UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (date of earliest event reported): May 12, 2006 (May 9,
2006)
|
U.S.
ENERGY CORP.
|
|
(Exact
Name of Company as Specified in its
Charter)
|
|
Wyoming
|
0-6814
|
83-0205516
|
|
(State
or other jurisdiction of
|
(Commission
File No.)
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
|
Identification
No.)
|
| |
|
|
|
Glen
L. Larsen Building
|
|
|
|
877
North 8th
West
Riverton,
WY
|
|
82501
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
| |
|
|
|
Registrant's
telephone number, including area code: (307)
856-9271
|
|
Not
Applicable
|
|
Former
Name, Former Address or Former Fiscal Year
(If
Changed From Last Report)
|
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2):
o
Written
communications pursuant to Rule 425 under the Securities Act
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
Item
8.01. Other Events - New Agreements for Utah Uranium
Projects.
U.S.
Energy Corp. (“USEG”), Crested Corp. (“Crested”), and Uranium Power Corp.
(“UPC”) have added two new projects to their uranium portfolios - the Green
River North and the Green River South projects, located in Emery County,
Utah.
USEG and Crested, and UPC, will hold equal interests in the projects.
Agreements.
The Green River South project consists of 428 lode mining claims and five
State
of Utah mineral leases.
-
UPC’s
Agreement with Uranium Group.
The
Green River South project, previously known as the Sahara Property, was optioned
by UPC from the Uranium Group (“UG”) pursuant to an Amended and Restated Option
and Joint Venture Agreement. Under this agreement, UPC has an option to earn
a
70% interest (the “Initial Option”) by making payments to UG of $585,000 and
200,000 shares of UPC stock, and paying $1,365,000 for exploration and
development activities, all over the four years ending December 31, 2009.
Until
the Initial Option is exercised, UPC will be solely responsible for paying
property maintenance costs. At any time after UPC has paid the full price
for
the Initial Option (whether with the last installment on December 31, 2009,
or
earlier), UPC can earn a further 15% interest (the “Additional Option”) by
paying UG an additional $300,000, issuing to UG 400,000 more UPC shares,
and
spending an additional $700,000 (over the year following exercise of the
Additional Option) on exploration and development work.
If
the
long term price of uranium oxide is below $20.00 per pound for four consecutive
weeks in any calendar year, the payments for that year will be reduced by
50%
and the balance deferred to the next year. If the uranium oxide price continues
below $20.00, (or recovers but then falls below $20.00 in one or more subsequent
years) the balance will be deferred to the next year or years after
2010.
After
exercise of the Initial Option (and the Additional Option, if exercised),
UG,
and UPC, will fund programs and budgets in proportion to their interests
in the
property. A party’s interest will be reduced in proportion to its non-funding of
costs. If a party’s interest is reduced to 10% or less, its interest will be
converted to either a 10% net profits interest or a 2% gross income royalty.
At
such
time as the Initial Option is exercised, UPC is required to make available
to UG
a three year $1 million revolving loan (8% simple interest on outstanding
balance) for purposes of UG funding its obligations on the project.
UPC
(or
its designee) is the manager of the project, and will be entitled to
compensation (for reasonable management costs, not for profit) of not more
than
10% of direct costs associated with exploration activities, plus not more
than
2% of direct costs associated with contract work related to development and
mining and the purchase of capital equipment. These percentages are subject
to
adjustment by the parties.
-
USEG/Crested’s
Agreement with UPC.
UPC,
and USEG /Crested have signed an agreement for USEG/Crested to earn one-half
of
UPC’s rights under the Initial Option, and the Additional Option, in the Green
River South project: For the Initial Option, UPC will provide the first
$500,000, and USEG/Crested will provide the second $500,000; and UPC and
USEG/Crested thereafter equally will fund the remaining $950,000 of exploration
and development work. The cash payment, and the exploration and development
commitment, for the Additional Option, will be equally funded by UPC, and
USEG/Crested. For the UPC stock component on both the Initial Option and
the
Additional Option, USEG (acting on behalf of itself and Crested) will pay
UPC
(in cash, UPC stock, or USEG stock) 50% of the lesser of (i) UPC’s stock price
at the time the stock is issued by UPC , and (ii) Cdn$1.00 per
share.
UPC,
UG,
and USEG/Crested, will enter into a joint venture agreement for the Green
River
South project, with terms consistent with UPC’s agreement with UG. UPC’s
ownership of its interest in this project is not subject to performance of
its
obligations under the 2004 Purchase and Sale Agreement (see below).
Green
River South Project.
Included in this property is the Sahara Mine, which has an historic estimate
of
approximately 500,000 pounds of uranium oxide (U3O8)
with an
average grade of 0.23% U3O8
per ton
of mineralized material. The Sahara Mine was in minimal production before
it was
shut down. The material and grade estimate was reported by the previous operator
of the property, Energy Fuels Inc. Approximately 450 holes were drilled on
the
deposit, delineating the first 1,800 feet of the trend. All the logs for
this
drilling are in the possession of UG.
Regional
historic exploration drilling on the Green River South property indicates
that a
substantial number of targets have already been developed and are available
for
follow-up drilling, and that the potential for additional discoveries is
significant.
The
Sahara Mine is approximately 90 miles by paved road from U.S. Energy’s
Shootaring Canyon uranium mill.
Green
River North Project.
The
Green River North project consists of 10 lode mining claims owned by U.S.
Energy
Corp. These claims cover the Deeper Gold deposit with an historic estimate
of
approximately 650,000 pounds U3O8
with an
average grade of 0.23% U3O8
per
ton
of mineralized material. This estimate was originally developed by U.S. Energy
Corp. in December 1985. U.S. Energy Corp. is in possession of logs for
approximately 1,300 drill holes covering the Deeper Gold deposit and surrounding
areas.
The
Deeper Gold deposit is approximately 110 miles by paved road from U.S. Energy’s
Shootaring Canyon uranium mill.
The
foregoing summary of certain terms of UPC’s Agreement with Uranium Group LLC,
and USEG/Crested’s Agreement with UPC, is qualified by reference to the complete
agreements filed as exhibits to this Report.
UPC
will
own a 50% interest in the Green River North project through its participation
in
the Mining Venture Agreement with USE, consistent with UPC’s 50% participation
in the other uranium properties held by that joint venture.
The
parties plan to immediately commence the digitization of historic drill logs
for
the Green River South’s Sahara deposit,, and the Green River North’s Deeper Gold
deposit. This likely will be followed by drilling to confirm the historic
data,
to test disequilibrium, and to follow up on mineralized
intersections.
Section
9 - Financial Statements and Exhibits.
Item
9.01 Financial Statements and Exhibits.
| 10.1 |
Agreement
(between UPC and the USE Parties, for the Green River North and Green
River South Projects).
|
| 10.2 |
Amended
and Restated Option and Joint Venture Agreement - Sahara Mine Property,
Emery County, Utah (between UPC and Uranium Group LLC).
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
U.S.
ENERGY CORP.
|
| |
|
|
| |
|
|
| |
|
|
|
Dated:
May 12, 2006
|
By:
|
/s/Keith
G. Larsen
|
| |
|
CEO,
U.S. Energy Corp.
|