Following a decade long bear market, the price of uranium has soared in recent months, reigniting the search for large-sale, competitively priced yellow cake projects around the world. In Argentina, Blue Sky Uranium Corp (TSX-V BSK) has spent the last 15 years prospecting and developing a brand new uranium play in the southern province of Rio Negro.
"From the start we have been looking not just for volume but for a highly competitive deposit," says Guillermo Pensado, the company's VP of Exploration. "What we have in Rio Negro is essentially a big fish net in a depression that can catch large quantities of Uranium from the huge surrounding Andes mountain range."
Blue Sky Uranium is part of the Grosso Group, an Argentine group with a strong track record of exploration success, discovering major gold and silver deposits including Gualcamayo, one of the country's largest gold mines, and Navidad, the world's largest undeveloped silver mine currently owned by Pan American Silver Corp. It made its first uranium discovery in the Rio Negro basin in 2006 and followed the trend south east for 145 kilometers discovering the Ivana deposit in 2017.
"The uranium was either on surface or very near the surface, meaning we could advance rapidly at low cost," says Pensado. "It took us less than a year between discovery to defining an initial resource estimate. That speaks to the potential of this district."
Using a cut-off grade of 100 parts per million Uranium, the Ivana deposit contains an inferred Uranium content of 22.7 million pounds. Most of the material lies less than 25 meters from the surface, making for relatively simple mining. According to the preliminary economic assessment (PEA) released in February 2019, the production cost using conventional methods would be competitive with the cheaper in-situ recovery techniques used in Kazakhstan, the world's largest producer.
"From the start our goal was to make the project competitive under low price conditions," says Pensado. "We showed in the PEA that our cash cost is around $16 per pound and our overall cost is $19 per pound. The processing plant is the main capital investment. Now we are trying to define a cluster of deposits within 30 kilometers of Ivana in order to increase volumes and improve the economics even further." The Ivana deposit is just one area of mineralization in the wider Amarillo Grande project. Blue Sky Uranium has over 300,000 hectares under title.
Pensado estimates that the break-even point for the project requires a uranium price in the mid $30 per pound. Over the course of 2021 the spot price has jumped from under $30 to over $45 in October. A decade after the meltdown at Fukushimi Daiichi nuclear power plant led to Japan, Germany and others turning their back on fission, countries are now reassessing the important role safe nuclear projects can play in supplying clean energy. The shut down of Canada's Cigar Lake min - the world's largest - during the pandemic led to tightening supply.
Since the 1950s, however, Argentina has been Latin America's largest consumer of nuclear power, with 7.5% of energy coming from three reactors and a fourth, to be built with Chinese support, in the planning stage. The country's previous state-owned Uranium mine in the Mendoza province was shut down in 1986 due to environmental concerns and its proximity to communities.
Amarillo Grande is in a far more remote region at a time when the need for green energy has never been higher.
"After 15 years of exploring the region and creating our own learning curve, we are confident that we have the district has the geological setting and the economics to develop a highly competitive mine," says Pensado.