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Information about Powertech Uranium Corp. and proposed uranium mining in northern Colorado and South Dakota

CENTENNIAL PROJECT - COLORADO

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POWERTECH/AZARGA REALITY CHECK


Notes on misleading or false statements made by Powertech or Azarga officials, consultants, or promoters, or information not previously disclosed by the companies.


NEW  October 25, 2014 -
Powertech's efforts to prevent disclosure of critical geological data continue, but the Canadian penny stock firm lost a major battle this week.  On Wednesday, the NRC's three Atomic Safety and Licensing Board judges granted a 30 day extension to the Oglala Sioux Tribe and Consolidated Intervenors to review 6,000 borehole logs and related data, and to submit additional testimony and exhibits on the intervenors' Contention 3.  The intervenors also have the right to file new contentions if certain standards are met.  The intervenors had requested an extension to January 9, but Powertech had opposed any extension.  The ASLB settled on an extension that runs through November 21.  The judges also reprimanded Powertech for violating federal regulations regarding mandatory disclosure of relevant documents, noting that the ASLB "has been forced to repeatedly rule that data it found relevant to Contention 3 must be disclosed."  Although disclosure has been ordered, only NRC staff and intervening parties can look at the data since Powertech successfully argued that the data are proprietary and confidential under federal regulations.  Consequently, the intervenors' expert, Dr. Hannan LaGarry, will analyze the borehole logs in Powertech's Edgemont office under the watchful eye of Frank Lichnovsky.  Lichnovsky is Powertech's Chief Geologist and has been assigned to keep tabs on LaGarry and provide detailed reports to Powertech officials, as evidenced in an affidavit filed with the ASLB.  After Dr. LaGarry's preliminary review of the data, he testified that the newly disclosed data "may provide a sufficient number of data points for me to create stratigraphic cross sections and geologic maps that support the Oglala Sioux Tribe and Consolidated Intervenors' position that there is a lack of adequate containment", referring to the argument that Powertech has not demonstrated the ability to contain radioactive and toxic fluids in the mined aquifers. 

October 23, 2014 -
The more things change, the more they stay the same, particularly when it comes to Powertech/Azarga's investor communications.  Tuesday evening, Azarga officials were positively giddy as they tweeted out "Toronto Stock Exchange approved our merger..." and "$5m cash in the can and the highest grade project among US ISR peers".  The next day, Powertech issued a news release that was more specific and not quite as upbeat.  According to the release, the TSX "conditionally approved" the "merger" between Powertech and Azarga, the proposed $5 million private placement, and a proposed one for ten reverse stock split.  True to form, Powertech did not fully disclose the TSX's conditions, only mentioning a four month lock-up period on shares issued pursuant to the private placement.  And describing the transaction between Powertech and Azarga as a "merger" is misleading.  The actual written agreement between the companies correctly describes it as a reverse takeover of Powertech by Azarga.  The TSX refers to these transactions as "backdoor listings", because a privately-held company (Azarga) bypasses the initial public offering process and assumes the public listing of the target company (Powertech).  TSX rules consider a transaction to be a backdoor listing if the transaction results in the existing shareholders of the listed company (Powertech) holding less than 50% of the voting power in the new entity, and if there is a change in effective control.  In the proposed Powertech/Azarga deal, existing Powertech shareholders will be left with only 33% of the company, and control will shift to a handful of Azarga executives as well as controversial Singaporean firm Blumont Group.  The fine print disclaimer on Powertech's news release notes that Powertech "expects" and "assumes" that "the TSX will approve the proposed transaction", implying that final approval has not occurred, and conflicting with the definitive statement made on Azarga's Twitter page.  Perhaps this is why on the same day the news release was issued, Powertech's stock price dropped to an all-time low of three cents.  One might expect that demand for Powertech shares would increase on the news, but the opposite was true.  And today, the stock price rose to only 3.5 cents as a mere 30,000 shares were traded, worth only $1,050 CAD.            

October 13, 2014 -
The Oglala Sioux Tribe and Consolidated Intervenors have begun the process of reviewing borehole logs and other drilling data that Powertech was ordered to disclose by the NRC's Atomic Safety and Licensing Board judges.  Powertech fought for several weeks to withhold the data from opponents of the proposed Dewey-Burdock uranium leach project, but ultimately failed to convince the judges that the data are not relevant to the intervenors' contention that Powertech has failed to demonstrate an ability to contain mining fluids and prevent contamination of ground water aquifers.  Powertech was able to obtain a license from the NRC staff by submitting only a small subset of the borehole data in its possession and by making sweeping generalizations based on the limited data.  In one particular case, Powertech and one of its key experts advanced a hydrogeological argument that appears to be at odds with a long-standing conclusion by federal scientists working for the Tennessee Valley Authority.  Last month, PhD geologist Hannan LaGarry traveled to Powertech's office in Edgemont, South Dakota to conduct a preliminary review of the data, contained in 27 boxes and 5 file cabinets.  Working on behalf of the Oglala Sioux Tribe and the Consolidated Intevenors, LaGarry estimates that he and two assistants would need 12 weeks to thoroughly review the data to develop a better understanding of the stratigraphy and geology of the proposed project area.  Last Thursday, the intervenors filed a motion with the ASLB requesting an extension of time to January 9 to file supplemental testimony and any new or amended contentions pertaining to the borehole data.  Powertech is expected to file a response objecting to the extension in the next day or so.    

October 10, 2014 -
Powertech issued a news release today "clarifying" its September 18 news release announcing an updated investor presentation.  The presentation and September news release heavily promote Azarga Uranium Corp., a new company to be formed from the proposed reverse takeover of Powertech by Azarga Resources Limited.  The September news release included a statement about "the recently completed capital raising and merger with Azarga Resources Limited".  Problem is, the capital raising and merger haven't happened.  Powertech claims to have escrowed an unspecified amount of funds "related to the $5.0 million private placement", but the financing is contingent on the closing of the reverse takeover, which has been delayed twice.  It is not clear if Powertech officials were intentionally trying to mislead investors or if the release was just poorly written.  Either way, today's correction was probably ordered by Canadian securities regulators or the Toronto Stock Exchange, which has still not approved an exchange listing for the new company.  Since Azarga began accumulating Powertech shares last year, the Hong Kong company appears to have become increasingly involved in Powertech's investor communications and regulatory filings.  And starting in February of this year, Powertech news releases have included contact information for Azarga's manager of investor and public relations.  The manager, Jenya Mesh, is a model and, according to her Twitter profile, a "global dominator".        

October 9, 2014 -
Today the Black Hills Clean Water Alliance issued a news release regarding a recent announcement by the Region 8 office of the U.S. Environmental Protection Agency that may affect the proposed Dewey-Burdock project.  The EPA noted that it has completed a Preliminary Assessment (PA) of the Darrow/Freezeout/Triangle abandoned uranium mines located north of Edgemont, South Dakota.  The abandoned mines are within and adjacent to the proposed Dewey-Burdock project, and the EPA's review of environmental data collected by Powertech found radioactive and heavy metal contamination of the air, surface soils, surface water, and ground water.  Based on the assessment, the EPA plans to conduct a site investigation in 2015 to determine if hazardous substance releases from the abandoned mines are impacting sensitive environments and posing a risk to nearby residents and workers.  The investigation could potentially result in a Superfund designation of the sites under the Comprehensive Environmental Response, Compensation, and Liability Act.  The PA was triggered by a petition filed by the non-profit Institute of Range and the American Mustang, owner of the Black Hills Wild Horse Sanctuary.  The EPA's announcement indicates the PA is separate from Region 8's expected decisions on underground injection control permits for the proposed Dewey-Burdock project, although it is hard to see how this investigation won't have some impact on permitting for the project.  It is not clear if the EPA's announcement had anything to do with yesterday's 30% drop in Powertech's stock price to an all-time low of $0.035 CAD.  The share price bounced back to close at $0.045 CAD today, but it remains depressed as Dewey-Burdock permitting woes persist and the company seems unable to gain approval from the Toronto Stock Exchange to list the new firm resulting from the proposed reverse takeover of Powertech by Hong Kong firm Azarga Resources.  (For the full 10 MB PDF of the EPA's Preliminary Assessment Report, click here.) 

September 29, 2014 -
Perhaps the most questionable assertion made by Powertech in its recent investor presentation is that the proposed merged company, Azarga Uranium, will have a market capitalization of $29.5 million CAD.  This wildly optimistic market cap, calculated by multiplying an expected share price of $0.05 by 589 million projected outstanding shares, has absolutely no supporting detail in the presentation.  The "pro forma" market cap assumes that the reverse takeover of Powertech by Azarga Resources will actually occur, even though the closing date has been delayed twice and the new company may be having difficulty meeting the Toronto Stock Exchange's listing requirements.  Since Powertech's current market cap was only $7 million CAD when the presentation was released earlier this month, Powertech and Azarga officials apparently believe that Azarga's net assets brought to the combined company are worth over $22 million CAD.  Even a cursory overview of Azarga's assets belies such a valuation.  Azarga's primary asset is its 80% stake in the Kyzyl Ompul Project in Kyrgyzstan.  While the presentation repeats the claim that it is the largest known uranium deposit in the country, the project actually consists of just an exploration license that expires in December 2015.  The technical report on the project notes that Azarga's Kyrgyz subsidiary "has advised that access to the property may be limited due to the roads being blocked by the local population and that the area had a history of political unrest during 2005 and 2010."  Even Azarga promoter and investment writer Peter Epstein warns that Kyzyl Ompul "is blue-sky upside potential" and not a core focus of the company.  Other Azarga assets, including a 60% interest in Powertech's Centennial project and a 19% interest in Black Range Minerals' Hansen/Taylor Ranch, both in Colorado, also carry significant permitting and technical risks.  Even Powertech officials have privately described Azarga's assets as "worthless", according to someone with knowledge of the matter.                 

September 26, 2014 -
Dilution of existing Powertech shareholders continues unabated as both Powertech and Azarga Resources issue more shares.  On July 9, Powertech issued 1,745,902 shares to Energy Fuels Resources (USA) Inc. as partial payment for drill hole electric logs, maps, and digital data.  On August 26, Powertech issued 888,655 shares to an unnamed U.S. party.  Since Powertech did not disclose the issuance in a news release, the recipient of the shares and the reason for the issuance are unknown.  Azarga issued 1,029,386 shares sometime in early to mid 2014 to an unnamed party.  And on September 11, Azarga converted debt and issued a whopping 38,212,493 shares to the Blumont Group Ltd., boosting the Singaporean firm's ownership of Azarga to 43.1%.  Under the terms of the proposed reverse takeover, Powertech will issue and exchange 3.65 shares for each Azarga share, leaving existing Powertech shareholders with about 14% of the new company.  The dilution is occurring as Powertech, Azarga, and their promoters are making a concerted effort to boost Powertech's stock price and attract new investors by implying that a "3x re-rating" (increase) of the trading valuation of the merged company is likely, even though the takeover has been delayed twice and the claimed resource estimates are questionable.   

September 25, 2014 -
One of the important takeaways from Powertech's new investor presentation has to do with who would control and influence the new Azarga Uranium Corp.  The proposed reverse takeover of Powertech by Azarga Resources has been delayed twice and may not overcome regulatory hurdles from the Toronto Stock Exchange.  But if the deal does close, it is unclear who will control the new company.  The investor presentation notes that the largest shareholder will be Singaporean firm Blumont Group Ltd. with a 30.7% stake.  Azarga insiders, led by CEO Alex Molyneux, will control 31.8% of the new company.  Ownership by current Powertech CEO Dick Clement and other Powertech officials will be diluted to an insignificant amount.  Blumont's ownership is likely to increase if Azarga Uranium issues more convertible debt to the Singaporean firm.  What the presentation fails to mention is the ongoing, unprecedented investigation of Blumont by Singapore's white collar police unit and central bank following a 95% drop in Blumont's stock price in October 2013.  Investigators are  probing possible breaches of the Singapore Securities and Futures Act.  And Powertech is silent regarding Blumont's financial connections to New York hedge fund Platinum Partners and its controversial manager Meir "Mark" Nordlicht.  Nordlicht appears to be the primary financier of Blumont and has been a key figure in major financial scandals in recent years.  

September 23, 2014 -
Last Thursday, Powertech released a new investor PowerPoint presentation that touts the merger of Powertech with Azarga Resources. One slide includes the statement that "merger finalization expected mid-October"  but fails to mention that the closing of the merger, actually a reverse takeover by Azarga, has been delayed twice.  The closing was originally scheduled for July 31.  The delays are presumably due to challenges in gaining approval of the Toronto Stock Exchange.  Because the TSX treats a reverse takeover as a new listing, Powertech/Azarga must meet the exchange's listing requirements for "non-exempt (less established) exploration and mining companies".  The problem is that the new Powertech/Azarga may not meet key listing requirements, specifically, the minimum requirements for working capital and net tangible assets.  To be even close to meeting both requirements, Powertech/Azarga will have to raise the entire $5 million from a recently-announced private placement offering.  But the private placement is contingent on the closing of the reverse takeover, and approval of the reverse takeover is contingent on meeting the listing requirements.  Stay tuned...(Interestingly, the TSX looked the other way for years while Powertech failed to meet its listing requirements.)

September 22, 2014
- After recently interviewing Azarga CEO Alex Molyneux, blogger and Powertech shareholder Peter Epstein posted a promotional article urging investors to purchase Powertech shares.  Epstein assumes the Azarga/Powertech merger will go through, and claims that all permits for the proposed Dewey-Burdock project are expected to be in place within nine months.  He fails to mention the ongoing contested hearing process on the Nuclear Regulatory Commission license, and the likelihood that any late-2014 decision by the NRC's Atomic Safety and Licensing Board will be appealed to the commission and then to federal court.  Epstein glosses over the multiple permits that must be obtained from the Environmental Protection Agency and the South Dakota Department of Environment & Natural Resources and the attendant appeals and judicial processes.  And he completely omits any mention of the Plan of Operations Powertech must obtain from the Bureau of Land Management, which may also land in federal court.       

Powertech shareholders approve reverse takeover by Australian and Singaporean investors

Transaction will hand over control to Azarga insiders, add massive convertible debt to Powertech’s balance sheet, and dilute longtime shareholders 

Posted July 20, 2014


Alexander Molyneux’s ownership of uranium mining properties as of July 4, 2014 (PDF 209 KB, 1 page)  This updated chart corrects certain corporate relationships disclosed in Powertech's May 13 Information Circular, and reflects recent share purchases of Black Range Minerals.


AZARGA TO TAKE OVER POWERTECH

Hong Kong dealmaker Molyneux to take control of Powertech in reverse takeover of troubled Canadian firm; Molyneux and other Azarga shareholders to own 77% of new Azarga Uranium Corp.; permitting risk at Dewey-Burdock cited

Posted March 8, 2014

News release - "Powertech Uranium Corp. to Merge with Azarga Resources Limited to Create Azarga Uranium Corp." -  Powertech Uranium Corp. - February 26, 2014 (PDF 27 KB, 4 pages)

Form 51-102F3 MATERIAL CHANGE REPORT - Powertech Uranium Corp. - March 6, 2014 (PDF 24 KB, 6 pages)

SHARE PURCHASE AGREEMENT between POWERTECH URANIUM CORP. and AZARGA RESOURCES LIMITED - February 25, 2014 (PDF 226 KB, 65 pages)  Includes list of Azarga shareholders (Schedule A).

Alexander Molyneux’s ownership of uranium mining and milling properties - March 8, 2014 (PDF 211 KB, 1 page)

"Powertech plans merger with Hong Kong-based Azarga Resources" by Adam Hurlburt, Black Hills Pioneer - February 28, 2014 (PDF 12 KB, 2 pages)  

"This Is Interesting. A Few Weeks Ago I Told Powertech Uranium To Get Lost. Well, They Did . . . Sort Of" by John Tsitrian, theconstantcommoner.blogspot.com - February 27, 2014


Colorado regulators: "Quite clearly the project was abandoned by Powertech"

Division of Reclamation, Mining and Safety terminates consideration of Centennial baseline plan after no communications from the Canadian company for nearly five years

Posted February 3, 2014


Clement writes down Centennial project by $12.3 million in questionable accounting move

Delayed writedown may have misled investors; is new value still inflated?

Posted January 9, 2014


Powertech sells 60% of Centennial project to Hong Kong investment firm; inexperienced Chinese company becomes largest Powertech shareholder 

Powertech agrees to sell controlling interest in dormant Colorado uranium project to recently-formed Azarga Resources; 38-year-old Australian CEO Alex Molyneux makes deal to buy out Toronto hedge fund's shares, and is likely to propose new mining and processing methods for project

Posted October 13, 2013


Powertech corporate filing describes Centennial project as "not material to the company" for the first time

Rare admission by Canadian company confirms that survival of company hinges on Dewey-Burdock

Posted July 9, 2013

For the first time, Powertech has admitted that the proposed Centennial project in northern Colorado is not material, meaning that the project's importance to the Canadian uranium company has declined significantly.

The admission comes in the March 28, 2013 Annual Information Form filed with Canadian securities regulators.  Centennial has always been touted as one of Powertech's two flagship projects along with the proposed Dewey-Burdock project in South Dakota.

The filing lumps Centennial in with Powertech's Wyoming exploration prospects, which are also described as immaterial.  No permitting activities are being conducted for Centennial or any of the Wyoming properties.

The AIF's description of the Centennial project consists of a brief three paragraphs sandwiched between a lengthy description of the Aladdin project (Crook County, WY) and descriptions of Powertech's other Wyoming prospects (Dewey Terrace, Colony, and Savageton).

This marginalization of the Centennial project in an official communication to investors comes two years after the project was reported as being "mothballed" by the Fort Collins Coloradoan newspaper and one year after the dismissal of Powertech's lawsuit against the State of Colorado over new uranium mining regulations.

Powertech still appears unable to provide investors with a complete and accurate account of Colorado House Bill 1161, adopted in 2008.  The AIF correctly notes that the legislation creates a "specialized regulatory regime" for in-situ leach uranium mining, but goes on to assert that "this new law could, upon implementation, establish standards for in-situ recovery mining and restoration that may ultimately affect the profitability of the Centennial Project".

Powertech fails to mention that the standards have already been established during a two-year rulemaking process that the company was a party to.  After the rulemaking didn't go Powertech's way, it sued the state.  The lawsuit was thrown out by the judge in July 2012. 

None of these details are disclosed in Powertech's AIF.

It is not surprising that Powertech would take its time to let investors know that they should not rely on the Centennial project for future cash flows to the Canadian company.  We will see how Powertech handles its disclosures regarding Centennial in its upcoming second quarter filings due August 14, and whether it finally tests its capitalized Centennial costs for impairment as required under international accounting rules. 

And it will be interesting to see if Powertech finally admits that the proposed Dewey-Burdock project will not be fully permitted by the end of this year, and if it discloses the NRC's Subpart L hearing process and the potential for appeals of any injection well permits issued by the Environmental Protection Agency. 

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) ANNUAL INFORMATION FORM FOR THE YEAR ENDED DECEMBER 31, 2012 - March 28, 2013 (PDF 189 KB, 38 pages)


Powertech puts more Centennial land up for sale

Canadian company lists key land positions with local realtor in attempt to raise cash

Posted June 27, 2013

Powertech recently listed three more properties for sale located near the center of the moribund Centennial uranium project.  As the Canadian company edges toward insolvency, selling its limited real estate holdings may be the only way to raise cash.

Powertech's share price has hovered between six and seven cents (Canadian) for the last several weeks.  Powertech's last equity financing round was at a share price of $0.10 CAD in February of this year, and the company was only able to raise $1.5 million CAD.  (Investors received one share purchase warrant with each common share.)

Powertech's cash burn rate for the first quarter of 2013 was $350,000 per month.  At March 31, Powertech's cash position was only $951,115.  If Powertech has been able to trim its cash disbursements to $300,00 a month, it should have less than $100,000 in the bank at the end of this month.

Powertech listed the three parcels with Wellington, Colorado brokerage ReQuest Real Estate Services.  The three properties, totaling 157.5 acres, are located in Section 15, Township 9, Range 67 West between the towns of Wellington and Nunn, Colorado.

Section 15 is located near the center of the proposed Centennial project, which was suspended by Powertech after the company lost its legal case against the state of Colorado seeking to overturn new uranium mining regulations.

One of the seven major orebodies of the Centennial project is located roughly in the center of Section 15.

Section 15 is also noteworthy for the fact that three families who were instrumental in forming Coloradoans Against Resource Destruction (CARD) live and own property within its boundaries.  CARD is a grassroots group with the mission of protecting local ground water and other resources

The three families control 37% of the land area of Section 15 (about 237 acres), and since Powertech announced the uranium mining project in 2006, none of the families have signed a surface use agreement with the Canadian company.

Powertech purchased the right to mine uranium on Section 15 from Anadarko Land Corp. in 2006.  When a split estate exists (minerals and surface ownership), a mining company must negotiate a surface use agreement with the surface owners before mining can occur. 

CARD's accomplishments include the passage of Colorado House Bill 08-1161, the 2008 legislation designed to protect ground water from in-situ leach uranium mining, and the adoption of resolutions of opposition to ISL uranium mining by several nearby municipalities including the city councils of Fort Collins and Greeley.

Since 2007, Powertech has purchased roughly a dozen parcels in the proposed Centennial project area.  In December 2012, Powertech sold one of its Section 15 properties and lost over $100,000 on the transaction.

The three properties currently for sale include a 44.1 acre parcel that Powertech has listed for $99,000. The Canadian company purchased the property in May 2007 for $125,000. 

The second parcel is 34.4 acres and is listed for $85,000.  Powertech purchased the property in May 2007 for $79,900.

The third property is 79 acres and is priced at $120,000.  Also acquired in May 2007, Powertech paid $250,000 for the parcel.  The sellers, S & J Company, bought the property a year earlier for $82,000.

It is likely that a condition of any sale would be Powertech's retention of certain surface rights for future uranium mining.  The real estate advertisement for the 34.4 acre parcel notes the inclusion of a ground water monitoring well without disclosing that this well is part of a proposed uranium mining project.   

The ad for the 80 acre property describes it as an "interesting development opportunity" and notes that the "sale requires perpetual easement for current seller to monitor water quality via monitoring well". 

None of the three ads mention possible future uranium mining or that the owner/seller is a Canadian uranium company.

JW

Advertisement for 44.1 acre property

Advertisement for 34.4 acre property

Advertisement for 79 acre property

Purchase and Sale Agreement between Anadarko Land Corp. and Powertech Uranium Corp. transferring uranium ore rights - September 27, 2006 (PDF 1,052 KB, 26 pages)

Maps of the Centennial Project


Short lead times to production?  Powertech's marketing pitch doesn't hold up

Posted June 2013

On the Powertech website, company officials claim that the Canadian company "minimizes risk by acquiring known deposits with short lead times to production".  Powertech, formed in mid-2005, has yet to produce a single pound of uranium.  Nearly eight years after securing an option to lease the surface and mineral rights to develop the Dewey-Burdock uranium project, Powertech has yet to obtain a single federal or state license or permit to mine uranium. 

JW    


THE SORDID HISTORY OF IN-SITU LEACH URANIUM MINING

License violations at Highland ISL uranium mine, Wyoming

License violations at Smith Ranch ISL uranium mine, Wyoming

License violations at Crow Butte ISL uranium mine, Nebraska

License violations at Willow Creek (formerly Christensen Ranch/Irigaray) ISL uranium mine, Wyoming


Geologist Bonner: Centennial project is still active

Posted February 22, 2013

Powertech Vice President of Exploration Jim Bonner insists the company's proposed northern Colorado uranium project is still active, according to a February 6 article in the Fort Collins Coloradoan by reporter Bobby Magill.

Bonner made the assertion despite the fact that the Canadian company has publicly announced the suspension of the Centennial project, ceased all permitting activities in December 2011, lost its two-year-long lawsuit against the state of Colorado over new uranium mining regulations, closed its northern Colorado office in August 2011, and failed to exercise options to purchase sizable land positions with significant uranium resources. 

Moreover, Powertech has begun selling project real estate and plugging exploration boreholes. It admitted in a regulatory filing that a significant portion of the project's uranium is not recoverable by standard in-situ techniques, and the company has less than $1 million in the bank, all of which is earmarked for its sole remaining project in South Dakota.

In an interesting choice of words, Bonner told Magill that "Centennial is still an active project on the books" (emphasis added).  Bonner's implication is that the $15 million of Centennial project costs that remain on Powertech's balance sheet are a legitimate asset even though all evidence points to the conclusion that the project is dead and is unlikely to ever be resuscitated.

The point is more than academic since International Financial Reporting Standards require Canadian public companies to write down "impaired assets".  If facts and circumstances suggest that Powertech may never recover the $15 million it has invested in Centennial, the company must test for impairment.  And If impairment is determined, it is required to measure, present and disclose an impairment loss on its income statement.

Publicly-traded companies, particularly cash-strapped penny stock firms such as Powertech, have an incentive to avoid asset write-downs due to the potential adverse reaction of shareholders.

Powertech has never done an analysis to determine if the Centennial project asset is impaired, and it will be interesting to see if Powertech and its Canadian auditors, BDO Canada LLP, address the issue in year-end financial statements which must be issued by April 2.

JW

"Powertech plugs test wells; plans for NoCo uranium mine still on drawing board" by Bobby Magill, Fort Collins Coloradoan - February 6, 2013 (PDF 4 KB, 1 page)   


Powertech begins to plug and abandon monitoring wells at Centennial site

Posted January 12, 2013; Updated January 17, 2013

Powertech Uranium Corp. has started to plug and abandon wells the Canadian company drilled at the proposed Centennial uranium mining site near Fort Collins, Colorado.  In a January 2 letter to the Colorado Division of Water Resources (DWR), Powertech VP of Exploration Jim Bonner explains that the four plugged wells "were no longer of any use to Powertech".

The wells were drilled in August and September of 2007 under two "Notice of Intent to Construct Monitoring Hole(s)" forms submitted to the DWR in July 2007.  Powertech did not obtain actual well permits from the DWR until October 7, 2008.  The wells were intended for use during aquifer pump tests. 

Powertech plugged the four wells on November 6-7, 2012.

Plugging and abandonment of Centennial project wells is not surprising since Powertech has ceased all permitting activities, closed its project office, and started selling project real estate.  Moreover, the Canadian company recently lost its lawsuit seeking to overturn new Colorado uranium mining regulations.

In spite of all the evidence that the project is in decline, Powertech continues to mislead investors about its status.  For instance, Powertech's current corporate presentation available on its website avoids any mention of the actual status of the project, focusing instead on questionable financial projections and resource estimates. 

In addition, Powertech has so far failed to disclose any serious analysis of expected cash flow from the project and whether the project needs to be written down on the company's financial statements.

Powertech's website calls Centennial a "flagship property" with a "short lead time to production".  Powertech acquired the mineral rights on September 27, 2006 and has yet to file a major permit application for the project. 

JW

Activity Report from Powertech to Colorado Division of Reclamation, Mining and Safety regarding plugging and abandonment of four pump test wells at the Centennial uranium project - James A. Bonner, Vice President of Exploration, Powertech (USA) Inc. - January 8, 2013 (PDF 5,254 KB, 18 pages)

Letter to Colorado Division of Water Resources providing notification of plugging and abandonment of four monitoring wells at the Centennial uranium project - James A. Bonner, Vice President of Exploration, Powertech (USA) Inc. - January 2, 2013 (PDF 624 KB, 8 pages)


POWERTECH QUITS LEGAL FIGHT AGAINST COLORADO MINING REGULATIONS

Canadian firm loses litigation after failure to appeal dismissal order

Posted January 1, 2013

Attorneys for Powertech Uranium Corp. will not be filing an appeal of a judicial order dismissing the company's lawsuit against the State of Colorado, according to someone with knowledge of the matter.  This marks the end of an over two-year legal effort by the Canadian start-up company to overturn strict new regulations governing in-situ leach uranium mining.

An attorney from Powertech's Denver law firm, Fognani & Faught, PLLC, recently told a representative of the Colorado Attorney General's office that an appeal was not forthcoming, according to the source.  All deadlines for filing a notice of appeal have passed.

