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Powertech management discloses risks to shareholders

Twenty reasons why owning Powertech stock may be a really bad idea

Posted August 26, 2007, Updated January 20, 2008


NOTE:  This page has been modified in response to the written threat of a defamation lawsuit from Powertech Uranium Corporation.  Mr. Blubaugh's complaint:


"False / Misleading. The quoted "motto" has never been issued or adopted by Powertech. Prior sale of uranium has no bearing on permitting or operation of a uranium mine such as the proposed Centennial Project. The ongoing need to raise capital during the permitting and pre-development phases is common in the mining industry. Powertech's need to raise additional capital to fund study, permitting and construction efforts related to its Centennial Project has no bearing on issues related to the viability of the Centennial Project or issues relating to permitting or any environmental impact assessment."


As far as the motto is concerned, see my retraction/clarification below.  Mr. Blubaugh's assertion that Powertech's financial position and lack of earnings have no bearing on its ability to successfully permit, operate, and reclaim the Centennial/Indian Springs Project is false.  Opposition to the Centennial/Indian Springs Project is widespread and growing, and permitting of the project could easily drag on for years.  Powertech will have to find more and more risk-tolerant investors to sustain the company during this period.  Many of these investors may look for other "junior" uranium companies with projects that are not located seven miles from a city of 130,000 people. 


Mr. Blubaugh goes on to complain about the fact that I published selected financial disclosures from Powertech's July 24, 2007 Management Discussion and Analysis report:


Blubaugh: "Misleading. Powertech, in compliance with laws and regulations concerning financial disclosures to shareholder, must make certain disclosures. Among these disclosures are the financial condition of Powertech, market conditions and forecasts, and legal and regulatory restrictions on the sale of uranium. These disclosures are made for the purpose of informing shareholders of certain factors for consideration in the sale or purchase of Powertech stock. These disclosures have no bearing on issues related to the viability of the Centennial Project or issues relating to permitting or any environmental impact assessment."


The M,D&A report is publicly available, and Mr. Blubaugh asserts that posting excerpts from this public document is defamatory.  Keep in mind the fact these disclosures were written by Powertech accountants and were approved by CEO Richard Clement.  The disclosures support the fact that Powertech stock is a high-risk investment and that the Centennial Project's permitting and viability is uncertain because of the following:


- The company has never operated a mine.

- Because the company has no mining or other operating revenue, it must raise significant amounts of money from the issuance of penny stock if it is to survive the lengthy permitting process for the Centennial Project.

- Numerous uncertainties remain regarding the geologic and economic viability of the project, particularly how the company plans to extract the shallow uranium deposits near Fort Collins without resorting to open pit mining.

- Political, legislative, and regulatory obstacles to the project are substantial and growing.


As far as the project's potential environmental impacts are concerned, Powertech's start-up status and weak financial position are troubling.  If Powertech, a Canadian company,  is allowed to mine uranium and an environmental disaster were to occur, would the company have the financial resources needed to cover the resulting cleanup and other liabilities, or would it declare bankruptcy and abandon the project?








1. Nuclear Energy Competes With Other Viable Energy Sources

2. Public Acceptance of Nuclear Energy Cannot Be Assured

3. Uranium Industry Competition is Significant

4. Sales of Uranium are Restricted by International Trade Regulations

5. Deregulation of the Electrical Utility Industry May Affect the Demand for Uranium

6. The Company’s Financial Condition and Results of Operations may be Adversely Affected by Changes in the
Market Price of Uranium.

7. The Company Will Require Significant Amounts of Additional Capital in the Future

8. The Company’s Operations are Subject to Operational Risks and Hazards Inherent in the Mining Industry

9. Mineral Reserve and Resource Estimates are Only Estimates and May Not Reflect the Actual Deposits or the
Economic Viability of Uranium Extraction

10. Exploration, Development and Operating Risk

11. Currency

12. Environmental Risks and Hazards

13. Government Regulation

14. Public Involvement in the Permitting Process

15. Political Risk

16. The Company has no History of Mineral Production or Mining Operations

17. Future Sales of Common Shares by Existing Shareholders

18. No Assurance of Titles or Borders

19. Availability of Qualified Personnel

20. Need for Additional Mineral Reserves and Delineation of Mineral Reserves




An investment in our company involves a number of risks. You should carefully consider the following risks and
uncertainties in addition to other information in this annual report in evaluating our company and our business
before making any investment decision in regards to the shares of our company’s common stock. Our business,
operating and financial condition could be harmed due to any of the following risks. The risks described below
are not the only ones facing our company. Additional risks not presently known to us may also impair our
business operations.

