Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble: “It's a Very Important Time for Us” as Winter Drill Program Kicks Off at the High-Grade Moore Uranium Project
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?
Jordan Trimble: I'm doing good. Thanks for having me.
Gerardo Del Real: Thanks for coming on. An important time in the company's history. Let's be frank, the winter diamond drilling program at your high-grade Moore Uranium Project has commenced and you're swinging for the fences.
I know that we always want to manage expectations, but the bottom line is that we've talked about these targets for what seems like months, and maybe even years, and now we're at the point where you're really testing some of these at depth. I would love for you to provide an overview of the diamond drilling program that's underway.
Jordan Trimble: Yeah. As we've spoken about in the past, we spent a fair bit of time last year doing geological modeling, remodeling geophysics to refine these basement-hosted targets. We had a couple of exploratory drill holes that we've drilled in previous programs, testing these basement targets. Really, it's the culmination now of all of this that's refined and prioritized these basement-hosted targets at our flagship Moore Project at the Maverick corridor.
Needless to say, this is a very important program for us. We're confident that we're going to find more high-grade uranium at depth in the basement rocks. Again, as we've talked about before, we're looking for the source mineralization for the high-grade that we have at the unconformity and in the sandstone. We're looking in these feeder zones. And again, a lot of work, good work, that was done last year by our technical team to prioritize these targets.
The first target area that we're going into is East Maverick, where one of our last drill holes testing this basement target intercepted our highest-grade basement-hosted zone in the 2019 drill program, where we had about 2.5% over 2.3 meters. Unfortunately, we were not able to follow that up, because it was at the end of the drill program, but fortunately now we are going to be going and following that up. So, that's a primary target open down plunge, based off of the geophysics in the geological modeling that we've done. We think there's more mineralization to be found there.
Then we're going to go into a couple of zones along trend, along strike, up to the northeast. One zone that's 500 meters away that's had some historical drilling in the sandstone and down to the unconformity, some high-grade mineralization found. But again, little to no drilling into the basement rock. And then another zone, about a 1.5km away from the high-grade Maverick Zone. Again, a similar situation there, where we're going to be testing some basement-hosted targets with the new geophysical data and geological modeling we've done over the last six to eight months.
So, this is a big program. We've just commenced the 2,500 meters in seven to nine drill holes, testing those three target areas. We'll have updates and news flow as a result of that.
But it's also worth mentioning, just last week we had our partner company, Azincourt, commence their 2,500 meters of drilling at our East Preston project, as a part of their 70% earn-in on that project. There's also a cash payment of $200,000 that needs to be made in order to complete the earn-in. So we have cash payments coming in from partner companies, which is important. It's part of our prospect generator model and strategy.
Then last but not least, at our Preston project, our strategic partner Orano will be commencing their upcoming field program, geophysical program. Should have some news out on that here in the coming weeks, as well. So, lots of news, lots of exploration, lots of potential for new discovery across three projects that we have in the portfolio, including our flagship. About 5,000 meters of drilling between us and Azincourt, and quite a bit of money being spent in the ground, and a good chunk of that being funded by partner companies.
Gerardo Del Real: I've joked, Jordan, that basement-hosted targets is the uranium version of Fosterville-like systems in the gold space. Right?
Jordan Trimble: Mm-hmm.
Gerardo Del Real: And the reason for that is the prize is a big one. Can you provide a little bit of context on what you're looking for, as it relates to the analogues that are nearby, right?
Jordan Trimble: Yeah. A lot of people are familiar with the recent discoveries that have been made in the basin like NexGen at Arrow, Fission at PLS, Denison's Gryphon deposit. The list goes on. This is a newer paradigm shift, if you will, where historically a lot of the mineralization and deposits were discovered in the sandstone or at the unconformity. There wasn't a lot of drilling or work done deeper into the basement rocks until more recently, and there's a variety or reasons for that.
But one of the interesting things is, when you have the high-grade uranium in these basement-hosted structures and you don't have a coarse sedimentary sandstone surrounding it like you do in the Athabasca sandstone, you basically get a concentration of mineralization, and you don't have that alteration halo around it. So, if you think about it, they can be trickier to find, but because they're the feeder zones, you can have very high-grade mineralization.
Getting back to the work that we've done over the last six to eight months, a lot of work that we've done, and prior to that, has given us now these targets, and very precise targets on where we need to be drilling. And so, that's important. That takes time. It's not just the geophysics. It's, as I said, looking at the geochem, previous drill holes, geological modeling. There's a lot that goes into that. So, we're confident in this program, and we're excited to get started with it, and you'll see news flow coming out over the coming months on it.
Gerardo Del Real: A lot of near-term catalysts, obviously, with partner-funded programs and, of course, the flagship being drilled.
