Uranium. It’s all the rage right now.
Sentiment in the uranium arena is turning altogether positive with spot prices tagging multi-year highs at $39 per pound in recent sessions.
The Sprott Physical Uranium Trust, which made its debut on the TSX earlier this summer, invests in physical uranium. According to Sprott’s updates on Twitter, the fund went on a buying spree adding 900,000 pounds of the energy-dense metal during the week of August 20th. It went on to add a further 400,000 pounds on the 23rd, 500,000 pounds on the 27th, and 400,000 pounds on September 1st, making no apologies for the market impact.
The aggressive buying continued unabated with the fund pulling in another 800,000 pounds on Sep 2nd, then reporting a “Monster Day of Stacking…” piling on a whopping 1.1 million pounds on Sep 3rd.
Spot Uranium closed Friday’s session at $39.00 per pound, up nearly 29% in two short weeks.
As expected, impressive price chart trajectories were printed across the board among the bigger names in the space.
Example: bellwether Cameco Corp (CCO.T) appears well on its way to testing 8-year highs—note the two gaps (up) during the previous two sessions.
The price action of some of the juniors in the space—NexGen Energy (NXE.T), Fission Uranium (FCU.T), Skyharbour Resources (SYH.V), for example—have performed even better, and on big volume.
Skyharbour Resources (SYH.V)
- 122.51 million shares outstanding
- $67.38M market cap based on its recent $0.55 close
When I first mentioned Skyharbour in an August 16th Highballer report, the shares were trading in the sub $0.35 range. The stock has gone on a rip-roaring tear since then.
Skyharbour is a cash-rich land baron in a region boasting the highest-grade uranium deposits on the planet—Saskatchewan’s prolific Athabasca Basin.
The Athabasca Basin is to uranium what the Carlin Trend is to gold.
According to the Alberta Energy Regulator…
“Athabasca-type, unconformity-related uranium deposits are unique in size and grade compared to similar deposits elsewhere. These deposits have uranium oxide pods, veins, and disseminations at or close to the unconformity at the base of the Athabasca Group.
The flat-lying Athabasca strata are mainly fluvial, pervasively altered, red to pale-tan quartz conglomerate, sandstone, siltstone, and mudstone and are about 1.7 to 1.8 billion years old. The underlying crystalline basement is made of reworked Archean and Early Proterozoic crust. The mines in the eastern part of the basin in Saskatchewan contain the richest uranium deposits in the world. The potential exists for similar unconformity-associated uranium deposits in the western part of the Athabasca Basin.”
Skyharbour’s 35,705 hectare Moore Lake Uranium Project, a high conviction project located in the southeast corner of the Basin, is the Company’s flagship.
Moore Lake is located 15 kilometers east of Denison Mine’s Wheeler River project and proximal to regional infrastructure for Cameco’s Key Lake/McArthur River operations (Denison is a strategic partner).
Skyharbour has a distinct advantage over many of its peers in that it’s probing ground that has already demonstrated significant (high-grade) resource and discovery potential.
Some history and (high-grade) highlights from previous drill campaigns:
- Moore hosts high grade uranium mineralization at the Main Maverick Zone, which was discovered by JNR Resources in the early 2000’s; historical drill results include 4.03% U3O8 over 10 meters, including 20% U3O8 over 1.4 meter at a depth of 265 meters in hole ML-61;
- Skyharbour has carried out diamond drill programs over the last few years with several drill holes intersecting high grade uranium mineralization along the 4.7 kilometer long Maverick structural corridor;
- Drill intercepts of high grade, shallow uranium include 20.8% U3O8 over 1.5 meters at 264 meters, 9.12% U3O8 over 1.4 meters at 278 meters and 5.29% over 2.5 meters U3O8 at 279 meters;
- Skyharbour’s drill hole ML-199 tested the Main Maverick Zone lens and intersected high grade uranium mineralization containing 6.0% U3O8 over 5.9 meters at 265 meters depth including 20.8% U3O8 over 1.5 meters;
- Hole ML-202 from the Maverick East Zone intersected high grade uranium of 1.79% U3O8 over 11.5 meters at 270 meters including 4.17% U3O8 over 4.5 meters and 9.12% U3O8 over 1.4 meters;
- This is a newly discovered high grade mineralized lens at Maverick East on the Maverick corridor 100 meters from the Main Maverick Zone, and illustrates the strong discovery potential of additional high grade lenses along strike;
- More recently, Skyharbour has identified and refined new targets in the underlying basement rocks using modern exploration and methodologies;
- Drill hole ML19-06 intersected a broad zone of uranium mineralization from 273.0 meters to 285.0 meters downhole within the growing Maverick East Zone. The interval returned 0.62% U3O8 over 12.0 meters with a basal high grade basement-hosted intercept returning 2.5 meters of 2.31% U3O8.
