Categories: Mining Stocks
Topics: Uranium Stocks

Skyharbour Resources (TSX-V: SYH)(OTC: SYHBF) CEO Jordan Trimble on Transformational JV with Denison

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Skyharbor Resources (TSX-V: SYH)(OTC: SYHBF), Mr. Jordan Trimble, the very busy Mr. Jordan Trimble.

Jordan, how are you today?

Jordan Trimble: I'm doing well, thank you. It's good to be on, and yeah, plenty to catch up on.

Gerardo Del Real: Look, let's get right into it. You are on the road, you're at a conference. First and foremost, let me ask you about sentiment, but before I do that, I want to congratulate you. You just entered to a major, major strategic agreement with Denison Mines to form four new joint ventures at Russell Lake. The combined project consideration is up to 61.5 million. I can't stress enough to people watching that the Skyharbour market cap is 74 million, and having a partner that is willing to come in and essentially backstop future dilution and give you multiple shots on goal is a heck of a job. I want to get to the structure of that deal in a bit, but I got to ask you about the conference and the sentiment in the uranium space.

Jordan Trimble: Yeah, so we're at the SMI Conference in Zurich this week, and we've been at a few conferences the last handful of weeks. And look, the sentiment is strong. There's no question. There's positive sentiment.

I would caveat that by saying it's been a bit of a choppy market the last few months. You know, in September, right after the W&A conference in London, we saw a pretty nice move higher and a lot of strength in the market. Everything's pulled back a little bit from those highs. But there's no question sentiment around the underlying fundamentals for uranium are as strong as they've ever been. You know, we're seeing the long-term price creep higher into the mid-eighties.

And keep in mind that's on relatively low volume, right? The long-term contract market volumes have been a lot lower this year. I think thus far it's been only about 55 million pounds contracted and replacement rates north of 170, 180 million pounds.

So this is, I think a key talking point right now is when you look at the last 12, 13 years, utilities have only been contracting about 45% of replacement rate. And so that means they've had to draw down inventories, they've had to burn up secondary supplies. This, again, can only last so long, and they've basically been pulling every lever they have flexing up on contracts, and again, drawing down stockpiles and inventories, basically pulling every lever they have to kick the can down the road. And they can only do that for so long.

I truly believe that next year ... Well, we're actually already starting to see it happen; as I mentioned, the long-term price moving a little bit higher, taking a little bit higher. And going into next year, I think we're going to see replacement rate contracting volumes hit or exceeded even, and that's going to be a main driver for both the long-term price and the spot price over the next few years.

Gerardo Del Real: No, look, exciting stuff.

Let's get to the company specific news and how you're positioning to, I mean, really give Russell Lake a proper, proper set of exploration programs and shots on goal, right? Can you speak to the agreement?

Jordan Trimble: Yeah, so this is a major transaction for Skyharbour, really a transformational transaction that we've announced. As we've talked about offline, it's a little complex. There's three parties involved.

So we as of a week ago had a 58% ownership in Russell Lake with Rio Tinto as the 42% minority holder. Rio is a large shareholder, they've been a great partner, but a passive non-funding partner. And as most people know, they have been digesting their uranium assets. However, in this case, this is one of their few remaining uranium project interests and we were able to negotiate with them to effectively buy them out of their minority interest. They are keeping a royalty, a small 0.25% royalty. So it does go to show that they do want to retain some upside if the exploration pans out as we think it will.

But Rio is being bought out and coming in is a very strategic partner that we know well, that we've had a long-standing relationship with, and that's Denison Mines. And so Denison, just to refresh everyone's memories, they've been a large shareholder of Skyharbour, the largest corporate shareholder of Skyharbour for a number of years. Dave Cates, the president of Denison, has been a director, a key director of Skyharbour over the better part of the last decade.

And so we already have this relationship, working relationship with Denison, and this transaction really makes a lot of sense for a number of reasons. Just as you mentioned, just quickly to note, the total combined project consideration that could come in from Denison is about 61 and a half million. And as you point out, it's not far off of our current market cap.

Now 10 million dollars of that is effectively going to purchase Rio's minority interest. And then Denison by year end, of that 61 and a half, 18 million is cash and share payments that will be made between now and year end, 10 of that going to Rio, eight of that coming into Skyharbour. So that provides basically our hard dollar funding for the foreseeable future. And then there's an additional three and a half million in cash payments that can be made by Denison to Skyharbour over the coming years as they complete their earnings.

Now, as it stands right now, the project will be broken up into four separate properties, sub-properties. And this was important to make it much more manageable in terms of exploration and the success in the field going forward. It's a big property, over a quarter ... Almost ... Well, I'll call it 200,000 acres, over 70,000 hectares of prime exploration real estate strategically located just south of the MacArthur River Mine and north of the Key Lake Mine and Denison's Wheeler River Project adjacent to the west. That's a lot of ground for a junior company to go out and effectively and systematically explore.

Now you can do it, but it's going to be potentially quite dilutive. And so we were very cognizant of this and we structured the deal such that the property gets divvied up into four different sub-properties.

We're locking in joint ventures with Denison on two of those. So there's a couple of small, as we're calling them, inlier claims adjacent to Wheeler River that Denison will own 70% and Skyharbour will retain the 30%; and then importantly for Skyharbor and our shareholders is we're locking in an 80% majority ownership stake in the vast majority of the original Russell Lake projects.

So over 70% of the original claims in the Russell Lake property, Skyharbour is now going to be the 80% owner, up from the 58% that we owned just recently. Right? So we're actually gaining an interest there immediately on this transaction. Denison will now be the 20% minority interest holder, and they are required to fund their 20% over the coming years, fund their pro rata amount of those budgets.

