Mount Emmons Mine Plan of Operations Is Sufficient

RIVERTON, WY - U.S. Energy Corp. reported that the Company has received a letter from the U.S. Forest Service ("USFS") notifying the Company that the USFS has completed a review of the Mine Plan of Operations ("MPO" or "Plan") for the Mount Emmons Molybdenum Project in Colorado and that it has determined that the MPO "does contain sufficient information and clarity to form the basis for a proposed action to initiate scoping and analysis under the National Environmental Policy Act ("NEPA")." The letter also states, "U.S. Energy has 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." The MPO provides an in-depth description of the proposed construction, mining, processing, and reclamation operations for the Project.

The USFS is the agency in charge of leading the NEPA review process to consider the potential impacts of the Project and also identify relevant mitigation requirements. 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).

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, Colorado 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 in the State of Colorado, 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.

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 will strive to hire local construction and mine and mill personnel to the extent possible.