Server: Microsoft-IIS/3.0 Date: Thu, 20 Nov 1997 22:04:48 GMT Content-Type: text/html Nukem Arbitration Award
 

Press Release:
U.S. Energy Corp. and Crested Corp. Announce Decision Reaffirming the Award of the Arbitration Panel








Riverton, WY
July 8, 1996

U.S. Energy and its 52% owned subsidiary Crested Crop. (OTC Bulletin Board "CBAG") doing business as the joint venture "USECC", reported today that they received an order from the three member arbitration panel initiated by Nukem, Inc. of Stamford, CT ("Nukem") and its 100% owend subsidiary Cycle Resouce Investment Company ("CRIC) concerning the Sheep Mountain Partners ("SMP") uranium operation in sWyoming. The SMP Partnership was formed in December 1988 between USECC and Nukem?CRIC to develop and mine uranium ore from the SMP mines in Wyoming to be milled into uranium concentrates (U3O8) and market (U308) worldwide. Disputes arose between the partners and arbitration proceedings were commenced by Nukem/CRIC in June 1991. Hearing on a consensual arbitration involving the parties were commenced on June 27, 1994 and comsumed some 73 hearing days which ended May 31, 1995.

On April 18, 1996, the Panel awarded USECC a net of approximately $7,400,000 in damagesagainst Nuhem. An amount of $4,800,000 was also awarded to USECC from funds held in SMP bank accounts for a total of $12,200,000. USECC reported on April 22, 1996, that additional amounts of cash and significant sources of low price uranium may also be available to SMP as a result of the Award.
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USECC petitioned the U.S. District Court in Colorado for confirmation of the award andNukem filed two motions to set aside portions of the Award, alleging that significant portions of the Award were erroneous. Nukem was seeking to set aside potentially $16 million which the Panel had awarded USECC. On May 31, 1996, the Court remanded the Award to the Panel for consideration of these motions. On July 3, 1996, the Panel entered a new order affirming its earlier Award stating that, "There was wrongdoing on the part of Nukem when it used what were clearly partnership contracts to obtain financial benefits for itself alone ...Our Award .,. is premised upon wrongdoing by Nukem and a judgment by us that Nukem ought not to be permitted to profit from that wrongful conduct." The Panel affirmed the Order awarding SMP the rights to purchase CIS uranium, the uranium acquired pursuant to those rights and the profits therefrom which are impressed with a constructive trust in favor of SMP. The Panel further stated, "We thus conclude that there is no inconsistency and no double recovery and no subtraction that ought to be made from profits already realized .. ."

The Panel did correct a portion of the award to reimburse J137,700 to CRIC for U,O, itpurchased, out of a bank account in Riverton, WY. The Panel also confirmed a correction to have the $136,500 previously awarded to USECC paid out of the First Interstate Bank of Riverton account rather than the Norwest account in Denver, CO. USECC calleda mathematical error to the Panel's attention which was made by Nukem after the close of evidence in the amount of $265,313.83. The Panel did not consider the issue and it remains for the U.S. District Court to resolve that issue.

In addition to the Petition for Confirmation of the Award, USECC also Ned a petition forappointment of a receiver for the SMP partnership and motions to dissolve the partnership and for an order directing distribution of the escrowed proceeds in the SMP account. These matters are expected be considered by the Court in the near future.
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John L. Larsen, President of U.S. Energy Corp. said, "After 5 years since Nukem/CRIC firstfiled its action for arbitration, we now have the final order and award of the Arbitration Panel. With the price of uranium concentrates (U,O,) improving over the last six months from $12.00/lb. to $16.60/lb U,O, last week, U.S. Energy Corp. and its affiliates are looking forward to being in the production of U,O,. The money we expect to receive within the near future will be used to put the Shootaring Canyon Uranium Mill in Utah on line by late 1996 or early 1997". Mr.Larsen went on to add, "that, in his opinion, because the shares of U.S. Energy are undervalued in the market place in comparison with its asset base he would discuss with the Board of Directors the possibility of some portion of the Award being used to repurchase U.S. Energy shares ~om the open market".

   
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