Blue Sky Uranium advances the Amarillo Grande uranium-vanadium project in Argentina

Blue Sky Uranium (TSXV: BSK; US-OTC: BKUCF) is exploring for uranium and vanadium deposits in the Patagonia region of southern Argentina, where it holds 400,000 hectares of prospective tenements.

The Canadian junior’s flagship project is its 100%-owned Amarillo Grande project in Rio Negro province, about 25 km north of Valcheta City.

Nikolaos Cacos, the junior explorer’s president and CEO, describes the project as one of Argentina’s most advanced uranium-vanadium projects and says the “district-scale project has the potential to rank amongst the largest uranium deposits in the world and have the lowest operating costs.”

“In addition, the mineralisation will be mined using a simple two-stage process employing low environmentally-impacting technology and reagents. The project also lies within a semi-desert region that is very sparsely populated, so there will no need to displace anybody.”

Mineralisation at Amarillo Grande has been defined in three zones— Ivana, Anit, and Santa Barbara — within a 145-km long and 50-km wide trend and occurs at or near-surface in loosely consolidated sandstones and conglomerates.

A 2019 preliminary economic assessment of the Ivana deposit envisaged an open-pit mine producing 1.35 million lb. of triuranium octoxide (U3O8) a year over thirteen years for total life-of-mine output of 17.5 million lb. of U3O8.

All-in sustaining costs were estimated to average US$18.27 per lb. U3O8 over the mine life. This cost profile would position Amarillo Grande “in the lowest quartile of operating mines globally,” Cacos said. 

The study pegged initial capital costs at US$128.05 million, with US$35.46 million budgeted for sustaining capital over the mine life. Based on prices of US$50 per lb. U3O8 and US$15 per lb.  vanadium pentoxide (V2O5), the study outlined an after-tax net present value (at an 8% discount rate) of US$135.2 million, and an after-tax internal rate of return of 29.3%. Initial capex could be paid back in just under two and a half years.

The early-stage study was based on an updated mineral resource estimate for Ivana of 28 million inferred tonnes grading 0.037% U3O8 and 0.019% V2O5 for 22.7 million lb. contained U3O8 and 11.5 million lb. of V2O5. The Ivana deposit remains open and Cacos believes there is “significant discovery potential for new uranium and vanadium resources throughout the property … so we expect to continue to improve its value proposition.”

Amarillo Grande also benefits from its location in a significant oil and gas producing region, which has infrastructure and a large labour pool. There is a network of roads providing year-round access to the project. In addition, National Road 23, which runs through Valcheta City, connects the project site to a deep ocean port at San Antonio Oeste, about 120 km to the east. A railway also runs parallel to National Road 23, and two high-power electricity lines cut across the property from east to west.

According to Cacos, Argentina has three nuclear power plants and is the largest generator of electricity from nuclear energy in South America. Another power plant is under construction, another one planned, and two have been proposed. About 200 km west of the project, a nuclear research center called INVAP is piloting a uranium enrichment plant.

But Argentina lacks a domestic supply of uranium, explained Cacos. “The country is looking to develop a secure supply of uranium, which could make Amarillo Grande an excellent candidate to be the first near-term uranium producer in Argentina, and could position Argentina as a strategic exporter of uranium to the international nuclear energy sector. It’s an exceptional environment in which to be developing a uranium project.”

Uranium was first discovered at Amarillo Grande in 2007. Blue Sky first discovered the Anit and Santa Barbara zones using an airborne radiometric survey, and a second survey in 2010 found Ivana.

Geophysicists advancing a borehole radiometric survey at the Ivana deposit. Credit: Blue Sky Uranium.

Since 2016, the company has completed pit sampling, auger sampling, geophysics, and over 9,000 metres of reverse circulation drilling. It produced its first resource estimate for the Ivana deposit in 2018. The work also delineated multiple new targets for additional resources, including Ivana West, Central, North, and the most recently identified Cuatro and Ivana East target areas.

Blue Sky completed 40 drill holes (1,591 metres) of a planned 4,500-metre 2021 drill program in June. The drilling focused on testing the Ivana North target area, where previous surface sampling had returned 1.1 metres grading 1.40% U3O8, including 0.5 metres of 2.74% U3O8.

“We are expecting to receive assays from the drilling in the next couple of weeks,” said Cacos, adding that the drill results “will allow us to evaluate the Ivana North target, with the aim of better defining the mineralisation as well as identifying further targets for drill testing.”

The company plans to complete 1,500 metres of drilling at the Ivana Central target, where the first six drill holes (286 metres) were drilled in 2020.

The goal at this phase of the work program “is to complete fences of drill holes over the target areas to provide information at depth to assist in vectoring towards uranium mineralisation lying deeper below the surface,” said Cacos.

Both Ivana North and Ivana Central are interpreted as being located along the same regional trend as the Ivana deposit. Each target covers an area of about four km by seven km.

Ongoing exploration and engineering studies are expected to expand and upgrade mineral resources and further optimise and enhance the economics of Ivana, Cacos said. The company expects to update the project’s resource estimate for Ivana in the second quarter of 2022.

Blue Sky has about $3 million in the treasury, which Cacos said will be more than enough to fund the company’s work program into at least the middle half of next year.

The company’s other assets in Argentina are Sierra Colonia, Tierras Coloradas, and Cerro Parva. The early stage projects are located in Chubut province’s Cerro Solo district.

This article was first published by The Northern Miner. Read the original story here.