Jul 15 2016
Skyharbour Resources Ltd. is pleased to announce the signing of an agreement with Denison Mines Corp. that grants the Company an option to acquire a 100% interest in the Moore Lake Uranium Project.
The 35,705 hectare Moore Lake Project is an advanced uranium exploration property strategically located in the eastern portion of the Athabasca Basin region, which is known for its large scale and high grade uranium deposits and producing uranium mines. Previous exploration efforts on the property discovered high grade uranium mineralization highlighted by drill hole ML-61, which intersected 4.03% eU3O8 over 10 metres at the Maverick Zone. The depth to the unconformity on the property is relatively shallow and significant additional discovery potential remains over several conductive trends.
- Option to acquire 100% interest in the Moore Lake Uranium Project, a mature uranium exploration property in the eastern Athabasca Basin near existing infrastructure with known high grade uranium mineralization and significant discovery potential
- As part of the Option Agreement, Skyharbour will issue 18,000,000 common shares and make staged cash payments over five years totaling $500,000 to Denison as well as incur $3,500,000 in exploration expenditures over five years to complete its acquisition of a 100% interest in the property (detailed terms provided below)
- Denison to become large, strategic shareholder of Skyharbour, holding approximately 18.7% of the shares outstanding (including Denison's existing share position in the Company) and David Cates, Denison President and CEO, to join Skyharbour's Board of Directors
- Moore Lake hosts a high grade uranium pod called the Maverick Zone, which was discovered by JNR Resources in 2002; drill results include 4.03% eU3O8 over 10 metres, including 20% eU3O8 over 1.4 metres starting at a depth of 264.68 metres in hole ML-61, plus 5.14% U3O8 over 6.2 metres in hole ML-55, and 4.01% U3O8 over 4.7 metres in hole ML-48
- The property has been the subject of extensive exploration with approx. $30 million in expenditures and over 132,000 metres of diamond drilling in 370 drill holes
- In addition to the Maverick Zone, diamond drilling in several other target areas has intersected multiple conductors associated with significant structural disruption, strong alteration and anomalous uranium and pathfinder element concentrations
- Skyharbour adds a high grade uranium asset to its project portfolio with significant exploration upside to complement its other projects in the Basin
Skyharbour's President and CEO, Jordan Trimble commented, "We are very pleased to have reached an agreement with Denison to acquire up to a 100% interest in Moore Lake, as this is a transformational deal for Skyharbour. Uranium properties with the pedigree and potential of Moore Lake are few and far between. The project has extensive historical exploration, high grade mineralized results including 4.03% eU3O8 over 10 metres, and several shallow exploration targets that remain with the potential to generate further discoveries. With a recovery in the uranium market on the horizon, Skyharbour views this transaction as a unique opportunity to acquire a prime exploration property before the next uranium bull cycle begins. Having Denison onboard as a strategic shareholder and David Cates joining our Board of Directors serves to bolster Skyharbour's profile and access to capital markets moving forward. We believe this is a highly accretive deal for the Company's shareholders as we add a high grade uranium property with strong exploration upside potential to our portfolio to complement our other uranium projects in the Basin."
Moore Lake Uranium Project:
The Moore Lake Uranium Project consists of 12 contiguous claims totaling 35,705 hectares located 42 kilometres northeast of the Key Lake mill, approx. 20 kilometres east of Denison's Wheeler River project, and 39 kilometres south of Cameco's McArthur River mine. Unconformity-hosted uranium mineralization was discovered on the property at the Maverick Zone in 2002 and several high grade intercepts have been drilled since. Drill hole ML-61 contained the best result drilled on the property to date, which returned 4.03% eU3O8 over 10 metres, including 20% eU3O8 over 1.4 metres, starting at a depth of 264.68 metres. Drill holes ML-55 and ML-48 also encountered high-grade mineralization, returning 5.14% U3O8 over 6.2 metres, and 4.01% U3O8 over 4.7 metres, respectively. The depth to the unconformity on the property is relatively shallow, with the thickness of the sandstone cover varying from less than 125 metres on the property's eastern side to over 325 metres on the property's northwestern side. Basement rocks are predominantly paragneisses belonging to the Wollaston Domain. A large mafic sill known as the "Moore Lake complex" partially overlies a portion of the eastern side of the property. The property has been the subject of extensive historic exploration with approx. $30 million in expenditures, and over 132,000 metres of diamond drilling completed in 370 drill holes. The project is accessible via ice roads from the McArthur River mine haul road and float or ski equipped aircraft.
Since 1969, the property has undergone episodic exploration by several companies including Noranda, AGIP, BRINEX, Cogema, Kennecott/JNR Resources and IUC/Denison. In April of 2002 the Maverick Zone was discovered and in the fall of 2003, International Uranium Corporation, who then merged with Denison, optioned 75% of the property from JNR and took over operatorship. Subsequently Denison acquired the remaining 25% interest from JNR for an undivided 100% in February of 2013, when it acquired all of the outstanding shares of JNR. Skyharbour's head geologist and director Rick Kusmirski was the President and CEO of JNR Resources during that time. Exploration programs carried out on the project lands include an assortment of airborne and ground electromagnetic and magnetic surveys, ground gravity, seismic, IP/resistivity and geochemical surveys, mapping, prospecting, lake sediment sampling programs and the drilling of some 325 diamond drill holes. From mid-2000 onwards, the primary focus of exploration has been the 3.5 kilometre long Maverick structural corridor where pods of high grade unconformity-type uranium mineralization have been intersected. The best intercepts to date were obtained from drill holes testing the southwestern portion of this corridor. The potential of intersecting additional mineralization along this corridor is very good and as such it will continue to be a high priority target area. Also of note is that both basement and unconformity-type uranium mineralization have been intersected in a number of underexplored target areas on the property.
