Skyarbour Resources (TSX-V: SYH) CEO Jordan Trimble on Drilling Moore Lake and Putting Together a Premier Uranium Prospect Generator
Gerardo: 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, thanks for joining me this afternoon.
Jordan: Thanks for having me.
Gerardo: Well, I wanted to have you on because you had some news this morning. The headline reads, "Skyharbour Resources announces plans for upcoming drill program at Moore Lake, Uranium Project and receives approval for DTC eligibility in the US.” And obviously, Moore Lake is the flagship and I definitely want to talk about that, but I just wanted to start the interview by talking a little bit about 2016 because Skyharbour has been very busy. There were actually a lot of significant milestones that you achieved in 2016 that I think position you perfectly for the upcoming drill program, so with your permission, I'd love to start there.
Jordan: Look, 2016 was really a transformational year for the company. A number of deals that we managed to get done, we beefed up the team, a couple of notable names that we brought onto the board and the advisory board, and really everything working towards this drill program, as you mentioned, at the flagship, Moore Lake, which will be commencing towards the end of the month. The big deal that we consummated last year with Denison Mines (TSX: DML). Denison is now our largest strategic shareholder. We're acquiring 100% of Moore Lake, a project that they had in their portfolio. That originally, as we’ve discussed before, was a project that my head geologist, Rick Kusmirski, had in his company, JNR Resources, back in the day. And it was his team that made the initial high-grade discovery there, so it's good to see it come back into our portfolio. We're looking at going back to that property with some new ideas, a new look at the drilling. We're obviously confident that we can get in there and we can find some more high-grade mineralization.
The deal with Denison was a big kick start for the company in 2016. We raised some money in conjunction with that deal. Dave Cates, the President and CEO of Denison Mines and Uranium Participation Corp. came on the board as well. Since then, I believe that was in July and August of last year, so the last few months of 2016, we brought on Paul Matysek as a Strategic Advisor, well known name in the industry. Founder and President of Energy Metals, which he built up from a 10 million dollar valuation in 2004, and sold it to Uranium One in 2007 for $1.8 billion, so a great addition to the advisory board.
Then, finally, towards the end of 2016, we signed a binding term sheet on a project we have a 50% stake in on the west side of the Athabasca Basin called, Preston. It's an $8 million dollar deal over a six year period with a strategic partner. The name of the partner forthcoming. We're just working towards the definitive agreement on that. But the significance of that deal is showing our strategy of the prospect generator, having a large portfolio, five projects covering 250,000 hectors of land in the Athabasca Basin. We're looking to option, joint venture off some of the non-core assets, finding strategic partners to come in, fund the exploration. We maintain a minority stake, so we still have some upside exposure. And it can bring in cash and stock, so it alleviates some of the pressure going forward, having to continue to raise money through equity issue and so, that deal, which is just being finalized now, was a big deal for us and it will also see more exploration carried out on that project, again funded by the partner company later on this year and over the coming years.
A big year for us. The timing is looking to be quite good as we're seeing the uranium market start to buck the trend it's been in for the last few years and I think we've positioned the company well for this. We knew that it was inevitable that the market would turn around. I think it's still at the early days of that turnaround and you know. It's really only been a month or two months since I think we saw the bottom, but nonetheless, it's exciting given that we have this upcoming drill program at Moore Lake, starting at the end of January here. Lots of news flow to come out.
Gerardo: Excellent. Well, I'd love to talk about the drill program in some more detail if you would, Jordan. I understand it's a 3,500 meter drill program initially. Is that correct?
Jordan: Yeah, that's correct. We just got the permits for the drilling. They're actually just getting the ice roads all set up. That's a big part of the logistics is not having to fly everything in. You save quite a bit of money, about 20 to 30% reduction in cost so we can haul everything in, the drill rig, the equipment, all of that, and so yeah, 3,500 meters. As you'll see in the news release, most of that will be focused in and around the known high-grade zone which is called the Maverick Zone. Previous drilling there returned 4% U308 over 10 meters. It's unconformity style mineralization. This is an important point, right, because where is the upside on the project with the drilling? Where are we going to make additional high-grade discoveries or expand that known high-grade zone? A lot of what we're looking at, we're going to be drilling into the basement rock, which is below the unconformity, testing for high-grade mineralization in feeder zones that come up. We know there's high-grade at the unconformity, at the Maverick Zone, so we'll be testing the basement rock below. It's still relatively shallow. The known high-grade mineralization there, the land is only at about 250, 260 meters depth, which is actually quite a bit shallower then some of the other well-known high-grade deposits in the basin, McArthur and Cigar Lake, for example at 500, 600 meters depth.
