I've attended two metals and mining conferences this month and two in May.
Last month there was little consensus on what might happen with Section 232
in the U.S. This month, I've heard more positive takes. While exciting for
the five to six uranium juniors with assets in the U.S., it's also very good
for the sector. The removal of this uncertainty next month could move uranium
prices higher after having stalled at ~US$29 per pound (US$29/lb) six months
ago.
I've spoken with more than 20 companies exploring for gold (Au), silver
(Ag), copper (Cu), zinc (Zn), nickel (Ni), lead (Pb), lithium (Li), magnesium
(Mg), vanadium (V), cobalt (Co), rare earth elements (REEs) and uranium. Spot
price notwithstanding, sentiment on uranium is surprisingly high. Rare earth
metals are hot, copper sentiment is solid, vanadium, gold, silver, cobalt,
lithiumÂcold to ice-cold.
It's great timing. Skyharbour
Resources Ltd. (SYH:TSX.V; SYHBF:OTCQB) announced good results from its
winter/spring drill program at its 100% owned Moore Uranium project on the southeastern side of the
Athabasca Basin, in northern Saskatchewan. The recently completed winter
diamond drilling program totaled 2,783 meters (2,783 m) in seven holes.
Readers may recall that the project contains 12 contiguous claims totaling
35,705 hectares (~88,230 acres).
Just three days earlier, on June 17, Azincourt Energy Corp. (AAZ:TSX.V)
reported positive results from its phase 1 drill program at the East Preston
uranium project. Azincourt is earning into a 70% Interest on that project as
part of a joint venture agreement with Skyharbour and Clean Commodities Corp
(CLE:TSX.V).
From the June 20th press release: "Unconformity style uranium
mineralization was discovered on the Moore Project at the Maverick Zone in
April 2001. Historical drill highlights include 4.03% eU3O8 over 10 m, incl.
20% eU3O8 over 1.4 m, and in 2017, Skyharbour announced an interval of 6.0%
U3O8 over 5.9 m, incl. 20.8% U3O8 over 1.5 m at a vertical depth of 265
m."
In the latest program, drill hole ML19-06 into the Maverick East zone hit
a zone of uranium mineralization from 273 m to 285 m downhole. The interval
returned 0.62% U3O8 over 12 m, incl. 2.5 m of 2.31% U3O8. According to
management, this is one of the broadest zones of mineralization intersected
on the property. This was the first hole ever drilled into the basement rocks
at the East Maverick zone and. . .success!
This is not a discovery hole, but could lead to one in a future drill
campaign. These were exploration holes, they could have missed. The fact that
Skyharbour's technical team is finding smoke suggests the real possibility of
fire nearby.
Importantly, a significant portion of the 12 m intercept
was in the basement rocks. Finding areas of high-grade U3O8 in the basement
rocks of Athabasca properties has been a recipe for success for companies
such as NexGen Energy Ltd. (NXE:TSX; NXE:NYSE.MKT), Fission Uranium Corp.
(FCU:TSX; FCUUF:OTCQX; 2FU:FSE) and Denison Mines Corp. (DML:TSX;
DNN:NYSE.MKT). These results are very encouraging. They don't guarantee a big
discovery, but the odds have gone up.
Hole ML19-05 was drilled at the western end of the Main Maverick zone and
found two areas of mineralization above and below the unconformity, including
0.30% U3O8 over 4.4 m and 0.27% U3O8 over 1.5 m at 264.7 m to 269.1 m
downhole and 274.7 m to 276.2 m downhole, respectively.
Jordan Trimble, president and CEO of Skyharbour,
commented: "We are very pleased with the results from this drill program
at our flagship Moore Project as we continue to discover new high-grade
uranium mineralization in the underlying basement rocks at the Maverick
corridor, as well as making new regional discoveries. We will be commencing a
summer drill program to test more extensively the highly prospective
potential feeder zones in the basement rocks, and follow up on the early
success at the newly discovered Otter Zone."
Management also reported that "strong potential for high-grade
uranium mineralization was identified at a newly discovered regional target
called the Otter zone, which is 7 km [kilometers] northeast of the Maverick
zone."
Analysis of the regional geophysical and geological data from the Otter
zone area indicate that it's in a setting that is highly prospective for
uranium mineralized deposits in the Athabasca Basin. Only 2 km of the total 4
km-long Maverick corridor have been systematically drill tested, leaving
robust discovery potential along strike as well as at depth. Planning is well
underway for a summer/fall drill program.
Richard Kusmirski, head geologist of Skyharbour,
commented: "The fact that significant uranium mineralization has once
again been intersected in untested target areas bodes well for the discovery
of additional uranium deposits. Furthermore, much of this uranium
mineralization is associated with basement lithologies, a characteristic
common to recent discoveries like NexGen's Arrow Deposit, Fission's Triple R
Deposit and Denison's Gryphon Deposit."
Skyharbour will conduct a drone-assisted airborne magnetic survey to
better identify high-priority structures along the Maverick corridor.
Following that, a 2019 summer/fall diamond drill program will commence in
August or September. This program will test both unconformity and basement
targets and regional targets identified by Skyharbour's technical team.
Of particular interest are potential underlying basement feeder zones to
the unconformity-hosted high-grade uranium present at the Maverick corridor.
These targets have seen only limited historical drilling. Additional drilling
will also be done on portions of the recently discovered Otter zone.
This is important news for the company. Shareholders should be pleased
that the management team, board and technical advisors are moving its wholly
owned Moore Uranium and joint venture projects forward when most uranium (and
other natural resource) juniors are dead in the water. The longer the uranium
spot price remains below US$30/lb, the more explosive the move higher in
price could be. Pre-Fukushima in March 2011, the price was in the low
US$70s/lb. That was eight years ago!
Mining cost inflation since then suggests that a
long-term contract price of US$60Â80/lb is not an unreasonable expectation.
The question is, how long before we see evidence that those prices are indeed
coming?
Skyharbour Resources is in no hurry: It doesn't need higher prices this
year or next. But, when the price moves definitively through US$30/lb,
high-quality uranium juniors like Skyharbour could see substantial share
price gains [see corporate presentation and latest press
releases].
Peter Epstein is the founder of Epstein Research. His
background is in company and financial analysis. He holds an MBA degree in
financial analysis from New York University's Stern School of Business.
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