SYHSkyharbour Resources (SYH.V) has been quiet in the past few weeks but as the winter is approaching the Athabasca Basin, the exploration companies are gearing up for what appears to be a busy exploration season. Fueled by a higher spot price for uranium, budgets appear to be higher than the previous years as the Athabasca Basin remains one of the best (and safest) areas to explore for uranium.

As Skyharbour continues to drill at its own high-grade Moore flagship project, its two joint venture partners (Orano and Azincourt Energy (AAZ.V)) will spend their own money on advancing the joint venture properties. We were positively surprised to learn Orano is planning to spend C$2.2M on the Preston Uranium project, as that’s more than we expected.

↓ Download PDF

Skyharbour Resources Project Locations
Skyharbour Resources Project Locations

Orano just unveiled its winter drill program

As it’s already November, Orano’s exploration team has now unveiled the plans for the properties the company has been and will be working on. We were obviously very interested to see what the French nuclear power conglomerate had in mind for the almost 50,000 hectare Preston Uranium project where it’s earning a 70% interest from Skyharbour Resources.

Orano is planning to spend C$2.2M in exploration and drilling next year, with a 4,850 meter drill program to be executed in early 2019. Orano is planning to drill 15-20 holes (indicating an average depth of 250-300 meters per hole) to follow up on the drill targets it has generated during the previous exploration work.

Preston Uranium Project – 2018/2019 Exploration Program Map
Preston Uranium Project – 2018/2019 Exploration Program Map

It looks like Orano’s drill program will be focusing on two high-priority targets at Preston. During its 2017 and 2018 exploration programs, Orano’s exploration staff encountered several outcrops of gneiss with some granite and pegmatite at the JL target. There were some thorium-related anomalies on this zone as well, and according to Orano, no less than seven (!) of the eight basement conductors outlined by the 2018 Electromagnetic survey should be followed up on with a drill program.

A second target is called the FSA target and this zone has been subject to historical drilling activities. Two holes were drilled of which the first one was lost, but the second hole encountered ‘moderate to strong’ alteration. During a follow-up program executed by Orano Canada, the company detected a radiometric anomaly with a uranium-bearing outcrop as epicenter. The grade in the grab samples was low (47 ppm and 62 ppm), but it’s easy to see why these results got Orano excited.

Although a large part of the planned C$2.2M in exploration will go towards the drill program, Orano will also conduct a ML-TEM (Moving Loop – Transient ElectroMagnetic) survey on the Canoe Lake grid. This program will consist of almost 40 line kilometers using a line spacing of 500 meters, and will help Orano to define more drill targets on the Preston project.

Preston Uranium Project Claims Map
Preston Uranium Project Claims Map

Azincourt will also be busy in the same area

And it’s not just Orano that has been very keen on further advancing its joint venture property; Azincourt Energy, which is currently earning a 70% stake in the East Preston uranium project from Skyharbour (and Clean Commodities) also announced its exploration plans in August.

According to its August update, the large number and high quality of conductor trends has generated sufficient targets for several drill programs. And Azincourt announced it was planning a 2000-2,500 meter drill program in 10 holes to follow up on the drill targets it generated during its geophysical exploration work.

It has been a while since Azincourt made these statements, so we would like to see a more firm commitment from the company to effectively drill some targets this winter. Considering Azincourt’s working capital position has decreased to just C$1.6M as of the end of June (the company hasn’t filed its full-year financials for FY 2018 – which ended in September – just yet), so perhaps Azincourt will need to raise some cash before firming up its exploration commitments.

Recent milestones and upcoming catalysts
Recent milestones and upcoming catalysts

The uranium price is slowly increasing

We do expect the entire Athabasca Basin to receive more attention this winter as the recent increase in the (spot) uranium price is seen as the prelude of a larger and more widespread move on the uranium market. According to our information from various sources, utility companies still haven’t really re-started the contract negotiations to secure a long-term supply of uranium. We expect the contract negotiations to accelerate and intensify in 2019, and this should put more spotlights on the entire uranium sector. As Skyharbour will be advancing three projects (of which two will be funded by joint venture partners), we would expect the company to be prominently featured over the next few months thanks to the continuous news flow.

And just a quick word on the uranium price. It looks like Cameco (CCO.TO, CCJ) is coming through on its promise to purchase physical uranium on the spot market to tender it into its longer-term offtake contracts. For Cameco, this makes more (economic) sense than effectively mining the stuff, which indicates there’s something broken in the uranium sector. A situation that won’t be sustainable for much longer as the uranium that’s currently available at spot prices will disappear fast.

Production by Cost vs. Demand (Source: Ux Consulting)
Production by Cost vs. Demand (Source: Ux Consulting)

Conclusion

It’s good to see Skyharbour’s JV partners are planning to advance the projects and the C$2.2M commitment from Orano is higher than we were expecting. This amount will put the French conglomerate ahead of schedule to complete its C$8M earn-in deal at Preston. So the fact they seem to be accelerating their exploration expenditures is a good sign.

It will be a busy winter for Skyharbour Resources as three of the company’s projects will be thoroughly explored, ensuring a continuous news flow in Q1 2019. Drill results from the Company’s summer / fall program at the flagship Moore Project are forthcoming as well so keep an eye out for news during the weeks to come.

Stay in touch with our weekly newsletter and when we publish a report. Unsubscribe at any time.

Disclosure: Skyharbour Resources is a sponsor of this website. We have a long position. Please read the disclaimer

Related

Comments

comments

Leave a Comment

Your email address will not be published. Required fields are marked *