Wednesday, June 3, 2015
Azarga (nee "Powertech") Uranium Cranks Up Its Hype Machine Again. My Column In Today's Rapid City Journal:
Azarga (nee "Powertech") Uranium, is the company that wants to forever alter the composition of the ground water in the southern Black Hills. Its in situ leach mining process results "in the impossibility of restoring natural groundwater conditions after completion of the leaching operations." This is a creepy possibility that has roused some serious opposition around here. That the mine would also disturb some sites of significant historical value is also a matter that has led a sizable group of interested parties (technically referred to as "intervenors" during the permitting process) to join forces with the environmental interests in trying to block the process.
Naturally, Azarga's fortunes, tied as they are to the successful development of this mine, have been deteriorating during the years that this brouhaha has been going on. Company shareholders ("bagholders" might be a more descriptive term) have watched their stock, already pummeled by the Fukushima nuclear disaster and its destruction of demand for uranium during the aftermath of that Japanese catastrophe in 2011, evaporate into near-worthlessness during the past few years. The company's stock price of nearly $2/share a couple of months after the Fukushima wipeout has since been steadily dropping, trading this past week or so at just over 30 cents/share.
All of which explains why Azarga has a tendency to over-hype the prospects of its permitting process. Its puffery got so out of hand recently that Canadian regulators (Azarga stock trades in Toronto) forced the company to withdraw and rewrite a major disclosure statement last April to more accurately reflect the tentative, complex and time-consuming barriers to getting its final permits. Regulators were effectively telling the company to drop the over-hype and give its investors and the general public a realistic picture of its prospects.
But did that slow down the Azarga hype-machine? Doesn't look like it. Last month the company put out a press release regarding current developments in the process overseen by American regulators and blithely ignored a few impediments. I mean, rosy scenarios are one thing, outright ignorance of material facts is another. It ignored favorable rulings in favor of intervenors. It characterized an "order" by regulators as a "request." It claims that the "project is progressing toward a resolution," when in fact a resolution is very much in doubt. It omits mentioning that a new licensing condition has been added and it claims that a process "for resolving outstanding matters is in place" when in fact regulators have yet to develop such a process.
Note to readers: The above post appears in today's (6/1/2015) Rapid City Journal, which can't provide the links that are embedded here. Following is a complaint letter submitted a few days ago to the British Columbia Securities Commission regarding the latest round of misinformation in Azarga's filing, which was dated May 1, 2015. The letter is from Colorado accountant James Woodward, who has closely followed developments with
Azarga/Powertech for a number of years. His excellent blog "Powertech Exposed" has a great deal of information on this company's activities, both in the field and in the boardroom:
May 31, 2015 BCSC Inquiries British Columbia Securities Commission Subject: File #20150123-13143/Azarga Uranium Corp. AZZ.TO
Dear Sir/Madam: I would like to submit the following complaint regarding issuer Azarga Uranium Corp. (“Azarga”), ticker AZZ.TO. On May 1, 2015, Azarga filed a news release about an initial decision by the U.S. Nuclear Regulatory Commission’s Atomic Safety and Licensing Board (“ASLB”) regarding seven contentions raised by intervenors in a proceeding on a Source Materials License for the proposed Dewey-Burdock uranium project in South Dakota, USA. The news release includes several materially misleading statements and omits material information on the ASLB’s decision and the permitting status of the project. These deficiencies violate securities legislation requiring an issuer to disclose material facts and to make timely disclosure of material changes relating to its material mineral properties. The following statements are misleading: 1. The title of the news release is “US Atomic Safety and Licensing Board Partially Dismisses Contentions Against Dewey Burdock Uranium Project”. The title is misleading since it mentions only dismissed contentions and omits the ASLB’s favorable rulings on certain contentions raised by intervenors. The ASLB ruled in favor of the intervenors on two contentions, ruled in favor of Azarga and NRC staff on five contentions, and added a license condition that is favorable to intervenors. 2. In the fourth paragraph, Azarga asserts that “the ASLB requested additional consultation between the NRC staff and the Oglala Sioux Tribe.” (emphasis added) The ASLB’s 2 decision was not a request, but an order. The ASLB found that, with respect to analyzing the environmental effects of the Dewey Burdock project on Native American cultural, religious and historic resources, the NRC staff did not comply with the National Environmental Policy Act. The ASLB ruled the NRC staff did not conduct the required meaningful government-to-government consultation with the Oglala Sioux Tribe (“the Tribe”), and ordered the NRC staff to conduct such consultation. 