The deadlines were apparently extended after attorneys from Fognani & Faught missed the original deadlines and later filed a motion alleging the July 13, 2012 order dismissing the case was never properly signed by former Denver District Court Judge Christina Habas.  Judge Habas retired from the bench on the same day the order was issued.

Judge Habas dismissed the case because "Powertech has failed to meet its burden in establishing the allegations contained in its Complaint", according to the July 13 order.

Powertech's attorneys made several legal arguments against the 2010 rules promulgated by the Colorado Mined Land Reclamation Board, none of which were ultimately successful. 

In April 2011, Powertech CEO Dick Clement revealed that the decision had been made to put the Centennial project on hold and to focus on the proposed Dewey-Burdock project in South Dakota.  It remains to be seen if the cash-strapped Canadian company can obtain the myriad permits needed for Dewey-Burdock, and whether returning to Colorado and the Centennial project is a viable option.

Company observers will be awaiting Powertech's year-end audited financial statements to see if the company discloses the terminated litigation, and whether an impairment loss is taken on the project. 

JW


Centennial project land sold to raise funds for Dewey-Burdock

Posted December 20, 2012

Powertech has sold a 35-acre parcel with a home that it acquired in 2007 along with several other properties, according to Weld County property records.  The sale marks the first disposition of land once considered essential to the proposed Centennial uranium project in northern Colorado.

The property at 51955 County Road 21 is located within the proposed permit boundary for the project and is one of 17 parcels acquired by Powertech since 2007, according to a surface ownership map Powertech submitted to the Environmental Protection Agency in 2010.

Powertech conducted exploratory drilling on the property in 2007.

Powertech sold the property in early November for $235,000. The Canadian company paid $340,000 for the property in 2007.  It is likely that Powertech retained the mineral rights, and it is unknown whether a surface use agreement was executed with the new owners.

Presumably, Powertech sold the property because it included a fairly new single-family home and would generate more cash to help finance its permitting efforts in South Dakota.  It is noteworthy that Powertech's financial position is so dire that it would sell part of what was once a flagship project to raise a relatively small amount of cash.

JW   


Hyper-technicality or nefarious action by district court clerk?

Posted November 2, 2012

Recent court filings in Powertech (USA) Inc. v. State of Colorado Mined Land Reclamation Board:

DEFENDANT’S RESPONSE TO PLAINTIFF’S MOTION FOR ENTRY OF JUDGMENT - POWERTECH (USA) INC., A SOUTH DAKOTA CORPORATION, Plaintiff, v. STATE OF COLORADO MINED LAND RECLAMATION BOARD, Defendant; and Defendant-Intervenor(s): COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY; SHEEP MOUNTAIN ALLIANCE. - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - October 22, 2012 (PDF 39 KB, 6 pages)

RESPONSE OF INTERVENORS IN OPPOSITION TO PLAINTIFF’S MOTION FOR ENTRY OF JUDGMENT - Plaintiff(s): POWERTECH (USA) INC.; v. Defendant(s): COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenor(s): COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY; SHEEP MOUNTAIN ALLIANCE. - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - October 22, 2012 (PDF 32 KB, 4 pages)

PLAINTIFF/APPELLANT’S REPLY IN SUPPORT OF ITS MOTION FOR ENTRY OF JUDGMENT - Plaintiff/Appellant: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant/Appellee: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE. -  DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - October 29, 2012 (PDF 155 KB, 4 pages)

AFFIDAVIT OF REBECCA ZISCH - Plaintiff/Appellant: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant/Appellee: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE. -  DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - October 29, 2012 (PDF 96 KB, 2 pages)

AFFIDAVIT OF KIMBERLY L. WISE - Plaintiff/Appellant: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant/Appellee: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE. -  DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - October 29, 2012 (PDF 78 KB, 2 pages)

ORDER - Plaintiff: POWEERTECH (USA) INC (sic), v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD And Defendant Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE. - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - November 2, 2012 (PDF 149 KB, 2 pages)


FRIVOLOUS LITIGATION?

Powertech's claim that Judge Habas didn't sign order dismissing lawsuit shown to be groundless

Posted October 4, 2012

Former Denver District Court Judge Christina M. Habas

A copy of the July 13 court order dismissing Powertech's case against the Colorado Mined Land Reclamation Board clearly shows the signature of former Denver District Court Judge Christina M. Habas.  In an October 1 motion filed by attorneys from Fognani & Faught, PLLC on behalf of Powertech, the Canadian company makes the assertion that Judge Habas never signed the order.

The motion appears to be an attempt to reopen the appeal window after Powertech and its attorneys let the deadline lapse on August 27.  The lawsuit was the culmination of a multi-year effort by Powertech to stop or overturn new Colorado rules designed to protect groundwater quality and enhance public participation in permitting decisions for uranium prospecting and mining.

The copy of the signed order comes from the Colorado Attorney General's office, which received it on September 11.  Attorneys from the AG's office represent the Mined Land Reclamation Board.

Court rules require that attorneys investigate the factual basis for any claim to avoid wasting the court's and other parties' time and resources.  It is unclear why Powertech's attorneys apparently did not obtain a copy of the signed order before filing the motion.

Since the motion appears to have no underlying justification in fact, Powertech could choose to withdraw the filing.  If it does not, the Attorney General and intervening parties will respond and the Court will rule on the motion. 

JW

(Signed copy) ORDER (Christina M. Habas Denver District Court Judge) - Plaintiff: POWERTECH (USA) INC., a South Dakota Corporation, v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD, and Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; AND SHEEP MOUNTAIN ALLIANCE - Case No. 10CV8615 - July 13, 2012 (PDF 74 KB, 6 pages)


Desperation move?

Powertech attorneys attempt to reopen appeal period by claiming judge's dismissal order was never signed

Posted October 2, 2012

Attorney Paul G. Buchmann, Fognani & Faught, PLLC

Five weeks after the deadline for filing a notice of appeal, Powertech's attorneys have filed a motion attempting to resuscitate the Canadian company's ill-advised lawsuit against the State of Colorado over new uranium mining regulations.  The motion was filed yesterday in Denver District Court.

When the August 27 deadline passed, most observers concluded that Powertech had decided to throw in the towel on the lawsuit.  This seemed logical given the judge's dismissal of the action because "Powertech has failed to meet its burden in establishing the allegations contained in its Complaint", according to the Court's order.

However, others with knowledge of the case speculated that Powertech's Denver law firm, Fognani & Faught, PLLC, may have intended to file a notice of appeal, but inadvertently let the appeal period lapse.

If true, Fognani & Faught may have been strongly motivated to find a way to preserve Powertech's right to appeal the Court's dismissal of the case.  Hence, yesterday's motion.

The motion, signed by junior attorney Paul Buchmann, asserts that Judge Christina Habas never signed the dismissal order, and that an unsigned order means that judgment in the case was never entered.  Buchmann requests that the Court sign the order, thereby reopening the period for filing an appeal.

The only problem for Powertech and Fognani & Faught is that Judge Habas did sign the July 13 dismissal order, according to someone with knowledge of the case.  A copy of the signed order is reportedly in the possession of the attorneys for the defendant, the Colorado Mined Land Reclamation Board.

It appears likely that Powertech's motion will be unsuccessful and that the dismissal of the case will stand.  The Court's dismissal does not bode well for the future of the Centennial project, since Powertech has expressed strong objections to many of the new uranium mining rules.

Despite this, Powertech continues to tell investors that the project is temporarily on hold, and that it will be reactivated when its proposed Dewey-Burdock project in South Dakota is permitted and begins to generate revenue.  Final licensing for Dewey-Burdock is not expected until 2014 at the earliest.

JW

PLAINTIFF/APPELLANT’S MOTION FOR ENTRY OF JUDGMENT - Plaintiff/Appellant: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant/Appellee: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Case Number: 2010 CV 8615 - October 1, 2012 (PDF 148 KB, 3 pages)


POWERTECH FOLDS

Canadian company doesn't appeal the dismissal of its lawsuit against new Colorado uranium mining rules; is the Centennial project dead?

Posted August 29, 2012

Powertech Uranium Corp. has apparently decided to not appeal the July 13 dismissal of its lawsuit challenging new Colorado rules regulating in-situ leach uranium mining.

Soon after announcing the proposed Centennial ISL uranium project in 2007, Powertech assured local Weld County, Colorado landowners that it could conduct ISL uranium mining and restore groundwater aquifers to pre-mining water quality.

But when northern Colorado residents and legislators sought to incorporate this concept into state law, Powertech sang another tune.  The Canadian company vigorously opposed the 2008 legislation that eventually passed by overwhelming bipartisan majorities, and fought subsequent regulations drafted by the Colorado Mined Land Reclamation Board.

After the MLRB unanimously adopted the rules on August 12, 2010, Powertech filed a lawsuit seeking to overturn them.  After delays by Powertech, the case was finally dismissed on July 13 of this year. 

The deadline for filing a notice of appeal with the district court was Monday, August 27.  A second deadline for filing a notice of appeal with the appellate court is Friday, August 31.  Since both filings are required in this case, one can assume that Powertech has missed the Monday deadline and therefore is not appealing the judge's dismissal order. 

The decision to not appeal is one more indication that Powertech has given up on the controversial Centennial project.  In the last year, Powertech has directed federal and state regulators to cease all permitting activities, closed its Wellington, Colorado project office, transferred or laid off the project manager and support staff, allowed key land options to expire, listed project real estate for sale, and announced that it is shifting its attention and resources to the proposed Dewey-Burdock project in South Dakota.

However, Powertech is unlikely to publicly admit that it has terminated the project since it wants investors, Canadian broker-dealers and hedge fund managers, and potential acquirers and "strategic partners" to think the Centennial project is still an economically-viable uranium project.

JW


Powertech's July 2012 investor presentation rife with misleading claims, omissions, and contradictions

Powertech claim Comment
The company has a "revitalized capital structure". While Powertech was able to issue new stock and restructure its debt to Belgian company Synatom in March 2011, it has since burned through most of its cash and could be insolvent by the end of the year without new financing. 
Slide 3 includes the claim that Powertech has "world-wide uranium expertise" of 200+ years.  Slide 20 states that the company has greater than 150 years of experience as "uranium finders, permitting, and design, construction & operation. Nowhere in the presentation does Powertech mention that co-founder and former chairman and COO Wallace Mays left these positions.  Mays considered Powertech to be his company, and most of Powertech's international and domestic uranium experience was attributable to Mays.
Dewey-Burdock project permits and license applications have been filed. Powertech has not yet submitted a Large Scale Mine Permit application to the State of South Dakota.  This is one of the three major permits/licenses needed for the project.  (Note: This permit application was filed on October 1, 2012.)
Centennial project permit applications are "ready to be completed and filed". This claim is particularly misleading since Powertech has directed the U.S. EPA and the State of Colorado to cease all permit application review activity.  All permitting activity on the project has been suspended.
Slide 3 includes the claim that the company has a "large uranium base" of 16.2 million pounds of "indicated" resources and 6.6 million pounds of "inferred" resources. Powertech fails to mention on this slide that it used different uranium price assumptions to calculate the resource estimates for the two projects.  A more aggressive assumption for the Centennial project resulted in a higher resource estimate.
Powertech has other "advanced exploration properties for future development". Of the three "advanced exploration" properties, Aladdin, Dewey-Terrace, and Powder River Basin (all in Wyoming), Aladdin is the only property with a NI 43-101 compliant technical report, but the report has numerous shortcomings as reported on this website.
The company had cash of $3.2 million CAD as of March 31, 2012. The presentation was released in July 2012.  There is no reason why Powertech should not have reported its cash position as of June 30, 2012, which was only $1.9 million.

PowerPoint presentation - "Advancing Towards Uranium Production" - Powertech Uranium Corp. - July 2012 (PDF 1,800 KB, 21 pages)


"Colorado activists took on uranium giant and won — for now at least" by Monte Whaley, Denver Post - July 31, 2012


"Located just 10 miles from the booming college town of Fort Collins, the proposed Centennial mine is unusual for a North American uranium project in that it’s close to a population center. Most of the mines worked in the 1950s and ‘60s were in southwestern Colorado, a region of mesas, deep river canyons, and few people." from "The Uranium Boom Hits Western U.S." by Richard Martin, energytribune.com, May 19, 2008.  Energy Tribune is a website providing news and analysis to investors in energy stocks.


CASE DISMISSED

Powertech's lawsuit challenging new Colorado uranium mining rules is thrown out by judge; court rejects each and every argument raised by Canadian company; C.A.R.D. co-founder calls on Powertech to formally abandon Centennial project

Posted July 13, 2012, Updated July 22, 2012

Powertech CEO Dick Clement pushed the failed lawsuit against the State of Colorado.  Clement had not read the court's decision as of July 16, three days after it was issued, according to one reporter.

"Local Group Prevails as Colorado Court Rejects Uranium Mining Suit Against the State of Colorado" - taccolorado.com (Tallahassee Area Community, Inc.) - July 17, 2012 

"Colo. judge upholds uranium mining rule" by Manuel Quinones, Greenwire (Environment & Energy Publishing) - July 17, 2012 

"Uranium regulations lawsuit thrown out; Canadian company filed to overturn state groundwater rules" by Collin McRann, Telluride Daily Planet - July 17, 2012  

"Judge tosses uranium lawsuit that claimed Colorado rules were capricious" by Monte Whaley, Denver Post - July 17, 2012 

"Judge dismisses Powertech's lawsuit" by Cathy Proctor, Denver Business Journal - July 16, 2012  

"Denver District Court dismisses Powertech lawsuit Court; confirms 2008 state law regulating mining operations can be used" by Jessica Maher, Loveland Reporter-Herald - July 16, 2012  

"Powertech mulls whether to appeal Colorado ruling" - Associated Press - July 17, 2012 

"Powertech: Uranium mining still viable near Wellington despite tossed lawsuit" by Bobby Magill, Fort Collins Coloradoan - July 17, 2012  

"State court rejects Powertech lawsuit" by Kate Hawthorne, North Forty News - July 16, 2012  

"Colorado: Court upholds rules that protect water from uranium mining and protect right to public involvement" by Bob Berwyn, Summit County Citizens Voice - July 15, 2012  "Efforts by a Canadian mining company to bully Colorado came to naught last week, as Denver District Court Judge Christina Habas upheld state regulations that protect water from in situ leach uranium mining impacts."

Weld County land owner Robin Davis, a co-founder of C.A.R.D. whose ranch is adjacent to Powertech’s proposed mine site, praised the ruling. “Powertech had told us from day one that they could and would restore our water. Instead of making good on that promise, the company instead sought through the courts to eliminate ground water protections and exclude the public from the process. If it can't fulfill its promises of protecting our precious water supplies, Powertech should formally abandon this risky project.”

 

News release - Colorado Court Rejects Canadian Mining Company’s Suit Against State of Colorado - Coloradoans Against Resource Destruction (C.A.R.D.), Tallahassee Area Community, and Western Mining Action Project - July 13, 2012 (PDF 82 KB, 2 pages)

ORDER (Christina M. Habas Denver District Court Judge) - Plaintiff: POWERTECH (USA) INC., a South Dakota Corporation, v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD, and Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; AND SHEEP MOUNTAIN ALLIANCE - Case No. 10CV8615 - July 13, 2012 (PDF 23 KB, 6 pages)

MINERAL RULES AND REGULATIONS OF THE COLORADO MINED LAND RECLAMATION BOARD FOR HARD ROCK, METAL, AND DESIGNATED MINING OPERATIONS - Effective September 30, 2010 (PDF 871 KB, 205 pages) 


Powertech attorneys file final brief in uranium rules lawsuit

Judge's order expected before July 13

Posted June 23, 2012

Attorneys from Denver law firm Fognani & Faught filed the final brief June 15 in Powertech's lawsuit against the Colorado Mined Land Reclamation Board.  The legal action challenges uranium mining rules adopted by the board in 2010.

The case now goes to Denver District Court Judge Christina Habas for a final ruling.  Judge Habas has announced her July 13, 2012 retirement from the court; an order ruling on Powertech's case is expected before then.

As the case has unfolded, Powertech's claims have steadily narrowed according to court filings.  The Canadian company's original complaint includes a multitude of allegations:  First, certain rule language proposed near the end of the rulemaking process did not comply with state statutes requiring a statement of the basis, specific authority, and purpose for the rules.  Second, certain state legislators improperly attempted to influence the rulemaking and thus violated the Colorado Constitution's separation of powers.  And third, sixteen of the new rules are unreasonable, arbitrary, capricious, vague, unduly burdensome, overreaching, prejudicial, or lacking a basis in law.

A couple of claims were thrown out by Judge William W. Hood III early in the proceedings; many others were simply dropped by Powertech.

In contrast to its 2010 complaint, Powertech's final brief includes only a handful of relatively narrow claims.  The company's attorneys argue that four rules drafted near the end of the rulemaking process lacked the required statement of basis and purpose, and that the same rules lacked adequate legislative authority.  The four rules address drilling fluid pit liners, baseline water quality testing before exploratory drilling, and public comment and appeal rights related to prospecting and mine permit transfers.

Most notably, Powertech dropped its legal challenge to a series of new rules that implement the core provisions of Colorado House Bill 08-1161.  Taken together, the rules place strict limits on the permitting, operation, and reclamation of in-situ leach uranium mining, with an emphasis on protecting ground water quality.

Powertech may consider its remaining claims to be the most promising from a legal standpoint, but overall its lawsuit appears to be running out of gas.  In addition to its narrowed scope, the final brief includes few caselaw citations to support the arguments, and it leans heavily on hyperbole.  For instance, Powertech attorneys argue that if the judge endorses the challenged rules she will be doing "violence to both the letter and spirit" of the Colorado Administrative Procedures Act and the Mined Land Reclamation Act.

JW

PLAINTIFF/APPELLANT’S REPLY BRIEF - Plaintiff/Appellant: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant/Appellee: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Case Number: 2010 CV 8615 - June 15, 2012 (PDF 61 KB, 11 pages)

DEFENDANT MINED LAND RECLAMATION BOARD’S ANSWER BRIEF - POWERTECH (USA) INC., A SOUTH DAKOTA CORPORATION, Plaintiff, v. STATE OF COLORADO MINED LAND RECLAMATION BOARD, Defendant; and Defendant-Intervenor(s): COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY; SHEEP MOUNTAIN ALLIANCE - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Case No. 2010 CV 8615 - May 25, 2012 (PDF 126 KB, 43 pages)

RESPONSE BRIEF OF DEFENDANT-INTERVENORS - Plaintiff(s): POWERTECH (USA) INC.; v. Defendant(s): COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenor(s): COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY; SHEEP MOUNTAIN ALLIANCE - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Case Number: 2010CV8615 - May 25, 2012 (PDF 110 KB, 29 pages)


POWERTECH BEGINS TO SELL OFF CENTENNIAL PROJECT ASSETS

Updated May 30, 2012 - Powertech recently listed this property for sale with ReQuest Real Estate Services of Wellington, Colorado.  The 35 acre parcel with a 1,729 square foot home (with 1,729 sf basement) at 51955 Weld County Road 21 was purchased in 2007 by Powertech for $340,000.  The property is listed for sale at $259,900, or 76% of what Powertech paid to acquire it.  The adjacent 44 acre lot to the south owned by Powertech is also for sale, according to an internet ad. Powertech purchased both properties in 2007 because the Canadian company determined that control of the surface rights was critical to the success of the proposed Centennial uranium mine project.  Powertech has stopped all permitting work on the project, walked away from optioned property, closed the project office in Wellington, and appears to have terminated the project's two managers.  (Photo by J. Davis)

Scope of lawsuit scaled back

Powertech's opening brief seeks invalidation of all new Colorado uranium mining rules but only argues against handful of rules added near end of rulemaking

Posted April 27, 2012, Updated May 13, 2012

In a surprising concession, Powertech has backed off its legal challenge of the most critical new uranium mining rules adopted by the Colorado Mined Land Reclamation Board in 2010.  The rules were adopted after a lengthy and extensive public rulemaking process and are intended to implement bills passed by the legislature in 2008.

In an opening brief filed on April 11, 2012, Powertech's attorneys present arguments against rules related to five issues that were discussed near the end of the rulemaking process.  The issues include pit liners for drilling-related mud pits, notifying local governments of upcoming prospecting/exploration activities, collection of baseline water quality data relating to prospecting, and others.

Powertech argues that these rules "were promulgated without proper notice to the public and an opportunity for hearing, without statutory authority, in an arbitrary and capricious manner and with no scientific or technical basis in the record demonstrating their need to protect public health or the environment."

What is surprising is that Powertech does not argue against the numerous other rules adopted by the Mined Land Reclamation Board.  These other rules address the most important elements of the 2008 legislation, including the requirement that an operator must demonstrate by substantial evidence that affected ground water will be reclaimed to premining baseline water quality or better, or to a quality which meets state ground water standards.

Furthermore, Powertech did not challenge the rule requiring an operator to achieve reclamation so that existing and reasonably potential future uses of groundwater are protected.

And no arguments were presented against the rule requiring a permit applicant to provide information about five in-situ leach mining operations that “demonstrate the applicant’s ability to conduct the proposed mining operation without leakage, vertical or lateral migration, or excursion of any leaching solutions or ground water containing minerals, radionuclides or other constituents mobilized, liberated or introduced by the mining operation into any ground water outside of the permitted in-situ leach mining area.”

Throughout the rulemaking, Powertech argued strongly against these rules, claiming that they were unreasonable, impractical, and too costly.  None of these arguments made it into the opening brief filed two weeks ago.

Of course, that didn't stop Powertech from requesting that the court invalidate the entire set of rules.  In lieu of that, Powertech asks the court to throw out the few rules that were developed near the end of the rulemaking.

The Colorado Attorney General has until May 25 to file an answering brief on behalf of the Mined Land Reclamation Board.  It is expected that attorneys Jeffrey Parsons and Travis Stills will file an answering brief for Defendant-Intervenors Coloradoans Against Resource Destruction, Tallahassee Area Community Inc., and Sheep Mountain Alliance. 

JW

PLAINTIFF/APPELLANT’S OPENING BRIEF - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Plaintiff/Appellant: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant/Appellee: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE. Case Number: 2010 CV 8615 - April 11, 2012 (PDF 74 KB, 18 pages)


RULES LAWSUIT DELAYED

Case should be before court by June, assuming Powertech still in business

Posted February 27, 2012, Updated May 13, 2012

District Court Judge Christina M. Habas today issued an order extending the briefing deadlines for Powertech's lawsuit against the Colorado Mined Land Reclamation Board (MLRB).  Powertech filed the lawsuit in 2010 in an attempt to reverse new rules governing in-situ leach uranium mining in Colorado.

The rules are intended to protect groundwater from contamination by radionuclides and heavy metals mobilized during ISL uranium mining.  The new rules were pushed by Northern Colorado residents and landowners in response to Powertech's proposed Centennial uranium project. 

The project would be located less than seven miles from Fort Collins, Colorado, a city of 143,986 people according to the 2010 census. 

Although Powertech promotes the ISL process as cheaper and less hazardous, the portion of the Centennial project located closest to Fort Collins would likely have to be mined by the open pit method.  The uranium deposits in this area are too shallow for typical ISL mining.

Powertech has floated the idea of "enhancing" the aquifer by pumping in massive quantities of fresh water to create the conditions necessary for ISL mining, but has been unable to point to any other uranium mining operation that has attempted this.

According to a person with knowledge of the case, the extended briefing deadlines mean that the lawsuit will be before the court by June and the court should issue a ruling by late summer.

Powertech must file its opening brief by April 11.  The MLRB and intervening parties have until May 25 to file answering briefs.  Coloradoans Against Resource Destruction, Tallahassee Area Community, and Sheep Mountain Alliance have intervened in support of the MLRB.  No companies or organizations have intervened to support Powertech's lawsuit.

Powertech then has until June 15 to file a reply brief.  Following briefing by the parties, the judge will then determine whether the MLRB "exceeded its jurisdiction or abused its discretion" during the rulemaking process.  Given the complexity of the case, a decision will likely take several weeks.

Powertech's ability to advance its lawsuit against the MLRB may depend on whether the Canadian firm can line up new financing in the next couple of months.  The company had only $5 million in cash as of September 30, 2011, and had been spending roughly $700,000 per month during the third quarter of last year.

Powertech has not issued its year-end financial statements.  But assuming the same cash burn rate and no new financing, the company will be out of cash by late spring or early summer. 

JW

Order Approving Joint Motion for Modified Briefing Schedule - Judge Christina M. Habas - February 27, 2012 - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Plaintiff: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE - Case Number: 2010 CV 8615 (PDF 63 KB, 4 pages)


Powertech requests more time to file opening brief in lawsuit

Posted February 19, 2011

According to someone familiar with the situation, Powertech attorney John Fognani wants to extend the deadline for filing the Canadian company's opening brief in its lawsuit against the Colorado Mined Land Reclamation Board (MLRB).

Under Colorado law, the original filing deadline is March 7.  Fognani has discussed a two week extension with the Colorado Attorney General's office, and it is likely the extension will not be opposed and will be granted by the court.

Powertech sued the state in late 2010 following a lengthy rulemaking process conducted by the Division of Reclamation, Mining and Safety and the MLRB.  The purpose of the rulemaking was to establish regulations to implement new legislation regarding in-situ leach uranium mining.

The primary bill, House Bill 08-1161, was adopted in 2008 in response to Powertech's proposed Centennial uranium project in Weld County.  The bill established new requirements for permitting, operating, and reclaiming in-situ leach uranium mines.

HB 08-1161 had strong grassroots support and passed both the Colorado House and Senate by wide margins.

Powertech's lawsuit seeks to overturn certain regulations implementing key provisions of HB 08-1161 and related bills.  In an August 2010 written response to the MLRB, Fognani and Powertech CEO Dick Clement stated that a particular requirement related to baseline water quality information "would be fatal to any serious potential in situ recovery project."

The lawsuit appears to be Powertech's final attempt to salvage the troubled Centennial project.  In the last year, Powertech has relinquished control of a large land and mineral position, suspended all permitting activities with the U.S. Environmental Protection Agency and the Colorado Division of Reclamation, Mining & Safety, and closed its project office in Wellington, Colorado.  It is unclear if the two employees assigned to the project, Terry Walsh and Mike Beshore, are still with the company.

JW


GAME ON!

Powertech files certified record in lawsuit against State of Colorado; company's opening brief is due March 7

Posted February 1, 2012, Updated February 12, 2012

Powertech has filed its Notice of Filing of Certified Record with the Denver District Court, setting into motion the briefing phase of its lawsuit against the Colorado Mined Land Reclamation Board (MLRB).

The notice, along with an index and compact disc containing 5,997 pages of documents, was filed on January 27, the deadline set earlier by District Court Judge William W. Hood III.

The record covers virtually the entire rulemaking process conducted by the MLRB to establish regulations following the 2008 passage of Colorado House Bill 08-1161 and other related bills.  HB 08-1161 requires mining companies to restore groundwater to at least baseline conditions or state water quality standards following in-situ leach uranium mining, among other provisions.

By agreement between Powertech and the MLRB, certain emails, letters, and statements submitted by members of the public were omitted from the certified record.  According to someone familiar with the matter, these comments by members of the public were never forwarded to the MLRB by the Colorado Division of Reclamation, Mining and Safety.  

In accordance with Colorado statutes, the filing triggers a forty day period during which Powertech's attorneys must file an opening brief arguing the merits of the Canadian company's case.  Powertech's complaint alleges that many of the rules are "unreasonable, arbitrary, capricious or otherwise contrary to law."

The deadline for Powertech's opening brief is March 7.  Powertech filed the lawsuit on November 1, 2010.

JW

PLAINTIFF POWERTECH (USA) INC.’S NOTICE OF FILING OF CERTIFIED RECORD - Plaintiff: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Case Number: 2010 CV 8615 - January 27, 2012 (PDF 35 KB, 3 pages)

Certification of administrative record by Colorado Division of Reclamation, Mining and Safety - January 27, 2012 (PDF 46 KB, 2 pages)

Exhibit B - MLRB Record Index - January 27, 2012 (PDF 59 KB, 2 pages)


Judge Hood to Powertech: File case record by January 27 or lawsuit will be dismissed

Powertech's lawsuit against state of Colorado hits another bump in the road

Posted January 9, 2012

Judge William W. Hood III has responded to Powertech's foot-dragging on its lawsuit against the state of Colorado by giving the Canadian start-up company until January 27 to file the certified record of the case, which includes transcripts of the rulemaking proceedings. 

