Categories: Energy
Topics: General Energy

Skyharbour Resources CEO Jordan Trimble on His Exploration Team, Influential Strategic Sharholders & Athabascan Uranium Assets

Aug. 17, 2016

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

Jordan is an entrepreneur who has worked in the resource industry with several companies. Specializing in corporate finance, strategy, shareholder communications, marketing, deal structuring and capital raising.

Now, Skyharbour Resources, is a uranium and thorium exploration company focused on the prolific Athabasca Basin of Saskatchewan, Canada, which is host, of course, to the world's richest uranium deposits and mines.

In July of 2016, Skyharbour secured an option to acquire a 100% interest in the Moore Lake project, the uranium project from Denison mines, which also happens to be a large and strategic shareholder of the company.

Jordan, thank you for joining me.

Jordan Trimble: Thanks, Gerardo, I really appreciate it.

Gerardo Del Real: Absolutely. Now, Jordan, I provided a brief introduction there, but for those that aren't familiar with you and with Skyharbour, can you please tell us a little bit about your background and Skyharbour Resources?

Jordan Trimble: Yeah, absolutely. I started running Skyharbour about three, three and a half years ago, now. I saw a real opportunity from a contrarian standpoint in the uranium sector, obviously post Fukushima, to go out there and start acquiring assets, building a company in the space that would really be a vehicle that investors could ultimately go to, to get exposure to this ultimate turnaround in uranium, in the uranium market going forward.

I knew it wasn't necessarily going to be overnight, but that's actually afforded us the opportunity to build the portfolio of uranium projects with a focus in the Athabasca Basin. Really one of the best jurisdictions globally and the highest grade depository of uranium globally.

Giving us the opportunity, acquire these projects for incredible valuations, build the company up, build the team up, strong shareholder base now behind us. I see this turnaround coming in the uranium market sooner than later. I think now we're at an inflection point. I think you're going to see it in the next twelve months.

My background, I've been working in the industry for a number of years now. I was with a company before Skyharbour Resources called Bayfield Ventures, a gold company in Ontario. My chairman, Jim Pettit, actually ran the company.

We ultimately sold the company to New Gold (TSX: NGD)(NYSE: NGD), a larger cap, mining, gold mining company here in Canada. Had some good success there. A CFA charterholder. I oversee all the corporate side of things here in Vancouver and have a geological team led by Rick Kusmirski, who'll I'll get into a little bit down the road on this interview, in Saskatoon.

Gerardo Del Real: Perfect, perfect. We talked about ... You mentioned the assets there and I definitely want to get into that, but whenever I look at a company, just from a speculator and a shareholder perspective, the first box that I need to check before considering investing or speculating in the company is always the quality of the management team.

One of the things that struck me about Skyharbour is the strength of the management and technical team that you've been able to put together. There's significant insider ownership, which I also love, 'cause it aligns your interest with shareholders’. Despite the tough uranium market you've been able to bring in a very experienced team.

Can you share with us the experience the management group brings and how you were able to put together such a strong, technical team?

Jordan Trimble: Yeah, no, absolutely, that's a big part of the story of Skyharbour. I've given you a bit of background on myself, the Chairman, Jim Pettit, who has over thirty years of experience, having built Bayfield and selling it to New Gold.

Rick Kusmirski, as I mentioned, he's the head geologist, the director and one of the largest shareholders of the company. Keep in mind, all of us insiders and the management team were also major shareholders in the company. Got a lot of skin in the game, which is very, very important.

Rick Kusmirski is worth noting. He has over forty years of exploration experience, with focused expertise in the Athabasca Basin. In fact, we call him "Radioactive Rick." He was with Cameco (TSX: CCO)(NYSE: CCJ) for a number of years, actually overseeing the exploration of projects for them on the east side of the basin, as the exploration manager. He left in about 1999, 2000. He started running his own company called JNR Resources, which I implore everyone to take a look at that. Had some great success in the early to mid-2000's, on the back of a number of notable discoveries. One of which, at a project called Moore Lake and the Maverick Zone, a high grade discovery there. It's on the east side of the basin. Now, Moore Lake is the project that we've now reacquired.

Rick and his team, knowing the project really, really better than anyone, having made the initial discovery there. With JNR, if you look at the chart, the company went from a market cap of about $5 or $6 million to, I believe, over $300 to $350 million in 2006, 2007. Share price increase from five or six cents, all the way up to over $4.00.

Rick ultimately sold JNR to Denison before he came on board with us here at Skyharbour. For him, he's looking to do exactly what he did with JNR and with the team that we've assembled here at Skyharbour. Looking to emulate the success that they had there.

