Blue Sky Uranium was incorporated in 2006 with the primary objective to take advantage of opportunities for large-scale uranium discoveries in Argentina. Executives at the TSX-V listed exploration company were well aware of a number of highly prospective regions in the South of the country, which have been known to host uranium deposits of a style not too dissimilar from those commonly found in Australia and Western Africa. Over the last 12 years, Blue Sky has acquired around 450,000 hectares of property in Southern Argentina and partnered with Areva, the world’s largest integrated uranium company, until 2011 when the Fukushima disaster in Japan sent the industry into deep freeze.
“It has only been in the last 18 months that we’ve really reactivated the company,” says Blue Sky’s president and CEO Nikolaos Cacos, discussing the company’s new lease of life after its projects were temporarily placed on care and maintenance in the aftermath of Fukushima.
“Since then, we’ve made some tremendous strides forward due to the new people we’ve been able to employ, namely our new geologist Guillermo Pensado, who is a uranium geologist with a very large pedigree, over 20 years’ experience in Argentina.”
Part of the Grosso Group
Cacos has been part of the overarching Grosso Group since its founding 25 years ago, working closely with legendary South American mining executive Joe Grosso in the running of Blue Sky.
“We [the Grosso Group] have had an uninterrupted 25-year history of mineral exploration in Argentina in all kinds of metals including lithium, silver and gold and for us Argentina has been ripe with opportunity because it is so unexplored. We’ve demonstrated that so far by making three world class discoveries.”
The resource management group advanced the Gualcamayo mine in San Juan province, which is estimated to contain 3.3 million ounces (Moz) of gold and is now in production by Yamana Gold and also has silver deposits in Southern Argentina, most recently discovering the Chinchillas deposit.
The deposit will now be brought into production through a lucrative partnership between Grosso Group’s Golden Arrow Resources (previously featured in RGN Vol 4 Iss 7) and SSR Mining. “However, we believe that the group’s fourth discovery in Argentina is under Blue Sky,” says the CEO.
Nuclear power is beginning to pick up again after reverberations from the Fukushima incident have been fully absorbed by global markets. Multiple reactors are being built across the world, with 56 currently under construction according to Cacos, many of which are in countries you wouldn’t necessarily expect, such as Japan and Saudi Arabia.
Argentina is home to an advanced nuclear energy industry itself. South America’s second largest economy has three nuclear power plants in operation, another one under construction, two more that are commissioned and two more in the planning stage.
At the moment Argentina needs around 500,000 pounds of uranium a year to feed the plants that are currently in operation, but this is set to rise to one million pounds a year after the new plants come online in 2019. Much like other sources within its energy mix, Argentina imports uranium primarily from Kazakhstan and Canada, which has proven to be a drain on funds.
“Argentina is shifting its focus from importing hydrocarbons and using up all its valuable US dollars in foreign exchange and is moving towards uranium as a source of reliable, efficient and cheap energy.
“The government is very keen to have a domestic source of uranium and Blue Sky has the project right now to gear up to be Argentina’s first domestic supplier of uranium and then become an exporter after that.”
While it is too early for the company to confirm Argentina as its first customer, Blue Sky is working very closely with the federal government, in particular within the Rio Negro province in which it is active, which has a budding nuclear research industry.
“We are getting a lot of support and are building a really positive rapport between us. We are very confident that Argentina is looking at us as a first source of uranium,” Cacos purrs.
Having seen global uranium prices bounce back in recent years, Cacos is one of many staunch advocates of nuclear energy as a clean, reliable and long-term source of energy. “I believe uranium is our best way of achieving a carbon-free source of energy,” he says.
“Reactors can have a long life. The new reactors being built are extremely safe and in terms of energy efficiency I remember reading in a recent article that half a barrel of uranium has enough energy to supply one person’s entire lifetime need of energy.
“I think even in Japan when the Fukushima reactor was damaged by the tsunami, it was a very old reactor. There were other new reactors there that weren’t damaged at all. I think part of it is also fear.
“However, if used properly and safely it is a natural form of energy that with the proper safeguards is the best form of energy we can use.”
