----

**E**
**XPLORATION,      DEVELOPMENT AND**

**MINE      OPERATING AGREEMENT**

**Between**

**U.S.      MOLY CORP., **

**U.S.      ENERGY CORP.,**

**CRESTED      CORP.**

**And**

**KOBEX      RESOURCES LTD.**

----

|                             | **TABLE                  OF CONTENT**                                               |     |
|----------------------------------|-------------------------------------------------------------------------------------|----------|
|                             |                                                                                | **Page** |
| **PART                  I**      | **THE                  TRANSACTION**                                                | **1**    |
| **ARTICLE                  I**   | **DEFINITIONS                  AND CROSS-REFERENCES**                               | **1**    |
| 1.1                              | Definitions                                                                         | 1        |
| 1.2                              | Cross                  References                                                   | 2        |
| **ARTICLE                  II**  | **NAME,                  PURPOSES AND TERM**                                        | **2**    |
| 2.1                              | General                                                                             | 2        |
| 2.2                              | Option                  Period and Joint Venture Period                             | 2        |
| 2.3                              | Purposes                                                                            | 2        |
| 2.4                              | Limitation                                                                          | 2        |
| **ARTICLE                  III** | **REPRESENTATIONS                  AND WARRANTIES; TITLE TO ASSETS**                | **2**    |
| 3.1                              | Representations                  and Warranties of all Parties                      | 2        |
| 3.2                              | Representations                  and Warranties of the U.S. Energy Group            | 3        |
| 3.3                              | Certificates                  of U.S. Energy and Crested                            | 5        |
| 3.4                              | Knowledge                  of Parties                                               | 5        |
| 3.5                              | Disclosures                                                                         | 6        |
| 3.6                              | Loss                  of Title                                                      | 6        |
| 3.7                              | Royalties,                  Production Taxes and Other Payments Based on Production | 6        |
| 3.8                              | Agreement                  Subject to TSX Venture Exchange Approval                 | 6        |
| **ARTICLE                  IV**  | **RELATIONSHIP                  OF THE PARTICIPANTS**                               | **6**    |
| 4.1                              | No                  Partnership or Fiduciary Relationship                           | 6        |
| 4.2                              | Tax                  Matters                                                        | 7        |
| 4.3                              | Other                  Business Opportunities                                       | 7        |
| 4.4                              | Waiver                  of Rights to Partition or Other Division of Assets          | 7        |
| 4.5                              | Implied                  Covenants                                                  | 7        |
| 4.6                              | No                  Third Party Beneficiary Rights                                  | 7        |
| 4.7                              | Relationship                  of U.S. Energy and Crested                            | 7        |
| **PART                  II**     | **THE                  OPTION PERIOD**                                              | **7**    |
| **ARTICLE                  V**   | **INITIAL                  EXPENDITURE**                                            | **7**    |
| 5.1                              | Initial                  Expenditure                                                | 7        |
| **ARTICLE                  VI**  | **THE                  OPTION**                                                     | **8**    |
| 6.1                              | Option                                                                              | 8        |
| 6.2                              | Option                  Stages                                                      | 9        |
| 6.3                              | Cash                  in Lieu and Accelerated Payments                              | 10       |
| 6.4                              | Failure                  to Make Option Payments and Termination                    | 10       |
| 6.5                              | Wind-Up                  upon Termination During the Option Period                  | 10       |
| 6.6                              | Discretion                  of Kobex for Manner of Payment                          | 11       |
| 6.7                              | Bankable                  Feasibility Study Payment                                 | 11       |