Denver District Court Judge William W. Hood III
Powertech's attorneys, Fognani & Faught, PLLC, filed the lawsuit on November 1, 2010 against the Colorado Mined Land Reclamation Board (MLRB) and Mike King, Executive Director of the Department of Natural Resources. 

The lawsuit seeks to overturn new Colorado uranium mining rules that were described by Powertech CEO Dick Clement as "fatal" to the proposed Centennial project.  Clement later flip-flopped, saying the rules are "livable".

Among other provisions, the new rules require that uranium mining companies restore groundwater to baseline conditions or to state water quality standards following in-situ leach mining.

But Powertech's lawsuit has been plagued with problems and setbacks from the start.

Powertech attorney John Fognani

After filing the action, the law firm failed to serve the Colorado Attorney General as required under the Colorado Rules of Civil Procedure.  Fognani & Faught also failed to comply with the Colorado Administrative Procedure Act by sending a notice of the lawsuit and a copy of the complaint to participants in the rulemaking process. 

Three weeks after the lawsuit was filed, Colorado Attorney General John Suthers noted in a filing with the court that "to date, the Colorado Attorney General's Office has not been served with a copy of the Summons and Complaint, as required" and that "Plaintiff (Powertech) has failed to notify the many hundreds of people who participated in this rulemaking proceeding of the filing of this judicial review litigation as required."

Presumably, Powertech and its law firm served the AG and notified the rulemaking participants following Suthers' filing.

On December 8, 2010, Suthers filed a motion to dismiss Powertech's claims against Mike King, the Executive Director of the Colorado Department of Natural Resources.  King served on the MLRB during the rulemaking and acted as hearing officer.

Under Colorado law, Powertech can seek judicial review of "final agency action", but Suthers argued that King, unlike the MLRB,  had no authority to take final agency action.  Judge Hood granted Suthers' motion and dismissed King from the lawsuit on March 31, 2011.

On January 25, 2011, Suthers and Assistant Attorney General Jeff Fugate filed the MLRB's answer to Powertech's complaint, signaling the state's intention to fight the lawsuit.

An April 26 order by Judge Hood agreed with arguments by the attorney general and subsequently dismissed two of the four claims made by Powertech against the MLRB.  In one of the claims, Powertech asserted that certain Colorado legislators violated the "separation of powers" clause of the Colorado Constitution by sending letters to the MLRB regarding the rulemaking.

Judge Hood dismissed that claim since Powertech did not name the legislators as defendants, and Powertech did not state a separation of powers claim against the MLRB.

On June 28, 2011, Judge Hood granted an order approving the intervention of three citizens groups in support of the MLRB.  The groups, Coloradoans Against Resource Destruction (CARD), Tallahassee Area Community, Inc., and Sheep Mountain Alliance, were all active in the rulemaking proceedings.  The intervention brought noteworthy attorneys Jeffrey Parsons and Travis Stills into the fight against Powertech's lawsuit.

From the beginning, Powertech has hoped that it would attract help for its lawsuit from other uranium companies.  In a November 18, 2010 news story in the Fort Collins Coloradoan, Clement said that Powertech was going to bat for the entire uranium industry with its lawsuit.  "This is a lawsuit on behalf of industry, not just Powertech", asserted Clement in the article.

Apparently, the industry hasn't gotten the message.  According to people familiar with the matter, Powertech officials blame their year-long delay in advancing the lawsuit on their inablility to convince other mining companies to help foot the bill for the litigation. 

Pursuing the lawsuit has been a low priority for Powertech since the company shifted its focus in early 2011 to the proposed Dewey-Burdock project in South Dakota.  And Powertech has been winding down the Centennial project over the last several months.  The company failed to exercise its options to purchase the Diehl and Varra properties, closed its Wellington project headquarters, and suspended all permitting activities with the U.S. Environmental Protection Agency and the Colorado Division of Reclamation, Mining & Safety.

The official story from Powertech is that the delay is due to economic effects from the Fukushima nuclear disaster.  But in the recent response to Judge Hood's show cause order, attorney John Fognani doesn't explain how Fukushima delayed Powertech's lawsuit, and public documents reveal that Powertech's decision to shift its focus from Colorado to South Dakota preceded Fukushima by more than a month.

Whether Powertech can file the certified record of the case by January 27 is an open question.  Following the certification of the record, Powertech has forty days to file its opening brief with the court.

JW

Ruling by Judge William W. Hood III approving Plaintiff's request for additional time to file certified record - POWERTECH USA INC vs. ST OF COLO MINED LAND RECLAMATION BOARD et al - CO Denver County District Court 2nd JD - Case Number: 2010CV8615 - Dec 20, 2011 (PDF 70 KB, 4 pages)


Powertech blames lawsuit delay on Fukushima

Delay's connection with Japanese nuclear plant meltdown is unexplained; Powertech requests that case not be dismissed

Posted December 19, 2011

Powertech attorney John Fognani on Friday filed a response to a show cause order issued by Denver District Court Judge William W. Hood III a month earlier.  Judge Hood's order directed Powertech to explain why its lawsuit against the Colorado Mined Land Reclamation Board should not be dismissed. 

Powertech hopes to overturn new uranium mining and groundwater protection regulations adopted in response to the proposed Centennial uranium project.   

Since filing the action on November 1, 2010, Powertech had failed to take the next step to certify the record for the case.  Under Colorado court rules, certification of the record starts the briefing schedule that must be followed by the parties to the lawsuit.

Powertech's response requests that Judge Hood not dismiss the case and asks for additional time to have the case record certified.  The Canadian company blames its delay on unspecified "economic circumstances" associated with the Fukushima nuclear power plant disaster that have forced the company to allocate its funds to the Dewey-Burdock project:

"Since filing its complaint and, as a result of the rules that went into effect on September 30, 2010, Powertech has been forced due to economic circumstances including certain unforeseen and unexpected events caused by or associated with the tragic nuclear incident at Fukushima Daiichi to focus its efforts and allocate its funds in pursuing a license for and in effecting the operations of its in situ uranium project in South Dakota known as Dewey Burdock."

The problem with this is that Powertech's recent quarterly securities filings don't appear to support this explanation.  Powertech's October 26, 2011 Management Discussion and Analysis addresses the earthquake and tsunami in Japan, and notes that the company's stock price has declined since Fukushima.  And in a discussion of the proposed Centennial project in northern Colorado, Powertech says that "as of October 2011, the Company has elected to defer activities on Centennial and focus its efforts on the Dewey-Burdock Project exclusively."

But nowhere does the MD&A make a connection between Fukushima and Powertech's decision to shift its focus to Dewey-Burdock.

The fact is that Powertech signaled its intention to focus solely on Dewey-Burdock prior to the Fukushima disaster.  As early as February 8. 2011, more than a month before Fukushima, Powertech issued a news release explaining that proceeds from an upcoming public stock offering would be used only for Dewey-Burdock and for "general corporate purposes."

The public stock offering, Powertech's first since its 2006 reverse merger, closed on Tuesday, March 15, four days after the tsunami hit the Fukushima Daiichi nuclear power plant.  The closing date had been set weeks earlier, and the offering was successful and apparently not affected by Fukushima.

Powertech sold nearly 48 million shares at $0.47 CAD per unit (each unit consists of one common share and one half of one common share purchase warrant.)  After paying issuance fees and paying down debt pursuant to a refinancing agreement, Powertech cleared about $8.5 million CAD.

Even though the offering closed four days after the Fukushima incident began, Powertech's agents managed to sell the maximum offering of 47.9 million units at the price of $0.47 CAD listed in the March 2, 2011 Short Form Prospectus. 

Powertech has announced no new financing since March 15.

For nine months Powertech has had enough money to advance its lawsuit but has chosen not to.  Only when threatened with the dismissal of the lawsuit has Powertech indicated its intention to move forward. 

So if Fukushima is not the reason for Powertech's delay, what is? 

The decision earlier this year to focus on Dewey-Burdock is not surprising given the steep hurdles Powertech faces in permitting the controversial Centennial project as well as the project's hydrogeological and engineering challenges. 

But Powertech can't afford to publicly abandon Centennial.  To do so could seriously damage investor confidence in the Canadian company.  Maintaining an active lawsuit against the State of Colorado over strict new mining rules demonstrates that the Centennial project is still alive, albeit on life-support.

Powertech's legal strategy seems to have been to delay certifying the case record since the certification triggers a roughly three month briefing schedule ending with the judge's ruling on the lawsuit.  If Powertech thought it had a strong case, it would likely have advanced the case several months ago since a favorable ruling would undoubtedly boost its stock price.

If Judge Hood grants Powertech more time to certify the record, the case could be concluded by April or May 2012.  Either party could appeal an unfavorable ruling.

JW

PLAINTIFF POWERTECH (USA) INC.’S RESPONSE TO ORDER TO SHOW CAUSE - Plaintiff: POWERTECH (USA) INC., a South Dakota Corporation; v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD; and Defendant-Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; and SHEEP MOUNTAIN ALLIANCE - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Case Number: 2010 CV 8615 - December 16, 2011 (PDF 35 KB, 3 pages)


POWERTECH GIVES UP ON PUMP TEST

Blubaugh requests immediate withdrawal of modification to prospecting notice filed with state; withdrawal marks cessation of permitting activities for Centennial uranium project; South Dakota project is sole focus for Powertech

Posted December 13, 2011

In a December 12 letter from Powertech permit chief Dick Blubaugh to the Colorado Division of Reclamation, Mining & Safety, the Canadian company "requests the immediate withdrawal" of its only pending permit application for the proposed Centennial in-situ leach uranium project in northern Colorado.

Powertech requested the withdrawal of Modification MD-03 to the Notice of Intent to Conduct Prospecting File No. P-2008-043.  The modification addressed Powertech's plan to dispose of water produced by a proposed aquifer pump test in the northern area of the Centennial project. 

The water, with elevated levels of uranium and radium, would be injected into the same aquifer it had been pumped from.  The injection would require a permit from the U.S. Environmental Protection Agency.  Last month Powertech asked the EPA to suspend work on the injection permit.

The withdrawal of the modification marks the cessation of permitting activities for the controversial and economically marginal Centennial project. 

At one time, Centennial was a flagship project for Powertech.  Although the project's office has been closed, control of a major land and mineral position has been lost, and all permitting activity has ceased, Powertech still has a pending lawsuit against the Colorado Mined Land Reclamation Board.  Powertech hopes to overturn new uranium mining and groundwater protection regulations adopted in response to the Centennial project. 

Powertech's lawyers have been delaying the case for months, resulting in the issuance of a "show cause" order by Judge William Hood III on November 18.  Judge Hood will dismiss the case if Powertech doesn't respond within thirty days of the order.

Blubaugh indicates the Canadian company "will submit the necessary documentation required by the DRMS when it is ready to perform the aquifer pump test", but in the meantime will focus on the proposed Dewey-Burdock project.  Powertech does not currently have enough cash reserves to complete permitting for the South Dakota project, and has obtained no major mining permits.

JW

Letter from Powertech to Colorado Division of Reclamation, Mining & Safety requesting immediate withdrawal of Modification MD-03 to NOI File No. P-2008-043 - Richard Blubaugh, Vice President - Health Safety & Environmental Resources, Powertech (USA) Inc. - December 12, 2011 (PDF 22 KB, 1 page)

Letter from Colorado Division of Reclamation, Mining & Safety to Powertech granting request to withdraw modification MD-03 to NOI P-2008-043 - G. Russell Means, Environmental Protection Specialist II - December 12, 2011 (PDF 664 KB, 1 page)


Powertech to let Centennial exploration permit lapse?

Prospecting notice may be terminated if Canadian company fails to request extension; deadline is December 12

Posted December 9, 2011

The Colorado Division of Reclamation, Mining & Safety has not posted a request from Powertech for another extension of time to respond to issues raised in the Division's March 18, 2010 letter to the company.  The most recent extension expires on December 12. 

The letter pertains to the Division's fourth review of Modification MD-03 to Powertech's prospecting notice P-2008-043.  The modification relates to Powertech's proposal to use an injection well to dispose of groundwater produced by an aquifer pump test in the northern area of the Centennial ISL uranium project. 

The proposed pump test must be conducted before Powertech can submit mining permit applications to the EPA and Colorado regulators.  And the pump test is critical to the project since a 2007 pump test in the north project area indicated  "relatively low hydraulic conductivity values for the production aquifer."

Since May 2010, Powertech has requested and obtained from the Division nine different 60-day extensions to respond to the agency's requests.  The extensions were based on Powertech's claim that it was waiting for an injection permit to be issued by the EPA.  

Powertech has been attempting to obtain a Class 5 Underground Injection Control from the EPA since April 2009.  However, last month Powertech asked the EPA to stop its work on the UIC permit.

If Powertech lets the modification lapse by not requesting an extension or not responding to the Division's 2010 letter, it will have no active state permits for the Centennial project.  No federal or local mining permits have been issued.

JW

Letter from Colorado Division of Reclamation, Mining & Safety to Powertech VP Dick Blubaugh granting a ninth 60-day extension for Powertech to respond to issues raised in the Division's March 18, 2010 letter concerning review of Powertech's request for a third modification to Notice of Intent P-2008-043 - October 28, 2011 (PDF 51 KB, 1 page)   

Email from Valois Shea, US EPA Region 8 announcing suspension of all work on Underground Injection Control permits for Powertech's proposed Centennial project - November 8, 2011 (PDF 46 KB, 1 page)

Fourth review by the Colorado Division of Reclamation, Mining & Safety of Powertech's proposed modification MD-03 to Notice of Intent to Conduct Prospecting P-2008-043 - Allen Sorenson, Reclamation Specialist - March 18, 2010 (PDF 716 KB, 5 pages)

Letter from Richard Blubaugh, VP of Environmental Health & Safety - Powertech (USA) Inc., to Allen Sorenson, Reclamation Specialist - Colorado Division of Reclamation, Mining & Safety regarding prospecting notice P-2008-043 MD-02, withdrawing Powertech's request for approval of the disposal of pump test wastewater in an unlined pit, proposing the storage of the wastewater in metal tanks with later injection into the aquifer, and complaining that public comments were allowed to be submitted - April 14, 2009 (PDF 369 KB)


JUDGE HOOD ISSUES SHOW CAUSE ORDER TO POWERTECH

Denver District Court Judge orders Powertech to explain why it is delaying lawsuit against Mined Land Reclamation Board, or case will be thrown out

Posted November 21, 2011, Updated November 22, 2011

Denver District Court Judge William W. Hood III has issued a show cause order to Powertech ordering the Canadian company to provide a written response within thirty days explaining why it has not advanced its case against the Colorado Mined Land Reclamation Board (MLRB). 

The show cause order states that the case will be dismissed "without prejudice and without further notice" if Powertech fails to make such a showing.

Powertech's lawsuit was filed on November 1, 2010 and challenges the new Colorado uranium mining rules adopted by the MLRB on August 12, 2010.  The lawsuit requests a judicial determination that "the Challenged Rules are arbitrary, capricious, exceed Defendants’ statutory authority under the Act and are otherwise contrary to law."

Among other provisions, the rules require that in-situ leach uranium mines must restore goundwater to pre-mining conditions or to state ground water standards.

Mike King, executive director of the Colorado Department of Natural Resources and a member of the Mined Land Reclamation Board, said on the day the rules were adopted:

"These rules will protect our groundwater resources by requiring baseline characterization and grant much greater transparency to the impacted communities regarding the proposed mining activities."

For his participation in the rulemaking, Powertech sued King along with the MLRB.  On March 31, 2011, Judge Hood granted the defendants motion to dismiss King from the case.  In his order, Judge Hood pointed out that Powertech's attorneys made rudimentary legal errors by including King.   

Several citizens groups intervened in the lawsuit to support the rules, including Coloradoans Against Resource Destruction, Tallahassee Area Community, Inc., and Sheep Mountain Alliance. 

Specifically, Judge Hood's November 18 order requires Powertech to defend why it has not "caused the certified record to be filed with the clerk of the court."  This refers to transcripts of all rulemaking meetings of the MLRB as well as other related documents. 

Under Rule 106 of the Colorado Rules of Civil Procedure, if a party challenges an action taken by a governmental body, certain filing deadlines must be met.  Once a certified record is filed, the plaintiff must file an opening brief within forty days.  The defendant may file an answer brief within thirty days, and the plaintiff has fifteen days to file a reply brief.  Intervening parties may also file briefs.  Following briefing, the court makes its determination.

Powertech's delay in filing a motion to certify the record is likely due to its reluctance to start the clock on the lawsuit.  By doing so, the company incurs significant legal fees.  Powertech is running low on cash and has stopped spending money on the Centennial project while it focuses its resources on the proposed Dewey-Burdock project in South Dakota.  Powertech currently has insufficient cash to complete permitting for Dewey-Burdock.

It has been reported that Powertech has been seeking financial support for the lawsuit from other mining companies.  So far, none have stepped forward to help. 

More importantly, a court ruling against Powertech could be a public relations disaster for the Canadian firm.  It could threaten to bury the Centennial project, since Powertech CEO Dick Clement described the MLRB's rules as "fatal" to the project.  The project is already on a downward trend with the loss of a significant land and mineral position, closing of the project headquarters, and the "suspension" of permit review activities by the EPA.

On a larger scale, an abandonment of the Centennial project might trigger an impairment writedown of the project's assets, affecting Powertech's ability to raise more capital from investors.

JW

SHOW CAUSE ORDER - DISTRICT COURT CITY AND COUNTY OF DENVER, COLORADO - Plaintiff(s): POWERTECH USA INC. v. Defendant(s): STATE OF COLORADO MINED LAND RECLAMATION BOARD - Case Number: 10CV8615 - William W. Hood III, District Court Judge - November 18, 2011 (PDF 15 KB, 1 page) 


EPA SUSPENDS ALL WORK ON CENTENNIAL SITE

Powertech requests that EPA stop its work on all injection well permits

Posted November 8, 2011

In a terse email, EPA permit writer Valois Shea notified interested parties today that the agency's Region 8 Underground Injection Control Program has "suspended all work on the Powertech Centennial site" at the request of Powertech.

The work in question includes two permits - a Class V permit to inject water produced by a proposed aquifer pump test, and a Class I permit for six deep disposal wells.  The proposed disposal wells would be for various liquid wastes including well field bleed, yellowcake wash water, uranium processing bleed, laboratory waste, reverse osmosis brine, and plant washdown water.

Powertech applied for the Class V permit on April 30, 2009.  The Class I permit application was submitted on August 20, 2010.  The EPA issued a final Class V permit to Powertech on December 3, 2010, but appeals were filed with the EPA's Environmental Appeals Board on January 3, 2011.  As a result of the appeals, the EPA withdrew the permit and began work on a revised permit.

The suspension of work by the EPA is only the latest setback for the proposed Centennial project.  In July, Powertech lost roughly half of its surface use acreage and a significant portion of its mineral rights when two options expired.  Powertech took a $2.3 million write off on the loss.

The Canadian company closed its northern Colorado project office in late August.  With the closure of the Wellington office, the two staff members may be working on the Dewey-Burdock project, or they may have been laid off.

Powertech still has an active Notice of Intent to Conduct Prospecting (NOI) with the Colorado Division of Reclamation, Mining & Safety.  A third modification to the NOI relates to the proposed aquifer pump test, but Powertech has managed to avoid responding to requests for more information for over nineteen months.  It is unclear how the EPA work suspension will affect the NOI. 

Lastly, Powertech's lawsuit against the Colorado Mined Land Reclamation Board over new state uranium mining rules is still in limbo.  Powertech's civil complaint was filed on November 1, 2010, but the company has done virtually nothing since then to advance the lawsuit.  Powertech's attorneys have not even moved to certify the case record, an early step required before legal briefs on the case can be filed.

Apparently, Powertech is choosing to divert its financial resources to South Dakota and Dewey-Burdock and is allocating little or nothing to the Colorado lawsuit.  It has been reported that Powertech hopes to find other mining companies to help finance the lawsuit.

JW

Email from Valois Shea, US EPA Region 8 announcing suspension of all work on Underground Injection Control permits for Powertech's proposed Centennial project - November 8, 2011 (PDF 46 KB, 1 page)


FULL DISCLOSURE?

Powertech's Blubaugh requests ninth extension from state for responses to completeness issues but fails to mention Powertech has halted EPA's permit review; DRMS grants extension based on delays "beyond your control"

Posted November 1, 2011

On the same day Powertech filed its third quarter report revealing a request to the EPA to stop work on the company's injection permit for a planned aquifer pump test, permit chief Dick Blubaugh sent a letter to Colorado mining regulators telling a different story.

Blubaugh's October 26 letter was a request for a ninth extension for responding to completeness issues raised by the Colorado Division of Reclamation, Mining & Safety (DRMS).  On March 18, 2010, the DRMS requested additional information from Powertech regarding the Canadian company's application for state approval to inject pump test water into the Fox Hills Aquifer.

Underground injection is Powertech's chosen method to dispose of water produced by a proposed aquifer pump test to be conducted in the northern area of the Centennial project.  The test is needed to assess the economic viability of in-situ leach uranium mining and to collect required data for permit applications.

Based on water quality analysis, the produced water would have elevated levels of uranium and radium.  Powertech preferred to dump the water in an open pasture or an unlined pit but has been unsuccessful in obtaining state approval for these disposal methods.

On April 14, 2009, Powertech dropped the unlined pit idea and requested that the DRMS approve disposal by injection.  Powertech applied for a Class V Underground Injection Control (UIC) permit from the U.S. Environmental Protection Agency on April 30, 2009.

Since May 2010 Powertech has requested and obtained from the DRMS eight different extensions to respond to the agency's requests.  Because the proposal has been actively opposed by local landowners and others, the DRMS has always justified its approval of the extensions because "the Division understands and appreciates that the delays being experienced at the project are beyond your control".

That was the same reason given by DRMS staffer David Bird for approving extension number nine on October 28. 

The difference is that this time Powertech is controlling the delay.  On October 26, Powertech filed its third quarter Management Discussion & Analysis with Canadian securities regulators.  On page five, Powertech states that "the Company has requested that the permit be placed on hold", referring to the EPA's UIC permit.

An EPA source has confirmed that Powertech made the request and that work on the permit has ceased.

On the same day, Dick Blubaugh requested the ninth extension from David Bird.  Blubaugh's reason was that "EPA has reissued the draft permit but has yet to issue the final permit.  Date of issuance is unknown."

While Blubaugh's statements are accurate, they omit the full story - that Powertech has asked the EPA to stop work on the permit.  It is unknown whether this omission of a material fact in Powertech's request to the DRMS was intentional or simply an oversight. 

JW

Letter to the Colorado Division of Reclamation, Mining and Safety requesting an extension for responding to the P-2008-043 NOI MD-03 Fourth Review completeness issues from March 18, 2010 - Richard E. Blubaugh, Vice President - EH&S Resources, Powertech (USA) Inc. - October 26, 2011 (PDF 46 KB, 1 page)

Letter from Colorado Division of Reclamation, Mining & Safety to Powertech VP Dick Blubaugh granting a ninth 60-day extension for Powertech to respond to issues raised in the Division's March 18, 2010 letter concerning review of Powertech's request for a third modification to Notice of Intent P-2008-043 - October 28, 2011 (PDF 51 KB, 1 page)  

POWERTECH URANIUM CORP. (An Exploration Stage Company) - MANAGEMENT DISCUSSION AND ANALYSIS - October 26, 2011 (PDF 182 KB, 23 pages)


POWERTECH TELLS EPA TO PUT INJECTION PERMIT ON HOLD

Critical aquifer pump test is delayed indefinitely "until the company returns its focus to the Centennial Project"; Powertech "has elected to defer activities on Centennial and focus its efforts on the Dewey-Burdock Project exclusively"

Posted October 27, 2011

Powertech's third quarter securities filings reveal that the company has ceased its efforts to obtain an Underground Injection Control (UIC) permit for water disposal from a proposed aquifer pump test.  Powertech requested that the U.S. Environmental Protection Agency put the permit on hold "until the company returns its focus to the Centennial Project."

According to Powertech, the pump test is a critical component to evaluating and permitting the proposed in-situ leach uranium mining project.  The UIC permit is required because Powertech wants to use underground injection to dispose of water produced by the pump test. 

Powertech's October 26, 2011 Management Discussion and Analysis explains that the Centennial project and the aquifer pump test have been "deferred":

Aquifer Pump Test - One particular test that has not yet been performed is the regional aquifer pump test. The pump test is a critical component to determining and understanding the hydrogeological characteristics of the project area. Powertech has been waiting for the EPA to issue its permit to inject, as that is the selected method for disposing of the water pumped during the test. The EPA issued the permit on December 3, 2010. On January 3, 2011, the permit was petitioned for appeal by two parties. On February 7, 2011, the EPA withdrew the permit with the stated intention of modifying and reissuing it. EPA issued the draft UIC permit #CO52209-08412 during May 2011and closed the public comment period during June 2011. As of October 2011, the Company has elected to defer activities on Centennial and focus its efforts on the Dewey-Burdock Project exclusively. Therefore, the planned pump test will be delayed until the company returns its focus to the Centennial Project and the Company has requested that the permit be placed on hold.  

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) - MANAGEMENT DISCUSSION AND ANALYSIS - October 26, 2011 (PDF 182 KB, 23 pages)


Proposed Centennial uranium project could serve as processing site for radioactive wastes

U.S. Nuclear Regulatory Commission wants to allow in-situ leach uranium mines to accept and process uranium-contaminated resins from municipal water systems

Posted October 17, 2011

In its infinite wisdom, the federal Nuclear Regulatory Commission (NRC) has determined that in-situ leach uranium mining operations such as Powertech's proposed Centennial project should be allowed to serve as waste processing sites for resins containing uranium from community water treatment facilities.  Since the resins are similar to those used in ISL mining and are processed in a similar way, the NRC is proposing that ISL mine operators should be allowed to accept these wastes.

The NRC is currently seeking public comment on the draft guidance.  If the guidance becomes final, it has the potential to turn ISL uranium mining projects into permanent radioactive waste processing facilities.

In announcing the draft guidance, the NRC failed to explain that it would apply to ISL mine projects.  The agency's October 12 news release never mentions in-situ leach uranium mines.  Instead, it refers to "uranium recovery facilities".  Under federal law and NRC rules, ISL mines and uranium mills are considered uranium recovery facilities.  (The NRC does not regulate underground and open pit uranium mines.)

No doubt Powertech and other uranium industry players are thrilled to have this potential new (and permanent) revenue stream.  If the Centennial project is ever built, northern Colorado could become the center for processing of uranium wastes from municipal water systems across the state. 

JW

News release - "NRC SEEKS PUBLIC COMMENT ON DRAFT GUIDANCE CONCERNING TREATMENT OF URANIUM FILTERED FROM LOCAL WATER SYSTEMS" - United States Nuclear Regulatory Commission, Office of Public Affairs - October 12, 2011 (PDF 74 KB, 1 page)  

Policy Regarding Submittal of Amendments for Processing of Equivalent Feed at Licensed Uranium Recovery Facilities - AGENCY: Nuclear Regulatory Commission. ACTION: Regulatory issue summary; request for comment. - Federal Register: September 30, 2011 (Volume 76, Number 190)


FOR RENT: Former Centennial project headquarters

Posted September 10, 2011

The North Forty News ("Homegrown, hyperlocal news since 1993") ran a display ad in its September edition for the former Wellington headquarters for Powertech's troubled Centennial uranium project. 

Powertech moved out of the converted residence in late August and no longer has an office in northern Colorado. 

The proposed Centennial project is located about five miles east of Wellington. 

Although Powertech originally envisioned the Wellington office as the hub of its community outreach efforts, the company has had little success persuading local residents, landowners, and elected officials that uranium mining would be a net benefit to northern Colorado. 

Since December 2007, seven governing bodies of northern Colorado cities and towns have passed resolutions opposing uranium mining in the area (Fort Collins, Greeley, Wellington, Ault, Nunn, Timnath, and New Raymer).

JW


CEO CLEMENT: "Some of my people are working out of their home offices"

Posted August 28, 2011

In an August 26 story in the Fort Collins Coloradoan, Powertech CEO Dick Clement finally confirmed that the company has closed its project headquarters in Wellington. 

