Skyharbour Resources Ltd. (SYH:TSX.V; SYHBF:OTCQB; SC1P:FSE) secured an option to acquire up to 100% of the Russell Lake uranium project from Rio Tinto, reported Fundamental Research analyst Sid Rajeev in a June 21 research note.
To own Russell Lake outright, the analyst noted, Skyharbour must pay about US$37.5 million (US$37.5M) in cash or shares and spend US$12M on exploration there over several years.
Note: The company stated in its May 19 news release that as operator, it can "earn an initial 51% interest in the Property by paying CAD $508,200 in cash, issuing 3,584,014 common shares to RTEC, and funding CAD $5,717,250 in exploration on the Project, inclusive of a 10% management fee to Skyharbour, over a period of 3 years."
The addition of this property would take Skyharbour's total of uranium projects in and around Canada's Athabasca Basin to 15. One of those, Moore, is just next door to Russell Lake, and Skyharbour is pursuing a seven-hole drill program at it.
"The drill-ready Russell Lake project is strategically located between Cameco’s (TSX: CCO) Key Lake mill and MacArthur uranium mine, the world’s largest uranium mill and the largest high-grade uranium mine, respectively," Rajeev noted.
Extensive exploration work already has been done at Russell Lake, which is made up of 26 claims over 73,294 hectares, the analyst stated. At this property, about 230 holes' worth of drilling spanning roughly 95,000 meters was previously completed, and exploration targets were identified, wrote Rajeev. Those include the Grayling zone, M zone extension, Little Man Lake, Christie Lake and Fox Lake Trail. The Grayling zone, for example, showed 0.3 meters of 3.45% U3O8.
Skyharbour plans to follow up soon with some preliminary exploration efforts at Russell Lake and then drill there later this year.
The analyst noted that Skyharbour has a strong balance sheet, and its in-the-money warrants and options imply it can raise US$5M.
"We expect several catalysts from the ongoing/planned exploration programs by Skyharbour and its partners this year," added Rajeev.
Fundamental adjusted its fair value estimate on Skyharbour to CA$0.75 per share from CA$1.04 "due to the lower sector multiple," Rajeev indicated. Currently, the uranium company is trading at around CA$0.38 per share. Fundamental maintains its Buy rating on the company.
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Disclosures for Fundamental Research Corp., Skyharbour Resources Ltd., June 21, 2022
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