Categories: Energy
Topics: General Energy

Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Multiple Near-Term Catalysts from the Skyharbour Portfolio of 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?

Jordan Trimble: I'm doing good. Thanks for having me.

Gerardo Del Real: Thanks for coming back on. We know we are in the midst of tax-loss selling season. Let's get the obvious out of the way. It's been a tough go at it for the share price of, frankly, almost every junior. It could be uranium, most gold companies, most base metal companies. However, as always, the better management teams, the better companies in the space continue to advance the business model.

To that end, you continue to advance the flagship, the high-grade Moore Uranium Project, and you continue to work that prospect generator model to a T. Can we talk about the latest bit of news here? And then I'd love to get some macro takes about the uranium space, because I know you're on the road. So I'd love to hear how that's going.

Jordan Trimble: Yeah, absolutely. We had news out this morning, and I think it's a good overview of what we have coming up in the next several months. We're going to be very active both at our flagship, Moore Lake Project, with a planned 2,500-meter drill program, which we spoke about in the last interview. Will talk a little bit more about that, but specifically in this news release announcing an initial exploration program by Orano at our Preston project.

As you may recall, this is a strategic partner we did a deal with a couple years back. They can spend up to $8 million to earn 70% of this project. They're well into that. In this upcoming program, they're planning a large DC resistivity geophysical program. What they're doing here is they're characterizing these electromagnetic EM conductors, looking for clay alterations and altered zones on these conductors so that they can go in and prioritize future drill targets.

A fair bit of regional work and exploratory drilling has been done on this project. What they want to do is go in there now with this upcoming program and really pinpoint specific targets. There's a lot of conductors. There's a lot of prospective areas on the project. It's a big property. This'll give another layer to the targeting and thereafter go in and look to drill test those higher priority targets.

So, looking forward to that program coming up. Again, this is all partner funded. It will provide news flow for us and our shareholders. It'll compliment what we're doing at our flagship project.

And we also, as I mention in this news release, have our other partner company, Azincourt, planning a substantial 2,500-meter drill program, again, early in the new year, testing the highest priority targets on our East Preston project.

Again, similar structure in terms of an earn-in option, whereby they fund the exploration. We also get some cash payments early in the new year as well. Again, the benefit of being a prospect generator is bringing in these partner companies, having them fund the work, and then having some cash payments as well, which we can use towards our other projects, in particular, our flagship.

So, a lot of news flow coming up. The three upcoming programs, including multiple drill programs, you're looking at just under $3 million, over 5,000 meters planned in drilling collectively. Again, most of that funded by partner companies, but really the big upcoming program and catalyst for us will be our drilling at our flagship Moore Project. Again, we spoke about this in the last interview, where we spent the better part of the summer months doing these geophysical programs with drones over the Maverick Corridor, our main 4-kilometer-long corridor.

We have a much, much better idea of the basement-hosted structures. Again, in our previous program earlier this year, we hit our highest grade intersection, multi-percent, 2.3% over 2.5 meters in the basement rock. Very little basement drilling previously, so very excited to see those kinds of grades early on as we drill into the basement rock.

But we really think we just scratched the surface, and what we've identified now with a new look at these basement structures and the geophysics is we're looking for these crosscutting structures. Right below that high-grade intersection it appears we have potentially a much larger zone, so that's going to be a primary drill target when we get back to work there early in the new year.

And we have other targets along strike, again predominantly focused on the basement rock. That's where we believe we can go out and make a bigger, higher grade discovery. And again, at the current valuation, one drill hole makes a big difference. That $11 million valuation, if we hit a big hole, if it's in the basement rock and high grade, you're going to see substantial returns generated from that.

Gerardo Del Real: Agreed, and frankly you being in the basin, there's a lot of whispers and a lot of rumors. I won't get into that today, but the activity in the basin is really heating up as far as potential M&A. More to come on that front.

I mentioned that you were on the road, Jordan. We know that uranium and the bull market is not a matter of if, it's a matter of when. I've heard rumors, and I will get into these, that the utilities may be close to stepping back in. I got to believe that they're likely waiting for clarity from the Nuclear Fuel Working Group. We know that deadline, depending on who you believe, either passed a few days ago or is coming up tomorrow. Right?

Jordan Trimble: Mm-hmm.

Gerardo Del Real: But I do believe we get something from the White House. What are you hearing in your travels? You're in Europe right now.

