Crested Corp. (fka CBAG)

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U.S. Energy Corp. Reports Affirmation of Lower Court Ruling on Mt. Emmons Patent Claims Litigation by Federal Appeals Court
Monday July 31, 9:30 am ET

RIVERTON, Wyo., July 31 /PRNewswire-FirstCall/ -- U.S. Energy Corp. (Nasdaq: USEG - News; "the Company"), a natural resources exploration and development company, today announced that the 10th Circuit Court of Appeals has issued a ruling that reaffirms the validity of patented mining claims at the "Lucky Jack" molybdenum property on Mt. Emmons in southwestern Colorado, which is owned by USEG and its majority-owned subsidiary, Crested Corp. (OTC Bulletin Board: CBAG - News).

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In a letter dated April 2, 2004, the U.S. Department of Interior, Bureau of Land Management ("BLM") issued patents on nine additional mining claims on the Mt. Emmons property, for a total of 25 patented claims consisting of approximately 350 patented or fee acres. A lawsuit was subsequently filed by certain local and governmental entities and environmentalists (the "Plaintiffs") in the U. S. District Court for the District of Colorado (the "District Court"). Defendants in the lawsuit were the BLM, certain officials of that agency, and certain private dependents including Phelps Dodge Corporation (Phelps Dodge). The District Court dismissed the Plaintiffs' allegations and held that the Plaintiffs had no right to challenge the BLM's issuance of the patents. The Plaintiffs subsequently appealed the District Court ruling to the 10th Circuit Court of Appeals, which ruled on July 21, 2006 that the Plaintiffs have no federal right of action against the Defendants.

In March 2006, U.S. Energy Corp. and Crested Corp. announced the reacquisition from Phelps Dodge of the Mt. Emmons property (since renamed the "Lucky Jack" deposit), including a total of 25 patented and approximately 520 unpatented mining claims, which together approximate 5,400 acres, or over 8 square miles of mineral claims.

In its letter dated April 2, 2004, the BLM estimated that there were approximately 23 million tons of mineable reserves containing 0.689% molybdenite, and that about 267 million pounds of molybdenum trioxide was recoverable from the Mt. Emmons property. The BLM relied on a mineral report prepared by Western Mine Engineering (WME) for the U.S. Forest Service, which directed and administered the WME contract. WME's analysis was based on a price of $4.61 per pound of molybdic oxide and was used by the BLM in determining that the nine claims satisfied the patenting requirements that the mining claims contained a valuable mineral that could be mined profitably. (As of July 28, 2006, the average market price for molybdic oxide approximated $25.50 per pound). WME consulted a variety of sources in preparation of its report, including a study prepared in 1990 by American Mine Services, Inc. and a pre-feasibility report prepared by Behre Dolbear & Company, Inc. In its 1992 patent application to the BLM, Amax Inc. (subsequently merged into Phelps Dodge) stated that the size and grade of the Mt. Emmons deposit was determined to approximate 220 million tons grading 0.366% molybdenite.

U.S. Energy Corp. and Crested Corp. are currently evaluating the commissioning of a bankable feasibility study for the Lucky Jack Project and expect to proceed with this study during the third quarter of 2006. The feasibility study should be completed within 18-24 months following its commencement.

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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.


Source: U.S. Energy Corp.