Company reports on plans for remainder of 2008
U.S. Energy Corp. is determined to move ahead to develop a molybdenum mine on Mt. Emmons, just outside of Crested Butte, the company told investors this week.
Wyoming-based U.S. Energy Corp. issued a press release on May 12 updating shareholders on its energy activities. The release confirmed that Kobex Resources Ltd. had exited its option agreement to develop the Lucky Jack molybdenum project, citing uncertainty in permitting and the overall regulatory environment. U.S. Energy Corp. says Kobex invested $10 million in the project in the 12 months prior to their exit. U.S. Energy now plans on spending a $5 million budget during the rest of 2008.
The release stated, “This project has “world-class” potential, and [U.S. Energy] stands undeterred in its resolve to advance, permit and develop Lucky Jack into a premier primary molybdenum mine that the United States can be proud of.”
U.S. Energy is now seeking financial partners to bring the mine into development and the report said it was “pleased by the levels of initial interest shown by prospective joint venture partners since Kobex announced its withdrawal from the project.”
Lucky Jack Project director of community relations Perry Anderson says they have been receiving interest, which company CEO Keith Larsen and president Mark Larsen have been pursuing. “We’ve had a number of inquiries and Mark and Keith have been talking to people as potential partners,” Anderson said. “They are intent to keep at it… They’re looking for the right partner who will stick in there and see it through.”
Red Lady Coalition board president Bill Ronai said he doubts whether U.S. Energy Corp. will be able to attract a viable mine partner. “The way I see it is that the circumstances that led to Kobex’s withdrawal haven’t changed,” he says. “I am skeptical that they will be able to find a world-class partner.”
The company is now seeking to complete a pre-feasibility study, similar to the one conducted by former property owner, Amax. U.S. Energy has hired Denver-based Samuel Engineering, Inc. to complete an engineering study that should be finalized by September.
Anderson says Samuel Engineering will complete a wide- ranging plan. “It covers everything from business to mining,” he said. “We’ve been working on getting material and data ready and they’ll be putting it together.”
U.S. Energy says the study will provide pre-feasibility figures and engineered costs for key operational aspects of the project, including mining methodology, milling procedures, tailings disposal and reservoir placement.
In its press release, the company said the study will provide key components that will be used in the filing of a plan of operations with the U.S. Forest Service as early as the fourth quarter of 2008 or early in 2009. The plan of operations has been delayed several times in the past two years.
In its press release, the company also addressed faltering stock prices. “Today, a cash-rich balance sheet presents both challenges and opportunities to [U.S. Energy], and it is the responsibility of management to exercise prudence when evaluating strategic opportunities that can enhance future shareholder value,” stated Larsen. “As a publicly traded company, we believe our stock price has suffered from confusion among some investors regarding management’s strategic approach to the creation of value for our shareholders.”
In the same release, U.S Energy gave updates in its other energy ventures, noting its intentions to sell its majority holdings in a gold mine in California and the commencement of oil and gas drilling in partnership with PetroQuest Energy Inc.
The company also expressed a new strategic initiative to explore the development and production of renewable energy sources. “The Company has stressed environmental stewardship in all of its activities by adopting environmentally responsible practices and hopes to expand these practices into the renewable energy arena,” the release stated.
U.S. Energy Corp. has moved its offices in Gunnison to a new location, at 120 North Boulevard in Gunnison.