Blue Sky's quest to make Argentina self-reliant in uranium

Canada's Blue Sky Uranium is seeking to become a supplier of the radioactive metal for the production of nuclear fuel in Argentina so the country can stop importing a product which it has in abundance.

The firm, part of the exploration-focused Grosso Group, is developing the Amarillo Grande uranium and vanadium project, which is in the advanced exploration phase and located in southern province Río Negro.

Developing the project’s Ivana deposit and building a plant capable of producing 1.5Mlb/y of uranium oxide would be largely financed through an agreement with Corredor Americano, the oil services subsidiary of holding company Corporación América, in return for a stake of up to 80% in what is planned as the first phase of Amarillo Grande.

BNamericas speaks with Guillermo Pensado, VP of exploration at Blue Sky, about uranium mining, the scarcity of the mineral and the boom in nuclear reactors.

BNamericas: Why will you start the Amarillo Grande project with the Ivana deposit?

Pensado: In 2006 the company discovered a major uranium district more than 100km long and over 30km wide in Río Negro called Amarillo Grande. When I joined in 2016, we focused on finding a deposit that was economically viable and that is how we discovered Ivana, which has low grades and surface sands, which allows for low-cost production. It’s practically loose sands, little compacted on the surface and with a depth of up to 25-30m, allowing us to kick-start the district.

BNamericas: How did you confirm that it will be a competitive operation?

Pensado: In 2017, when we started with the idea, the price of uranium was at US$20/lb, so we set out to make it a competitive project. We did the first preliminary economic assessment in 2019 to demonstrate the feasibility of the project, but then the pandemic delayed development.

In 2022 and 2023 we resumed the drilling program to update the PEA, and the price was already around US$80/lb. Although post-COVID inflation affected costs and the necessary investment, the new PEA still demonstrated Ivana's economic strength and we confirmed that it's the largest uranium deposit discovered in the last 40 years in Argentina.

BNamericas: How important has uranium mining been in Argentina?

Pensado: Argentina produced uranium from the 1950s until 1997 and had seven production centers, but due to political and economic decisions, it stopped producing. Currently, despite having three nuclear reactors, it imports 100% of the concentrated uranium to produce its own nuclear fuel. This project will allow the country to recover its self-sufficiency in uranium for nuclear fuel and that is why we're looking for strategic partners.

BNamericas: Why did you choose Corredor Americano?

Pensado: It belongs to Corporación América, one of the most important economic groups in the country. It is in several important sectors, such as the oil and gas sector, and they wanted to diversify into the mining sector, considering that the combination of mining, uranium and energy was a good option. They have know-how in prospecting, exploration and geology, and they are specialists in creating energy-related businesses in Argentina. We signed the agreement to advance in this strategic alliance.

BNamericas: At COP 29, several nations pledged to triple global nuclear capacity by 2050, which would exponentially increase global demand for uranium. Do you plan to export production from Ivana?

Pensado: Ivana is the first discovery in a district with many exploration targets and the idea is to increase the resources and extend the useful life of the mine. With only half of the production of this economic unit we will be able to cover local demand. By law, Argentina has to have the first option to buy the mineral for local supplies.

It's very expensive for Argentina to buy uranium concentrate due to transport, security and logistics issues. The country has the capacity to cover domestic demand of its nuclear reactors and export nuclear fuel or concentrate. Río Negro is 100km from a port to access international markets and the demand for uranium is high and the deficit is large. In addition, this imbalance will continue to increase as more reactors are built around the world.

BNamericas: Is Río Negro ready for large-scale uranium mining?

Pensado: Río Negro has a lot of knowledge in the development of natural resources, non-metallic mining [it produces gypsum, bentonite, diatomite, limestone, etc.] and metallic mining [gold, silver, iron, etc.]. It has an important oil and gas sector, and was the first to validate the Rigi [incentive regime for large investments] due to an LNG export project from Vaca Muerta [shale formation] that will use a port in the province.

It also has extensive experience in nuclear energy. It owns the Balseiro Institute, a school of nuclear engineering, whose students are already in demand abroad before they graduate. It has a research reactor and INVAP, a company developing nuclear technologies that has sold reactors all over the world and controls a pilot plant for uranium enrichment [Pilcaniyeu technological complex].

Argentina is one of the few countries that sits at the table of global nuclear energy due to its track record and professionals. Recently, Argentine Rafael Grossi was reelected as director general of the International Atomic Energy Agency. The nation has the capacity to control each link in the nuclear value chain, which is very sophisticated. We will only do the simplest thing: produce uranium.

BNamericas: Uranium mining is a cause for environmental concern because of its relationship with radioactive components and waste. How will these aspects be managed?

Pensado: The Ivana project is practically an environmental remediation project, because the sands contain uranium and are on the surface in contact with the environment. What we will do is remove the uranium from the sands and return the sands to their place without causing damage. No drilling or blasting is required.

The process consists of making the pre-concentrate with a sieve to remove the uranium and then this is taken for liquidation in tanks to separate the uranium and vanadium from the solution. Finally, the sands are put back into the quarry, practically clean, through a remediation process that is already planned in our PEA.

BNamericas: Regarding the presence of vanadium, will you produce it as a byproduct?

Pensado: Exactly. The plant is planned to process the uranium that will absorb the vanadium that is also present in the sands, which is uranium vanadate, and then with a dissolution process the separation is carried out to obtain the vanadium in solution. Argentina imports all the vanadium that is used to harden steels, especially in the oil and gas industry for the Vaca Muerta operations. We intend to produce vanadium as a uranium byproduct to supply the Argentine market.

BNamericas: What difficulties have you faced in exploration work at Ivana and how have you managed to obtain quality samples from loose sands?

Pensado: The exploration challenges are related precisely to working in loose sands. As VP of exploration, my goal is to ensure that the sample quality is as high as possible to ensure the sustainability of the project. Unlike exploration programs that are carried out in rock, where the greatest challenge is encountering very hard rocks where it's difficult to drill, here it's the opposite, because everything is very soft. However, we achieved a very successful drilling model for the deposit and developed a new experience.

BNamericas: About the Santa Bárbara and Anit deposits, which are also part of Amarillo Grande, what stage are they at?

Pensado: The district was discovered with Santa Bárbara and then Anit and Ivana were identified, the latter being the one that showed the greatest potential to be transformed into a productive project. We continue with exploration programs to analyze which will be the next deposit. Our project is targeting a district similar to one in Kazakhstan, the world's leading uranium producer. That country has geology similar to ours, has nine mines in operation and produces around 50% of the world's uranium. Its largest mine is 10 times larger than Ivana, but it took Kazakhstan decades to get to where it is today. Now, that work lies ahead of us.

BNamericas: Of the other Blue Sky uranium projects, like Corcovo, Chihuidos, Sierra Colonia, Tierras Coloradas or Cerro Parva, which has greater potential or probability of development?

In Chubut, Sierra Colonia is a project with a lot of potential, but it's in a province with socio-political challenges to develop it. We're waiting for the right moment to move forward. In the Neuquén basin and Mendoza province, an exploration program is underway at Corcovo and Chihuido to identify uranium deposits susceptible to in situ recovery that stands out for low operating costs. The largest uranium production in the world comes from this type of deposit. Although this takes time and investment, we have already begun to develop the areas that could replace Amarillo Grande in the future.