Nuclear Energy Competes With Other Viable Energy Sources

Nuclear energy competes with other sources of energy, including oil, natural gas, coal and hydro-electricity.
These other sources are to some extent interchangeable with nuclear energy, particularly over the longer term.
Sustained lower prices of oil, natural gas, coal and hydro-electricity may result in lower demand for uranium
concentrates and uranium conversion services, which in turn may result in lower market prices for uranium,
which would materially and adversely affect the Company’s business, financial condition and results of

Public Acceptance of Nuclear Energy Cannot Be Assured

Growth in the demand for uranium and in the nuclear power industry will depend upon continued and increased
acceptance of nuclear technology by the public as a safe and viable means of generating electricity. Because of
unique political, technological and environmental factors that affect the nuclear industry, the industry is subject
to public opinion risks which could have an adverse impact on the demand for nuclear power and increase the
regulation of the nuclear power industry. An accident or incident at a nuclear reactor anywhere in the world, or
an accident or incident relating to the transportation or storage of new or spent nuclear fuel, could negatively
impact the public’s acceptance of nuclear power and the future prospects for nuclear power generation, which
may have a material and adverse effect the Company’s business, financial condition and results of operations.

Uranium Industry Competition is Significant

The international uranium industry is highly competitive. The Company will be competing against competitors
that may be larger and better capitalized, have state support, have access to more efficient technology, and
have access to reserves of uranium that are cheaper to extract and process. As such, no assurance can be
given that the Company will be able to compete successfully with its industry competitors.

Sales of Uranium are Restricted by International Trade Regulations

The supply of uranium is, to some extent, impeded by a number of international trade agreements and policies.
These agreements and any similar future agreements, governmental policies or trade restrictions are beyond
the control of the Company and may affect the supply of uranium available in the United States and Europe,
which are the largest markets for uranium in the world. If the Company is unable to supply uranium to
important markets in the United States or Europe, its business, financial condition and results of operations may
be materially and adversely affected.

Deregulation of the Electrical Utility Industry May Affect the Demand for Uranium

The Company’s future prospects are tied directly to the electrical utility industry worldwide. Deregulation of the
utility industry, particularly in the United States and Europe, is expected to impact the market for nuclear and
other fuels for years to come, and may result in the premature shutdown of some nuclear reactors. Experience
to date with deregulation indicates that utilities are improving the performance of their reactors, achieving
record capacity factors. There can be no assurance that this trend will continue.

The Company’s Financial Condition and Results of Operations may be Adversely Affected by Changes in the
Market Price of Uranium.


The majority of the Company’s potential revenues are anticipated to be derived from the sale of uranium
products. The Company’s financial condition, results of operations, earnings and operating cash flow will be
closely related and sensitive to fluctuations in the long and short term market price of uranium. Historically,
these prices have fluctuated widely. Between 1970 and 2005 the price of uranium
has fluctuated between approximately US$10 per pound and approximately US$100 per pound. The price of uranium
has been and will continue to be affected by numerous factors beyond the Company’s control. Such factors include, among
others: demand for nuclear power; political and economic conditions in uranium producing and consuming
countries; reprocessing of used reactor fuel and the re-enrichment of depleted uranium tails; sales of excess
civilian and military inventories (including from the dismantling of nuclear weapons) by governments and
industry participants; and production levels and costs of production.

If the price of uranium declines for a substantial period below the cost of production at the Company’s mines, it
may not be economically feasible to continue production at such sites. This would materially and adversely
affect production, profitability and the Company’s financial position. A decline in the market price of uranium
may also require a write-down of the Company’s mineral reserves and resources which would have a material
and adverse affect on its financial condition, results of operations and profitability. Should any significant writedown
in reserves and resources be required, material write downs of the Company’s investment in the affected
mining properties and increased amortization, reclamation and closure charges may be required.

The Company Will Require Significant Amounts of Additional Capital in the Future

The Company has limited financial resources. The Company will continue to make substantial capital
expenditures related to exploration, development and production. In particular the Company will have further
capital requirements as it proceeds to expand its present exploration activities at its uranium projects, or to take
advantage of opportunities for acquisitions, joint ventures or other business opportunities that may be
presented to it.

In addition, the Company may incur major unanticipated liabilities or expenses. There can be no assurance that
the Company will be able to obtain necessary financing in a timely manner on commercially acceptable terms, if
at all.

Volatile demand for uranium and the volatile price for uranium may make it difficult or impossible for the
Company to obtain debt financing or equity financing on commercially acceptable terms or at all. Failure to
obtain such additional financing could result in delay or indefinite postponement of further exploration and
development of its uranium projects with the possible loss of the rights to such properties. If exploration or the
development of any mine is delayed, such delay would have a material and adverse effect on the Company
business, financial condition and results of operation.

