Did you know that Argentina is the largest generator of electricity from nuclear energy in South America? Or that it imports all of the 500,000 pounds a year of uranium that its three nuclear reactors use? Or that Argentina has one additional nuclear reactor under construction and two in the planning stages?
Speaking with Nikolaos Cacos, CEO of Blue Sky Uranium (V.BSK), I learned all that and more. Critically, at the moment, “Argentina is keen to have a domestic source of uranium production,” said Cacos. “We want to be the first.”
As part of the Grosso Group of resource companies, Blue Sky inherited a long history of mining in Argentina. As the Blue Sky website puts it, “The Grosso Group leverages its vast network of local, regional and international industry contacts to support the exploration team on their search for quality resource opportunities.”
With its Argentinian contacts, Blue Sky was able to identify a potentially significant area of uranium mineralization in the Rio Negro province, in the Patagonia region of southern Argentina. This was a district scale project which contains several potential uranium deposits. The first airborne radiometric survey was flown in 2007 and further radiometric work was done in 2010.
“Flying gives you information down about two meters,” said Cacos. “But we have very reliable geophysics and have done extensive ground exploration. And yes, that did involve a guy with a Geiger counter.”
The size of the Blue Sky Amarillo Grande Project is very much on the district scale. “It’s 140 kilometres long and 50 kilometres wide,” said Cacos. “There are uranium showings throughout and we have three discovery targets we are focused on.”
The geology of the Amarillo Grande Project is similar to the Yeelirrie deposit in Australia operated by Cameco. Very close to the surface there are layers of what are likely to be dried up rivers and lake beds. Most of the mineralization found on the properties to date has the characteristics of Surficial Uranium Deposits in which uranium occurs in sediments or soils of relatively young age. However, beneath the Surficial deposits, there may be earlier formed sandstone deposits which act as the source for the Surficial deposits.
Cacos points out, “the vast majority of the uranium produced today comes from these sorts of deposits.”
Of course, the great advantage of Surficial uranium deposits is that they are at surface. Reports of reverse circulation drilling at the Ivana target, on its 100% owned Amarillo Grande in a recent Blue Sky press release had high-grade mineralization beginning a meter or two beneath surface. And none of the 4,327 metres drilled in 269 holes went below 30 meters.
The near surface nature of the deposit is good news for production. “This is super cheap to extract,” said Cacos. “All you need is a digger.”
The focus on the Ivana target is expected to give Blue Sky a 43-101 compliant resource to report by the end of February. “But this is just one deposit,” said Cacos. “We have three or four other showings which we will explore. And our airborne work suggests there is mineralization throughout the 140 by 50 km on our property”.
Looking ahead Cacos is anticipating a 43-101 compliant Resource Estimate by the first week of March. “We know this is a large deposit,” said Cacos, “We’d like to see a minimum of 15 million pounds.”
From there it is on to a PEA for the first deposit. “We need to do the economics of this for investors,” said Cacos. “We plan to have those by June of this year.”
Those economics have to be seen in the context of a multi Surficial deposit property with a plan to build a single plant to service multiple mining sites. “We can truck the material,” said Cacos. “So we’ll define the first deposit, work out the economics and then we could proceed to mine the deposit. The plant is expected to cost 50-80 million dollars and the overall CAPEX would be, at most, 100 million.”
Which all sounds pretty attractive when the Argentinian nuclear industry is looking for domestic supply. But there is a kicker. The Amarillo Grande uranium is showing significant associated vanadium. “Right now, because of its use in batteries, the price of vanadium has risen from $5 a pound to $12 a pound,” said Cacos. It the Ivana target we see uranium to vanadium ratios as high as 1:1. At our other targets, it is on the order of 1:5.”
For Blue Sky investors there will be a steady news flow as the Amarillo Grande project moves through its maiden resource calculation, through a PEA and onto mine development. Plus there will be drilling results from the other targets on the property. The accelerated exploration, analysis and development of the Amarillo Grande project will bring the market’s attention to the huge potential of uranium (and vanadium) in Argentina.