WWS has made a similar move to U S Energy Corp.
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Friday July 31, 5:58 pm Eastern Time
Company Press Release
SOURCE: U.S. Energy Corp.
U.S. Energy Corp. and Crested Corp. Suspend Development
Operations at the Jackpot Uranium Mine
RIVERTON, Wyo., July 31 /PRNewswire/ -- U.S. Energy Corp. (Nasdaq: USEG - news) and its 52% owned
subsidiary Crested Corp. (OTC Bulletin Board: CBAG - news) doing business as the Joint Venture ''USECC,''
reported today that they have suspended the development of the Jackpot underground uranium mine on Green
Mountain, in Fremont County, WY. The Green Mountain Mining Venture (GMMV) consisting of Kennecott Uranium
Company and USECC, was formed in 1990 to develop a major uranium mining, milling and marketing business and
has spent some $21 million on the project prior to June 1997 when USECC entered into an agreement to acquire
Kennecott's interest in the GMMV. Under the terms of this acquisition agreement, Kennecott loaned $16 million to the
GMMV of which $14 million has been expended by USECC in order to complete the Mine infrastructure; run two 18' x
14' declines about 8,000 feet in length on a -17% grade to reach the uranium deposits, and upgrade the Sweetwater Mill
in preparation for production. The expenditures were made because of a substantial need for U30 to meet world market
demand, resulting in projections of the market price for uranium concentrates increasing substantially.
John L. Larsen, Chief Executive Officer of U.S. Energy Corp. and Crested Corp. said, ''In July 1998, the U.S.
Government decided to make U.S. Enrichment Corporation a private company and transferred the Government's
uranium enrichment facilities, enrichment services and contracts, and supplies of natural uranium to the new corporation
named 'USEC, Inc.' In a financing spearheaded by New York investment banking firms, USEC, Inc. raised and paid
the Government some $1.9 billion for the transfer of certain assets. USEC, Inc., is now a publicly traded company and
is the world leader in the production and sale of uranium fuel enrichment services for commercial nuclear power plants
and natural uranium. However, USEC, Inc. also will be in direct competition with domestic producers of uranium in
the United States, because the Government through the U.S. Department of Energy (DOE), transferred an additional 33
million pounds of uranium over what was provided for in the law creating the private corporation known as the 'USEC
Privatization Act of 1996.' As a result of this additional transfer, USEC, Inc. holds approximately 75 million pounds of
uranium and uranium equivalent products. USEC, Inc. has disclosed that it plans to sell this uranium inventory over the
next few years to pay down its indebtedness. This announcement came as a complete surprise to the uranium industry.
Consequently, the Uranium Producers of America including U.S. Energy Corp. and Crested Corp. have sued the DOE
in the U.S. District Court of Wyoming alleging that the additional transfers of uranium to USEC, Inc. were illegal.
Unless this matter is resolved between the parties, it may take several years to have a final decision by the Courts.''
Mr. Larsen added, ''The negative effects of the transfer to USEC, Inc. of the additional uranium, could depress the
price of uranium concentrates to the $6.00/lb. level. This has forced the Green Mountain Mining Venture to temporarily
shut down development of the Jackpot Mine. This will include a reduction of the work force of approximately 45
people, which we hope will be temporary. The development of the Jackpot Mine will cease and it will be placed on a
standby basis effective midnight, Friday, July 31, 1998.''
Mr. Larsen added, ''This was a very difficult decision. We fully understand the burden that it will have on our
employees and their families and the impact it will have on our communities, County and the State of Wyoming.'' |