Clement told reporter Bobby Magill that "until we do something else, some of my people are working out of their home offices."  Clement may be referring to project staffers Terry Walsh and Mike Beshore, although it is unclear if the two are still on the Powertech payroll.

Powertech had been paying $1,800 a month for the office space in a small one-story converted house located behind the Loaf N Jug gas station and convenience store.  The company had apparently been renting on a month-to-month basis since its lease with landlord Doug Andersen expired in January of this year.

The closure was not unexpected.  As early as February Powertech issued a stock prospectus that revealed the company's plans to focus all its resources on the Dewey-Burdock project in South Dakota.  A company sign that hung in front of the Wellington office vanished several months ago and was never replaced.  And in recent weeks most of the front lawn had turned brown.

Powertech has yet to issue a news release announcing the closure of the Centennial project office.  In contrast, the company was quick to issue its January 11, 2008 release publicizing its opening "to maintain strong oversight of the Centennial Project and to create a local presence in the project area with the objective of enhancing community relations." 

JW 

"Powertech closes office in Wellington" by Bobby Magill, Fort Collins Coloradoan - August 26, 2011

News Release - "Powertech Expands Management Team - Opens New Offices in Greenwood Village and Wellington" - January 11, 2008 (PDF 115 KB, 2 pages)


POWERTECH CLOSES CENTENNIAL PROJECT OFFICE

Posted August 23, 2011

Powertech's former Centennial project office - Wellington, Colorado, August 23, 2011 (photo by JW)

Powertech has quietly shut down its northern Colorado office in the small town of Wellington.  The office was opened to much fanfare in January 2008 and was intended "to maintain strong oversight of the Centennial Project and to create a local presence in the project area with the objective of enhancing community relations," according to Powertech's January 11, 2008 news release. 

The office was staffed by Project Manager Terry Walsh and Senior Environmental Coordinator Mike Beshore.  The converted residence at 8305 6th Street is owned by real estate broker and hardware store owner Doug Andersen. 

Shortly after the office opened, the Wellington Town Board unanimously approved a resolution on April 8, 2008 expressing "its strong opposition to the Project and urging all county, state and federal agencies involved in the permitting process for the Project to recognize that locating the Project along the North Front Range and in close proximity to the Town of Wellington is ill advised because it may well be injurious to the health, safety and/or welfare of the residents in the area and do irreparable harm to the economic well-being of the Town of Wellington." 

Neither Walsh nor Beshore attended the Town Board meeting. 

In recent months, Powertech officials have stated that the proposed Centennial project has been idled so that the company can focus its efforts and resources on the Dewey-Burdock project in South Dakota. 

Last month Powertech was unable to meet payment obligations to exercise options to buy 3,585 acres of land located within the Centennial project's boundaries.  The company was forced to write off $2.3 million already spent on the option agreements.

JW   


NUMBER EIGHT: Colorado DRMS grants eighth extension to Powertech to respond to March 2010 letter

Proposed aquifer pump test intended to assess hydrogeological problems with northern Colorado mining site

Posted August 18, 2011

On Tuesday the Colorado Division of Mining, Reclamation & Safety approved Powertech's request for an 60-day extension to respond to the state's March 2010 letter regarding storage and re-injection of groundwater produced as part of a proposed aquifer pump test. 

The state had previously granted seven extensions to Powertech. 

The March 18, 2010 letter requires a commitment from Powertech to provide details of previous storage tank contents as well as the company's promise not to conduct the pump test during freezing conditions.  But the likely cause for Powertech's reluctance to respond is the letter's requirement for a $63,670 reclamation bond. 

Powertech has been unable to obtain a federal underground injection control permit for the test, a permit it applied for on April 30, 2009. 

The proposed aquifer pump test is critical to the Centennial project since previous tests indicated potential problems.  As Powertech's August 20, 2010 NI 43-101 Preliminary Assessment notes:

"The primary hydrogeologic concern for the development of a uranium ISR project is orebody transmissivity (or hydraulic conductivity). Both have been characterized at a preliminary level, based upon localized aquifer testing and spot coring for geotechnical parameters. The results of these activities are considered by SRK (SRK Consulting Engineers and Scientists) to be marginal for ISR development without aquifer enhancement. Powertech plans to conduct more definitive aquifer testing during 2010 with the goal of reducing this current risk through acquisition of robust data." 

Aquifer enhancement is Powertech's term for raising the water table by bringing in outside water and injecting it into the ground.  The technique has never been attempted for in-situ leach uranium mining.

The consultant's report, mandated by Canadian securities law, goes on to describe the main technical problem associated with the Centennial project:

"Successful ISR conditions require hydraulic as well as aquifer containment; the deposits must be below the water table. The proposed ISR well field development plan calls for the need to augment (raise) the groundwater table to fully saturate those portions of the project areas where about 30% to 40% of the total project resource base is located at or above the water table. This is compounded by the relatively shallow depth of the mineralization in some areas. The challenge will be to elevate the water table by fresh-water injection to saturate the mineralization sufficiently to allow ISR recovery, maximizing hydraulic head and minimizing well field drawdown." 

JW

Letter from Colorado Division of Reclamation, Mining & Safety to Powertech VP Dick Blubaugh granting an eighth 60-day extension for Powertech to respond to issues raised in the Division's March 18, 2010 letter concerning review of Powertech's request for a third modification to Notice of Intent P-2008-043 - August 16, 2011 (PDF 52 KB, 1 page) 

NI 43-101 Preliminary Assessment - Centennial Uranium Project, Weld County, Colorado - August 13, 2010 - Section 18. Interpretation and conclusions (PDF 73 KB, 5 pages)


Blubaugh requests eighth extension for response to completeness issues raised by Colorado mining regulators

Posted August 15, 2011

See request letter: 

Letter to the Colorado Division of Reclamation, Mining and Safety requesting another extension for responding to the P-2008-043 NOI MD-03 Fourth Review completeness issues from March 10, 2010 - Richard E. Blubaugh, Vice President - EH&S Resources, Powertech (USA) Inc. - August 10, 2011 (PDF 48 KB, 1 page)


Powertech writes off millions after uranium mine land deal collapse - by Bobby Magill, Fort Collins Coloradoan - August 11, 2011  According to CEO Dick Clement, Powertech has put the Centennial project on hold and is focusing all its money and efforts on the Dewey-Burdock project in South Dakota.  “We’re focusing our efforts and finances because of problems with the market, Fukushima and everything else made money hard to come by,” Clement said.  Four years ago, Powertech launched a website describing itself as "a near-term uranium producer" with "two near-term production projects".  Four years later, no major mining permits have been obtained, the Centennial project is on hold, and Dewey-Burdock is years away from being permitted.  No wonder money is hard to come by...   


POWERTECH WRITES OFF $2.3 MILLION OF CENTENNIAL PROJECT COSTS

Company takes "impairment charge" after walking away from Diehl and Varra properties

Posted August 3, 2011

To comply with International Financial Reporting Standards (IFRS), Powertech has written off $2.3 million in costs associated with option agreements for 3,585 acres of land, including water, mineral rights, and lease interests, owned by the Diehl and Varra families in Weld County.  Last month, Powertech announced that it would not exercise or extend the agreements, which were originally executed with much hoopla in 2009. 

As a result of its earlier deal with Anadarko, Powertech already controlled the mineral rights on the critical Section 33 owned by the Diehls.  But the possibility of acquiring the surface rights to nearly six sections as well as some additional uranium deposits became a key part of Powertech's promotional message in 2009-2010.  When the Canadian company was forced to disclose its abandonment of the properties, its message was more subdued.

From June 2009 through June 2010, Powertech paid the two families $2,102,000.  The roughly $200,000 in additional costs were most likely legal fees and possibly land services. 

These costs were capitalized as "mineral properties" assets, and were required under IFRS to be written down because the assets had become, to use accounting lingo, "impaired".  The $2.3 million write off represents about 13% of the total asset value of the Centennial project on Powertech's balance sheet.

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and six months ended June 30, 2011 (Stated in United States Dollars) - UNAUDITED (PDF 146 KB, 33 pages)

News release - "POWERTECH OPTIONS ADDITIONAL PROPERTY AT CENTENNIAL" - Powertech Uranium Corp. - July 8, 2009 (PDF 35 KB, 2 pages)  When Powertech announced the optioning of the Varra and Diehl properties in 2009, CEO Dick Clement claimed "the valuable addition of surface rights provides the Company access to its existing privately-owned minerals, and enables it to complete mine planning and supporting operational facility design."  Explaining the termination of the Varra option two years later, Clement now says the properties "were determined to not be necessary for the development of the Centennial Project."  


"Powertech drops Northern Colorado uranium project land deal" by Bobby Magill, Fort Collins Coloradoan - July 7, 2011  According to this article, Powertech chose not to exercise its options to purchase more than 3,500 acres of land from the Diehl and Varra families.  Not mentioned is the fact that the Canadian company simply does not have enough cash to make the option payments while at the same time continue to pursue permitting of the Dewey-Burdock ISL project in South Dakota.  Abandoning the Diehl and Varra properties is a major setback for Powertech; the 2009 announcement of the option agreements stressed the critical importance of the properties to the success of the Centennial project.  Also not mentioned in the article is the fact that the $2.1 million spent by Powertech to acquire and maintain the option agreements is cash that the company cannot use to advance Dewey-Burdock or Centennial.  The article also raises the question of whether the abandonment of the options affects Powertech's ability to conduct aquifer pump tests on Section 33, which is owned by the Diehls.  Powertech has drilled several wells on Section 33 in anticipation of conducting pump tests.  Colorado mining regulators require "proof of right of access" before such tests can be conducted.  While there is some evidence that Powertech may have executed a surface use agreement with the Diehls, no such agreement has been submitted to the state.    


Colorado Division of Reclamation, Mining & Safety grants seventh sixty-day extension to Powertech to respond to March 2010 issues regarding aquifer pump test

Posted July 9, 2011

Letter from Colorado Division of Reclamation, Mining & Safety to Powertech VP Dick Blubaugh granting a seventh 60-day extension for Powertech to respond to issues raised in the Division's March 18, 2010 letter concerning review of Powertech's request for a third modification to Notice of Intent P-2008-043 - June 28, 2011 (PDF 51 KB, 1 page)


POWERTECH LOSES DIEHL AND VARRA OPTIONS

Cash-strapped firm unable to make $6.2 million dollar option payment due last month; Powertech relinquishes control of 3,585 acres of land along with associated water, mineral, and lease interests, gives up an estimated 1.1 million pounds of uranium, and loses $2.1 million in previous option payments; will termination affect proposed aquifer pump test? 

Posted July 5, 2011

In a carefully worded news release, Powertech today announced the termination of its option agreements with the Diehl and Varra families.  To maintain the options, Powertech would have had to pay $6.2 million, and the company had only an estimated $7 million at the end of June. 

As a result, Powertech loses roughly half of the surface use acreage of the Centennial project and 24% of the project's gross mineral rights.  According to the news release, the Diehl property contains 1.1 million pounds of uranium.  Powertech had options to purchase 2,160 acres from the Diehls and 1,425 acres from the Varras.  The option agreements included associated water, mineral, and lease interests. 

The two families have farmed and ranched in Weld county for decades and experienced the extensive uranium exploration activities in the area during the 1970s and 1980s.  Since the option agreements were signed two years ago, Powertech has paid the families a total of $2.1 million, which was to be credited against any final purchase of the properties. However, upon termination of the options these funds are lost and must be written off by Powertech. 

The termination raises an interesting question since Powertech's proposed aquifer pump test would take place on Section 33 which is owned by M.J. Diehl and Sons Inc.  The pump test must take place before Powertech can submit any mining permit applications for the Centennial project.  Referring to the Diehl option agreement, Powertech's March 31, 2011 Annual Information Form notes that "During the term of the option, the Company is permitted to access the property for the purposes of pumping, testing, monitoring and sampling water."  It is unclear if the termination of the Diehl option agreement will affect the proposed pump test, and Powertech did not address this issue in its news release.

JW

News release - "Powertech Announces Termination of Diehl and Varra Option Agreements" - Powertech Uranium Corp. - July 5, 2011 (PDF 152 KB, 1 page)

"Canadian firm cuts back on Weld County uranium deals" by Joey Bunch, Denver Post - July 6, 2011

News release - "POWERTECH OPTIONS ADDITIONAL PROPERTY AT CENTENNIAL" - Powertech Uranium Corp. - July 8, 2009 (PDF 35 KB, 2 pages)  When Powertech announced the optioning of the Varra and Diehl properties in 2009, CEO Dick Clement claimed "the valuable addition of surface rights provides the Company access to its existing privately-owned minerals, and enables it to complete mine planning and supporting operational facility design."  Explaining the termination of the Varra option two years later, Clement now says the properties "were determined to not be necessary for the development of the Centennial Project.

Memorandum Notice of Option - M.J. Diehl & Sons, Inc., Howard M. Diehl, and Donna E. Diehl (Owners/Sellers) - Powertech (USA) Inc. (Purchaser) - June 30, 2009 (PDF 148 KB, 3 pages)


AN UNUSUAL PROJECT

"Located just 10 miles from the booming college town of Fort Collins, the proposed Centennial mine is unusual for a North American uranium project in that it’s close to a population center. Most of the mines worked in the 1950s and ‘60s were in southwestern Colorado, a region of mesas, deep river canyons, and few people." from "The Uranium Boom Hits Western U.S." by Richard Martin, energytribune.com.  Energy Tribune is a website providing news and analysis to investors in energy stocks.
Posted May 26, 2008

DENVER DISTRICT COURT JUDGE APPROVES CARD'S MOTION TO INTERVENE IN POWERTECH'S SUIT AGAINST COLORADO MINING BOARD

ORDER (APPROVING INTERVENTION) - Powertech (USA) Inc, v. Colorado Mined Land Reclamation Board and Defendant-Intervenors Coloradoans Against Resource Destruction, Tallahassee Area Community, Inc., and Sheep Mountain Alliance - District Court, City and County of Denver, Colorado - Case Number 2010CV8615 - June 28, 2011 (PDF 36 KB, 3 pages)


"Unopposed Resounding “NO” to Powertech Proposed Pump Test" by Jay Davis, Voice of Wellington - June 16, 2011


Blubaugh: "it is becoming more doubtful that the (aquifer pump) test will be performed in 2011"

Critical test needed for permit applications delayed; Powertech requests seventh extension to respond to Colorado mining agency's questions

Posted June 27, 2011

In a June 23 letter from Powertech permit chief Dick Blubaugh to the Colorado Division of Reclamation, Mining and Safety (DRMS), Blubaugh says Powertech still intends to conduct the proposed aquifer pump test on Section 33.  But Blubaugh admits that the test may not be performed in 2011 and may be delayed until the "warm months of 2012".  Powertech conducted a previous pump test at the same site but must conduct an additional test because the earlier test indicated that hydrogeological characteristics of the site may be less than ideal for in-situ leaching.  The June 23 letter is Powertech's seventh request to the DRMS for a sixty-day extension to respond to the agency's March 18, 2010 questions and concerns regarding the proposed pump test and disposal of pumped water.  Previous extension requests were submitted on May 21, 2010, August 7, 2010, October 13, 2010, December 8, 2010, February 8, 2011, and April 12, 2011.  The DRMS granted all previous requests for extensions and is expected to approve the June 23 request even though it was submitted nearly two weeks late.

JW   

Letter to Colorado Division of Reclamation, Mining and Safety requesting extension of time to respond to the agency's fourth review completeness issues regarding Notice of Intent File No. P-2008-043 MD-03 - Richard Blubaugh, Vice President - EH&S Resources, Powertech (USA) Inc. - June 23, 2011 (PDF 54 KB, 1 page)


"Group: Powertech test could taint water; Environmentalists comment during permit process for aquifer pump test at uranium mine" by Bobby Magill, Fort Collins Coloradoan - June 15, 2011  


Attachments (8) to comments submitted to EPA Region 8 on June 10, 2011 by Western Mining Action Project on behalf of Coloradoans Against Resource Destruction regarding Powertech's draft UIC Class 5 permit number CO52209-08412:

Comments from CARD to DRMS regarding Powertech's baseline characterization File No. P-2009-12, including comments from Richard Abitz, PhD - November 18, 2009 (PDF 1,319 KB, 20 pages)

"Anthropogenic Induced Redox Disequilibrium in Uranium Ore Zones" - Powerpoint presentation by Richard Abitz, PhD and Bruce Darling, PhD given at the Geological Society of America's 2010 Annual Meeting, Denver, Colorado (PPT 19 KB, 18 slides)

"ANTHROPOGENIC INDUCED REDOX DISEQUILIBRIUM IN URANIUM ORE ZONES" - Abstract of presentation by Richard Abitz, PhD and Bruce Darling, PhD given at the Geological Society of America's 2010 Annual Meeting, Denver, Colorado (PDF 19 KB, 1 page)

DRMS letter to Powertech re: Addendum to fourth adequacy review for Modification MD-03, Centennial Project aquifer test, file number P-2008-043 - December 27, 2010 (PDF 154 KB, 2 pages)

DRMS letter to Powertech re: Centennial Project Notice of Intent Modification MD-02, file number P-2008-043 - March 31, 2009 (PDF 250 KB, 3 pages)

"Uranium Mining in Texas: Why Is It Done That Way? by Ronald L. Sass, PhD, James A. Baker III Institute for Public Policy, Rice University - March 28, 2011 (PDF 2,833 KB, 33 pages)

Pages from Powertech's Request to DRMS for modification to Notice of Intent File No. P-2008-043 - March 4, 2009 (PDF 1,141 KB, 4 pages)

Map of Section 33 Pumping Test Layout, Centennial Project - Powertech (USA) Inc. (PDF 224 KB, 1 page)


Comments on Proposed Underground Injection Control Program (UIC) Permit (Permit Number: CO52209-08412); Powertech (USA) Incorporated - Jeffrey C. Parsons, Senior Attorney, Western Mining Action Project - On behalf of Coloradoans Against Resource Destruction - June 10, 2011 (PDF 56 KB, 9 pages not including attachments)  This far-reaching submittal by CARD includes eleven distinct and substantive comments identifying deficiencies in the EPA's third draft injection permit issued to Powertech for its proposed aquifer pump test on Section 33. 

Comments on UIC Class V Draft Permit No. CO52209-08412 Issued to Powertech (USA) Inc. and dated May 2011 - James B. Woodward - June 10, 2011 (PDF 22 KB, 3 pages) 

"Deadline nears for Powertech comments" by Bobby Magill, Fort Collins Coloradoan - June 9, 2011  

ACTION ALERT - EPA public comment period - Coloradoans Against Resource Destruction (C.A.R.D.) - June 7, 2011 (PDF 20 KB, 2 pages)  The public comment period for the EPA's draft Class 5 Underground Injection Control permit issued to Powertech ends at midnight on Friday, June 10.  This alert from CARD includes an email address and mailing address for comments.  If a final permit is issued after the EPA reviews all public comments, the permit would become effective 30 days after the issuance date.  During this 30-day period, anyone who spoke at the June 6 hearing or submitted written comments may appeal the permit to the EPA's Environmental Appeals Board in Washington, DC. 

"Residents slam water test permit proposal for Powertech; Attendees at EPA hearing in Nunn strongly oppose leach mining operation" by Chris Casey, Greeley Tribune - June 6, 2011  Not a single person testified in support of Powertech, the Centennial project, or in-situ leach uranium mining at this public hearing in Nunn, Colorado.  Powertech did not even send project manager Terry Walsh or environmental coordinator Mike Beshore.  But the narrow focus of EPA staff on the injection well permit for a proposed aquifer pump test, rather than the larger mining project, means a final permit will probably be issued in a few weeks or months.  Unless the final permit is rewritten to address substantive issues raised at the hearing, it will most likely be appealed to the EPA's Environmental Appeals Board.

UNOPPOSED MOTION TO INTERVENE AND MEMORANDUM IN SUPPORT THEREOF - Plaintiff: Powertech (USA) Inc. v. Defendant: Colorado Mined Land Reclamation Board and Proposed Defendant-Intervenors: Coloradoans Against Resource Destruction; Tallahassee Area Community; Sheep Mountain Alliance - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Case Number 2010CV8615 - May 26, 2011 (PDF 84 KB, 17 pages)  C.A.R.D and other Colorado grassroots organizations move to intervene in Powertech's lawsuit that seeks to overturn Colorado's new uranium mining and exploration rules. 

"What IS Going on With Powertech?" by Jay Davis, The Voice of Wellington - May 18, 2011 


ACTION ALERT - To All Concerned Weld and Larimer County Citizens - Coloradoans Against Resource Destruction (C.A.R.D.) 

Public Notice of Underground Injection Control Permit Number CO52209-08412 - U.S. Environmental Protection Agency - May 6, 2011 (PDF 28 KB, 2 pages)

News release - "EPA issues new draft permit associated with aquifer pump test at Weld County (Colo.) uranium site; Permit specifies pressure requirement, clarifies issues noted in recent petitions" - United States Environmental Protection Agency - May 6, 2011  While EPA staff acknowledge the omission of a key permit condition in the final Class 5 injection permit issued to Powertech in December 2010, the agency is silent on substantive issues raised by C.A.R.D. in comment letters and the organization's appeal petition filed in January.  

Underground Injection Control Program - Draft Permit - Class V Injection Well - Permit No. CO52209-08412 Issued to Powertech (USA) Inc. - United States Environmental Protection Agency Region 8 - May 2011 (PDF 6,149 KB, 22 pages)

Statement of Basis for Underground Injection Control Class V Draft Permit Number CO52209-08412 - United States Environmental Protection Agency - May 2011 (PDF 7,177 KB, 32 pages) 


"EPA reissues uranium pump permit, Powertech exec resigns" - Northern Colorado Business Report - May 10, 2011


Powertech suffers two defeats in lawsuit against State of Colorado

Orders from District Court Judge Hood strike down two of four claims and dismiss defendant Mike King

Posted May 9, 2011

ORDER Re: Colorado Mined Land Reclamation Board's Motion to Dismiss Plaintiff's Second and Fourth Claims for Relief - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Plaintiff: POWERTECH (USA) INC., A SOUTH DAKOTA CORPORATION v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD AND MIKE KING, EXECUTIVE DIRECTOR OF THE DEPARTMENT OF NATURAL RESOURCES - April 26, 2011 (PDF 26 KB, 3 pages)

Mike King, Executive Director - Colorado Department of Natural Resources
ORDER Re: State Defendants’ Motion to Dismiss Plaintiff’s Claims Against Defendant Mike King - DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - Plaintiff: POWERTECH (USA) INC., A SOUTH DAKOTA CORPORATION v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD AND MIKE KING, EXECUTIVE DIRECTOR OF THE DEPARTMENT OF NATURAL RESOURCES - March 31, 2011 (PDF 25 KB, 3 pages)

 


CENTENNIAL "MOTHBALLED"

Project's employees will be transferred to South Dakota project; no permit applications will be filed; company will likely give up Varra and Diehl land options and close Wellington office

"Powertech: Centennial Project to be mothballed in wake of tsunami" by Bobby Magill, Fort Collins Coloradoan - April 27, 2011 (PDF 48 KB, 3 pages)


CLEMENT ADMITS POWERTECH HAS IDLED CENTENNIAL PROJECT; FOCUS IS ON DEWEY-BURDOCK

CEO waited until after public stock offering to discuss change in strategy; company places all its chips on troubled South Dakota project

Posted April 10, 2011, Updated April 10, 2011

In a story in the Northern Colorado Business Report, longtime local reporter Steve Porter gets Powertech CEO Dick Clement to open up regarding the company's current strategy for its two proposed projects: Centennial in northern Colorado and Dewey-Burdock in South Dakota.  As predicted, Clement admits that Powertech has put its Colorado project on hold and is focusing all its attention and resources on South Dakota. 

Surprisingly, Clement reveals that Powertech is not actively advancing its lawsuit that seeks to overturn new uranium mining rules adopted last fall by the Colorado Mined Land Reclamation Board. 

The revelations came just after Powertech completed its first public stock offering in Canada.  The offering closed on March 15, just four days following the start of the Fukushima nuclear power plant disaster.  Apparently, Powertech's underwriters were able to find subscribers for the full 47.9 million shares at a unit price of $0.47 CAD before the tsunami hit.  The stock price closed yesterday at $0.30 CAD, a 36% drop from the offering price.  Speaking to Porter, Clement was candid about the offering: "I was very pleased with the timing of it."  Regarding the unlucky uranium companies whose stock offerings closed a few days later, Clement said "I feel sorry for them." 

But will the roughly $8.5 million that Powertech claims to have cleared from the stock offering be enough to complete permitting of Dewey-Burdock?  It's doubtful.  At the average 2010 cash burn rate of $700,000 per month, Powertech could run out of cash in early 2012.  It's unlikely that Powertech will have its EPA permit and NRC license by then. 

EPA Region 8 has yet to issue a draft Class 3 Underground Injection Control (UIC) permit for the project.  The EPA has never issued a Class 3 permit for in-situ leach uranium mining, has given no indication when it might issue a draft permit to Powertech, and questions have been raised regarding the agency's lack of detailed guidance governing the issuance of such permits.  Final UIC permits can be appealed to the EPA's Environmental Appeals Board in Washington, DC. 

Also uncertain is the timeline for issuance of the Source Material License by the Nuclear Regulatory Commission.  Powertech submitted the license application in February 2009.  In June of that year, NRC staff told Powertech that the application was deficient and would be rejected if it was not withdrawn and revised.  Powertech resubmitted the application in August 2009.  In April 2010, the NRC issued a Request for Additional Information (RAI) to Powertech.  In August 2010, the NRC's Atomic Safety & Licensing Board approving standing to intervene and certain contentions of the Oglala Sioux Tribe and other parties, setting in motion a formal hearing process on the proposed license.  Powertech submitted its responses to the NRC's RAIs in December 2010.

On March 7, NRC staff informed Powertech that it had identified a "significant number of deficiencies" and that "Powertech did not provide information in sufficient detail in these responses for NRC staff to make an evaluation of public health and safety impacts."  NRC staff stopped its review of the safety-related portion of the application and scheduled a two-day meeting in April with Powertech to discuss the deficiencies. 

According to a participant, the April 7-8 meeting did not go well for Powertech.  Apparently the company urged the NRC to issue a license prior to the collection and submission of detailed baseline groundwater and geological data, an idea that was not received favorably by NRC staff.  In addition, NRC staff pressed for more data on the condition of historical abandoned drillholes and the potential for leakage between aquifers.  And according to reports, CEO Clement pushed for a June meeting with NRC staff but was rebuffed, with NRC indicating that staff will be reassigned to other projects while Powertech re-works its RAI responses.

As of March 4, 2011, the NRC staff's official estimate of the license issuance date was July 2012.  After the April meeting with Powertech, it is likely that this date will change when the NRC files its May 3 update with the Atomic Safety & Licensing Board.

JW 

"Powertech shifts focus to South Dakota" by Steve Porter, Northern Colorado Business Report - March 25, 2011


Colorado Mining Association offers lukewarm support for Powertech's lawsuit against State of Colorado

Statement expresses concern over potential delays of prospecting approvals but is silent on Powertech's attempt to overturn rules meant to protect ground water quality 

CMA STATEMENT CONCERNING POWERTECH LAWSUIT OVER DRMS RULEMAKING - November 17, 2010


No more money for the Centennial project?

Stock offering prospectus reveals decision; Powertech officials not talking

"Proceeds won't boost area project; Powertech doesn't plan to devote earnings to proposed Centennial Project" by Bobby Magill, Fort Collins Coloradoan - February 18, 2011


Letter from the Colorado Division of Reclamation, Mining & Safety to Powertech reducing bonding for activities under prospecting Notice of Intent P-2008-043, rescinding approval for the drilling of three exploration boreholes, and declaring that no additional drilling may be conducted without the Division's written approval of a modification to the prospecting notice - David Bird, Principal Scientist - February 1, 2011 (PDF 828 KB, 10 pages) 


Powertech's corporate presentation misrepresents status of Centennial project permitting

Posted February 13, 2011

Powertech's most recent corporate PowerPoint presentation, dated November 2010, asserts that, with respect to the proposed Centennial project, "All baseline studies complete, permit applications ready to be completed and filed."  In contrast, the company's November 12, 2010 Management Discussion and Analysis filed with Canadian securities regulators states that "the majority of the tasks required to develop the Environmental Report are complete" and that permit applications will be submitted "after analysis of the aquifer test results."  The aquifer test referred to in the MD&A is the pump test proposed for Section 33.  Not only has this critical baseline study not been conducted, but the underground injection well permit for the test was recently withdrawn by the EPA.        

