U.S. Energy Corp. Considering Federal Land Exchange for Mt. Emmons Property
May 14 2012 - 08:30AM
U.S. Energy Corp. (Nasdaq:USEG) ("U.S. Energy" or the "Company"),
announced today that it is in the process of developing a world
class molybdenum deposit in Gunnison County, Colorado, known as the
Mt. Emmons Project. As a result of several meetings held with
interested local parties and numerous public officials over the
course of the last eleven months, U.S. Energy has also determined
that it will consider a land exchange or similar process that would
allow the conveyance of the patented and unpatented mining claims
associated with the Mt. Emmons Project to the United States in
return for real property or other consideration. The potential
land exchange will proceed in parallel with U.S. Energy's ongoing
effort to secure permits for the development of its Mt. Emmons
molybdenum mine.
U.S. Energy owns 25 patented mining claims representing
approximately 365 acres of fee land and mineral rights within the
Gunnison National Forest in the State of Colorado, as well as an
additional 160 acres of fee land. U.S. Energy also holds
approximately 1,353 unpatented mining and millsite claims
associated with the Mt. Emmons Project, constituting approximately
9,395 acres. U.S. Energy's patented claims, related fee land,
and unpatented claims would be subject to the
exchange. Because these lands are entirely within the Gunnison
National Forest, it is likely that the U.S. Energy lands would
become subject to the jurisdiction of the United States Forest
Service.
In June 2011, U.S. Energy met with the Town of Crested Butte and
other interested parties to determine whether there were
alternatives to full mine development. High Country Citizens
Alliance and Red Lady Coalition, opponents of mine development,
also participated in the process. After a series of
conversations, U.S. Energy agreed to explore the possibility of a
land exchange. U.S. Energy currently operates a water
treatment plant that treats legacy water discharge from a prior
mine on the Mt. Emmons property. The parties are exploring a
process to allow a third party entity to take over operation of the
water treatment plant. Assumption of the water treatment plant
by a third party is a fundamental pre-condition to consummating a
land exchange.
Conversations with the Town of Crested Butte, other state and
federal governmental officials, and local public interest
organizations are ongoing and U.S. Energy has found substantial
support for the proposed exchange. Still, the potential
exchange remains subject to legislative action, as well as a
federal appraisal. U.S. Energy intends to work closely with
Senators Michael Bennet (D-CO) and Mark Udall (D-CO) towards
resolving this issue through consensus-based legislation.
The Board of U.S. Energy has put several conditions on any
consideration of an exchange as follows:
(i) that the Company pursue the exchange contemporaneously with
permitting efforts for full mine development;
(ii) that the land exchange be substantially completed by year
end 2012;
(iii) that a third party entity take over the operation of the
water treatment plant located at the Mt. Emmons property; and
(iv) that the Company receives significant value for its
shareholders as part of the exchange.
During the course of 2011, U.S. Energy conducted extensive due
diligence concerning the potential land exchange. As part of
that process, U.S. Energy engaged well respected experts in the
land exchange process as consultants. U.S. Energy has also had
a series of meetings in Washington, D.C. to discuss legislative
approaches to the land exchange. In addition, U.S. Energy
engaged a federally certified appraiser to provide the company with
a preliminary assessment of the value of the Mt. Emmons properties
using federal appraisal standards. The preliminary evaluation
came in at a range of $50 to $100 million in value today utilizing
various valuation approaches, similar to a commercial
appraisal. Final valuation of the Mt. Emmons properties would
be based on a federal appraisal which would be completed at some
time in the future, based on legislative action.
In 2011, Governor Matt Mead and the Wyoming Legislature
authorized conveyance of state parcels within Grand Teton National
Park to the Department of Interior at an agreed upon price. It
is possible that U.S. Energy and the State of Wyoming could work
together to exchange the Mt. Emmons and Teton lands to the United
States. This exchange could also result in compensation to the
State of Wyoming for its parcels inside Grand Teton National
Park.
"We have dedicated considerable time over the last year
investigating a land exchange as a possible method for us to create
shareholder value for the Mt. Emmons Project in the nearer term,"
said Keith Larsen, CEO of U.S. Energy Corp. "Thus far we have
been very pleased with the efforts of several parties that have
played a key role in bringing us to this decision point which Mark
Larsen, our President and COO has spearheaded on behalf of U.S.
Energy Corp.," he added.
"We will continue to work on the plan of operations for the Mt.
Emmons Mine, which we plan to submit in the first quarter of
2013. This dual path approach provides us with time to
continue to gauge the likelihood of a federal land exchange, while
preserving our rights to advance the project towards the permitting
process and the resumption of our project marketing efforts at the
beginning of 2013," stated Mark Larsen. "At the same time, it
is encouraging to see parties with opposing views come together to
develop creative and mutually beneficial solutions. U.S.
Energy appreciates the efforts of all the stakeholders in this
project to respect and accept different perspectives, and find
common ground," he added.
About U.S. Energy Corp.
U.S. Energy Corp. is a natural resource exploration and
development company with a primary focus on the exploration and
development of oil and natural gas. The Company also owns the
Mount Emmons molybdenum deposit located in west central
Colorado. The Company is headquartered in Riverton, Wyoming
and trades on the NASDAQ Capital Market under the symbol
"USEG".
The U.S. Energy Corp. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5043
Disclosure Regarding Forward-Looking
Statement
Statements made in this news release other than statements of
historical fact are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements
include those relating to U.S. Energy's pursuit of a potential land
exchange transaction, the terms of such a transaction, including
the consideration to be received by U.S. Energy, and future
valuations of the Mt. Emmons properties. These statements are based
on assumptions and estimates that management believes are
reasonable based on currently available information; however,
management's assumptions are subject to a wide range of business
risks and uncertainties and there is no assurance that these
assumptions and expectations will be realized. In particular,
there can be no assurance that U.S. Energy will complete a land
exchange transaction, or of the terms and timing of any such
transaction that is completed. The value of the consideration
received by U.S. Energy in any such transaction may be greater or
less than the appraised value of the properties it conveys, and
such value may be subject to a variety of business risks and
uncertainties. Further information regarding risks and
uncertainties that may affect the company's operations and the
forward-looking statements made herein is available in the
company's filings with the Securities and Exchange Commission,
which are incorporated by this reference as though fully set forth
herein.
CONTACT: Reggie Larsen
Director of Investor Relations
U.S. Energy Corp.
1-800-776-9271
1-307-851-4043
Reggie@usnrg.com
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