Blue Sky Uranium (TSX-V: BSK) CEO Niko Cacos on the Low-Cost, Positive PEA for the Ivana Uranium-Vanadium Deposit at the Amarillo Grande Project in Argentina
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Blue Sky Uranium (TSX-V: BSK)(OTC: BKUCF), Mr. Niko Cacos. Niko, how are you?
Niko Cacos: I'm doing very well, Gerardo. A pleasure to be back on your program.
Gerardo Del Real: We chatted a few weeks back, we talked about near term catalysts. At the time we talked about an upcoming PEA for the Ivana Uranium-Vanadium Deposit, the project is called the Amarillo Grande Project in Argentina. That was just announced today, congratulations are definitely in order.
Niko Cacos: Thank you very much.
Gerardo Del Real: Let's go over some of these numbers. After tax NPV at 8%, $135.2 million. After tax IRR, 29.3%. The after tax payback period, 2.4 years. Can you share some light on some of the numbers? Because a quick scan tells me two things. One, it's low cost. Two, there's a heck of a lot of runway between your current market cap – and I'll let you go over that a little bit as well – and what the project is valued at. And the third thing that sticks out to me is the vast exploration potential that exists.
I think it's really smart of you guys, guys and gals I should say, to put some preliminary numbers, initial numbers, maiden numbers. But let's talk about all these things. I'm excited for the exploration upside, because this is a heck of a start.
Niko Cacos: It is one heck of a start, Gerardo. We're very excited to have this PEA out. I think the two most key points in my mind that the PEA highlights, even at this early stage, is one, what's the initial capital we need? It's $128 million dollars. That includes almost a $29 million dollar contingency, so potentially it's under $100 million dollars. And you look at other similar mines around the world, they're ranking in the billions of dollars of capex. So number one, it's significantly low cost to put into production.
The second thing to keep in mind is, as we're producing is this thing going to be profitable? Well, if you look at the average contract price for uranium, it is between $50 and $60 and we can produce it for $18 according to this PEA. There's a lot of margin there, so yes. The two takeaways of this is that it's cheap to put into production and it continues to make money, even in this environment.
The key to remember is this is just the beginning. This is at the Ivana deposit only which is just under 23 million pounds of uranium, and that's at the very southern end of the Amarillo Grande district. Now this district goes on for 145 kilometers in length and 50 kilometers wide. It has the potential to hold double, triple, up to 100 million pounds of uranium on here, because that's how big these deposits tend to become around the world.
As this thing continues to grow, because that's where our focus is now, you're going to see these costs are not going to go up with it. So the profitability and the after tax NPV, net present value, is only going to increase. So this is a very, very exciting opportunity.
The other thing if I can talk about is the environment in which the uranium market is right now. We've seen in the last year a 50% rise in the price of uranium. As uranium now begins to take off, like a lot of the experts are predicting, Blue Sky’s positioned to give spectacular results back to shareholders.
Gerardo Del Real: Well said. I think another point that is worth mentioning is the mine life. The initial mine life just based on this is 13 years. So again, a heck of a start. What do the recoveries look like both in the uranium and vanadium side there, Niko?
Niko Cacos: Well, the mine life is very key because 13 years is not a short mine life. You look at we're processing 6,400 tonnes of rocks per day. That's not a small operation. So this is a very, very big operation and so it's quite significant. And the recoveries? We're recovering 85% of the uranium and a little over half of the amount of vanadium, which is better than what the average is out there for these types of deposit. So we have a very, very good team that's worked on metallurgy and the rest of the PEA components very diligently. This is a very reliable study.
Gerardo Del Real: Strip ratio, what's that come in at?
Niko Cacos: It's just 1.1 to 1. And the reason for that is the deposit is on surface. It starts from surface, goes down to about 30 meters. It doesn't get better than that, and it's not consolidated so there's no blasting or hard rock breaking. You just use a digger and you scoop up the surface, lay it on a leach pad, apply some alkaline leach like baking soda and out it comes. It couldn't be easier, it couldn't be cheaper. That's why the economics look so great.
Gerardo Del Real: You mentioned Niko, that the focus now is to grow the deposit and obviously to test the discovery potential of this district-scale play. You're pretty well positioned, though. The years of construction, it's just two. So if we get the kind of raging bull uranium market that a lot of us are calling for, you can start digging and within a couple of years actually start benefiting from that.
Niko Cacos: Yep, that's right. In a couple of years, between two and three years, I'd like to see this project in production. We have enough to be economic now but we know from the previous work we've done throughout the entire district – not just surface work, but drilling work – we know that the entire region is mineralized. We're going to focus over the next six months now with a very aggressive drill program and I’d like to be able come back and tell you, "Gerardo, look at how much we've grown this thing." Then get into our feasibility study work towards the end of this year.
Gerardo Del Real: Wow. You delivered on the PEA when we talked a few weeks back so I'm looking forward to having you back on and hoping you're able to deliver on that front as well.
Niko Cacos: Very exciting, thank you.
Gerardo Del Real: Niko, well you be at PDAC?
Niko Cacos: Yes, we definitely will be at PDAC and we have a booth there. If anybody wishes to come by and meet the team and then to talk about the big yellow, Amarillo Grande, by all means welcome to stop by.
Gerardo Del Real: Fantastic. Thanks again.
Niko Cacos: Thank you.