**                      **

----

|                              | **TABLE                  OF CONTENT**                                                  |     |
|-----------------------------------|----------------------------------------------------------------------------------------|----------|
|                              | (continued)                                                                            | **Page** |
| 6.8                               | Exercise                  of Option                                                    | 11       |
| 6.9                               | The                  USE/CC Election                                                   | 12       |
| 6.10                              | Termination                  on Acquisition Election                                   | 14       |
| 6.11                              | Covenants                  of USE/CC                                                   | 14       |
| 6.12                              | Title                  to Property on Acquisition Election                             | 14       |
| 6.13                              | Royalty                                                                                | 14       |
| **ARTICLE                  VII**  | **RIGHTS                  AND OBLIGATIONS DURING THE OPTION PERIOD**                   | **14**   |
| 7.1                               | Manager                  During Option Period                                          | 14       |
| 7.2                               | Technical                  Committee                                                   | 15       |
| 7.3                               | Management                  Committee                                                  | 15       |
| 7.4                               | Water                  Treatment Facility                                              | 15       |
| 7.5                               | Reports                  During Option Period                                          | 16       |
| 7.6                               | Title                  to Property                                                     | 16       |
| 7.7                               | Permit                  Obligations of Kobex During Option Period                      | 16       |
| 7.8                               | Access                  to Property During Option Period                               | 16       |
| 7.9                               | Maintenance                  of Property During Option Period                          | 16       |
| 7.10                              | Management                  of Existing Underground Mine Conditions During Exploration | 16       |
| 7.11                              | Indemnification                  of Manager During Option Period                       | 17       |
| 7.12                              | Programs                  and Budgets                                                  | 17       |
| 7.13                              | Presentation                  of Programs and Budgets                                  | 17       |
| 7.14                              | Review                  and Adoption of Proposed Programs and Budgets                  | 17       |
| 7.15                              | Budget                  Overruns; Program Changes                                      | 18       |
| 7.16                              | Assignment                  During Option Period                                       | 18       |
| 7.17                              | Other                  Provisions                                                      | 18       |
| **PART                  III**     | **THE                  JOINT VENTURE PERIOD**                                          | **18**   |
| **ARTICLE                  VIII** | **JOINT                  VENTURE**                                                     | **18**   |
| 8.1                               | Purpose                                                                                | 18       |
| 8.2                               | Manager                                                                                | 18       |
| 8.3                               | Initial                  Participating Interests and Contributions                     | 19       |
| 8.4                               | Changes                  in Participating Interests                                    | 19       |
| 8.5                               | Deemed                  Expenditures                                                   | 19       |
| 8.6                               | Conversion                  of Minority Interest.                                      | 20       |
| 8.7                               | Continuing                  Liabilities Upon Adjustments of Participating Interests    | 20       |
| 8.8                               | Documentation                  of Adjustments to Participating Interests               | 21       |
| 8.9                               | Grant                  of Lien and Security Interest                                   | 21       |
| 8.10                              | Subordination                  of Interests                                            | 22       |
| 8.11                              | Indemnity                                                                              | 22       |
| 8.12                              | Holding                  of Property                                                   | 22       |
| 8.13                              | Holding                  of Joint Venture Property                                     | 22       |
| 8.14                              | Management                  Committee                                                  | 22       |

----

|                                  | TABLE                      OF CONTENTS                                                                                  |     |
|---------------------------------------|-------------------------------------------------------------------------------------------------------------------------|----------|
|                                  | (continued)                                                                                                             | **Page** |
| 8.15                                  | Facility                                                                                                                | 23       |
| **ARTICLE                      IX**   | **PROGRAMS                      AND BUDGETS**                                                                           | **23**   |
| 9.1                                   | Operations                      Pursuant to Programs and Budgets                                                        | 23       |
| 9.2                                   | Presentation                      of Programs and Budgets                                                               | 23       |
| 9.3                                   | Review                      and Adoption of Proposed Programs and Budgets                                               | 23       |
| 9.4                                   | Election                      to Participate                                                                            | 24       |
| 9.5                                   | Recalculation                      or Restoration of Reduced Interest Based on Actual                      Expenditures | 25       |
| 9.6                                   | Budget                      Overruns; Program Changes                                                                   | 26       |
| 9.7                                   | Emergency                      or Unexpected Expenditures                                                               | 26       |
| 9.8                                   | Development                      Programs and Budgets; Project Financing                                                | 26       |
| 9.9                                   | Expansion                      or Modification Programs and Budgets                                                     | 27       |
| **ARTICLE                      X**    | **ACCOUNTS                      AND SETTLEMENTS**                                                                       | **27**   |
| 10.1                                  | Monthly                      Statements and Applications of this ARTICLE                                                | 27       |
| 10.2                                  | Cash                      Calls                                                                                         | 27       |
| 10.3                                  | Failure                      to Meet Cash Calls                                                                         | 28       |
| 10.4                                  | Cover                      Payment                                                                                      | 28       |
| 10.5                                  | Remedies                                                                                                                | 28       |
| 10.6                                  | Audits                                                                                                                  | 31       |
| **ARTICLE                      XI**   | **DISPOSITION                      OF PRODUCTION**                                                                      | **31**   |
| 11.1                                  | Taking                      In Kind                                                                                     | 31       |
| 11.2                                  | Failure                      of Participant to Take In Kind                                                             | 32       |
| 11.3                                  | Hedging                                                                                                                 | 32       |
| **ARTICLE                      XII**  | **SUPPLEMENTAL                      BUSINESS AGREEMENT**                                                                | **32**   |
| 12.1                                  | Supplemental                      Business Agreement                                                                    | 32       |
| **ARTICLE                      XIII** | **TRANSFER                      OF INTEREST; PREEMPTIVE RIGHT**                                                         | **33**   |
| 13.1                                  | General                                                                                                                 | 33       |
| 13.2                                  | Limitations                      on Free Transferability                                                                | 33       |
| **PART                      IV**      | **PROVISIONS                      APPLICABLE TO BOTH OPTION PERIOD AND JOINT VENTURE                      PERIOD**      | **35**   |
| **ARTICLE                      XIV**  | **MANAGEMENT                      COMMITTEE**                                                                           | **35**   |
| 14.1                                  | Meetings                      of Management Committee                                                                   | 35       |
| 14.2                                  | Action                      Without Meeting in Person                                                                   | 36       |
| 14.3                                  | Matters                      Requiring Approval                                                                         | 36       |
| **ARTICLE                      XV**   | **MANAGER**                                                                                                             | **36**   |
| 15.1                                  | Powers                      and Duties of Manager                                                                       | 36       |
| 15.2                                  | Standard                      of Care                                                                                   | 40       |

