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Press Release Source: U.S. Energy Corp.; Crested Corp.
U.S. Energy Corp. / Crested Corp. and Kobex Resources Ltd. to Proceed With an Agreement to Develop the Lucky Jack Molybdenum Property
Thursday December 7, 12:56 pm ET
Kobex Has Option to Acquire 50% Interest in 'World-Class' Moly Deposit for $50 Million in Option Payments and Expenditures
RIVERTON, Wyo., Dec. 7 /PRNewswire-FirstCall/ -- U.S. Energy Corp. (Nasdaq: USEG - News) and Crested Corp. (OTC Bulletin Board: CBAG - News), d/b/a USECC, today announced that Kobex Resources, Ltd. (TSX Venture Exchange: KBX.V - News) notified USECC effective December 5, 2006, they wish to proceed with the Transaction as amended and the execution of a Formal Agreement whereby Kobex can acquire a 50% interest in the Companies' Lucky Jack (formerly known as Mt. Emmons) molybdenum deposit in west-central Colorado (the "Project").
On October 6, 2006, U.S. Energy Corp. ("USEG"), its majority-owned subsidiary, Crested Corp. ("Crested"), and U.S. Moly Corp. ("U.S. Moly"), a Wyoming corporation organized by USEG and Crested but not yet active, entered into the "Letter Agreement" with Kobex Resources Ltd. ("KBX"), which is headquartered in Vancouver, B.C. The Letter Agreement outlined the terms under which Kobex can acquire a 50% interest in certain patented and unpatented mining claims held by USEG and Crested, for $50 million in option payments and expenditure funding. USEG and Crested each reserved a 3% gross royalty on the Project subject to being reduced to a 1.5% gross royalty each at such time as Kobex earns a 50% interest in the Project.
Under the terms of the amended Letter Agreement, the first option payment of US$1.45 million of KBX stock will be reduced by US$700,000 to US$750,000 payable to USECC. Kobex has the option to either: incur an additional US$700,000 in Expenditures prior to the first anniversary of the effective date; or pay an additional US$700,000 in Option Payments to USECC on the anniversary date. In addition, Kobex has a one year option after acquiring a 50% interest in the Project to reduce the 1.5% gross royalty to each USEG and Crested to a 1% gross royalty each by a total payment of US$10 million, in cash or KBX stock at USEG and Crested's sole option. Further details of the Letter Agreement are available in the Form 8-K filed by USEG and Crested with the Securities and Exchange Commission on October 10, 2006, and details of the Amended Letter Agreement will be available in the Form 8-K to be filed on December 7, 2006.
"It is with great pleasure that we welcome the Kobex team to the Lucky Jack project. Together, we plan to commence work immediately to advance this "world class" mineral development endeavor. At Kobex's request and based on their desire to access more funds for the advancement of the project in 2007, we have agreed to allow a portion of our year one consideration to be added to the 2007 project budget at Kobex's discretion" stated Mark J. Larsen, President and COO of U.S. Energy Corp. "Based on our preliminary budgets and our overall goals for the project in 2007, we feel that the added funds will advance the project in a meaningful way in an effort to develop a Plan of Operations and Mine Plan to present to the public in a more timely fashion and we are 100% on board with this plan" he added.
The mining claims, located on Mt. Emmons near Crested Butte, Colorado and referred to as the "Lucky Jack Property", contain a significant deposit of molybdenum. The Lucky Jack Project includes a total of 25 patented and approximately 520 unpatented mining claims covering approximately 5,400 acres, or over 8 square miles, in area. The United States Department of the Interior, in a report dated April 2, 2004, estimated that the Lucky Jack deposit contains approximately 23 million tons of mineable reserves averaging 0.689% molybdenite, and that about 267 million pounds of molybdenum trioxide should be recoverable from the Project. This report covered the high-grade mineralization, which represents only a portion of the total mineral deposit delineated to date.
AMAX Inc. originally acquired the Project from USEG and Crested in a series of transactions during the 1970s and 1980s. AMAX reportedly invested in excess of our estimated $150 million in the acquisition of the Project, the securing of water rights, extensive exploration, ore body delineation, mine planning, metallurgical testing, permitting and other activities involving the Lucky Jack project.
Disclosure Regarding Mineral Resources
Under SEC and Canadian Regulations;
And Forward-Looking Statements
USE and Crested (the "Company") own or may come to own stock in companies which are traded on foreign exchanges, and may have agreements with some of these companies to acquire and/or develop the Company's mineral properties. Examples of these other companies are Sutter Gold Mining Inc., Uranium Power Corp., sxr Uranium One, and Kobex Resources Ltd. These other companies are subject to the reporting requirements of other jurisdictions.
United States residents are cautioned that some of the information available about our mineral properties, which is reported by the other companies in foreign jurisdictions, may be materially different from what the Company is permitted to disclose in the United States.
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. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revision or changes after the date of this release.
For further information on the differences between the reporting limitations of the United States, compared to reports filed in foreign jurisdictions, and also concerning forward-looking statements, please see the Company's Form 10-K ("Disclosure Regarding Forward-Looking Statements"; "Disclosure Regarding Mineral Resources under SEC and Canadian Regulation,"; and "Risk Factors"); and similar disclosures in the Company's Forms 10-Q.
Source: U.S. Energy Corp.; Crested Corp.
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