Jordan Trimble: Yeah, so look. I'm hearing several different things. But I think to your point, this Nuclear Fuel Working Group, which we all know what happened with the Section 232 non-decision. That really sparked this sell-off in the sector. And then the uncertainty around that, I mean, we talked about this at length, but the uncertainty around the 232 and the Nuclear Fuel Working Group, it's really sidelined the largest buyer of uranium, global and U.S. nuclear utilities and fuel buyers over the last year, year and a half, and they have to come back to the market. They have some significant contracts, large contracts, some utilities down there that roll off in the next little while, so they're going to have to come back.

I think one thing to note, you look a couple of weeks ago at Cameco's quarterly, it was probably the most upbeat, positive commentary we've seen from them on the market, talking about making headway on their contract negotiations, talking about the market going forward. We've seen in the past they've been shy. They really shied away from being bullish whatsoever, and that was an interesting thing to see Tim Gitzel talking a little more openly and positively about the sector.

I really do believe that once you do have this Nuclear Fuel Working Group and the previous Section 232 all put to bed, we will see some large utilities, in particular in the States, come back. We've heard some European utilities as well running low on inventory, so they're looking to step into the market. We may see that translate into higher spot prices initially if they can't get the contract prices that they want.

That's something else to note. The market is, in particular, equity investors. They do tend to hone in on the spot price. Right?

Gerardo Del Real: Absolutely.

Jordan Trimble: And as we've seen the spot price has length. It's pulled back a little bit, but we've just seen in the last few weeks it's started to tick up. And I think what we could see before a number of major new contracts are signed, I think you could see utilities step into the spot market, take advantage of a low spot price and buy that up. It wouldn't take a lot for the spot price, currently around $24.50, $25 a pound, to jump up, and it's that $30 number. We've tested it, we've been close to it in the last couple of years a few times. I think we could see it break out in the new year, and I think that's going to bring a lot more buying into the market.

So, yes, there's a lot on the horizon. Also good to note, Cameco again having shut down McArthur River. They have to deliver 30 to 32 million pounds of uranium annually, and their only main producing mine now is Cigar Lake. So, even going forward, we know that they have to continue to buy in the spot market. They still have to buy just under 10 million pounds in the next several months or acquire that from somewhere, so if they can't get it from another secondary supply source, they're going to have to buy a pretty meaningful amount in the spot market. And if you look at how much has transacted in the spot market this year, it's been a lot lower volume than we saw last year. So, Cameco coming in to buy even a few million pounds in the spot market would make a big difference in a short period of time.

So there's a lot of things that are lining up right now. Potentially utility contracting and buying, buyers coming into the spot market, Cameco, for example. I think you could see some utilities in there, especially utilities that have run low, are running low on inventories. The supply side destruction that we've seen, that's finally working its way into the market.

And look, we know from the WNA, when they came out with the biennial nuclear fuel report, demand is still strong. It was the first year at that conference, the first report that had come up since Fukushima that showed, even in the lower case, increasing demand, and in the mid and upper case, substantially increasing demand over the next 20 years. So, things are lining up.

This kind of reminds me a little bit of three years ago. In late 2016, it felt like there was a bit of capitulation. The spot price was down around $18 a pound. It was a short three or four months later where we saw everything jump up, share prices, the spot price, on the back of the initial announcement of the Kazakh cuts.

I think that's also a really important note here. There's a seasonality. We see this usually through November, from November through February, it's usually a very strong four months for this sector, for the spot price, and for the equities. As you're talking about, there's a lot of rumors swirling around out there, potential shakeups in M&A, and so I think this is all going to culminate in a much stronger market going into the new year.

Gerardo Del Real: Well, there's a lot of smart money that has stepped in. There's also a lot of smart money that has called for a bull market for the past six years in the uranium space. But I think you're absolutely right in your overview there, Jordan.

There's a ton of catalysts, both company-specific for Skyharbour and overall in the sector. I think it should be an interesting end to 2019. Jordan, anything else you'd like to add?

Jordan Trimble: No, I think that covers it all. Again, I just think given where the valuations have backed off to, the value proposition I think right now is incredibly compelling. I continue to buy shares in the market. You'll see that on my insiders, and I think given with all the catalysts, specific catalysts we have coming up, again, we're a high-grade discovery story and a prospect generator.

So, in addition to the uranium price moving up, we do offer that exposure to the next big high-grade discovery in the Athabasca Basin, both our programs and partner-funded programs, so I definitely think people need to take a look at Skyharbour right now.

Gerardo Del Real: Fantastic. Jordan, well put as always. Thanks again.

Jordan Trimble: Thanks a lot.

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