Thursday, November 25, 2010

Western Lands Uranium Gopher for 11/26/10

Powertech sues Colorado over new mining regulations

gopherPowertech (TSE:PWE), a Canadian firm developing an ISR mine in Nunn, Colo., sued the Colorado Mined Land Reclamation Board Nov 1 over new regulations implementing a state law passed in 2008.

The lawsuit represents a reversal of a previous position in which Powertech CEO Richard Clement said the firm could live with new mining regulations. Now, the firm claims the rule makes unreasonable demands on mining companies.

The first key area of contention is the requirement for the mining firm to restore groundwater quality to conditions prior to mining. The second is a so-called "blackball" provision that denies a permit to a miner if there are past violations in similar circumstances. Powertech is particularly incensed by the second issue because it isn't related to the performance of a specific firm.

The lawsuit states, "These provisions are overly broad and punitive and could prevent a good company from conducting a mining operation."

The suit also claims two Colorado legislators illegally tried to influence how the regulations were written by the mining agency. The lawmakers are Rep. John Kefalas and Rep. Randy Fisher, both of Fort Collins. Both law makers declined to be interviewed by the Denver news media about the issue.

Additionally, Powertech wants to strike two other provisions in the regulations. The first requires firms to conduct baseline groundwater studies prior to prospecting. The second gives third parties legal standing to appeal prospecting claims.

Powertech attorney John Fognani told the Denver Post "these provisions are outside the bounds of what the Colorado legislature intended." He called the provisions "a Catch-22."

Richard Clement, Powertech CEO, told FCW the firm has the most heartburn with "last minute additions" to the regulations that are not tied to the legislation.

"Legislators gave specific direction to the mining board on legislative intent that are inappropriate communication which took place outside the established process."

Clement said he's looking to the Colorado mining industry, including other uranium mining firms, to help Powertech with the costs of the lawsuit. Clement declined to say how much money would be needed to pay for the lawsuit.

Environmental groups OK with new regs

Jeff Parsons, an attorney with Western Mining Action Project, told FCW Powertech's allegations about the legislators having illegal communications with the regulatory agency is a "mischaracterization."

"As far as I know all they did was send letters to the board like everyone else."

Parsons said his organization, and the environmental groups it represents, "strongly support the new mining regulations."

In response to Powertech's lawsuit, Parsons said, "In a rule making process no one gets everything they want. We feel the board did a good job."

Synatom to sell Powertech stake

In an unrelated matter CEO Clement confirmed that Synatom is planning to sell its 19.9% stake in the firm. Clement said the Belgium firm told Powertech the investment no longer fits its long term goals. However, Clement also said that Synatom has not cancelled its offtake agreement since it still holds Powertech convertible debentures worth CDN$9 million.

Synatom, part of Belgian power utility Electrabel SA, is seeking to sell its 19.6% stake in Powertech. Belgian daily De Tijd reported last September that Cormark Securities is acting as financial advisor to Synatom in the auction process. Synatom, which is responsible for the management of the nuclear fuel cycle of the Belgian nuclear power plants, has reviewed its strategy and decided to exit the capital of the Canadian company according to financial wires services.

Supreme Court denies petition to overturn Indian Lands ruling

Uranium Resources, Inc. (NASDAQ:URRE) got some good news Nov 15 as the United States Supreme Court denied a petition to review the March 2010, 10th Circuit Court of Appeals' ruling that upheld the company's NRC license to conduct in-situ recovery (ISR) uranium mining at the Churchrock/Crownpoint project. This action closes the long running "Indian Lands" controversy.

The U.S. Court of Appeals in Denver had ruled 6-5 that private land surrounded by Indian tribal land was not subject to tribal jurisdiction. The ruling opens the way for the State of New Mexico to issue a permit for mining activities on the site and for the NRC license to be renewed.

Don Ewigleben, President and CEO said in a prepared statement, "Today's announcement was significant in that it clears the last remaining legal challenge to our NRC license. We have long maintained our belief that our license was valid and have continued to move forward towards the final development of the Churchrock/Crownpoint project."

The firm said that in October 2010 it filed the necessary documents with the NRC to reactivate its license. URI said its New Mexico feasibility studies are expected to be completed by the end of 2011.

The firm said that if licensing and financing milestones are met, the company will begin construction of the facilities in 2012 and producing in 2013.

The NRC license allows for the production of up to an initial 1 million pounds per year from the Churchrock/Crownpoint project until a successful commercial demonstration of restoration is made, after which the quantity of production can be increased to 3 million pounds per year.

Uranium Resources to develop Texas property with Cameco

Uranium Resources has signed a letter of intent with Canadian-based Cameco for an extensive prospecting scope of work at a property in Texas. The three-year program will develop an unnamed site in South Texas, presumably within economic haul distance of its Kingsville and Vasquez properties. Financial terms of the deal were not disclosed.

Uranium resources also completed an offering of just over seven million shares of stock at $1.16/share reaping net proceeds of $7.8 million.

By any recent measure based on price, the offering of $1.16 was a steal. On October 1 the stock closed at $1.26. At market mid-day Nov 16 the firm's stock was trading at $2.34 share against a 52-week range of $0.38-$2.90. The profit on one million shares of stock purchased as part of the offering at $1.16 and sold today at $2.34 would have been $1.18 million.

& & &

Portions of this blog post also appeared in Fuel Cycle Week v9:N402, 11/18/10 published by International Nuclear Associates, Washington, DC.

# # #

# # #

No comments: