Blue Sky Uranium Takes a Unique Approach to a Market Poised to Turn Higher
March 22, 2017 8:02 pm ET
Nuclear power has become an increasingly compelling source of renewable energy with over 400 existing nuclear reactors and a further 60 under active construction. While uranium prices have fallen since 2007, many analyst are forecasting a recovery as more and more nuclear reactors come online and traditional uranium sources are depleted. Investors may want to take a look at companies within the uranium market to capitalize on these dynamics.
In this article, we will take a look at Blue Sky Uranium Inc.’s (TSX-V: BSK) (OTC: BKUCF) (FSE: MAL2) unique approach to the market and why investors may want to take note.
Growing Demand for Uranium
There are 447 nuclear reactors operating in over 30 countries around the world, according to the World Nuclear Association, which generate nearly 392 gigawatts of electricity and supply over 11% of global demand. In addition to these existing reactors, there are nearly 60 nuclear reactors under construction, 164 on order or planned, and 350 proposed, which points to solid long-term demand for uranium as a power source.
Uranium prices have been in steady decline since 2007 due to an oversupply from the decommissioning of nuclear weapons and delays in nuclear reactor construction following the Fukushima nuclear disaster in March of 2011. Despite these trends, Cameco expects uranium demand to increase at a 3.5% compound annual growth rate over the next ten years with a significant lack of supply to meet the 70 million pounds of anticipated extra demand.
With uranium prices low at the moment, investors have an opportunity to build a stake in the market at the low end of the cycle. Many of the world’s largest uranium products, such as Cameco Corp. (NYSE: CCJ), have seen their stock prices already rebound from lows made late last year as the sentiment surrounding the industry has improved. Spot uranium prices have already started to rebound in recent months from a low of $18.00 to over $24.00 per pound.
Analysts are forecasting the prices will rise from these levels to more than $60 per pound by 2020 and beyond as the market moves from an over-supply to an under-supply.
Strategic Positioning in Argentina
Blue Sky Uranium has taken a unique approach relative to many competitors in the uranium industry by targeting Argentina’s uranium market. The country has no existing domestic supply of uranium for its three existing nuclear reactors, which makes developing strategic local reserves an important goal for the government. In addition, Argentina would represent a compelling “first customer” for any uranium produced in-country.
The company recently began an aggressive exploration of a new uranium district in central Rio Negro, which is an area that’s open to and supportive of uranium mining. After acquiring exclusive rights to 100% of ~250,000 hectares, the company identified a 140 kilometer stretch of uranium mineralization that’s near the surface with excellent grades. The project could be a low-cost opportunity with a short lead-time to development.
The company has embarked on an ambitious timeline to commercialize these resources and deliver value to shareholders. Currently, the company is undergoing a 7,000 metre RC infill drilling program while preparing to initiate metallurgical studies for wet screening, leach capacity, and recovery needed to prepare an NI 43-101 resource estimate by year end.
Blue Sky Uranium (TSX-V: BSK) (OTC: BKUCF) (FSE: MAL2) represents a compelling opportunity in the uranium industry. With uranium prices set to rebound, investors have an opportunity to invest at the bottom of a cycle that’s poised to increases through 2020. Blue Sky Uranium is targeting Argentina’s market as an untapped opportunity to become a strategic supplier or uranium to an existing domestic nuclear market with access to near-surface uranium at excellent grades.
The company is led by the Grosso Group Management team, which has over 23 years of experience conducting mineral exploration in Argentina. With three world-class precious metal discoveries in the country, the company has built a vast network of industry and government contacts that provides it with a strategic advantage relative to the competition.