The sky is the limit – Blue Sky Uranium making strides in Argentina
By Rory Slater
In the last five years, uranium prices have soared by 233%, significantly outpacing the gains observed in both gold and copper. This surge is mirrored in the stock market, with increased confidence in uranium stocks. In Canada alone, several uranium players have seen up to 400% increases in their stock values, in the past 4 years. Several factors have revived uranium from the brink, transforming it from a once risky commodity to a sought-after resource. Primarily, increasing climate change pressures have governments worldwide seeking substitutes for carbon-intensive power sources. (Bloomberg)
Canadian Prime Minister Justin Trudeau recently stated that uranium is a key element in Canada’s net-zero emissions plan, which aims to cut greenhouse gas emissions by 40% to 45% below 2005 levels by 2030. (Mining Weekly) Additionally, Russia’s invasion of Ukraine has accelerated global interest in alternative energy sources. The trade sanctions imposed on Russia have exacerbated the shortage of raw and enriched uranium, highlighting the urgent need for Western Europe to diversify its energy sources and reduce reliance on Russian oil and gas. Many countries are now securing supplies from more geopolitically stable regions such as Canada and Australia. Last month, President Joe Biden signed the ‘Prohibiting Russian Uranium Imports Act,’ completely banning the import of Russian enriched uranium into the United States. (Reuters)
Under these conditions, it is evident that the balance of supply and demand has quickly fallen into disequilibrium. Major players such as China, India, Japan, the United States, and Europe are consuming uranium faster than it can be extracted. Treva Klingbiel, president of TradeTech, estimates that demand could exceed supply by more than 100 million pounds annually through the 2030s. (Bloomberg)
Blue Sky Uranium Corp. [BSK-TSXV; BKUCF-OTCQB; MAL2-FSE] is making significant strides in the uranium rush, positioning itself as a leader in uranium exploration in Argentina. Argentina has a well-established nuclear industry, generating about 10% of its electricity since 1974 and supplying research reactors and radioisotopes (SRK). There are plans to construct two additional reactors, and a small, locally designed power reactor prototype is already under construction. As Argentina’s nuclear energy requirements are projected to increase by 2.5 times by 2025, the country’s consumption is expected to reach approximately 1.25 million pounds of U3O8 annually (BSK). Presently, all uranium utilized by Argentina’s nuclear industry is imported from abroad, which presents a significant opportunity for Blue Sky.
Boasting 100% ownership of over more than 450,000 hectares of mining tenures. Blue Sky Uranium sees this region as underexplored, with excellent potential for near-surface uranium and vanadium resources that can be developed relatively quickly and at low cost. The company’s flagship project, the Amarillo Grande Uranium-Vanadium Project in Rio Negro, represents a significant new district-scale discovery. This project includes Argentina’s largest NI 43-101 resource estimate for uranium, with a substantial vanadium credit.
The Amarillo Grande Project, spanning approximately 300,000 hectares of mineral rights along a 145 km trend in the Rio Negro province, has been the focus of Blue Sky’s exploration efforts for 15 years. This region is well-equipped for uranium exploration, boasting established transport infrastructure, including rail and road networks, and a strong local nuclear knowledge base with a research nuclear reactor, hydro-metallurgical lab, and a pilot uranium enrichment plant. The environmental conditions are also favourable, as the projects are located in semi-desert, low population density areas with low environmental risk. The consistent climate allows for year- round operations and with good infrastructure in the locality, Blue Sky’s sites are easily accessible from major cities, airports, and a deep-sea port.
Within the Amarillo Grande Project is the Ivana Deposit, which has recently expanded and upgraded its resources and encompasses a 5-km mineralized corridor, with a high-grade core, 200 to over 500 metres wide, and up to 23 metres thick. The deposit features near-surface uranium and vanadium mineralization, hosted in loosely consolidated sand and gravel. This includes both oxide (carnotite) and partially oxidized “primary” (β-coffinite) mineralization, characteristic of both sandstone and surficial-type deposits. Notably, 80% of the mineral resources are in the indicated category, with lower uranium and higher vanadium resources to the west, suggesting potential for an extended mine life.