----

|                                 | **TABLE                    OF CONTENTS**                                             |     |
|--------------------------------------|--------------------------------------------------------------------------------------|----------|
|                                 | (continued)                                                                          | **Page** |
| 15.3                                 | Resignation;                    Deemed Offer to Resign                               | 40       |
| 15.4                                 | Administrative                    Charges and Services Agreement                     | 42       |
| 15.5                                 | Transactions                    With Affiliates                                      | 42       |
| 15.6                                 | Activities                    During Deadlock                                        | 42       |
| **ARTICLE                    XVI**   | **WITHDRAWAL                    AND TERMINATION**                                    | **42**   |
| 16.1                                 | Termination                                                                          | 42       |
| 16.2                                 | Termination                    by Deadlock                                           | 42       |
| 16.3                                 | Withdrawal                                                                           | 43       |
| 16.4                                 | Continuing                    Obligations and Environmental Liabilities              | 43       |
| 16.5                                 | Disposition                    of Assets on Termination                              | 43       |
| 16.6                                 | Non-Compete                    Covenants                                             | 43       |
| 16.7                                 | Right                    to Data After Termination                                   | 44       |
| 16.8                                 | Continuing                    Authority                                              | 44       |
| **ARTICLE                    XVII**  | **ACQUISITIONS                    WITHIN AREA OF INTEREST**                          | **44**   |
| 17.1                                 | General                                                                              | 44       |
| 17.2                                 | Notice                    to Non-Acquiring Party                                     | 44       |
| 17.3                                 | Election                    to Acquire                                               | 45       |
| 17.4                                 | Election                    to Acquire Not Exercised                                 | 45       |
| **ARTICLE                    XVIII** | **ABANDONMENT                    AND SURRENDER OF PROPERTIES**                       | **45**   |
| 18.1                                 | Abandonment                    and Surrender of Property - Option Period             | 45       |
| 18.2                                 | Abandonment                    and Surrender of Property - Joint Venture Period      | 45       |
| **ARTICLE                    XIX**   | **DISPUTES**                                                                         | **46**   |
| 19.1                                 | Governing                    Law                                                     | 46       |
| 19.2                                 | Dispute                    Resolution                                                | 46       |
| 19.3                                 | Mediation                                                                            | 46       |
| 19.4                                 | Arbitration                                                                          | 46       |
| **ARTICLE                    XX**    | **CONFIDENTIALITY,                    OWNERSHIP, USE AND DISCLOSURE OF INFORMATION** | **49**   |
| 20.1                                 | Business                    Information                                              | 49       |
| 20.2                                 | Party                    Information                                                 | 49       |
| 20.3                                 | Permitted                    Disclosure of Confidential Business Information         | 49       |
| 20.4                                 | Disclosure                    Required By Law                                        | 50       |
| 20.5                                 | Permitted                    Disclosure                                              | 50       |
| 20.6                                 | Public                    Announcements                                              | 51       |
| **ARTICLE                    XXI**   | **GENERAL                    PROVISIONS**                                            | **51**   |
| 21.1                                 | Notices                                                                              | 51       |
| 21.2                                 | Currency                                                                             | 52       |
| 21.3                                 | Headings                                                                             | 52       |

----

|   | **TABLE                    OF CONTENTS**                    |     |
|--------|-------------------------------------------------------------|----------|
|   | (continued)                                                 | **Page** |
| 21.4   | Waiver                                                      | 52       |
| 21.5   | Modification                                                | 53       |
| 21.6   | Force                    Majeure                            | 53       |
| 21.7   | Rule                    Against Perpetuities                | 54       |
| 21.8   | Further                    Assurances                       | 54       |
| 21.9   | Entire                    Agreement; Successors and Assigns | 54       |
| 21.10  | Memorandum                                                  | 54       |
| 21.11  | Counterparts                                                | 55       |

| EXHIBIT                    A | Property                    Description               |
|------------------------------|-------------------------------------------------------|
| EXHIBIT                    B | Accounting                    Procedures              |
| EXHIBIT                    C | Tax                    Matters                        |
| EXHIBIT                    D | Definitions                    and Interpretation     |
| EXHIBIT                    E | Section                    3.2(g) Disclosure          |
| EXHIBIT                    F | Certificate                    of Non - B.C. Resident |
| EXHIBIT                    G | Certificate                    of Accredited Investor |
| EXHIBIT                    H | Support                    Agreement                  |
| EXHIBIT                    I | Voting                    Trust Agreement             |
| EXHIBIT                    J | Marketing                    Agreement                |
| EXHIBIT                    K | Insurance                    Requirements             |
| EXHIBIT                    L | Services                    Agreement                 |
| EXHIBIT                    M | Area                    of Interest                   |
| EXHIBIT                    N | Escrow                    Agreement                   |
| EXHIBIT                    O | Net                    Profits Interest               |