In the Fall of 2020, drill hole ML20-09 confirmed continuity in the Maverick East Zone tagging an impressive 0.72% U3O8 over 17.5 meters (including a basal high-grade basement interval of 1.00% U3O8 over 10.0 meters) in a discrete zone of predominantly basement-hosted uranium mineralization at a depth of 271.5 meters.
ML20-09 represents THE longest continuous drill intersection of uranium mineralization discovered on the project to date.
The following chart helps put the above values in perspective. Of course, with the recent spike in uranium prices, 1% U3O8 takes on greater (economic) meaning.
The Company is currently drilling Moore Lake, having accelerated the program back in mid-June from 3,500 meters to 5,000 meters.
This fully-funded program is following up on existing unconformity and basement-hosted targets along the 4.7 kilometer long Maverick structural corridor where significant discovery potential remains along strike and at depth.
Recent drilling has been largely focused on testing the Maverick East Zone down plunge—the thinking is that they may have only just scratched the surface at Maverick East (we stand to watch).
Other regional targets, including those recently defined at the Grid Nineteen Zone, will also receive a proper probe with the drill bit during this campaign.
During an August 31st call with Skyharbour’s CEO, Jordan Trimble, I learned that this campaign is close to reaching the targeted 5,000 meters (in 12 to 14 holes).
CEO Trimble anticipates tabling the first batch of assays within the next two weeks.
After a short break, the Company plans to return to Moore Lake in late September for another 2,000 meters, just before freeze-up.
This additional phase of drilling will succeed in (roughly) doubling the size of the original 3,500-meter program, generating assay-related newsflow right on through December, perhaps into the New Year.
Once all of the assays are in hand, the Company will begin work on a maiden Moore Lake resource estimate. Beyond that, we’ll receive an update on a planned Winter-of-2022 drill campaign that should see a rig mobilized back to Moore Lake early in the New Year.
The partner companies
At the top of the page I characterized Skyharbour as a cash-rich Athabasca Basin land baron. For the remaining properties in the project pipeline, the Company (wisely) employs the prospect generator business model to push them further along the exploration and development curve.
A few examples:
The Preston Uranium Project is a JV with industry-leader and strategic partner Orano Resources Canada where Skyharbour maintains a 24.5% stake.
This just in…
Updated Exploration Plans:
“The planned early fall diamond drilling program to complete approximately 1,000 meters of drilling remaining from the shortened winter 2021 program has been rescheduled after consultation with local communities and contractors. As a result, this meterage will be used to further expand the upcoming extensive winter drill program. This program will now consist of approximately 7,000 meters in 30-35 drill holes. Preparations are set to begin in early December. Target selection is ongoing and will be refined based on the ground-based follow-up of anomalies identified from the recently completed airborne survey.”
7,000-meters is an aggressive campaign. Azincourt’s technical team is top-shelf, as is the discovery potential at the East Preston project.
Back in December of 2020, Skyharbour inked a deal with Valor where this ASX-listed explorer can earn up to 80% in the 25,846-hectare project by contributing cash and exploration expenditures totaling $3,975,000 over three years ($475,000 in cash and $3,500,000 in exploration commitments).
To seal this deal, Valor was also required to issue 233,333,333 shares to Skyharbour, upfront.
There’s considerable exploration upside at Hook Lake, a view heightened by the discovery of uber high-grade grabs plucked from the north end of the property six years back.
“In October 2015, on the northern side of the property at the Hook Lake target, Skyharbour reported that it had confirmed the presence of high-grade uranium mineralization with up to 68.0% U3O8 in a grab sample from a trench. The trench is referred to as the Hook Lake U-Mo showing and was the focus of the Company’s Summer 2015 field program which consisted of detailed prospecting and vegetation sampling. Skyharbour randomly selected three grab samples from the Hook Lake showing to verify historic results and these grab samples returned 68.0% U3O8, 35.7% U3O8 and 29.8% U3O8.”
Previous operators of the project were unable to locate the source of this high-grade surface material.
Having mobilized a field crew to the project earlier this summer, Valor is beginning to generate news. The following headline dropped on August 31st…
These additional high-grade surface samples further support the geological potential in Hook Lake’s subsurface stratum.
