US ENERGY CORP
8-K, 1997-03-18
METAL MINING
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                       SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 and 15(d) of the
                         Securities Exchange Act of 1934


Date of Report (date of earliest event reported):  March 6, 1997


                           U.S. ENERGY CORP.
- ------------------------------------------------------------------
       (Exact Name of Registrant as Specified in its Charter)


  Wyoming                   0-6814               83-0205516
- -------------------      ---------------      --------------------
(State or other           (Commission         (I.R.S. Employer
jurisdiction of            File No.)          Identification No.)
incorporation)


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)




<PAGE>

Item 5 - Other Events
- ---------------------

A.   Registrant and Crested Corp. ("USECC") - Nukem/CRIC Litigation/Arbitration

     On March 6, 1997,  Judge Lewis T.  Babcock of the U. S.  District  Court of
Colorado  entered  an  Amended  Judgment,  together  with an "Order for Entry of
Amended  Judgment  as Final,"  dated  March 3, 1997,  following  the  hearing on
USECC's  motion to correct the Court's  November 5, 1996 Order and  Judgment and
motions to enter a final  judgment  The Amended  Judgment  further  confirms the
Order  and  Award of the  panel  of  three  arbitrators  who  presided  over the
arbitration  proceedings  involving U.S. Energy Corp. (the "Registrant") and its
52%  owned  subsidiary  Crested  Corp.  d/b/a  USECC  and  Nukem,  Inc.  and its
wholly-owned  subsidiary  Cycle  Resource  Investment  Corporation  ("CRIC")  of
Stamford,  CT. In  December  1996,  Nukem and CRIC filed a notice  with the 10th
Circuit Court of Appeals ("CCA")  appealing the Court's  judgment of November 5,
1996,  which  confirmed  the Award.  However,  the 10th CCA held that  appeal in
abeyance pending the issuance of the U. S. District Court's final judgment.

     The Sheep Mountain Partners ("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 to market  U3O8
worldwide. Arbitration proceedings were initiated in June 1991 by Nukem and CRIC
concerning the SMP's uranium  operations in Wyoming after disputes arose between
the parties.  USECC filed suit in July 1991  against  Nukem and CRIC in the U.S.
District Court of Colorado to rescind the Sheep Mountain  Partnership  Agreement
based  on fraud in  inducing  USECC  into  the SMP  Partnership.  Thereafter  in
February  1994,  after  lengthy  discovery  proceedings  which  brought  out the
wrongdoings  of Nukem,  USECC agreed to arbitrate  the disputes and affirmed the
SMP Partnership agreement. Hearings on the consensual arbitration were commenced
on June 27, 1994 and consumed some 73 hearing days which ended on May 31, 1995.

     On April  18,  1996,  the  Panel  awarded  USECC a net  monetary  amount of
approximately  $7.4 million  together with interest in damages  against Nukem in
its Order and Award.  An amount of $4.8  million was also  awarded to USECC from
funds  held in SMP  trust  and  bank  accounts  for a total  of  $12.2  million.
Regarding  Nukem's  purchase  contracts with the CIS  republics,  the Award also
provided,  "Since the rights to purchase the CIS uranium were  obtained  through
the use of SMP  contracts  (partnership  assets),  those  purchase  rights,  the
uranium  acquired  pursuant  to  those  rights  and the  profits  therefrom  are
impressed with a constructive trust in favor of SMP."

<PAGE>

     USECC then petitioned the U.S.  District Court in Colorado for confirmation
of the Award.  Nukem and CRIC filed motions to modify and/or vacate  portions of
the Award,  alleging  that  significant  portions  of the Award were  erroneous.
Specifically,  Nukem was seeking to set aside  potentially $16 million which the
Panel had awarded  USECC and to rewrite  portions of the Award  dealing with CIS
uranium.  On May 31, 1996,  the U.S.  District  Court  remanded the Award to the
Panel for consideration of these motions.

     On July 3, 1996,  the Panel  entered a  supplemental  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  further  affirmed  its April 18,  1996  Award  imposing  a
constructive  trust in favor of SMP on the rights to purchase CIS  uranium,  the
uranium acquired pursuant to those rights and the profits  therefrom.  The Panel
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. . . ."

     In the March 6, 1997 Amended  Judgment,  which included  rulings on some 12
monetary  claims of the parties,  Judge Babcock ordered Nukem to pay USECC a net
of  approximately  $8.465 million as monetary  damages.  In November 1996, USECC
received  $4.367  million out of SMP escrowed funds and its bank account per the
Court's November 5, 1996 Order. Judge Babcock again confirmed the Panel's Awards
denying  Nukem's  motion to modify  and/or  vacate  portions  of the Award,  and
granted USECC's motion to modify one paragraph of the Award  deducting  $265,213
from the amounts Nukem and CRIC claimed to have advanced to purchase uranium for
the SMP Partnership.