----

**EXPLORATION,      DEVELOPMENT AND MINE OPERATING AGREEMENT**

**Agreement      Date**
**Kobex**
**Company**
**U.S.      Energy**
**Crested**
**U.S.      Energy Group**

**RECITALS**

| A.   | U.S.                Energy and Crested (collectively **“USE/CC”**)                own the Company as to 50% each. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------|

| B.   | USE/CC                collectively own 100% of certain property in Gunnison County, Colorado,                named the “Lucky Jack Project” (the “**Property**”),                previously known as the Mt. Emmons Project, and which Property is                described in **Exhibit A**. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| C.   | The                Parties previously entered into the Letter Agreement whereby the                U.S.                Energy Group granted Kobex an option to earn certain interests in                the                Property and provided Kobex with the right to explore and, if justified,                develop the Property. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| D.   | The                Parties wish to formalize the terms of the Letter Agreement by entering                into this Agreement which defines the relationship of the Parties                for two                distinct periods: (1) the Option Period, during which Kobex can                choose to make certain expenditures and option payments which shall                entitle Kobex to earn an initial 15% equity interest in the Property                and                subsequently during which Kobex may choose to continue with making                certain                expenditures and option payments in order to earn an additional 35%                equity                interest in the Property (for an aggregate 50%); and (2) the Joint                Venture Period during which Kobex may enter into a joint venture                with                USE/CC and USE/CC may later elect to have Kobex acquire an additional                15%                interest in the Joint Venture or elect to have Kobex acquire all                of                USE/CC’s interest in the Property. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**PART      I**

**THE      TRANSACTION**

**ARTICLE      I**

**DEFINITIONS      AND CROSS-REFERENCES**

**1.1**
**Definitions**
**Exhibit D**
**Exhibits**

----

**1.2**
**Cross      References**
**Exhibits**
**“Parts”**
**Articles**
**Sections**
**Exhibits**
**Paragraphs**
**Subparagraphs**
**Exhibits**

**ARTICLE      II**

**NAME,      PURPOSES AND TERM**

**2.1**
**General**

**2.2**
**Option      Period and Joint Venture Period**

**2.3**
**Purposes**

| (a)   | to                conduct all permitting studies, work, and governmental submissions                to                allow the Property to be explored, developed and if appropriate                produced; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to                conduct Exploration within the Property and Area of                Interest; |
|-----------------|------------------------------------------------------------------------------------------------|

| (c)   | to                evaluate the possible Development and Mining of the Property, and,                if                justified, to engage in Development and                Mining; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | to                engage in Operations on the                Property; |
|-----------------|------------------------------------------------------------------------|

| (e)   | to                engage in marketing Products, to the extent provided by this                Agreement; |
|-----------------|----------------------------------------------------------------------------------------------------------|

| (f)   | to                complete and satisfy all Environmental Compliance obligations affecting                the Property; and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------|

| (g)   | to                perform any other activity necessary, appropriate, or incidental                to any of                the foregoing. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------|

**2.4**
**Limitation**

**ARTICLE      III**

**REPRESENTATIONS      AND WARRANTIES; TITLE TO ASSETS**

**3.1**
**Representations      and Warranties of all Parties**

----

| (a)   | it                is a body corporate duly incorporated and validly subsisting under                the                laws of its incorporating                jurisdiction; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | it                has full power and authority to own its property and assets and to                carry                on its business and to enter into this                Agreement; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | neither                the execution and delivery of this Agreement nor any of the agreements                referred to herein or contemplated hereby shall result in the breach                or                accelerate the performance required by any other agreement or arrangement                to which it is a party; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | it                is not subject to any governmental order, judgment, decree, debarment,                sanction or Laws that would preclude the permitting or implementation                of                Operations under this Agreement; and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | this                Agreement has been duly executed and delivered by it and is valid                and                binding upon it in accordance with its                terms. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**3.2**
**Representations      and Warranties of the U.S. Energy Group**

