RCKS Talk

30-Apr-2019

Blue Sky Uranium Corp

Demonstrating the "Blue Sky" Potential

Impact: Mildly Positive

Blue Sky released positive step-out channel sampling outside of the Ivana deposit which provide evidence that suggests the current resource at Ivana has the potential to materially grow. Blue Sky is in possession of a PEA stage uranium-vanadium resource within a potential district-scale project and could see a re-rating with further exploration success. 

Highlights:
  • Results highlight higher grades than current resource. Pit sampling to the southwest of the Ivana deposit returned banner results of 1,881 ppm U3O8 and 640ppm V2O5 over 2m (AGI-CAL103). The results compare well to the resource at Ivana which grades 370 ppm U3O8 and 190ppm V2O5. Pit sampling has proven to be an effective and inexpensive method for testing near-surface targets, and we expect follow-up drilling will test areas where mineralization extends beyond the reach of western pit grids (pits test up to 2.9m of depth).
  • Follow-up drilling could expand the resource with higher-grades. The mineralization encountered with pit sampling appears to possess similar qualities to the mineralized body at Ivana thus suggesting the deposit could extend further west than previously thought. With the PEA already implying a relatively low-cost project, these higher-grade areas to the west could improve project economics. To prove this potential the test pitting completed to date, needs to be followed up with drilling.
  • Exploring along a 145km trend. The company is planning an RC drill program to test the depth potential of these western targets which remain open to the west. We note that the wider ~250,000 ha Amarillo Grande Project consolidates several targets across an immense 145 km trend and we expect that drilling could lead to multiple discoveries. We highlight that the Ivana deposit covers less than 2km of this massive trend.
Valuation:
Expansion drilling could provide lift on the current discounted valuation. Blue Sky trades at US$0.58/lb U3O8Eq relative to peers at US$0.73/lb U3O8Eq. The company’s PEA suggest that the Amarillo Grande project is one of the lower cost uranium development projects out there. This combined with the significant exploration potential, partially offset by country risk suggests to us that Blue Sky should trade in line with or at a slight premium to peers. Upcoming Catalysts include 1) RC drill results from western targets.

 

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