Blue Sky Uranium proposes low-cost operation at Ivana with new PEA

Blue Sky Uranium (TSXV: BSK; US-OTC: BKUCF) has unveiled a preliminary economic assessment (PEA) for its Ivana uranium-vanadium deposit at its 100% owned Amarillo Grande project in Rio Negro, Argentina.

“For the last three months we’ve been busy finalizing our PEA,” Blue Sky president and CEO Niko Cacos says in an interview with The Northern Miner. “It’s a very positive PEA. It shows that the Ivana deposit is economic in today’s environment.”

According to the study, the project would produce 1.35 million lb. uranium oxide per year over a 13 year mine life at US$18.27 per lb. uranium oxide all-in sustaining costs (AISC). The project would require US$128.05 million in pre-production capital and US$35.46 million in life of mine sustaining capital. It has a US$135.2 million after-tax net present value (NPV) at an 8% discount rate and a 29.3% after-tax internal rate of return (IRR) at US$50 per lb. uranium oxide and US$15 per lb. vanadium oxide. The project would achieve after-tax payback in 2.4 years.

“At $18 AISC, even if we sold it at spot we’d be making money,” Cacos says. “So if the uranium price starts to move up, this is going to be very profitable.”

At US$60 per lb. uranium oxide, the project’s after-tax NPV improves to US$202.3 million at an 8% discount rate; the after tax IRR jumps to 37.3%.

“The goal was, since the beginning, trying to be in the lower quartile of operating costs and we achieve it very well,” Blue Sky vice president of exploration and development Guillermo Pensado says. “The metallurgical process looks very simple and common as well.”

The PEA proposes an open pit that extends to a maximum depth of 30 metres below surface. It would be 3 km long, with widths ranging from 1 km to 400 metres. The company would mine 13,000 tonnes per day with two excavators, a front-end loader and six 31-tonne articulated trucks; because the materials are contained in unconsolidated gravels and sand, the company does not need drill or blast operations. The company can recover 84.6% uranium from the project and 52.5% vanadium.

“You just use an excavator, and then you do a scrubbing of the pebbles to remove the large un-mineralized ones,” Cacos says. “And then you put it on the leach pad. You don’t get a simpler process than that.”

Mineralization occurs at Ivana within 25 metres of surface in two stacked zones. It is the southernmost of three target areas at Amarillo Grande.

“What’s exciting now is the upside,” Cacos says. “The potential expansion from there in this 145 km strike length zone which we know is mineralized. It’s got potential to be 100 million lb. plus.”

Pensado adds, “Our goal was: let’s try and show in this sector that we have something that could be economic. Now that we understand the geological model, we understand how to explore the other sectors.”

He goes on to say that with Blue Sky’s greater understanding of the area’s geology, it needs to retrace its steps and re-examine previously overlooked areas of the property.

The study uses an updated resource estimate for the project that Blue Sky tabled in fall 2018. It includes 61 reverse circulation holes totaling 1,043 metres the company drilled at the project in September 2018. In total, the company has drilled 7,600 metres at Ivana to an average depth of 15 metres below surface.

“You say, well, 7,600 metres—that doesn’t look like much drilling,” Pensado says, “but in fact it’s 488 holes, because they are very shallow. And due to the spacing that we have, most of them could be converted into the indicated category.”

The updated resource outlined a 17% increase in total tonnes as well as a 19% increase in contained uranium oxide and a 13% increase in contained vanadium oxide. The updated resource totals 28 million inferred tonnes grading 0.037% uranium oxide and 0.019% vanadium oxide for 22.7 million lb. uranium oxide and 11.5 million lb. vanadium oxide.

The company will spend the next six months focusing on drilling and expanding its resource area.  It aims to spend between $2 and $3 million, drilling 8,000 metres. Toward the end of the year it will begin work on a prefeasibility study for the project.

“To drill there is very low cost,” Pensado says. “It’s a flat area. We don’t need to build roads or anything. We are in the bottom of the basin, with no connection to other basins.”