Before I let you go, Jordan, I've got to get your take on the pulse of the uranium sector. I know you're active out there. I know you have many, many, many conversations with insiders in the space, both with majors and behind-the-scenes people in the field. Can you give me your brief take and overview on what you sense behind the scenes, that maybe isn't as common knowledge to the average speculator in the uranium space?
Jordan Trimble: Yeah, absolutely. We've talked at length about the underlying fundamentals for this commodity, for this metal. And as I've stated before, I really do believe that there's some of the most compelling supply/demand fundamentals out there, a major primary mine supply deficit that's forming here. On the supply side, responding to the low price environment with production curtailment, and project and development deferrals. We know that that's all happening, and that's working its way into the market.
The demand side, continuing to grow. Recently you've seen more talk on SMR, small modular reactors and advanced nuclear technologies. When you get people like Bill Gates out there and other well-known nuclear proponents starting to really talk about it in the mainstream media, that's going to, I think, start to have more of an impact with sentiment, with investor and market sentiment, and just with the general populace out there. And so, I think that that's going to help drive demand going forward.
So again, very, very strong underlying supply/demand fundamentals that will drive higher prices, ultimately. But more specifically, and more recently, you've seen some positive developments out of the U.S., right? So, again. One of the big issues that we've had is the uncertainty created by the Section 232 petition and the trade action that we didn't see come out of it, and then the subsequent Nuclear Fuel Working Group, as we've talked about.
From a broader perspective, this has really kind of stifled, in particular, the U.S. utilities and sidelined them from buying and contracting material over the last year-and-a-half. Well, that's almost a third of the global demand, right? So, when your biggest buyer is out of the market, needless to say, it's going to have an impact, a negative impact, on the market, which we've seen.
Now, we just saw this proposed budget, a domestic and U.S. uranium reserve, $150 million a year that they're proposing for it. So, I think just having some clarity now, and having some resolution, will go a long way. That could be one of the catalysts that brings these utilities, and the U.S. utilities, back to the market.
So, that's important. And just last week we saw Cameco's annual financials reported, and quite obviously positively received by the market. But a couple of the key takeaways were in Tim Gitzel's market commentaries. One of the big ones that he pointed out, he said, "We have more prospective long-term business in their contract pipeline than there has been since 2011."
So, clearly there is a lot going on behind the scenes, negotiations happening with mining companies, and utilities trying to renegotiate contracts that are expiring. And then he also talked about the spot market purchasing program and their contract deliveries. Now, we know last year they kept their cards pretty close to their chests. I think a bit of the weakness we saw in the market was they weren't buying as aggressively as they were in 2018.
But they just stated here, they have 20 to 22 million pounds that they're going to have to acquire in 2020 to deliver into their contracts, and they explicitly state here that a good chunk of that is going to have to be in the spot market. Well, we know in January, you and I were just chatting about this, there was only about a million-and-a-half pounds transacted on the spot market.
So, that market is tightening up. It's getting tighter and tighter, and Cameco having to go in and buy a bunch of material in a relatively tight market, the price is going to go higher as a result of that. If you get, now, a couple of utilities that are looking to shore up supply in the near-term, and they step into the spot market as well, that's a recipe for a much higher price. And I think we're going to see that here sooner than later.
Gerardo Del Real: Well said. Jordan, you've positioned the company well. I know the market hasn't supported a higher share price, yet. That's the opportunity, right, if we get these multiple catalysts that all seem to be trending in the right direction as far as we can tell. We know the supply/demand story. We know it's a matter of when, not a matter of if. And the next big question is, do you hit with the drill bit?
Any last words, Jordan?
Jordan Trimble: No, I think that covers it all. I mean, I've continued to buy in the market. Again, the value proposition right now, to me, is incredible. You can see what I've been doing, and I will look to continue buying shares at these prices. It's great value here. Like we talked about, a lot coming up over the next several months with our drilling and our partner-funded programs.
And the uranium market recovery, obviously it's been a tough last 12 months. We've been in this position before, where it feels like there's this capitulation in the market, and then one development comes out. It's a supply cut, or it's some news headline that comes out that sends the spot price higher, and the equities all move in tandem.
That's the one thing in this sector. The juniors move quickly as well, because there's not many companies that investors can go to to get exposure. So, the Skyharbours of the world that are active and that are on those radar screens, they will move quickly.
Gerardo Del Real: You should be commended for buying in the market, by the way. I should note that more CEOs should be making a point at these depressed prices to put confidence in the company's stock, right? Because if you're not buying, and you know what's going on and the work that you're putting in, what does that say to the market? So, kudos to you and the team.
Jordan Trimble: Absolutely.
Gerardo Del Real: Jordan, thanks again. I appreciate it.
Jordan Trimble: Thanks, Gerardo.