David Cates just joined our board. For those of you who do not know, Dave Cates. He is the President and CEO of now one of our largest strategic shareholders, Denison Mines (TSX: DML)(NYSE: DNN). He's also the President and CEO of Uranium Participation Corp (TSX: U)(OTC: URPTF).

Denison, a Lukas Lundin company, development company with assets in the basin, been around for a number of years. Trades on the TSX, under the symbol, DML. A big name to have on our board, obviously. We're going to be working quite closely with him and their team in Saskatchewan. Working on the projects, in particular on Moore Lake, where Denison has carried out the bulk of the most recent exploration programs on the property. Great addition to have to the board. Certainly, again, from a $15-$16 million market cap company, like Skyharbour, a great name to have.

Last, but not least, just announced that Paul Matysek has joined as an advisor. I don't think he needs any introduction, but one of the most well known and respected names in our industry. He's a true company builder. You look at the four companies that he's built and sold over the last decade amounting to almost $2.5 billion in value creation. In particular, Energy Metals Corp, which was his uranium company, listed, traded on the New York Stock Exchange and he grew up from a market cap of $10 million in 2004 to approximately $1.8 billion when it was acquired by Uranium One in 2007. That was a big win. Obviously, his expertise ... He's a seasoned veteran in the industry, that will be invaluable for the company going forward.

Those are some of the highlights in terms of the management team and advisory board. Obviously, there's additional other directors and advisors and you can take a look at those on the website if you like.

Gerardo Del Real: Absolutely. Now, thank you Jordan. I encourage everybody to go to the website, 'cause there's really a who's who of names that's involved with Skyharbour. Now, I don't think it's a coincidence given the talent and the strength of the management team and the technical team, the assets that you've been able to bring together, which are near some of the best uranium discoveries, in recent memory, frankly. They have seen expenditures by previous operators, which I think exceed your current market cap. Can you share with us, some of the more prospective projects and how you were able to bring those into the Skyharbour portfolio?

Jordan Trimble: Yeah, so, as I talked about when we first started talking, the opportunity to acquire projects in the depressed uranium market was what really drew me into coming on board. I'm passionate about this industry. I see the cycle turning now.

We've gone out over the last three years and we've been opportunistic. We've been aggressive on the acquisitions that we've made. If you look at it, we now have a portfolio of five projects scattered throughout the basin. Uranium and even a thorium component as well, but uranium focused. At various stages of exploration.

We are one of the only companies, sub twenty million market cap that has an NI-43-101 resource on one of the projects.

What I'm excited about is, we've been able to acquire these projects for really, I think, pennies on the dollar. If you look at the total amount we've spent, under three million, to build up this portfolio. The projects have had quite a bit of historical exploration. You're looking at about $60+ million dollars in historical exploration, which is important because you know where the targets are. You're not necessarily looking for that proverbial needle in the haystack. It's been found on a couple of the projects. So you're now going, you're looking to expand on some of these known zones. In particular at Moore Lake, a high grade zone that, called the Maverick zone, which we can go back into.

The projects also offer a lot of upside potential, discovery potential and it's important to note that as an exploration company in the Athabasca Basin, one of the biggest catalysts for us is discovery. Is going out there, making a discovery, look at companies like NexGen, like Fission, like Hathor... and the kind of value that they created, the returns that they generated for their shareholders. Even in a declining commodity price environment like we've seen with uranium over the last few years.

These companies have gone from $10, $20 million market caps to hundreds of millions in market cap. That's notable. That's worth noting, because that's what investors want to get exposure to. That's what we offer, is that potential upside discovery and value increase.

Gerardo Del Real: Absolutely. You mentioned the quality of the assets and the dominant land position. I understand that you plan to employ the prospect generator model. Which of course limits dilution and it gives shareholders more shots at a significant discovery.

Why the prospect generator model for Skyharbour and where are you now in executing that strategy?

Jordan Trimble: Yeah, so that's a model that I think has proven quite effective over the years. We have a number of projects now that we ... Since acquiring Moore Lake from Denison, which will be the flagship, that's where we will be spending the bulk of the exploration dollars. We have four other projects throughout the basin in notable areas, including one of the largest land packages in the emerging Patterson Lake district with NexGen and Fission near by.

The prospect generator model is a model that we can now look at employing going forward. Divesting and/or finding partners in some of these other assets that we have in the portfolio that can bring in some cash to fund exploration on the more core assets that we have like Moore Lake. Also, other companies coming in and funding exploration programs that will generate news flow.

We actually did this initially with our project at Patterson Lake, it's called Preston, whereby we brought in ... There was three partner companies that came in and helped fund the bulk of the $5 million dollar exploration program. It's less dilutive for the shareholders. It generates a lot of news flow through the exploration and I quite like the model going forward. I think it's a great way to compliment our exploration and drilling plans at Moore Lake going forward.

