Powertech shifts focus to South Dakota

NUNN – Further progress on a proposed uranium mining operation a few miles west of Nunn in Weld County won’t likely be happening any time soon.

The Canadian company that’s been seeking to develop the site since 2007 said it will be focusing its money and energy on a similar project in South Dakota.

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Powertech USA, a subsidiary of Vancouver, British Columbia-based Powertech Uranium Corp., just completed a public offering of 47.9 million shares in the company that raised $22.5 million. On its website, the company said it would use $12.5 million to pay off a portion of a $25 million loan from Synatom, a Belgian company that decided last year to end its investment in Powertech.

Powertech said it would use the remaining $10 million to complete permitting of its proposed 18,000-acre in-situ uranium extraction site near Edgemont, S.D., called Dewey-Burdock, and for general operating expenses.

Dick Clement, Powertech USA president and CEO, said the public offering was completed just as the Japanese earthquake-tsunami-nuclear disaster was unfolding. Clement said the timing of the offering was fortuitous for Powertech, given the negative publicity that’s resulted from the nuclear accident.

“I was very pleased with the timing of it,” he said. “There were other companies out there seeking funding at the same time that didn’t close in time and I feel sorry for them.”

Clement said Powertech intends to pursue its Dewey-Burdock project and idle its Centennial project permitting process for the present.

“It’s far more advanced,” he said of the project about 200 miles east of Casper, Wyo., and 80 miles southwest of Rapid City. “We’re in the process of going through the several phases of permitting there. Dewey-Burdock is the first project we’re anticipating bringing onstream.”

South Dakota vote

And that became much more likely earlier this month when the South Dakota legislature voted to reduce the state’s participation in permitting injection-well uranium mining projects.

On a 57-11 vote, the South Dakota House approved a bill that turned the permitting process over to the U.S. Environmental Protection Agency and Nuclear Regulatory Commission. The bill also sets aside some state rules on underground injection control Class III wells.

South Dakota Rep. Val Rausch, who sponsored the bill in the state House, said the bill was aimed at removing the duplication of getting permits from both the state and the federal government and as a cost-saving measure for the state.

“The state doesn’t have specialists on staff for that,” Rausch said. “We’d have to expand (the South Dakota Department of Environment and Natural Resources’) staff.”

Rausch said the department attended all the hearings on the bill and voiced no objection to it. Rausch, a Republican, also noted there was “strong bipartisan support.”

Rausch did acknowledge that Powertech is currently the only company in the state that would benefit from the bill.

“It was probably only one company going through the process at the time, so it might look like it was for only one company,” he said. “But the intent is for it to apply to other companies, too.”

Powertech’s Clement said his company did push for the bill.

“It was something we talked about with the governor and the legislature,” he said. “We proposed this as something that would make sense and both the House and the Senate decided it was appropriate to proceed on that basis.”

Not easier

However, Clement said the intent of the bill was not specifically to make it easier for Powertech to get its mining permit in South Dakota.

“It wasn’t to get South Dakota out of the process,” he said. “But to submit the applications to two agencies wasn’t logical or practical.”

Powertech has been pursuing permits for both projects simultaneously in South Dakota and Colorado. But the Colorado legislature in 2008 adopted measures to ensure Powertech and other future uranium mining companies would take steps to protect groundwater supplies and do their prospecting in a transparent manner.

Based on those laws, the Colorado Mined Land Reclamation Board last summer adopted several amendments to the state’s Mined Land Reclamation Act. In November, Powertech USA sued the state of Colorado, the Mined Land Reclamation Board and Mike King, executive director of the Colorado Department of Natural Resources, claiming the new rules overstepped the bounds of the Legislature’s action.

Clement said there has been no advancement of that lawsuit by Powertech.

“We’re not pursuing it very stringently so we can focus on our efforts at Dewey-Burdock,” he said.

Clement would not acknowledge that Colorado’s regulatory environment is less friendly than South Dakota’s.

“I think the regulatory climate in both states is very favorable,” he said. “We have legislation in Colorado that makes it a little more strenuous.”

Strong scrutiny remains

Brian Walsh, a hydrologist with the South Dakota Department of Environment and Natural Resources, said the new state law will make it easier for Powertech to get a mining permit.

“Under the way things were, Powertech would have had to get Class III injection permits from both the EPA and the state of South Dakota,” he said. “Now it looks like they’ll just have to get it from the EPA.”

But Walsh said the state will still play a role in Powertech’s path to a permit. “All I can tell you is they don’t have any of the permits they need from us yet,” he said.

And Powertech is still facing strong scrutiny from the federal government. Review of the safety-related portion of its Dewey-Burdock application to the Nuclear Regulatory Commission was stopped in early March and a two-day meeting is set for April 7 and 8 at the NRC’s office in Rockville, Md., to resolve dozens of questions about the project.

Jay Davis, who lives next to Powertech’s Centennial site near Nunn and is a strong opponent of the project, said he’s glad the company’s focus has shifted to South Dakota. But he worries that Powertech may be able to fast-track the permitting process there.

“It’s worrisome in the sense that they get going up there and pulling in some money and start focusing on Centennial again,” he said.

Davis said the hope by opponents of the project has always been that Powertech would eventually run out of money, and he noted that the company’s share price has dwindled to as low as 14 cents a share. The price stood at 39 cents a share on March 21, but how that will fare in the wake of the still-unfolding Japanese nuclear disaster and world response to nuclear power safety is still to be determined.

And the value of uranium on the world market continues to drop, to about $50 for a pound of U3O8 on March 21.  (See sidebar at top.)

“If it goes under $30 a pound, they’ll have to pack it in,” he said.