February 7, 2019

Skyharbour Resources Ltd (CVE:SYH) Athabasca Basin Site Boasts World’s Best Uranium Grades

Midas Letter
Midas Letter
Skyharbour Resources Ltd (CVE:SYH) Athabasca Basin Site Boasts World’s Best Uranium Grades

Skyharbour Resources Ltd (CVE:SYH) (OTCMKTS:SYHBF) (FRA:SC1P) President and CEO Jordan Trimble has nothing but enthusiasm for the company’s uranium drill program. Skyharbour’s Northern Saskatchewan project site is in the Athabasca Basin and boasts the best uranium grades in the world, 20 times greater than is typical. Skyharbour’s flagship project is at Moore Lake, where the company has drilled for several years. Trimble reveals that uranium powers 11 percent of the world’s energy, but few companies are left operating in the space. He explains the value proposition Skyharbour offers investors, noting that major uranium mines are shutting down and uranium prices have rebounded from the Fukushima Daiichi disaster. He also indicates that uranium demand continues to grow, especially from China and India.


James West:   Hey, welcome back. I’m here with Jordan Trimble; he’s the President and CEO of Skyharbour Resources, trading on the TSX Venture under the symbol SYH. Jordan, welcome back.

Jordan Trimble:    Thanks for having me.

[stock_chart symbol=”SYH:TSV” align=”left” range=”5D”]

James West:   Jordan, we seem to be having you back, you and your group back, regularly, because you guys are serial producers of opportunities in the mining sector. So we’ll start with – why don’t we start with an overview of Aben Resources, a company which I’m a shareholder by way of disclosure, give us an update on that and then we’ll focus on Skyharbour, which is the company that you’re the CEO of?

Jordan Trimble:    Yeah, so I work with Jim Pettit, as you know, who runs Aben; it’s the gold company in our stable, and we had a lot of success last summer. I think Jim came on and did an interview when we were out here in August; we had just announced a pretty significant, high-grade discovery hole that was about two ounces of gold over 6 metres, relatively shallow at what’s called the Forest Kerr Project up in the Golden Triangle. So one of the most prolific mining jurisdictions, really, in the world, and in Canada.

We announced that hole and we had some really good follow up holes, and we ended up drilling, I think, just under 10,000 metres, and it was, you know, really the first larger drill program we had carried out, that Aben had carried out at the project. So very successful summer drill season; as you know, there’s a lot of seasonality with these Golden Triangle plays, and you see the share prices run up, Aben in particular, I think got up to $0.45, $0.46 and big volume, and it was one of the heaviest traders, and then, you know, a lot of these companies in September through, you know, January, pull back. And we’ve seen that with GT Gold, we’ve seen that with other companies in the area.

But bottom line is there’s new discoveries that have been made, Aben included; there’s a lot more work to be done, and going into the season, Aben is well-funded. It’s got about $5.5 million in the treasury, Eric Sprott’s the largest shareholder. So we’re fully funded for the upcoming summer drill program, and I’m sure Jim will be back, and as the President and CEO of the company and he’ll give you the full update in the next few months. But, a lot to look forward to, there.

James West:   You bet. Okay, so now let’s switch gears and talk about Skyharbour, and Skyharbour is looking for uranium and thorium? Which is always an interesting substance.

Jordan Trimble:    Yeah, so I mean, it is a uranium first company, that’s the focus, and what we did about 5, 5.5 years ago when I started running the company was, we went out there and with a contrarian mentality, looking for an opportunity to build the next uranium, high-grade uranium store in the Athabasca Basin. So the Athabasca Basin, for your viewers who don’t know, it’s in northern Saskatchewan. It’s the highest grade, most prolific uranium jurisdiction in the world. You know, you get grades of deposits that are 10 to 20 times the average global grade, so that brings your costs down when you actually go to develop in mining – you get incredibly rich mineralization and ore.

So we’re out there looking to be that next big discovery story, right, and there’s some notable examples in the last several years of successful exploration and discovery stories, NexGen being one which has gone from a $30 million valuation to $1 billion; Fission being another one. And there’s been a new look at the geology and at the exploration that’s been carried out. Historically, a lot of the high-grade uranium was found in what’s called the Sandstone, and more recently, some of the major discoveries like NexGen, like Fission, like Denison’s Gryphon Deposit, have been found in the underlying basement rock. So that’s a key point, and that’s one of the things that we’re looking at doing on some of our projects.

