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Skyharbour Resources Ltd. (TSX-V:SYH) (OTCQB: SYHBF) (Frankfurt:SC1P)delivered
some exciting results to the market with the announcement earlier this week
of high-grade uranium intersections at its Moore
project in Saskatchewan’s Athabasca Basin.
Read
the press release
The Vancouver-based company has just completed its fall drill program
focusing on the Maverick Zone of its Moore property, located about 15 km east
of Denison Mines’ Wheeler River project. The primary objective of the 3,800m
program was to investigate the potential for uranium mineralization at depth,
in the basement rocks.
Why is that important? It’s known from previous drilling at the Maverick
Zone that the bulk of the mineralization is in the sedimentary sandstone and
the unconformity - the point where the sandstone meets the underlying
basement rocks. What was not known, was the potential for high grade uranium
in the basement rocks. Skyharbour wanted to solve that mystery because most
of the highest-grade deposits discovered in the Athabasca Basin in recent
years have been found in the basements. These include NexGen’s Arrow,
Fission’s Triple R and Denison’s Gryphon deposits.
And the answer was… yes. Drilling at the western end of the Maverick Zone,
SYH pulled up a 15.2m intercept containing 0.56% triuranium octoxide (U3O8) -
including 3.11% U3O8 over 1.8m. More importantly though, the intercept - one
of the broadest to date - occurred between 264.5m and 279.7m downhole, and
most of the zone was below the unconformity in the basement rocks.
According to Skyharbour CEO Jordan Trimble, the high-grade intercept is
proof that the basement rocks have a lot of potential to host more high-grade
uranium mineralization, which was a key objective of the fall drill program.
“The big takeaway is hitting the bulk of that 15.2m of mineralization in
the basement rock. Now we know the basement has the potential to host more
high-grade uranium, and we can continue to drill to find bigger, higher-grade
feeder zones.”
By feeder zones, Trimble is referring to what could be the source of the
uranium that precipitated out from fluids millions of years ago and pushed
upward, into the basement rocks, the unconformity and the sandstone.
“Conceptually it gives us a lot more confidence there’s probably a lot
more to be found at depth.”
A few more highlights from the program:
- Hole ML18-15 returned 1.33% U3O8 over 7.8m including
2.91% U3O8 over 1.5m, at the unconformity at the western end of the
Maverick Zone.
- This 7.8m intercept contained not only high-grade
uranium, but cobalt and nickel at decent grades - 0.44% Co and 1.62% Ni.
While it’s too early to say whether there could be mineable credits,
Trimble says “That was a nice surprise and when we drill the next
program we’ll definitely be looking out for that.”
- The Maverick Zone has been expanded to the west and at
depth.
- Four exploratory holes testing targets in the basement
rocks intersected up to 80m of “altered and structurally disrupted
graphitic lithologies.” Graphite is a very strong pathfinder mineral for
uranium, because when the mineralized fluid meets a graphitic structure,
the uranium precipitates out. Rarely is high-grade uranium found without
graphite.
Skyharbour will take what it’s learned from its fall 2018 drill program
into a new 3,000m program planned for early 2019. The focus will include more
exploratory drilling into the basement rocks with the goal of adding
high-grade uranium mineralization that can be plugged into a maiden resource
expected to be published sometime next year.
Recapping what has been done so far at Moore:
- The Moore property that Skyharbour optioned from Denison
Mines is just over 35,000 hectares. It is located between the Key Lake
mine and mill complex and the McArthur River Mine. Over $40 million in
historical exploration has been done, with over 140,000 meters of
diamond drilling and more than 380 holes completed.
- Since mid-2000, the focus at Moore has been on the
4-kilometer Maverick structural corridor where pods of high-grade
unconformity-type uranium mineralization has been intersected. During
the winter and summer of 2017, just under 10,000 meters of drilling was
completed. Highlights included 20.8% U3O8 over 1.5m, 9.12% U3O8 over
1.4m, and 2.23% over 9.3m U3O8, all at between 250 and 275m depth.