| (a)   | USE/CC                collectively own a 100% interest in the Property and the Property                is                properly described in **Exhibit                A**; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | USE/CC                is in exclusive possession of the Property, has good marketable title                to                the patented mining claims which are part of the Property, subject                only to                the Patented Claim Litigation, and has Good Mining Title to the unpatented                lode and millsite claims which are part of the Property, and has                the right                to dispose of the Property, or an interest therein, as contemplated                in                this Agreement; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the                U.S. Energy Group has delivered to or made available for inspection                by                Kobex all Existing Data in its possession or control, and true and                correct                copies, as requested by Kobex, of all permits, licenses, leases or                other                contracts relating to the Property; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | with                respect to unpatented lode claims and millsite claims located by                the U.S.                Energy Group that are included within the Property, except as set                forth in                the Title Opinion and** **subject                to the paramount title of the United States: (i) the unpatented                mining claims were properly laid out and monumented; (ii) all                required location and validation work was properly performed;                (iii) location notices and certificates were properly recorded and                filed with appropriate governmental agencies; (iv) all assessment                work required to hold the unpatented mining claims has been performed                and                all Governmental Fees have been paid in a manner consistent with                that                required of the Manager pursuant to Section 15.1(j)                through the assessment year ending September 1, 2007; (v) all                affidavits of assessment work, evidence of payment of Governmental                Fees,                and other filings required to maintain the claims in good standing                have                been properly and timely recorded or filed with appropriate governmental                agencies; and (vi) the U.S. Energy Group has no knowledge of |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (e)   | with                respect to unpatented lode claims and millsite claims not located                by the                U.S. Energy Group but which are included within the Property, except                as                set forth in the Title Opinion and subject to the paramount title                of the                United States: to the knowledge of the U.S. Energy Group (i) all                assessment work required to hold the unpatented mining claims has                been                performed and all Governmental Fees have been paid in a manner consistent                with that required of the Manager pursuant to Section 15.1(j)                through the assessment year ending September 1, 2007; (ii) all                affidavits of assessment work, evidence of payment of Governmental                Fees,                and other filings required to maintain the claims in good standing                have                been properly and timely recorded or filed with appropriate governmental                agencies; (iii) the claims are free and clear of Encumbrances or                defects in title; and (iv) the U.S. Energy Group has no knowledge of                conflicting mining claims. Nothing in this Section, however, shall                be                deemed to be a representation or a warranty that any of the unpatented                mining claims contains a valuable discovery of                minerals; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | with                respect to the Property, except for the Patented Claim Litigation                as                previously disclosed to Kobex, since the acquisition of the Property                from                Phelps Dodge Corporation and Mt. Emmons Mining Company (collectively                **“PD/MEMCO”**),                there are no pending or threatened actions, suits, claims or proceedings,                and there have been no previous transactions affecting its interests                in                the Property which have not been for fair consideration; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | except                as to matters otherwise disclosed in writing to Kobex prior to the                Effective Date as set out in **Exhibit                E**: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | since                the acquisition of the Property from PD/MEMCO activities on the Property                with respect to the Property and its ownership and operation have                not been                in violation of any Laws (including without limitation any Environmental                Laws), nor caused or permitted any damage (including Environmental                Damage,                as defined below) or impairment to the health, safety, or enjoyment                of any                person at or on the Property or in the general vicinity of the Property; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | since                the acquisition of the Property from PD/MEMCO there has been no material                spill, discharge, leak emission, ejection, escape, dumping, or any                release                or threatened release of any kind, of any toxic or hazardous substance                or                waste (as defined by any applicable Laws) from, on, in, or under                the                Property or into the environment, except releases permitted or otherwise                authorized by such law; |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | the                U.S. Energy Group has not received inquiry from or notice of a pending                investigation from any governmental agency or of any |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (iv)   | the                U.S. Energy Group has no interest in any mineral interest located                within                two miles of the outermost boundary of the Property, with the exception                of                the Property itself; and |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (v)   | since                the acquisition of the Property from PD/MEMCO by the Company, the                water                treatment facility (the **“Facility”**)                located on the Property has at all times been operated within the                terms of                any permits and licenses that it is operating under, and has been                operated                in accordance with all applicable Laws; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | except                for patented land within the exterior boundaries of the Property,                except                as set forth in the Title Opinion** **all                of the land within the Property is covered by at least one mining                or                millsite claim of the correct nature for the deposit being located                or the                use being contemplated (*e.g.*,                a                lode claim was used to locate a lode deposit, a placer claim was                used to                locate a placer deposit, and a millsite claim was used to locate                the                ground for mine facilities) which the mining claim records of the                United                States Department of Interior, Bureau of Land Management (LR-2000                system)                show as being an “active” claim as of December 1,                2006; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | except                for the Permitted Encumbrances or the Royalty, the Property is clear                of                all Encumbrances; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | no                consent or approval of any third party or governmental agency is                required                for the execution, delivery or performance of the Agreement by the                U.S.                Energy Group or the transfer or acquisition of any interest in the                Property; and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | no                proceedings are pending for and the U.S. Energy Group is not aware                of any                basis for the institution of any proceedings leading to the dissolution                or                winding-up of the U.S. Energy Group or the placing of any company                in the                U.S. Energy Group into bankruptcy or subject to any other laws governing                the affairs of insolvent persons. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**3.3**
**Certificates      of U.S. Energy and Crested**

| (a)   | a                Certificate of Non-B.C. Resident in the form attached at **Exhibit                F**;                and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------|

| (b)   | a                Certificate of Accredited Investor attached at **Exhibit** **G**. |
|-----------------|-----------------------------------------------------------------------------------------|

**3.4**
**Knowledge      of Parties. **
**knowledge**

----

**3.5**
**Disclosures**

**3.6**
**Loss      of Title**

| (a)   | all                such costs up to the amount of $75,000 will be borne solely by the                U.S.                Energy Group; and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | all                such costs greater than the initial $75,000 referred to in Section                3.6(a)                shall be charged to the Business Account, and Kobex shall be entitled                to                include such costs as Expenditures. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**3.7**
**Royalties,      Production Taxes and Other Payments Based on Production.**