So we do have plans to go and aggressively explore, advance and drill that sub-property, if you will, which again is the vast majority of the original property, and we'll have news out on that in the coming months. There's a number of key targets at that project area that we're going to be working on.

Now the other two sub-properties are subject to earn in options, whereby Denison initially starts with a minority interest, Skyharbour with the majority interest, but Denison can earn up to a 70% interest in those sub-properties by funding exploration and making cash payments to Skyharbour.

So the main one is called Wheeler North, which is basically the claims surrounding the Wheeler River Project, right? And so naturally this makes sense given the proximity to the Phoenix deposit where Denison's building the Phoenix ISR mine and the Griffin deposit, which is nearby. Those claims are the closest to those deposits into Wheeler River.

So Denison can earn an initial 49% interest, Skyharbour with 51; over the next seven years, they can earn up to 70% by spending 25 million in exploration at the property and also paying Skyharbour an additional three and a half million in cash.

The fourth and final sub-property is called Getty East. And Getty East is unique in that Denison starts off with a 30% minority interest, Skyharbour with 70; Denison can earn up to 70, so we basically flip the interest there. However, Skyharbour starts as the operator. The first earn in would get Denison to a 49% stake, so Skyharbour would still retain 51 and majority ownership; and then they have a second earn in option phase that they can get to 70%.

Now, in order to get to 70%, they have to spend 15 million in exploration expenditures over the next seven years. So in total, that's 40 million in exploration expenditures and pretty significant cash and share payments both upfront and over the next handful of years.

So a very, very important transaction for us. It's a huge stamp of approval as well from Denison, a multi-billion dollar developer, just showing the importance of this project in their pipeline, right? They're looking to make additional discoveries and delineate resources as close to the mine and the development project at Wheeler as they can, and these claims are as close as you can get. When you look on a map, it's right there.

So it's going to allow us to expedite the discovery process, prove up resources much quicker, having a large strategic funding partner like Denison in there with as little dilution to Skyharbour as possible. That's key for us is keeping that equity dilution in check, and this transaction allows us to do just that. It allows us to participate in the upside upon new discoveries being made at the project, and it also allows us to stay focused at a big chunk of the project, the RL claims, and go in and operate that part of the project continuously now with the 80/20 JV that we've locked in with Denison.

Gerardo Del Real: No, listen, good work. 2026 is shaping up to be a busy year.

Briefly, can you just give us the bullet points about what shareholders can expect in 2026?

Jordan Trimble: Yeah, absolutely. So a lot is going to be coming out here in the next six to 12 months.

So just in the near term, we still do have assays pending from our drilling this year at Russell and Moore Lake. Keep in mind that the transactions just at Russell, we have our other co-flagship, 100% owned Moore Lake project, which is host to a small high grade deposit.

We notably last summer announced a 40-meter step out hole to the east of what we thought was the eastern extent of the high grade mineralization at the Maverick Zone, East Maverick Zone, and we intercepted just under 5%, over a meter and a half. So we're expanding that resource, that deposit. And it's relatively shallow and predominantly sandstone hosted, which makes it interesting when you look at it through the lens of down the road potentially ISR or Sabre, as one of the two surface mining methods being utilized and proposed in the Athabasca Basin.

And so we are going to continue drilling at Moore Lake once we have the final results in from the drilling this year. Those assays are pending and should be out in short order; again, some drilling that we carried out this year at Russell, which will help set the stage for all the drilling and exploration next year, which will be significantly more because we've got Denison as a partner funding, again, quite a bit of work there over the next few years, and we can also on top of that, fund the work at the RL claim.

So we'll have the final budgets and drilling plans, exploration programs, we'll have all of that news coming out for the 2026 year. That news will likely be coming out in the next couple months. And then we have all of our other partner funded programs and projects.

So we've still got ... Now with Denison as the 10th partner, we've got nine other partner companies, Orano being another notable large strategic partner. They just finished a drill program earlier this year at the Preston joint venture project we have with them. Assays are pending from that as well, so that'll be some near term news. And then we've got a handful of other companies, partner companies, smaller cap companies that are going to be either drilling or carrying out exploration at various other projects in our portfolio.

So next year is gearing up to be the biggest, busiest year in terms of meters drilled programs, exploration programs, and a lot of that funding is coming from various partner companies. When we add in the Denison option agreements and joint ventures that we've just announced, the combined project consideration as a part of our prospect generator business now totals to over $118 million in combined project consideration. That's exploration funding as well as cash and share payments potentially coming into Skyharbor as these various partner companies complete their earn ins.

So it's significantly higher than our current market cap, but we're going to remain focused on the exploration, the drilling at our co-flagship Russell now RL claims, as well as our 100% on Moore Lake project.

Gerardo Del Real: No, look, a lot to like, a lot of catalysts. I know that even the uranium faithful have been waiting for uranium to break that hundred dollars spot price, though the long-term contract price is the most important single indicator there. The one that gets watched the most, as you know, Jordan, especially by retail, is that spot price. I think that's coming. And I think with that backdrop, Skyharbour is positioned pretty darn well for 2026.

Anything to add to that?

Jordan Trimble: No, I think we've covered that off. Keep an eye out for news.

And again, this is setting the stage very nicely for us going into 2026 to offer investors a one stop shop, if you will, for high-grade uranium exploration and discovery potential in the Athabasca Basin with strategic partners like Denison and Orano, and with as little dilution as possible. It's important to emphasize that. We're very cognizant of that and we want to try to, as I said earlier, fast track discoveries and resource delineation without having the equity dilution that can come with these larger exploration programs and budgets.

Gerardo Del Real: No, good stuff.

Jordan, thanks as always. Appreciate it.

Jordan Trimble: Thank you, Gerardo.

Gerardo Del Real: All right, chat soon.

Jordan Trimble: Thank you.

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