Gerardo Del Real
Jan. 26, 2023
Editor’s Note: I sat down again this week with Jeff Phillips to discuss the commodity market in general and uranium in particular. Jeff is one of the most successful speculators and financiers in the entire resource space. In this conversation, he lays out where we are in the current uranium cycle, and a few names he likes. To get all our uranium stock recommendations, click here. Enjoy the interview.
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is one of the most influential contrarian speculators in the resource space and a friend — Mr. Jeff Phillips.
Jeff, it's been fun talking with you here over the past several months. The audience has really taken to it. Thank you for coming back on. How are you today?
Jeff Phillips: I'm doing well, Gerardo. Thanks for having me.
Gerardo Del Real: Listen, let's get right into it. You told me once that you make money in a bull cycle for two years, and then you wait another eight years for it to come back around, right? And the reason I bring that up is those two years, as you've explained to me, are usually so lucrative that you can afford to not make the kind of money that you make in a bull market for the next eight.
Now, we're off to a pretty good commodity bull run here early in 2023, whether we're talking gold, whether we're talking uranium, whether we're talking lithium. But for today's conversation, I wanted to talk uranium and kind of pick your brain about where you see that cycle right now.
You've seen some of these bull markets and bear markets in the past. And both of us know how profitable the bull market runs can be. We also know that it can be a bit of a round trip. That being said, I think we're in a sweet spot right now. I'd love to get your take on it. And then, of course, before I let you go — I'm going to ask for a pick or two from you.
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Jeff Phillips: Yeah, Gerardo, I agree with you. You know, every eight years or so, you get a bull market where almost anybody can make money in natural resource stocks. We all love those types of markets where everything seems to be going straight up. And those are great markets… but they only come around every so often.
In between those times, if you know what you're doing and you’re able to properly spread out your risk, you can still have those types of winners that justify remaining in junior natural resource stocks. You just have to be more selective and more cautious. And always remember that you’re speculating — not investing!
One example of a big winner from last year and into this year — and this is lithium, not uranium — is Patriot Battery Metals (TSX-V: PMET)(OTC: PMETF). We both participated in a big way in financing Patriot. I think the initial financing was at C$0.36 when we both first got in. It’s trading above C$12.00 right now!
Click here to get Gerardo’s latest lithium recommendation.
He thinks has similar upside to Patriot.
Jeff Phillips: So even though the resource market has been a bit rough these last couple of years, a winner like that can easily make up for stocks in your portfolio that may be underperforming for far longer than you’d like.
Gerardo Del Real: Jeff, well said and great context! The uranium bull market… where do you think — if we're going to use baseball parlance, both you and I are baseball fans — what inning do you think we're in of the uranium bull cycle if you think that we're in a uranium bull cycle?
Jeff Phillips: I think we're just finishing up the third inning. We recently saw uranium move up from around US$30 per pound to nearly US$60 per pound before pulling back some. It’s right around US$50 now… and I think we’ll see another run up to a new cycle high before too long. Of course, it will then pull back once again before regaining forward momentum! So you always have to be paying attention.
Gerardo Del Real: I agree with you wholeheartedly. And if that is actually the case, the uranium equities — which there are only a handful of quality names out there — are going to do phenomenally well from current levels as we head into these next few innings.
Do you have a pick or two that you like right now that may be worthwhile for our audience to do some due diligence on?
Jeff Phillips: There are a few uranium names I’m liking right now. One is Uranium Energy Corp. (NYSE-American: UEC). And another is enCore Energy (TSX-V: EU) (OTC: ENCUF). I was a large shareholder in a junior uranium miner that was recently acquired by enCore.
Gerardo Del Real: Yep, you’re referring to Azarga Uranium, which we both owned.
Jeff Phillips: Correct, with Azarga now being a part of enCore.