"Centennial Project, Colorado" page 15 of Powertech's corporate presentation - Powertech Uranium Corp. - November 2010 (PDF 158 KB, 1 page)

POWERTECH URANIUM CORP. (An Exploration Stage Company) MANAGEMENT DISCUSSION AND ANALYSIS - November 12, 2009 (PDF 120 KB, 16 pages)

Proposed Section 33 pump test

Centennial project by the numbers

Time Powertech has been working on the project: 4 years, 4 months

Money spent on the project as of September 30, 2010: $17.5 million

Mining permit applications submitted: 0

Distance from downtown Fort Collins: 11 miles

Cities and towns that have passed resolutions against the project: 7

Proposed mine units requiring "aquifer enhancement" because of low water tables: 6 (out of 9)

Other in-situ leach uranium mines that have used aquifer enhancement: 0

EPA WITHDRAWS UNDERGROUND INJECTION PERMIT FOR PROPOSED AQUIFER PUMP TEST

Withdrawal of final UIC Class V permit issued to Powertech on December 3, 2010 is in response to two petitions for review filed in January; EPA will revise and reissue a new draft permit "within the next several weeks", and the new permit will include a public review and comment period

Posted February 7, 2011, Updated February 11, 2011

"Agency withdraws Powertech test permit - Details left out; EPA to reissue it after making fixes" - by Bobby Magill, Fort Collins Coloradoan - February 11, 2011  In a related news release from the EPA, the Region 8 office in Denver says it will make revisions and issue a draft Class V UIC permit to Powertech within the next several weeks.  In accordance with EPA regulations, following publication of the draft permit decision there is a public notice period that runs a minimum of 30 days.  During this time, anyone may request that the EPA hold a public hearing to provide further opportunity for commentors to provide objections or information regarding the proposed permit.  If the EPA determines that there is a sufficient reason for a hearing, a notice of the hearing must be issued for a minimum period of 30 days.  Any comments received during this period will be addressed in a Responsiveness Summary issued with the final permit decision.  If a final permit issued, it will become effective 30 days after issuance, unless an appeal is filed with the EPA's Environmental Appeals Board in Washington, D.C.       

"EPA revokes permit for uranium test well, will draft another" by Joey Bunch, Denver Post - February 10, 2011

"EPA pulls Powertech permit, will draft new one" - Associated Press - Forbes.com - February 10, 2011 (Same story on MSNBC.com, Yahoo Finance, TheStreet.com.)

"Powertech says no negative connotation to EPA withdrawal of uranium mining permit" by David O. Williams, Colorado Independent - February 10, 2011  Powertech attorney John Fognani strikes a conciliatory tone, asserting that the company is "perfectly comfortable" with the EPA's decision to withdraw Powertech's underground injection permit.  Referring to EPA technical staff as "the experts", Fognani appears to commend the EPA for ensuring that its permitting process is "airtight".  This friendly approach to EPA staffers does not seem to extend to their regulatory counterparts in South Dakota.  Powertech is currently engaged in a legislative effort to block the state's ability to regulate in-situ leach uranium mining.  This follows the technical review by the South Dakota Department of Environment and Natural Resources of Powertech's Underground Injection Control permit application for the Dewey-Burdock uranium project.  The DENR concluded (twice) that Powertech's application was incomplete and "lacks sufficient detail to address fundamental questions related to whether Powertech can conduct the project in a controlled manner to protect ground water resources."  

"EPA pulls Powertech in-situ mine test permit" - Denver Post - February 9, 2011

News Release - "EPA Region 8 Withdraws Underground Injection Permit Issued to Powertech" - Coloradoans Against Resource Destruction (C.A.R.D) - February 9, 2011 (PDF 17 KB, 1 page)  From the news release: In withdrawing the permit, EPA indicated that it will release a revised draft permit within the next several weeks, and accept a new round of public comments. EPA Assistant Regional Administrator Steve Tuber promised “full transparency” and a “rigorous” analysis in the new draft permit. Jeff Parsons, senior attorney with the Western Mining Action Project who filed the appeal on behalf of CARD stated “Full transparency and a rigorous review requires that EPA consider all relevant information, including necessary and available data regarding the integrity of confining layers in the aquifer and the condition of improperly abandoned historic drill holes in the immediate area.”   “Powertech and EPA have repeatedly promised to meet the highest standards in reviewing this project so as to protect groundwater upon which hundreds of nearby wells rely on for drinking, irrigation, and stock watering. We intend to hold them to that promise,” stated Mr. Davis (Jay Davis, CARD co-founder.)

ORDER DISMISSING PETITIONS FOR REVIEW - In re: Powertech (USA) Inc. UIC Permit No. CO51237-08412 - UIC Appeal Nos. 11-01 & 11-02 - BEFORE THE ENVIRONMENTAL APPEALS BOARD, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C. - Kathie A. Stein, Environmental Appeals Judge - February 9, 2011 (PDF 82 KB, 3 pages)

Notice of Withdrawal - Powertech (USA) Inc. UIC Permit No: CO51237-08412 - Appeal Numbers: UIC 11-01 and 11-02 - James B. Martin, Regional Administrator, United States Environmental Protection Agency Region 8 - February 7, 2011 (PDF 376 KB, 2 pages)

News release - "EPA to revise permit associated with aquifer pump test at Weld County (Colo.) uranium site" - U.S. Environmental Protection Agency Region 8 - February 7, 2011 (PDF 18 KB, 2 pages)  In its news release, the EPA focuses on the fact that the maximum allowable injection pressure requirement was "inadvertently not included in the final permit."  The EPA avoids mentioning the fact that it failed to require Powertech to submit for review the data from earlier aquifer pump tests conducted near the proposed pump test, as well as information on plugging and abandonment of numerous exploration drillholes that exist in the pump test area.  

RESPONDENT REGION 8'S MOTION TO DISMISS AS MOOT THE PETITIONS FOR REVIEW OF THE UIC PERMIT - In the Matter of: Powertech (USA) Inc. UIC Permit No. CO51237-08412 - UIC Appeal Nos: 11-01, 11-02 - BEFORE THE ENVIRONMENTAL APPEALS BOARD, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C. - Lucita C Chin, Associate Regional Counsel, Office of Regional Counsel, EPA Region 8 - February 7, 2011 (PDF 785 KB, 4 pages)

PETITION FOR REVIEW OF UIC PERMIT - IN THE MATTER OF POWERTECH (USA) INC. UIC PERMIT NO. CO51237-08412 - BEFORE THE ENVIRONMENTAL APPEALS BOARD, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C. - Submitted by Coloradoans Against Resource Destruction through counsel: Jeffrey C. Parsons, Roger Flynn - Western Mining Action Project - January 3, 2011 (PDF 80 KB, 19 pages)

PETITION FOR REVIEW OF UIC PERMIT FOR POWERTECH (USA) INC. ISSUED BY REGION 8 - In re: Powertech (USA) Inc. UIC Permit No. CO51237-08412 - BEFORE THE ENVIRONMENTAL APPEALS BOARD, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C. - Submitted by James B. Woodward - January 3, 2011 (PDF 42 KB, 9 pages)

News release - "C.A.R.D. Files Appeal of EPA Underground Injection Permit Issued to Powertech" - Coloradoans Against Resource Destruction - January 6, 2011 (PDF 19 KB, 2 pages)

Active Dockets - Powertech (USA) Inc. - Environmental Appeals Board, U.S. Environmental Protection Agency - File Date: 1/3/2011, Appeal Nos.: UIC 11-01; UIC 11-02, Docket No.: CO51237-08412, Statute: Safe Drinking Water Act


ANSWER OF THE COLORADO MINED LAND RECLAMATION BOARD - POWERTECH (USA) INC., A SOUTH DAKOTA CORPORATION, Plaintiff, v. STATE OF COLORADO MINED LAND RECLAMATION BOARD AND MIKE KING, EXECUTIVE DIRECTOR OF THE DEPARTMENT OF NATURAL RESOURCES, Defendants.  DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO - January 25, 2011 (PDF  45 KB, 9 pages)  Not surprisingly, the Colorado Mined Land Reclamation Board flatly denies Powertech's claims that the board's adoption of the new uranium mining rules was arbitrary and capricious, beyond statutory and constitutional authority, in violation of procedural requirements and otherwise contrary to law.  Interestingly, the MLRB denies Powertech's assertion that it "owns" the Centennial Project because the board "has insufficient knowledge and information to admit or deny that Plaintiff owns such project."  What the MLRB probably doesn't know is that, in fact, Powertech does not control large portions of what it refers to as the Centennial Project.  For many sizable parcels of land that are included in maps of the proposed project area, Powertech has been unable to negotiate surface use agreements with landowners.  While Powertech may own all or some fraction of the mineral rights, it does not own or control these parcels.  


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Powertech Uranium Corp. (PWE.TO)

Toronto Stock Exchange

Closing price: $0.035 CAD (10/24/14)   

Link to chart (since inception)

52-week high: $0.12 CAD (2/27/14)

52-week low: $0.03 CAD (10/22/14)

Public offering price: $0.47 CAD (3/15/11)

All-time high: $4.45 CAD (3/23/07)



AZARGA TAKEOVER BY SUMMER 2014?

Hong Kong firm buys out Synatom, increasing ownership to 45.1%; expected conversion of debt to equity will give Azarga control of Powertech; mining method for Centennial and Dewey-Burdock likely to change

Posted November 18, 2013


The strange case of Mr. Mays

Is the veteran uranium miner still associated with Powertech, or has he moved on to greener pastures?

Posted July 22, 2013

Powertech officials have released conflicting information about the status of the company's legendary co-founder Wallace Mays. A review of recent securities filings by the Canadian company raises questions about whether Mays is still on the board of directors and whether he even remains a shareholder.
Powertech co-founder Wallace M. Mays: missing in action?

Mays formed Denver Uranium LLC with Dick Clement in 2005.  The company acquired mineral rights and mining leases in the Dewey-Burdock area and conducted a reverse merger with Canadian public shell company Powertech Industries a year later.

Mays is often described as a pioneer in the field of in-situ leach uranium mining, with experience operating mines in Texas and Wyoming.  He has also been involved in uranium mining projects in Mongolia and Kazakhstan.

In his book, Uranium: War ,Energy, and the Rock that Shaped the World, author Tom Zoellner notes that Mays is known in the uranium business as "one of its old-time cowboys--brash and confident".  His interview with Mays revealed Mays' marriage to a local Mongolian woman nearly half a century younger than he, after many trips to Ulaanbaatar, the capital of Mongolia.   

Mays claims to have started the first ISL uranium mine, but his assertion is disputed by industry analyst James Finch.  Similarly, the claim by Powertech that Mays was awarded membership in the Uranium Hall of Fame cannot be verified since the organization does not seem to exist.

An August 2005 news release from Powertech Industries reported that Mays would be appointed President and Chief Executive Officer following the reverse merger with Denver Uranium.  It is unclear why, but the plan changed when Dick Clement assumed the positions of CEO and President in June 2006.  Mays became Chief Operating Officer and Chairman of the Board.

Following the reverse merger, Mays owned 4,400,000 shares of Powertech Industries, which changed its name to Powertech Uranium Corp. in June 2006.  Mays owned roughly 11% of Powertech at the end of 2006.

Powertech was able to leverage Mays' experience and expertise to attract investors, most notably the Belgian company Synatom.  Synatom has lost millions of dollars as a result of a series of equity and debt transactions with Powertech dating from 2008.

In May 2011, Mays resigned as an officer of Powertech.  By the end of 2011, Mays' ownership position had dwindled to 1,868,000 shares, or only 1.8% of the shares outstanding.

That same year, Mays and Powertech dissolved the Indian Springs Land and Cattle Company, LLC.  Indian Springs was a subsidiary of Powertech (USA) Inc., the operating subsidiary of Powertech Uranium Corp.  It appears that Mays formed Indian Springs in 2008 to somehow further his interests in the dealings with Synatom.  Powertech never disclosed the nature of its relationship with Indian Springs in its securities filings.  It took two years for Powertech to finally disclose the dissolution of Indian Springs, and the details of this subsidiary remain a mystery.

In April 2012, Powertech announced in a regulatory filing that Mays would not stand for re-election to the board of directors.  A filing a month earlier disclosed that Mays still owned 1,868,000 shares of the company.

The confusion surrounding May's current association with Powertech stems from the March 28, 2013 Annual Information Form filed by the Canadian company.  In the section on directors and officers, Mays is listed as a current member of the board of directors.  But in a related table showing current directors and executive officers and the number of shares owned, Mays is missing.

It is not clear why Powertech would announce Mays' removal from the board and then one year later indicate he is still a current board member.  And given his key role in the founding of the company, Powertech appears remiss for not disclosing whether the former Chairman and COO is still a shareholder.

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) ANNUAL INFORMATION FORM FOR THE YEAR ENDED DECEMBER 31, 2012 - March 28, 2013 (PDF 189 KB, 38 pages)


Powertech issues first quarter financial statements

Posted May 10, 2013

On May 3 Powertech filed its first quarter financial statements and Management Discussion & Analysis with Canadian securities regulators.  The reports reveal the Canadian company's precarious financial condition as well as further delays in the permitting of its only active uranium project:

- Powertech raised $1.38 million in a February private placement, but the company's cash burn rate for the quarter was over $350,000 per month.

- Powertech had only $951,115 in the bank on March 31.  Using its first quarter cash burn rate and assuming no new financing, the Canadian company would have $600,000 at April 30 and $250,000 at May 31 (and would run out of cash in June).

- As of March 31, Powertech had just over $1 million in liabilities and contractual obligations that are due in less than one year.

- The company invested $624,000 in the proposed Dewey-Burdock project during the first quarter, and spent virtually nothing on its Colorado and Wyoming projects.

- Regarding the Dewey-Burdock project, Powertech acknowledged the recent permitting delay by the U.S. Nuclear Regulatory Commission.  The NRC has moved the estimated issuance date for a Final Supplemental Environmental Impact Statement to October 2013, a delay of five months.

- Powertech misled investors by stating that the NRC will issue a mining license thirty days after the Final SEIS is issued.  Powertech failed to mention that the issuance of the Final SEIS will trigger the formal litigation process between mine opponents and the NRC under 10 CFR Part 2.  It is unclear how long this hearing process will take.

- Powertech erroneously claimed that South Dakota mining regulators have scheduled a hearing on the company's Large Scale Mine Permit application for May 15, 2013.  A prehearing conference has been scheduled for May 23 to address prehearing and scheduling issues, but the actual public hearing on the permit application has not been scheduled.

 - Perhaps the most egregious example of deception is the discussion of the proposed Centennial project in northern Colorado.  Powertech's brief narrative of the project in the Management Discussion & Analysis leaves the impression that the only thing keeping Powertech from permitting the project is a lack of cash.  Missing is any mention of the Canadian company's unsuccessful two-year lawsuit against the state over new uranium mining regulations, the closure of its project office, the loss of significant land positions, technical hydrogeological issues, and the widespread opposition to the project from local landowners and governmental bodies.  

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2013 (Stated in United States Dollars) (PDF 59 KB, 13 pages)    

POWERTECH URANIUM CORP. (An Exploration Stage Company) MANAGEMENT DISCUSSION AND ANALYSIS - May 2, 2013 (PDF 149 KB, 18 pages)

APPLICANT POWERTECH (USA) URANIUM CORPORATION’S RESPONSE TO NRC STAFF’S APRIL 1, 2013 STATUS REPORT - UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD - In the Matter of: POWERTECH (USA), INC. (Dewey-Burdock In Situ Uranium Recovery Facility) - April 4, 2013 (PDF 14 KB, 4 pages)

Appointment of Hearing Chair, Notice of Prehearing Conference, Motion for Procedural and Scheduling Order, Proposed Order, Proposed Election of Participation Form, and Certificate of Service - Steven R. Blair, Assistant Attorney General, Office of Attorney General, State of South Dakota - May 1, 2013 (PDF 1,859 KB, 30 pages)    


Powertech funding comes from Mexico, Switzerland, and Bermuda

Posted April 28, 2013

In addition to Canadian hedge fund K2 Principal Fund LP, Powertech has recently raised money from individuals and entities in Mexico, Switzerland, and Bermuda, according to a March 28 filing with the British Columbia Securities Commission.

The filing discloses information about Powertech's February 26 private placement of 15 million units that raised $1.4 million CAD after commissions and finder's fees.  Thirty-four individuals and entities participated in the financing round. 

The largest amount, $600,000 CAD, was raised from an individual Mexican investor; $314,000 CAD was raised from two Swiss entities, KC50 LLC and KCO LLC, controlled by investment analyst Olivier Garret.

Dianne L. Tatem invested $200,000 CAD through a Bermuda entity, Malibrigo Ltd.  Sixteen U.S. individuals and entities invested a total of $172,000 CAD.  The balance, $214,000 CAD, was raised from Canadian investors (including $150,000 CAD from K2), as well as investors from Germany and Japan.

JW

Amended Form 45-106F6 British Columbia Report of Exempt Distribution - Powertech Uranium Corp. - March 28, 2013 (PDF 39 KB, 7 pages)   


POWERTECH STOCK FALLS TO 8 CENTS

Shares hit new 52-week low in intraday trading

Posted April 16, 2013

Shares of cash-strapped Canadian start-up Powertech Uranium Corp. dropped to $0.08 CAD in intraday trading today on the Toronto Stock Exchange, setting a new 52-week low. 

The shares recovered to close at $0.09 CAD after brokers at Merrill Lynch Canada placed two tiny trades totaling $119.00 CAD five minutes before the closing bell.

Powertech shares have declined 37% from their 2013 high of $0.14 set on January 2, and are down 98% from the all-time high of $4.45 CAD reached on March 23, 2007.

Investors may be responding to the recent announcement by U.S. Nuclear Regulatory Commission staff of a five-month licensing delay for the Dewey-Burdock project, the fact that the Canadian company is nearly broke, or yesterday's 4% drop in the spot price of U308.

JW 


POWERTECH URANIUM CORP. (An Exploration Stage Company) CONSOLIDATED FINANCIAL STATEMENTS (audited) December 31, 2012 (PDF 139 KB, 29 pages)

POWERTECH URANIUM CORP. (An Exploration Stage Company) MANAGEMENT DISCUSSION AND ANALYSIS - March 1, 2013 (PDF 229 KB, 29 pages)


News Release - "POWERTECH ANNOUNCES CLOSING OF PRIVATE PLACEMENT" - Powertech Uranium Corp. - February 27, 2013 (PDF 20 KB, 1 page)  In response to the shareholder dilution resulting from this private placement, or perhaps because the spot price of uranium dropped to $42.00 this week, Powertech's share price slid to $0.10 CAD today (February 28) on the Toronto Stock Exchange.


Powertech CEO Dick Clement inflates resume

Posted February 24, 2013

Powertech CEO and President Richard Ferdinand Clement overstated his uranium mining experience in a January 2013 corporate presentation available on the Canadian company's website.

The sixth slide of the Powerpoint presentation asserts that Clement's more than 40 years' experience in "uranium corporate management...includes uranium exploration, development, production in U.S. and Australia".

While Clement does have experience in uranium exploration, he has little to no experience in uranium mine development and production, according to regulatory filings dating back to 2006.

The filings detail Mr. Clement's professional experience:

- In 1967, Clement went to work for Mobile Oil Corp.  He managed U.S. uranium exploration programs and "developed worldwide strategy".  He later became Vice President and Exploration Manager for Mobile Energy Minerals Australia Inc. In this position he managed Australian uranium exploration.

- Clement was hired in 1983 by Uranium Resources, Inc. to be its Senior Vice President of Exploration.  He resigned in 1994.

- In 1996, Clement became President of Hydro Resources Inc., a subsidiary of Uranium Resources, Inc.  Clement oversaw the permitting process for proposed uranium mines at Crownpoint and Church Rock, New Mexico.  These proposed mines have yet to be developed.

 - In 1999, Clement formed Lone Mountain Archeological Services Inc., a firm that provided cultural resources services to the uranium and petroleum industries.

- Mr. Clement formed Powertech Uranium Corp. in 2006 with Wallace Mays.  The company was created by a reverse merger with Canadian shell company Powertech Industries, a manufacturer of high efficiency condensing boilers and water heaters.  Powertech has never permitted, developed, or operated a uranium mine. 

JW

Strictly Private and Confidential - "Advancing Towards Uranium Production" - Powertech Uranium Corp. - January 2013 (PDF 1,281 KB, 21 pages)  

POWERTECH URANIUM CORP. FORMERLY POWERTECH INDUSTRIES INC. - INFORMATION CIRCULAR Dated June 5, 2006 (PDF 159 KB, 32 pages)

POWERTECH URANIUM CORP. (An Exploration Stage Company) ANNUAL INFORMATION FORM FOR THE YEAR ENDED DECEMBER 31, 2011 - March 28, 2012 (PDF 265 KB, 43 pages)


Nuclear Fuel’s Dirty Beginnings - Environmental Damage and Public Health Risks From Uranium Mining in the American West - Geoffrey H. Fettus and Matthew G. McKinzie, Natural Resources Defense Council - March 2012 (PDF 4,125 KB, 104 pages)


Powertech to raise $1.5 million from secret "strategic" investors

Posted February 18, 2013

Once again, Powertech CEO Dick Clement has saved the Canadian penny stock company from bankruptcy by convincing "strategic" investors to buy up to 15 million shares for $0.10 each, according to a February 12 news release.

The unidentified strategic investors would purchase units consisting of one common share of Powertech and one share purchase warrant.  One warrant entitles the investor to purchase one additional share for $0.20 for a period of three years.

The gross proceeds of the proposed private placement are only $1.5 million, but would allow Powertech to survive for another four months, assuming a cash burn rate of $400,000 per month.

Unlike financial investors who invest solely to realize a return on their investment, strategic investors are typically operating companies in the same or similar industries that seek to create synergies with their investments. 

Strategic investors often expect to assume a degree of control over the investee company, and in many cases intend to acquire the company. 

Since Powertech is in the midst of seeking multiple federal and state permits for the proposed Dewey-Burdock uranium mine, one would think that the disclosure of the potential future management of the company would be of interest to affected landowners, regulators, and investors. 

But in typical fashion, Powertech has chosen to conceal the identities of the strategic investors.

On a side note, Powertech has changed the description of the company that appears at the end of its news releases.  After repeated challenges on this website to provide supporting evidence, Powertech has removed the following statement from its news releases:

"The Company's key personnel have over 200 years of experience in the uranium industry throughout the United States, and have permitted more than a dozen in-situ operations for production."

The February 12 news release includes the new language:

'The Company's key personnel have in-situ uranium experience throughout the United States and worldwide."

JW

News release - "Powertech Announces Private Placement" - Powertech Uranium Corp. - February 12, 2013 (PDF 33 KB, 1 page) 


Is Powertech's accounting for the Centennial project misleading?

Posted December 28, 2012

A public company communicates its financial position to market participants with its balance sheet.  An asset on the balance sheet is expected to generate future cash flow for the company.  If the reported value of an asset is greater than the expected cash flow, the asset is "impaired" and must be written down.  Companies don't like to write down impaired assets because of the negative message it sends to investors and others.   

Nearly one third of the assets on Powertech's balance sheet consists of costs related to the proposed Centennial project in northern Colorado.  In accordance with International Financial Reporting Standards (IFRS), Powertech has capitalized these costs rather than expensing them on its income statement.  The costs are classified as intangible, and include land services, legal fees, claims fees, lease payments, drilling, engineering, permitting, exploration, geological services, consulting, wages, and data and land acquisitions.

Under IFRS, these costs are considered to be "exploration and evaluation assets" since the technical feasibility and commercial viability of the proposed Centennial project have not been demonstrated. 

According to IFRS, a company is required to test an asset for impairment when facts and circumstances suggest that the carrying amount (value on balance sheet) may exceed its recoverable amount.  If impairment is determined, a company is required to measure, present and disclose an impairment loss on its income statement.

The recoverable amount of an asset is the higher of its fair market value less costs of disposal, and its "value in use".  In other words, how much could Powertech sell the project for, versus what is the net present value of the future cash flows expected if the project is developed and operated. 

Powertech took an impairment write-off in 2011 after the decision was made to focus exclusively on the Dewey-Burdock project.  That year, Powertech decided not to exercise options to purchase large land and mineral positions owned by local ranchers.  Certain mining claims and leases were also abandoned.  Because of the obvious impairment, the company wrote off approximately $2.5 million of Centennial assets, which represented all historical costs associated with these items.

As of September 30, 2012, the carrying value of the Centennial mineral properties asset was $15.2 million.  The recoverable amount of the asset depends on several factors, including the current market price of uranium and expected future demand, the extent of uranium mineralization, the local geology and hydrogeology, and environmental regulatory restrictions, to name a few.  These factors affect the ability of Powertech or a successor company to permit, develop, and operate the project and generate a sufficient return on investment.

There are two factors that call into question the economic viability of the proposed Centennial project: the hydrogeology of the area, and new amendments to the Colorado Mined Land Reclamation Act (along with implementing regulations).

A little-publicized fact is that the hydrogeology of much of the proposed Centennial project area is not amenable to typical in-situ leach mining.  This is due to the low water table relative to the uranium orebodies, resulting in insufficient hydraulic head.  Sufficient hydraulic head is required to maintain dissolved oxygen injected into the production aquifer and to accommodate the drawdown from the recovery wells.

According to Powertech's own experts, as much as 40% of the total project resources are actually at or above the water table, and there is insufficient hydraulic head in six of the nine proposed mine units.  The problem is compounded by the relatively shallow depth of the mineralization in some areas. 

Powertech proposes to conduct what it calls "aquifer enhancement" to raise the water table in the six mine units.  The unproven technique involves the underground injection of fresh water on the perimeters of the well fields to raise the water table.  But Powertech has completed no modeling of the plan to assess its effect on surrounding water resources.  No other uranium mining company has attempted the technique. 

Not surprisingly, Powertech routinely fails to disclose this technical risk in its quarterly securities filings and communications with investors. 

A fairly detailed discussion of the problem can be found in the February 2011 NI 43-101 Preliminary Assessment of the project.  The report's authors from SRK Consulting caution investors that "the ability to satisfactorily raise the water table in an operation model may not be fully understood until the initial production well field is in operation".  In other words, Powertech won't know if aquifer enhancement works until after initial capital has been committed for construction of the project.

New Colorado laws and regulations affecting in-situ leach uranium mining appear to present another obstacle to Powertech, based on the company's response to the passage of the 2008 legislation and the rulemaking that followed.

Ironically, when Powertech first approached landowners in the Wellington/Nunn area of northern Colorado in late 2006 and early 2007, company officials assured them that uranium leach mining would not contaminate their well water.  Skeptical of the Canadian company's claims, project opponents sought a way to require Powertech to protect the area's ground water.

A fast-growing grassroots movement of rural families, farmers and ranchers, and residents of nearby towns and cities (including Fort Collins and Greeley) was successful in getting legislation passed and signed by Colorado Governor Bill Ritter in the spring of 2008.  The legislation set strict new state standards for protecting ground water quality potentially affected by uranium mining, and expanded opportunities for public participation in regulatory reviews of uranium prospecting and mining activities.

The legislation passed with overwhelming bipartisan support, in spite of Powertech's vigorous and outspoken opposition.  A two-year rulemaking process followed, during which Powertech fought unsuccessfully to weaken the new rules. 

Powertech officials were particularly adamant in their opposition to a handful of rules that were developed near the end of the process that addressed issues mostly relating to prospecting and exploration.  In a widely-publicized statement, Powertech CEO Dick Clement and Powertech attorney John Fognani claimed a rule requiring a baseline site characterization prior to the initiation of prospecting activities "would be fatal to any serious potential in situ recovery project".  The rule was subsequently adopted by the Colorado Mined Land Reclamation Board (MLRB).

