Power Play
The announced shut-down of the world’s largest uranium mine has sent the prices of uranium companies rallying.
But with drills turning now and a unique situation developing around its project, Blue Sky Uranium (BSK.V; BKUCF.OB) may be the best bet around.
Has the uranium sector finally turned around?
A few days ago, Cameco shocked the world by announcing a 10-month shutdown of its McArthur River mine.
That news hit the uranium world like a lightning bolt. McArthur River is the world’s largest uranium mine, accounting for about 11% of global production.
So it was no surprise to see the prices of uranium companies spike higher in recent days...and investors sent scurrying for the best bet in this tiny sector known for spinning out extraordinary profits during upturns. As you’re about to see, one of the more exciting opportunities is in Blue Sky Uranium (BSK.V; BKUCF.OB). And that’s not because of the recent mine closure — but rather the fact that drills are now turning on its uranium exploration project...
...And because of a unique situation that is developing in Argentina.
But before we examine these short-term opportunities, let’s look at the long-term investment case for this exciting uranium explorer.
Climate Change Is Here to Stay
Regardless of one’s beliefs about climate change, that it has become a major public policy issue is a fact beyond dispute.
The specter of a man-made crisis is what’s driving the electric car boom, and the demand for lithium-ion batteries that has come with it. One need only look to the lithium market of the past couple of years to see what a hot trend can do to a commodity’s trading price.
Moreover, governments the world over are looking for clean-burning sources of electric power to replace coal. The problem is, as the work-horse source for baseload power, coal is not easily replaced.
Wind and solar are undoubtedly clean, but they’re also intermittent sources of power. Calm days and, of course, nighttime, don’t help keep the juice flowing.
Smart-grid technology offers at least a partial solution to that issue, but the fact remains that the world’s demand for baseload power will continue to outstrip the ability of wind and solar sources to provide it.
Where Will the Baseload Power Come From?
The planet’s insatiable demand for energy, combined with governments’ desire to limit carbon dioxide emissions, requires a solution that’s both clean-burning and reliable.
In other words, it’s an environment that plays right into the nuclear power industry’s hands. If you look up even briefly from the current moribund state of the uranium market, you see an explosive price environment driven by the demand for nuclear power.
Over 200 nuclear reactors are either under construction or planned globally. Another 330 reactors have been proposed and could come online as early at 2030. Given this pace of development, it’s not surprising that experts are predicting a significant deficit in uranium oxide (U3O8) supplies by 2020.
A recent survey of industry analysts on long-term U3O8 prices returned an average prediction of over $60 pound, or more than triple current $20/pound trading levels.
The Difference For Blue Sky: A Special Situation In Argentina
Fortunately, you don’t need to wait years for a big price turnaround in uranium to make money in the sector.
That’s because of a remarkable situation now developing in Argentina...
You see, Argentina’s grid is highly dependent on fossil fuels and hydroelectric power. And while hydro is clean, it only provides 30% of the country’s energy needs — which explains why Argentina has three nuclear power plants in operation.
Moreover, it has one plant under construction, two in the planning phase and another two under proposal.
With its nuclear power capacity set to more than double in short order, the government is casting about for potential domestic sources of uranium to supply these new reactors. This desire for a secure (and home-grown) supply of uranium plays right into Blue Sky Uranium’s game plan.
The Right Project
Blue Sky’s flagship project, Amarillo Grande, spans 269,000 hectares in Argentina’s Rio Negro province. Uranium mineralization at Amarillo Grande has been outlined along a 140-kilometer-long trend.
Importantly, this mineralization is near-surface, easily leachable and potential upgradeable at a low cost.
Combined with the potential to host 15 million pounds or more of U3O8, these features make Amarillo Grande a perfect candidate to become a low-cost, short-lead time source of uranium for Argentina’s nuclear power industry.
A Specialty Metal Sweetener
Adding to Amarillo Grande’s allure is the project’s vanadium content.
A key component in structural steel, vanadium has seen its spot price rocket nearly triple from $4 to almost $12 in recent months. The price increase is, in part, related to a recent mandate by the Chinese government to increase the vanadium content in structural steel.
With vanadium being the primary metal component within some targets at Amarillo Grande, the specialty metal’s ability to improve the economics of any uranium mine built here is significant.
The Right People In Charge
Greasing the wheels of the project’s development as a uranium-vanadium mine is the fact that Blue Sky is led by the Grosso Group, a major player in the Argentinian mining sector for well over two decades.
The Grosso Group has made no less than three world-class precious metals discoveries in Argentina, allowing it to accumulate an unmatched Rolodex of industry and government contacts.
With this team driving Blue Sky forward, the company has an excellent chance to leverage its position as a local source of uranium and a key supplier of vanadium.
Add in the economic boost provided by Amarillo Grande’s vanadium mineralization, and you have a project and a company in a perfect position to deliver value for shareholders.
But here’s why this opportunity is urgent: Drills are turning at Amarillo Grande as we speak and are, in part, targeting high-grade mineralization that could dramatically transform the economics of the project.
With global uranium supplies suddenly much tighter thanks to the closure of the world’s largest uranium mine, it seems that the time to invest in top-quality uranium companies is now.
And with drills turning and Argentina looking for home-grown uranium, Blue Sky looks to be one of the best near-term ways to bet on this high-powered sector.
CLICK HERE To Learn More About Blue Sky Uranium And the Amarillo Grande Project.
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