The Company’s Operations are Subject to Operational Risks and Hazards Inherent in the Mining Industry

The Company’s business is subject to a number of inherent risks and hazards, including environmental pollution,
accidents or spills; industrial and transportation accidents, which may involve radioactive or hazardous
materials; labour disputes; power disruptions, catastrophic accidents; failure of plant and equipment to function
correctly, the inability to obtain suitable or adequate equipment, fires; blockades or other acts of social activism;
changes in the regulatory environment; impact of non-compliance with laws and regulations; natural
phenomena, such as inclement weather conditions, underground floods, earthquakes, pit wall failures, ground
movements, tailings, pipeline and dam failures and cave-ins; and encountering unusual or unexpected
geological conditions and technical failure of mining methods. The Company may also contract for the transport
of its uranium and uranium products to refining, conversion and enrichment facilities in North America, which
will expose the Company to risks inherent in transportation including loss or damage of transportation
equipment and spills of cargo.

There is no assurance that the foregoing risks and hazards will not result in damage to, or destruction of, the
Company’s uranium properties, personal injury or death, environmental damage, delays in the Company’s
exploration or development activities, costs, monetary losses and potential legal liability and adverse
governmental action, all of which could have a material and adverse effect on the Company’s future cash flows,
earnings, results of operations and financial condition.

Mineral Reserve and Resource Estimates are Only Estimates and May Not Reflect the Actual Deposits or the
Economic Viability of Uranium Extraction


Reserve and resource figures included for uranium are estimates only and no assurances can be given that the
estimated levels of uranium will actually be produced or that the Company will receive the uranium price
assumed in determining its reserves. Such estimates are expressions of judgment based on knowledge, mining
experience, analysis of drilling and exploration results and industry practices. Estimates made at any given time
may significantly change when new information becomes available or when parameters that were used for such
estimates change. While the Company believes that the reserve and resource estimates included are well
established and reflect management's best estimates, by their nature reserve and resource estimates are
imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable.
Furthermore, market price fluctuations in uranium, as well as increased capital or production costs or reduced
recovery rates, may render ore reserves containing lower grades of mineralization uneconomic and may
ultimately result in a restatement of reserves. The extent to which resources may ultimately be reclassified as
proven or probable reserves is dependent upon the demonstration of their profitable recovery. The evaluation of
reserves or resources is always influenced by economic and technological factors, which may change over time.

Exploration, Development and Operating Risk

The exploration for and development of uranium properties involves significant risks which even a combination
of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may
result in substantial rewards, few properties which are explored are ultimately developed into producing mines.
Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes
and to construct mining and processing facilities at a particular site. Whether a mineral deposit will be
commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit,
such as size, grade and proximity to infrastructure; metal prices which are highly cyclical, drilling and other
related costs which appear to be rising; and government regulations, including regulations relating to prices,
taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The
exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in
the Company not receiving an adequate return on invested capital.


Exchange rate fluctuations may affect the costs that the Company incurs in its exploration activities. Uranium is
generally sold in United States dollars. Since the Company principally raises funds in Canadian dollars, but since
the Company’s costs are incurred in United States dollars, the appreciation of the United States dollar against
the Canadian dollar can increase the cost of uranium and other mineral exploration and production in Canadian
dollar terms.

Environmental Risks and Hazards

All phases of the Company’s operations are subject to environmental regulation in the jurisdictions in which it
operates. These regulations mandate, among other things, the maintenance of air and water quality standards
and land reclamation. They also set forth limitations on the general, transportation, storage and disposal of solid
and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and
enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and their officers, directors and
employees. There is no assurance that future changes in environmental regulation, if any, will not adversely
affect the Company’s operations. Environmental hazards may exist on the properties which are unknown to the
Company at present and which have been caused by previous or existing owners or operators of the properties.
Reclamation costs are uncertain and planned expenditures estimated by management may differ from the
actual expenditures required.

Government Regulation

The Company’s mineral exploration and planned development activities are subject to various laws governing
prospecting, mining, development, production, taxes, labour standards and occupational health, mine safety,
toxic substances, land use, water use, land claims of local people and other matters. Although the Company
believes its exploration and development activities are currently carried out in accordance with all applicable
rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that
existing rules and regulations will not be applied in a manner which could limit or curtail production or

Many of the mineral rights and interests of the Company are subject to government approvals, licenses and
permits. Such approvals, licenses and permits are, as a practical matter, subject to the discretion of applicable
governments or governmental officials. No assurance can be given that the Company will be successful in
maintaining any or all of the various approvals, licenses and permits in full force and effect without modification
or revocation. To the extent such approvals are required and not obtained, the Company may be curtailed or
prohibited from continuing or proceeding with planned exploration or development of mineral properties.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement
actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or
be curtailed, and may include corrective measures requiring capital expenditures, installation of additional
equipment or remedial actions. Parties engaged in mining operations or in the exploration or development of
mineral properties may be required to compensate those suffering loss or damage by reason of the mining
activities and may have civil or criminal fines or penalties imposed for violations or applicable laws or

Amendments to current laws and regulation governing operations or more stringent implementation thereof
could have a substantial impact on the Company and cause increases in exploration expenses, capital
expenditures or production costs or reduction in levels of production at producing properties or require
abandonment or delays in development of new mining properties.

