Blue Sky Uranium worthy of active consideration, says Globe Small Cap Research

Blue Sky Uranium Corp received a positive report from Globe Small Cap Research LLC, citing the growth in the global nuclear industry and business relations with the Argentinian government as catalysts to continued success for the uranium developer.

Another tailwind for the company is the rising price of uranium. Spot U3O8 values have skyrocketed to a 12-year high this year – US$50.25 per pound) – and are anticipated to continue this trajectory as more countries build out their nuclear fleets and small modular reactors become more prevalent.

“[Blue Sky] operates in a hot space with stellar growth opportunities and deserves consideration by risk adverse micro and small cap-oriented investors,” the report stated.

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The analysts went on to note that the industrialized world is unlikely to meet the challenge of climate change without increasing nuclear power use.

“We feel many others are now agreeing with us,” the analysts wrote. “This realization puts the uranium market into further play over the next few years, creating opportunities for companies such as Blue Sky.”

Nuclear is the second largest source of low-carbon power in the world. There are currently 443 operational nuclear reactors in 33 countries around the globe that generate 10% of the world’s electricity.

“According to the World Nuclear Organization, as of August 2021, about 445 nuclear power reactors are currently operating in 32 countries plus Taiwan,” analysts said.

The report continued: “Approximately 50 plants are under active construction, with 300 additional being proposed or in various stages of organization. Most of this activity is in the Asia region; China alone has gone from just three nuclear power stations a few decades ago to now having over 45 now in operation.”

Once operational these new reactors will further strain an already tight market. 

Growth in Argentina  

Blue Sky’s flagship property, Amarillo Grande, located in a promising district of Argentina, not only offers cost-effective uranium deposits, but it also houses vanadium, a critical metal in steel production and the energy storage sectors.

This deposit diversity was also referenced by the analysts.

“While this report focuses primarily on uranium, we must point out the properties controlled by Blue Sky also hold significant deposits of vanadium, which is increasingly being demanded by the steel industry as a strengthener,” the overview noted.

“While Argentine steel production was down meaningfully during 2020, domestic production had grown substantially over the past ten years. It is reported that the Argentine steel industry imports 100% of its vanadium, so it also seems reasonable to assume that Blue Sky would also have a substantial opportunity relative to vanadium within Argentina.”

With its dual potential, Blue Sky is currently advancing for development three geographic areas: Ivana West, Ivana Central, and Ivana North. These targets have exhibited, “strong evidence there are significant uranium and vanadium deposits that are recoverable at relatively low costs,” analysts said.

In 2019, Blue Sky completed a preliminary economic assessment (PEA) for the Ivana site. Based on a price of US$50 per pound for uranium and US$15 per pound for vanadium, the PEA outlines an after-tax internal rate of return (IRR) on the project of 29% and a net present value (NPV) of US$135 million (using an 8% discount rate), yielding an after-tax payback period of a short 2.4 years.

Now with uranium sitting above US$50 per pound, the project has become more economically viable.

As demand for uranium for the nuclear fuel cycle rises, Blue Sky’s low-cost production model and deposit size positions it to capitalize on the sector’s growth both in Argentina and across the globe.

“The lack of domestic uranium supply presents an opportunity for local, low-cost producers to supply the growing Argentine nuclear market,” wrote the analyst.

“Blue Sky’s Amarillo Grande Project in Rio Negro appears to be the first low-cost domestic uranium supplier in a position to take advantage of this opportunity.”

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Story by ProactiveInvestors