Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble with an Update at the Moore Uranium Project: High-Grade Results from the Growing Maverick East Zone & Discovery of the Otter Zone Target

June 20, 2019

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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 this morning?

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

Gerardo Del Real: Thanks for coming on. You just announced results from the 2019 winter/spring drilling program at your 100%-owned Moore Uranium Project. You always do an incredible job of summarizing the results. Pretty encouraging, you’ve got some high-grade hits, you got some good, good, good indications that bode well for potential new discoveries. So I'd love for you to talk to us about that.

Jordan Trimble: Yeah, great. So we'll start with the headline hole, which was 2.31% U3O8 over 2.5 meters. Now that's within a much broader zone of 12 meters of 0.62%, which is actually one of the widest intercepts of mineralization we've hit on the property. Now, what's key about this is that that hole was the first hole that we drilled in the recently discovered East Maverick Zone. 

The East Maverick Zone, as you may recall, we actually made a high-grade discovery there back in 2017. Even the previous operators had not found it, so it was a new lens that we found recently. But again, the drilling was focused in the sandstone and at the unconformity. This represents, with just one hole being drilled, we only drilled the one hole at that target in this program, we hit multi-percent and that high-grade zone being in the basement rock just above 300 meters.

Again, this is the most recent drilling we've been doing. A lot of the drilling has been focused on basement-hosted targets. We've flown these airborne mag surveys that we've used drones and we've had success. We're actually flying one coming up here shortly, another one. But we've had success with these geophysics and analysis of previous drilling and just kind of taking a new look at the project over the last couple of years. We've had success now, early on drilling into the basement rocks with the most recent drilling. This is just yet another example of that.

It's still very early. We’ve only drilled a handful of holes into the underlying basement rocks, or specifically targeting the underlying basement rock. So it's still relatively untested and we'd like to, obviously, with future drill programs continue to test the potential for high grade in these feeder zones. That's really where we think we're going to make a big discovery, much larger higher grade deposit in the basement structures. Given that the unconformity at that Maverick corridor is only about 260 meters, 250 to 270 meters call it, the basement rock all below that is still relatively shallow compared to other deposits in the basin. So, very exciting.

Yet again, we're very happy with the results. We continue to discover additional high-grade mineralization at the project. And, as you mentioned, we also in this news release announced a regional discovery at what's called the Otter Zone. We hit there, wasn't as high grade, but 0.15% over 0.5 meter. That’s significant because this is a new target area. It's about 7 kilometers north of the Maverick Zone. So a brand new area, whole different conductive corridor. That was really the first drilling that we've done at that area. Followup work needs to be done at Otter.

Looking forward, we are planning a summer program. Just getting back to that main hole in the East Maverick Zone, it's completely open at depth. That’s what we highlight in in the news release, that the down dip potential and extension of that high grade, given it was the first hole drilled there, that's what we're going to go after in a future drill program as well as continuing to prove up mineralization along strike, both in the basement rock and above in the sandstone. As we've talked about, there's some interesting new mining methods being proposed in the basin; ISR at Denison’s nearby Phoenix deposit, as well as SABRE. So it is also important to know we have high grade in the actual sandstone.

But again, I think the real exploration upside potential, the Maverick corridor, is going to be in the basement rock, which we'll continue to drill in. And, again, hopefully look to emulate the success that other notable discoveries in the basin like NexGen, like Fission, like the Gryphon deposit at Denison's Wheeler Project. These are all basement-hosted discoveries and deposits.

Gerardo DelReal: And correct me if I'm wrong, Jordan, but in the past we've talked, and let me use the baseball analogy, we talked about going for singles and doubles, and now it seems to me that the focus is definitely on swinging for home runs in the basement rocks. It seems like you're kind of at an inflection point where you know where you want to dedicate the bulk of your attention and efforts. Would that be accurate?

Jordan Trimble: Yeah. I'd say that we're looking for those big home run hits, but we're coming up with singles and doubles here. Right?

Gerardo DelReal: Right.

