Uranium Co. Starts Drilling at Co-Flagship Project in Athabasca Basin

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Skyharbour Resources Ltd. (SYH:TSX.V; SYHBF:OTCQX; SC1P:FSE) announced the start of its fall diamond-drilling program at its co-flagship Russell Lake Uranium Project in the central core of Canada's Eastern Athabasca Basin in Saskatchewan.

The project is 51% owned by the company and 49% owned by joint venture (JV) partner Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK).

Skyharbour said it is planning a 4,500-meter drilling program in seven to nine holes on the project, "building on successful results from the drilling campaign completed earlier this year."

Russell Lake is a large, advanced-stage uranium exploration property totaling 73,294 hectares strategically located between Cameco's Key Lake and McArthur River projects and Denison's Wheeler River Project to the west, and Skyharbour's Moore project to the east.

Most of the historical exploration there was conducted before 2010, prior to the discovery of several major deposits in/around the Athabasca Basin, Skyharbour said. Notable exploration targets on the property include the Grayling Zone, the M-Zone Extension target, the Little Man Lake target, the Christie Lake target, the Fox Lake Trail target, and the newly identified Fork Zone target.

"More than 35 kilometers of largely untested prospective conductors in areas of low magnetic intensity also exist on the property," the company noted.

Drilling will be focused on the road-accessible Fork target within the broader Grayling target area, as well as the M-Zone Extension target, the company said.

All-in drilling costs are lower given the nearby infrastructure, including the mine and mill haul road as well as Skyharbour’s exploration camp at the project. Six holes are planned for the Fork target and two to three holes are planned for the MZE target.

Drilling Details

The Fork target is a newly identified target to the west of the Grayling Zone and on-strike with Denison's M-Zone at their adjacent Wheeler River Project, Skyharbour said. Earlier this year, Hole RSL24-02 there returned a 2.5-meter-wide intercept of 0.721% U3O8 at a relatively shallow depth of 338.1 meters, including 2.99% U3O8 over 0.5 meters just above the unconformity in the sandstone, the best intercept of uranium mineralization on the project historically.

Recently identified, Fork has had "very limited historical exploration due to a lack of reliable geophysical data and drill targets resulting from nearby powerline interference," the company said.

The mineralization there is open in most directions, including along strike, and will be a focus for this drill program, Skyharbour said.

The company said it has also refined more drill targets in the M-Zone Extension area where historical drilling intersected basement-hosted uranium.

"More recent drilling by Denison in 2020 at the M-Zone encountered uranium mineralization with significant faulting, core loss, geochemical anomalies, and radioactivity encountered in other drill holes," the company noted.

'One of the Largest Portfolios' in Basin

Skyharbour has a large portfolio of uranium exploration projects in the Athabasca Basin, with 29 projects, 10 of which are drill-ready, covering over 1.4 million acres 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 to advance its secondary assets.

The company now has 10 partner companies advancing 11 projects in their portfolio, with project considerations totaling over $90 million, assuming that these partner companies complete their full earn-ins at their respective projects.

Skyharbour announced its latest partner on Wednesday. Mustang Energy Corp. has entered into an agreement with the company to acquire a 75% interest in its 914W Uranium Project, which covers about 1,260 hectares in the Athabasca Basin of Northern Saskatchewan.

Mustang can acquire the 75% interest by issuing shares worth CA$480,00, making cash payments of CA$275,000, and incurring CA$800,000 in exploration spending on the property over a three-year period, Skyharbour said. Skyharbour will retain a net smelter return royalty of 2% and Mustang can repurchase one half of that for CA$1 million.

In an updated research note in July, 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," he wrote, confirming the firm's Buy rating and adjusting 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."

The Catalyst: Power Needed for AI, EVs

Nuclear energy, and the uranium needed to fuel it, is entering a new era due to the growth of artificial intelligence (AI), electric vehicles (EVs), and the power needed to make all of it a reality.

Uranium prices are expected to move higher by the end of this quarter, when Trading Economics' global macro models and analyses forecast uranium to trade at US$84.15 per pound, Nuclear Newswire reported on Oct. 3. In another year, the site estimates that the metal will trade at US$91.80 per pound. According to Cameco, the uranium spot price was US$80.50 at the end of October.

Microsoft Corp. (MSFT:NASDAQ) announced a deal with Constellation Energy Group (CEG:NYSE) to restart and buy all of the power from one of the shut-down reactors at its infamous Three Mile Island plant in Pennsylvania and the Biden administration also announced a plan to restart the Palisades plant in Michigan.

Chris Temple, publisher of The National Investor, recently noted that with the Three Mile Island deal, "uranium/nuclear power is BACK!"

"I've watched as the news has continued to point to uranium being in the early innings of this new bull market," Temple wrote. "Yet the markets have been yawning . . . until now."

The consequences of what could happen without more nuclear power can be seen in the U.K., where the number of reactors is shrinking. Four of five of them are expected to close in the next couple of years, which could stretch the electric grid there to the limit.

"As Britain's reactor fleet shrivels, the amount of nuclear capacity will fall from six gigawatts (GW) today to just 1.2 GW by 2028 or soon after," Jonathan Leake and Matt Oliver wrote for The Telegraph. "Along with rising demand from power-hungry data centers and technologies of the future, it will make it even harder to keep the lights on when wind and solar generation is low."

Ownership and Share Structure

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

According to Reuters, President and CEO 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 178 million free float traded shares, while the company has a market cap of CA$76.77 million and trades in a 52-week range of CA$0.31 and CA$0.64.