Host Cyndi Edwards began by asking general questions about the uranium market. She asked Gerardo Del Real why investors should believe a true bull market is imminent, when experts have been predicting one for a handful of years, which has not materialized.
Del Real, the president of Resource Stock Digest and cofounder of Digest Publishing, responded that a confluence of factors is happening that should lead to higher uranium prices. They include political will, more favorable economics supporting production and a lack of existing quality deposits. Countries around the world, he said, are looking to develop a domestic uranium supply given the political risk involved in sourcing it from other external jurisdictions.
Niko Cacos, president and CEO of Blue Sky Uranium Corp. (BSK:TSX.V; BKUCF:OTCQB), noted that a shift is occurring globally in which countries are becoming more willing to embrace nuclear as a safe, reliable energy source. Driving this, in large part, is climate change, and jurisdictions' resulting focus on and commitment to adopting clean energy. The previous hesitation in adopting nuclear energy led to today's paucity of uranium producers.
Del Real agreed. "Nuclear absolutely will play a critical factor moving forward in the infrastructure scale-out around the world because it is the safest, cleanest, most reliable energy," he said.
He pointed out that while investing in junior uranium companies is high risk, the rewards can be great. He cited Mega Uranium as an example, the market cap of which soared to $940 million from $15 million in 2005.
He also noted that while uranium equities have surged recently, it is not too late for investors to get in the game. Del Real predicted that the uranium spot price will increase rapidly, up to about $200 per pound, but then drop to and remain at about $95–100 for some time.
The market forerunners are the junior uranium companies, he added, one of which is Blue Sky Uranium, which rose 180% in the past three months while the spot price stayed the same.
As for that company, Cacos explained that whereas 60% of the world's uranium production comes from Kazakhstan and a good portion from Russia, Blue Sky's project, Amarillo Grande, is located in southern Argentina.
"It's not just a new discovery of a new deposit; it's a discovery of an entire new district, not unlike the districts in Kazakhstan, where deposits can run up to 200 million pounds (200 Mlb)," Cacos said. "This district that we have has the potential to rank amongst the largest and lowest cost in the world."
Blue Sky began exploring the property in 2006, discovered the district and then, in 2017, began to concentrate on the La Ivana deposit, where it has since discovered 23 Mlb of uranium and vanadium at or near surface, said Guillermo Pensado, Blue Sky's vice president of exploration and development.
He explained that La Ivana is similar to Laguna Salada, also in Argentina, in that both are surficial deposits, meaning they are at or near surface. However, unlike Laguna, La Ivana also has a sandstone component. Sandstone deposits, those from which most uranium in Kazakhstan is produced, tend to be bigger and higher grade than surficial ones.
La Ivana is important to Blue Sky for several reasons, Pensado said. It is the first deposit discovered in Blue Sky's district. Because it is mostly at or near surface and, thus, will not require blasting or other expensive metal extraction processes, operating costs are projected to be low and, thus, the project should be economic. Also, La Ivana afforded Blue Sky a better geological understanding of the mineralized system there.
"Now, we are controlling an entire district with one potential economic deposit that gives us the key to apply to the rest of the district where there are many other targets to go and explore," Pensado added.
As for operating costs, Cacos explained that Blue Sky keeps its overhead expenses low and incentivizes its team through ownership of company shares. Insiders own about 60–65% of the company stock.
"[Amarillo Grande" is something that potentially could make money today," Cacos said. "If the uranium price goes up as projected, we'll be in a very nice position."
Blue Sky generated $5.5 million in a recent upsized financing, which should carry the company through to about April. In the meantime and with the funds, Blue Sky plans to complete its in-progress, 4,500 meter drill program, hoping to add more pounds, and conduct some preliminary engineering studies.
After April, plans call for doing more advanced engineering and prefeasibility studies, for which Blue Sky will again need to raise funds. All along, the company will continue exploring.
With Amarillo Grande, Blue Sky aims to grow and advance the project, ultimately becoming the first source of domestic uranium for Argentina and then look to exporting its product. However, because the company is solely an explorer, it will need to decide how best to move the project toward production. Does the company take on a partner? Does it sell to a partner? Does it maintain a carried interest?
"We'll see what event is going to maximize returns for shareholders," Cacos said, "and that's my primary, primary thought all the time."
Headquartered in Vancouver, British Columbia, the uranium exploration company is a member of Grosso Group Management Ltd., a management firm specializing in resource exploration in Argentina. Joseph Grosso, head of the Grosso Group and chairman of Bly Sky's board, is an award-winning pioneer of Argentina's exploration and mining industry, of which he is a 30-plus-year veteran. Having made four major discoveries in Argentina, he and his team bring vast experience and numerous contacts to the table.
Del Real noted that in assessing whether or not a company is a good investment, it must meet the criterium of having a top tier management team with a proven record of executing the plan during bear markets. Blue Sky's team fits the bill, he said.
Del Real offered new uranium sector speculators three pieces of advice. Don't be afraid to take profits along the way, he said. Get your advice from multiple sources. Don't get discouraged when pullbacks occur after run-ups, as they are typical. Instead, keep an eye on why you invested in a company in the first place.
Pensado wrapped up the broadcast with this final thought: "Amarillo Grande really is an entire district whose story is just starting."
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures:
1. The following companies discussed in this broadcast have paid a fee to participate: Blue Sky Uranium.
2. This broadcast does not constitute investment advice. Each viewer is encouraged to consult with his or her individual financial professional and any action a viewer takes as a result of information presented here is his or her own responsibility. This broadcast is not a solicitation for investment. StreetSmart Live does not render general or specific investment advice and the information should not be considered a recommendation to buy or sell any security. StreetSmart Live does not endorse or recommend the business, products, services or securities of any company mentioned here.
3. Statements and opinions expressed are the opinions of the presenters and not of StreetSmart Live or its officers. The presenters are wholly responsible for the validity of the statements. The presenter was not paid by StreetSmart Live for this broadcast. StreetSmart Live requires presenters to disclose any shareholdings in, or economic relationships with, companies that they write about. StreetSmart Live relies upon the authors to accurately provide this information and StreetSmart Live has no means of verifying its accuracy.
4. From time to time, StreetSmart Live and its directors, officers, employees or members of their families, as well as persons interviewed for broadcasts and interviews on the site, may have a long or short position in securities mentioned. As of the date of this broadcast, officers and/or employees of StreetSmart Live (including members of their household) own securities of the following companies discussed in this broadcast: Blue Sky Uranium. Blue Sky Uranium currently does not have a consulting relationship with StreetSmart (description available at https://www.streetwisereports.com/disclaimer/html#consulting). Blue Sky Uranium is a billboard sponsor of Streetwise Reports, an affiliate of StreetSmart Live (description available at https://www.streetwisereports.com/disclaimer/).
5. Niko Cacos is president and CEO of Blue Sky Uranium and Guillermo Pensado is vice president of exploration and development; both own securities of the company.
6. Disclosures for Gerardo del Real, president of Resource Stock Digest:
I, or members of my immediate household or family, own securities of the following companies discussed in the broadcast: None
I personally am, or members of my immediate household or family are, paid by the following companies discussed in the broadcast: None
My company has a financial relationship with the following companies discussed in the broadcast: Blue Sky Uranium is a sponsor.
7. Disclosures for Cyndi Edwards:
I, or members of my immediate household or family, own securities of the following companies discussed in the broadcast: None
I personally am, or members of my immediate household or family are, paid by the following companies discussed in the broadcast: None
My company has a financial relationship with the following companies discussed in the broadcast: None
