Powertech files misleading prospectus in attempt to lure new investors
Posted March 5, 2011, Updated March 6, 2011
The Securities Act administered and enforced by the securities commissions of British Columbia, Alberta, and Ontario requires that "a prospectus must provide full, true and plain disclosure of all material facts relating to the securities issued or proposed to be distributed." Powertech's prospectus document omits or misstates important facts that may or may not be material.
(Since Powertech officials previously threatened to sue me for questioning their failure to disclose the level of opposition to the Centennial project, I will leave the determination of whether certain facts are "material" to others.)
The prospectus document paints a very misleading picture of the proposed Centennial project, and devotes only three paragraphs of the 26-page document to the project.
Powertech mentions the recent adoption of new rules for in-situ leach uranium mining in Colorado. But the prospectus goes on to assert that the company is "determining the proper form of application for mining permits under the new rules" and "is currently preparing to submit the necessary permit applications". The truth that Powertech fails to disclose is that it has filed a lawsuit against the state seeking to overturn many of the rules. Powertech will not be submitting a permit application to the Colorado Division of Reclamation, Mining & Safety while the lawsuit is unresolved, and the legal case is still in the early stages.
The prospectus document also notes that Powertech "has applied for a Class 3 injection permit to enable it to conduct an additional pump test to yield more data" for permit applications. (The application is actually for a Class 5 permit. This is a rather significant error, given the differences between Class 3 and Class 5 wells and their respective regulation under the EPA's Undergound Injection Control program.) MIssing are the facts that Powertech applied for the permit nearly two years ago in April 2009, that a final permit issued by the EPA was withdrawn in February 2011 in response to appeals filed by project opponents, that an expected re-issuance will be in the form of a draft permit requiring a new public comment period, and that Powertech has not yet received authorization from the state to conduct the pump test.
And in a further misleading statement, the prospectus asserts that Powertech "has also conducted several outreach programs with communities in the area to communicate its intentions with respect to the Centennial Project and the benefits of same to such communities." Powertech has held only one company-sponsored public outreach meeting in the last four years, and resolutions of opposition to the project have been passed by the governing bodies of Fort Collins, Greeley, Wellington, Nunn, Timnath, Ault, and New Raymer. Many of the resolutions passed by unanimous vote and call for the EPA, State of Colorado, and Weld County to "deny any and all permits" for the project. These facts are not included in either the prospectus or the fourteen other documents incorporated by reference.
JW
SECURITIES ACT - [RSBC 1996] CHAPTER 418 - British Columbia Securities Commission