Blue Sky Uranium has conducted a highly successful initial metallurgical test program at the Ivana Deposit, optimizing the recovery of uranium and vanadium through a simple two-stage process with low environmental impact. The first stage involves wet scrubbing and screening of composite samples, which increases the grades of uranium and vanadium by approximately four times, with 89% recovery for both elements and a 77% mass reduction. The second stage uses alkaline leaching of the concentrate, achieving recoveries of 95% for uranium and 60% for vanadium, with overall process recoveries of 85% for uranium and 53% for vanadium.
A recent Preliminary Economic Assessment (PEA) confirms robust after-tax economics for an 11-year surficial mining operation of the Ivana Deposit, with a base case Net Present Value (NPV8%) of US$227.7 million and an Internal Rate of Return (IRR) of 38.9% at a uranium price of $75 per pound. The spot price case indicates even greater potential, with an NPV8% of US$418.3 million and an IRR of 57%. Blue Sky Uranium plans to continue building value through resource expansion and advanced engineering to improve project economics. [The PEA is preliminary in nature and is intended to provide an initial assessment of the project’s economic potential and development options. The PEA mine schedule and economic assessment includes numerous assumptions and is based on both Indicated and Inferred mineral resources. Inferred resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA results will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Additional exploration will be required to potentially upgrade the classification of the inferred mineral resources to be considered in future advanced studies.]
Several other key exploration targets such as Ivana Central and North, Cateo Cuatro, Ivana East, Anit, and Santa Bárbara. Ivana Central and North have shown promising results, with significant uranium anomalies and geological footprints comparable to the Ivana Deposit. The Anit target, with a 15-km long high-radiometric anomaly, and Santa Bárbara, with deeper blind mineralization potential, both support the long-term district potential.
Following the latest mineral resource estimate in early June 2024, Blue Sky Uranium announced a proposed transaction to advance the Ivana uranium deposit through feasibility and then to commercial production. This transaction involves Blue Sky and Corredor Americano S.A. (COAM), an Argentine company of the Corporación América Group. COAM can earn up to a 50% indirect interest in the Ivana Property by investing up to US$35 million. This investment will advance the project through the completion of a feasibility study and drill key exploration targets in adjacent areas.
After a positive feasibility study, COAM can earn an additional 1% interest by deciding to fund the capital cost of the project. COAM can then earn a further 29% interest by covering 100% of the estimated capital costs to achieve commercial production.
Nikolaos Cacos, Blue Sky President & CEO commented, “The recent PEA for our Amarillo Grande Project confirmed the Ivana deposit as a potential candidate for low-cost uranium production. The proposed transaction with COAM provides compelling benefits for Blue Sky and its shareholders by setting a clear path to bring Ivana to production in partnership with one of the most capable groups in Argentina. Following an initial 50% interest for bringing Ivana to feasibility phase, Blue Sky will receive a free carry on the estimated capital costs in exchange for COAM earning an additional 30% interest in the project. Furthermore, we are benefiting from substantial investment towards exploration at adjacent properties, with the potential for new discoveries to be purchased by the JVCO in the future. We look forward to completing the agreement and quickly moving Ivana forward through the next stages.”
Blue Sky Uranium’s strategic advancements in Argentina are setting the stage for a potential shift in the global uranium landscape. With uranium prices surging and geopolitical factors driving increased demand, the company’s efforts to develop the Amarillo Grande Uranium-Vanadium Project could not be timelier. By capitalizing on Argentina’s established nuclear infrastructure and the country’s growing energy needs, Blue Sky is positioning itself as a key player in the region’s uranium supply chain.
The partnership with Corredor Americano S.A. is a testament to Blue Sky’s commitment to bringing the Ivana Deposit to commercial production. This collaboration not only provides the necessary funding to advance the project but also leverages the expertise of one of Argentina’s most capable groups. As Blue Sky continues to explore and expand its resource base, the potential for new discoveries and enhanced project economics remains high. The sky is indeed the limit for Blue Sky Uranium as it navigates the evolving energy landscape and strives to become a leading supplier of uranium in Argentina and beyond.
Disclosure: Blue Sky Uranium is a sponsor of this content. Resource World Magazine Inc. has prepared this editorial for general information purposes only and should not be considered a solicitation to buy or sell securities in the companies discussed herein. The information provided has been derived from sources believed to be reliable but cannot be guaranteed. This editorial does not take into account the readers investment criteria, investment expertise, financial condition, or financial goals of individual recipients and other concerns such as jurisdictional and/or legal restrictions that may exist for certain persons. Recipients should rely on their own due diligence and seek their own professional advice before investing.