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Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Signs of Life in the Uranium Sector & Upcoming Partner-Funded Drill Programs at the Preston and East Preston Projects

November 5, 2018

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 good, thanks.

Gerardo Del Real: Got some action in the uranium market, I just got back from the New Orleans Investment Conference. I can tell you I got more questions about uranium than any other commodity. Signs of life in the space and finally signs of life in the equities. Before we talk about the good news you had this morning, can I get your take on the uranium sector?

Jordan Trimble: Yeah, sure. It has been a point of discussion for the last little while. We've talked about this several times over the last few months and seen the price continue to move higher and higher, just on Friday breaking through a pretty strong resistance level, hitting a 2.5-year high at $28.50, working its way up. Looks like it wants to test that $30/lb. level that we've talked about. I think once we see it break through that, it'll really get some momentum. It's great to see. Again, we've been talking about this for a while. It's finally happening. The fundamentals have lined up nicely with the confluence of factors and tailwinds, finally starting to see it materialize into a higher spot price.

As you just pointed out now, moving into the mining companies and the stocks, we're seeing share prices on the move as well, which is great to see. I think it's important to note there's still a lot more to come. We talk about the demand side continuing to grow, the acceleration of Japanese restarts, the continued rollout of the nuclear fleets in China, in India, and other parts of the developing world. The supply side's really what's responded to the low price environment.

Again, we've talked about this at length, with the largest producers, Kazatomprom out of Kazakhstan and Cameco, shutting down some of the lowest cost, largest uranium mines in the world. I think you'll see continued production cuts, especially as these higher-priced contracts expire. We know a lot of these contracts expire in the next five years. I think that's an important point to highlight going forward on why the price of uranium can trade even higher than where it is and the momentum to continue. A lot of these contracts at $50, $60, $70 expiring. We're still at, again, $28, $29 uranium. You aren't going to see a lot of contracting. You haven't seen a lot of contracting as a result of that.

That also plays in, and this was a point that was talked about a lot at this recent San Francisco mining conference I was at, and this is specifically down in the United States, is this Section 232, the ruling on that coming out here in the next several months, early in the new year, or the findings of the investigation. And then there's a three-month period for the U.S. government to make a decision on it, whether they want to force U.S. nuclear utilities to buy 25% of their uranium needs from domestic sources.

This 232 has essentially forced U.S. utilities over the last little while to sit on their hands. They haven't been contracting. The U.S. nuclear utilities account for the largest source of demand of uranium globally. The U.S. is the largest consumer of uranium for its nuclear reactor fleet. When you have the largest consumer of the metal not contracting, that does have an impact on the price, and it's not good.

I think once we see that ruling come down, there being some clarity on what U.S. utilities have to do going forward, that will actually add to the forces that be that are moving the price of uranium higher. You'll see that largest consumer, the largest buyer, of uranium come back to the market. Even if they have to end up buying 25% domestically, there's still that other 75% that they have to source from international sources. That will, I think, be a key catalyst coming up in the new year that will drive higher prices.

Gerardo Del Real: I think the commentary's spot on. You've been great about calling it, frankly, since the spot price was at about $18 a pound. We're flirting with $30 here. You've also done a fantastic job of positioning Skyharbour shareholders for success during the bear market. You've been busy. You're drilling, obviously, at the flagship. But you also had some news this morning regarding the Preston uranium property. Can we talk about that?

Jordan Trimble: Sure. This is a part of our prospect generator strategy. As you're well aware, we have our flagship project, Moore, which we're drilling at right now, which is really the focus for the company. High-grade drill results that we've reported there, just wrapping up an expanded summer and fall program, so keep an eye out for news on that project over the coming next month or so.

At Preston and at our East Preston properties, we have partner companies. At Preston, big French multinational Orano, which has just announced this morning plans for 2019 exploration programs, a very large budget of about $2.2 million. Within that, you'll see most of that going towards a 4,850 meter drill program to commence early in 2019. That's 15 to 20 drill holes testing to high-priority target areas, JL and FSA. Then on our East Preston, we had some news a few months ago on our partner company there, Azincourt, planning a drill program come January. Combined, you have multiple drill programs being funded by partner companies.

