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Skyharbour secures major footprint in the world's richest depository of uranium in the world

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Skyharbour Resources holds an extensive portfolio of uranium projects in Canada's Athabasca Basin.

By: Denise Deveau

  • Due to the projected growth in demand for uranium and lack of primary supply, new discoveries and deposits are becoming increasingly valuable in balancing the market

  • Skyharbour Resources has gained a major foothold in Saskatchewan’s Athabasca Basin – the world’s richest depository of uranium in the world

  • The company currently has fifteen projects, ten of which are drill-ready, covering over 450,000 hectares of mineral claims

The world is facing a climate crisis and political upheavals, which have pushed nuclear energy to the forefront of many political and social agendas. For the mining community, all eyes are on the positive impact this will have on uranium demand and pricing.

Vancouver-based Skyharbour Resources Ltd. (TSXV: SYH | OTCQX: SYHBF | FRA: SC1P) has been focusing its exploration efforts on uranium for almost a decade, gaining a foothold in Saskatchewan's Athabasca Basin – host to the highest-grade uranium deposits in the world.

"The timing could not be better," says Jordan Trimble, president, CEO and director. "Not only is uranium in high demand, supply constraints and security of supply uncertainty in major producing jurisdictions – like Russia and Kazakhstan – are creating notable opportunities for uranium exploration and development in North America. This is also in the backdrop of looming energy crises globally and the need for clean, reliable, scalable baseload electricity generation."

"We believe the uranium supply chain is highly vulnerable, and supply disruptions are likely. Russia accounts for 35 per cent of global enriched uranium production," says Sid Rajeev, vice president and head of research, Fundamental Research Corp. (FRC) in Vancouver. "Another factor supporting uranium is high oil prices."

The Athabasca Basin is home to the highest-grade uranium deposits in the world that average 20 times the international average grade for uranium deposits. In 2021, the Fraser Institute ranked Saskatchewan as number one in Canada, the second-best jurisdiction globally.

A hybrid strategy for a changing market

Skyharbour's success is built on a unique hybrid strategy. In addition to being a high-grade uranium exploration and early-stage development company, it also acts as a prospect generator. On the former front, in July 2022, Skyharbour completed its acquisition of the Russell Lake Uranium project in the eastern portion of the Athabasca Basin from Rio Tinto, with Rio becoming a large strategic shareholder of Skyharbour. The property comprises 26 claims covering 73,294 hectares of prospective exploration ground between Skyharbour's Moore Uranium project to the east and Denison Mines' Wheeler River project to the west.

"Not only is uranium demand growing, supply constraints and security of supply uncertainty in major producing jurisdictions – like Russia and Kazakhstan – is creating notable opportunities for uranium exploration and development in North America. This is also in the backdrop of looming energy crises globally and the need for clean, reliable, scalable baseload electricity generation." ­– Jordan Trimble, President, CEO and Director, Skyharbour Resources Ltd.

The Moore Lake project drill program.

Since the announcement, the geological team has been refining drill targets and increasing exploratory efforts, reports Trimble. "The available data from over 30 years of exploration has been a huge benefit. We are now able to look at the project through a new lens with modern exploration techniques and a better understanding of the geology to prioritize and refine the best targets. Historical exploration has identified numerous prospective target areas and several high-grade uranium showings in previous drill hole intercepts."

Given that the property has a road, powerlines and an exploration camp, while being adjacent to Skyharbour's Moore Uranium project, there will be ample opportunities to reduce exploration and drill costs for both projects. Skyharbour's other flagship asset at Moore comprises 35,705 hectares approximately 15 kilometres east of Denison Mine's Wheeler River project with access to regional infrastructure for Cameco's Key Lake and McArthur River operations in the Athabasca Basin. The primary area of focus has been the 4.7-kilometre-long Maverick structural corridor where pods of high-grade uranium mineralization have been delineated including highlight drill results of 21 per cent U3O8 over 1.5 metres. Skyharbour has completed numerous drill programs at the project over the last several years with plans of future drilling in the winter as they continue to advance the project.

David Talbot, managing director, equity research at Red Cloud Securities Inc. in Toronto, describes Skyharbour as "a maverick in basement exploration," adding that Russell Lake "was an excellent acquisition that improves its odds of discovering further high-grade, basement or unconformity uranium deposits in the Athabasca Basin".

Because Russell Lake and Moore are adjacent, Skyharbour has designated them as co-flagship projects moving forward. "Plans are to execute a multi-phased drill program over the next 10 months at Russell Lake, which will tie-in with a smaller drill program at Moore." The company recently announced plans for a multi-phased, 10,000-metre drill campaign with the first phase to follow up on notable historic exploration and findings, as well as to test additional targets with the potential to generate new discoveries. "This is a key milestone for Skyharbour and will provide consistent news flow for the next year" says Mr. Trimble.

