Blue Sky reaches deal with Abatare Spain to advance Argentine uranium project

Canada's Blue Sky Uranium has signed an agreement with Abatare Spain, its partner in Corporación América, to jointly develop the Ivana uranium and vanadium project in the Argentine province of Río Negro through the Ivana Minerales joint venture.

The deal includes a financing package that will cover construction costs until the production phase is reached.

Abatare will allocate US$35mn to finance development work at Ivana in exchange for an indirect 49.9% stake in the project, Blue Sky said in a release on Wednesday. 

In addition, the Spanish firm has committed to financing up to a potential US$160mn to support exploration expenditures and technical studies, Blue Sky said.

Abatare will have the right to acquire up to an 80% stake in Ivana Minerales following the completion of a feasibility study, the two-year construction period, and the start of the commercial phase of the project, according to Blue Sky. 

Meanwhile, the companies are evaluating engineering firms for the Ivana prefeasibility and feasibility studies, with the expectation of signing contracts in the coming months. 

Preparations are also underway to start another exploration program in the Ivana deposit's surrounding areas to evaluate new resources.

A shortage of uranium oxide to meet the growing global demand for nuclear energy, aerospace, medical applications and electronics is forecast. Blue Sky anticipates a supply-demand gap of approximately 164Mlb (about 74,000t) by 2040.

Ivana is seeking to become a supplier of the radioactive mineral for the production of nuclear fuel in Argentina so the country can stop importing a product which it has in abundance.

"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.... Río Negro is 100km from a port to access international markets and the demand for uranium is high and the deficit is large," Guillermo Pensado, VP of exploration at Blue Sky, told BNamericas in an interview in December. 

With the potential to produce 1.5Mlb/y of uranium oxide over an 11-year mine life, Ivana has an after-tax NVP of US$227mn at a discount rate of 8%, but Pensado emphasized that the company is making every effort to increase resources and maximize the mine life.