Uranium project in Argentina has ready-made buyer

Only a handful of uranium projects hold the potential to challenge the largest and lowest-cost producers globally.
One budding candidate — Blue Sky Uranium (BSK.V; BKUCF.OTC) — is now drilling to expand its already sizeable, ultra-low-cost project (in Argentina, not in Asia) and the next three months are crucial in terms of value-creation.
The key: Argentina needs a domestic source of uranium to feed its own nuclear plants and ambitions.

Dear John,

It’s perfect timing: Just as the uranium market is heating up, Blue Sky Uranium Corp. (BSK.V; BKUCF.OTV) is aggressively drilling its district-scale Amarillo Grande (The Big Yellow) uranium project in Argentina.

Amarillo Grande might well stand with the largest and lowest-cost uranium mines, including those in Kazakhstan which produce 40% to 60% of global supply each year and which are actually very similar to Amarillo Grande geologically.
The project’s independent PEA, completed in 2019, shows an initial near-surface inferred resource of 22.7 million lbs. U3O8 with 11.5 million lbs. of vanadium by-product.
Importantly, the PEA also shows all-in sustaining costs of US$18.27/lb U3O8, well within the lowest quartile of production costs globally.
Just about all of the resource is within 25 meters of surface, so no blasting or crushing will be needed. It can be a scoop-and-process operation.
The project has excellent infrastructure — roads, power, accessibility, skilled work force — in Rio Negro province, Argentina’s center for nuclear research.

The province welcomes BSK and its project, which already holds the largest uranium resource in the country.

Here’s a big key to the opportunity and the clear path ahead for the project: Argentina needs the uranium for nuclear fuel for its three operating nuclear power plants, a plant under construction, a pilot uranium enrichment plant, and six research reactors.

Today, all uranium used for nuclear fuel in Argentina is imported from across the Pacific on contracts averaging approximately $85/lb., and these contracts complete in the near term.
Argentina has had ambitious goals for nuclear power for decades and has the trained personnel and facilities to achieve these goals. In fact, the country aims to become the largest generator of electricity from nuclear energy in South America.
It is expected to more than double nuclear power usage by 2025, making Amarillo Grande an excellent fit as a source of uranium.

A Compelling Uranium Project In A Great Location

The project consists of a series of new uranium-vanadium discoveries made over 12 years along a 145-kilometer-by-50-kilometer trend— yes, 90 miles long by 31 miles wide.
That package covers 261,000 hectares of mineral rights, and Blue Sky controls the project 100%. The area is semi-desert, with very little population and low environmental risk.
Geologically, the district-scale project contains sandstone-hosted, oxidized and partially oxidized uranium deposits at or very near surface in loosely consolidated sand and gravel.
The geology is very similar, in fact, to the world’s largest and lowest-cost primary uranium-producing zones, the Chu-Sarysu and Syrdarya Basins in Kazakhstan.

Large Resource, Solid Economics

Blue Sky’s resource thus far at Amarillo Grande is concentrated in the Ivana deposit at the far south end of the project area as shown below.

Based on 488 drill holes, the resource at Ivana, as determined by independent engineers and consultants, was estimated in 2019 to be:

22.7 million lbs. U3O8 grading 0.037% in 28 million tonnes with 11.5 milion lbs. vanadium (V2O5) grading 0.02%*

* Assumes operating costs of $12/tonne, $50/lb. U3O8, $15/lb V2O5 and process recovery of 90%. For a comparison regarding grade, the Inkai Mine in Kazakhstan, one of the largest and lowest-cost uranium mines in the world, grades 0.03%.

The PEA demonstrates average life-of-mine cash costs, net of credits, of $16.24/lb. U3O8, and all-in sustaining costs of $18.27/lb.
The deposit’s NPV, discounted at 8%, is estimated to be $135.2 million with an internal rate of return of 29.3%, paying back in 2.4 years. Capital expenditure would be $128 million, including $28 million of contingency costs.
Few uranium operations around the world could be profitable at today’s uranium price of approximately $28/lb., but Amarillo Grande just might.
But that’s beside the point. The plan calls for a far larger and still lower-cost operation.

Plenty Of Exploration Targets

Exploration along the project’s long trend has already outlined four zones that appear to be Ivana look-alikes: Ivana Central and North, and Cateo Cuatro and Ivana East.

A 4,500-meter, reverse circulation drilling campaign commenced in February at Ivana Central and Ivana North. Permitting and project planning have been started to advance exploration at Ivana East and Cuatro targets.
This drilling program should wrap up by the end of April. So, we do not have long to wait here to see about expansion of resources at Amarillo Grande.

A Team That Knows Argentina

Blue Sky Uranium has a strategic advantage over competing explorers in Argentina.

The company is a member of the Grosso Group, a management group that pioneered the mineral exploration industry in Argentina.

The group formed in 1993, 28 years ago, specifically to explore mineral opportunities in Argentina, and is credited with four exceptional mineral deposit discoveries, all in Argentina.
Blue Sky management is proud to have strong relationships that have been built over the decades with local, provincial and federal officials, as well as strong community and cultural ties. Money can’t buy these values.

Blue Sky is well-financed, having announced a non-brokered private placement financing near the end of 2020.
Due to high investor demand, the company increased the private placement from C$3.5 million to C$5.46 million, underscoring that this team is as adept at accessing capital as it is at making discoveries.

Drill Results Due Soon — It’s Time To Act

Here’s what we know about Blue Sky Uranium:

• The company’s Amarillo Grande project holds the potential to rank among the largest uranium districts in the world with lowest-quartile operating costs.
• The initial PEA on its Ivana deposit has established its viability as a potential uranium mine.
• We will know shortly, based on new drilling results from two to four new zones, just how strong the magnitude is here.

The pre-drilling work-ups — including intensive geochemical and geophysical assessments — make the initial indication that Blue Sky Uranium could be one of the uranium sector’s big winners.
With drills now turning at Amarillo Grande, you’ll want to look at Blue Sky Uranium soon, before assays can start validating this company’s “blue sky” potential.

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