Categories: Energy
Topics: General Energy

Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Developments in the Uranium Market & an Update on Skyharbour's Portfolio of 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 the heck are you? It's been a bit since we chatted.

Jordan Trimble: I'm doing very well, thanks. Good to be back on, good to catch up, and have some news to talk about. We will have some more news to talk about here over the coming weeks. The timing's perfect.

Gerardo Del Real: Excellent. We had some news today from your partner on East Preston. We also have news, of course, that we're awaiting at the Moore high-grade uranium project for Skyharbour.

Before we get to each of those, I want to get your take on the current state of the uranium market. Every time I have you on you provide great insights. I get great feedback from everyone. I know it's appreciated. Can you give me your take on what you're seeing and hearing out there?

Jordan Trimble: Yeah, absolutely. I think when we last spoke, we did a long interview on the state of the market. This was mid-April. So, this was I'd say right at the peak point when we had a number of production cuts announced in Canada at Cigar Lake Mine, as well as in Kazakhstan. We saw that work its way into the market. We saw the market response, the uranium price move from the low to mid-$20s all the way up to about $34, almost $35 a pound. It's settled back in around $33.50. We've seen it, more or less, flat for the last month. 

But I do believe it is building a base here. I think the chart on it looks quite good. Just to recap what we talked about there, and still prevalent to this day, is we saw major, major supply curtailment to the tune of about 30% of global mine supply as a result of this pandemic. We will start to see some of that supply coming online over the next, I would say, several months.

However, the timing of that is still unsure. You take Cameco, for example, at Cigar Lake. They've been pretty adamant that the restart decision's going to be based off of economic factors, not the pandemic. Kazakhstan will be interesting to watch. One of the things that's been talked about a little bit more recently is, as pretty much all their production is ISR, they need to continuously invest in wellhead drilling and sustaining CapEx. Their state-run drilling company has more or less been incapacitated for the last several months. They've been hit hard by the virus. 

For them to get back to the pre-COVID production rate, that may not happen for some time. I think that's a key thing to watch here. As the Kazakh production restarts, how quickly can they ramp back up? If they're unable to ramp back up to the pre-pandemic levels quickly, that is going to have a material impact on the market. We are still seeing the ramifications of the supply disruption from the virus. 

On the demand side, it's relatively stable. We talked about this in that interview where nuclear power will really be the last source of electricity that would be scaled back. You'll see intermittent sources, renewables, that if you have that lower electricity demand, you'll see those go offline first.

Just to talk numbers. Pre-pandemic, we were expecting about 140 million pounds of primary mine supply. It looks like we could hit about 100 million, maybe even less, pounds of primary mine supply. That's in the backdrop of over 180 million pounds of demand. So, we'll keep a close eye on that, but that's obviously been positive for the price.

One of the things that we've seen now over the last several months as well is the spot market activity, and volumes have really shot up. I think we've traded now over 50 million pounds that's been transacted. That's an average annual transaction amount on that market. Seeing that kind of volume is important and healthy. We saw that back in 2018, a major year for the spot market. About 90 million pounds transacted. We had quite a good year, especially early on in the year. 

We're seeing the market clean up. Just to talk a little bit about what that is. Well, what we know is producers have to be buying, like Camco, given that they curtailed production. They're buying material in the spot market, so you're seeing some of that. You're seeing the traders as well in the market. That's not all utility buying.

That's an important point there, that we still have yet to see that main catalyst, that main driver, which is utility buying. It is coming back. We're seeing the interest levels pick up. I think that that's going to be the big driver for the next move in the price. You'll see, obviously, the spot price tick up, but you'll see more long-term contracts being signed.

One of the big things recently is the unraveling of the carry trade, which has allowed utilities to shore up supply in the short to mid-term. As we've seen some price volatility, we've seen less easy access to capital, cost of capital going up for traders, and just less availability of material in the spot market from producers like Kazatomprom. You're seeing that carry trade unravel.

So, you're seeing a source of material for producers really start to disappear. As that continues to happen, you will see utilities come back to the long-term market. You could see more of them buying just straight out of the spot market as well. Again, we saw a very busy, active April where the spot price moved up. 

We saw the equities and the share prices move up in tandem with that. It's flattened out here a little bit, but I do think we'll see another leg up here at some point in the next several months, with more utility buying and as we continue to see the carry trade unravel.