Gerardo Del Real: Agreed. Agreed.

You talked about having great partners and that's another quality that I constantly look for is a committed and influential shareholder base that understands the resource markets and the discovery process, especially in light of the tough uranium market that we've been in.

You have some of the most respected voices in the resource space that are committed long term shareholders. Along with, of course, we mentioned Denison mines, which again, they own approximately 18.7% of outstanding shares, if I'm not mistaken. Can you share with us some of the long term shareholders names and why there support is important?

Jordan Trimble: Yeah, investors want to know who they're investing alongside with. I think that's an important part of any story. After having closed this $2.5 million dollar financing, we have an impressive list of shareholders. As I mentioned earlier, the insider and management position, we own a lot of stock. You have Marin Katusa and his KCR fund that took a large position. Obviously Denison mines, as one of our largest strategic shareholders. Look at those groups. You're talking about just over 40% of the shares issued in outstanding. The structure, having 44 million shares out now issued and outstanding.

You've got a well structured vehicle. You got some big shareholders in there. Names including Jeff Philips, you have obviously Paul Matysek, Doug Casey. You have some well known industry experts that are getting behind the story that like what we're doing. We're looking to go out and make a discovery and continue building the portfolio of projects and watching the share price move in the right direction.

Gerardo Del Real: Absolutely, and for those that are listening and reading along, it's important to note that these are investors and speculators that understand the discovery process. I think it's critical that you have that long-term support. I congratulate you on being able to put together such an impressive list of supporters there.

We all know the uranium market has been tough these past few years. There are several indicators, however, that are beginning to line up, that kind of show it may be the ultimate contrarian play right now for patient investors. Much like precious metals were going into this year. What do you see developing in the uranium market?

I know you just recently returned from a conference in Boston, if I'm not mistaken. You mentioned off air, some of the opinions and some of the feedback that you were receiving and the renewed interest in the sector. What are you seeing out there?

Jordan Trimble: Yeah, it's interesting because you have a lot of narrative right now that revolves, that's focused on the turnaround, the inevitable turnaround. I don't think there's any argument that uranium market is going to rebound. It's just the million dollar question, which is “when?”.

I see it turning around sooner than I think most people think, within the next 12 months. The simple explanation and rationale behind my thought process on it is ... I look at what happened between the years of 2009 and 2011, when you did have a pretty big rebound in the uranium price and market, which was really driven by investors and speculators coming into the market. You did not have a new contracting cycle with utility so it wasn't like there was a whole bunch of new demand that came to market. Yet you had the price increase quite significantly. Uranium companies that did quite well and raised a lot of money and then obviously the market turn in particular in uranium. You had a black swan event like you had at Fukushima, which has really kind of crippled the industry for a number of years now.

I see in the next twelve months, as the resource market, in particular the mining market, picking up. I see spill-over in the uranium space. I think you're going to see investors take positions, build positions now sooner than later knowing that over the next few years. We're going to see a new contracting cycle from the utilities companies. A lot of these contracts are being entered into eight, ten, twelve years, fifteen years ago, expiring. They need long term secure supply of uranium for these nuclear reactors, both the existing reactor based and the new ones coming online.

You look at the numbers out of China, out if India, out of some of these other developing countries, nuclear's going to be an important part of the energy grid. China in particular looking to break ground on ten new reactors a year by 2020. They need that supply. A lot of these countries right now that need to go green that have big issues with pollution. Renewables is obviously going to be a big part of the solution, but so is nuclear.

The issue right now is you have a spot price trading near its historical low actually, historical low in inflation-adjusted terms. There just isn't the price right now to incentivize new mine builds. You're going to have to see a drastic move, increase in the price to bring new mines online.

I think we're going to see that sooner than later. One from investors coming in that are looking to take positions in the uranium space before that turnaround, but also real fundamental demand coming online with new nuclear reactor builds, in particular in places like China. A lot of supply is going to be needed to fuel those reactors going forward. I think the Athabasca Basin, obviously, given it's location in Canada, it's high grade. They're economic deposits even at lower uranium prices, that's going to be an important part of that supply, global supply going forward.

I do just want to touch on that note. Getting back to what Skyharbour is doing and this project that we've acquired. Moore Lake, from Denison here, the project that we'll be working on. It's important to note that as an exploration company, there's really two main catalysts. One, you obviously have the commodity, the commodity price increasing. As a junior company you get leveraged to that commodity price. When we see the uranium market turn, obviously Skyharbour and the other uranium companies will benefit from that.