Gerardo Del Real: I would love for one uranium pick that perhaps you've written a check for recently or that you currently work with. I know you consult for a lot of different companies… companies where you like the management, where you like the business model, and where you like the catalysts that are coming up.
Jeff Phillips: Sure, one company that I’m a large shareholder of, and that I recently bought more of, is Skyharbour Resources (TSX-V: SYH)(OTC: SYHBF). Skyharbour is a company that I think will do very well in the… and sticking with our baseball analogy… the upcoming middle innings and into the latter innings. And hopefully into extra-innings, Gerardo!
They have an exceptionally strong team and an impressive portfolio of uranium assets in Canada’s Athabasca Basin region. The Athabasca, as you know, is perhaps the best mining address on Earth to explore for and mine uranium. It’s where Cameco and numerous other major players have their big North American uranium mines.
What I like most about Skyharbour Resources is their hybrid prospect generator model. They have the Moore uranium project, which is their 100%-owned flagship project. They’ve hit some high uranium grades — as high as 6% — via the drill there.
And then, they have another 10 or so drill-ready, partner-funded projects that they’ve optioned out via joint venture to other firms. It’s great having other companies spending their own money drilling properties that you maintain an interest in. Switching to hockey… it’s like having multiple, multiple shots-on-goal every single period!
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Gerardo Del Real: Love hockey!
Jeff Phillips: Yeah! In all, Skyharbour will probably have anywhere between 25,000 and 35,000 meters of drilling completed on their properties just within the next 12 months or so. And the vast majority of that will be partner-funded.
They just announced a 10,000-meter drill program that they’ll be doing themselves at their second flagship property — the Russell Lake project. They acquired the project from major miner Rio Tinto with Rio now being a major shareholder of the company. That’s not bad company to keep!
The property is strategically located between their Moore project and Denison’s Wheeler River project and gives Skyharbour a pretty dominant land position in the southeastern corner of the basin.
So yeah, I think Skyharbour has a lot of positive catalysts coming up… and I think they’re positioned to do exceptionally well in the current uranium bull cycle we were discussing earlier.
Gerardo Del Real: Absolutely, and I think you’ve touched on it all; the catalysts, the business model, the management team.
Just for some context, the company has a market cap of roughly C$65 million. You and I have seen uranium bull markets where companies that have quality assets and quality management teams are all trading with market caps of hundreds of millions of dollars. And if you make a discovery of significance that gets taken over, that can go into the billions of dollars really, really quickly.
I want to continue this dialog maybe next week, Jeff, or the week after. I know that you're always busy but I respect the time that you always take for us. I know our audience really, really enjoys these conversations.
We talked uranium today. You gave us a few names. You gave us one at the end that was very specific and detailed. Maybe next week, we’ll talk lithium. It's been a minute since we’ve done that. I know you mentioned Patriot Battery Metals… but there's more than one way to skin a cat! I know you and I are on the hunt for something similar to Patriot. So if you're open and receptive to it — I'd love to have you back on soon.
Jeff Phillips: Yes, absolutely! I enjoy doing this as well. And I’m glad your audience is enjoying the ongoing discussion. As always, I want to just remind your listeners that, again, these are all speculative stocks.
So let's plan on doing something on a copper company… something on a precious metals company… and something on a lithium company. You really want to have anywhere from 6 to 10 junior resource companies at any given time that you're speculating on and that you understand well. The resource market, as we all know, can be very volatile so it’s good to have some diversification into some different commodities.
So let’s shoot for three new picks next week or the week after. Remember, you only need one Patriot-type stock to blow the lid off your portfolio. It’s high-risk speculation… but that’s what swinging for the fences is all about!
Gerardo Del Real: Can’t argue against that, Jeff! Well said and love the analogy. Words of wisdom from one of the best. Jeff, thank you so much for your time today.
Jeff Phillips: Thanks for having me, Gerardo. Appreciate it.
You can get our latest uranium research and recommendations here.
Gerardo Del Real
Editor, Resource Stock Digest