Categories: Energy
Topics: General Energy

Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Section 232 Whispers, Game-Changing Potential of SMRs, & Partner-Funded Drill Programs in the High-Grade Athabasca Basin

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, busy times. How are you today?

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

Gerardo Del Real: There's a lot going on, a lot I want to touch on. I want to start by getting your macro insights into the whispers – here we go again with 232, right?– the whispers that there should be a positive outcome from the nuclear fuel working group's recommendations, much like back in the summertime.

It appears that whatever is in the report has kind of made it to the bigger news outlets, the Bloombergs of the world, and it seems favorable judging by most of the companies in the US that have leveraged to any positive outcome. Many are up 13, 14, 15, 16%.

I know you keep your finger on the pulse. So before we talk Skyharbour partner-funded projects and the financing you just closed, I'd love your take because I know that you have some very strong opinions on this subject.

Jordan Trimble: Yeah. As you pointed out, there was a couple of news articles out today, Bloomberg, that reported on the White House Task Force recommendation that the President direct the federal government buy more uranium from domestic producers.

We've seen the share prices of a couple notables, like UR-Energy, Energy Fuels, UEC, pop on this. Similar to what we saw heading into the 232 decision in July, a couple of months leading up to that, where you did see these leaks, if you will, that a positive outcome was coming. That was not to be had, needless to say, with the the final 232 decision.

But it's good to see the market coming to life at least when there is some rumor out there that positive news is coming down the pike. For us as a Canadian company, the jury's still out, I would say, on all of this.

One thing I will highlight for for us and for our peers is that as a Canadian company, in the Athabasca Basin, I do believe that we stand to benefit given our Canadian relationship with the US. Again, this section 232 was very much geared towards imports into the US, in particular from countries like Russia, Kazakhstan, Uzbekistan, these state sponsored production centers.

So I think Canada and Australia potentially could benefit if you do see the market tighten up as a result of any decisions from the White House on this. We've historically been a reliable source of uranium for the US and its nuclear fleet.

But again, getting back to the bigger picture here, and we've talked about this offline quite a bit, this section 232 investigation and really non-decision and then the subsequent nuclear fuel working group, which is still ongoing. Unfortunately, an unintended consequence of this has been the sidelining of the really the largest buyer of uranium globally, being US nuclear utilities.

Gerardo Del Real: Absolutely.

Jordan Trimble: We've seen utilities that would normally be in the market, not in the market, waiting to see some resolutions. So any step towards that is a positive because I'd like to see this behind us.

I'd like to see the market come back to some normality. I think that'll happen relatively quickly over the next few months here. And you will see utilities contracting and as you're starting to see, too, the potential for utilities to actually step into the spot market given the price is still relatively low. We have really yet to see that unfold. I think that's coming here in short order.

Gerardo Del Real: Well said. Let's talk Skyharbour and how you've positioned shareholders here to benefit from, obviously, what we all think is going to be a much better 2020 for the better uranium companies in the space. Let's be frank, there's not very many because one of the beauties of a bear market is the teams that do not have access to capital and/or quality projects, in a bear market, they go away.

Skyharbour's done the complete opposite. You've managed to put together an impressive portfolio of projects, some of which you're developing on your own and some that you're developing with partner funds.

So you have news on several fronts, including the financing that you just closed. Can you touch on that?

Jordan Trimble: Yeah, absolutely. So we've just closed $1.8 million. It was over-subscribed. We had orders for even more and so it was good to see that kind of demand on the financing. We took what we needed for next year.

We have fairly aggressive plans early in the new year, both at our flagship Moore Project, where we're going to be drilling early in the new year. We'll have more details on that program coming out over the next month or so.

But at a high level, we're looking at 2,500 meters of drilling. We're going after some of our best, and I'd say highest prospectivity, basement-hosted targets. Again, we spoke about this in the last interview where we spent the last 6 months doing some geophysics and some geological modeling.

