Fundamental Research Corp has reiterated a 'Buy' rating with a C$0.37 fair value target on Blue Sky Uranium Corp. (TSX-V:BSK, OTCQB:BKUCF) (BSK) shares following recent news.
The research house's analysts noted that the recent infill and step-out drill program at the Ivana deposit on Blue Sky's flagship Amarillo
Grande project in Argentina indicates potential for resource upgrade/expansion.
The results will be included in an upcoming resource update, and a Pre-Feasibility Study (PFS) in 2023/2024, they added. A 2019 Preliminary Economic Assessment (PEA) returned an AT-NPV8% of US$135 million, and a high AT-IRR of 29%, using US$50 per pound (/lb) U3O8. Blue Sky is trading at just 12% of AT-NPV8%.
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The company is also pursuing a $1 million equity financing to continue exploring - drilling/geophysical surveys - regional targets for resource expansion.
Ivana - a medium-sized/low-grade deposit - holds 23 million pounds (Mlbs) of U3O8, and 12 Mlbs of V2O5 (vanadium) in inferred resources. Uranium accounts for approximately 85% of the project’s value.
The Fundamental Research analysts said: "We believe a major advantage of the deposit is that it is near-surface (within depths of 25m). We believe the project has potential to be a low-cost mine, as the cash cost is estimated to be just US$16/lb vs the spot price of US$50/lb."
The analysts pointed out that uranium prices have pulled back 22% from their highs in April 2022, but are still up 9% year-on-year.
They said: "We believe the uranium supply-chain is highly vulnerable, and supply disruptions are likely. Russia accounts for 35% of global enriched uranium production. Another factor supporting uranium is high oil prices.
"As the uranium supply chain is highly vulnerable, we believe majors are likely to pursue M&A to secure long-term supply. Canadian uranium junior UEX Corporation was recently acquired by Uranium Energy Corp for $196M."
The analysts concluded: "We believe BSK could be an attractive acquisition target if it is able to delineate resource estimates for one or more of its regional targets. We note that there is a need for domestic uranium producers, as Argentina imports 100% of its uranium consumption. Argentina has three operating nuclear reactors (plus one in construction, and two additional planned), but no domestic uranium production."
At a current share price of C$0.10, they noted that Blue Sky is trading at just $1.5/lb versus the sector average of $3.7/lb.
Contact the author at jon.hopkins@proactiveinvestors.com