Company to Host Investor Conference Call on Wednesday, May 31, 2006
at 4:00 P.M. EDT RIVERTON, Wyo., May 31 /PRNewswire-FirstCall/ --
U.S. Energy Corp. (NASDAQ:USEG) ("the Company") is pleased to
provide the following corporate update and announces that its
management will host an investor conference call today, Wednesday,
May 31, 2006 at 4:00 p.m. Eastern Time, to discuss recent corporate
developments. Liquidity and Marketable Securities As of May 30,
2006, the Company has approximately $6.5 million of cash and cash
equivalents in the bank. On June 1, 2006, the Company will exchange
its non-marketable 436,586 Class D shares of Enterra Energy Trust
for 436,586 Enterra Units, which trade on the Toronto Stock
Exchange ("ENT-UN.TO") and the New York Stock Exchange ("ENT") and
were valued at approximately $6.2 million (US) on May 30, 2006. At
this time, USEG does not plan to sell the units. Rather, the
Company looks forward to the receipt of approximately $78,585 (US)
per month in cash dividends, based on the current $0.18 (US) per
unit monthly dividend, for the foreseeable future. Additionally,
USEG owns 34,345,000 shares of Sutter Gold Mining ("SGM.V"),
currently trading at $.38 (Cdn)/share and 1,250,000 shares of
Uranium Power Corp. ("UPC.V"), currently trading at $.56
(Cdn)/share. As of May 30, 2006, USEG also owns 12,024,733 shares
of Crested Corp (OTC:CBAG) (BULLETIN BOARD: CBAG) currently trading
at $1.90/share. CBAG, which will also own 245,759 Enterra Energy
Trust units as of June 1, 2006 and owns 1,250,000 shares of UPC.V,
owed USEG $11.4 million at March 31, 2006. U.S. Energy Corp.
expects a portion of this indebtedness to be repaid to the Company
over the next 12 months. Pinnacle Gas Resources, Inc. Information
about Pinnacle Gas Resources, Inc. can be obtained from the
recently filed Form S-1 registration statement filed by Pinnacle
(available at http://www.sec.gov/, go to "companies and other
filers", or go to
http://www.sec.gov/Archives/edgar/data/1362120/000104746906006828/0001047469-
06-006828-index.htm). Uranium Project updates Exploration and
evaluation of the eight uranium properties in Utah, Colorado and
Arizona that are jointly owned by USEG and Crested Corp. dba USECC,
continues in an area known as the Colorado Plateau. The objective
of the exploration programs is to develop proven reserves
sufficient to supply the Company's Shootaring Canyon Mill for five
years by the time it is expected to reopen in 2008. To achieve this
objective, an exploration budget of $4.8 million for 2006 has been
approved. Of this amount, approximately $1.4 million will be funded
by joint venture partner Uranium Power Corp. on the four projects
in which that company participates. A number of very successful
drilling programs have already been completed in 2006 on the Burro
Canyon project in southwestern Colorado and on the Breccia Pipes
project in northern Arizona. Additional drilling is planned for the
Breccia Pipes project to follow-up the results of the first
drilling phase. The recently announced Green River projects with
UPC will also see extensive work, with the objective of
transferring the "Deeper Gold" and "Sahara" deposits to USEG's
mining department by the end of 2006. Extensive drilling is also
included in the budget for the large and highly prospective Lisbon
Valley and Henry Mountains projects, which are owned 100% by USECC.
Additionally, management is evaluating the acquisition of several
additional properties in the Colorado Plateau region.
Permits/Licenses Shootaring Canyon Uranium Mill In March 2005,
USEG's 100%-owned Plateau Resources Limited, Inc. ("PRL")
subsidiary submitted a request for a source material License
amendment to the State of Utah Department of Environmental Quality,
Division of Radiation Control (DRC). Submittal of detailed
amendment information was completed in late December 2005. To
expedite the review process, PRL entered into a Memorandum of
Agreement on March 14, 2006 that allows for a DRC contractor to
work on the review. To date, the contractor and DRC staff have
completed a site tour and a review of the submittal. PRL is in the
process of preparing a response to a May 4, 2006 Completeness
Review. It is anticipated that the amendment review will be
completed in the fourth quarter of 2006, and this will be followed
by a public hearing and a final decision by DRC. The Shootaring
Canyon Mill was constructed by a subsidiary of Consumers Power
Corp. in 1980-82 at a cost of approximately $56 million. In July
2005, the independent engineering firm of Behre Dolbear estimated
the current "replacement value" of the mill and related facilities
at approximately $88 million. USEG is currently in discussions with
a number of mining industry companies regarding the Shootaring
Canyon Mill, for joint venture and/or other arrangements. Up to $31
million will be required to upgrade the mill. Uranium Mine Sites
Potential uranium mine sites will be evaluated late this summer.
