Uranium-Vanadium Project Fully Funded Through Feasibility Study and Potential Development

With the uranium market in a growing global supply deficit and the price per pound having more than tripled since 2016 to US$67, the demand for new resources is hitting a generational high. Not since the commodity supercycle of 1996 to 2011, driven by rapidly industrializing markets such as Brazil, India, Russia and China, has uranium experienced such pronounced momentum.

This time around, demand for clean energy from governments and end users around the world has continued to rise, highlighting nuclear energy’s lack of emissions, high density and competitive costs as key pillars to global decarbonization goals. According to the International Energy Agency, this has resulted in 63 nuclear reactors currently under construction housing over 70 gigawatts of capacity, a level not seen since 1990.

Despite dozens of projects underway propelled by the push away from fossil fuels, Visual Capitalist estimates a 164-million-pound gap between production and demand for uranium oxide (U3O8) by 2040, providing investors with an incentive to build positions in high-conviction resource developers intent on shoring up supply.

Blue Sky Uranium’s blue-sky potential

Blue Sky Uranium (TSXV:BSK), with a market capitalization of C$16.75 million, is well positioned to capitalize on long-term uranium demand growth with its over 480,000-hectare, six-project portfolio highlighted by its flagship Amarillo Grande project in Argentina, which is advancing its flagship uranium-vanadium deposit towards advanced engineering studies and potential production with its Argentine option/joint venture partner.

From a bird’s eye view, Argentina is an ideal market for Blue Sky. The country has three nuclear power plants in operation, and one under construction, consuming approximately 500,000 pounds of U3O8 per year, plus two in the planning phase and two more under proposal, with no national production.

The Amarillo Grande project

Blue Sky’s Amarillo Grande project in southern Argentina, located in the Rio Negro province within the Neuquén basin and totaling approximately 300,000 hectares of mineral rights, features three main properties – Ivana, Anit and Santa Barbara – which house numerous uranium and vanadium discoveries made by the company along a 145 kilometre (km) trend delineated over the span of two decades.

The mineralization found to date is located at or near surface – generally less than 25 metres – making it relatively low-cost to explore. It is also hosted in loosely consolidated sediments meaning that no drilling, blasting or coarse crushing would be required for future mine development.

Uranium mineralization is of the surficial and sandstone varieties. Comparable styles of sandstone deposits produce a significant amount of the world’s uranium, including over 40% in 2022. These deposits act as important geologic models that help guide Blue Sky’s ongoing exploration and potential future development.

The Ivana property

Amarillo Grande’s Ivana property, only 25 km north of Valcheta City, where Blue Sky maintains an exploration camp and office, contains an indicated resource of 17 million pounds of U3O8 and 8.1 million pounds of vanadium pentoxide (V2O5), plus an inferred resource of 3.8 million pounds U3O8 and 2.4 million pounds V2O5, making it the largest uranium deposit in all of Argentina.

Ivana’s 2024 preliminary economic assessment details an after-tax net present value (discounted at 8 per cent) of US$227.7 million at a base-case of US$75 per pound U3O8, yielding production of 16.5 million pounds U3O8 over an 11-year mine life. At average all-in sustaining costs net of credits of only US$24.95 per pound U3O8, entailing a payback period of only 1.9 years, Ivana is positioned for potential meaningful unencumbered cash flow.

Ivana’s 2025 exploration program

To date, Blue Sky has identified Ivana’s mineralization within a 5 km high-grade corridor that reaches up to 500 metres wide and 23 metres in thickness, with clear signs of exploration upside to be tested in 2025.

The 2025 exploration plan includes over 7,000 metres of drilling, including infill and exploration holes. Drilling is slated to begin in Q2 and last for approximately 6 months.

Ivana’s joint venture with COAM

Ivana’s development path through feasibility and into potential production is fully funded by joint venture partner Abatare Spain, S.L.U. (COAM), which must spend US$35 million within the next 36 months to earn a 49.9 per cent interest in the property.

COAM can earn an up to 80 per cent interest in Ivana by completing a feasibility study and spending up to US$160 million to advance the project into commercial production, with Blue Sky incurring zero costs along the way.

Luis Leandro Rivera will serve as General Manager of the joint venture operating company, applying his more than 30 years of mining experience from exploration to operations, including as Senior Vice President of Latin America at AngloGold Ashanti (NYSE:AU), where he oversaw operations, sustainability and finance at four mines in two countries. Before that, he was General Manager of AGA’s Cerro Vanguardia mine in Argentina.

Under Rivera’s guidance, the joint venture is vetting engineering groups for prefeasibility/feasibility work, with contracts expected to be established over the coming months as the team prepares for upcoming drilling.

Blue Sky management believes it has a strong chance of becoming Argentina’s first uranium producer, while continuing to deliver shareholder value from exploring its vast land holdings not included in the joint venture.

Blue Sky’s untapped portfolio is overseen by a leadership team with strong geology and exploration backgrounds, major miner relationships and Argentinian mining experience that dates back to the opening of foreign investment in 1993. The company is also a member of the Grosso Group, whose discovery-rich history (slide 5) has earned it a leadership position in South American mineral exploration, making it an invaluable resource propelling Blue Sky’s development journey.

In more than capable hands, Blue Sky’s advanced uranium project, fortified by a rich set of exploration targets, makes a strong case for long-term value creation.

An energy transition story with upside potential

Uranium’s emissions-free profile is in line with increasingly critical net-zero goals, making it one of the solutions emerging for a green energy transition.

According to the Nuclear Energy Agency, uranium demand could rise by as much as 140 per cent by 2050, surpassing 142,000 tons per year, as the threat of climate change grows in urgency and more governments realize that the element’s high density makes national energy security more efficient to achieve.

It’s against this backdrop that Blue Sky will undertake 2025 drilling at Ivana, providing multiple potential catalysts for value creation.

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