Skyharbour's third core project in the region, the South Falcon Point Uranium project, covers 32,006 hectares. South Falcon Point contains a NI 43-101 inferred resource totalling 7.0 million pounds of U3O8 at 0.03 per cent and 5.3 million pounds of ThO2 at 0.023%. The Company has recently optioned up to 75 per cent of a portion of this project to Tisdale Energy.

While Skyharbour's primary business is focused on high-grade exploration at its main projects, its prospect generator model seeks out joint ventures and option agreements with partner companies. This has resulted in partnerships to advance the Preston, East Preston, Hook Lake, Mann Lake and Yurchison projects, respectively. More recently, Skyharbour announced two new earn-in option agreements with Yellow Rocks Energy, a private Australian entity, to option the Wallee and Usam Island projects, as well as Tisdale Clean Energy at the South Falcon East project, bringing the total to seven partner companies.

Together, Skyharbour has signed option agreements with partners worth over $34 million in exploration expenditures, over $23 million in share issuances, and just under $15 million in cash payments, assuming that these partner companies earn-in the full amount at their respective projects. The planned exploration and drill programs to be carried out by these partner companies will further add to the news flow and catalysts over the coming year.

A nuclear energy market on the rise

With all the foundational elements in place, and a rapidly changing energy landscape, Skyharbour is well positioned to benefit from the anticipated growth in the nuclear energy market that will drive demand for uranium around the globe. The International Energy Agency reports that global demand for electricity is set to grow around 50 per cent by 2040. As the only baseload source of carbon-free, scalable, reliable, and affordable electricity, nuclear will play a prominent role in meeting this growing demand while satisfying decarbonization objectives globally.

Promoting nuclear energy is increasingly prevalent on government agendas for a number of compelling reasons. For example:

  • The EU Parliament labelled nuclear as a positive environmental investment in July 2022 by including it in the EU Sustainable Finance Taxonomy
  • The Russian invasion of Ukraine has led to energy crises in countries reliant on Russian natural gas, making nuclear a viable alternative solution
  • The  U.S. passing of the Inflation Reduction Act of 2022 reinforces nuclear power's role in clean energy. "It's very positive for nuclear energy in the US," says Trimble. "There is bipartisan support for nuclear energy which is a clear indicator that it has become much more accepted by the masses and investors are waking up to that"
  • The new South Korean government is pushing for nuclear power to overtake coal as the main source of electricity to help meet the country's climate targets and strengthen energy security
  • In August of 2022, Japan announced it would expedite the restart of idled reactors and extend the lifespan of existing reactors as the country's energy costs soar

The growth in the demand of nuclear power.

Uranium demand is expected to grow at a 3.1 per cent CAGR from 2020 to 2040. At the same time, the supply gap is widening. In 2022, demand is expected to reach 195 million lbs in the backdrop of expected primary mine supply of only 140 million lbs with the shortfall having to be met by dwindling secondary supplies and inventories. Furthermore, the start of a new nuclear utility contracting cycle has historically been a key catalyst for higher uranium prices. However, with geopolitical tensions dividing the market into eastern and western regions, western utilities will likely have to source more material from western producers.

A new and potentially important emerging market that could drive demand even higher is small modular reactors (SMRs) ranging from 5 to 300 MWe, says Trimble. "We have seen increased funding in the last few years. It's still a nascent market but they are less expensive and easier to permit so I expect the SMR market will get a lot of traction in the next 5 to 20 years. This will generate a new wave of demand, especially in western countries."

A promising outlook

Over the next 10 months, Trimble says targeted drilling programs will continue at its flagship projects consisting of a minimum of 10,000 metres. "We are also looking forward to working with our existing joint venture and option partners, while looking to bring in new ones, which will substantially augment our news flow in 2023."

Trimble is confident that Skyharbour is hitting its stride at just the right time. "Our team has acquired a top-tier uranium project portfolio and we are value-adding the assets with a unique hybrid strategy. We have ample news flow on the horizon, a lot of flexibility and optionality value in our model, and a strong group of active partner companies. All the ingredients are in place to make a high-grade uranium discovery."

Skyharbour is ideally positioned to take advantage of three prominent macro trends that are supporting the resurgence of nuclear energy today: decarbonization, electrification, and energy security.

For more information on how Skyharbour is well-positioned to benefit from improving uranium market fundamentals, visit their website here.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.