**3.8**
**Agreement      Subject to TSX Venture Exchange Approval**

**ARTICLE      IV**

**RELATIONSHIP      OF THE PARTICIPANTS**

**4.1**
**No      Partnership or Fiduciary Relationship**
**Exhibit      C**

----

**4.2**
**Tax      Matters**
**Exhibit      C**

**4.3**
**Other      Business Opportunities**

**4.4**
**Waiver      of Rights to Partition or Other Division of Assets**

**4.5**
**Implied      Covenants**

**4.6**
**No      Third Party Beneficiary Rights**

**4.7**
**Relationship      of U.S. Energy and Crested.**

**PART      II**

**THE      OPTION PERIOD**

**ARTICLE      V**

**INITIAL      EXPENDITURE**

**5.1**
**Initial      Expenditure**
** **
**Initial      Expenditure**

----

**           ARTICLE VI**

**THE      OPTION**

**6.1**
**Option**
** **
**Option**
**Option      Payments**

| (a)   | on                or before 10 Business Days of the later of the Agreement Date or                Canadian                regulatory and stock exchange approval applicable to Kobex, may make                an                Option Payment by either: |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | issuing                to USE/CC common shares in the capital of Kobex having an aggregate                value                of $750,000, at the Market Price and using the Exchange Rate on the                date                the Market Price is set; or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | making                a cash payment to USE/CC of                $750,000; |
|------------------|----------------------------------------------------------------------------|

| (b)   | in                addition to the Initial Expenditure (which is a firm commitment of                Kobex),                on or before March 31, 2008, make an Option Payment to USE/CC of                $500,000 or issue to USE/CC common shares in the capital of Kobex                having                an aggregate value of $500,000 of the Market Price and using the                Exchange                Rate on the date the Market Price is set; and make a payment of $700,000                in one of the following manners, to be decided by                Kobex: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | increasing                the Option Payment by $700,000 (or issuing to USE/CC additional common                shares in the capital of Kobex having a value of $700,000) for an                aggregate $1,200,000; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | incurring                an additional $700,000 in Expenditures;                or |
|------------------|------------------------------------------------------------------------------------|

| (iii)   | apportioning                the additional $700,000 between increased Expenditures and an increased                Option Payment (payable in cash or shares of Kobex); |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | on                or before December 31, 2008: |
|-----------------|------------------------------------------------|

| (i)   | completing                not less than an additional $5,000,000 (for a minimum aggregate of                $8,500,000 and maximum of $9,200,000) in Expenditures;                and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (ii)   | making                an Option Payment to USE/CC of $500,000 or issuing to USE/CC common                shares                in the capital of Kobex having an aggregate value of $500,000 of                the                Market Price and using the Exchange Rate on the date the Market Price                is                set; |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | on                or before December 31, 2009: |
|-----------------|------------------------------------------------|

| (i)   | completing                not less than an additional $5,000,000 (for a minimum aggregate of                $13,500,000 and a maximum of $14,200,000) in Expenditures;                and |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | making                an Option Payment to USE/CC of $500,000 or issuing to USE/CC common                shares                in the capital of Kobex having an aggregate value of $500,000 of                the                Market Price and using the Exchange Rate on the date the Market Price                is                set; |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | on                or before December 31, 2010: |
|-----------------|------------------------------------------------|

| (i)   | completing                not less than an additional $2,500,000 (for a minimum aggregate of                $16,000,000 and a maximum aggregate of $16,700,000) in Expenditures;                and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | making                an Option Payment to USE/CC of $500,000 or issuing to USE/CC common                shares                in the capital of Kobex having an aggregate value of $500,000 of                the                Market Price and using the Exchange Rate on the date the Market Price                is                set; |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | on                or before December 31, 2011 making an Option Payment to USE/CC of                $500,000                or issuing to USE/CC common shares in the capital of Kobex having                an                aggregate value of $500,000 of the Market Price and using the Exchange                Rate on the date the Market Price is set;                and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | delivering                to USE/CC a bankable feasibility study on the Property, including                confirmation of advance permitting or mining permit issuance thereon                (collectively the “**Study**”),                subject to Section 6.7. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**6.2**
**Option      Stages**

| (a)   | Upon                Kobex incurring $15,000,000 in Expenditures on the Property, Kobex                can                elect if it desires to earn a 15% interest in the Property, with                such                election being made to USE/CC within 30 days of incurring such                Expenditures, and a failure to make such election shall be deemed                to be an                election by Kobex to earn the 15% interest in the Property. The documents                reflecting this 15% interest shall be |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (b)   | If                Kobex completes the remaining Option Payments and Expenditures and                delivers the Study (subject to Section 6.7),                it shall earn an additional 35% interest in the Property (for an                aggregate                50% interest). The documents reflecting this 35% interest shall be                transferred through the procedure set forth in Section 3.3 of the                Escrow Agreement. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**6.3**
**Cash      in Lieu and Accelerated Payments**
**Shortfall      Payments**

**6.4**
**Failure      to Make Option Payments and Termination**
** **

**6.5**
**Wind-Up      upon Termination During the Option Period**

----

**6.6**
**Discretion      of Kobex for Manner of Payment**

**6.7**
**Bankable      Feasibility Study Payment.**
** **

| (a)   | If                the Option Payments and Expenditures plus the costs to prepare the                Study                aggregate $50,000,000 before the Study is completed and delivered,                USE/CC                and Kobex shall jointly fund the completion of the Study as to 50%                USE/CC                and 50% Kobex. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Upon                the completion of the Study, if the Option Payments and Expenditures                and                costs to prepare and complete the Study are less than $50,000,000,                then in                order to fully exercise the Option to obtain an aggregate 50% interest                in                the Property, Kobex shall pay to USE/CC concurrent with the delivery                of                the Study, the cash difference between $50,000,000 and the Option                Payments                and Expenditures plus the costs to prepare and complete the Study                (the                “**Study                Cash Difference**”).                If the Study is not completed on or before December 5, 2016, then                Kobex’s                interest in the Property shall revert to a 15% interest, and the                Company                shall assume operatorship of the Property, subject to force majeure                as set                out in Section 21.6. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**6.8**
**Exercise      of Option.**
** **

