Categories: Energy
Topics: General Energy

Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Announced Drill Program at the Moore High-Grade Uranium Project & Partner-Funded Exploration Programs at the Preston and East Preston Uranium Projects

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 today?

Jordan Trimble: Doing good. Thanks for having me.

Gerardo Del Real: You and I were talking a bit off air, and of course we're in what looks like it's going to be a historic gold bull market. We commented that I believe we're going to be in a similar situation with uranium here soon. The better companies and the quality management in any space, frankly, always use quiet moments to add value. I think that the way you've approached developing multiple projects, bringing in partners while simultaneously developing the flagship, you deserve credit for that. I think it's going to be rewarded. 

To that end, you just had news announcing an upcoming 2,500-meter summer diamond drilling program at the high-grade Moore uranium project. Can we talk about that a bit?

Jordan Trimble: Yeah, absolutely. I'll start by saying, I agree. I think we'll have a year where both yellow metals shine. We've seen obviously the gold market come to life here, breakout. We saw, I think, the first part of that with uranium in April. It's been a bit quiet since then, but we'll talk a little bit more about the uranium market later on in the interview. 

Quickly to cover off the news from this morning, we've announced a 2,500-meter planned drill program at our flagship Moore high-grade uranium project, ideally located on the east side of the basin. Seven to nine drill holes planned. Just to cover off the targets, we just had our team up there over the last several weeks, finalizing these drill targets. We're going to continue to chase and hopefully discover more high-grade, basement-hosted uranium mineralization at the Maverick and East Maverick zones.

As you may recall, in our last program earlier this year we doubled the strike length at East Maverick with some high-grade mineralization discovered in one of the holes there. We're going to continue working on that. There's still a lot that we believe is yet to be discovered at depth in the Maverick and East Maverick zones. We're also going to be looking and drill testing a few targets to the northeast. So it's a big long corridor, just under 5 kilometers long. The Maverick structural corridor really has only been systematically drill tested down to the unconformity, so not also including the basement rock, but down to the unconformity for about half of that strike length.

There's a zone called the Viper zone. We have done a little bit of drilling there, some exploratory work in previous programs over the last several years, but very sparse drill holes. There's the potential for more mineralization and higher grade pods to be found, both in the sandstone and in the basement rock. Those are going to be the two main target areas. 

There's still a lot of blue sky potential on this project. I do note that this is just one part of the 36,000 hectare land package, which comprises the Moore project, so there are other regional targets. But this, we believe, is going to give us the best shot in this upcoming drill program to discover more high-grade mineralization, continue adding to what we have there. 

I will note we are planning to put out a resource estimate at some point, hopefully before year-end, once we have the results in from this program. With every program that we've carried out, we've been adding to the high-grade known mineralization there in the sandstone and, more recently, in the basement rock. So an exciting program, big catalyst for us coming up. Again, we're going to compliment it with other programs, partner-funded programs, at some of our other projects including Preston and East Preston.

Gerardo Del Real: Well said. Can we talk about those projects a bit?

Jordan Trimble: Yeah. Late last week there was an announcement out from our partner company, Azincourt, announcing a summer program at our East Preston project. They're carrying out some field work in geophysics, electromagnetic EM survey that they're going to be carrying out. This will suffice for the remaining $150,000 or so that they need to spend as per their earn-in requirement. They also have to make a $200,000 cash payment, so we're expecting that here. Then they will have earned in 70%, will form a joint venture and continue advancing that project thereafter. They have plans for a drill program later this year, early next year, once they complete this a summer field program.

Then at our Preston project, Orano, France's largest uranium mining and nuclear fuel cycle company, is exploring and advancing that project. We're just waiting to get the final report back from a field program that they carried out earlier this year. We'll have some news out on that and plans going forward at that project. 

Then just a quick note, as you're well aware, we have a large portfolio of projects scattered throughout the Athabasca basin. We employ the prospect generator model. We are in fairly advanced negotiations on, in particular, one of our other projects, looking at bringing in a third partner. So look out for news on that forthcoming.

Gerardo Del Real: Excellent. Before I let you go, I have to get a current take on the overview of the uranium space. I'd love to hear your thoughts. You're always insightful and have your finger on the pulse of that.

Jordan Trimble: Yeah. As I pointed out earlier, in April we saw a very busy, active month. We raised a bit of money then and there was a fair bit of market activity. I'll just note that we did take advantage of that and fully fund the company right through into next year. We saw the market really moved. There was a huge amount of spot volume transacted in that month. It was one of the busiest and most active months. It really cleaned out the market. We saw the spot price tick up from $23, $24 a pound all the way up to the mid-$30s. It settled back in around $33 a pound.