3. In the sixth paragraph, Azarga CEO Alex Molyneux is quoted claiming “that a process has been put in place to resolve the outstanding matters.” Molyneux is presumably referring to the ASLB’s order that the NRC staff shall file monthly reports with the Board on its progress in addressing the outstanding issues in the two contentions relating to consultation with the Tribe. This is simply a reporting requirement, not a process to resolve the outstanding issues. Such a process must still be developed as the NRC staff initiates government-to-government consultation with the Tribe. The NRC staff and the Tribe must still negotiate the details of a tribal field survey, including the area to be surveyed, survey methodology, and financial compensation, to name a few. If historic, religious, or cultural resources are identified, the NRC staff and the Tribe must agree on a process for evaluating such resources, as well as determining and resolving potential adverse effects from the project. Azarga’s statement that a process has been put in place to resolve the outstanding matters is simply false. 4. In the same paragraph, Mr. Molyneux asserts that permitting of the project is “progressing towards a resolution”. This statement is misleading and lacks the specificity investors need to evaluate the actual permitting progress of the project. Azarga still has numerous permitting hurdles to overcome before the project can be developed: a. The ASLB’s partial initial decision has been appealed to the NRC’s Commission by Azarga, NRC staff, the Tribe, and the Consolidated Intervenors. 3 b. The parties will likely seek judicial review of the Commission’s decisions in federal court. c. If the ASLB’s partial initial decision is upheld, the NRC staff and the Tribe must conduct government-to-government consultation, including a field survey and related evaluation and mitigation efforts. d. The following federal permits must be obtained: i. Class III Underground Injection Control Permit and Aquifer Exemption from the U.S. Environmental Protection Agency ii. Class V Underground Injection Control Permit from the U.S. Environmental Protection Agency iii. Plan of Operations from the U.S. Bureau of Land Management iv. Section 404 Permit from the U.S. Army Corps of Engineers e. The following permits must be obtained from the South Dakota Department of Environment & Natural Resources: i. Large Scale Mine Permit ii. Ground Water Discharge Plan for land application of treated wastewater iii. Water Right Permit for the Madison Aquifer iv. Water Right Permit for the Inyan Kara Aquifer v. National Pollutant Discharge Elimination System surface water discharge permit The only permit obtained so far is the NRC-issued Source Materials License, which is the subject of the ASLB’s partial initial decision. Azarga makes brief mention in its news release that permit approvals are needed from the Environmental Protection Agency and the “South Dakota Department of Natural Resources” [sic]. But Mr. Molyneux’s statement that permitting is progressing towards a resolution is misleading, vague, and incomplete, and fails to disclose the true status of the project’s permitting. 5. Azarga omitted any mention in the news release that the ASLB amended the license by adding a new license condition. The license condition requires Azarga to attempt to locate and properly abandon all historic drill holes located within the project’s wellfields. This is important since Azarga argued during the ASLB’s proceedings that improperly plugged historic drill holes are solely responsible for leakage between adjacent aquifers, in contrast to leakage caused by faults, fractures, and other geological characteristics. An operator must conduct pump testing and demonstrate confinement in an aquifer before the NRC staff will authorize production. Although Azarga had agreed in its license application to plug such drill holes, the NRC staff failed to include a specific requirement in the license. The action by the ASLB to add this license condition should have been disclosed by Azarga, and failure to do so renders the news release materially deficient. Due to the numerous deficiencies, Azarga should be required to withdraw the May 1 news release and issue a news release correcting the aforementioned misstatements and detailing the true permitting status of the proposed Dewey-Burdock project.
Respectfully submitted, /s/ James B. Woodward James B. Woodward P.O. Box 599 Wellington, Colorado 80549 USA
Further note to readers (added 6/3 @1452): I encourage and invite friends of Azarga and/or company officials to respond to this and other posts I've put up here regarding this company. Posts can either be submitted through the comments section or e-mailed to me at the address on the right side of the page at the end of the bio column. I will cut and paste the posts and publish them "as is," the only stipulation being that the commentary must pass the "do I want my grandma to read this?" test.