In particular, this news this morning with Orano on our Preston project just shows their level of commitment to the project. It's an $8 million dollar earn-in for up to 70% of the project over 6 years. Come March of 2019, they'll be two years into it, and assuming the $2.2 million that we've announced this morning gets spent, they'll be about halfway through that earn-in. That just shows they're ahead of schedule, committed to the project. And it also will generate news flow for us going forward. If they have success, we'll benefit from that with a retained minority interest in the project at the end of the day.

Gerardo Del Real: Now, for people that aren't familiar with the project, can you talk a little bit about where it's located? It's in the western Athabasca Basin. It's near NexGen's Arrow deposit and Fission's Triple R deposit, obviously two monster deposits. Eventually somebody's going to have to come in and consolidate all of those. Success there would be a big deal. Can you talk a little bit about the location and the upside there?

Jordan Trimble: Yeah, sure. It's actually adjacent to ground that NexGen holds. We share a property border that's quite long. It's a big property. Preston is about 40,000 hectares, and that's the partnership we have with Orano. Then East Preston's about 25,000 hectares. Big property package situated ideally on the west side of the basin, near the recent discoveries and notable high-grade deposits that Fission and NexGen are exploring and developing right now. This has really been the part of the basin that's seen a lot of exploration and discovery excitement over the last several years.

It's ripe for more discovery. I think with the discoveries at Triple R and Arrow by Fission and NexGen, it's really opened up this side of the basin, a lot of exploration that's being conducted. We were fortunate to benefit with two partner companies in Orano and Azincourt taking an interest and coming in and funding the exploration and advancing the projects, Preston and East Preston. The location's key.

It's a project that we had initially staked when we actually first started the company about five, five and a half years ago. We had a few partner companies that helped fund just under $5 million dollars in exploration on the property, taking it from an earlier stage, more grassroots property to a project that was drill ready. In fact, we did carry out several drill programs. Interestingly, one of the target areas that Orano is planning to drill, we did a little bit of drilling there back in 2014 and 2015. One of the holes that was drilled was actually lost in some very interesting looking rocks and very strong clay alteration and indicator minerals.

Again, very exciting to see them go back into this area with an aggressive drill program and budget plan for 2019. And if they can find something big, that's great for all parties involved.

Gerardo Del Real: Jordan, near-term catalyst, the flagship of course is the Moore project. When can we expect assays from that project? I'm looking forward to those.

Jordan Trimble: Yeah, absolutely. We should have final numbers out here within the next month, I'd say, and we're excited to get those numbers out. We're happy with the drilling there and the continued exploration that we've carried out. This'll be our fourth drill program since acquiring the project from Denison. We own 100% of it. We completed the earn-in in the summer. It's yielded some high-grade, notable drill results. One of the holes that we drilled in an earlier program intersected 21% U308 over a meter and a half within 6% over 6 meters. So some very high-grade and relatively shallow mineralization that we've found, and we're looking to expand that known high-grade zone.

But with this program, as we've talked about previously, what we're going after here is basement-hosted mineralization. Really, one of the first programs ever carried out on this property focused almost entirely on the basement rock. Should have news shortly, and then we'll be planning a winter program there which will commence early in the new year. Details on that forthcoming as well.

Gerardo Del Real: Good stuff. Jordan, I appreciate the update. Quick check on the market cap. What's that look like? I think we're at the beginning of what's going to be violent upside in the uranium market. Heck of an opportunity with Skyharbour. A lot of near-term catalysts. What's your market cap?

Jordan Trimble: Well, it's trading at about a $30 million Canadian market cap right now. So absolutely still a lot of upside from here, a lot of catalysts coming in the next 6 to 12 months. I think the backdrop of a rising uranium market helps that.

Gerardo Del Real: Fantastic. Jordan, thank you so much for the update. Appreciate the time.

Jordan Trimble: Thanks, Gerardo.

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