Blue Sky Uranium Targets Argentina’s Growing Nuclear Market
April 19, 2017 11:51 am ET
Argentina has turned a corner with the election of Mauricio Macri in late-2015, which could pave the way to economic success over the coming years. With a pro-business administration at the helm, the country’s evolving economy has opened the door to many different types of companies. The nuclear sector in particular has become a hot topic given the government’s efforts to reduce energy prices and greenhouse gas emissions.
In this article, we will take a look at Blue Sky Uranium Corp. (TSX-V: BSK) (OTC: BKUCF) (FSE: MAL2) and why the decision to target Argentina makes sense.
Watch the interview with Blue Sky Uranium CEO Niko Cacos. Mr. Cacos talks about the resource potential, the unique market conditions in Argentina, and the company management's history of resource development.
Turning a Corner
Argentina is the eighth largest country in the world and the second largest economy in South America. Despite rivaling the United States in the early 20th century, the country’s troubled politics have plagued its economy with severe recessions, income maldistribution, poverty increases, and periods of significant inflation. Most recently, Peronist (populist) policies contributed to rampant inflation and debt leading up to 2015 under President Kirchner.
Mauricio Macri, a billionaire and former official of Buenos Aires, became the first non-radical or Peronist president since 1916. He began his term with many problems including depleted foreign reserves, inflation of over 30%, and little access to the international bond markets thanks to a 2001 default on its debt. Since his election, Macri has taken several difficult steps to address these issues and put the country back on the right course.
The country’s upcoming mid-term elections, scheduled for October, will be closely watched by the world. With the tough actions needed to reverse the economy’s decline, Macri’s policies have been unpopular among labor movements and other groups. Many experts believe that the ruling coalition will secure additional seats in the legislature despite the rising opposition and help the President’s business-focused platform implement reforms moving forward.
Argentina has a long history of science and technology innovations. In 1957, it became the first country in Latin America to design and build a research reactor with homegrown technology. The technology was incorporated into the region’s first commercial nuclear power plant - Atucha I - in 1974 and later into Embalse in 1983 and Atucha II in 2011. These three nuclear power plants generate about 4% of the country’s total electrical demand at 1,627 MWe.
Argentina’s uranium resources totaled about 18,500 tU, according to the 2014 Red Book, but others estimate the resources as high as 55,000 tU in several different geographical environments. Uranium exploration was conducted in the 1950s, but the country’s last mine closed in 1997 for economic reasons. Currently, the country has no domestic uranium production capacity, which has made it reliant on importation of the fuel source.
Currently, the country has three commercial nuclear power plants in operation, six research reactors, four particle accelerators, three atomic centres, one heavy water plant, and one uranium purification plant with an estimated usage of about 500,000 pounds of uranium in 2016. In addition, the country has one nuclear power plant under construction, two in planning stages, and two under proposal, which would increase nuclear power from 4% to 10% of total power.
Blue Sky Uranium is uniquely positioned to capitalize on Argentina’s pro-business and pro-nuclear stance by developing a domestic source of uranium. With a built-in price advantage and secure supply, the country would become a “guaranteed” first customer and eventually become an exporter or uranium to a market that’s expected to be undersupplied by 2020. These dynamics make it worth watching for investors in the space.
The company’s leadership has over 23 years of experience in mineral exploration in Argentina with three world-class precious metal discoveries. Over the course of their careers, the team has built a vast network of industry and government contacts that give it a distinct advantage in the acquisition, exploration, and development of mineral projects. These credentials may help reassure investors that the right group is supporting the development.
The company owns exclusive rights to 100% of ~250,000 hectares of land in central Rio Negro - a district that’s very friendly to mining operations. Within that area, the company discovered a 140 kilometer stretch of uranium mineralization that could represent a major resource that would be both low-cost and have a short development timeline. The team is now drilling to refine the geological model ahead of completing a NI-43-101 resource.
Blue Sky Uranium Corp. (TSX-V: BSK) (OTC: BKUCF) (FSE: MAL2) represents a compelling investment opportunity given its focus on Argentina’s market. With a guaranteed first customer and political support for mining, the company is rapidly progressing towards a completing an NI-43101 resource that can pave the way to commercialization. Investors may want to keep an eye on the stock given the many near-term catalysts ahead.