Categories: Energy
Topics: General Energy

Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Airborne Geophysics Survey Informing Upcoming Drilling Plans at the Moore Uranium Project & the Improving Uranium Industry Sentiment Coming Off the WNA Symposium

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 well. Thanks for having me again.

Gerardo Del Real: I'm glad it's fall. It's been a tough summer for the uranium equities. Despite that, the top management teams do what top management teams do. And that is to add value to existing projects, continue to develop them and advance them. And the real good management teams, frankly, go out and put their money where their mouth is, they eat their own cooking, they buy shares of their own company.

You check all three of those boxes, Jordan. So first off, let me start by saying I know it's been tough share price wise, but that shouldn't be confused for a lack of work or development, especially in regards to the flagship, the Moore Project, obviously.

Can we talk about that a little bit? You had some news today, you completed an airborne geophysics survey. You obviously have upcoming plans for drilling at the high-grade Moore Uranium Project. Important piece of news.

Then let's talk about your time on the road recently because it's been pretty substantial. Let's start with the news first.

Jordan Trimble: Yeah, absolutely. So this morning we announced an upcoming 2,500-meter drill program. This is an important program for us for a number of reasons.

One, the last program we carried out we intersected our highest grade mineralization in the underlying basement rock at the Maverick Corridor, in the East Maverick Zone of 2.3% over 2.5 meters. That was one of the last drill holes in the program. It was really a new discovery in the basement rock. We've been keen to get back and follow up on that.

Now, this recent geophysics that we've just completed has shed some new light on this area and other areas on that 4-kilometer long Maverick Corridor. What we're looking for there is high-grade mineralization in the feeder zone, in the underlying basement rock. And what we're looking for are cross cutting features or structures that allow more fluids to come up.

It looks like we've identified a handful of these, including at the East Maverick Zone as well as further up to the northeast, another target called the Viper target. So, these are top-priority targets that we're going to be drill testing.

As we've spoken before, we believe there is a much larger, higher grade deposit to be found at depth in the basement rock. When you are getting upwards of 21% U308 at the unconformity in the sandstone, it's come from Below. It's come from a source. And we think we're right there.

So a real important drill program coming up for us, it could be a game-changer if we're able to find a larger zone of higher grade mineralization. we think we can.

In the news release we outlined the plans for this program. So we have the Maverick East target as I just mentioned, the Viper Zone which is about a kilometer and a half to two kilometers northeast of the Maverick Zone.

And then interestingly, in the last program we had a regional target that we had really what we deemed to be a new discovery, at what's called the Otter Zone. Now this is about 9 kilometers away from the main Maverick Zone and where the high grade is. So it's on a different conductive corridor. It hadn't seen any drilling since the '80s. We went back there and drilled a few holes, it had anomalous mineralization in the basement rock. So we are going to do some follow up drilling there as well and hope to find more high grade on the project.

So a good solid plan going forward, again like I said it could be a game changer for us. Especially given the market value and current capitalization, I think we could see a significant move up with a couple of good drill holes.

Gerardo Del Real: You took my next question because I was keen to ask you about the Otter Zone. That target is particularly compelling to me, as it relates to success at the Maverick target. The reason is this, the Otter Zone is actually on land. Again, this is me getting way ahead of myself.

Let's assume there is success at Maverick, and then you can follow that up with success at the Otter Zone. The Otter Zone is accessible year-round. It's on a landward portion that you can explore basically all seasons. Is that accurate?

Jordan Trimble: Well, most targets on the project are land-based. And we can access them all year-round. The Maverick Zone and Corridor, the vast majority of the targets are land-based so we can get at them all year-round. It's actually quite easy to work there, it's not swampy, it's higher ground. So yeah, most of the targets we're drilling – and that's part of the target selection process – most of the targets we're drilling are land-based.

Gerardo Del Real: Excellent, and that's an important point to make. Let's talk about the share price a bit. It's obviously been a tough go that last couple of months. We do have some potential catalysts coming up. You and I spoke a little bit off the record the last time we chatted, Jordan, that despite the fact that you don't have any exposure to the U.S. Uranium market, you were hit pretty hard after the Section 232 news.

I know that you've been on the road. Can you talk a bit about the sentiment out there, and upcoming catalysts on a macro level, and just your general take on it?

Jordan Trimble: Yeah, like most of our peers and other non-U.S. companies, we've seen a pullback post 232. A bit of a head scratcher. That's certainly the feedback I've gotten from a lot of people and a lot of other companies that don't have assets in the U.S.

Clearly, what's happened is money that came in over the last year, year and a half, that was buying all the uranium companies – you have to remember this is a relatively small sector so money that comes in, especially if it's institutional money, is going to spread it around, they aren't just going to buy one or two names.