What's important here is that over the last few months, although it's been flat, we have seen a new base set here in the low $30s. I really do think that it's going to march higher for the remainder of the year, especially as we come into a more seasonally active period, usually in the fall. So keep an eye out for that. We did see a bit of a pullback with the announcement of Cameco restarting Cigar Lake, although I'm not overly surprised. People need to get back to work. It's a big operation.

It's also worth noting that McClean Lake, which is the high-grade mill that the Cigar Lake ore is trucked to. That's a part of that. There's a lot of people that were not working that can go back to work now, although Cameco did state in their press release that they're going to obviously be very cautious and careful if there's any new COVID cases that arise that could throw a wrench in the restart or the continued operations at the mine. So keep an eye out for that.

But outside of that, the market, as we've discussed at length, has seen a major rebalancing taking place. We're seeing a massive supply deficit that's forming. We've seen major production curtailment across the board. Even with Cigar restarting, you still have a number of large mines that are still on care and maintenance, that aren't producing, including McArthur, and the recent curtailment in Kazakhstan. 

I think that's a key thing to look out for here over the coming weeks. We'll get some guidance, hopefully get some clarity, on what's happening in Kazakhstan. I've talked to people out there familiar with what's going on. It's a country that's been hit hard by the virus, especially recently. They've extended their lockdowns in the country. I wouldn't be surprised to see the production curtailment continue.

One of the big issues is ISR operations. They haven't been able to put much money into wellhead development. So their production profile could be impacted, could be affected for a long time to come. I don't think you're going to see them ramp up as quickly as I think a lot of people are expecting. They've even said that in the event they are unable to do so, they will likely become buyers in the spot market, much like Cameco has been, which has been a big source of new demand that's come into that market.

Ultimately, what we are looking for are new contracts. We want to see this new contracting cycle start in earnest. I've just heard recently, we've had an increase in interest from utility companies, both in the spot market and a couple of RFPs that have come out recently. I think as we, again, move into the fall, typically a busier time of year, we could start to see these new contracts being signed. Given that we have seen the spot price tick up, I think that'll help ease the stalemate that we've seen between utility purchasing managers and the mining companies. I think they're going to, I hope, come to terms on these contracts at these higher prices that the mining companies want. Much like we've seen in previous cycles, that will really be the main driver for the price going forward.

But it all stems back to there's a major supply side response that's playing out here. You got 180 to 190 million pounds of annual demand in the backdrop of a primary mine supply that could be approaching 100 million pounds on the low end here with the production cuts we've seen from the virus. As Cameco points out, and I think this is a great way to summarize it, the risks to the supply side are far greater than the risks to the demand side. That's just something to kind of keep in mind going forward.

The industry is heavily reliant on supply. That's highly concentrated, both geographically and geologically. That's what we saw in March and April, when you had these announcements coming out from Cameco from Kazakhstan. You saw a number of the largest mines shutting down or cutting back production, and have a major impact because there aren't a lot of large uranium mines out there. So when you do see those few operations effected, it has an immediate impact in the market.

I do think we see this continue to march higher. As you and I were talking offline, we've seen with the gold price moving up, as we do, an influx of new gold companies and precious metal companies, but we haven't seen that in uranium yet. It's still very few active publicly-traded companies. Again, when money comes into the sector, you're going to see them all rise. 

I think we'll see some spill over from the precious metal space. We saw this in 2010, 2011. As an asset class, mining and junior mining companies typically do move in lock step. We saw in 2010, we had a full precious metal market. We did see that spill over into the other metals and into other mining companies focused on other metals. So we could very well see that. As money comes into the space, we could see a rising tide that does lift, not just the gold and silver companies, but uranium companies as well.

Gerardo Del Real: Well put. We talked off air a bit about the fact that everybody's playing catch up in the gold space now. There's a lot of quality companies that aren't yet catching a bid. There's a lot of companies that, I think, are catching disproportionate bids relative to the merit of the value proposition. That tells you there's a lot of newbies in the space, which of course, it's always welcomed. We want new blood. I think it's a good thing. I think the exact same playbook will play out in the uranium space. Nothing happens until it does, then it happens all at once.

The bottom line is there's not a lot of quality uranium companies out there. There just is not. So I think it bodes well. One last point. To be clear, everyone, we are rooting for everyone to get back to work. We have anticipated a coming bull uranium market under full employment. Obviously, we're not there right now. We don't need mines to stay closed down in order to get that bull market that we all anticipate.

Jordan Trimble: Absolutely.

Gerardo Del Real: All right, Jordan. Thank you so much. I appreciate it.

Jordan Trimble: Thank you.

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