Categories: Energy
Topics: General Energy

Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble on Upcoming Drilling at the Flagship Moore Project, Exploration Programs at Partner Funded Projects, & Why 2018 is Going to be a Transformative Year in the Uranium Market

Jan. 24, 2018

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of Skyharbour Resources (TSX-V: SYH)(OTC: SYHBF), Mr. Jordan Trimble. Jordan, thank you for your time today.

Jordan Trimble: Thanks for having me, always a pleasure.

Gerardo Del Real: Listen, a staple of Skyharbour and a part of the reason why it's so attractive to me is because you employ the prospect generator model, but you also have a flagship and in the last week or two we've seen you execute that beautifully. You now have both partners, Azincourt and AREVA, launching exploration programs and you got work going on at Moore.

Can we start with the news the last couple of days with your partners beginning these exploration programs because it's going to be an important catalyst for you this year?

Jordan Trimble: Yeah, absolutely. As you know, we have this dual-pronged approach, strategy to creating shareholder value. One with the high-grade discovery potential at our flagship Moore Project. We'll be drilling there shortly and we'll talk a little bit more about that later on.

But, in the last few days you've seen a couple of news releases starting with AREVA about to commence their 4,500 meter, 5,000 meter drill program at our Preston Project. As you're well aware they're earning in over the next 6 years. It’s an $8 million dollar deal, $7.3 million in exploration expenditures and $700,000 in cash payments to earn up to a 70% stake. So, a very strategic partner, a very important deal. They're starting these programs with a $2 million budget over the next year. That includes this drill program. They've gone in, they've done some geophysics and some data comp as well. So we'll see steady news flow from that, needless to say we'll benefit if there's a major discovery made. We retain a minority interest at the end of the day assuming they earn in on that option agreement.

And then just yesterday, we had news out on Azincourt, starting their exploration programs. They're going to be doing some geophysics to further refine drill targets going forward and then hoping to get drill rigs there later this year. So, lots of news flow. Again, these two deals combined, you're looking at up to $9.8 million in total exploration expenditures. $1.7 million in cash payments and some shares of Azincourt that have been issued as well to us and our partners.

It's an exciting few months ahead of us. This is actually going to be the busiest exploration season that Skyharbour's ever had when you factor in those two programs that our partner companies are carrying out on the west side of the basin by Fission and NexGen, as well as our upcoming drill program at Moore. Lots of drilling and lots of news flow to come.

Gerardo Del Real: Excellent, now talk to me about Moore because that's the flagship of course. So it's great to have the partners spending money, exploring, especially considering that they're doing it next to NexGen’s and Fissions; projects, which of course are world class projects in their own right. But the Moore property is the flagship. What's going on there?

Jordan Trimble: Yeah, it is the crown jewel, if you will, right now for the company and that's where we feel we have the best shot of making that next big high-grade discovery and continuing to expand the known high-grade mineralization uranium that's there. It's shallow, it's along this 4 kilometer corridor called the Maverick Corridor. And keep in mind, too, this project is ideally located on the eastern side of the basin where the infrastructure is near Denison's flagship project, the Wheeler River Project. You have the access road going up to McArthur River that is just west of our border.

It's a great project in terms of location and upside potential.  As you may have seen a couple of weeks ago, we announced – and this isn't new for us and for this project – a drone geophysical MAG survey. This is very innovative, it's cutting edge and the reason that we're excited to get the results from this program – it's just wrapping up now – is that one, it's a lot less expensive so we can start with that, but two, specifically for what we're looking for and in the basin, these are high-grade, low tonnage deposits. You could find a lot of uranium in a very small area.

When you're doing your geophysics, when you're flying, whether it's an airplane or a helicopter, you're limited in terms of the spacing of the geophysics, the line spacing. As a result your geophysical signature is much more coarse if you're flying it, especially in an aircraft. With a drone you can get much tighter spacings. You have a much more refined geophysical signature and this allows us to pinpoint specific targets. And in the case of Moore, we're flying the Maverick Corridor, for that 4 kilometer long corridor, it allows us to get 20 meter spacings on it. So it will allow us to pinpoint specific cross-cutting structures on that main corridor and that's a very important control for high-grade mineralization at this project as well as other projects in the Athabasca Basin.

This is the first of its kind being flown, being done on the Moore project. This will help refine additional drill targets when we get back to drilling it in February, coming up in the next few weeks. We have a budget for about 5 to 6 thousand meters, call it, a drilling.

It's exciting. As I highlighted before, we are employing the most innovative techniques and methodologies we can. Anything we can do to use the science to better increase our chances of making high-grade discoveries, expanding on the known high-grade zones of uranium mineralization, we are employing. I really do think this could be the key to unlocking additional discoveries at the project.

Gerardo Del Real: Wonderful. Now this survey's being done at 20 meter spacing? Is that correct, Jordan?

Jordan Trimble: Yeah, exactly. Exactly. So, the previous geophysics that was done on the project was much wider spacings, 100 to 200 meter spacings. This really gets us in there and allows us to identify specific structures, in particular cross-cutting structures along that main conductive corridor. These cross-cutting structures break up that corridor.  They allow the fluids to come up and that can be a key control for high-grade uranium deposition.