So that's what happened, we saw that happened a year ago when we were hitting our 52-week highs. They were coming in on a trade, it was an event-based trade and money that came into the sector. So when the 232 decision was announced, which was unexpected for most market participants in the uranium sector, we've had to see those positions unwound.

Needless to say, as a small cap, relatively illiquid name compared to the larger cap names, you obviously see an impact in the share price. So, I think we've seen the dust settle. As you'll see with my insiders, I've been buying quite a bit recently and will continue to do so. I think it's overdone. I think, given the upcoming catalysts that we have, company-specific with our drilling and our partner companies – don't forget we have two partner companies planning exploration programs here in the near future as well, Orano and Azincourt at our Preston and East Preston Projects – that's quite a bit of upcoming news flow.

To complement that we'll talk a bit more about my time at the WNA. There are some pretty significant near-term macro catalysts in the space. One of which being Cameco having to buy upwards of 12 millions pounds in the short term. Just to highlight that point, again I go back to a year ago when we saw strength in the sector, we saw the spot price ticking up, and we saw a lot of the uranium stocks hitting 52-week highs. A big part of that spot price increase was Cameco buying 8 million pounds in the spot market. That's what drove the equities higher.

We're now in a situation where the reset button has been hit a bit on valuations across the board. Yet, we see Cameco in a position where they are going to have to acquire some portion of that, I would think, in the spot market in the near term. So there is a good case to be had for a much higher spot price in short order.

Gerardo Del Real: Excellent, excellent. Let's talk about the WNA. How was the sentiment there?

Jordan Trimble: Yeah, the sentiment was interesting. I definitely say from the mining company perspective it was much better. You have to remember the WNA, World Nuclear Association, you have obviously the uranium mining companies, but you have the fuel buyers, utilities as well, and companies that work in the fuel cycle, enrichment and conversion, so on and so forth. So it's really the whole industry, if you will. The uranium mining side, supply side is just one part that's represented.

Why I say it was positive for the uranium mining companies was they do a bi-annual nuclear fuel report. This was definitely a highlight or takeaway for any uranium mining company. They issued it, and for the first time since Fukushimi, they project demand increasing in the upper, mid, and lower case. Previously, we had not seen that in the lower case. And in the upper case we see a doubling of demand over the next 20 years. And in the base case we see an increase of about 50%, so pretty significant.

But I think that lower case is worth noting. What that's showing is these plant closures are taking a lot longer. And it also is showing how sticky the industry is. These nuclear power plants can operate for many, many years. There's a handful that have operated for over 50 years. So that demand side is continuing to grow, especially in places like China and India and the developing world. As we spoke about before, it so very much is a growth story.

What's important to note, the WNA, which is one of the go-to sources for information for the nuclear industry, because of anti-trust laws, they can't speculate or factor in the price of the commodity and the cost of mining, the cost of extraction. So, when they forecast their supply going forward, previously, they've had a lot of projects that quite honestly are never going to see the light of day unless you see a much higher uranium price. They still can't factor that in, but they have addressed it now. That's included a couple things that they've done. They've accounted for idle mines, because we have seen some major shutdowns including the McCarthur River and other mines globally that are responding to this low-price environment.

And one note on the McCarthur River – and Cameco stated this – turning the light switch back on simply isn't that easy. There's a thousand employees that were laid off. These were highly skilled employees, they have to get re-certified, re-hired. So that's going to take time to turn that mine back on, which was the largest producing mine in the world.

They also talk about unspecified supply. So when you see the supply and demand, there's a pretty significant supply deficit, and that needs to be met by, as they deem, unspecified supply. That at least addresses this issue of price. The price of the commodity is simply too low at $25 or $26 a pound in the spot market. That does not incentivize new production to come online, the average global cost of production is much higher.

So, we're going to have to see the price increase. As I pointed out earlier, there's good rationale right now to see that price higher in the shorter term versus the longer term.

Gerardo Del Real: Jordan, always insightful. I appreciate it. Anything else that you would like to add?

Jordan Trimble: No, I think that's it. I'll just re-highlight our upcoming drill program. As I said this is a big program for us. Testing these targets in the basement rock, we truly believe there is something much larger and higher grade to be found at depth. Keep in mind it's still relatively shallow, we're only talking about 300-350 meters, the unconformity being at 250-270 meters.

So the drill program that we have coming up, as well as our partner companies Orano planning a program coming up, a fairly large program. Azincourt recently announcing also a 2,000-2,500 meter drill program at our East Preston Project.

We have some option payments coming in as well over the next 6 months from partner companies. We're in good shape here. We have a lot of news flow in the near term coming up. As I said, I think we're going to be good backdrop with potentially the spot price ticking up on the back of Cameco buying and potentially utilities coming into the market as well.

Gerardo Del Real: Excellent, good work, Jordan. Thank you again.

Jordan Trimble: Thank you.

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