U.S. Energy implements big shake-up to company

Local stakeholders and new CEO would all love a “final” solution to mine question

by Mark Reaman

The company with mining rights to the molybdenum in Mt. Emmons and responsibility to operate the water treatment plant on Coal Creek has gone through a major corporate shake-up.

Larsen family members who founded and have run U.S. Energy Corp. for 49 years have stepped down from top management positions and the company headquarters will be moving from Riverton, Wyo. to Denver.

Both the board of directors and company workforce will be streamlined and the changes will be implemented before the end of the year.

Local stakeholder groups feel this could present another opportunity to resume serious discussions with the company to perhaps reach a final solution over the mining quandary on Mt. Emmons, also known as Red Lady. New U.S. Energy chief executive officer David Veltri said he too would like to see a final solution to the mining question on Mt. Emmons and the company will continue to pursue a variety of options toward that end.

“There have been some major changes within the company and it will mean a lot more work from my end,” Veltri said Tuesday afternoon. “Our view as a company in regard to the Mt. Emmons project hasn’t changed. We want to first continue running the water treatment plant and the operation there at the same quality standard it has been. We are trying to get into a financial position to handle it comfortably. It sounds like it has probably gotten more complicated with the Gold King mine situation but we are looking for a finality to the mine question.”

Veltri said U.S. Energy is “constantly negotiating with potential partners” but no agreement has been reached on a future mining project. “We want a final solution to the mine whatever that final solution could be,” he said. “Whether it is a mine, plugging it, development, whatever. We will continue to look at all options but there is nothing final at the moment.”

The company announced several major changes on Wednesday, September 23.

According to a press release from the company:

“During a recent meeting, the Company’s Board of Directors has approved the following initiatives to be implemented prior to the end of the year:

“—Relocation of the Company’s corporate headquarters to Denver, Colorado.

“—Reduction of current staff from eleven to four employees.

“—Reduction of the current number of directors from seven to five.

“Subsequent to the board meeting the following additional actions have taken place:

“—The Board of Directors appointed Mr. David Veltri, President & Chief Operating Officer to the additional position of Chief Executive Officer. Mr. Veltri will implement and oversee the Company’s transition to Denver.

“—The Board accepted the resignation of Mr. Keith G. Larsen, Chief Executive Officer and Chairman of the Board, effective September 25, 2015.

“—The Board accepted resignations from Mr. Steven Richmond, Chief Financial Officer, and Mr. Bryon Mowry, Principal Accounting Officer and Corporate Secretary, effective year end 2015 or earlier contingent upon transition timelines.”

Veltri’s past experience appears focused on oil and gas operations. He was appointed president and chief operating officer of U.S. Energy last January.

Red Lady Coalition president Bill Ronai said the corporate shake-up could present a new chance to re-open talks with the company. “These changes must have been a tough decision for both the Larsen family and the board of directors. I trust that under the new leadership, fresh eyes will be taking a look at the Mt. Emmons situation,” he said. “There’s the liability for the water treatment plant versus the mining rights, particularly in light of the outlook for moly. I would hope that all interested parties can come together and find a realistic solution that protects our water and amenity-based economy while preserving some value for U.S. Energy shareholders.”

High Country Conservation Advocates public lands director Alli Melton said no matter who is sitting in the company’s executive seat, the community needs some assurance that the town and the watershed will be protected.

“A lot of the concerns voiced over the summer remain true,” Melton said. “We need some sort of financial surety or bond to make sure the water treatment plant continues to operate to ensure our community is protected regardless of the financial status and ownership of U.S. Energy. What these recent changes mean for the company’s bottom line is something we will have to wait and see about once the company makes its quarterly financial report. HCCA remains concerned about the continued operation of the water treatment plant and our community shouldn’t be put at risk as a result of their tenuous financial situation.”

Attorneys from the town of Crested Butte and Gunnison County met with the Colorado Water Quality Control Division and Colorado Division of Reclamation Mining and Safety on Tuesday. Town attorney John Belkin said the meeting was very productive. “They are keenly aware of the changes at U.S. Energy and are looking at all options in regards to ensuring that the water treatment plant continues to run as it has,” he said. “We are pleased with the meeting and we look forward to working closely with the State in both the short and long term to ensure that the community’s water is protected.”

Veltri emphasized the company will be pursuing the same goals it always has in terms of the molybdenum mine project. While the company has certainly pivoted toward more oil and gas development, Veltri is a mining engineer, so not unfamiliar with hard-rock mining. The Mt. Emmons project is the company’s only physical mining property on the U.S. Energy books.

Veltri stated in the company announcement, “While difficult, we believe that in light of the current commodity price, that these reductions in staff and cost cutting measures are a necessary step in order to continue to assure the viability of the Company during these times. We intend for the move to enhance the Company’s opportunity to grow the Company and enhance shareholder value through attracting qualified technical personnel and to increase our networking within our industry, with an emphasis on deal flow and banking opportunities.”

Former CEO Keith Larsen said, “Riverton has been home for the Company and its employees since its inception. I, along with Steve and Bryon have chosen to remain in the community where we and our families have deep roots. I would like to thank our community for its support over the years, as we’ve had a good run. I am optimistic for the opportunities that the move will bring and I look forward to rooting for the team as they enter into a new era of U.S. Energy Corp.”

It costs U.S. Energy about $1.8 million per year to operate the water treatment plant. Its oil and gas operations have declined with lower energy prices and put a squeeze on the company. Its stock price is now at under 50 cents per share. Veltri has no current plans to visit Crested Butte but the company headquarters will be relocated to Denver before the end of the year.

Despite some information on recent financial blogs that says U.S. Energy has an approved plan of operations for the mine, Forest Service Spokesperson Lee Ann Loupe said that is not the case. “The Forest Service does not have any approved Plans of Operations from U.S. Energy for mine development,” she said. ”We have a proposal for geotechnical testing and monitoring wells proposed by U.S. Energy that will have to go through environmental analysis (NEPA). The Forest hopes to begin “scoping” for this project proposal sometime this fall.”