The evaluation process will consist of acquiring limited activity
permits from state agencies, in order to enter old mines. By
entering the historical mines, geological and mining evaluations
can be completed regarding the feasibility of future mining
activities, along with estimated grades and tonnages. Ore grade and
predications of future ore trends will the first items to be
reviewed, followed by conceptual mine plans. These activities will
utilize contract miners and will occur during the balance of 2006
and into 2007, in anticipation that mining activities will commence
by early 2008. Lucky Jack Molybdenum Project USECC has formed its
U.S. Moly Corp. subsidiary and expects to vend its Lucky Jack
(formerly known as Mt. Emmons) molybdenum assets into the
subsidiary in the near future. The creation of a dynamic board of
directors, including Jerry Danni and Al Winters -- two industry
veterans with extensive experience in large mining projects -- is
currently underway. U.S. Moly Corp. is currently evaluating the
commissioning of a bankable feasibility study for the Lucky Jack
Project and expects to proceed with this study in the third quarter
of 2006. The feasibility study should be completed within 18-24
months following its commencement. Sutter Gold Sutter Gold's
aggressive development plans for its mining project in the Mother
Lode Gold District in California received a tremendous boost with
the late May 2006 completion of a $3 million (Cdn) private
placement. Proceeds from the offering will primarily be used to
initiate surface and underground diamond core drilling, with the
expectation of moving ounces from the "inferred resource" to
"indicated resource" category under Canadian disclosure rules. In
addition, Sutter plans to undertake a feasibility study in the fall
of this year that should set the stage for a final capital raise to
fund a mill and begin production. Management Commentary "With our
current strong liquidity position and with most metal prices
trading near two-decade highs, U.S. Energy Corp. is in the
strongest position in its corporate history to pursue the values
inherent in its portfolio of natural resource assets," stated Mark
J. Larsen, President and COO of U.S. Energy Corp. "During the past
twelve months, we have monetized a portion of our natural gas
assets with the sale of Rocky Mountain Gas, Inc. on June 1, 2005,
eliminated $11.5 million in debt, and our gold subsidiary has
raised a substantial amount of exploration drilling capital for a
permitted US located gold property." "We are now diligently
advancing both our uranium and molybdenum mining projects and
expect uranium oxide production from our Shootaring Canyon Mill to
resume in 2008. While some commodity prices have abated in the last
few weeks, both uranium and molybdenum have traded higher. We
expect prices for uranium to remain strong as demand for the metal
increases to fuel the existing and growing number of nuclear power
plants either planned or under construction around the world."
"Currently, there are 440 nuclear plants operating worldwide,
including 103 in the United States that generate approximately 20%
of our nation's electricity requirements. China has announced plans
to build 30 new nuclear power plants over the next 15 years, to
supplement the 9 nuclear plants currently operating in the world's
most populous country. Russia plans to produce 25% of its electric
power from nuclear energy by 2030, compared with 16% today. This
will require the equivalent of 2 new Russian reactors every year,
on average, during the next 20 years. In the U.S., at least ten
utilities have announced plans for up to 20 new reactors, and
worldwide up to 178 new reactors are either under construction or
on the drawing boards." "Nuclear power is receiving unprecedented
attention due to concerns about global warming and the fact that it
represents an environmentally clean and politically stable source
of base load energy for electric power plants. Our ownership of one
of the four remaining licensed uranium mills in the United States
positions U.S. Energy years ahead of the numerous prospectors in
this sector. The greatest value, however, lies in our license,
which represents an intangible asset that is not reflected on our
balance sheet. Because new uranium mill construction has been
virtually non-existent for the last 25 years, our Shootaring Canyon
Mill and its new tailings facility will be the most modern in the
world when recommissioned. The mill operated for only 90 days in
1982, and there is virtually no environmental contamination legacy
at the site. We are forging ahead with our plans to be producing
uranium oxide from our Shootaring Mill by 2008." Keith Larsen, CEO
of U.S. Energy Corp., added, "Our Lucky Jack Molybdenum property is
also a very exciting project. This is a 'world-class' molybdenum
deposit that has the potential to develop into a highly profitable
mine with a long life cycle. We are in the early stages of the
project and look forward to the permitting process, especially in
light of the fact that molybdenum prices are currently trading
almost 350% higher than three years ago. The property has been
permitted before, but the permit was not signed by the former owner
(AMAX Inc.) due to depressed market conditions at the time.