- About half of the 4-km corridor has been drill-tested.
Stepping out 100m from the Maverick Zone, Skyharbour also discovered a
new high-grade mineralized lens, where 9.12% U3O8 over 1.4m and 4.17%
U3O8 over 4.5m at 278m depth was found.
In partner news, Orano is planning to drill 4,850m in 2019 as part of a
$2.2 million exploration program at Skyharbour’s Preston property. The two
companies previously signed an earn-in agreement whereby Orano (formerly
Areva) must spend C$8 million exploring the property over six years, in order
to earn up to 70% of the project. Orano has identified two priority targets,
JL and FSA.
With this program, financed by partner money, Orano looks to be well ahead
of their earn-in targets and will nicely complement SYH’s drill program at
Moore, while adding to the news flow. A recent $600,000 private placement
means Skyharbour is fully cashed up for its next phase of exploration at
Moore.
A recent report from BMO predicts the price will gradually rise as
inventories are reduced; the report targets $55 a pound in 2023. The spot
price is carefully watched by retail investors but nuclear utilities mostly
buy on long-term contracts.
On the supply side, Trimble pointed to production cuts at KazAtomProm,
mine closures - Cameco’s McArthur River/ Key River and Rabbit Lake - and big
mines like Ranger in Australia, and Rossing in Africa, running out of ore.
The Ranger mine operated by Rio Tinto will stop operating in 2021 and is
slated for closure in 2026. Paladin Energy has cancelled a planned expansion
and has shuttered its aging Langer Heinrich open-pit mine in Namibia.
Since 2016, between 30 and 33 million pounds of mined uranium has been
curtailed, representing about 23% of global production.
Trimble notes it’s a win-win situation for the market right now because as
uranium contracts with nuclear utilities roll off in the next three to four
years, producers won’t be able to produce at current low prices - negotiated
a few years ago pre-Fukushima - meaning either the price goes up or those
producers shut mines. If the latter happens, supply will be restricted and
the price will rise.
 
Also feeding into the supply picture, and what’s really moved the spot price,
says Trimble, are several new uranium funds and holding companies that have
emerged over the past 10 months. Seeing an imbalance in the market, their
rationale is to buy uranium on the spot market, store it, and sell it later
to utilities when the price goes up.
Adding to the spot market buying frenzy is Cameco, which plans to purchase
11 to 15 million pounds to fulfill contracts in the new year - having run out
of inventory and stockpiles. Trimble sees this as the most immediate
near-term driver of the spot price.
On the demand side is the usual strong pull towards nuclear energy,
particularly in Asia. China has the most reactors in the pipeline including
43 operating, 15 under construction and 179 planned or proposed. Globally
there are 453 operating nuclear reactors and 55 new reactors under
construction. Japan, which shut down all its reactors following the 2011
earthquake/ tsunami, now has nine reactors back online, up from just three
last year.
Nuclear consultant UxC predicts a shortage of uranium in 2018, when
full-year results are tallied: only 135 million pounds of U3O8 due to recent
closures and project deferrals, versus 192 million pounds demanded.
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or
the solicitation of an offer to purchase or subscribe for any investment.
Richard Mills has based this document on information obtained from sources he
believes to be reliable but which has not been independently verified.
Richard Mills makes no guarantee, representation or warranty and accepts
no responsibility or liability as to its accuracy or completeness.
Expressions of opinion are those of Richard Mills only and are subject to
change without notice. Richard Mills assumes no warranty, liability or
guarantee for the current relevance, correctness or completeness of any
information provided within this Report and will not be held liable for the
consequence of reliance upon any opinion or statement contained herein or any
omission.
Furthermore, I, Richard Mills, assume no liability for any direct or
indirect loss or damage or, in particular, for lost profit, which you may
incur as a result of the use and existence of the information provided within
this Report.
Richard owns shares of Skyharbour Resources (TSX.V:SYH). SYH is
an advertiser on his site aheadoftheherd.com
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