In addition to the Maverick Zone, diamond drilling in several other geophysical target areas, has intersected multiple conductors associated with significant structural disruption, strong alteration and anomalous uranium and pathfinder element concentrations. This bodes well for the possibility of discovering additional high grade uranium zones in these areas.
Under the Option Agreement, Skyharbour will become the operator of the Moore Lake project and is planning to complete additional infill and exploratory drilling on the Maverick Zone as well as on other high priority target areas on the property. The initial drill program is being planned with input from both the Skyharbour and Denison technical teams.
Skyharbour's Head Technical Advisor and a Director, Rick Kusmirski commented: "I've always considered the Moore Lake Project to be one of the most geologically prospective exploration projects in the Basin, with the potential to host a sizeable high grade uranium deposit. JNR made the initial high grade discovery at the Maverick Zone and after a number of years we sold the project and company to Denison. I am very excited to get back to work on this project with the Skyharbour team. In addition to the Maverick structural corridor, which still has a number of targets that are untested and require follow-up, there are at least nine other target areas throughout the property that contain well defined and extensive conductive systems. The nominal amount of drilling that was carried out in these areas intersected well defined structures associated with multiple graphitic lithologies. Analysis of the drill core returned highly anomalous geochemistry, including uranium mineralization in seven of the target areas."
David Cates, President and CEO of Denison, Joins Board of Directors:
The Company is pleased to announce that David Cates, President and CEO of Denison and Uranium Participation Corp. (TSX:U), will be joining Skyharbour's Board of Directors. Mr. Cates is a Chartered Professional Accountant (CPA, CA) and holds Master of Accounting (MAcc) and Honours Bachelor of Arts (BA) degrees from the University of Waterloo. Prior to his appointment as President and CEO of Denison, Mr. Cates served as Denison's Vice President Finance, Tax and CFO. As CFO, Mr. Cates played a key role in the Company's mergers and acquisitions activities - leading the acquisition of Rockgate Capital Corp. and International Enexco Ltd. Mr. Cates joined Denison in 2008 and held the position of Director, Taxation prior to his appointment as Chief Financial Officer. Prior to joining Denison, Mr. Cates held positions at Kinross Gold Corp. and PwC LLP with a focus on the resource industry. As part of the Option Agreement, Denison is entitled to nominate a member to Skyharbour's Board of Directors, so long as Denison maintains a minimum ownership position of 5% in the Company.
Denison's President and CEO, David Cates commented: "Denison is continuing to focus its efforts and budgets on the Company's flagship Wheeler River project - which is in the process of advancing from a successful Preliminary Economic Assessment to a Prefeasibility Study together with extensive exploration focused on delineating new and existing resources. Partnering with Skyharbour is the perfect way to ensure Moore Lake continues to be explored for potentially significant mineralization. While Denison wasn't actively looking to sell its position in the Moore Lake property, we couldn't pass on an opportunity to join forces with the dynamic leadership team at Skyharbour and their strong will to take Moore Lake through the next phase of exploration."
Terms of the Agreement:
Under the terms of the Option Agreement, which is subject to TSX Venture Exchange approval, Skyharbour may acquire a 100% interest in the Moore Lake project in consideration for the issuance of 18,000,000 preconsolidated shares and staged cash payments totaling $500,000 over the next five years (all dollar figures are Canadian dollars). Skyharbour has also agreed to fund $3,500,000 in exploration expenditures on the Moore Lake Project over the same five year period and will act as project operator. Skyharbour must make the aggregate cash payment of $500,000 to Denison and incur expenditures of $3,500,000 on the property on or before July 31st, 2021 in accordance with the following schedule:
- $50,000 in cash and $500,000 in exploration expenditures on or before July 31st, 2017
- $50,000 in cash and $500,000 in exploration expenditures on or before July 31st, 2018
- $100,000 in cash and $500,000 in exploration expenditures on or before July 31st, 2019
- $100,000 in cash and $1,000,000 in exploration expenditures on or before July 31st, 2020
- $200,000 in cash and $1,000,000 in exploration expenditures on or before July 31st, 2021
Once Skyharbour acquires its 100% interest in the property, Denison may exercise a buyback option ("Buyback Option") to repurchase a 51% interest in the property by making a cash payment of $200,000 and spending $6,750,000 in exploration expenditures on the property over the following three year period. The parties would then form a joint venture. If Denison fails to complete the Buyback Option, Skyharbour would retain 100% ownership in the property.
Provided this first Buyback Option is not exercised by Denison, Skyharbour would own 100% of the property and would have an additional five year period to incur an additional $3,000,000 in exploration expenditures on the project ("Additional Expenditures"). At this point, Denison may elect to exercise a second buyback option to repurchase a 51% interest in the property by making a cash payment of $500,000 and spending $16,500,000 in exploration expenditures on the property over the following four year period. The parties would then form a joint venture. If Denison fails to complete this second buyback option, Skyharbour would retain 100% ownership in the property.
Provided the first Buyback Option was not exercised by Denison and Skyharbour does not complete the Additional Expenditures within the allotted five year period, Denison may elect to exercise a buyback option at any time to repurchase a 51% interest in the property by making a cash payment of $500,000 and spending at least 2.5 times the expenditures incurred by Skyharbour since the beginning of the Option Agreement. The parties would then form a joint venture.