Gerardo Del Real: Excellent. Now the last time I saw you, Jordan, I was at a conference. The interest for uranium was starting to pick up. You were recently at the Vancouver Resource Investment Conference. I'd love to get your take and your insights from the conference. Was it well attended? I hear that the turnout was fantastic frankly.

Jordan Trimble: Yeah, it was. It was the busiest, from what I heard, the busiest conference since 2012. I don't know the exact number. I was hearing about 7 or 8 thousand registrants. So, it was very busy.

We saw it at the booth, in the deal room, the one-on-one meetings as well, at the panel. I was on the uranium panel on the Sunday and I did a couple of presentations. It was great to see there's definitely a renewed buzz and we'll see what the markets do over the course of the next 12 months.

The interest is back. There's no question. We've seen the commodity prices start to move. You and I talked a little bit about this. We've seen the commodity prices start to move, the junior miners, I think there’s still some catching up to do. But as we've just discussed, there's been a lot of money made on the TSX Venture and the CSE in particular over the last six months in some of these non-resource sectors. You could start to see some of that capital hopefully flow back into the resource and mining space over the coming months. That would be positive, obviously, for junior miner share prices.

Gerardo Del Real: Were you seeing a lot of the retail side of the investment space at the conference?

Jordan Trimble: Yeah, it was a lot of retail. I did see for the first time in a couple of years some more institutional shareholders and investors there, private family offices, resource funds. No question there was a mix, but a big retail audience and it's a big conference, right? This is the time of year here in Vancouver. You have Round Up, you have the VRIC, you have a couple of conferences all in and around the same time so you got everyone, a lot of the industry that's here at this point in time.

Gerardo Del Real: Wonderful, now, Amir Adnani always likes to think he is one of the most insightful people in the uranium space and I joke, because of course he is, but, you also have an opinions that I value. What are your thoughts about the uranium space? We've seen the consolidation and the price. I happen to think that's a good thing. I personally believe that the majors are not going to allow these prices to stand the way they are now. What are your thoughts? You're a lot more insightful. You have your finger on the pulse and this is what you do every day, all day. I'd love to hear your insights there, Jordan.

Jordan Trimble: Absolutely. Well, Amir definitely is an expert on the space. If you look at the last few months of news out of the uranium sector, and in particular, November, December you had major, major cuts announced by Cameco at McArthur, that's 15 to 18 million pounds potentially this year. Now keep in mind that that's just shutting down right now. As of February 1st they plan to no longer be producing at McArthur for this year. That's the world's largest mine, richest mine, one of the lowest cost operating mines out there. That's a major, major cut by the world's largest publicly traded uranium producer and then just shortly thereafter we had the news out of Kazakhstan, Kazatomprom announcing 20% cut over the next three years. 2018, you have right now over 20% of global primary mine supply that's going offline.

And I like to highlight this point. It's important to note that this is at the low end of the cost term. These mines, Cameco’s McArthur River and Kazatomprom's mine, Kazakhstan is the lowest cost producing region in the world. So, these mines that are being shut down or are curtailing production, this is the low end of the cost curve, right? As we see again, these higher priced contracts roll off, we know 70% of them roll off in the next five or six years and there's a lot of them rolling off in the next few years so that's imminent. As those higher prices contracts roll off these higher cost producers, the marginal producers in other parts of the world simply won't have a leg to stand on to renegotiate that high price that they were benefiting from, that they were able to sell the material into over the past five or 10 years.

What are they going to have to do? Either the price of uranium has to move back up so they can negotiate a higher price or they're going to have to shut down production. They're not going to continue producing at a loss.  I think you could see even more cuts in the next year or two as some of these higher cost producers’ contracts roll off so that's worth noting.

As far as the price and what I'm expecting in 2018, look, we need to see the fuel buyers, the utilities come back to the market in a meaningful way. I really do think that these recent production cuts are going to force their hand. They're going to have to come back at some point. There isn't always going to be this abundant supply coming from the miners. We’re already now going to see a supply deficit for 2018, the first time in a long time even when you factor in secondary supply. So that's exciting. That's positive going forward. That's bullish for the price of uranium, but, I think, the real catalyst to send this price much higher as we've spoken about before, we need to see these fuel buyers coming back, contracting again. We know that a lot of these contracts do roll off in the next little while. They have to come back and I think these recent shutdowns are going to accelerate that process.

I really do think 2018 is going to be the year that we really start to see the price move. I do think we bottomed. You saw that in late 2016. It's been consolidating for the last year, year and a bit. And I think now we're going to start to benefit from a real bona fide recovery in the price and obviously, any company that offers investment exposure to that commodity price to uranium is going to benefit from that as well, like a Skyharbour.

Gerardo Del Real: Very well said, Jordan and all jokes aside, I encourage everybody to do their due diligence on Skyharbour, UEC, URZ and, of course, Fission. I think those are, me personally, my top four holdings. Again, on a personal note as far as stock goes. So, great leadership, great projects, great team.

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

Jordan Trimble: No, I think that that covers it off. Keep an eye out for news flow over the next few months. Three programs that will be underway come February for Skyharbour. So lots of news flow. I really do think this is going to be a transformative year for the uranium market and the uranium companies.

Gerardo Del Real: I absolutely agree. Jordan, thank you so much for your time.

Jordan Trimble: Thank you.

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