MetallurgicalTests Confirm Molybdenum Grade and Recovery Projections for Lucky Jack Project;Non Acid Generating Tailing Produced

RIVERTON, Wyoming (February 25, 2008) — U.S. Energy Corp. (“U.S. Energy”) (NASDAQ: USEG) and its partner at the Lucky Jack Molybdenum Project, Kobex Resources Ltd. (Kobex) (TSX-V: KBX), are pleased to provide the following update on the Lucky Jack Molybdenum Project:

 

A preliminary laboratory metallurgical test program has been completed at SGS-Lakefield Research on material from the Lucky Jack deposit.  The test program was conducted on historical core and reject samples from previous drill programs conducted by Cyprus Amax.  The program included locked cycle testing which produced a molybdenum concentrates assaying between 45 and 50% molybdenum at 86 to 90% molybdenum recovery from samples with a head grade of 0.30% molybdenum.  This is in line with the historical projections by Cyprus Amax.  The developed process eliminates the use of cyanide which was previously proposed and simplifies the overall reagent scheme.

 

The process also includes a step to remove pyrite by flotation following molybdenum recovery.  This processing addition removes the sulphide minerals from the main tailings flow and was undertaken to produce final tailings for surface storage having minimal environmental impact.  A tailings characterization program conducted by Golder Paste Tec is currently underway.  This program includes a study of paste backfill with the objective of maximizing the placement of tailings underground as backfill to fill the voids left by mining.  Environmental analysis of the tailings planned for surface storage produced by the locked cycle testing which incorporated the pyrite flotation step has been completed by both SGS-Lakefield Research and Golder Paste Tec.  In both of these analyses the neutralization potential ratio (NPR), which is the ratio of neutralization potential (NP) to acid-generating potential (AP) was greater than 4.5 to 1.  This is a strong indication the flotation tailings to be stored on surface will not be acid generating.  Industry accepted criteria classify a material with NPR greater than 4 as having no potential for acid generation. 

 

 

 

 

Maurice Tagami, COO of Kobex stated, “We are very pleased with the results of the metallurgical test program.  The ability to produce a high quality molybdenum concentrate with reasonable recovery at the laboratory scale is good news for the Project.  The results of the pyrite flotation as part of the process are extremely encouraging as we are committed to being able to design a mine and process plant which will have minimal environmental impact.  A non-acid-generating tailings stream is another step towards this goal.”

 

Kobex is also pleased to announce that its wholly-owned subsidiary, Kobex Colorado Corporation, compiled an excellent safety record for 2007, with over 36,000 hours worked with no safety incidents or lost time accidents.  “Our Colorado-based Project, operations staff and contractors are to be commended for their exemplary safety record in our first year of the development of the Lucky Jack Project.  Human health and safety is a top priority for our organization.” stated Leo King, President of Kobex.

 

Keith Larsen, Chairman and Chief Executive Officer of U.S. Energy, said, “We continue to make significant progress toward demonstrating the operational and environmental viability of the Lucky Jack Project.  In the decades since this deposit was discovered, technology has evolved to a point where there is now potential for an economically feasible project, with all of the benefits this will mean to the local communities and a way to virtually eliminate acid-generating tailings which, historically, has been one of the most difficult environmental problems associated with mining.  In addition, we are pleased with the safety record of Kobex.  U.S. Energy and Kobex are committed to a safe and healthy workplace.”