     The  notice of appeal  filed by Nukem and CRIC to the 10th CCA in  December
1996 may apply to the March 6, 1997 Amended Judgment. A hearing may be scheduled
to  determine  the amount of bond which  Nukem/CRIC  will be required to post as
security in favor of USECC, as a condition to Nukem/CRIC  proceeding through the
appeals  process.  The purpose of the bond would be to protect and  preserve the
amount of the final judgment in favor of USECC.

     Despite the rulings of the Panel imposing a constructive  trust in favor of
SMP on the rights to purchase  CIS  uranium,  the uranium  acquired  pursuant to
those rights and the profits  therefrom,  the  defendants-appellants  Nukem/CRIC
continue to assert in both Court filings and public news releases that the Panel
did just the opposite and in fact, "denied" SMP's rights of the CIS contracts in
constructive trust. For Nukem and CRIC to appeal to the 10th CCA, they must post
a supersedeas bond to protect and preserve the final judgment in favor of USECC.
Thus, the amount of the bond is placed in question  because of the assertions of
Nukem/CRIC.  Registrant  and Crested  contacted  Nukem/CRIC for a stipulation to
request  the Court to order a limited  remand  to the  Arbitration  Panel on the
question of which CIS contracts are subject of the  constructive  trust referred
to in the  Panel's  Order and  Award.  Nukem and CRIC  would not agree to such a
stipulation  and stated  they  would  oppose  any such  application  to the U.S.
District Court.  Consequently  on March 14, 1997,  USECC filed a motion with the
U.S. District Court of Colorado requesting the Court to enter an order remanding
to the  Arbitration  Panel the issue of which specific  contracts are subject to
the constructive trust with SMP. The motion is pending.


B.   Plateau's Application to NRCfor Operational License

     Registrant's  wholly owned subsidiary Plateau Resources Limited ("Plateau")
has received  notification from the U.S. Nuclear  Regulatory  Commission ("NRC")
that it had conducted a review of Plateau's  application to amend its license on
the Shootaring Canyon Uranium Processing Facility in Utah. Plateau's application
for the  amendment  consists of renewing its NRC  license;  changing the license
from  standby to  operational;  proposing  new  environmental  and  occupational
monitoring procedures; and submitting a comprehensive demolition and reclamation
plan with  adequate  performance  surety.  The NRC  requested an increase in the
financial  surety  from the  present  cash bond of $2.549  million.  In response
thereto, Plateau increased the NRC surety to a cash bond of $6.784 million. This
will allow the NRC to maintain  its review  schedule in  completing  the amended
license by March 31,  1997.  The surety  amount  posted  should be adequate  for
bonding requirements before resuming Mill operations.


     Plateau  has  commenced  reactivation  of  the  Shootaring  Mill  for  full
start-up.  There is a  stockpile  at the Mill of some 90,000 tons of uranium ore
and  additional  ore in various  stockpiles at one of its mines three miles from
the Mill. When the ore in these stockpiles is milled, it could produce in excess
of 500,000 lbs. of uranium concentrates. Since the cost of mining the stockpiled
ore was paid by others,  production costs will be limited to milling and haulage
from the  stockpiles.  Plateau plans to commingle this ore with higher grade ore
from  another of its mines to provide  better mill feed when the Mill  commences
production.  Registrant's subsidiary Crested Corp. owns a contingent interest in
one-half of Plateau's obligations and operating cash flows.

<PAGE>

C.   USECC Option on Kennecott's Interest in the
     Green Mountain Mining Venture

     Registrant and Crested have entered into negotiations with Kennecott Energy
and Coal Company for Registrant and Crested Corp. to acquire  Kennecott  Uranium
Company's interest in the Green Mountain Mining Venture.  The Registrant expects
such discussions to continue, however, no definitive agreement has been reached.
Registrant  will file a further 8-K if an  agreement  is reached  regarding  the
acquisition of Kennecott's interest.

D.   Repurchase of Common Stock of Registrant

     Since February 25, 1997, the Registrant has purchased  13,000 shares of its
Common  Stock  in  open  market  transactions,  at a cost to the  Registrant  of
$137,337.25.   None  of  the  transactions  have  involved   affiliates  of  the
Registrant.  The Board of Directors of the Registrant  believes the Registrant's
Common Stock is trading at prices($9  3/8 to $11 1/4) bid on NASDAQ NMS over the
past month) which  justifies the use of a limited  amount of working  capital to
purchase shares and will increase the book value of the outstanding  shares. The
Registrant  may purchase  additional  shares up to $60,000  worth in open market
transactions over the 60 days after the date of this 8-K Report.




                                   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.



March 18, 1997                              By:   s/ Max T. Evans
                                                ------------------------------
                                                MAX T. EVANS, Secretary






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