RIVERTON, Wyo., Jan. 17 /PRNewswire-FirstCall/ -- U.S. Energy Corp. and Crested Corp. (BULLETIN BOARD: CBAG) , d/b/a as "USECC", today announced an amendment in the terms of the Purchase and Sales Agreement dated December 8, 2004 involving the Sheep Mountain Project in the Joint Venture with Uranium Power Corp. (TSX.V: UPC).
Under the terms of the amendment, two payments, each consisting of US $800,000 cash and 750,000 UPC common shares (totaling $1.6 million cash and 1.5 million shares of UPC common stock), that were due on June 29, 2006 and December 29, 2006, respectively, have been accelerated and UPC has paid USECC the sum of $1.6 million cash. Upon approval by Canadian regulatory authorities, the 1.5 million shares of UPC common stock will be issued subject to a 4-month hold period expiring on May 16, 2006. In addition, UPC paid USECC the US $152,011.89 for the outstanding balance on the Joint Venture's 2005 drilling program, and an additional US $400,000 in partial payment of the $775,440 budgeted for the Joint Venture drilling program in the first half of the 2006.
In exchange for the accelerated payments, two balloon payments of US $1.5 million each (totaling $3 million cash) that were previously due on April 29, 2006 and October 29, 2006, as a result of the price of U3O8 having exceeded US $30 a pound for 4 consecutive weeks, were deferred by USECC by one year to April 29, 2007 and October 29, 2007, respectively. Two additional payments, each consisting of US $800,000 cash and 750,000 UPC common shares (totaling $1.6 million cash and 1.5 million UPC common shares), that are due on June 29, 2007 and December 29, 2007, respectively, have not been amended and remain due in accordance with the December 8, 2004 Purchase and Sales Agreement.
"U.S. Energy, Crested and UPC are positioning themselves to become the next U.S. uranium producers," commented Keith Larsen, Chief Executive Officer of U.S. Energy Corp. "The Amended Agreement provides immediate cash to USECC and allows UPC additional time to pay for its 50% interest in the Sheep Mountain Project. We enjoy our relationship with UPC and expect encouraging results from exploration drilling programs that have been pre-funded for the first half of 2006."
"The spot price for uranium (U3O8) reached $37.00 per pound yesterday, and we expect it to continue trending higher as the year progresses," added Mark Larsen, President of U.S. Energy Corp. "Spot prices at a 25-year high clearly illustrate that new uranium production must come on line to address the inability of current mines to supply the requirements of the world's 440 operating nuclear power plants and the more than 40 nuclear plants that are under construction or on the drawing boards. We continue to move towards our goal of producing uranium in the U.S. in the near future."
ABOUT U.S. ENERGY CORP. AND CRESTED CORP.
U.S. Energy Corp. and its majority-owned subsidiary, Crested Corp., are engaged in a joint venture to conduct various business operations as USECC. Through their subsidiaries, Sutter Gold Mining Inc., Plateau Resources Limited., U.S. Moly Corp, U.S. Uranium Ltd. and USECC, they own various interests or properties prospective for gold, uranium, vanadium and molybdenum.
This news release includes statements which may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect," or similar expressions. These statements are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, future trends in mineral prices, the availability of capital, competitive factors, and other risks.
The profitable mining and processing of uranium and vanadium will depend on many factors: Obtaining properties in proximity to the Shootaring mill to keep transportation costs economic; delineation through extensive drilling and sampling of sufficient volumes of mineralized material, with sufficient grades, to make mining and processing economic over time; continued sustained high prices for uranium oxide and vanadium; obtaining the capital required to upgrade the Shootaring mill and add a vanadium circuit; and obtaining and continued compliance with operating permits.
The profitable mining and processing of gold will depend on many factors, including receipt of final permits and keeping in compliance with permit conditions; delineation through extensive drilling and sampling of sufficient volumes of mineralized material, with sufficient grades, to make mining and processing economic over time; continued sustained high prices for gold; and obtaining the capital required to initiate and sustain mining operations and build and operate a gold processing mill.
We have not yet obtained feasibility studies on any of our mineral properties. These studies would establish the economic viability, or not, of the different properties based on extensive drilling and sampling, the design and costs to build and operate gold and uranium/vanadium mills, the cost of capital, and other factors. Feasibility studies can take many months to complete. We have not established any reserves (economic deposits of mineralized materials) on any of our uranium/vanadium or gold properties, and future studies may indicate that some or all of the properties will not be economic to put into production. The molybdenum property is currently owned by Phelps Dodge Corporation who plan to return the properties to USECC in 2005. The properties have had extensive work conducted by prior owners to establish the deposits of molybdenum, mine planning and other ancillary activities. This data will have to be updated to determine the viability of starting mining operations. Obtaining mining and other permits to begin mining the molybdenum property may be very difficult, and, like any mining operation, capital requirements for a molybdenum mining operation will be substantial.
By making these forward-looking statements, the Companies undertake no obligation to update these statements for revision or changes after the date of this release.
