The Mount Emmons Project is a proposed mining operation located in Gunnison County west of Crested Butte, Colorado. This "world class" deposit is believed to be one of the largest and purest molybdenum deposits in the world.

Option Agreement
On August 19, 2008 U.S. Energy Corp. ("USE") entered into a definitive Exploration, Development and Mine Operating Agreement for its Mount Emmons molybdenum property, located in Gunnison County, Colorado, with Thompson Creek Metals Company Inc. (TSX:TCM) (NYSE:TC), 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.

Terms of the Agreement
Thompson Creek has the option to earn up to a 75% interest in the Mount Emmons 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 has the right to 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 be the project manager. At such time as the property goes into production, TCM will purchase USE's portion of output from the mine.

About The Mount Emmons Project
The Mount Emmons molybdenum property was originally discovered by AMAX Inc. ("AMAX") in the 1970s on mineral claims held by USE. The mineral claims were subsequently sold to AMAX with reversionary rights to USE. Under these reversionary rights, AMAX's successor Phelps Dodge Corporation conveyed the property back to USE in 2006.  AMAX and its successors (Cyprus Amax and Phelps Dodge) reportedly spent in excess of $150 million on ore body delineation, engineering studies, permitting and the application and receipt of conditional water rights and patents for the project. The conditional water rights were granted in 2002 and the patents were obtained in 2004.

Historical records filed by predecessor owners of the Mount Emmons Project with the Bureau of Land Management in the 1990’s for the application of patented mineral claims, referenced identification of mineralized material of approximately 220 million tons of 0.366% molybdic disulfide (MoS2), with a high grade section of mineralized material containing approximately 23 million tons at a grade of 0.689% MoS2.  The issuance of these mineral patents in 2004 by BLM was upheld by the United States Supreme Court in 2007.

The project is currently in the pre-feasibility and early permitting stage.