- Sampling results from the Hook Lake (Zone S) prospect returns:
- 59.2% U3O8, 499g/t Ag, 5.05% TREO (11,797ppm Nd2O3 + Pr6O11 and 1,825ppm Dy2O3), 14.4% Pb (Float sample)
- 57.4% U308, 507g/t Ag, 3.68% TREO (8,562ppm Nd2O3 + Pr6O11 and 1,676ppm Dy2O3), 14.5% Pb (Rock chip sample)
- 46.1% U3O8, 435g/t Ag, 2.88% TREO (7,054ppm Nd2O3 + Pr6O11 and 1,139ppm Dy2O3), 8.8% Pb (Rock chip sample)
- 6.92% U3O8, 0.81% TREO, 2% Pb (Rock chip sample)
- 6.42% U3O8, 1.17% TREO, 1.8% Pb (Rock chip sample)
“A total of 57 samples were taken from across the Hook Lake Project with assay results now having been received. The results are highlighted by the assays from the Hook Lake (or Zone S) prospect which confirmed the reported historical high-grade uranium mineralization. A total of seven rock chip samples were taken from a historical trench located at the Hook Lake prospect, with four of these samples returning high-grade uranium assays (>6% U3O8) as well as highly elevated rare earth (>0.5% TREO*), silver (>50ppm) and lead (> 1.8%) assays.”
In Australia, Valor’s shares were up sharply on this news (Valor has 2.95B shares outstanding giving it a market cap of roughly AUD $43.23M ).
If my math rings true, Skyharbour’s equity position in Valor is currently worth somewhere in the neighborhood of $3.5M Cdn.
Valor is using good science—a combination of geochem and geophysics—to push Hook Lake further along the exploration curve. The Company is currently defining drill targets for a campaign that should see a late Q4 start.
This setting is reminiscent of Fission Uranium (FCU.T) in 2012, where high-grade boulders were traced up ice leading to the Triple R discovery—a discovery that opened up the whole western side of the Athabasca Basin.
Continued success at any one of these partner-funded programs—East Preston, Hook Lake, Preston—will be icing on the cake. There’s also South Falcon Point which could generate a headline before year’s end.
These are exciting times to be a speculator in the uranium arena.
Elsewhere on our list
Defense Metals (DEFN.V) is preparing for a summer/fall drill campaign at its wholly-owned Wicheeda REE project.
Wicheeda’s current resource stands at 4,890,000 tonnes averaging 3.02% LREO (Light Rare Earth Oxide) in the Indicated category, and 12,100,000 tonnes averaging 2.90% LREO counted as Inferred.
The August 25th headline…
In addition to three existing drill pads remaining from a 2019 drill program, the Company constructed an additional four pads to facilitate the successful execution of this 2021 campaign.
The program—up to 5,000 meters (a minimum of 2,000 meters)—will focus on expanding the zone of REE mineralized dolomite-carbonatite to the north, in addition to further delineating existing inferred resources within the central and northwestern areas of the deposit (see press release dated May 26, 2021).
Craig Taylor, CEO:
“We continue to make steady progress towards commencement of our 2021 resource definition and expansion drilling program despite record resource sector demand pressures in BC. Our expectation is that we are well on the path to delivering on our stated 2021 goals of expanding and increasing the confidence in the existing Wicheeda REE Deposit mineral resource in support of potential future advanced economic studies.”
Drilling is expected to commence in early September.
Rick offered the following update:
Janice Lake drilling is complete. Nine holes were drilled at the Rafuse target where Rio Tinto Exploration Canada (RTEC) is earning up to 80% in the project by spending $30M. RTEC also had a large contingent with boots on the ground mapping and prospecting the full extent of the 52-kilometer trend (it’s an enormous land package and will require additional field campaigns to fully map and sample).
Forest fires in the region were an issue, but where fire swept through and scorched the ground, it cleaned up and exposed much of the outcropping rock making it easier for the crews to do their thing.
At the time of our conversation (mid-morning Aug. 31st), the Company had completed two deep holes at the Korvin Lake target and was working on a second hole at the What Lake target.
Rick will be at the Love Lake project until September 7th and plans to provide an update soon after.
Further to the east—much further eastward—Harfang Exploration (HAR.V) launched a 3.5k meter drill campaign at its 100% owned Serpent Project located in the James Bay region of Québec.
“This second diamond drill campaign consists of 3,500 m (initially-planned at 2,500 m) that will mainly test a series of high priority targets up-ice of the gold-in-till anomaly where surface gold showings and drilled auriferous shear zones are known (Figure 1). Other newly developed targets will be drill-tested.”
Full disclosure: Defense Metals and Forum Energy Metals are Highballer clients.Disclaimer - Legal Notice
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