Uranium One Buying Shootaring Canyon Mill

sxr Uranium One, during late February 2007, entered into a definitive agreement with U.S. Energy Corp. and its affiliate, Crested Corp., to purchase the Shootaring Canyon uranium mill in Utah, as well as nearly 39,000 acres of uranium exploration properties in the western United States. Consideration for the purchase is approximately 6.6 million Uranium One common shares plus $750,000 in cash.

The Shootaring Canyon mill was commissioned and
operatedfor four months in 1982 before being moth-
balled due to declining uranium prices
In addition, Uranium One will pay U.S. Energy $20 million upon the Shootaring Canyon mill reaching commercial production and $7.5 million on the first delivery to the mill after commercial production of mineralized material from any of the purchased properties. U.S. Energy also will receive a royalty equal to 5% of the gross proceeds from the sale of commodities produced at the mill to a maximum amount of $12.5 million.

Closing of the purchase is subject to receipt of required governmental and regulatory approvals, including approval by the Utah Division of Radiation Control of the transfer of the mill’s radioactive materials license and final acceptance by the Toronto Stock Exchange for the listing of the Uranium One common shares to be issued on closing.

The Shootaring Canyon mill is located 48 miles south of Hanksville, Utah, and is the last conventional uranium mill to be built in the United States. The mill was commissioned and operated for four months in 1982 before being mothballed due to declining uranium prices. It has been on care and maintenance since that time. The mill is an acid leach facility, with throughput capacity of 750 st/d that could be upgraded to an estimated 1,000 st/d.

The purchased uranium properties consist of eight separate claim groups in Utah, Wyoming, Arizona, and Colorado. Four of these—White Canyon, Henry Mountain, Lisbon Valley, and Sage Plains—are wholly owned by U.S. Energy. The other four—Sheep Mountain, Green River North, Burro Canyon, and the Breccia Pipes—are held by U.S. Energy in joint venture with UPC. Sheep Mountain, in Wyoming, is the most advanced of the properties. On Aug. 29, 2006, UPC announced the completion by Scott Wilson Roscoe Postle Associates of an NI 43-101-compliant inferred mineral resource estimate for Sheep Mountain of 4.56 million st, grading 0.17% U3O8 (15.6 million lb of contained metal).