U3O8 Corp. holds a 39% interest in South American Silica Corp., a private company with silica sand properties in Argentina, Uruguay and southern Brazil. These properties were selected on the basis of their sand quality and their reasonable transport distance to ports for potential export and access to development of Argentina’s giant Vaca Muerta shale oil and shale gas region.
The “disruptive technology” brought about by fracking turned the USA from declining oil production to an oil exporting nation in an astonishingly short period of 6 years (2009-2015). Shale gas is displacing energy from coal-fired power stations and is therefore contributing to a reduction in green house gas emissions and pollution in general.
Argentina, which spent US$7 billion on oil imports in 2015, has an opportunity to emulate the USA’s success by developing the giant Vaca Muerta Formation which contains the world’s 3rd largest shale gas reserve and the 4th largest shale oil reserve. Argentina has advantages over the USA’s shale hydrocarbon production: firstly, the USA’s production comes from at least 7 major basins that are distributed over the country, for which infrastructure needed to be developed. Argentina’s reserves, in contrast, are contained mainly in one basin that already has extensive infrastructure from a century of conventional oil production. And Argentina is benefiting from the latest technology used in other parts of the world by partnering with the who’s who of international oil producers including Chevron, ExxonMobil, Dow Chemical, Total, Wintershal, BP, Petronas, Sinopec, China National Petroleum Corporation, Gazprom and Petrobras.
Argentina has the potential to become the energy powerhouse of South America through the development of its vast shale gas and oil reserves as well as with low-carbon nuclear and renewable energy from its world-class solar resources in the Atacama Desert in the north and the enviable wind resources of the Patagonian region in the south.
South American Silica Corp.’s properties in Argentina, Uruguay and southern Brazil contain sand that meets and exceeds the requirements laid out by the American Petroleum Institute. The sands in Uruguay and Brazil would be amenable to hydro-mining, one of the most cost-effective mining methods that has a minimal environmental impact. Scoping work by management has led to the conclusion that all-in transport costs to a deepwater port and to the Nuequen Basin in which the Vaca Muerta resource is located, are reasonable. Having cleared these critical hurdles, the next step is to establish the consistency of quality of the sands through formal resource estimation when funds are available at less dilutive levels.