Upon final adoption of the new rules in September 2010, Powertech filed a lawsuit against the MLRB seeking to overturn the rules.  After a series of judicial rulings unfavorable to Powertech, the lawsuit was thrown out on July 13, 2012.  Since then, Powertech's attorneys have filed pleadings arguing that the judge's dismissal order was never properly signed.  According to someone familiar with the matter, it was recently confirmed that Powertech decided not to appeal the judge's order.

Powertech CEO Dick Clement has made conflicting public statements regarding the new regulations and their potential effect on the economics of the Centennial project.  What is clear is the Canadian company has fought nearly five years to scuttle first the legislation and later the rules.  It seems unlikely that Powertech would fight so hard if the regulations didn't have the potential to impact what is arguably an already financially-marginal project.             

From an accounting standpoint, both the hydrogeological issues and the new state mining regulations are potential indicators of impairment of the Centennial project asset.  The combination of these circumstances raises doubts about whether the project can be financially feasible.   

Other facts pointing to impairment are the cessation of all permitting activities, the closing of the project office, the sale of project land, and the discontinuance of expenditures for further exploration for and evaluation of mineral resources.

Taken together, these multiple indicators of impairment would appear to support impairment testing and possible write-down of the Centennial project asset in accordance with IFRS.

JW

Powertech Uranium Corp. - NI 43-101 Preliminary Assessment - Centennial Project, Weld County, Colorado - Prepared by SRK Consulting Engineers and Scientists - August 13, 2010, Updated February 7, 2011  (PDF 6,604 KB, 152 pages)

ORDER (Christina M. Habas Denver District Court Judge) - Plaintiff: POWERTECH (USA) INC., a South Dakota Corporation, v. Defendant: STATE OF COLORADO MINED LAND RECLAMATION BOARD, and Intervenors: COLORADOANS AGAINST RESOURCE DESTRUCTION; TALLAHASSEE AREA COMMUNITY, INC.; AND SHEEP MOUNTAIN ALLIANCE - Case No. 10CV8615 - July 13, 2012 (PDF 74 KB, 6 pages)


Third quarter financial statements: Powertech's cash nearly exhausted

Burn rate holds steady; still no impairment testing of Centennial project asset

Posted December 14, 2012

Powertech's third quarter financial statements, issued in early November, reveal the Canadian firm's sole focus on permitting the proposed Dewey-Burdock project as well as its dwindling cash position.

A few highlights of the financial statements and related Management Discussion and Analysis:

- As of September 30, Powertech had only $614,000 in cash, its lowest cash position since Dick Clement took over the Canadian shell company in a reverse merger in 2006.  (In early November, Powertech raised $1 million CAD by issuing shares to insiders and others, and sold a Colorado property for $235,000.)

- Powertech's cash burn rate has averaged about $400,000 per month in 2012; assuming the same burn rate, the company would be expected to run out of cash in February 2013 without new financing.

- Powertech's accumulated losses total $34 million.  The company has never sold uranium.

- Expenses continue to decline, including wages and benefits as Powertech lays off more employees.

- Powertech had negative working capital of $1.9 million as of September 30.

- Mineral property assets increased to $48.7 million.  These are classified as intangible assets and make up 98% of all assets owned by Powertech.

- Of the $3 million Powertech has invested in its mineral properties in 2012, $2.7 million has been spent on Dewey-Burdock.  The company has spent $300,00 on its Wyoming prospects, and only $30,000 on the mothballed Centennial project in Colorado.

- Powertech CEO Dick Clement is on track to receive 2012 compensation of $400,000, followed by CFO Tom Doyle ($300,000) and corporate Secretary Greg Burnett ($245,000). 

- Powertech continues to omit any disclosure of its relationship with the mysterious wholly-owned subsidiary Indian Springs Land and Cattle Co., LLC.  The Denver company was formed by Powertech director Wallace Mays in 2008 and was involved in the dealmaking with Belgian company Synatom.

- The portion of the mineral properties asset attributable to the defunct Centennial project in northern Colorado continues to be carried on the balance sheet at its full historical cost (less a $2.3 million write-down in 2011 due to a failed real estate deal).  Powertech has apparently never tested the asset for impairment despite facts and circumstances that indicate the carrying amount may exceed its recoverable amount.

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the three and nine months ended September 30, 2012 (PDF 77KB, 17 pages)

POWERTECH URANIUM CORP. (An Exploration Stage Company) MANAGEMENT DISCUSSION AND ANALYSIS - November 6, 2012 (PDF 170 KB, 21 pages)    


Synatom takes $6.1 million hit on Powertech investment

Loss on debt conversion follows March 2011 write-off of $5.4 million; Belgian company is now largest owner with 18.6% of troubled Canadian firm, but holds no board seats

Posted November 13, 2012, Updated November 16, 2012

On November 6, Powertech Uranium Corp. issued a news release stating that Societe Belge de Combustibles Nucleaires SA (Synatom) and Powertech are "pleased" to announce a debt conversion transaction that will result in a $6 million CAD loss to the Belgian firm.

Robert Leclere, Managing Director of Société Belge de Combustibles Nucléaires Synatom SA, and former Director of Powertech Uranium Corp.

Powertech is undoubtedly pleased since the transaction allows the struggling Canadian company to pay off a $7.5 CAD loan not with cash but with 12.5 million newly-issued shares of Powertech stock worth only $1.4 CAD million as of the news release date.  After the debt conversion, Synatom owns 23,390,000 shares, or 18.6%, of Powertech.

Synatom is now the largest owner of Powertech, closely followed by Toronto hedge fund manager Shawn Kimel's K2 Principal Fund L.P.

It is hard to conceive how Synatom could be "pleased" with the recent transaction or for that matter any of its transactions with the Canadian penny-stock company.

The debt conversion is a result of a troubled debt restructuring deal Powertech inked with Synatom on March 15, 2011.  Prior to the restructuring, Powertech owed Synatom $25.4 million CAD.  Synatom restructured the debt by taking a $12.5 million CAD cash payment, a $7.5 million CAD note, and a $5.4 million CAD write-off.  With the conversion of the $7.5 million CAD note, Synatom has a total realized loss of at least $11.5 million CAD since it first invested in Powertech in June 2008. 

In the 2008 deal, Synatom invested $9 million CAD and acquired 6 million shares of common stock at $1.50 CAD per share (the deal also included warrants that are currently underwater).  Powertech stock closed at $0.12 CAD today on the Toronto Stock Exchange.

Based on the current stock price, Synatom has an $8.3 million CAD unrealized loss on the 6 million Powertech shares acquired in 2008.

The debt conversion was not unexpected; the $7.5 million CAD note payable from Powertech to Synatom was unsecured and non-interest bearing and appeared to be a way for Synatom to make the 2011 debt restructuring look better to its shareholders. 

Synatom officers Robert Leclere and Gerard Pauluis resigned from the Powertech board of directors in October 2010.  Powertech has never disclosed why the Belgian executives left the board.  Synatom is a subsidiary of Electrabel, a European power company that is wholly-owned by multinational corporation GDF Suez.

JW

News Release - "POWERTECH ANNOUNCES CONVERSION OF DEBT AND CLOSING OF PRIVATE PLACEMENT" - Powertech Uranium Corp. - November 6, 2012 (PDF 27 KB, 2 pages)

REFINANCING AGREEMENT - POWERTECH URANIUM CORP. and POWERTECH (USA), INC. and INDIAN SPRINGS LAND AND CATTLE CO., LLC and SOCIÉTÉ BELGE DE COMBUSTIBLES NUCLÉAIRES SYNATOM SA - FEBRUARY 4, 2011 (PDF 320 KB, 73 pages)

SYNATOM EXECS QUIT POWERTECH BOARD

"Synatom officers resign from Powertech board" - Northern Colorado Business Report - December 8, 2010  Synatom officers Robert Leclere and Gerard Pauluis actually resigned from Powertech's board sometime prior to October 26, 2010.  A two-sentence news release was filed with Canadian securities regulators on October 25, but it took Powertech six weeks to post the news on the company's website.  CEO Dick Clement did not respond to an NCBR request for a comment on the resignations, but the publication reported Clement's earlier claim that losing the firm's sole financial backer "will not affect our development interests in Centennial."  Right.... 

Synatom and Powertech

SO LONG, SYNATOM... The "Synatom Partnership" page on Powertech's website has been taken down.  As is customary with Powertech, the company offers no explanation to investors or other stakeholders.  To see what the Synatom Partnership page used to look like, click here.


Powertech agrees to sell 9% of company to unnamed party for $1 million CAD

Posted November 2, 2012

In a bid for financial survival, Powertech Uranium Corp. announced that it has agreed to sell up to 8.8% of the company for only $1 million CAD, or $1,004,000 USD at today's exchange rate. 

Powertech's October 26 news release announcing the non-brokered private placement failed to disclose the party or parties that will be purchasing up to 10 million common shares of the Canadian company. 

The investor(s) will pay $0.10 CAD per unit; a unit consists of one common share and one-half of one share purchase warrant.  One whole warrant entitles the holder to purchase one common share at $0.20 per share for a period of one year.

The private placement is non-brokered since Powertech will sell the units directly rather than through a broker-dealer or investment bank.  A private placement avoids the costs and disclosures of a public offering.

By issuing up to 10 million new shares, Powertech is diluting the ownership of existing investors and company insiders while raising only a relatively small amount of capital.  In contrast, Powertech's March 2011 public offering of nearly 48 million shares raised over $23 million USD.  Those funds have been nearly exhausted.

The $1 million CAD raised in the private placement should last roughly three months given Powertech's recent cash burn rate.

JW

News release - "Powertech Announces Private Placement" - Powertech Uranium Corp. - October 26, 2012 (PDF 18 KB, 1 page)

Powertech fails to test Centennial project asset for impairment

International Financial Reporting Standards require impairment testing upon indication that carrying value of asset exceeds recoverable amount

Posted August 5, 2012

Powertech's recently-released second quarter financial statements do not inspire confidence in the Canadian company.  Powertech had only $1.9 million in cash as of June 30.  Without new invested capital, the company will run out of cash before the end of the year. 

More striking is the fact that the financial statements are silent on the question of whether the $15.2 million of capitalized costs for the Centennial project are "impaired".  These costs are an asset on Powertech's balance sheet, and consist primarily of intangible items such as permitting, wages and salaries, consulting, leasing, drilling, and testing. 

Under International Financial Reporting Standards (IFRS), these costs must be written down if they exceed the value expected to be recovered through the operation or sale of the project.  Such write-downs result in an impairment loss on the company's financial statements.  For example, in 2011 Powertech wrote down $2.3 million in costs for Centennial land options that were not exercised. 

Since then, Powertech has ceased all permitting activities, closed its project office, begun selling project land, and lost its lawsuit against new state mining regulations. 

Under IFRS rules, Powertech must test for impairment of the Centennial project asset when there is an indication that the asset may be impaired, and at least annually. 

One indicator of impairment is if the book value of the company exceeds its market capitalization.  At June 30, Powertech's book value was $46.1 million; its market capitalization was only $12.9 million.

One would expect the June 30 financial statements to include a discussion of possible impairment of the $15.2 million asset.  No such discussion is included, raising the question of whether this omission constitutes a departure from IFRS

JW 

POWERTECH URANIUM CORP. (An Exploration Stage Company) INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the three and six months ended June 30, 2012 (PDF 75 KB, 17 pages)       

POWERTECH URANIUM CORP. (An Exploration Stage Company) MANAGEMENT DISCUSSION AND ANALYSIS - July 30, 2012 (PDF 167 KB, 21 pages)

Certification of interim filings - Richard F. Clement, Jr., Chief Executive Officer and President of Powertech Uranium Corp. - July 31, 2012 (PDF 11 KB, 2 pages)

International Accounting Standard 36 - Impairment of Assets - IFRS Foundation - accessed August 5, 2012 (PDF 259 KB, 50 pages)

IAS 36 Impairment testing: practical issues - Ernst & Young - 2011 (605 KB, 20 pages)


Powertech advisory board member caught in fracking study scandal

Investigative report reveals that longtime Powertech advisor Charles "Chip" Groat concealed conflict of interest from University of Texas; Groat led university study of fracking without disclosing compensation from industry 

Posted July 27, 2012

"Fracking Company Paid Texas Professor Behind Water Contamination Study" by Terrence Henry, stateimpact.npr.org - July 23, 2012

Charles G. "Chip" Groat, PhD.  Groat has been a member of the Advisory Board of Powertech Uranium Corp. since August 2, 2006.  He is one of only two advisors; the other is attorney Anthony Thompson.

"Texas Professor On the Defensive Over Fracking Money" by Terrence Henry, stateimpact.npr.org - July 24, 2012

"Contaminated Inquiry - How a University of Texas Fracking Study Led by a Gas Industry Insider Spun the Facts and Misled the Public" - Public Accountability Initiative - July 2012 (552 KB, 25 pages)

"Industry money and questionable ethics contaminate UT Austin fracking study" by David Wogan, Scientific American Blogs - July 24, 2012

OUR ADVISORY BOARD - Powertech Uranium Corp.


Powertech releases technical report on Wyoming property

Canadian company attempts to pump up dormant property to investors

Posted July 7, 2012

On June 25 Powertech issued a news release announcing the completion of a National Instrument 43-101 compliant technical report for the Aladdin uranium "project" located in Wyoming. 

Canadian securities regulators require the preparation of a NI 43-101 report if a company wants to report "current" uranium resources to investors.  Powertech previously reported that the Aladdin leases and mining claims contained "historic" resources of 1.2 million pounds of uranium.  Historic resources are considered more uncertain and speculative than current resources. 

The rules require a licensed geologist to review and analyze drillhole data to estimate current resources.  According to the new report, Powertech has identified 1,038,023 pounds of "indicated" resources and 101,255 pounds of "inferred" resources.  Indicated resources are more certain than inferred resources.

The identified Aladdin uranium deposits are paltry compared to Powertech's Dewey-Burdock project.  Dewey-Burdock contains 6.7 million pounds of indicated resources and 4.5 million pounds of inferred resources.  And the Aladdin uranium deposits are of a lower average grade than Dewey-Burdock.

Furthermore, Powertech used a different and more aggressive  methodology to estimate Aladdin resources.

Powertech uses the industry-accepted method of "GT contour mapping" to calculate estimated uranium resources.  This method maps a uranium deposit using data obtained by drilling.  When an orebody is intercepted, the grade of mineralization is multiplied by the thickness to give a grade/thickness (GT) number.  When the mapping is completed, a "GT cut-off" is applied to identify the ore that can be economically extracted.

The GT cut-off is important since using a lower cut-off results in a higher resource estimate.  As the price of uranium drops, geologists are expected to use a higher GT cutoff since lower grades become uneconomical to mine.

Powertech's April 2012 technical report on Dewey-Burdock used the more conservative 0.5 GT cut-off to estimate uranium deposits.  In contrast, the company's news release on Aladdin used a 0.2 GT cut-off, resulting in an inflated estimate of uranium resources.  When a 0.4 GT cut-off is used (still lower than Dewey-Burdock), total uranium deposits are nearly halved to 554,195 pounds of indicated resources and 42,620 pounds of inferred resources.

While the 0.4 GT calculation was included in the technical report, it was omittted from the news release.  The report did not include a resource estimate using the same 0.5 GT cut-off used for Dewey-Burdock.

In its news release, Powertech has elevated Aladdin from a "prospect" to a "project".  Calling Aladdin a project, however, is a stretch since Powertech has not filed a single mining permit application.  In fact, the prospect/project has been shrinking.  In 2011, Powertech decided not to renew portions of certain lease agreements and chose not to renew 65 mining claims. 

Basic prospecting work has not yet been conducted.  Powertech has drilled no core holes to obtain samples for testing, and has performed no mineralogical or metallurgical testing.  Powertech has no analytical data related to earlier core holes drilled by Teton Exploration.  

Perhaps most revealing is the fact that Powertech spent a grand total of only $28,484 on all of its Wyoming prospects in the first quarter of this year.  And Aladdin is only one of five Wyoming prospects owned by Powertech.  The other four are Dewey Terrace, Colony, Powder River Basin, and Shirley Basin.

The author of the news release also notes that geologist Jerry Bush has estimated the Aladdin area may potentially contain an additional 5 to 11 million pounds of uranium.  But the news release and the technical report are quick to qualify this statement, noting that "the density of exploration drilling is light", "the grade and quantity of this potential is conceptual in nature", and "there has been insufficient exploration...to define a mineral resource". 

Eighty percent of the 10,831-acre Aladdin prospect area is "lightly explored".  In other words, close-spaced exploration drilling necessary to identify current resources has been done on only 20% of the Aladdin property.

Near the end of the report the author notes that some of the uranium deposits are only 100 feet below ground surface.  There is no discussion of whether there is sufficient hydraulic head above these shallow resources to allow for in-situ leaching.

Adding to doubts about Aladdin is the fact that Powertech does not control hundreds of acres that are located in the middle of the prospect area, according to maps from the report.

None of these facts stop Powertech CEO Dick Clement from pumping up Aladdin in the news release.  Calling the technical report a "fully vetted" report, Clement says he is pleased with the results and that "the potential of upwards of 10 million pounds makes the Aladdin Project a favorable prospect for future ISR exploration and development."

The report's author, Jerry D. Bush, is required to be independent of Powertech, according to Canadian securities law.  Section 1.5 of National Instrument 43-101 requires that an "independent qualified person" prepare a technical report.  A qualified person is independent if there is no circumstance that, in the opinion of a reasonable person, could interfere with the qualified person's judgement. 

Bush was hired by Powertech in 2007 to work on the Aladdin prospect.  He supervised Powertech's exploration drilling program, reviewed logging of drill cuttings, and observed geophysical logs being run on all drill holes.  The data from 2007 became a key part of the dataset used to prepare the technical report.  Consequently, as author of the report and also a former Powertech consultant, Bush reviewed his own work.

It is no surprise that Bush concluded that "all newly-generated data by Powertech used to evaluate the uranium resources of the Aladdin Project" are sufficient and accurate.  He goes on to opine that "pertinent data concerning the uranium deposits in the Aladdin Project are bound to exist in other data storage".  Without speculating how this data was obtained or who has custody of it, Bush makes the unsupported assertion that such additional data would support his interpretations and that it is "not likely that any data could be in existence that could detract from the conclusions presented".

Bush concludes the report with a recommendation to conduct a two-phased, $800,000 exploration drilling program.

JW

News release - "POWERTECH COMPLETES NI 43-101 REPORT ON THE ALADDIN PROJECT" - Powertech Uranium Corp. - June 25, 2012 (PDF 46 KB, 3 pages)

Technical Report on the Aladdin Uranium Project Crook County, Wyoming - Powertech Uranium Corp. - Prepared by: Jerry D. Bush - June 21, 2012  (PDF 4,097 KB, 43 pages)

Certificate of Qualified Person - Jerry D. Bush - June 22, 2012 (PDF 412 KB, 1 page)

NATIONAL INSTRUMENT 43-101 STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS - Ontario Securities Commission - June 24, 2011 (PDF 215 KB, 44 pages)


Investors kept in dark with latest Powertech news release

Clement is silent on Mays' departure from board; CEO overstates company's uranium experience

Posted May 17, 2012, Updated May 30, 2012

In a move that appears to be intended simply to let the world know that Powertech is still alive, the Canadian company issued a news release yesterday announcing the election of directors at its annual meeting held on May 15.

But the news release is noteworthy for what it fails to disclose.  Legendary uranium miner and Powertech co-founder Wallace Mays dropped off the board effective May 15. 

In contrast, since 2005 Powertech's communications to investors and the markets have never missed an opportunity to trumpet Mays' involvement with the company.

Mays was at one time the largest shareholder of Powertech, and publicly proclaimed that it was "his company".  Even though CEO Dick Clement appears to have done most of the company's heavy lifting, Mays' ownership and experience was leveraged to raise capital from Canadian and European investors as well as from Belgian company Synatom.

But when it came time for Mays to cut his managerial and governance duties with Powertech by leaving the board (he is still a shareholder), Clement and his remaining boardmembers saw no need to inform the firm's investors in the May 16 news release.  

This disclosure lapse, while surprising, is not atypical.  The same news release repeats an unsupported claim by Powertech that has shown up on company news releases for years.

The claim is that Powertech's "key personnel have over 200 years of experience in the uranium industry throughout the United States, and have permitted more than a dozen in-situ operations for production".

The assertion was first published in a June 28, 2007 news release Powertech issued regarding the Centennial project in Colorado.  For years the statement seemed dubious since the most experienced Powertech executive, Wallace Mays, only claimed to have been involved with eight in-situ leach uranium mines, and some of these were likely outside of the U.S. 

Powertech has never released the names of these eight mines.  And no other Powertech employee or official has ever claimed to have permitted an ISL uranium mine.

Powertech never explained that only two officials, Wallace Mays and son John Mays, were the only key personnel with actual operational uranium mining experience.  (CORRECTION: According to a résumé recently obtained from the South Dakota Minerals and Mining Program, Powertech Chief Geologist Frank Lee Lichnovsky has uranium mining experience that goes beyond exploration.  Lichnovsky worked for Wyoming Minerals Corporation from 1976 to 1981 at three operating in-situ leach uranium mines: Bruni and Three Rivers in Texas, and Irigaray in Wyoming.)

Now that Wallace Mays is gone, one would expect that Powertech's news releases would be modified to reflect this material fact.  If "key personnel" have permitted a dozen uranium mines, or even one mine, Powertech should disclose the identity of the individuals as well as the uranium mines.

JW

News release - "POWERTECH ANNOUNCES RESULTS FROM ANNUAL GENERAL MEETING" - Powertech Uranium Corp. - May 16, 2012 (PDF 22KB, 1 page)


Powertech downsizes, according to first quarter financials

As remaining cash dwindles, employees are let go and assets sold; no pay cut for Clement

Posted May 5, 2012

Over the last several months, Powertech has moved to downsize the company in an effort to conserve its vanishing cash.  The Canadian uranium developer and penny stock company has no operating revenue.

Powertech's cash and working capital has dropped steadily since its March 2011 public stock offering.  According to recently released first quarter financial statements, the company had only $3.2 million in cash as of March 31.  In contrast, a year earlier Powertech had $9.1 million.

The company reported $8.4 million in working capital at the end of the first quarter of 2011 but only $3.0 million as of March 31 of this year.

Powertech has been able to reduce its cash burn rate through layoffs, selling equipment, and by stopping all work on the Centennial project in northern Colorado.  Excluding one-time asset sales and foreign exchange loss, its monthly burn rate for first quarter 2012 averaged $390,000, compared to $530,000 for 2011 (excluding the March 2011 troubled debt restructuring with Synatom).  When it was flush with cash from Synatom, Powertech would regularly spend over $1 million a month.  

Since the March 2011 stock offering, Powertech has slashed its workforce. The company had 21 employees and four independent contractors, according to the March 31, 2011 Annual Information Form filed with securities regulators.  The March 28, 2012 AIF revealed that Powertech was down to ten employees and three independent contractors.

To raise cash, Powertech has been selling assets.  Since the beginning of the year, the company sold its logging truck and related equipment for $243,000.  The geophysical logging truck was manufactured by Geoinstruments Logging, Inc. and allowed Powertech to collect data from drillholes to perform detailed subsurface geologic mapping.

Last year, Powertech ceased all permitting work on the Centennial project and walked away from a large land and mineral position it had optioned from two Weld County ranching families.  The company is still advancing its 2010 lawsuit against certain new Colorado uranium mining rules, but appears to have given up the legal fight against those rules it considered most onerous.

As Powertech downsizes and approaches its eighth year without a permitted uranium mine, the firm continues to compensate its executives handsomely.  For instance, in 2011 CEO Dick Clement was paid $293,470 in salary, benefits, and deferred compensation.  Not bad for a company that has never booked a sale, and with a share price that has dropped from a 2007 high of $4.45 CAD to $0.09 CAD on the last day of 2011.

Clement is one of three members of Powertech's Compensation Committee, the body primarily responsible for determining the compensation to be paid to the company's executive officers and evaluating their performance.

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) For the three months ended March 31, 2012 (Stated in United States Dollars) (PDF 72 KB, 16 pages)

POWERTECH URANIUM CORP. (An Exploration Stage Company) MANAGEMENT DISCUSSION AND ANALYSIS (April 30, 2012) (PDF 159 KB, 19 pages)

POWERTECH URANIUM CORP. (An Exploration Stage Company) ANNUAL INFORMATION FORM FOR THE YEAR ENDED DECEMBER 31, 2011 - March 28, 2012 (PDF 265 KB, 43 pages)

POWERTECH URANIUM CORP. - NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 15, 2012 AND INFORMATION CIRCULAR - April 13, 2012 (PDF 248 KB, 33 pages)


WALLACE MAYS LEAVES POWERTECH BOARD

ISL uranium mining pioneer drops off board with no explanation; Powertech continues to avoid disclosure of relationship with Mays' Indian Springs Land and Cattle Co.

Posted April 25, 2012

Powertech co-founder Wallace Mays is exiting the company's board of directors on May 15, 2012, according to its April 13, 2012 Notice of Annual General Meeting of Shareholders and Information Circular.  No reason is given for his not standing for re-election at Powertech's annual meeting.  One year ago, Mays left his positions as Chairman and Chief Operating Officer.  Mays was Chairman of Powertech from May 2006 to May 2011.

Wallace M. Mays

Although Mays was nominally a Powertech director for the last year, he did not attend six board meetings held from March to October 2011.  As of December 31, 2011, Mays still owned 1,868,000 shares of Powertech, or 1.8% of the company.  Five years ago, Mays owned 8.9% of Powertech.

The colorful and legendary uranium miner was instrumental in Powertech's early financing efforts since he was the firm's only principal with actual uranium mining experience.  (John Mays, Wallace Mays' son, was hired by Powertech in February 2008.  John Mays is currently the only Powertech manager with uranium mining experience.  CEO Richard Clement has only worked in exploration and permitting.)

Powertech never missed an opportunity to tout Mays' experience with in-situ leach uranium mining.  Prior to a July 2009 debate between Powertech and Centennial project opponents Coloradoans Against Resource Destruction in Nunn, Colorado, Powertech sent a list of debate questions to Nunn Town Clerk Tori McMechan and Mayor Jeff Pigue.  The Town of Nunn organized the debate, which was originally to be moderated by Pigue and McMechan.  Both town officials supported the proposed Centennial project.  (Responding to protests, the debate was moderated by Colorado State University professor Jeff Boulter.)

One question submitted by Powertech didn't beat around the bush regarding Mays' experience:

"A good question for CARD would be: ls CARD aware that Powertech officials have more than 200 years combined experience in the uranium mining industry, and Wallace Mays (Powertech COO) is considered by industry to be the most knowledgeable person on the planet when it comes to in-situ uranium mining?"

During the debate, Mays struck a combative tone, stating that it is "our land, our water, our uranium that we have paid for" and that "we will not be blackmailed".  Mays did not explain how he believed Powertech was being blackmailed.

On a roll, he started banging his fist on the table to punctuate each sentence:

"I've been doing this for forty years (bang). This is my company (bang). This is my technology (bang). I'm the largest single shareholder in this company (bang). I'm here to stay (bang). And I have put in eight uranium mines (bang). I've reclaimed them (bang). I've managed them (bang). I've done three in other countries (bang). I've mined in this state for twenty years in uranium mining (bang)." 

Two months later, the Nunn Town Board passed a strong resolution of opposition to the Centennial project.

While Wallace May's experience with in-situ leach uranium mining is well documented, his claim to have designed and operated the first commercial scale ISL is in dispute.  A Powertech news release from 2008 claims that Mays developed the first such mine, the Clay West Uranium Mine in Texas, in the mid 1970s.

But a 2006 article by uranium industry analyst James Finch recounts the history of a commercial scale ISL mine in Wyoming's Shirley Basin starting in the early 1960s.  The mine, the Lucky Mc Uranium Mine, was developed and operated by the Utah Construction Company.

And according to Wallace Mays' official biography, he was awarded membership in the Uranium Hall of Fame in 1996.  It is unclear who awarded this membership, if there are any other members, and if the Uranium Hall of Fame even exists.

Perhaps the most enduring mystery surrounding Wallace Mays is the Indian Springs Land and Cattle Co., LLC.  The Colorado limited liability company was formed by Mays in July 2008, five months after Mays was named Chief Operating Officer of Powertech.

