical for maximizing profits in a bull cycle. Right? The difference between a quality play with multiple properties and multiple real partners and someone new to the space that just decided to become a uranium company, looking for a project that has uranium at the end of it. There's a big difference there.

And I absolutely believe that the quality names like Skyharbour will capture a disproportionate amount of the initial capital that will be allocated to the sector once it turns. And that brings me to Moore. Right? I have to ask, how are things coming along there?

Jordan Trimble: Yeah. Things have gone quite well. And we've talked a little bit about this over the last several months, but very, very pleased with the drilling, the 2,500-meter drill program. We have results in assays pending for that. Again, the focus has been on the Maverick Corridor, looking for these higher grade feeder zones in the basement rocks. We really think we're onto something much larger there. And so that's a near-term, upcoming catalyst, the results from that program. Fully funded for programs next year as well, having raised money through one generalist fund just a couple months back here.

And obviously now with this new deal, we'll have some cash and some stock coming into the company, additional cash payments from other partner companies. So we're well-funded to execute on our game plan, which includes continued exploration at our flagship moor and multiple irons in the fire now with partner-funded programs at other projects.

Gerardo Del Real: A lot going on. Jordan, anything else you'd like to add?

Jordan Trimble: No, I think that covers it all off. And again, if anyone wants to reach out and discuss further, I'm always available. You can now get our contact on the website at skyharbourltd.com. Happy to chat with anyone.

Gerardo Del Real: Excellent. Thanks so much for your time, Jordan. Appreciate it.

Jordan Trimble: Thanks, Gerardo.

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