Gerardo Del Real: All of that obviously bodes very, very well for higher spot prices and increased activity in the sector, a sector that's small in comparison to the gold sector or other commodities, hence the violent upside that we tend to get, and the violent downside and bear markets that we're coming out of.

The better teams in the space, Jordan, as you know, always use the tough markets to shore up the treasury and, frankly, get to work on quality projects that other companies don't have access to. Skyharbour, no stranger to that. You had news today from your partner, Azincourt, on the East Preston property. It looks like to me more smoke, but some important smoke that hopefully will help vector in towards the fire. Would you describe it that way, Jordan?

Jordan Trimble: Yeah, that's a good way of putting it. I'll just note, the drill program that they completed, this was really their first meaningful kick at the can, if you will. As you may recall, last year they did a smaller program, just over 600 meters of drilling. This was really a key program with just over 2,400 meters of drilling in 9 diamond drill holes to properly test some of these targets.

Three zones that they tested. Two of them, I would say, were a success. They're seeing all the right alteration structures, graphitic conductors, anomalous mineralization. One of the key takeaways was some pretty notable rare earth mineralization, which can be good indicators for high-grade uranium proximal to it. So, good smoke. 

No question they're going to want to follow up. As you may have seen in the news release, that was one of the key takeaways is a summer program being planned at East Preston and then multiple other target areas that have yet to be drill tested, that have yet to be followed up on. So, we'll see additional news flow coming out of that. 

Just to refresh everyone's memories on this. This is an earn-in option that Azincourt has for 70% interest in the project. We did come to an agreement on an extension for this, by about a year. So, they have until next March to complete the earn-in. In return for that, we were issued 2.5 million Azincourt shares. But to complete the earn-in, they have to complete a little bit more in exploration expenditures, which should be covered with the summer program, an they do have to make a $200,000 cash payment to Skyharbour.

We're excited for them to get back in the field to follow up on this. Again, really the first meaningful kick at the can with the drill program. No question in my mind and, I think, my geological team's mind that there's going to be more to be found there. Additional work will hopefully uncover that.

Gerardo Del Real: I mentioned the smoke and the fire. To use another cliche, you have multiple irons in the works. You have multiple irons in the fire there. Can we speak a bit about Skyharbour, specifically Moore? We're awaiting assays there. How is that progressing with obviously the changes as a result of the Covid lockdowns?

Jordan Trimble: For us, our flagship is our Moore Lake project, which we completed a winter-spring drill program on. We've been awaiting results. Unfortunately, things have been backed up with the virus. We are expecting to get final numbers in and issue a news release soon on that. Again, like I said in previous interviews, very happy with what we've been seeing there, especially in the basement rocks.

We do have plans already to follow up with a summer program, which you'll see details on in additional news releases. We are fully-funded for that. We did close a $1.7 million financing in April, which was predominantly taken down by institutional investors, existing shareholders, and a couple of family offices. Great to see that interest and support.  We'll segue way right into that, as will Azincourt with the summer program. 

Last but not least, at our Preston project, Orano, which recently completed a field program in geophysics. We're waiting to get the final results back from that. They'll see some news flow on that, and they do have plans to continue exploring and drilling that Preston project later this year as well. So like you said, multiple irons in the fire. 

I will note, we've had more recently some new interest from other companies and groups on some of our other properties as a part of our prospect generator model. We're looking to bring in partner companies at our Falcon Point project, which does have an inferred NI 43-101-compliant uranium and thorium deposit, has a very high-grade surface showing of 68% U308 at surface. Big property on the southeast side of the basin. We're hoping that we can consummate a deal and bring in additional partners to add yet one more iron to that fire.

Keep an eye out for news on the drill results from our flagship, as well as the results from the field program that Orano recently completed. Then we're getting close to the summer programs starting as well.

Gerardo Del Real: A lot going on. How's the treasury look? Jordan, I know you recently closed a financing that was oversubscribed, as you mentioned.

Jordan Trimble: Yeah. So, we have about $2 million in the treasury. We do, as I mentioned, have cash payments due as a part of our option agreements with partner companies as well. So, we're fully-funded for all of our plans this year, and we have partner companies funding the exploration at our other projects.

Gerardo Del Real: Fantastic. Anything else you'd like to add?

Jordan Trimble: I think that covers it all.

Gerardo Del Real: Looking forward to having you back on once you get assays back. Thanks again, Jordan.

Jordan Trimble: Thanks, Gerardo.

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