Apr 18, 2018
Looking for opportunity in the current uranium market
Blue Sky Uranium finds cause for optimism in Argentina
Uranium prices have plummeted in recent years, as Japan’s nuclear power industry has continued to recover very slowly from the Fukushima disaster in 2011.
Nuclear power remains a reliable, low-emission source of baseload power for the world’s electricity needs. As such, it is in the mix for many countries’ plans to hit their carbon dioxide emission reduction goals as participants in the Paris climate accord.
In the short term, however, major players in uranium like Cameco and the country of Kazakhstan have elected to curtail production in the face of a global glut in uranium.
Uranium oxide (U3O8) is currently trading at around US$21 a pound on the spot market, a price less than half 2012 trading levels.
In the face of this soft environment, Blue Sky Uranium Corp. (TSX.V: BSK) is developing a uranium project in Argentina that has a chance to turn into a profitable project. Based on a combination of its in-country location and the presence of an easily mineable resource — with a vanadium kicker — Blue Sky’s Amarillo Grande project gives the company an excellent chance to win, even in a down market.
Argentina’s Growing Nuclear Power Industry
Blue Sky’s position in Argentina aligns it with the growing nuclear power industry in Argentina.
A signatory to the “Paris Accord,” the country is actively seeking ways to support a growing population while reducing carbon dioxide emissions by 15 per cent by 2030.
With Argentina currently dependent on fossil fuel and hydroelectric power to feed its grid, meeting the goals of the Paris Accord will require the country to double its nuclear energy supply by 2025. That equates to 1.25 million pounds of additional U3O8 annually.
Today, the country operates three nuclear power plants, six research reactors, four particle accelerators, three atomic centers, one heavy water plant, and one uranium purification plant. In addition, it has one nuclear plant under construction, two in the planning phase, and two under proposal.
All of the country’s uranium is currently imported, and the government’s desire for a secure supply could make it a guaranteed first customer for any U3O8 mined at Amarillo Grande.
A Large, Easily Extractable Resource
Located in the Rio Negro province, Amarillo Grande is home to surficial uranium mineralization. That means the uranium lies near surface, in this case as a coating on the sediments left in ancient river beds.
This type of deposit is easy to access, inexpensive to explore, and very inexpensive to mine and develop. At 250,000 hectares, Amarillo Grande is a district-scale property that encompasses a 140-kilometre-long trend of uranium mineralization.
The property contains three key targets: Santa Barbara, Anit, and Ivana. In addition to the surficial mineralization, higher-grade material has been encountered in recent drilling on Amarillo Grande, implying a deeper, richer resource may lie at depth.
For now, Blue Sky is focusing on the surficial mineralization. The company just released an initial resource estimate for the Ivana target that pegs its inferred U3O8 resource at 19.1 million pounds.
According to Guillermo Pensado, the company’s Vice President of Exploration, Ivana has the potential to be “a very low-cost uranium deposit that could be economic even in a very low-price scenario for uranium.”
A Vanadium Kicker
The presence of vanadium on Amarillo Grande gives Blue Sky an additional way to boost the project’s economics.
Used primarily as a strengthener in structural steel, vanadium is also being looked at as a potential source of battery storage. With demand for smart grid technology growing in response to the alternative energy industry, a Vanadium Redox Battery to store electricity generated by intermittent sources like wind and solar is under development.
The renewed interest in vanadium has more than tripled its price since 2015. And given the vanadium content of the uranium mineralization on Amarillo Grande’s Anit target, Blue Sky has a legitimate shot at supporting any uranium production with vanadium production as well.
Metallurgical recovery of a preliminary sample of ore from Ivana demonstrated 95 per cent uranium recoveries and 60 per cent vanadium recoveries. More robust work on that ore is underway to help Blue Sky produce a preliminary economic assessment for Ivana.
These positive early results, that similar extraction methods use, would work well at Anit, should the company decide to put that target into production down the road.
With a resource established at Ivana, Blue Sky Uranium Corp. (TSXV: BSK) is moving forward with the work it needs to complete in order to generate an economic study on the resource. Combined with expansion and infill drilling at Anit and ongoing metallurgical testing on both Anit and Ivana, the team at Blue Sky will be very busy in the coming months.
The goal is to provide Argentina with a domestic source of uranium. Pensado elaborates, “We’d like to develop Ivana and Anit as satellite deposits to feed a central plant at Amarillo Grande. Our goal is to build Argentina’s first uranium-vanadium concentration plant.”