Contrarily, today we are confident that, with few new molybdenum
mines having been developed over the last 25 years, U.S. Energy has
an opportunity to bring on-stream a major primary production mine
that can supply global steel markets well into the future. Our goal
is to create significant long-term value for our shareholders with
the Lucky Jack project." "We are currently in discussions with a
number of prospective joint venture partners regarding both our
uranium and molybdenum projects, and I am confident that we will be
successful in attracting industry partners that have the expertise
and financial commitment to ensure the success of these projects,"
concluded Mr. Larsen. Metals Prices The following table reviews
recent market prices for metals that are relevant to U.S. Energy
Corp.'s current and planned activities, compared with approximate
prices three years ago: 5/30/06 Price 5/30/03 Price % Change
URANIUM OXIDE $43/lb. $10.95/lb. +293% MOLYBDENUM $26/lb. $5.82/lb.
+347% GOLD $650/oz. $365/oz. + 78% Investor Conference Call An
investor conference call has been scheduled for 4:00 p.m. Eastern
Daylight Time (EDT) on Wednesday, May 31, 2006. Shareholders and
other interested parties may participate in the conference call by
dialing 888-459-5609 (international/local participants dial
973-321-1024) and referencing the ID code 7456328, a few minutes
before 4:00 p.m. EDT on May 31, 2006. The call will also be
broadcast live on the Internet at
http://www.videonewswire.com/event.asp?id=34166. A replay of the
conference call will be available two hours after the completion of
the call from May 31, 2006 until June 7, 2006 by dialing
877-519-4471 (international/local participants dial 973-341-3080)
and entering the conference ID 7456328. The call will also be
archived on the Internet until August 28, 2006 at
http://www.videonewswire.com/event.asp?id=34166. * * * * * 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, Inc., 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 in
southeastern Utah 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 has
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 and milling 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 operations 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. DISCLOSURE
REGARDING MINERAL RESOURCES UNDER SEC AND CANADIAN REGULATIONS USE
is a joint venture partner with Uranium Power Corp. ("UPC") and a
major shareholder of SGMI. The common stock of UPC and SGMI, both
Canadian corporations, are traded on the TSX-V, and are subject to
the reporting requirements of the TSX-V and Canadian securities
regulatory authorities. Harold F. Herron, Senior Vice President and
Director of USE and Crested, serves on the board of directors of
SGMI and is also the Company's President and CEO. Chris Healey,
Vice President Exploration of USE, serves on the board of directors
of UPC. From time to time, UPC and SGMI make public disclosures in
compliance with National Instrument 43-101, "Standards of
Disclosure for Mineral Properties." NI 43-101 establishes
procedures and standards for determining the existence of, and the
reporting of, Mineral Resources and Mineral Reserves. Mineral
Resources are classified in ascending categories of geological
confidence, as Inferred, Indicated, and Measured. Each definition
relates to a resource that is determined to be of "such a grade or
quality that it has reasonable prospects for economic extraction."
Mineral Reserves are classified as Proven or Probable. The SEC
allows public disclosure of the extent and grade of mineral
deposits, and, under SEC Industry Guide 7, "Description of Property
by Issuers Engaged or to be Engaged in Significant Mining
Operations, of Proven (Measured) Reserves and Probable (Indicated)
Reserves. In contrast to NI 43-101, the SEC does not allow public
disclosure of Inferred, Indicated, or Measured Resources. In
addition, there are some significant differences in the standards
allowed, and the procedures required to be followed by the SEC for
public disclosure of the SEC's Proven (Measured) Reserves and
Probable (Indicated) Reserves, as compared to NI 43-101 for Proven
and Probable Mineral Reserves." United States residents, who obtain
information about those of our uranium properties, and about the
gold properties, which are reported upon by UPC and SGMI to the
TSX-V in accordance with NI 43-101, and about SGMI's gold
properties, are cautioned that such information may be materially
different from what would be permitted under SEC rules for United
States companies. DATASOURCE: U.S. Energy Corp. CONTACT: Keith G.
Larsen, CEO or Mark Larsen, President, both of U.S. Energy Corp.,
+1-307-856-9271 Web site:
http://www.videonewswire.com/event.asp?id=34166
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