Skyharbour Resources (TSX-V: SYH) CEO Jordan Trimble Articulates the Case for a Coming Uranium Bull Market
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 good. Thanks for having me.
Gerardo Del Real: Interesting day. The broader US indices, actually globally, all the indices are selling off at a rapid pace. The bond market is doing things it has never done. We patiently await the resurgence of a uranium bull market, and in the meantime you're doing what the better management teams always do. They add value, whether or not the market realizes it immediately. Eventually, the re-rating will come.
You had some important news with your partner – and I know that you're also drilling at your high-grade flagship Moore Uranium Project. I want to talk about that a bit, but first let's talk about the news, Jordan. Can you give us some details?
Jordan Trimble: Yeah. Tough market not withstanding, we are quite active right now. This is the busiest time of year. Lots of news flow and catalysts coming up. We just announced this morning our strategic partner, Orano, France's largest uranium mining company, state-run, based in Paris. They are getting to work back at our Preston project. A fairly large geophysical program, DC resistivity. Not to get too technical, but what they're trying to do with this program is hone in on specific alteration clay zones at the many kilometers of electromagnetic conductors, EM conductors, on the project.
So they're basically doing this to refine drill targets for drilling later in the year. This is quite an effective tool, a geophysical program that's been used in the basin, and many discoveries have been made using it. So it's good to see them going. This, like I said, will help refine future targets. There's several target areas that they're going to be carrying out this resistivity on a geophysical program on. We'll obviously have some news flow from that as we work our way through the program.
And then as you mentioned, we have other programs underway including our 2,500-meter drill program at our flagship Moore Project. Again, we've talked about this in previous interviews, a key catalyst and program for us testing basement hosted targets at the East Maverick Zone and the Goose and Viper Zones along strike at the main Maverick corridor at our high-grade flagship project. I will say the drilling is going quite well, still relatively early on, but a look out for news and updates on that over the coming weeks and months.
And then last but not least, our other partner, Azincourt, carrying out 2,500 meters at our East Preston project. So collectively, 5,000 meters of drilling between us and Azincourt. Three programs now underway. So multiple irons in the fire. Despite a tough market broadly out there, we're going to remain active and generate news flow and hopefully some good results here.
One thing I will point out is we have seen in the past, uranium is somewhat uncorrelated with the broader market. So maybe there's some solace in that. But we know in the last year, it has been a tough uranium market. Again, I really do believe we're going to see a turnaround this year. There's specific fundamentals to the uranium market, positive drivers here that I see materializing over the next several months and this could be, if we continue to see this broad market sell-off, maybe uranium becomes the one area that investors look to.
Gerardo Del Real: Well, let's touch on it. I know we have in past interviews, but with the instability in the markets right now, I'm sure there are going to be people that are listening to Jordan Trimble for the first time talk about why he feels confident that a uranium bull market, or at least a turnaround, is definitely in the cards the second half of the year.
Could you just recite a couple of the main reasons why you think that to be the case, Jordan?
Jordan Trimble: Yeah. Starting with the supply demand, over the last several years we've seen major supply curtailment. McArthur River, Cameco's largest operating mine, obviously still offline and we will not see that come back online until we have a much higher uranium price. A number of other mines and project deferrals. I think it's also important to note there's several mines out there in Africa and Australia that are simply coming to the end of their mine lives.
So it's not just supply destruction as a result of low prices. We are going to see additional supply coming offline simply because the deposits in the mines are running out of reserves. And so, as we see that supply side response play out as we've seen it play out, that's going to be positive for the price going forward.
But on the demand side, we continue to see growth in demand, especially in the developing world. I will note, just in the context of the market we're in right now, it's a relatively sticky market, right? These nuclear reactors, you don't just turn them on and off, right? So it's important to note that once they're built and once they're operating, they're online. I don't see there being any major demand destruction if we do see a recession, if we do see a pullback as we're seeing. So that's an important point.
Then, more recently we've talked about some of the potential positive demand catalysts, one being new SMRs, small modular reactors. We've seen an MOU signed here in Canada with several provinces, including Ontario, for the development and advancement of this new wave of small modular reactors. I think that could add to demand significantly.
Then when you look in the next, call it 6 to 12 months here, we've talked about Cameco – and this could have the most immediate impact on the spot market – Cameco having to buy or acquire up to 22 million pounds of uranium in 2020 and they've stated that they're going to have to acquire most of that in the spot market. We know now that they drew down inventory, more inventory towards the end of 2019. They're now well below their minimum threshold that they've guided. So they're going to have to restock, in addition to acquiring material in the market to make their deliveries, to make their contract deliveries. And so that could be a big driver for the spot price here in the near term.
And then last but not least, we appear to be seeing some resolution to the uncertainty that's really plagued the industry over the last year and a half around section 232 and the Nuclear Fuel Working Group. We don't have the details yet, but we have seen $150 million budget proposal for a US uranium reserve. So look out for additional news on that.
But again, that does help bring some resolution to what has been an overhang in the market where you've seen in particular US nuclear utilities more or less sidelined in a lack of contracting. I think with resolution to the 232 and the Nuclear Fuel Working Group, I think that will be one of the reasons that you see utilities come back to the market this year in a meaningful way, in addition to the fact that their contracts are rolling off. We know a big chunk of their contracts roll off in the next several years. So they have to come back to the market sooner than later.
We have seen, in the spot market in January for example, a relatively low volume month. So we are seeing the market tighten up and that will be positive. Again, with Cameco having to buy in the spot market and even potentially utilities coming in, I think you could see that drive the price.
So there's a lot to look out for. I think we've suffered through the tough times. I do think we're in for a good 6 to 12 months here. There's a handful of catalysts that will drive that.
Gerardo Del Real: Well articulated. Jordan, I want to make one point, you mentioned the $150 million budget request. That's per year.
Jordan Trimble: Per year, yeah.
Gerardo Del Real: And if I'm not mistaken, that's for a decade. So we're not talking about a short-term request. We're talking to budget that proposes $1.5 billion over a decade. So important to note. Well articulated, as always. I'm with you. I agree wholeheartedly that we're absolutely due for a rebound. We know when those happen, they happen violently to the upside. Unfortunately, it looks like we're at the tail end of just a nasty plunge down.
And so, I would encourage everyone, if you are not speculating in the uranium sector, the good news for you is that bear markets do a great job of weeding out the management teams that don't deserve the paycheck and don't deserve a bull market. And fortunately for Skyharbour, you have somebody leading the charge there that knows what he's doing in Jordan Trimble.
So Jordan, kudos to you and your team for continuing to add value and I'm looking forward to the day that the market starts acknowledging it.
Jordan Trimble: Yeah, I appreciate it. Thanks. And I've been buying more in the market. I just see, again, the value proposition here, given the last year. I think it's incredible and we'll continue to do so.
Gerardo Del Real: I like people that eat their own cooking. Appreciate it Jordan.
Jordan Trimble: Thank you.