As the exploration company, you also get exposure to one of the biggest catalysts for any one of these companies which is discovery or having exploration success. This project that, which is the flagship, for the company now, Moore Lake. It's had over $30 million in previous exploration, has a high grade showing, or high grade zone at the Maverick Zone. Again, my head geologist Rick Kusmirski, and his team at JNR discovered back in the early 2000s, the best drill result there is 4% U308 equivalent over 10 meters. The great part about it is, it's relatively shallow. You look at these other high grade basin deposits that typically are 500 or 600, 700 meters deep even.

This high grade lens or zone called the Maverick Zone is only about 260, 265 meters deep, which is great for a small cap, smaller cap exploration company. It obviously allows us to delineate this high grade zone with shallower holes. They're cheaper. They're easier to target.

The project has eight or nine other high priority target areas as well that have mineralization and so there's a lot of upside potential elsewhere on the property.

We're going to be drilling there later this year, early next year. That first initial drill program will generate lots of news flow. I think we'll have a positive impact on the market.

Gerardo Del Real: Absolutely. You recently closed a financing, if I'm not mistaken, about a week ago. Is that correct?

Jordan Trimble: Absolutely. Just closed it here actually in the last few days, yeah.

Gerardo Del Real: Perfect and so the cash position right now for Skyharbour where does that stand?

Jordan Trimble: Yeah, so we just closed, it was $2.47 million, so net of everything you're at about $2.35 million. That covers ... We're fully financed for this initial drill program. We're looking to put about $1.2, $1.25 million into an initial drill program at Moore Lake. We are looking at a few other smaller programs at some of the other projects in the coming months here as well.

Fully financed here for the next year at least. We, as I mentioned, we will ... We're just in the planning phases right now of that initial program but it will be commencing here later this year, early next year.

Gerardo Del Real: Excellent. Excellent.

I understand that simultaneously, you're also seeking potential joint venture partners for some of the other projects. Is that correct?

Jordan Trimble: Yeah. Absolutely, we are in negotiations with a couple other companies on a few of the other projects. Given the location, the strategic location of a number of the projects, obviously, Preston, you have Fission and NexGen.

NexGen just released news last week on a new discovery at their project. As I said, we have one of the largest contiguous last packages in that area called the Preston project. Bit of work that was carried out by partner companies there.

We own 50% of it, another company owns the other 50%. Looking to bring in a joint venture partner on that project. We own a 100% of a project called Mann Lake, which is strategically located just southwest of McArthur River and north of Denison's Wheeler project.

We're adjacent to another property called the Mann Lake joint venture, which Denison owns 30% of. A high grade discovery was made there a few years back. Denison then purchased that 30% that they own from a company called International Enexco. Last but not least, Falcon Point. Falcon Point was a project actually in the JNR portfolio. Then, when JNR was acquired by Denison, we reacquired it. It's a big property package on the east side of the basin. We own 100% of it.

It actually has an NI-43-101 uranium resource as well as a thorium credit. We're actively looking to find a joint venture partner there as well.

The other interesting thing with Falcon Point is we carried out a sampling program late last year in 2015. We had a grab sample return 68% U308 at surface. A massive pitch blend vein showing at surface, which, needless to say, we're keen to do some follow up work on or find a partner company who can do some follow up work on that as well.

A strong diverse portfolio of projects at various stages of exploration. I think it will give us the opportunity to go out there, find joint venture partners, which obviously is great in that it can bring money into the company with less equity dilution. Also see the projects being advanced through field work funded by the other companies.

Gerardo Del Real: That's perfect. That's perfect.

Jordan, I want to thank you for taking the time to chat today. Is there anything else you'd like to add?

Jordan Trimble: No, I think that covers it. As I said, this company, it's been over three years in the making. We've been patient but opportunistic. I think we have a top tier portfolio of uranium projects in the basin. We're poised to take advantage of this turnaround in the uranium market. I think it's going to happen sooner than later.

We have an incredible management team and technical team. We're going to be carrying out a lot of exploration in the coming years. There's a lot of upside potential, discovery potential on these projects. We will look to bring in partner companies to help fund exploration on some of the non-core assets.

Keep an eye on the company. We got a lot going on. I think we're in for a good few years.

Gerardo Del Real: I agree. You have a large and very diversified land package. You have great neighbors, obviously in a premier uranium jurisdiction in the world. A good, tight share structure. You got a great team. You mentioned a long term committed influential shareholder base. I'm looking forward to seeing the Skyharbour story develop and hopefully we can have you back on soon.

Jordan Trimble: Absolutely, Gerardo, I really appreciate it and look forward to coming back on soon.

Gerardo Del Real: Thanks, again, Jordan.

Jordan Trimble: All right. Thank you.

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