We'll be testing the basement rock. We'll be testing along strike, along the conductive corridor. There's lots of room for expansion and you know, I'd say good potential for additional high-grade discoveries. There's other targets on the project that have had work done on them. We know there's mineralization elsewhere on the project, so you know, all in all, we are confident that we can go back in there with this drill program, continue to prove up the known high-grade but also find more high-grade mineralization as well, so it's an exciting time and we're looking forward to getting in the field.
Gerardo: Excellent. Now, Skyharbour is in a pretty unique position because you are a prospect generator. You follow the prospect generator model but you do have a flagship in Moore Lake, obviously and so can you talk a little bit about the prospect generator aspect of the strategy moving forward in 2017, because I understand that you're still looking to be active on that front as well.
Jordan: Yeah. Our strategy for 2017, as you pointed out, we have this two-pronged approach. First and foremost, we are an exploration company, so the real value creation from an exploration company is through the discovery process, proving up deposits, economic deposits, that is what we are looking to do, at Moore Lake, looking to emulate recent successes in the Athabasca Basin, like those at Nexgen, Fission, Hathor, which was bought out by Rio Tinto. These are all well-known discovery stories and exploration successes in the Athabasca Basin in recent years. We are in that category. That's what we're looking to do at Moore Lake. But we also do, as I mentioned earlier, have a hand full of other projects, big property packages, throughout the Athabasca Basin and a number of these projects have a strong discovery potential. They too have the potential for high-grade uranium mineralization to be found on them. We own 100% of the majority of them. One of the strategies, as I talked about, is this prospect generator strategy model, which has worked so well for many companies in the mineral exploration and early stage mining industry.
Given our portfolio projects, we can now look to leverage that, leverage the portfolio to have strategic partners come in, fund that exploration on those projects, advance those projects and also bring in some cash and stock for the company. So you've seen that here in late December with the announcement of the binding term sheet for the 8 million dollar deal on Preston. We have a couple of other projects that we are talking with other groups on right now, so look for more of these deals to be consummated this year as well.
Gerardo: Excellent. Now Jordan, earlier you touched a little bit about what looks like an improving uranium market. Can you elaborate a little bit more and just kind of give us your take there on what you're seeing behind the scenes?
Jordan: Sure, so we have seen a turn around, at least, from the lows. We saw the spot price tick down to $18.00 a pound in November and December of last year. I mean look, last year, if you look at the full commodities sphere, you had really the only one that significantly underperformed, and was actually down over 40% was uranium and I think as we saw in kind of October/November, you saw a capitulation really, I think, in that market. Since then, it bottomed. It's popped back up to the low to mid $20s. It's moving back up. Some significant news out today from Kazakhstan, the largest producer globally. They've announced that they're cutting their production by 10%. That's over 3% of global supply, so just in the last twelve months, you've actually had about 15% of supply cut back globally, which is quite significant.
That's a result, obviously, of the depressed prices, the difficult market we've been in, and I think eventually, you're going to see a transition to this demand-driven market. We know that the new reactors coming on line, there's sixty reactors being built globally, under construction, hundreds of more in the pipeline. You have well over 400 reactors operating globally right now. These reactors continue to need fuel. Going forward, there's this new contracting cycle that we're coming into with the utilities by 2025. Some predict that they'll be about 80% of the requirements, the necessary fuel for these reactors that's uncovered, that isn't met by current contracts. Those need to be renewed, so you have the stars aligning really, I think, both on the demand and the supply side. We are and have been in an over-supplied market, hence the price decline. A lot of that has come from secondary supplies but you know, eventually that does subside and I think we're starting to see the tail end of that. It's anyone's guess really how long it lasts, but we're starting to see the spot price, in particular, rebound.
Look, we're still taking about a price at $22, $23, $24.00 a pound, right? I mean again, you go back and you look at the average global all in cost of production, it's much, much higher, and so I still think there's a lot of room for this commodity to move. I still see a lot of upside from here.
Gerardo: Excellent. Jordan, thank you so much for your time. Anything you'd like to add?
Jordan: No, I think that covers it.
Gerardo: Excellent. Well, hopefully we have you back on soon. I look forward to hearing progress from drilling at Moore Lake and it sounds like late January that program will kick off, so I imagine that shortly thereafter we'll start getting a feel for how things are advancing there.
Jordan: Yeah. We will be in touch. Thanks Gerardo.
Gerardo: Thank you so much.