U.S. Energy Corp. a natural resources exploration and development company with interests in molybdenum, uranium, oil and gas, gold, and real estate, today announced that it has entered into a definitive Exploration, Development and Mine Operating Agreement for its Lucky Jack molybdenum property, located in Gunnison County, Colorado, with Thompson Creek Metals Company Inc., one of the world’s largest publicly traded, pure molybdenum producers. Under the terms of the agreement, which are valued at up to $400 million, Thompson Creek has the right to earn up to a 75% interest in the project.

“Securing a partnership with a global leader like Thompson Creek provides significant validation of both the Lucky Jack project and our strategy to realize value from this asset over the long-term,” said Mark Larsen, President of U.S. Energy Corp. “Thompson Creek brings an outstanding environmental record, substantial expertise, financial resources and a singular focus on the development and operation of molybdenum projects to the table. With an office in Denver, CO, operating mines in the U.S. and Canada, and substantial roasting capacity, we believe that Thompson Creek is the ideal partner for the advancement of the project,” he added.

Terms of the Agreement

Thompson Creek has the option to earn up to a 75% interest in the Lucky Jack molybdenum property. TCM has paid USE $500,000 as an option payment. If TCM pays USE additional option payments (not refundable) of $1 million on January 1 of each year from 2009 through 2014 and also pays a minimum of $8.5 million (for a total of $15 million) in expenditures on or related to the property in stages by June 30, 2011, TCM will earn a 15% interest in the property.
TCM can earn a further 35% by expending an additional $35 million (for a total of $50 million) by July 31, 2018 for a total of 50%. At that time, TCM may elect to be a joint venture partner in the project.

TCM can obtain an additional 25% interest in the project (for a total of 75%) by making added expenditures of $350 million (for at total of $400 million). Through the option period, TCM will manage the property with USE. At such time as the property goes into production, TCM will purchase USE’s portion of output from the mine.

source news : GlobeNewswire

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