U.S. Energy received approval to proceed with Colorado Molybdenum project scoping and NEPA analysis


(Riverton, Wyo.) – U.S. Energy Corp. announced this week that it had received approval from the U.S.Forest Service to initiate scoping and analysis for the Mount Emmons Molybdenum Project in Colorado under the National Environmental Policy Act, or NEPA. (Photo of Mt. Emmons above by U.S. Energy)

“We are very pleased to have met this major Project milestone,” stated Keith Larsen, CEO of U.S. Energy Corp. “This key step will allow us to share the detailed mine plan with the local communities and to discuss the significant economic benefits associated with the Project.”

The Riverton-based energy firm also received notice that they had “met the requirements of the Reality Check provision granting conditional water rights for the Mt. Emmons Molybdenum Project by filing the Plan for the Mt. Emmons Mine with the Forest Service. No other special use permits or rights-of-way for the water facilities are required because they are addressed in the Plan.”

“We have expended a considerable amount of resources to present an environmentally sound Mining Plan of Operation (MPO) to the U.S. Forest Service and dedicated a significant amount of time focusing on reducing the Project’s environmental footprint in an effort to balance resource extraction with environmental protection,” statedMark Larsen, President of U.S. Energy Corp. “It is our paramount goal to develop the Project in an environmentally conscientious manner, while adding significant positive economic impacts to the local economy,” he added.

The MPO provides an in-depth description of the proposed construction, mining, processing, and reclamation operations for the Project.

Picture 4According to U.S. Energy, the Mount Emmons deposit is believed to be one of the highest grade primary molybdenum deposits in the world. The Project is a proposed underground mining operation located in Gunnison County west of Crested Butte, Colorado. The Company owns 25 patented mining claims consisting of approximately 365 acres of fee land and mineral rights within the Gunnison National Forest, as well as an additional 160 acres of fee land. The Company also holds approximately 1,353 unpatented mining and millsite claims associated with the Project, constituting approximately 9,395 acres or approximately 15 square miles of holdings.

“We are very appreciative of the professional efforts of the U.S. Forest Service personnel in both the Gunnison and Delta, Colorado offices in their timely review of the MPO and we look forward to advancing the Project under their continued oversight,” Keith Larson said. “We also look forward to working closely with local governments and the public as we proceed through the NEPA process.”

The MPO proposes a mine that would produce up to 12,600 tons of ore per day in an underground molybdenum mine with a 33 year operational life utilizing a vertical blast hole cut and fill method of mining. Surface milling facilities are planned to be comprised of SAG and ball mills followed by flotation circuits to separate mineral from waste rock. A paste (cement) mixing plant is also planned to be constructed on the surface to prepare backfill materials. The cut and fill method of mining is planned to allow for over half of the processed material to be placed back into the mine voids, significantly reducing the overall size of the tailings storage facility. In addition to the milling facilities, several equipment and personnel facilities are planned to be constructed near the proposed mill site which is situated in close proximity to two proposed horizontal drifts that will access the deposit. The ore crushing facility is planned to be located underground to reduce noise and material handling requirements.

The mine is projected to produce 8,500 tons of ore per day in year one of operation and ramp up to 12,600 tons per day by year four with the higher grade sections of the mine being targeted for early production. Initial development of the higher grade ore is expected to produce 22 million lbs. of molybdenum in year one and ramp up to 27 million lbs. by year three and then average 17-20 million lbs. per year thereafter. The size and overall grade of the deposit could increase with subsequent infill drilling. In addition to the mine and mill complexes, the MPO calls for three fresh water reservoirs and a state of the art lined tailings storage facility.

Mine, mill and infrastructure development is estimated to require approximately 1,000 personnel (at the peak of construction activities) for a period of three to four years. After construction, it is estimated that the Project would provide approximately 335 direct operations jobs and an additional 800 spin-off jobs. The Company indicated that it would strive to hire local construction and mine and mill personnel to the extent possible.

(click on image to enlarge)

(U.S. Energy) 

According to U.S. Energy’s web site, The Mount Emmons molybdenum property was originally discovered by AMAX Inc. (“AMAX”) in the 1970s on mineral claims held by U.S.Energy (USE) The mineral claims were subsequently sold to AMAX with reversionary rights to USE. Under these reversionary rights, AMAX’s successor Phelps Dodge Corporation conveyed the property back to USE in 2006. AMAX and its successors (Cyprus Amax and Phelps Dodge) reportedly spent in excess of $150 million on ore body delineation, engineering studies, permitting and the application and receipt of conditional water rights and patents for the project. The conditional water rights were granted in 2002 and the patents were obtained in 2004.

Historical records filed by predecessor owners of the Mount Emmons Project with the Bureau of Land Management in the 1990’s for the application of patented mineral claims, referenced identification of mineralized material of approximately 220 million tons of 0.366% molybdic disulfide (MoS2), with a high grade section of mineralized material containing approximately 23 million tons at a grade of 0.689% MoS2. The issuance of these mineral patents in 2004 by BLM was upheld by the United States Supreme Court in 2007.

As part of the NEPA review process, it is anticipated that an Environmental Impact Statement (“EIS”) will be prepared for the Project, which will be subject to public review and comment. Subsequent to the review and response to public comments, it is further anticipated that a final EIS would be prepared, after which the USFS would issue a “Record of Decision” either approving the MPO or providing recommendations for modifications to the MPO. Subsequent to the “Record of Decision,” it is anticipated that the Company would file a final MPO (incorporating any necessary modifications).

Picture 8About 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”.