Ramping Up Activities as AI Sparks Renewed Optimism in the Uranium Sector

• Tech giants like Google (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN) have recently signed nuclear power deals to secure sustainable energy supply for their expanding data center operations and AI initiatives. The rising demand for uranium, coupled with the highly vulnerable supply chain, particularly with Russia accounting for 35% of global enriched uranium production, has fueled renewed optimism in the industry. As a result, we anticipate a significant increase in M&A activity within the sector in 2025.
• Since our previous report in July 2024, SYH has optioned three uranium properties, brining the total number of projects with JV/option agreements to 10. The company has also entered into agreements to sell a majority interest in certain non-core assets. SYH has one of the largest portfolios among uranium juniors in the Athabasca Basin.

• The company has commenced drill programs at its two flagship projects: Moore and  Russell Lake.  
• A 4,500 m follow-up drill program at the Russell Lake project, a JV with Rio Tinto (NYSE: RIO), will test two targets, including a newly discovered one.  A 2024 winter drill program identified a shallow mineralized zone with high-grade intercepts of up to 3.0% U3O8 at this new target.
• An ongoing 2,500 m drill program at its 100%-owned Moore uranium project  seeks to potentially expand high-grade mineralization at the Main Maverick and Maverick East zones. All seven holes from the last winter drill program at the Main Maverick zone intersected shallow uranium mineralization, with high-grade intercepts including 3 m of 7.3% U3O8 and 1 m of 10.19%. Management aims to complete a maiden resource estimate in 2025.
• Option partners are actively advancing their projects through exploration and drill campaigns. SYH could receive up to $52M in cash/share payments if these option agreements are fulfilled.
• Uranium prices have pulled back from their peak of US$106/lb earlier this year, to US$78/lb, down 5% YoY. The Sprott Physical Uranium Trust (TSX: U-UN), the world’s largest physical uranium investment fund, has increased its holdings by 5% in the past 12 months to 66 Mbls. 
• Upcoming catalysts include strong sentiment for uranium juniors, drilling at Russell Lake and Moore, ongoing and planned exploration programs by its partners, and potential new option agreements to advance its prospect generator business.

Portfolio Summary

29 properties, covering over 1.4M acres, in the Athabasca basin. The Athabasca basin hosts some of the world’s richest uranium deposits and mines

Ten projects with JV/ option agreements (previously seven). Partners could commit up to $41M for exploration, and over $52M in cash/share payments to SYH

Russell Lake Uranium Project (SYH 51%: Rio Tinto 49%)

SYH has commenced a follow-up drill program (comprised of seven to nine holes totaling 4,500 m) at the Fork and M-Zone Extension (MZE) zones.

Russell Lake is strategically located between SYH’s Moore uranium project, and Denison’s (TSX: DML) Wheeler River project, and close to Cameco’s (TSX: CCO) Key Lake mill, and MacArthur River mines

35+ km of untested targets 

Geophysical surveys over the Grayling and Fork targets identified several new drill targets. A follow-up drill program is currently underway

Earlier this year, SYH completed a two-phase drill program, totaling 5,152 m/10 holes, at the  East Grayling zone, the MZE, and the recently discovered Fork zone. Fork is a high-priority area with limited historical drilling. One of five holes drilled in this target encountered high-grade mineralization, with grades of up to 0.72% U3O8 over 2.5 m, starting at 338 m, including 0.5 m of 2.99%. This new discovery is relatively shallow, and open in multiple directions.

The Fork zone is 1 km southwest of the central Grayling zone, and 4 km southeast of Denison’s Phoenix deposit

Phase one drilling uncovered a shallow mineralized zone with high-grade intercepts at the Fork zone

Moore Lake Uranium Project

In September 2024, SYH commenced a follow-up drill program (comprised of seven to nine holes totaling 2,500 m) to potentially expand the high-grade uranium mineralization at the Main Maverick, and Maverick East zones. All seven holes of a 2024 winter drill program at the Main Maverick zone encountered uranium mineralization, including a few high-grade intercepts such as 3 m of 7.3% U3O8, and 1 m of 10.19%. 

Previous drilling intersected high-grade mineralization at shallow depths, between 250-280 m from surface 

Management aims to completed a resource estimate in 2025

Entered into multiple option agreement in the past few months

Updates on Other Projects 

• November 2024: SYH optioned its 914W uranium project to Mustang Energy (CSE: MEC/MCAP: $19M). Mustang can acquire a 75% interest for $1.6M in cash/share payments, and exploration expenditures, over a three-year period. The company also entered into an agreement with Hatchet Uranium  (a privately held junior), wherein Hatchet can acquire an 80% interest in SYH’s Highway uranium property for $3.3M in cash/share payments, and exploration expenditures, over a three-year period. SYH also agreed to sell Hatchet a 100% interest in three non-core properties.
• October 2024: SYH optioned its South Dufferin and Bolt uranium projects to UraEx Resources (a privately held junior), allowing it to earn a 51% stake for $4.6M in cash/share payments, and exploration expenditures. 
• July 2024: SYH sold a portion of its Karin uranium property to Cosa Resources (TSXV: COSA/MCAP: $13M) for 250k shares, valued at $0.06M.
• At the South Falcon East uranium project, Terra Clean Energy (CSE: TCEC/MCAP: $2M) is planning a 2,000 m drill program.
• At the Falcon uranium project, North Shore Uranium (TSXV: NSU/MCAP: $2M) secured a three-year exploration permit. NSU has identified 36 targets, and is in the process of selecting drill locations.
• At the East Preston uranium project, Azincourt Energy (TSXV: AAZ; MCAP: $5M) reported hydrothermal alteration minerals, a positive indicator for uranium, from its 2024 winter drilling (1,086 m/four holes).

All holes encountered hydrothermal alteration, indicating potential uranium mineralization

Financials  

Healthy balance sheet. In-the-money options can bring in $0.61M 

Uranium juniors in North America are trading at $8.8/lb (previously $8.1/lb)

FRC Valuation

Uranium juniors in North America are trading at 3.0x book value (previously 3.4x)

Applying sector multiples to SYH’s flagship assets, we arrived at a revised fair value estimate of $1.21/share (unchanged)

We are reiterating our BUY rating, while maintaining our fair value estimate of $1.21/share. We believe SYH is poised to benefit from the resurgence of interest in the uranium sector. The company’s strategic land holdings in the Athabasca Basin, combined with key partnerships and ongoing exploration efforts, present promising opportunities. Upcoming drill results from key projects such as Russell Lake and Moore, along with potential M&A activity in the sector, are likely to serve as catalysts.

Risks

We believe the company is exposed to the following key risks (not exhaustive):

• The value of the company is dependent on uranium prices
• Exploration and development 
• None of its flagship projects have a NI 43-101 compliant resource estimate
• Access to capital and share dilution 
• No guarantee that option partners will follow through with their proposed programs