Blue Sky Uranium (TSXV: BSK; US-OTC: BKUCF) has unveiled a preliminary economic assessment (PEA) for its Ivana uranium-vanadium deposit at its 100% owned Amarillo Grande project in Rio Negro, Argentina.

“For the last three months we’ve been busy finalizing our PEA,” Blue Sky president and CEO Niko Cacos says in an interview with The Northern Miner. “It’s a very positive PEA. It shows that the Ivana deposit is economic in today’s environment.”

According to the study, the project would produce 1.35 million lb. uranium oxide per year over a 13 year mine life at US$18.27 per lb. uranium oxide all-in sustaining costs (AISC). The project would require US$128.05 million in pre-production capital and US$35.46 million in life of mine sustaining capital. It has a US$135.2 million after-tax net present value (NPV) at an 8% discount rate and a 29.3% after-tax internal rate of return (IRR) at US$50 per lb. uranium oxide and US$15 per lb. vanadium oxide. The project would achieve after-tax payback in 2.4 years.

“At $18 AISC, even if we sold it at spot we’d be making money,” Cacos says. “So if the uranium price starts to move up, this is going to be very profitable.”

At US$60 per lb. uranium oxide, the project’s after-tax NPV improves to US$202.3 million at an 8% discount rate; the after tax IRR jumps to 37.3%.

“The goal was, since the beginning, trying to be in the lower quartile of operating costs and we achieve it very well,” Blue Sky vice president of exploration and development Guillermo Pensado says. “The metallurgical process looks very simple and common as well.”

The PEA proposes an open pit that extends to a maximum depth of 30 metres below surface. It would be 3 km long, with widths ranging from 1 km to 400 metres. The company would mine 13,000 tonnes per day with two excavators, a front-end loader and six 31-tonne articulated trucks; because the materials are contained in unconsolidated gravels and sand, the company does not need drill or blast operations. The company can recover 84.6% uranium from the project and 52.5% vanadium.

“You just use an excavator, and then you do a scrubbing of the pebbles to remove the large un-mineralized ones,” Cacos says. “And then you put it on the leach pad. You don’t get a simpler process than that.”

Mineralization occurs at Ivana within 25 metres of surface in two stacked zones. It is the southernmost of three target areas at Amarillo Grande.

“What’s exciting now is the upside,” Cacos says. “The potential expansion from there in this 145 km strike length zone which we know is mineralized. It’s got potential to be 100 million lb. plus.”

Pensado adds, “Our goal was: let’s try and show in this sector that we have something that could be economic. Now that we understand the geological model, we understand how to explore the other sectors.”

He goes on to say that with Blue Sky’s greater understanding of the area’s geology, it needs to retrace its steps and re-examine previously overlooked areas of the property.

The study uses an updated resource estimate for the project that Blue Sky tabled in fall 2018. It includes 61 reverse circulation holes totaling 1,043 metres the company drilled at the project in September 2018. In total, the company has drilled 7,600 metres at Ivana to an average depth of 15 metres below surface.

“You say, well, 7,600 metres—that doesn’t look like much drilling,” Pensado says, “but in fact it’s 488 holes, because they are very shallow. And due to the spacing that we have, most of them could be converted into the indicated category.”

The updated resource outlined a 17% increase in total tonnes as well as a 19% increase in contained uranium oxide and a 13% increase in contained vanadium oxide. The updated resource totals 28 million inferred tonnes grading 0.037% uranium oxide and 0.019% vanadium oxide for 22.7 million lb. uranium oxide and 11.5 million lb. vanadium oxide.

The company will spend the next six months focusing on drilling and expanding its resource area.  It aims to spend between $2 and $3 million, drilling 8,000 metres. Toward the end of the year it will begin work on a prefeasibility study for the project.

“To drill there is very low cost,” Pensado says. “It’s a flat area. We don’t need to build roads or anything. We are in the bottom of the basin, with no connection to other basins.”

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