Indian Springs is a "wholly-owned indirect subsidiary" of Powertech Uranium Corp., according to documents recently filed with Canadian securities regulators.  Indian Springs was a party to financing agreements between Powertech and Belgian firm Synatom.

The problem is that Powertech's audited financial statements and related disclosures have omitted all mention of Indian Springs.  It was early 2011 before Powertech even disclosed the existence of Indian Springs.  And Powertech first disclosed that Indian Springs was a wholly-owned indirect subsidiary on March 28 of this year. 

It is likely that Indian Springs is wholly-owned by Powertech (USA), Inc., a South Dakota corporation that is the only direct subsidiary of Powertech Uranium Corp.  It is unclear why Powertech's Canadian auditors, BDO Canada LLP, have not required Powertech to disclose the details of its financial relationship with Indian Springs Land and Cattle Co., LLC.

JW


Powertech's market cap hits rock bottom

Posted April 18, 2012

According to a recent Powerpoint presentation by uranium companies Energy Fuels Inc. and Denison Mines, Powertech Uranium Corp. has the smallest market capitalization of a list of seven uranium developers operating in the United States.


Annual financial statements document Powertech's decline

Posted March 19, 2012, Updated March 21, 2012

On March 5, Powertech filed its audited annual financial statements and management discussion and analysis (MD&A)with Canadian securities regulators.  The filings reveal Powertech's precarious financial position and shed additional light on its 2011 debt restructuring with Belgian firm Synatom.

Points of interest include:

- Auditors BDO Canada LLP emphasized in their report "the existence of a material uncertainty that may cast doubt about the entity's ability to continue as a going concern."  In other words, Powertech may not have enough cash to survive through 2012.

- As of December 31, Powertech had $4 million in cash.  During 2011, Powertech spent an average of roughly $530,000 per month on its projects and corporate overhead.  At this rate, and with no new financing, Powertech could run out of cash by late summer.  Layoffs and office closings might buy another couple of months.

- Powertech actually had net income of $4.4 million in 2011.  But this "phantom income" resulted from the forgiveness of debt by Synatom and various accounting maneuvers that together yielded $13 million in gains.  Powertech has never had any sales revenue.

- 2011 compensation for CEO Dick Clement was $285,970.  Vice President Dick Blubaugh was paid $184,989. Compensation for CFO Thomas Doyle was $182,070.  (These amounts do not include deferred compensation.)

- Certain Powertech executives and managers have agreed to defer a portion of their salary (ranging from 10-25%) starting November 2011 through October 2013.  

- During the fourth quarter of 2011, "wages and benefits were lower due to a decrease in the number of employees."    

- "The Company has ceased its spending on property, plant and equipment."  As of December 31, 2011, the book value of all of Powertech's buildings, computers, field equipment, office equipment, and vehicles was only $208,000.  After December 31, the company sold "a portion" of its equipment assets for $240,000.

- Although Powertech has office leases in Vancouver, BC, Albuquerque, NM, and Greenwood Village, CO, the company has no office lease agreements in South Dakota, site of the proposed Dewey-Burdock project.  Dewey-Burdock is the only project for which Powertech is engaged in permitting activities.

- Powertech disclosed that federal law requiring the protection of historic cultural properties of religious significance to Indian tribes "could affect the timing for final licensing of the Company's Dewey-Burdock Project."

- "The Company has decided to forego additional permitting activities on Centennial (Colorado) until the completion of the permitting and licensing of Dewey-Burdock."

- Powertech did not disclose its active lawsuit against the Colorado Mined Land Reclamation Board.  The lawsuit seeks to overturn new Colorado rules regulating uranium mining.

- Powertech's early 2011 "refinancing agreement" with Belgian firm Synatom was not a simple refinancing but rather a "troubled debt restructuring" as defined by accounting experts.  In such transactions, a lender grants a concession to a financially troubled borrower that it would not otherwise consider.  Prior to the troubled debt restructuring, Powertech owed Synatom $25.5 million CAD.  Synatom forgave $5.5 million CAD of debt in return for $12.5 million CAD in cash and a $7.5 million CAD unsecured, non-interest bearing convertible promissory note.  The recently released annual financial statements reveal an additional $6 million gain on the convertible promissory note.  Even though the face value of the note is $7.5 million CAD, the "fair value" of the note dropped to only $1.5 million as of December 31 since the repayment is pegged to a set number of Powertech shares (at $0.60 CAD a share).  Powertech stock closed at $0.085 CAD on December 30, the last trading day of the year.

- The mysterious entity, the Indian Springs Land and Cattle Co. LLC, is not explained in the financial statements.  Although the limited liability company, created by former Powertech Chairman Wallace Mays, is party to an agreement tied to the troubled debt restructuring with Synatom, Powertech and its auditors did not disclose the relationship between the companies.  It is unknown if Indian Springs is a special purpose entity (SPE) formed by Powertech.  While SPEs can be perfectly legal, they were used extensively by Enron to reduce financial risk, hide debt or ownership, conceal self-dealing, and obscure relationships between different entities which were in fact related to each other.

- While Powertech reports shareholders' equity of $47 million, its largest asset is its "Mineral Properties", at $46 million.  This is classified as an "intangible asset" since it consists mainly of capitalized exploration and permitting costs.  Thus, Powertech's tangible book value (accounting value of the company's tangible assets less any debt) drops to about $1 million. 

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) CONSOLIDATED FINANCIAL STATEMENTS December 31, 2011 (Expressed in United States Dollars) (PDF 198 KB, 43 pages)  

POWERTECH URANIUM CORP. (An Exploration Stage Company) MANAGEMENT DISCUSSION AND ANALYSIS (March 5, 2012)  (PDF 223 KB, 34 pages)


Powertech trading spikes

Abnormal increase in share price and volume occurs with no disclosure of news regarding company or uranium industry

Posted February 22, 2012

Both trading volume and share price of Powertech stock jumped today on the Toronto Stock Exchange, even though the company has disclosed no recent news.

Powertech shares rose 13.89% to close at $0.205 CAD.  Trading volume was 339,563 shares.  The average daily trading volume for the previous ten trading days was 61,604 shares.

This spike in share price and volume occurred in spite of the fact that Powertech has not disclosed any news in over seven months.  And other factors that might affect Powertech's stock price don't explain today's increase.  The spot price for uranium has been basically flat for the last two weeks, as has the Global X Uranium ETF, an investment fund that tracks the global uranium industry.

Several Canadian broker dealers were involved in today's trading, including Toll Cross Securities Inc., Desjardins Securities Inc., Scotia Capital Inc., Questrade Inc., TD Securities Inc., and RBC Capital Markets.

JW


Russian government may control royalty interest in Dewey-Burdock project

Posted February 9, 2012, Updated February 12, 2012

The Kremlin may control a royalty interest in Powertech's proposed Dewey-Burdock project through Rosatom, a "state corporation" owned by the Russian government.

On November 18, 2005, Powertech issued a news release announcing the purchase of 119 federal unpatented mining claims from Energy Metals Corporation (EMC).  The claims comprised approximately 2,300 acres in the Black Hills of South Dakota and served to consolidate Powertech's control of the identified uranium resource in the Dewey-Burdock area, according to the news release.  Powertech purchased the claims with a combination of stock and warrants.   

As part of the transaction, EMC retained a production royalty of from 2% to 4% dependent on the price of uranium. 

Powertech has not obtained mining permits for the project.

On August 10, 2007, EMC was acquired by Uranium One Inc., a Canadian corporation listed on the Toronto and Johannesburg stock exchanges.  In June 2010, Russian mining firm ARMZ Uranium Holding Co. acquired a controlling stake in Uranium One.

ARMZ is the mining subsidiary of Rosatom, the state corporation that runs Russia's nuclear complex.  Rosatom controls Russia's nuclear power reactors, nuclear weapons companies, research institutes, and nuclear and radiation safety agencies.

It is not known if Uranium One, now controlled by Rosatom and the Russian government, still owns the production royalty interest in Dewey-Burdock.  Powertech's latest Management Discussion and Analysis (October 26, 2011) is silent on the matter.

JW 


Opinion - "The EPA has a duty to protect aquifers" by Adam Friedman and Jim Blackburn, The Houston Chronicle - December 28, 2011


WHAT GOES UP...

Powertech shares rally 100% in five trading days; uranium sector sees relatively modest increase in same time period

Posted January 17, 2012

Shares of Powertech Uranium Corp. continued their eye-popping gains with a nearly 18% increase today on the Toronto Stock Exchange.  Since January 10, a period of five trading days, shares have jumped 100%.

Powertech shares closed at $0.20 CAD.  Powertech is a microcap stock, with a market capitalization of only $20.7 million CAD.

The gains are not due to any recent public information about Powertech or its troubled Centennial and Dewey-Burdock projects.  The Canadian firm has not issued a news release since July 5, 2011.

The uranium sector is "showing some signs of powering back to life", according to Globe and Mail columnist Darcy Keith.  As evidence, she cites the Global X Uranium ETF, an investment fund specializing in uranium companies.

But in the same time period that Powertech notched its 100% gain, Global X Uranium ETF increased only 12%. 

It might be reasonable to expect Powertech stock to track the increase in the uranium sector, even though the company has nearly abandoned its Centennial project in Colorado and is bogged down with its Dewey-Burdock project in South Dakota.

In contrast, Powertech shares have jumped eight times faster than the industry as a whole, as represented by the Global X Uranium ETF.

Rapid increases in trading volume and share price of microcap companies when there has been no recent news can sometimes indicate market manipulation.  Michael J. Watson, former Executive Director of the British Columbia Securities Commission, describes one scenario:

"Often at the early stages of the manipulation, “circular trading”, that is trading that involves a small group of traders deliberately recirculating the stock among themselves at increasingly higher values to create the appearance of both demand and value in the shares, is the only trading which occurs. Large blocks of stock are traded through nominee and other accounts controlled by the insiders, through match orders and wash sales. Often the purchased stock is “paid for” by the proceeds of the subsequent sale of the same stock, sometimes called free riding. Through this mechanism, manipulated stock can appear to have achieved a significantly high level of capitalization, without the injection of a significant amount of capital by the insiders."

Watson explains further:

"Exceeding the normal trading parameters would, in normal circumstances, be caused by the disclosure of activity relating specifically to the issuer, or sometimes to the broad industry in which the issuer is involved. Trading activity which exceeds the pre-established parameters may be evidence of unlawful insider trading, (where there are significant increases or decreases in the trading price of the stock without any disclosure of information which would explain the change,) or market manipulation (usually where there is an increase of trading volume and/or price without any disclosure of information which would explain the change)."

And Watson addresses rumors:

"On the other hand, there may be a reasonable explanation for the changes. Usually, exchange staff will start the investigation by contacting the issuer to determine whether there is any reasonable explanation for the change in trading activity. Where the issuer reveals undisclosed material information, the exchange may halt trading and require immediate public dissemination of the information. If there is no explanation, the trading activity may be based on rumour, and the issuer may be required to issue a news release indicating that there have been no material changes to the issuer’s circumstances which would warrant the change indicated by the trading activity. Often the exchange may halt trading in the issuer’s shares until there has been sufficient time for the mandated news release to reach the investing public. In extreme cases the exchange may halt trading even before any contact has been made with the issuer."

The reason for Powertech's five-day 100% share price increase may never be known, and Powertech officials aren't talking.

JW

"The Regulation of Capital Markets; Market Manipulation and Insider Trading" by Michael J. Watson, Q.C., Executive Director, B.C. Securities Commission, British Columbia, Canada (PDF 37 KB, 18 pages)


Stock manipulation or dumb luck?

Powertech's share price increases sixty percent in three days; no news releases issued in over six months

Posted January 13, 2012

Powertech shares closed at $0.16 CAD today on the Toronto Stock Exchange, jumping 28% from yesterday's close.  The shares are up 60% from Tuesday's close at $0.10 CAD.

There has been no new public information on the Canadian company in the last week.  Powertech has not issued a news release since July 5, 2011, over six months ago.  And Powertech's last securities filing was on October 26, 2011.

While uranium company shares have climbed since Tuesday, Powertech's increase is unusual.  Over the same three-day period, shares of Cameco, Uranium One, and UR-Energy have risen 8%, 1%, and 4%, respectively.

The last time Powertech's stock price jumped this high and this fast was when the company was gearing up for its first public stock offering in early 2011. 

At the time, Powertech disclosed in its prospectus that its agents, broker-dealers Salman Partners and Dundee Securities, "may effect transactions intended to stabilize or maintain the market price for Common Shares at levels at or above that which might otherwise prevail in the open market."

JW

TMXmoney.com - Powertech Uranium Corp. (PWE) - Toronto Stock Exchange

"Canada Business Corporations Act: Insider Trading" - Penny Becklumb, Law and Government Division, Parliament of Canada - Revised October 14, 2008

National Instrument 55-104 INSIDER REPORTING REQUIREMENTS AND EXEMPTIONS (PDF 281 KB, 29 pages)


Powertech shares jump 20% on no news

Posted January 11, 2012

Today Powertech shares jumped from $0.10 CAD to $0.12 CAD, or twenty percent, on the Toronto Stock Exchange. There was no news today or in the last few days to account for the increase.  In fact, Powertech has not issued a news release since July 5, 2011, over six months ago.  Powertech's last securities filing was on October 26, 2011.

Powertech's stock price is highly volatile, but a 20% bump in one day is unusual.  Unusually large changes in a stock's price can sometimes be the result of manipulation by corporate insiders, brokers, large shareholders, and market makers.  These parties may also have access to material non-public information.

Interestingly, on December 30, 2011, there were a handful of insider transactions among Powertech officials Wallace Mays, Gregory Burnett, and Thomas Doyle.  In the "off-exchange" transactions, Mays sold 100,000 shares each to Burnett and Doyle at an undisclosed price.  On the same day, Mays sold options to Burnett and Doyle to purchase a total of 1,868,000 of Mays' shares.  The strike price of the options was $0.12 CAD.

JW

CanadianInsider.com - Powertech Uranium Corp. (PWE)


Powertech consultant exploits Colorado State University connection during Virginia uranium workshop

Posted November 24, 2011

Steve Brown, a Certified Health Physicist who has done extensive consulting for Powertech Uranium Corp., recently organized and moderated a workshop on radiation and uranium mining in Danville, Virginia.  Danville is near Virginia Uranium, Inc.'s proposed Coles Hill uranium mining and milling project. 

Brown conducted a similar event in February 2008 at Colorado State University in Fort Collins.  Brown used many of the same presenters for both the Danville and Fort Collins events, including two professors from CSU's Department of Environmental and Radiological Health Sciences.  In both workshops, the majority of the presenters were uranium industry executives or consultants. 

In both Fort Collins and Danville, start-up uranium companies are facing intense local opposition to proposed uranium mining projects.  Brown was brought in to assemble panels of ostensibly objective experts in an attempt to seize the scientific high ground and assure the locals that uranium mining is safe, harmless, and relatively risk free.

An attendee at either workshop would certainly have learned a great deal of factual information about radiation, uranium mining, and related regulations.  But unfortunately, Brown failed to invite even one expert who might have raised legitimate human health concerns about the projects proposed by Powertech or Virginia Uranium.

In his public presentations, Brown admonishes his listeners to evaluate a speaker's credibility based on the person's work experience and advanced degrees.  So it was surprising to see a November 12 news story on the WSLS Channel 10 website about the Danville workshop with a quote by "Colorado State University professor, Dr. Steve Brown".

Brown is neither a CSU professor nor a PhD.  Brown has never been a professor at CSU, according to Jac Nickoloff, Head of the Department of Environmental and Radiological Health Sciences.  And Brown's own bio submitted in 2009 to the Colorado Department of Public Health and Environment indicates that his only advanced degree is a M.S. in physical science from West Chester University.

It is unclear how this description of Brown made it into the news story.  According to the reporter who wrote the story, Brown said he was "with" CSU and was a PhD, but he was not a professor.  On November 14 the reporter said she would double check her notes and make any necessary corrections.  As of November 24, no corrections have been made.

The CSU Department of Public Relations was notified on November 15 of this mischaracterization of Brown's association with the university but has apparently not acted to correct the article.

It is conceivable that the reporter misunderstood Brown and inaccurately reported his relationship with CSU and his educational credentials.  But no one seems interested in correcting the news story, including the television station, the CSU Department of Environmental and Radiological Health Sciences, and the CSU Department of Public Relations.

As a result, readers and viewers of WSLS Channel 10 in Virginia are left with the impression that the Danville workshop was organized and led by a Colorado State University professor with a PhD, not by a long time uranium industry consultant and promoter.

JW

"Danville uranium meeting hears from experts on mining" by Morgan Donnelly, WSLS 10 (Roanoke, Virginia) - November 12, 2011 (PDF 49 KB)


"SITE-SPECIFIC ASSESSMENT OF THE PROPOSED URANIUM MINING AND MILLING PROJECT AT COLES HILL, PITTSYLVANIA COUNTY, VA" - Prepared by Robert E. Moran, PhD, Michael-Moran Assoc., LLC - November 2011 (PDF 341 KB, 39 pages)  This report prepared for the Roanoke River Basin Association in Danville, Virgina provides a site-specific assessment of water-related issues from the proposed Coles Hill uranium mining site.  The author, Dr. Robert Moran, has thirty-nine years of domestic and international experience in conducting and managing water quality, geochemical and hydrogeologic work for private investors, industrial clients, tribal and citizens groups, non-governmental organizations, law firms, and governmental agencies.  Moran was involved in 1983 as a hydrogeological and water quality consultant to the two companies that discovered the Coles Hill deposits.  If the Virginia legislature votes to rescind the current statewide ban on uranium mining and the project is approved by regulators, Virginia Uranium, Inc. would use open pit mining to extract the uranium.  Moran concludes that the project would have long term negative impacts on water resources in the area.  Powertech proposed to use open pit mining in the southern portion of the proposed Centennial project in northern Colorado.  While it backed off from that idea in recent years, Powertech has never ruled out open pit mining since a sizable portion of the Centennial uranium deposits sit above the water table and therefore may not be amenable to in-situ leaching.  


Colorado hydrogeologist warns of risks to water resources from uranium mining

Posted November 8, 2011

"Uranium focus of lecture" by Paul Collins, Martinsville Bulletin (Virginia) - November 8, 2011


Belgium to phase out nuclear power?

Parent company of large Powertech shareholder may be shutting down Belgium's seven reactors

Posted November 6, 2011

According to a BBC news story, Belgium's main political parties have agreed to shut down the country's seven nuclear reactors.  The reactors are operated by Electrabel, the parent company of Société Belge de Combustibles Nucléaires Synatom SA (Synatom). 

Synatom is the former strategic partner of Powertech and still owns 10,890,000 shares of Powertech stock, or 10.5% of the Canadian company.  Synatom is the second largest Powertech shareholder; Toronto investor Shawn Kimel owns 17.8% of Powertech through his hedge fund K2 Principal Fund.

Synatom lost $5.4 million on a series of loans made to Powertech from 2008 to 2010.  Synatom would have lost more had it not refinanced the debt earlier this year and agreed not to sell its 10.5% stake until September 2012. 

The Belgian company invested in Powertech in June 2008 in an attempt to secure uranium for Belgian nuclear power stations.  Powertech has never produced uranium and is unlikely to obtain permits for its first mine before 2014. 

Synatom announced its intention to sell its Powertech stake in September 2010, and Synatom executives Robert Leclere and Gerard Pauluis resigned from Powertech's board of directors a month later.

JW  

"Belgium plans to phase out nuclear power" - BBC News Europe - October 31, 2011

Synatom and Powertech


KIMEL INCREASES POWERTECH STAKE TO 18%

Toronto hedge fund manager buys additional six million shares from undisclosed party

Posted October 26, 2011

Canadian hedge fund manager Shawn Kimel's K2 Principal Fund L.P. purchased 6,026,500 shares of Powertech common stock on October 21, according to CanadianInsider.com.  The shares were purchased on the public market for a per share price of $0.08 Canadian.  This acquisition brings Kimel's stake up to 18.3 million shares, or 17.8% of Powertech's outstanding shares.

Powertech has not disclosed the transaction and who sold the shares even though the trade marks a significant shift in the company's ownership.  The only Powertech shareholder with that many shares is Belgian firm Société Belge de Combustibles Nucléaires Synatom SA, which owns 10.89 million shares.  But on March 15, 2011, Synatom signed an agreement with Powertech to not sell the shares until September 15, 2012 or until a "change of control" or an "event of default" occurs.

According to Powertech's April 28, 2011 Information Circular, other major shareholders include Wallace M. Mays (4,180,000 shares), Richard F. Clement, Jr. (3,528,000 shares), Thomas A. Doyle (2,813,400 shares), and Greg Burnett (2,185,000 shares).

JW 

CanadianInsider.com - Powertech Uranium Corp. (PWE)


Powertech shares hit new 52 week low of $0.08 CAD

Posted October 2, 2011

Although Powertech closed at $0.10 CAD Friday, the shares hit a new 52 week low by dropping to $0.08 during late morning trading.

It would not be surprising if the Powertech board has quietly put the company up for sale.  However, both the Centennial project and the Dewey-Burdock project face major challenges.  It seems unlikely that any serious uranium mining company would choose to allocate capital to either of these high-risk projects.

In fact, according to an industry source Powertech is "available", but the company is an unattractive takeover target primarily because of the obstacles in the way of permitting the Centennial project.

JW


TEN CENTS: Powertech stock closes on a dime

Posted September 28, 2011

In a flurry of trading, Powertech shares today fell 13.04% to close at $0.10 CAD on the Toronto Stock Exchange.  Volume was exceptionally high at 474,850 shares.  The stock hit an intraday low of $0.09, setting a new 52 week low.

JW


ELEVEN CENTS: New 52 week low for Canadian company

Posted September 26, 2011

Today Powertech stock fell 15.38% to close at $0.11 CAD, setting a new 52 week low and hitting its lowest close in company history.  The shares are down 83% from their 52 week high of $0.65, and have dropped 98% from the March 2007 high of $4.45.

JW


Powertech stock trades at ten and a half cents intraday

Posted September 24, 2011

Shares of Powertech continued their downward slide on Friday as trading hit $0.11 CAD for most of the day and at one point dropped to $0.105.  Powertech closed at $0.13 CAD.  The company is listed on the Toronto Stock Exchange and is not listed on a U.S. stock exchange.  This is the lowest intraday trading level since Clement and Mays devised their 2006 reverse merger with Canadian shell company Powertech Industries, a former boiler manufacturer.

JW 


Powertech stock closes at $0.12 CAD for second time

Posted September 20, 2011

For the second time in its history as a uranium company, Powertech shares closed at $0.12 CAD on the Toronto Stock Exchange.  The first $0.12 close occurred on September 8.

Powertech's head office is located in Vancouver, British Columbia.  Vancouver is a magnet for junior uranium companies because of relatively lax securities regulation, numerous brokerage houses and stock promoters, and the city's long history of natural resource ventures. 

But Tom Zoellner, author of the 2009 book Uranium: War, Energy, and the Rock that Shaped the World, calls Vancouver "a historic tank of sharks".  In 1989 Forbes magazine called Vancouver the "Scam Capital of the World" for the many stock frauds launched from the city.

Uranium juniors count on a "story" to move their stock and raise capital.  The story includes locations and amounts of historic reserves, what kind of drilling has taken place, permitting efforts, and management team biographies.

Powertech's story has become less compelling as of late.  Belgian company and strategic partner Synatom chose to cut its losses and disengage from Powertech.  Founder and legendary uranium miner Wallace Mays resigned his positions as Chairman and Chief Operating Officer.  Powertech abandoned its northern Colorado project office in the face of new regulation, local opposition, the loss of a large land position, and poor cash flow.  And its flagship Dewey-Burdock project in South Dakota faces delays from problems with its NRC license application and confusion surrounding the Section 106 consultation process with area Indian tribes.

JW


RECORD-BREAKING CLOSE

Powertech stock closes at $0.12 CAD for first time in company history; shares slide deeper into penny stock territory

Posted September 8, 2011

Less than six months after Powertech sold nearly 48 million shares of its common stock to investors at $0.47 CAD per share, its stock closed today at a record low of twelve cents Canadian.  The close is the lowest since Messrs. Clement and Mays created Powertech Uranium Corp. in 2006 through a reverse merger with shell company Powertech Industries, Inc. 

With 103.5 million outstanding shares, Powertech's market capitalization is only $12.4 million, a fraction of the company's June 30 book value of $43.3 million.  Investors are obviously not impressed with Powertech's $45 million in "Mineral properties" on its balance sheet.  These mineral properties assets consist primarily of capitalized permitting costs, lease payments, wages, consulting fees, and legal fees.  The carrying value, or book value, of Powertech's mineral properties at June 30 are: Dewey-Burdock $25.9 million, Centennial $15.7 million, and $3.4 million for properties in Wyoming where Powertech has not even started permitting efforts.

JW 

POWERTECH URANIUM CORP. (An Exploration Stage Company) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and six months ended June 30, 2011 (Stated in United States Dollars) - UNAUDITED (PDF 146 KB, 33 pages) 


Twelve cents: New 52 week low

Posted September 6, 2011

Powertech shares set a new 52 week low today by falling to an intraday low of $0.12 CAD on the Toronto Stock Exchange.  The shares closed down 7.14% at $0.13 CAD.  Trading was exceptionally active for Powertech with 389,840 shares changing hands (the previous trading day saw only 1,500 shares traded.)  Assuming the company's recent cash burn rate of about $700,000 per month is holding steady, Powertech's cash position should be down to roughly $5.6 million.  The Canadian company is in retreat from its Centennial project in Colorado, and the soonest it can expect to receive a license from the NRC for the South Dakota Dewey-Burdock project is sometime in 2014.

JW


DISCLOSURE? WE DON'T NEED NO DISCLOSURE

Posted August 31, 2011

To maintain a listing, the Toronto Stock Exchange requires prompt disclosure of "Any other developments relating to the business and affairs of the company that would reasonably be expected to significantly affect the market price or value of any of the company's securities or that would reasonably be expected to have a significant influence on a reasonable investor's investment decisions."  Has Powertech violated Toronto Stock Exchange rules by not formally disclosing its closure of the Centennial project office in Wellington, Colorado?  You be the judge...

JW

TSX Company Manual - Part IV Maintaining a Listing - General Requirements


Thirteen cents: Powertech stock dives to lowest close ever

Posted August 24, 2011

Today Powertech stock fell 13.33% to close at a record low of $0.13 CAD.  The closing price sets a new 52 week low and is the lowest close since the former shell company re-listed its shares on the Toronto Stock Exchange in 2006. 

Today's drop probably had little to do with the news that Powertech has closed its Centennial project office in Wellington, Colorado.  This is because Powertech has not publicly announced the closing; the story broke after local residents noticed 'For Rent" signs posted on the property.  In contrast, Powertech went to great lengths to publicize the 2008 opening of the Wellington office.  

Powertech's failure to announce the office's closing appears to conflict with the Toronto Stock Exchange's Company Manual.  Section 914 of the manual states "Bad news must be disclosed just as promptly and fully as good news. Unwillingness to release a negative story, a disguising of unfavourable news, or a partial release can endanger a company's reputation. Such actions may encourage the public to view all company announcements with distrust. News releases should be explicit, and should accurately reflect corporate news."

JW

TSX Company Manual - Section 914


TEXAS URANIUM MINE BURNS

Brush fire at Kingsville Dome ISL mine ignites plastic piping system in wellfield; Uranium Resources official downplays incident

Posted August 13, 2011

Uranium Resources' Kingsville Dome uranium mine on fire, Kleberg County, Texas, August 10, 2011.


LOWEST CLOSE IN COMPANY HISTORY

Powertech shares close at $0.14 CAD; closing price is lowest since former shell company relisted on Toronto exchange in 2006

Posted August 9, 2011

Powertech shares fell 6.67% today and closed at $0.14 CAD, the stock's lowest closing price since the company re-listed on the Toronto Stock Exchange on August 15, 2006.  On that first day of trading, the shares closed at $1.48 CAD. 

The relisting followed a 2005 reverse merger by Dick Clement and Wallace Mays to take control of the shell company Powertech Industries Inc., a former manufacturer of boilers.  Clement and Mays were the principal shareholders of Denver Uranium Corp., the private company that engineered the reverse merger. 

