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U.S. Energy Corp. And Uranium Power Corp. Announce Phase 1 Drill Program on the Arizona Breccia Pipes Project to Commence November 1, 2005

Posted on: Tuesday, 25 October 2005, 12:00 CDT

RIVERTON, Wyo., Oct. 25 /PRNewswire-FirstCall/ -- U.S. Energy Corp. and Uranium Power Corp. (TSX-V: UPC) are pleased to announce that all necessary permitting clearances have been received to allow commencement of the planned 40 - hole drill program as scheduled on November 1, 2005. The Breccia Pipes project is a 50:50 joint venture between USE and Crested Corp. (doing business as the USECC Joint Venture), and UPC, and is located in Mohave County, AZ.

The Arizona Strip was the site of major uranium production in the early 1980's. Uranium-bearing breccia pipes were first located in the Hack Canyon area of Mohave County. The mineralization was of a much higher grade than other uranium deposits located in surrounding areas of the Colorado Plateau. This mineralization has been mined at a relatively low cost per pound by conventional underground methods. Historic mining in the Arizona Strip had produced average uranium contents of up to 0.80% U3O8. The total production from individual mines has ranged from about 800,000 lbs to 4,400,000 lbs U3O8.

This drilling program will concentrate on targets within the STAR claims, which are adjacent to the Arizona I mine. The mine was developed in preparation for mining in the 1980's, but no production ever took place. The area is located a short distance south of the Hack Canyon mining area. Mapping on the STAR claims indicates the presence of 23 potential pipes.

The objective of this drilling program is to verify the presence of deeper structural collapse features inferred by surface mapping. The program will consist of up to 40 drill holes, planned to test the stratigraphy surrounding these identified target areas. If successful, a second phase of drilling is planned, consisting of deep tests of the most favorable targets identified by the first phase of drilling.

If any of the targets are developed to a mining stage then the Shootaring Canyon Mill, owned by USEG (and in which Crested has an interest), would be the likely location for processing.

To assist in the operation of this and other projects, the USECC Joint Venture, the project operator, has hired Jim Rasmussen as Chief Geologist. Jim has a long and successful history of working in the Arizona Strip, including over 12 years as District Geologist and other senior exploration department positions with Energy Fuels Nuclear. He has been directly involved in the discovery of several breccia pipe producers. Jim will bring the strong technical background necessary to ensure the success of the project.

ABOUT U.S. ENERGY CORP. AND CRESTED CORP.

U.S. Energy Corp. and its majority-owned subsidiary, Crested Corp., are engaged in a joint venture to conduct various business operations as USECC. Through their subsidiaries, Sutter Gold Mining Inc., Plateau Resources Limited, U.S. Moly Corp, U.S. Uranium Ltd. and USECC, they own various interests or properties prospective for gold, uranium, vanadium and molybdenum.

This news release includes statements which may constitute "forward- looking" statements, usually containing the words "believe,""estimate,""project,""expect," or similar expressions. These statements are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, future trends in mineral prices, the availability of capital, competitive factors, and other risks.

The profitable mining and processing of uranium and vanadium will depend on many factors: Obtaining properties in proximity to the Shootaring mill to keep transportation costs economic; delineation through extensive drilling and sampling of sufficient volumes of mineralized material, with sufficient grades, to make mining and processing economic over time; continued sustained high prices for uranium oxide and vanadium; obtaining the capital required to upgrade the Shootaring mill and add a vanadium circuit; and obtaining and continued compliance with operating permits.

The profitable mining and processing of gold will depend on many factors, including receipt of final permits and keeping in compliance with permit conditions; delineation through extensive drilling and sampling of sufficient volumes of mineralized material, with sufficient grades, to make mining and processing economic over time; continued sustained high prices for gold; and obtaining the capital required to initiate and sustain mining operations and build and operate a gold processing mill.

We have not yet obtained feasibility studies on any of our mineral properties. These studies would establish the economic viability, or not, of the different properties based on extensive drilling and sampling, the design and costs to build and operate gold and uranium/vanadium mills, the cost of capital, and other factors. Feasibility studies can take many months to complete. We have not established any reserves (economic deposits of mineralized materials) on any of our uranium/vanadium or gold properties, and future studies may indicate that some or all of the properties will not be economic to put into production. The molybdenum property is currently owned by Phelps Dodge Corporation who plan to return the properties to USECC in 2005. The properties have had extensive work conducted by prior owners to establish the deposits of molybdenum, mine planning and other ancillary activities. This data will have to be updated to determine the viability of starting mining operations. Obtaining mining and other permits to begin mining the molybdenum property may be very difficult, and, like any mining operation, capital requirements for a molybdenum mining operation will be substantial.

By making these forward-looking statements, the Companies undertake no obligation to update these statements for revision or changes after the date of this release.

U.S. Energy Corp.

CONTACT: Keith G. Larsen, CEO, or Mark Larsen, President, both of U.S.Energy Corp., both at +1-307-856-9271

Source: PRNewswire-FirstCall

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