| (a)   | Upon                Kobex incurring an initial $15,000,000 in Expenditures, Kobex shall                have                earned a 15% interest in the Property. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Upon                Kobex incurring and paying all of the Option Payments and funding                all of                the Expenditures over and above the initial $15,000,000, and by completing                and delivering the Study and the payment of any Study Cash Difference                (if                applicable) Kobex shall have earned an additional 35% interest in                the                Property (for an aggregate interest of 50%). The “**50%                Option Exercise Date**”                shall therefore be the later of the date when BOTH the Option Payments                and                Expenditures have been incurred and paid, and the Study has been                delivered                to USE/CC along with the payment to USE/CC of the Study Cash Difference                (if any).  |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | On                the 50% Option Exercise Date, Kobex shall, by written notice to USE/CC,                be                entitled to either: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | form                a Joint Venture on the terms set out in PART                III;                or |
|-----------------|--------------------------------------------------------------------------------------------------------|

----

| (ii)   | within                four months of the 50% Option Exercise Date, offer in writing to                USE/CC a                one time election (the “**USE/CC                Election**”)                as described in Section 6.9.                The USE/CC Election is to be made in writing by notice to Kobex by                USE/CC                within 30 Business Days of such offer, and where USE/CC fails to                make the                USE/CC Election within such time period, USE/CC shall be deemed to                have                made the election set out in Section 6.9(a).  |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**6.9**
**The      USE/CC Election**

| (a)   | form                a Joint Venture on the terms set out in PART                III; |
|-----------------|--------------------------------------------------------------------------------------|

| (b)   | form                a Joint Venture on the terms set out in PART                III,                but have Kobex arrange all future financing on optimal terms available                for                all Operations on the Property, seeking the most appropriate blend                of debt                and equity in the context of the Study, and for further clarification                Kobex shall bear all operating costs related to the Property, and                the debt                and equity costs related to such financing, and in return for bearing                such                costs, then Kobex shall earn an additional 15% Participating Interest                in                the Joint Venture (for an aggregate 65% Participating Interest, with                USE/CC correspondingly reducing to a collective 35% Participating                Interest) (the “**65%                Election**”),                with Kobex earning such additional 15% Participating Interest upon                Kobex                committing to arrange such financing; or  |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | to                have                Kobex acquire, directly or indirectly, subject to Section 6.12,                all of the then outstanding securities of Newco (the **“Acquisition                Election”**)                in consideration for the issuance of common shares of Kobex (subject                to                any resale restrictions, hold periods or escrow provisions that may                be                required or imposed by an applicable stock exchange or securities                commission, provided, however, that Kobex shall use its best efforts                to                avoid or minimize such restrictions) or any successor company under                the                following terms: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | the                number of shares of Kobex to be issued to the shareholders of Newco                shall                be based on the agreed relative values of the enterprises (after                the                Property, the Facility and all related permits and licenses are                transferred to Newco), where in any event the total number of shares                of                Kobex issued to the shareholders of Newco shall not be greater than                50% of                the issued and outstanding shares of Kobex at the time the Acquisition                Election is completed. The shares of Kobex shall be issued at the                Market                Price and the transaction shall be subject to stock exchange approval                and                structured in a manner that, to the extent possible, is tax neutral                to the                shareholders of Newco and Kobex. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A)   | either                of Kobex or USE/CC has the right to appoint an independent valuator                to                value Newco, with the cost of such valuator being borne equally by                USE/CC                collectively and Kobex. Such valuator shall be mutually acceptable                to such                Parties, and if such Parties cannot agree, such Parties shall utilize                following the procedure:  |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (1)   | when                either Kobex or USE/CC believes that they cannot agree to a valuator,                either such Party shall deliver written notice to the other such                Party; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | the                Senior Executives of Kobex or USE/CC shall meet at a mutually acceptable                time and place within 15 days after the date of the notice required                by                Section 6.9(c)(i)(A)(1)                to                attempt to reach agreement as to a valuator. If a senior executive                intends                to be accompanied at the meeting by an attorney, the other Party’s’ senior                executive shall be given at least 3 Business Days’ notice of such                intention and may also be accompanied by an attorney;                and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | if                Kobex and USE/CC are unable to reach agreement on a valuator within                30                days of the date of the notice required by 6.9(c)(i)(A)(1),                such Parties shall request that the Dean of the Colorado School of                Mines                select a valuator within 45 days from the date of the notice required                by                6.9(c)(i)(A)(1).                The valuator shall determine value of Newco within 70 days of the                notice                required by 6.9(c)(i)(A)(1); |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B)   | if                Newco is formed pursuant to Section 6.11(a),                U.S. Energy and Crested shall each execute support agreements,                substantially in the form attached as **Exhibit                H**                (each a “**Support                Agreement**”),                under which they shall agree to tender 100% of their shares of Newco                and                vote not less than 50% of the outstanding shares of the Newco in                support                of the transaction, and covenant to enter into the Voting Trust                Agreement; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C)   | upon                the execution of this Agreement, in furtherance of the Acquisition                Election, U.S. Energy and Crested Corp shall each execute and deliver                a                Certificate of Non-B.C. Resident in the form attached as **Exhibit** **F**                and a Certificate of Accredited Investor attached as **Exhibit** **G**,                and upon the issuance of shares of Kobex to the shareholders of Newco                under this Section 6.9(c),                U.S. Energy and Crested Corp. shall each deliver updates of the foregoing                certificates to Kobex and USE/CC shall procure any other shareholders                of                Newco at such time to deliver the foregoing certificates to Kobex;                and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D)   | U.S.                Energy and Crested each agree to enter into a voting trust agreement,                substantially in the form attached as **Exhibit                I**                (the “**Voting                Trust Agreement**”),                whereby shareholders receiving shares of Kobex in the acquisition                shall                agree to vote not less than 50% of the shares held in Kobex in favor                of                the directors nominated by Kobex management to the board of directors                of                Kobex, or shall abstain from voting their shares held in Kobex in |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**6.10**
**Termination      on Acquisition Election.**