So over the last little while, we’ve accumulated six different projects; they’re scattered throughout the Athabasca Basin. They range from earlier stage exploration projects to more advanced stage exploration projects – two of the projects have notable high grade mineralization; one has a 43-101 inferred resource. And our flagship project, which is called Moore Lake, we’ve been drilling and exploring for the last several years. We did a deal with Denison mines – they’re headquartered here, run by Dave Cates, who’s on our Board.

James West:   Sure.

Jordan Trimble:    Denison’s our largest strategic shareholder, and we’ve acquired 100 percent of the project, and we’re actually just about to commence another 3,000 metre drill program on this project. We had one of our first high grade drill holes in this basement rock, as I mentioned some recent discoveries being found in the basement rock, well, we’re going to go up and follow up on that and hopefully find some more high grade.

James West:   Sure. What is the compelling fundamental argument to own uranium exploration stocks right now?

Jordan Trimble:    Yeah, I mean, look, it’s been a very tough commodity over the last five or six years. That’s what has afforded us the opportunity to build the portfolio we’ve built, and we’ve acquired these six projects for about $4.5 million, mostly in stock and some cash, and then exploration expenditures, they’ve had over 75 million in historical exploration done on them. So there’s a lot of value there, and I think there’s a strong re-rating potential as we see the uranium price start to move or continue to move in the right direction.

But from a high level, a lot’s happened in the last few years. This was a commodity that was really down and out post-Fukushima, it was traded below $20 a pound in late 2016.

James West:   Where is it at now?

Jordan Trimble:    It’s about $29 a pound. So it has rebounded from those lows in late 2016, but I think the important thing, you look at what’s happening, you look at the supply side, there’s been major production cuts from two of the largest producers: Kazatomprom Kazakhstan, which is their state-run uranium mining company; they’re the largest producer. Kazakhstan accounts for about 40 percent of global primary mine supply, they’re shutting down production.

James West:   Wow.

Jordan Trimble:    And then most notably, recently, Cameco. So Canada’s largest uranium company, publicly traded, they shut down McArthur River, which accounted for about 13 percent.

James West:   Why did they shut that down?

Jordan Trimble:    Simply they weren’t making money. It was more profitable for them, as they’re doing right now, to buy in the spot market and then sell into their long-term contract. So even in the high 20s, where we are today, we’re still well below the average global cost of production for a pound of uranium.

So that just shows you that there’ll likely be further production cuts, which will be positive for the price, especially as these longer-term, higher-priced contracts roll off in the next several years. So look to see more supply cuts as well.

And then on the demand side, demand continues to grow. You look at China, for example: they’re really leading the charge, India as well. Nuclear still is that baseload C02-free source of electricity, it’s an important part of the economy in many places in the world. It powers 11 percent of the world in the US in particular; 1 in 5 homes powered by nuclear here in Ontario. A lot of nuclear power generation. So it’s still a very important part, and the reality of it is there’s not many companies left because it has been such a tough market. So that’s, you know, that’s one of our strategies: be opportunistic when others are leaving the space. We’ve been able to do that, and we’ve been having success with our drilling.

So in addition to being a high-grade discovery story, trying to emulate the success of companies like NexGen, like Fission, we also act as a prospect generator, and we recently consummated a deal with France’s largest nuclear and uranium mining company, called Orano. So they’re coming in, they have to spend $8 million over a six-year period to earn in 70 percent.

James West:   Orano? AREVA.

Jordan Trimble:    Yeah, previously AREVA, yes, previously AREVA, they changed their name.

James West:   They changed their name.

Jordan Trimble:    Correct, yeah, they were restructured, so it’s Orano now.

James West:   Good. I learn so much about the uranium industry from my guests.

Jordan Trimble:    So that’s a good example of us executing on this prospect generator model; we had another company called Azincourt, a similar deal where they have to spend money. There’s cash payments, and then they earn in 70 percent. So we’re looking to essentially monetize and make sure that our secondary projects are advanced, with partners coming in funding the work, and then we also get some cash payments from that over the next few years. So it’s a good complement to the high-grade discovery potential we offer at our flagship Moore project; this brings in partner companies to make sure we have multiple irons in the fire, and there’s both of those companies are planning to drill here in the next several months. So we’ll have our drill program, and then two other drill programs as well.

James West:   Okay, great. Jordan, that’s an awesome update. We’re going to come back to you soon, as soon as we see some drill results, and have you back.

Jordan Trimble:    Great.

James West:   Thanks for joining me today.

Jordan Trimble:    Thanks for having me.

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