Low-Cost Domestic Uranium Producer Positioned To Meet Rising Demand In Argentina
In an October 15 research note, Fundamental Research Corp.’s Head of Research Sid Rajeev, B.Tech, CFA, MBA and equity analyst Nina Rose Coderis, BSc (Geology) commented that uranium and vanadium explorer Blue Sky Uranium Corp. is well positioned to provide a solution to the rising demand for uranium in Argentina.
The report pointed out that currently there are three operating nuclear reactors in Argentina. A fourth reactor is now being built and two more are planned for construction. At present, there are not any domestic sources of uranium, and the country must import 100% of the uranium it consumes.
The analysts remarked that this creates a solid opportunity for domestic uranium producer Blue Sky Uranium which holds a 100% interest a portfolio of four uranium assets in Argentina. Fundamental Research added that the company’s management team has a solid track record and has been operating in the country for nearly 30 years.
Fundamental Research explained that “Blue Sky has the largest NI 43-101 compliant uranium resource in Argentina.” The report stated that the Preliminary Economic Assessment (PEA) for the company’s flagship Amarillo Grande project located in the Rio Negro province estimates the value of the resource at US$135 million with very low estimated cash costs of US$16/lb.
Research analysts Rajeev and Coderis indicated that the project is a medium-sized/low-grade deposit with an inferred resource of 22.7 Mlbs U3O8 (uranium) and 11.5 Mlbs V2O5 (vanadium). The analysts stated that about 85% of the projects economic value is attributed to the property’s mostly shallow, near-surface uranium deposits located within depths of 25 m from surface. Blue Sky is now conducting an active drill program with the goal of expanding and upgrading the existing resource.
The analysts mentioned that global efforts toward clean energy are providing strong tailwinds for the uranium sector. Fundamental Research stated, “We have a positive outlook on uranium prices and believe that long-term prices have to be at least US$50/lb for new projects to come online.”
The report advised that in terms of equity market valuation, Blue Sky is trading at just US$4.24/lb, much lower than the average for the sector of US$5.85/lb.
Fundamental Research listed that Blue Sky’s future success will be predicated upon results achieved in its ongoing drill program and continued rising interest and optimism in the uranium industry.
Fundamental Research Corp. stated that it rates Blue Sky Uranium Corp. as a “Buy” with a fair value estimate of CA$0.47 per share. The firm advised that the valuation is based upon average uranium prices of US$55/lb.
The company’s shares trade on the TSX Venture Exchange under the symbol “BSK” and last closed for trading at CA$0.275/share on October 26, 2021.
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