Uranium Co. Enters Agreement to Option Athabasca Basin Projects

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Skyharbour Resources Ltd. (SYH:TSX.V; SYHBF:OTCQX; SC1P:FSE) announced it has entered into an option agreement in which a private arm's-length company can acquire up to a 100% interest in two of Skyharbour's projects.

UraEx Resources Inc. can earn an initial 51% in the South Dufferin and Bolt uranium projects in the Athabasca Basin through CA$4.6 million and 100% through CA$9.8 million in combined project consideration.

Combined project consideration includes cash, share payments, and exploration expenditures over a five-year period, Skyharbour said.

Skyharbour has an extensive portfolio of uranium exploration projects in Canada's Athabasca Basin, with 29 projects, 10 of which are drill-ready, covering over 580,000 hectares of mineral claims. In addition to being a high-grade uranium exploration company, it also utilizes a prospect generator strategy by bringing in partner companies such as UraEx to advance its secondary assets.

In a July 24 research note, Analyst Sid Rajeev of Fundamental Research Corp. wrote that Skyharbour "owns one of the largest portfolios among uranium juniors in the Athabasca Basin."

"Given the highly vulnerable uranium supply chain, we anticipate continued consolidation within the sector," wrote Rajeev, who reiterated the firm's Buy rating and adjusted its fair value estimate from CA$1.16 to CA$1.21 per share. "Additionally, the rapidly growing demand for energy from the AI industry is likely to accelerate the adoption of nuclear power, which should, in turn, spotlight uranium juniors in the coming months."

Details of Agreement

Under the option agreement, UraEx may acquire the initial 51% interest in the properties by issuing CA$1.15 million in shares, making cash payments of CA$450,000, and incurring CA$3 million in exploration expenditures on the property over a three-year period, Skyharbour said.

UraEx may then earn an additional 24% interest by issuing CA$500,000 in shares, making a cash payment of CA$200,000, and completing CA$1.5 million more in exploration expenditures on the properties.

Following that, UraEx may acquire the final 25% in the properties by issuing CA$2 million in shares and making a cash payment of CA$1 million.

If, after earning in the initial 51%, UraEx decides not to option the properties further, the projects will become a joint venture (JV) with Skyharbour holding 49% and UraEx holding 51%. If UraEx chooses not to continue after 75%, the projects will become a JV, with Skyharbour holding 25% and UraEx holding 75%.

Skyharbour said there are no royalties on the projects except a 2% net smelter return (NSR) royalty on one claim at the South Dufferin Project.

The agreement also stipulates that UraEx will list its shares on a recognized stock exchange on or before one year from the closing date or pay penalties.

The 13,204-hectare South Dufferin Project is immediately south of the southern margin of the Athabasca Basin in Saskatchewan, Skyharbour said. The area is known to host high-grade uranium mineralization at Cameco Corp.'s (CCO:TSX; CCJ:NYSE) Dufferin Lake zone about 13 kilometers to the north and Cameco's Centennial deposit about 25 kilometers to the north. Centennial drill results have included up to 8.78% U3O8 over 33.9 meters.

The Bolt Project is two contiguous claims totaling 4,726 hectares about 32 kilometers southwest of Cameco's Key Lake operation, which produced 209 million pounds of U3O8 at an average grade of 2.32% U3O8 from two deposits.

The Catalyst: Nuclear Demand to Rise

Other Skyharbour partner companies include Orano Canada, Thunderbird Resources Ltd. (THB:ASX) (Previously Valor Resources Ltd.), Basin Uranium Corp. (NCLR:CSE; BURCF:OTC; 6NP0:FRA), Medaro Mining Corp. (MEDA:CNX), Terra Clean Energy Corp. (TCEC:CSE; TCEFF:OTCQB; T1KC:SE) (Formerly Tisdale Clean Energy Corp.), and North Shore Uranium Ltd. (NSU:TSX).

"Option partners are actively advancing their projects through exploration and drill campaigns," Rajeev wrote for Fundamental Research. "SYH anticipates receiving (CA)$1-$2M in cash/share payments from its partners in the upcoming months."

"The demand for nuclear power is expected to grow faster than previously anticipated as data centers for AI applications experience exponential growth in energy needs," Rajeev continued.

Demand for uranium in nuclear reactors is expected to climb 28% by 2030 and nearly double by 2040 as governments ramp up nuclear power capacity to meet zero-carbon targets, the World Nuclear Association said in a report, according to Reuters.

The commodity's price has seen some pressure lately, peaking at US$100.25 per pound in January and settling to US$82 on September 30.

But a recent research note published by Citi Research predicted any weakness in prices would subside as the demand for nuclear energy continues to rise, Investing.com wrote.

"Analysts at Citi remain tactically bullish on uranium in the near to mid-term, with projections indicating a potential price rebound to (US)$98/lb later this year," the site said. "Citi has adjusted its uranium price forecasts in response to the recent market softness. The analysts now expect uranium prices to average (US)$94/lb in 2024, with potential upside momentum during the third and fourth quarters.

Looking further ahead, the website said Citi forecasts uranium prices to average (US)$110 per pound in 2025, reflecting continued bullish sentiment driven by the increasing demand for nuclear energy.

Ownership and Share Structure

Management, insiders, and close business associates own approximately 5% of Skyharbour.

According to Reuters, President and CEO Jordan Trimble owns 1.6%, and Director David Cates owns 0.70%.

Institutional, corporate, and strategic investors own approximately 55% of the company. Denison Mines owns 6.3%, Rio Tinto owns 2.0%, Extract Advisors LLC owns 9%, Alps Advisors Inc. owns 9.91%, Mirae Asset Global Investments (U.S.A) L.L.C. owns 6.29%, Sprott Asset Management L.P. owns 1.5%, and Incrementum AG owns 1.18%, Reuters reported.

There are 182.53 million shares outstanding with 177.59 million free float traded shares, while the company has a market cap of CA$82.45 million and trades in a 52-week range of CA$0.31 and CA$0.64.