So we've really honed in on what we feel are the targets that could potentially yield that large high-grade discovery, additional discoveries at this project. So we're excited to get back to work there. We're fully funded for that. We raised some flow through dollars for that. And then we raised some hard dollars as well.

I'd say one important note here is that the institutional interest in this financing was notable. We had a couple of funds and family office that came in for larger orders. So that's worth noting for a small cap company like ourselves. So fully funded, excited to get back to work at our flagship Moore Project.

But we also have partner companies, Orano and Azincourt, both of which have now announced exploration and drill plans for early next year in 2020. The news out this morning, Azincourt has detailed their upcoming drill program at our East Preston project. That's a part of the earn in that they have there, which they should be complete next year. They're planning a 2,500-meter drill program. That's about 15 holes, approximately $1.2 million in the budget. They've already started the road building, which they've announced for that, to get into the project, make it easier access, make logistics better.

That's important because last year the season was cut short due to warmer weather. So it'll prevent that from happening this year. But they're going after targets, again, that are highly prospective targets that they did a little bit of drilling on earlier in this year, but they're now going after it with 2,500 meters. So a notable program.

One of the targets, the Swoosh target, is a highly prospective target that we had done some work on with our partner company previously. And so they're going back in there. I think there's a good shot of a new discovery being made and this project's over and adjacent to NexGen. It's on the west side of the basin. So we're in the right area code there as well.

And then on top of that Orano, this was news that we announced a few weeks back now, but Orano is planning a big regional program, geophysical program, early in the new year and then planning a program in the summer and in the fall next year as well, which we'll have some details on at some point in the new year as well.

So lots of news flow to come, multiple drill programs that'll be underway in early 2020. So lots of news flow, lots of potential for high-grade discovery. Again, I can't emphasize this enough as an Athabasca Basin company, that's one of the key catalysts that we offer and value drivers that we offer investors outside of just being a uranium company, trading with the uranium price. We do offer that high-grade discovery potential and at the current market cap, one drill hole make can make a huge difference.

Gerardo Del Real: And that current market cap is approximately, Jordan?

Jordan Trimble: About $12 million Canadian and just about $2 million in cash in the treasury.

Gerardo Del Real: Well, you know the old saying, "Capital goes where it's treated best." It is not a coincidence that the institutional interest was noteworthy this go round. I know several of the higher net worth speculators that participated in the financing and I could tell you they're excited about 2020, not just in the uranium space, but specifically with Skyharbour.

Anything else that you'd like to add, Jordan?

Jordan Trimble: Yeah. We've spoken a little bit about the recent news that's come out. Just to, again, re-highlight the uranium market, the macro developments. We tend to talk a lot about what's happening in the US, but I think it's important to refocus on some of the other key fundamental factors that are going to drive this market.

You've had continued supply shrinking. One thing to note there is that it's not just mines being shut down. It's not just project deferrals, but you are seeing certain projects and mines that are simply coming to the end of their mine lives, right? One being COMINAK in Africa. It's an Orano mine. There's several others that, in the next four to five years, will simply run out of ore. So that's important.

It's not just companies electing to shutdown production because of the low-price environment. We've, over the last 10 years, mined a lot of uranium and these deposits only have so much uranium in them. So that's one thing on the supply side.

I think, again, given the current price, you'll see that continued supply destruction that we've seen, which will ultimately be positive for the price. Demand continuing to grow. Again, I can't emphasize enough in places like China and India and other parts of the developing world, right now in particular, with all the climate protests we're seeing globally, I think nuclear is going to become a more prominent topic in a positive light versus a negative light as it is the only baseload source of emissions-free electricity. Reliable, safe, and cost effective.

So I think that what you're seeing, this macro trend globally, these environment climate protests, I think that'll help the nuclear case going forward.

And then last but not least, as I mentioned, utility buying coming in, a new contracting cycle and Cameco spot market purchasing. We've talked about this several times. Cameco is going to be buying in the spot market to meet their contract deliveries. They have quite a bit to buy in the next month or two here. But they also have, as we work our way into 2020, they have a lot of material that they have to buy in 2020 and 2021 as MacArthur continues to be mothballed in shutdown.

