U.S. ENERGY CORP. AND SXR URANIUM ONE SIGN DEFINITIVE AGREEMENT
U.S. ENERGY AND CRESTED CORP. TO RECEIVE 6.6 MILLION URANIUM ONE SHARES AND ADDITIONAL CONSIDERATION FOR SALE OF URANIUM PROPERTIES
Riverton, WY (February 23, 2007)—U.S. Energy Corp. (NASDAQ Capital Market: “USEG”) and Crested Corp. (OTCBB: “CBAG”), natural resource exploration and development companies, today announced the signing of a definitive Asset Purchase Agreement (“APA”) for the sale of their uranium assets to sxr Uranium One Inc. (Toronto Stock Exchange and Johannesburg Stock Exchange: “SXR”), in accordance with an Exclusivity Agreement announced July 10, 2006. Uranium One shares closed at a price of $17.68 on the Toronto Stock Exchange on February 22, 2007 (equivalent to approximately $15.22 per share in U.S. Dollars).
Subject to satisfaction of customary closing conditions, approval by the Toronto Stock Exchange, regulatory approval of the transfer of the radioactive material license related to the Shootaring Canyon Uranium Mill and receipt of a favorable Exon-Florio ruling, closing is anticipated to occur on or before April 30, 2007 or as soon thereafter as reasonably possible following satisfaction of all closing conditions.
“We are very pleased to announce the signing of this definitive agreement with Uranium One,” stated Keith Larsen, Chairman and Chief Executive Officer of U.S. Energy Corp. “The sale of our uranium properties in the United States represents a milestone accomplishment for our Company and management’s shareholder value enhancement strategy.”
“We look forward to having U.S. Energy as a shareholder,” commented Neal Froneman, Chief Executive Officer of sxr Uranium One Inc. “Upon completion of the asset purchase transaction, Uranium One will be well-positioned to realize its potential as a globally diversified uranium producer with properties in South Africa, Australia, the United States and Canada.”
“Through our shareholding in Uranium One, U.S. Energy Corp. shareholders will be able to participate in the bright future that we envision for the uranium industry,” stated Mark Larsen, President and Chief Operating Officer of U.S. Energy Corp. “In addition, the cash received from the asset sale, along with an expected reduction in our post-sale operating expenses, should bolster the resources available for U.S. Energy Corp. to pursue strategic opportunities in the future.”
While additional details of the definitive APA are provided in the Form 8-K filed with the Securities and Exchange Commission on February 23, 2007 (and we urge you to read the 8-K), the primary consideration to be paid to U.S. Energy Corp., for itself and as agent for Crested Corp. and various subsidiary companies, will include the following:
* $750,000 cash (paid in advance on July 13, 2006);
* 6,607,605 sxr Uranium One common shares, at closing;
* Approximately $5 million at closing, as a payment in accordance with a revised agreement between U.S. Energy Corp., Crested Corp., and Uranium Power Corp. (“UPC”) that grants U.S. Energy Corp. and Crested Corp. the right to transfer certain UPC agreements, including the right to receive all payments thereunder ($4.1 million cash plus 1.5 million UPC common shares) to Uranium One; and
* Approximately $1.3 million to reimburse U.S. Energy Corp. and Crested Corp. for certain expenditures from July 10, 2006 to the date of the APA related to the assets being sold.
Additional consideration, if and when certain events occur, will include:
* $20 million cash when commercial production occurs at the Shootaring Canyon Uranium Mill;
* $7.5 million cash on the first delivery to the Mill following commercial production of mineralized material from any of the claims being sold to Uranium One under the APA; and
* From and after the date commercial production occurs at the Shootaring Canyon Mill, a 5% production payment royalty up to but not more than $12.5 million.
Uranium One will assume certain specific liabilities associated with the assets to be sold, including future reclamation liabilities associated with the Shootaring Canyon Mill and the Sheep Mountain uranium properties. Subject to regulatory approval of replacement bonds issued by a Uranium One subsidiary as the responsible party, U.S. Energy Corp.’s cash bonds in the approximate amount of $7.0 million will also be released and the cash returned to U.S. Energy Corp. by the regulatory authorities.
U.S. Energy Corp.’s and Crested Corp.’s joint venture holds a 4% net profits interest on Rio Tinto’s Jackpot uranium property located on Green Mountain in Wyoming. This interest is not included in the APA.
The APA also provides that U.S. Energy Corp. and Crested Corp. and Uranium One will enter into a strategic alliance agreement at closing under which, for a period of two years, Uranium One will have the first opportunity to earn into or fund uranium property interests which may in the future be owned or acquired by U.S. Energy Corp. and Crested Corp. outside the five mile area surrounding the purchased properties. Keith Larsen further stated, “We believe that our strategic alliance with sxr Uranium One will lead to further opportunities that will enhance shareholder value for both U.S. Energy Corp. and Uranium One.”