Reverse mergers are typically done to facilitate financing since the new owners end up with a publicly-traded company and avoid the lengthy and complex initial public offering process.  Reverse mergers have been particularly popular with Chinese companies that want access to U.S. capital markets. 

In Powertech's case, the company immediately arranged a series of private placements that yielded over $20 million CAD from investors in Canada and Europe. 

Since the 2005 reverse merger, Mays has resigned as Chief Operating Officer and Chairman of the Board (but remains as a Director), Powertech has gained and lost a strategic partner (Synatom), and the company has not submitted a single major permit application for the Centennial project and has not obtained a single major permit for the Dewey-Burdock project.

JW


Eleven percent drop marks new 52 week low for Powertech shares

Posted August 5, 2011, Updated August 6, 2011

Today Powertech's share price dropped 11.11% to $0.16 CAD, matching its July 19 close and establishing a new 52 week low.  Recent news about a permitting delay for the Dewey-Burdock project and shrinkage of the Centennial project must be worrisome for investors.  And those who have read Powertech's June 30 balance sheet may have realized that the company will be faced with pursuing another round of financing by next spring.  Combine all this with the ongoing crisis in Japan and its broader impact on the nuclear power industry, and the outlook for Powertech shares looks less than favorable for the foreseeable future. 

JW


2.8 million underwater stock options held by Powertech executives expire

Clement, Mays, Bonner, Burnett, Doyle, and Blubaugh lose options because strike price is several times higher than current share price

Posted July 9, 2011, Updated July 23, 2011

CanadianInsider.com - Powertech Uranium Corp. (PWE)


POWERTECH STOCK DROPS TO 52 WEEK LOW

Posted July 19, 2011

Today Powertech shares fell to $0.16 CAD, setting a new 52 week low for the penny stock.  The company's market capitalization dropped to $16.5 million CAD, or only 36% of Powertech's book value as of the latest balance sheet date.  The fact that shareholders are heavily discounting the $46 million CAD in "mineral properties" carried on the Canadian company's books is not surprising given the firm's weak cash position and its inability to obtain even one major mining permit after five years of trying.  Mineral properties make up the bulk of Powertech's assets, but the "assets" consist mainly of costs for permitting, leases, claims, drilling, wages, consulting, and legal fees.  These "assets" have little intrinsic value if Powertech is unable to obtain mining permits.

JW 


WYOMING ISL URANIUM MINE TAKES NEARLY FOUR YEARS TO STOP EXCURSION

Posted July 13, 2011

From wise-uranium.org:

State regulator requests investigation of possible impacts of long-term excursion at Cameco's Highland in situ leach uranium mine

In a "Letter of Conference and Conciliation" dated May 17, 2011, the Wyoming Department of Environmental Quality Land Quality Division requested Cameco Resources (CR) to perform additional groundwater monitoring in the aftermath of an excursion at monitor well CM-32 that was first reported on July 10, 2007: "The Land Quality Division (LQD) has conducted a review of the records for Well-CM-32 which was on excursion from July 2007 through April 2011. During the review it was discovered that the location of CM-32 is within several hundred feet of the aquifer exemption boundary and the permit boundary. As a result of the injection of restoration fluid into the wellfield, subsequent to the onset of the excursion, there is concern that the lack of control of the excursion for almost four years may have caused fluid migration outside the exemption boundary." [...] "CR is required to investigate the extent of the excursion beyond the monitor well ring and the proximity to the aquifer exemption boundary and the permit boundary. A minimum of two monitor wells to investigate the extent of the excursion will be required."

http://www.wise-uranium.org/umopuswy.html#PRIHIGHL

Wyoming Department of Environmental Quality internal memorandum on chronology of events and recommendations for excursion well CM-32, Cameco Resources, Permit #603, Highland Uranium Project - May 12, 2011 (PDF 166 KB, 3 pages)

Letter from Wyoming Department of Environmental Quality to Cameco Resources regarding excursion well CM-32, Permit #603, Highland Uranium Project - Pam Rothwell, District 1 Assistant Supervisor, Land Quality Division - May 17, 2011 (PDF 294 KB, 5 pages)


Unknown shareholder sells 600,000 shares of Powertech stock to insider for a nickel a share

Powertech Director Malcolm Clay privately purchases shares at 89% discount to $0.47 CAD public offering price, according to CanadianInsider website 

Posted July 6, 2011

CanadianInsider.com - Powertech Uranium Corp. (PWE)


POWERTECH SPIN MACHINE RUNNING FULL BORE

Posted June 24, 2011

In its first Management Discussion & Analysis (MD&A) filed since Wallace Mays resigned as Chief Operating Officer, Powertech breaks new ground in its efforts to paint a rosy picture of the struggling company and its beleaguered projects.  The June 10 document was filed pursuant to Canadian securities rules and is intended to be a discussion of Powertech's performance, financial condition, and future prospects. 

Regarding the company's primary project, Dewey-Burdock (South Dakota), the MD&A asserts that the NRC is expected to provide a draft Supplemental Environmental Impact Statement in late 2011 or early 2012.  The document fails to mention that a June 1 letter from NRC staff to the Atomic Safety and Licensing Board Panel includes the NRC staff's current best estimate for the issuance date as April 2012, and that the NRC's own web page, Application Review Schedule for Dewey Burdock, shows the completion date as "to be determined".  The MD&A also omits the fact that "review has been suspended pending submittal of response to staff's request for additional information", as stated on the NRC site. 

In its discussion of the Centennial (Colorado) project, Powertech is equally misleading.  Regarding the aquifer pump test that must be conducted before permit applications can be completed, Powertech implies that a final EPA injection well permit will be issued in July 2011.  It will likely take several more months for the EPA to issue a final permit, if the agency chooses to, and the final permit is subject to appeal.  More importantly, the MD&A omits any discussion of the fact that six of nine proposed ISL mine units would require untested, water-intensive, and expensive "aquifer enhancement" due to shallow ore deposits. 

In its discussion of Colorado House Bill 08-1161, Powertech fails to mention that the implementing rules and regulations place requirements on ISL operators that Powertech CEO Dick Clement described as "fatal" to the project.  While the MD&A acknowledges that Powertech has sued the State of Colorado in a challenge to the regulations, the document states that Powertech is actively engaged in discussions with the state regarding the regulations and the lawsuit.   According to a knowledgeable source, Powertech's lawyers are not currently engaged in any substantive discussions with the state. 

Finally, the MD&A includes no discussion of the Indian Springs Land & Cattle Co., LLC.  Indian Springs is a subsidiary of Powertech and was formed by Wallace Mays.  The LLC was involved in the "strategic partnership" between Powertech and Belgian firm Synatom, but Powertech has consistently failed to explain the nature of its financial or contractual relationship with Indian Springs.

JW  

POWERTECH URANIUM CORP. (An Exploration Stage Company) - MANAGEMENT DISCUSSION AND ANALYSIS - June 10, 2011 (PDF 156 KB, 22 pages)


Synatom writes off $5.4 million owed by Powertech

Powertech emerges from Synatom refinancing and first public stock offering with less than $9 million; new investors' shares are down 62%

Posted June 21, 2011

Belgian firm Synatom took a $5.4 million write off in its efforts to distance itself from Powertech Uranium Corp., according to Powertech's unaudited first quarter financial statements released on June 10.  Prior to the recent simultaneous public stock offering and debt refinancing, Powertech owed Synatom $25 million.  Powertech managed to raise $21.5 million in the first-time public stock offering.  Investors who bought in at the $0.47 CAD offering price have seen those shares drop 62% since the offering closed on March 15.  Following the offering, Powertech paid Synatom $12.8 million, leaving $8.7 million for Powertech to spend on permitting, executive compensation, and overhead.  At its recent cash burn rate, these funds should be exhausted in a year or less.  As part of the refinancing, Powertech issued a $7.7 unsecured non-interest bearing promissory note to Synatom.  The note can be paid off with Powertech shares rather than cash.  The balance of the debt owed to Synatom was forgiven by the Belgian company.  The exact amount of the write off is unclear.  While the financial statements report this "gain on extinguishment of debt" at $5,431,452, a financial statement note reports it at $5,508,195.  But the same note includes information that would indicate the amount may be only $4,469,583,  A June 19 email to Powertech's controller asking for clarification has elicited no response.  As a condition of the refinancing, Synatom released its blanket liens on all Powertech assets and all assets of the secretive subsidiary Indian Springs Land & Cattle Company.  The relationship between Powertech and Indian Springs has never been disclosed by Powertech in its securities filings.

JW

POWERTECH URANIUM CORP. (An Exploration Stage Company) CONDENSED FINANCIAL STATEMENTS For the three months ended March 31, 2011 (Stated in United States Dollars) - UNAUDITED (PDF 141 KB, 32 pages)


RETRACTION and correction of statement that Powertech missed filing deadline for first quarter financial statements

Posted June 8, 2011

In a brief article posted last night, I stated that Powertech had missed a May 16 deadline of the British Columbia Securities Commission for the filing of first quarter financial statements and Management Discussion & Analysis.  This statement was incorrect and is hereby retracted.  I received an email today from Powertech CEO Richard Clement wherein he explained that the filing deadline has been extended to June 14 for issuers that are first-time adopters of International Financial Reporting Standards (IFRS).  Powertech has prepared and filed its previous financial statements in accordance with Canadian Generally-Accepted Accounting Principles (GAAP) and has apparently chosen to adopt IFRS for the quarter ended March 31, 2011.  Consequently, the filing deadline is extended to June 14, as shown on the Continuous Disclosure Filing Calendar 2010/11 - For Initial IFRS Filings.  I regret the error, and I thank Mr. Clement for correcting the record.

J. Woodward

Email from Powertech CEO Richard Clement regarding inaccurate statement on website - June 8, 2011 (PDF 39 KB, 1 page)  


POWERTECH URANIUM CORP. (An Exploration Stage Company) ANNUAL INFORMATION FORM FOR THE YEAR ENDED DECEMBER 31, 2010 - March 31, 2011 (PDF 207 KB, 40 pages)

Notice of Annual and Special Meeting of Shareholders to be Held on May 31, 2011 and Information Circular - Powertech Uranium Corp. - April 28, 2011 (PDF 413 KB, 49 pages)  This filing reveals that Powertech stock has performed poorly when compared to the Toronto Stock Exchange's TSX SmallCap Index.  One hundred dollars invested in the index on March 31, 2007 would be worth $99.40 at December 31, 2010.  In contrast, $100.00 invested in Powertech stock would be worth a paltry $7.73.  During this time period, executive compensation steadily increased in spite of the abysmal stock performance.  For 2010, CEO Dick Clement and COO Wallace Mays were each paid a base salary of $240,000.  Not bad for a company that has yet to mine its first pound of uranium after five years of permitting efforts.

POWERTECH URANIUM CORP. (An Exploration Stage Company) - MANAGEMENT DISCUSSION AND ANALYSIS - March 28, 2011 (PDF 204 KB, 29 pages) 

POWERTECH URANIUM CORP. (An Exploration Stage Company) - CONSOLIDATED FINANCIAL STATEMENTS - December 31, 2010 and 2009 (PDF 198 KB, 32 pages) 


MAYS QUITS

Wallace M. Mays, Powertech co-founder and only known inductee to the Uranium Hall of Fame
Powertech news release:

May 09, 2011

Powertech Announces Resignation

VANCOUVER, B.C. - POWERTECH URANIUM CORP. ("Powertech" or the "Company") today announces the resignation of Wallace Mays as an officer of the Company and its subsidiaries. Mr. Mays will remain a director of the Company and its subsidiaries.

The Company thanks Mr. Mays for his contribution to the Company and wishes him success in his future endeavors.

About Powertech Uranium Corp.

Powertech Uranium Corp. is a mineral exploration and development company that, through its Denver-based subsidiary Powertech (USA), Inc., holds the Dewey-Burdock Uranium Deposit in South Dakota, the Centennial Project in Colorado and the Dewey Terrace and Aladdin Projects in Wyoming. The Company's key personnel have over 200 years of experience in the uranium industry throughout the United States, and have permitted more than a dozen in-situ operations for production. For more information, please visit http://www.powertechuranium.com

POWERTECH URANIUM CORP.

Per: "Richard F. Clement"

Richard F. Clement Jr.,

President & CEO

News release - "Powertech announces resignation" - Powertech Uranium Corp. - May 9, 2011 (PDF 22 KB, 1 page)


Notice of Exempt Offering of Securities - Form D, UNITED STATES SECURITIES AND EXCHANGE COMMISSION - Issuer: POWERTECH URANIUM CORP., Total offering Amount and Amount Sold: $327,565 USD, Date of First Sale: March 15, 2011, Finders' Fees: $21,291 USD, Signer: Thomas A. Doyle, Chief Financial Officer - March 24, 2011 (PDF 39 KB, 7 pages)  In Powertech Uranium Corp.'s first SEC filing, the company discloses that it raised $327,565 by selling stock and warrants to "accredited" and/or "sophisticated" U.S. investors.  Under Regulation D of the Securities Act of 1933, a company is allowed to offer and sell their securites without having to register the securities with the SEC.  If Powertech sold the shares to "accredited investors", it can decide what information to give to them.  However, if the investors were only "sophisticated" (as defined by securities regulations), Powertech must meet a higher standard by providing disclosure documents that are generally the same as those used in registered offerings.  Assuming the stock was sold by subscription and Powertech can collect on the subscription agreement(s), the funds raised in this U.S. offering should last about two weeks. 

News release - "Powertech Closes Unit Offering and Refinancing Transaction" - POWERTECH URANIUM CORP. - March 15, 2011 (PDF 167 KB, 3 pages)  According to CEO Dick Clement, Powertech sold almost 48 million newly-issued shares of common stock, raising $22.5 million CAD.  Thanks to flaccid Canadian securities regulations, Powertech was able to raise the offering's maximum amount while failing to disclose the true and complete status of permitting efforts for its two proposed projects.  Clement also claims Powertech has closed on its refinancing deal with Synatom, writing a $12.5 million CAD check to the Belgian firm.  After commissions and other issuance costs, Powertech should clear about $8.5 million CAD in the public stock offering.  Based on the company's historical cash burn rate, this should last about 9 or 10 months.  This does not include the $6.5 million payment due to the Varra and Diehl families in Weld County, Colorado pursuant to two real estate option agreements.  The Varra and Diehl properties constitute a material portion of the uranium deposits in the Centennial project.  Powertech's prospectus says the company "has not allocated any proceeds of the Offering to the Centennial option payments and will raise additional capital in due course for such payments if deemed appropriate." 


Special meeting of Powertech shareholders to be held March 14

Meeting called to vote on Synatom refinancing

Posted March 13, 2011

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON MARCH 14, 2011 AND INFORMATION CIRCULAR - POWERTECH URANIUM CORP. - February 11, 2011 (PDF 574 KB, 101 pages)


Hedge fund manager Kimel buys additional 610,000 Powertech shares on eve of Japan earthquake and nuclear emergency

Combined with March 3, 4, and 8 acquisitions, Kimel's partnership now owns 12,970,000 shares, a stake worth $5.6 million CAD

Posted March 13, 2011

K2 Principal Fund L.P.'s acquisition of Powertech common shares in the open market - March 8 & 10, 2011 - Canadianinsider.com (PDF 56 KB, 1 page)


Kimel moves to increase Powertech position

Hedge fund buys 310,000 shares on March 4 dip, increases ownership to 12,310,000 shares

Posted March 8, 2011

On Friday, March 4, hedge fund manager Shawn Kimel, through his K2 Principal Fund L.P., bought 310,000 Powertech shares at an average price of $0.42 CAD per share. 

Toronto hedge fund manager Shawn Kimel

Kimel took advantage of a brief dip in the stock price, which closed at $0.46 CAD only two trading days later.  This acquisition increases K2's ownership to 12,310,000 shares, solidifying the partnership's position as the largest Powertech shareholder.  On March 3, K2 purchased 12 million Powertech shares in a private placement.  Neither Powertech nor K2 have disclosed the price paid for the shares. 

As of March 8, the Toronto Stock Exchange is still reporting Powertech's outstanding shares at 55,429,022, providing evidence that the private placement may have been non-dilutive, meaning the 12 million shares may have been purchased from insiders such as Synatom, Wallace Mays, or Dick Clement.  This could potentially have significant ramifications for the future of the Canadian uranium development company.   JW  

K2 Principal Fund L.P.'s acquisition of Powertech common shares in the open market - March 4, 2011 - Canadianinsider.com (PDF 64 KB, 1 page)


Powertech files misleading prospectus in attempt to lure new investors

Posted March 5, 2011, Updated March 6, 2011


Canadian hedge fund manager buys 12 million Powertech shares and 6 million warrants in private placement deal

Shawn Kimel's partnership jumps past Synatom, Wallace Mays, and Dick Clement to become largest Powertech shareholder

Posted March 6, 2011

News release - THE K2 PRINCIPAL FUND L.P. ACQUIRES COMMON SHARES OF Powertech Uranium Corp. - K2 Principal Fund L.P. - March 3, 2011 (PDF 44 KB, 1 page)

Report Pursuant to Section 102.1 of the Securities Act (Ontario) and Similar Provisions of other Provincial Securities Legislation - The K2 Principal Fund L.P. by its general partner, K2 GenPar Inc., (signed) Shawn Kimel, President - Morningstar.com - March 3, 2011 (PDF 54 KB, 3 pages)


News release - "POWERTECH OBTAINS RECEIPT FOR FINAL PROSPECTUS" - POWERTECH URANIUM CORP. - March 3, 2011 (PDF 27 KB, 1 page)  According to this release, Powertech's investment bank received orders for the maximum offering of units on the same day the prospectus was received by the securities commissions.

SHORT FORM PROSPECTUS - Minimum Offering: $17,500,000 or 37,234,043 Units, Maximum Offering: $22,500,000 or 47,872,340 Units, Price: $0.47 per Unit - POWERTECH URANIUM CORP. - March 2, 2011 (PDF 192 KB, 26 pages) 

News release - "Powertech Announces Pricing of Public Offering" - Powertech Uranium Corp. - March 3, 2011  The planned follow-on stock offering by Powertech has been priced at $0.47 CAD per unit.  At this price, Powertech must sell a minimum of 37.2 million units for gross proceeds of $17.5 million CAD.  Powertech must raise the minimum proceeds by April 30; if not, all money will be returned to investors, the refinancing agreement with Synatom will terminate, Powertech will be in default on $3.45 million CAD of its debt to Synatom (due April 14), and the Belgian firm can invoke its security agreements to immediately take possession of any assets owned by Powertech to satisfy the debt.  On the other hand, if the Canadian company succeeds in raising at least $17.5 million CAD, it must immediately pay Synatom $12.5 million CAD.  Powertech must also pay Salman Partners Inc., its book-running manager, a cash commission of at least $1.14 million CAD.  Legal and accounting fees related to the stock offering will be significant.  Even if the offering raises the minimum amount, Powertech will be left with less than $4 million CAD.  The news release repeats earlier statements that Powertech will use these proceeds to pursue permitting for only the Dewey-Burdock project.  The news release is silent on the Centennial project, and a recent attempt by a Colorado reporter to obtain a clarification from Powertech was unsuccessful.  Based on Powertech's past financial history, $4 million CAD would likely last only a few months.  As of September 30, 2010, Powertech's cash position was down to $3.1 million USD.


Powertech failed to disclose relationship with Indian Springs Land and Cattle Co.

Posted February 22, 2011, Updated February 23, 2011

Wallace M. Mays

 

On February 4, Powertech entered into an agreement with Synatom to refinance the over $26 million of debt owed to the Belgian firm.  A previously-undisclosed company, the Indian Springs Land and Cattle Co. LLC, is also a party to the agreement.  The limited liability company was formed in 2008 by Powertech Chairman Wallace M. Mays, according to articles of organization filed with the Colorado Secretary of State.  The company's principal office is in Greenwood Village, Colorado, and is the same street address and suite number as Powertech's office.  The Refinancing Agreement describes Indian Springs as a "US subsidiary" of Canadian company Powertech Uranium Corp.  A December 2008 loan agreement with Synatom contains a brief reference to a guaranty/security agreement between Indian Springs and Synatom, and refers to the limited liability company as a Powertech subsidiary.  But in numerous filings with Canadian securities regulators since 2008, it appears that Powertech has never fully disclosed the existence of, and relationship with, such a subsidiary.  Powertech has not disclosed the extent of its ownership and control of Indian Springs, details of the LLC's involvement in various Synatom financing agreements, any Centennial project assets held by the LLC, and the role played by Wallace Mays.  As Powertech approaches its first public stock offering, it will be interesting to see what the Canadian penny-stock company tells investors about the obscure Indian Springs Land and Cattle Co.

REFINANCING AGREEMENT - POWERTECH URANIUM CORP. and POWERTECH (USA), INC. and INDIAN SPRINGS LAND AND CATTLE CO., LLC and SOCIÉTÉ BELGE DE COMBUSTIBLES NUCLÉAIRES SYNATOM SA - FEBRUARY 4, 2011 (PDF 320 KB, 73 pages)


"Powertech restructures $25M debt to former shareholder" by Bobby Magill, Fort Collins Coloradoan - February 8, 2011

News release - POWERTECH ANNOUNCES FILING OF PRELIMINARY PROSPECTUS - Powertech Uranium Corp. - February 8, 2011 (PDF 156 KB, 2 pages)  Powertech indicates its intention to use the proceeds from its proposed stock offering to pay down debt and advance the Dewey-Burdock project in South Dakota, but not to further the Centennial project in Colorado: "The Company intends to use the net proceeds from the Offering to complete the initial $12.5 million payment to Société Belge de Combustibles Nucléaires Synatom SA (“Synatom”) as described in the February 4th, 2011 press release, for the advancement of the Dewey-Burdock Project, and for general corporate purposes."  Note that the news release is "Not for distribution to United States newswire services or for dissemination in the United States."

PRELIMINARY SHORT FORM PROSPECTUS - Minimum Offering: $17,500,000 (CAD) - Powertech Uranium Corp. - February 7, 2011 (PDF 244 KB, 24 pages)  This public stock offering is Powertech's last ditch, Hail Mary play to survive after losing the financial support of Belgian company Synatom.  Four months ago, Powertech was down to $3.1 million in cash.  Prior to that, its cash burn rate was about $800,000 per month.  If the company can manage to raise the minimum $17.5 million CAD by the end of April, it will pay $12.5 million CAD to Synatom, $1.1 million CAD in commissions to its investment bankers, and an unknown amount for offering expenses to attorneys, accountants, and securities commissions.  Powertech will then be left with something less than $3.9 million CAD.  (Currently, the Canadian and US dollar are roughly at parity.)  According to the prospectus, the net proceeds from the offering will be used to "obtain all necessary permits and licenses to permit the Corporation to pursue production" at the Dewey-Burdock project in South Dakota.  No mention is made of the Centennial project in northern Colorado.  For four years, Powertech has touted both projects as "near-term" in its pitch to investors.  Apparently, Powertech officials have determined that continuing to spend money to advance the Centennial project is unwise, at least for now. (If subscriptions for the minimum offering are not received by the deadline, the offering will not continue and proceeds will be returned to subscribing investors.  Alternatively, subscriptions could exceed the minimum offering.) 

Powertech calls special shareholders meeting to consider financing issues

Letter to Canadian Securities Regulatory Authorities regarding March 14, 2011 special meeting of Powertech shareholders - Computershare Trust Company of Canada (agent for Powertech Uranium Corp.) - February 4, 2011 (PDF 97 KB, 1 page)

POWERTECH PLANS TO REFINANCE SYNATOM DEBT, IS WORKING ON $17.5 MILLION EQUITY FINANCING DEAL

New release - "POWERTECH ANNOUNCES STRATEGIC REFINANCING OF SYNATOM DEBT" - Powertech Uranium Corp. - February 4, 2011 (PDF 167 KB, 3 pages)

What is the Indian Springs Land and Cattle Co.?  Mysterious entity formed in 2008 by Powertech Chairman Wallace Mays is somehow involved in the Synatom refinancing, according to Powertech's February 4 news release

Articles of Organization - Indian Springs Land and Cattle Co., LLC - formed by Wallace M. Mays - July 7, 2008 (PDF 35 KB,  3 pages)  A search of Weld County real estate records reveals that Indian Springs Land and Cattle Co., LLC owns no land in the county.  So where does it keep the cattle?

SO LONG, SYNATOM... The "Synatom Partnership" page on Powertech's website still remains (as of January 17, 2011), but all content has been removed.  As is customary with Powertech, the company offers no explanation to investors or other stakeholders.  To see what the Synatom Partnership page used to look like, click here.

Robert Leclere, CEO of Société Belge de Combustibles Nucléaires Synatom SA, and former Director of Powertech Uranium Corp.

"Synatom officers resign from Powertech board" - Northern Colorado Business Report - December 8, 2010  Synatom officers Robert Leclere and Gerard Pauluis actually resigned from Powertech's board sometime prior to October 26, 2010.  A two-sentence news release was filed with Canadian securities regulators on October 25, but it took Powertech six weeks to post the news on the company's website.  CEO Dick Clement did not respond to an NCBR request for a comment on the resignations, but the publication reported Clement's earlier claim that losing the firm's sole financial backer "will not affect our development interests in Centennial."  Right.... 

Notice Declaring Intention to be Qualified under National Instrument 44-101 Short Form Prospectus Distributions (“NI 44-101”) - Thomas A. Doyle, Vice President, Finance and Chief Financial Officer, Powertech Uranium Corp. - November 18, 2010 (PDF 13 KB, 1 page)  Powertech is taking the first step to raise more capital through a public offering of securities.  Without new financing, the company is set to run out of cash by early 2011.  Powertech's 2009 loan agreement with Belgian nuclear company Synatom requires Powertech to start repaying its $13.8 million CAD loan by April 2011.  The April payment is $3.8 million CAD, and the same amount is due in June.  Payments of $3.9 million CAD are due in September and December 2011.  In addition, Powertech must repay an earlier Synatom loan totaling $11 million CAD by December 2011.  Total loan payments due to Synatom by the end of next year are over $26 million CAD.  Since Wallace Mays and Dick Clement engineered a reverse takeover of Canadian shell company Powertech Industries by Denver Uranium Company in 2006, Powertech has never publicly issued equity or debt securities.  It has raised capital through private placements which don't require the public filing of a prospectus.

POWERTECH URANIUM CORP. (An Exploration Stage Company) - CONSOLIDATED FINANCIAL STATEMENTS - September 30, 2010 (Stated in U.S. Dollars) - unaudited (prepared by management)  Powertech reports that it had $3.1 million in cash at the end of September.  The company continues to burn cash at the rate of about $800,000 per month.  If Powertech cannot raise any new money, it could be broke by January or February 2011.

POWERTECH URANIUM CORP. (An Exploration Stage Company) MANAGEMENT DISCUSSION AND ANALYSIS - November 12, 2010 (PDF 120 KB, 16 pages)  In typical Powertech fashion, this MD&A is noteworthy for what it doesn't mention: the lawsuit filed against the State of Colorado, expected economic impact of the new Colorado uranium mining rules on the Centennial project, hydrogeologic issues facing the Centennial project including the number of mine units requiring "aquifer enhancement", delays in conducting a final pump test for the Centennial project, reasons why Synatom wants to end its partnership with Powertech, the hearing process for the NRC Source Material License for the Dewey-Burdock project, the NRC's schedule for issuing draft and final review documents for Dewey-Burdock, and any mention of opposition to the two projects.

Form 52-109F2 Certification of interim filings - certified by Richard F. Clement, Jr., Chief Executive Officer and President - Powertech Uranium Corp. - November 12, 2010 (PDF 23 KB, 2 pages)  Canadian securities law requires the CEO of a public company to certify that, among other things, the company's interim financial statements and MD&A do not contain misrepresentations.  Powertech CEO Dick Clement certifies that "Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings."  The November 12 MD&A says the company is preparing to submit permit applications for the Centennial project "after analysis of the aquifer test results."  However, the MD&A omits any mention of the November 1 lawsuit filed against the State of Colorado challenging the new uranium mining rules.  It is hard to imagine how Powertech could submit a mining reclamation permit application while it is suing to overturn regulations governing such applications.


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