Like I've said in previous interviews, I really don't see that restart happening until obviously a much higher price materializes. I would think somewhere between that $45 to $50 range for a sustained period of time. And it's going to take time for that mine to turn on. You don't just turn it on overnight. It'd probably take a year to maybe a year and a half. And so it's even when you do get that price increase, it doesn't just happen overnight. So important to note those fundamentals.

Then last but not least, I was just in Saskatoon at the Saskatchewan Geological Open House. This is a conference that's hosted each year at this time in Saskatoon. It's more technical in nature. You got the geologists, the engineers that attend. My geological team is based in Saskatoon. I'll just say it was fascinating to see – you got to remember these are scientists, geologists, and then the engineers – it's fascinating to see the work and the knowledge base that goes into exploration development and production in the Athabasca Basin. It was great to see some new ideas and techniques being used to make new discoveries.

I've talked about this in the past where we're really focusing on utilizing all the tools at our disposal and taking a new look, a different look at the geology and at our targets to hopefully yield and produce new discoveries. That's a key component to our strategy.

And there's some new mining methods, right? We've talked about this with Denison potentially using ISR at their Wheeler project. This, the SABRE mining method that's being developed by Orano and Denison.

So there's a lot going on behind the scenes. Investors don't typically see that, but having spent the last few days there, it was great to see and a lot of headway being made.

Actually, one of the interesting things that's just happened, a news headline over the last week here, is the Saskatchewan government has signed an MOU with two other provinces, Ontario and New Brunswick, to develop SMR, small modular reactors.

So this is something that we've seen over the last several years get more traction with opposed to building these big 1, 1.5 gigawatt power plants that are, needless to say, very capital intensive. Permitting licensing can take a long time.

SMRs really could be the new wave of demand, especially in the Western world. So you have these modular reactors that are portable. They're standardized and you can build them for a fraction of the cost and they can generate up to anywhere between 10 megawatts to 300 megawatts.

So they're looking at this, in particular in Saskatchewan, not just for the cities and the communities, but also for the northern communities where the Athabasca Basin is, and even potentially for big mining projects or other natural resource development projects.

It's interesting to see that, to here you are the Athabasca Basin. It's the really the epicenter for high-grade uranium and now they're going to potentially be using that uranium to power northern communities, to power the cities, and potentially even to power the mining operation. So that's was a neat little tidbit of news over the last week here. I implore people to look a bit more into the SMR technologies being developed, as they're being rolled out and commercialized over the next 5 to 15 years.

Gerardo Del Real: What are some good sources for the average non-geologists, non-scientists, non-technical person that has a curiosity for what you just went over? Where can we look?

Jordan Trimble: I honestly you can just go online and Google it. There's some good research and there's a handful of companies as well, most of which are private that are developing SMRs. They haven't been commercialized yet, but there's a handful of them. So you can just go online and you can look into it.

There's some notable proponents of this new technology. Bill Gates being one. We know he's a pro-nuclear speaking head and, obviously, someone that a lot of people follow. But this is an interesting point right now that we're at where as we've seen in the Western world, demand has been relatively stagnant for nuclear. These big power plants that they're building in China and in India, we're not seeing as many of these being built and commissioned in the Western world.

But SMRs could be a game changer. We could very well see SMRs rolled out over the next, as I said, 5 to 15 years in the Western world and that could be a brand new source of demand and growing demand for uranium in the Western world.

Gerardo Del Real: I love it, I love it. Jordan, insightful as always. I get the sense we're going to be chatting a lot more here. A lot of news flow, a lot of catalysts here for early 2020, and I think you've positioned the company very well to go and start swinging like we talked last time for some home runs, frankly. Right? We want to see that deep high grade that you're searching for and hopefully 2020 you're able to unravel that puzzle.

Jordan Trimble: Yeah, absolutely.

Gerardo Del Real: Awesome. Thanks so much, Jordan. Appreciate it.

Jordan Trimble: Thanks a lot.

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