Wednesday, July 23, 2014

The Powertech/Azarga Uranium Mining Combo: There's A Whole Lotta Shakiness Goin' On

     Powertech Uranium Corporation's announcement last month that it was forming a business combination with Azarga Resources has a noteworthy touch.  The disclaimers are longer than the statement itself, and wise observers will spend as much time reading those disclaimers as they do the news release.  Looks to me like there's a whole lot of shakiness goin' on.    
     First off, pending approval by Toronto Stock Exchange regulators, the new business combo will be known as Azarga Uranium Corporation (known as Powertech/Azarga here for the time being), Azarga Resources being a company whose head, Alex Molyneaux, resides in Hong Kong.  On the face of it, this merger, technically known as a "reverse takeover"--I'll spare the financial gobbledygook after this--seems like a simple enough transaction.  Prior to it, Powertech was on the financial ropes. Along came Azarga Resources to the rescue, in the process picking up the company's plan to mine uranium in the southern Black Hills of South Dakota using a controversial method called in situ mining that will alter the region's groundwater forever.
     Dubious as I am about the scheme, I'll set it aside here and let the scientists hash it out.  I'm more skeptical about the business structure that Powertech/Azarga has created with this merger.  Turns out that one of the biggest stakeholders in the deal is a Singapore-based outfit called Blumont Group, Limited.  
Blumont has ties with Azarga and touted itself as the "big winner" in the deal.  I know it's a head-scratcher, but there are multiple levels of international corporate intrigue going on here (I mean, we're talking Hong Kong, Singapore, Toronto, The British Virgin Islands and--oh, yes--Edgemont, South Dakota.) and you're just getting a distillation.  Anyway, Blumont is a company that is now in deep regulatory trouble with Singapore's financial overseers following a huge drop in its stock price last Fall, wiping out billions of dollars of shareholder equity. Singapore's "white collar crimes" police unit is all over this company, its principals, and its records.  Most intriguing is that one of the company's consultants and "key advisors" is none other than Mr. Alexander Molyneaux.
     Molyneaux is now apparently the man who will take charge of the Black Hills uranium-mining interests of the Powertech/Azarga combo.  This strikes me as a little weird and a whole lot unnerving. Do we really need to upset the tranquility of the Black Hills by bringing this cast of characters into them?  

2 comments:

  1. John, While I am not the scientist that you demurred to in your piece, I certainly am not the financial expert to dissect what you have written. I have to say, it certainly does sound shaky.

    The part that I am still having a hard time understanding, I why the State of South Dakota keeps chasing all of the energy proposals out there, except the one that will not do damage to our environment, wind.

    In addition to the leaching that would harm our water supply, the risks that the new company, whatever it ends up being called, poses because it may not survive long enough to clean up after it is done doing its dirty deeds and the possible harm to tourism in the Hills, there is the issue of the disfavor worldwide with nuclear power since the disaster in Japan.

    South Dakota nearly became the first nuclear disaster back in the 1960s with the failure of the Pathfinder plant located on the Sioux River between Sioux Falls and Brandon. Luckily it was closed and converted to gas in the late 1960s. It took nearly 25 years before the fissile material was transferred to a low level nuclear wasted dump in Washington.

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    1. We need to be very cautious about a company that is essentially shut down by Singapore securities regulators touting itself as the "big winner" in the Azarga/Powertech merger.

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