This letter is in regards to Azarga Uranium, which is listed on the Toronto Stock Exchange using the symbol AZZ.TO. On January 19, 2015, Azarga issued a press release regarding a change in its Board of Directors along with a brief summation of its activities regarding its proposed uranium mining site (known as "Dewey Burdock") in the Black Hills of South Dakota. You can find the entire press release here.
My concern is with the concluding statement that "The Dewey Burdock Project in South Dakota is the main initial development priority, which has received its final NRC [Nuclear Regulatory Commission] License." I believe this statement is incomplete, at best, misleading, at worst, as it gives potential investors the impression that the Dewey Burdock Project has received "final" approval to move ahead with this project, an impression that is reinforced by the company's website that states the Dewey Burdock Project "is on track to be developed for first production within two years." Actually, the NRC license is anything but "final," and the company is not on track to develop this project within two years or any other specific time frame. The permitting process is far from finalized. Per local experts, The 'final' license was issued by NRC staff last April. But the Atomic Safety and Licensing Board hearing process is still underway. The ASLB judges will issue an initial decision probably in March. They can invalidate the license, impose conditions, or remand it back to NRC staff for more work, including redoing the EIS [Environmental Impact Statement]. It’s almost certain that the initial decision – whichever way it goes – will be appealed to the NRC Commissioners. That will add several months to the process. The decision by the commissioners will likely be appealed in federal court. At this point, no one knows if the state [of South Dakota] will restart their hearings after the ASLB’s initial decision and the issuance of permits from the EPA (draft EPA permits have not yet been issued).
In my view, Azarga is presenting investors with an incomplete picture of the status of its permitting process. As a former SEC registered Broker-Dealer, former member of the Chicago Board Options Exchange, and a former Introducing Broker affiliated with a member firm of the Chicago Mercantile Exchange and the Chicago Board of Trade, I'm well-versed in disclosure requirements when it comes to publicly traded companies. Azarga's incomplete representation of pending permitting applications, which are being challenged at every step in the process, does not fulfill reasonably expected disclosure requirements as I understand them in the United States. Canadian standards may be different, but I believe common sense should prevail and require Azarga Uranium to state that it still must clear some significant hurdles before it can begin mining uranium at Dewey Burdock. Investors need to be aware of the permitting risk before they put their money into this company.
Thank you for looking into this matter regarding one of your TSE listed stocks. Sincerely, John Tsitrian 6144 Wildwood Drive, Rapid City South Dakota 57702 (605-341-6411)