Every so often we are lucky enough to receive a bit of intelligence on a particular market or commodity.
Hallgarten & Company produces research on the natural resources sector, with particular focus on the mining and oil & gas industries. The principal regional focus is on the Americas (particularly Latin America), where the team has long “on the ground” experience.
Coverage ranges across companies that trade on the Toronto Stock Exchange, the AlterNext, Australian Stock Exchange, London’s AIM and locally-traded names in Latin American bourses.
October 12, Hallgarten issued the following note on uranium in Argentina:
“Clearly Argentina is a natural market with an existing nuclear power plant fleet that is currently under expansion and yet no indigenous mine production of Uranium. What should be an ideal investing environment is clouded by the generalized negativism towards Argentina. This ongoing bad vibe, perversely, is justified by political and financial events but NOT by mining events because the government in Argentina remains pro-mining. It has long been the case that some provincial governments have followed a more erratic attitude to mining in their bailiwicks. So the ideal uranium development story in Argentina is one in a pro-mining province and at some distance from any substantial settlement (a good example being Rio Negro province). Few miners dabbling in the Argentine space though appear to have cottoned on to the possibilities presented by making themselves an integral part of the revived nuclear power program in Argentina.
Negotiating concessions and even obtaining funding (helped by giving the Federal government some participation) could go some way towards mitigating the current hostility from capital markets towards funding uranium exploration ventures. A key factor though must be credibility, for as we have noted many uranium companies are as prone as Rare Earth companies were towards pursuing solely the concept of proving up a resource and not developing it, and that in no way moves the Argentine nuclear energy industry towards vertical integration. ONLY those intent upon development and production in the short term can hope to create a real dialogue.
The goal of this note is not to point out winners and losers but rather to illuminate to investors that in Argentina there is a real prospect of a self-supporting uranium industry evolving. There would appear to be a compelling logic for a coherent mine to generator vertical integration in the Argentine nuclear industry with the only thing lacking is a project advanced enough to capture the government (and CNEA’s) imagination to make this happen.”
For a company like Blue Sky Uranium (V.BSK), with deep roots in Argentina, the opportunity to explore and develop a uranium property in the country to feed the Argentinian demand for uranium is very attractive. Blue Sky just announced a private placement and we look forward to covering the company shortly.