Jordan Trimble: It's important to note that we are adding pounds, we are finding high grade in the basement rock. But we, needless to say, believe there's a lot more to be found there. And so with additional drilling coming up here soon, we think we can tap into something much bigger and much higher grade.

Gerardo DelReal: Excellent. You're also going to have a lot of news flow from your partner companies. Can we get a status update there?

Jordan Trimble: Yeah, sure. Again, a secondary part of our story is the prospect generator model. So we have the five other projects outside of our flagship Moore Project. Over on the west side of the basin, near Fission and NexGen, Preston and East Preston are currently under option to Orano and Azincourt. Again, their combined spend over a 6-year period is just under $10 million in exploration, and some cash payments as well coming in. 

You saw earlier this week Azincourt with a news release announcing results from their winter program. Very, very encouraging early results. It was a truncated program due to a quick thaw, an early onset of spring. They drilled just over 550 meters, but seeing all the right stuff at East Preston, graphitic structures, alteration. What's important going forward is they've recently raised the money to go and carry out a much larger drill program in the near future. Just to shed some light on that earn in, they can earn in 70% at East Preston. To complete that earn in within the next year, they have to spend $1.4 million, and there's a couple hundred thousand dollar cash payment as well. It's a great start, and we're looking forward to them continuing to work there over the course of the next year. 

Orano also just recently finished their winter/spring program and we're awaiting results there. They do have plans for additional exploration work programs this year, and next year they have a $2.2 million budget for 2019. Needless to say, a strategic partner of ours, France's largest state run uranium mining company, and needless to say, have a great geological team, a lot of depth of knowledge, and have been in the basin for many decades. So a strategic partnership for us.

Gerardo DelReal: Good stuff. I know everybody in the uranium space is waiting for the clarity that we all anticipate the section 232 recommendation will end up providing. Any context or color there from you, Jordan? Thoughts?

Jordan Trimble: Yeah, we're all waiting for that and it's coming up soon. Look, middle of July is when the 90-day review ends, so we've got a big X on my calendar with that coming up. And look, we all know what's happened as a result of this 232 investigation. We saw this time last year, when Cameco came into the spot market, when we had some of these new funds, Yellow Cake in particular, that were set up, and we saw the spot price move significantly. Then it moved up into the high $20s and we saw all the share prices of these companies move as well. Then, I think a big part of the stalling out that we've seen with the uranium price is because of section 232 and because you haven't had the largest buyer of uranium globally, US nuclear utilities, they've been relatively dormant. Right?

Gerardo DelReal: Absolutely.

Jordan Trimble: We haven't seen contracting, we haven't seen a lot of utility buying. I think a big part of that has to do with the uncertainty around section 232. So at the very least, we're hoping we get some resolution here in the next few weeks and that should clear the air. We expect that to bring in new utility buying, in particular US nuclear utilities, regardless of what the outcome is, whether we see a quota of 25%. Again, that will take time though. For the US to ramp up to producing 25% of their domestic needs is going to probably take 5-7 years. So if you look at that where if there is a quota system that ramps up, where's the US going to get its uranium in the short term? And that's where I think Canadian companies stand to benefit.

Just having it out of the way, though, I think brings in utilities. I think it triggers a new contracting cycle and flurry of new contracts, which will be positive. That's the real driver for the price going forward. Then, when you look at Cameco, as I said, Cameco was a big reason that we saw the spot price tick up for the latter part of 2018, yet they've been relatively dormant in the spot market. Now, we know they have to buy millions of pounds for the remainder of the year to deliver into their contracts, so that you will see them back in the market. But, I think a part of their lack of buying in the spot market actually has to do with section 232 as well. They want to see what the ruling is on it as well. I think that could also help trigger more spot market purchasing as well.

Gerardo DelReal: Seems like a coiled spring, doesn't it?

Jordan Trimble: Yeah, it absolutely does.

Gerardo DelReal: Good stuff as always, Jordan. I'm looking forward to having you back on as we get results from partner properties and, of course, plans for the future program at Moore.

Jordan Trimble: Absolutely. I appreciate it.

Gerardo DelReal: Thank you, Jordan.

Jordan Trimble: Thanks, Gerardo.

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