Blue Sky has established exploration activity in two provinces of Southern Argentina; Rio Negro and Chubut, both of which straddle the geologically diverse Patagonia region.
Despite being highly prospective uranium-bearing regions, there had been next to no exploration projects when the company arrived in the provinces, aside from the atomic agency for Argentina’s (CNEA) deposit in Chubut called Cerro Solo.
“Initially, we teamed up with local exploration geologists, they knew where we should be focused and that’s always been the Grosso Group modus operandi: Find the best experts in what you are looking for and work closely with them and that way we can focus our strategy.”
These local geologists pointed Blue Sky to a region surrounding Cerro Solo. Just North of the deposit, a number of outcroppings were located in Rio Negro that generated a great deal of excitement amongst the geologists.
Blue Sky subsequently purchased a very large land package and flew a radiometric survey spanning 28,000km, which remains to this day the largest flown for any metal in Argentina.
“It was just amazing to see on a map almost a quarter size of Switzerland all these radioactive anomalies that were popping up,” recalls Cacos. “We were able to acquire really large packages, almost an entire district of potential uranium discovery.”
After the airborne surveys, Blue Sky staked the properties and afterwards it was a matter of trying to locate the radiometric anomalies that had showed up on the surveys.
“We sent a crew of geologists driving through the properties and it’s very interesting what they saw. Patagonia is a very flat and semi-arid area in Argentina and its very sparsely populated, less so than Siberia.
“Our team was following a typical dirt road in the area and were raking through the gravel just to clean it up and you could actually see this yellow carnotite right on the side, so the spectrometers in the geologists’ Jeep went off, they got out and within a matter of a few minutes they found the uranium.”
With the proliferation of uranium in the region all but confirmed by the geologists on the ground, Blue Sky began to put together a big geophysical mapping programme and conducted trenching to gage how deep the uranium was occurring, before commencing a drill programme across the large, 140 x 50km land package which is now called Amarillo Grande.
“We initially prospected over the entire 140km length of the project but decided in the last year to really focus on one area and we chose the Ivana area,” says Cacos. “We used some very focused geophysics, which turned out to be an excellent guide to how the mineralisation was flowing through.”
The type of mineralisation present across the target is called a surficial type deposit, which tend to occur over large areas at a relatively low-grade, comparable to uranium deposits found in Namibia or in Western Australia such as the Wiluna deposit.
However, the results of a recent drill programme have allowed the company to expand the high-grade core at the Ivana target by a further 1km, while infill drilling results also revealed consistent higher-grade thicknesses, including individual results as high as 10,517 ppm or > 1% uranium over 1m.
These results are a significant mark-up on the low-grades commonly found in the comparable African and Australian deposits, which tend to come in at around 500 ppm or 0.5% uranium.
“Our results are really exciting because this is the type of economic grade that can really add up very quickly when you do a resource calculation. We have closed off a series of 3,000m of infill drilling at Ivana, and are very close to publishing our initial resource calculation.”
With the resource calculation due in the first week of March, Cacos expects to see an immediate institutional following based on the high-grades present in the deposit and the fact that Blue Sky picked up the property for pennies back when it had no real value.
“We would become candidates for those uranium investors that are going to see not just the potential of this initial deposit but also that we now have a completely understood model that we can replicate in other areas in this property. We are sitting on an entire uranium deposit with the potential of up to 100 million pounds or more.”
Blue Sky’s short-term targets in 2018 are three-fold: To put out an initial resource estimation, to continue its geophysical programme that has been an excellent guide to discovery thus far, and to publish a preliminary economic assessment on the resource.
“We are targeting what we believe is economic in this environment today, and I want to demonstrate that,” says a confident Cacos. “If prices of uranium go up that’s fantastic, but we are focused on what would make money today.”
Finally, the occurrence of vanadium alongside uranium at the Amarillo Grande deposit is also adding further juice to its economic potential, as prices for the mineral have soared in recent months owing to its usages as a steel hardener and in high-tech batteries.
“We’ve always known about it but didn’t take much notice because vanadium was typically between $3-5 per pound, but now it fetches between $12-13 and all of a sudden it’s become a very significant metal.
“This is a real game changer here, its giving the Amarillo Grande project an entire new complexion.”