Citron blows the cover off of Uranium Energy (OTCBB:URME) and asks the question, “Can a stock promotion game turn downright dangerous?”
Mining for uranium is not the same as mining for gold or oil. With the latter, a few Vancouver promoters spin a couple lies, “salt” some samples or drill a few dry holes, and make off with a few million in unsuspecting investors’ money – hey, it happens every day.
But in this case, the company in question is not playing with gold or oil — but something much hotter. We’re talking uranium – where contamination can kill people, or deprive an entire a community of its land or its drinking water. Uranium Energy has whipped up a storm of controversy in a small Texas community – while failing to offer proper disclosures either to the investing public or the community which is at risk of being victimized by the consequences. And the locals are rightly expressing alarm at their blatant irresponsibility and lack of accountability.
Rrecently, the Texas Railway Commission (the body that regulates mining in Texas) found HUNDREDS of violations in the exploration done by Uranium Energy in Goliad. The drilling was so sloppy that only 6 of the 117 boreholes could be found. The company is currently declared to be in a state of violation by the Railway Commission and has asked for a 30 day extension to get “up to code”.¼br /> http://texas.sierraclub.org/coastalbend/SouthTexasUranium.htm
History of Contamination of Resources from In-Situ Mining
No doubt Uranium Energy will trot out its “experts” to argue that the people of Goliad are playing “Chicken Little” and there is nothing to be concerned about because in-situ mining is as safe. But evidence shows the contrary. In the last 10 years, the Texas Department of Health Services has cited several instances of radioactive waste spills by uranium mining companies, including Cogema Inc.’s 1998 spill of more than 20,000 gallons of radioactive solution in Bruni, Texas. These spills put entire communities at risk, and it’s no wonder that Goliad and Kleberg counties don’t want the burden of satisfying the market’s appetite for nuclear power. http://goliad-tx.tamu.edu/uic/uic_districtpolicy.pdf
South Texas communities have been victimized more than once. Look at what can happen if an irresponsible group decides to look for uranium in your neighborhood. http://www.txpeer.org/press/86.html
Locally, they call this the “rip ‘n’ skip”. Companies set up shop as long as it suits their economic interests, but turn up bankrupt by the time the environmental consequences become apparent.
“Don’t Worry, Our Expert will Take Care of Everything”
To make sure everything goes OK, Uranium Energy has engaged a Mr. Harry Anthony (http://www.hanthony.com/ ) As you can see, he has long experience in assuaging the fears of anxious locals. He lists many in-situ uranium projects in south Texas in his vitae – including the specific URI project just above – which left behind an environmental disaster – the very same in-situ uranium operation Mr. Anthony claims credit for!
In fact he was a Senior Vice President of URI where he
“managed all facets of operations and technical support to achieve production goals, drilling, ion exchange, reverse osmosis, software development and equipment design. His duties also included oversight of construction, technical aspects, and daily operations of plants and wellfields, budget planning and forecasting, property evaluations and reserve estimations”
Now Mr. Anthony just executed an SEC Form 4 last week showing how he bought 5,000 shares of Uranium Energy, ostensibly with his own heard-earned $29,000. This is supposed to make us all feel all warm and cozy – that he has so much confidence in his new employer that he’s put his own money into the deal.
Well, what’s $29,000 when you realize that the company granted Mr. Anthony over 750,000 shares of URME stock and options at prices of 1c to 50c per share ? With an incentive of over $5 million dollars, one might wonder if his objectivity might be bought and paid for ?
What makes this story even worse: No disclosure = No accountability
Prospecting for uranium is like playing with fire. In fact, its way worse than fire, we’re talking radioactivity, heavy metals, and toxic chemicals in the water table. It was bad enough when Erin Brockovich led the charge to hold Pacific Gas and Electric accountable to the local community. But in this case, the citizens of Goliad have no way to know who to hold accountable. Uranium Energy has just $13 million in cash – raised by selling cheap stock. And they’re listing leases in six states!
In order for us to evaluate the credibility of the company we have to consider its largest shareholders.
1. Golden West Investments. Despite filing as a “control person” of Uranium Energy, we still do not know who this group represents. Nevertheless, we find it very interesting that on February 22, they sold an aggregate of 1,625,000 shares of stock is a series of private transactions to nine separate purchasers. Each sale was made for “nominal consideration”. That amounts to over $10 million worth of under-market transactions at today’s prices – from undisclosed to undisclosed. That’s pretty nominal!
In a world where you or we can’t even transfer $10,000 without passing governmental scrutiny, how are these transactions to be scrutinized ?
2. Isaiah Capital Trust. The second largest shareholder is a trust controlled by — but not disclosed — the Chairman of the Board’s sister Sandra Corin. The chairman, Alan Lindsay, does not report this stock as being under his control. This trust is also domiciled in the tax haven of Turks & Caicos.
So as the people in Goliad fight to keep their town free of nuclear contaminants issuing from uranium exploration, they are counting on the responsibility of a CEO who is a Vancouver stock promoter by trade, a chairman of the board (also Vancouver-based) who has a slew of failed stock deals and is currently in violation of public disclosure requirements, and an offshore entity in which we do not know the beneficial owner but who passes large blocks of stock around to other undisclosed entities.
If anyone has any guesses into the financial future of Uranium Energy Corp, all you have to do is look at the most recent 10-K’s from the other 3 companies that Chariman Alan Lindsay presides over …these are GMXX, MIVT, and AZMN. The combined 2006 revenues for those companies was $16,237. Each of those companies has been trading for at least 4 years.
No Disclosure, No Insurance, No Proven Reserves
Of course, this company, which so consistently practices the art of non-disclosure, has disclosed none of the regulatory problems in Goliad documented above, although they are obviously material with regard to the company’s financial affairs. In its press releases and filings, it continues to refer to [ the “advanced” Goliad Project.] leaving us to ponder exactly what is advanced about it — other than the millions they’ve advanced to experts, advanced to stock promoters, and advanced to unidentified foreign entities. It is important to note that this company states it does not carry any liability insurance and as of today, they have zero proven reserves. How can URME say they are going to start producing uranium in 2009, when they have not shown that they have a commercially viable find? A commercial find is a lot different than a find in the middle of a neighborhood.
Oh, this just in. Last night a Canadian company 0761034 BC (British Columbia) registered 257,500 shares of URME stock for sale in the upcoming quarter. There’s some more disclosure from Uranium Energy.
Our concerns with Uranium Energy go way beyond the shenanigans of routine stock promotion. Here is a company threatening the lives and property of thousands of US citizens, while operating clandestinely from behind the cloak of offshore entities.
This story undoubtedly won’t end in a day or a month. We’ll keep tracking it closely.
/wp-content/uploads/2017/05/CitronLogo2017-350x65-1.png00Citron Research/wp-content/uploads/2017/05/CitronLogo2017-350x65-1.pngCitron Research2007-04-10 06:47:202017-05-30 04:00:23Citron Issues Part 2 on Uranium Energy Corp. (URME)