Public Involvement in the Permitting Process

The process of obtaining radioactive materials licenses (“RML”) from the US Nuclear Regulatory Commission and
those required in the States that the Company is operating in allow for public participation. If a third party
chooses to object to the issuance of any RML or permit required by the Company, significant delays may occur
before the Company is able to secure an RML or permit. Generally, the public objections can be overcome with
the passage of time and through the procedures set forth in the applicable permitting legislation. However, the
regulatory agencies must also allow and fully consider public comment according to such procedures and there
can be no assurance that the Company will be successful in obtaining any RML or permit.

Political Risk

The Company’s future prospects may be affected by political decisions about the uranium market. There can be
no assurance that the United States or other government or quasi-governmental authority will not enact
legislation or other rules restricting uranium extraction and processing activities, or restricting to whom the
Company can sell uranium. In addition the price of uranium may be affected by decisions of state governments
to decommission nuclear weapons, thereby increasing the supply of uranium.

The Company has no History of Mineral Production or Mining Operations

The Company has never had uranium producing properties. There is no assurance that commercial quantities of
uranium will be discovered at the Properties or other future properties nor is there any assurance that the
Company’s exploration program thereon will yield positive results. Even if commercial quantities of uranium are
discovered, there can be no assurance that any property of the Company will ever be brought to a stage where
uranium resources can profitably be produced therefrom. Factors which may limit the ability of the Company to
produce uranium resources from its properties include, but are not limited to, the spot price of uranium,
availability of additional capital and financing and the nature of any mineral deposits.

The Company does not have a history of mining operations and there is no assurance that it will produce
revenue, operate profitably or provide a return on investment in the future.

Future Sales of Common Shares by Existing Shareholders

Sales of a large number of Common Shares in the public markets, or the potential for such sales, could
decrease the trading price of the Common Shares and could impair the Company’s ability to raise capital
through future sales of Common Shares. Substantially all of the Common Shares can be resold without material
restriction in Canada.

No Assurance of Titles or Borders

The acquisition of the right to exploit mineral properties is a very detailed and time consuming process. There
can be no guarantee that the Company has acquired title to any such surface or mineral rights or that such
rights will be obtained in the future. To the extent they are obtained, titles to the Company’s surface or mineral
properties may be challenged or impugned and title insurance is generally not available. The Company’s surface
or mineral properties may be subject to prior unregistered agreements, transfers or claims and title may be
affected by, among other things, undetected defects. Such third party claims could have a material adverse
impact on the Company’s operations. The Company’s rights in New Mexico are also affected by measures
implemented by the Navajo Nation. In addition, the Company may be unable to operate its properties as
permitted or to enforce its rights with respect to its properties.

Availability of Qualified Personnel

The mining industry generally is experiencing a significant shortage of qualified personnel particularly in the
availability of professionals such as mining engineers, metallurgists and geologists. There is also a shortage of
staff and skilled workers and, as a result, training to fill the positions may be necessary in order to achieve
Energy Metals’ planned production activities. The uranium industry is further impacted based on the need for
professionals and skilled workers because the downturn of the uranium market in the 1980’s resulted in a loss
of skills and considerably fewer people entering the market in this area of mineral industry. The current demand
for people has also resulted in a significant escalation of salaries and wages.

Need for Additional Mineral Reserves and Delineation of Mineral Reserves

Because mines have limited lives based on proven and probable mineral reserves, the Company will be required
to continually replace and expand its mineral reserves if and when its mines produce uranium. The Company’s
ability to maintain or increase its annual production of uranium in the future will be dependent in significant part
on its ability to bring new mines into production and to expand mineral reserves at existing mines.
The Company may be unable to acquire right to explore additional attractive mining properties on acceptable
terms due to competition for mineral acquisition opportunities with larger, better established mining companies
with greater financial and technical resources. There can be no assurance that the Company will be able to
bring any of its properties into production or achieve mineral reserves on its properties.





POWERTECH URANIUM CORP. - REPORT AND CONSOLIDATED FINANCIAL STATEMENTS - March 31, 2007 and 2006 - Stated in Canadian Dollars (pdf)


Invest in uranium? Not yet - Jim Jubak

MSN Money - August 17, 2007