**6.11**
**Covenants      of USE/CC**

| (a)   | that                in the event the Acquisition Election is made, to form a new special                purpose subsidiary, wholly-owned by USE/CC (“**Newco**”),                to hold the Property and all permits and licenses required in connection                with the Property; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | upon                the formation of Newco, not to transfer or issue shares of Newco                to any                person other than USE/CC; and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | to                enter into the Voting Trust Agreement upon the Acquisition Election                being                made and completed. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

**6.12**
**Title      to Property on Acquisition Election**

| (a)   | U.S.                Energy and Crested shall each transfer to Newco their respective                interests                in the Property, which shall comprise in aggregate 100% of the title                to                the Property, and                all permits and licenses held in their names required in connection                with                the Property and the Facility; and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the                Company shall transfer to Newco the Facility, and all permits and                licences                held in its name required in connection with the Property and the                Facility. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**6.13**
**Royalty**
**“Royalty”**

**ARTICLE      VII**

**RIGHTS      AND OBLIGATIONS DURING THE OPTION PERIOD**

**7.1**
**Manager      During Option Period**

----

**7.2**
**Technical      Committee**
**Technical      Committee**

**7.3**
**Management      Committee**
**“Management      Committee”**

**7.4**
**Water      Treatment Facility.**
** **

| (a)   | During                the Option Period an independent contractor engaged by the U.S. Energy                Group, or any subsequent independent contractor as appointed by the                Management Committee, shall operate the Facility, and such contractor                shall carry adequate insurance for operations and for any liabilities                related to operations of the Facility. Kobex shall pay all operating                costs                for the Facility during the Option Period but shall have no decision                making authority with respect to Facility operations and Kobex shall                bear                responsibility only for losses or damage caused by Kobex. Kobex,                however,                shall have no liability for any losses incurred or damage caused                by the                contractor or the Company in connection with the operation of the                Facility. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | After                the Option Period, an independent contractor engaged by the Management                Committee shall operate the Facility, and such independent contractor                shall carry adequate insurance for operations and for any liabilities                related to such operations. Kobex and the U.S. Energy Group (as Joint                Venture partners) shall each be liable for the operating costs of                the                Facility in accordance with their Participating Interests.  |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**7.5**
**Reports      During Option Period**

**7.6**
**Title      to Property.**

| (a)   | Upon                the execution of this Agreement, U.S. Energy and Crested shall each                prepare executed transfer forms in registerable/recordable form for                the                transfer of an aggregate 15% and an additional aggregate 35% interest                in                the Property to Kobex, as required by the Escrow                Agreement. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**7.7**
**Permit      Obligations of Kobex During Option Period**

**7.8**
**Access      to Property During Option Period**

**7.9**
**Maintenance      of Property During Option Period**

**7.10**
**Management      of Existing Underground Mine Conditions During Exploration.**
** **

----

**7.11**
**Indemnification      of Manager During Option Period**

**7.12**
**Programs      and Budgets**

**7.13**
**Presentation      of Programs and Budgets**

**7.14**
**Review      and Adoption of Proposed Programs and Budgets.**
** **

| (a)   | Within                20 days after submission of a proposed Program and Budget, the Management                Committee must approve, reject or modify the proposed Program and                Budget.  |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (b)   | Until                a new Program and Budget is adopted, the Program and Budget from                the prior                year shall govern Operations on the                Property. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | If                no Budget has been adopted within 6 months after the expiration of                the                latest adopted Program and Budget, either the U.S. Energy Group or                Kobex                may elect to terminate the Business by giving 30 days notice of                termination to the other Parties and complying with the termination                procedures specified in Sections 6.4                and 6.5. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**7.15**
**Budget      Overruns; Program Changes**

**7.16**
**Assignment      During Option Period**

**7.17**
**Other      Provisions**

**PART      III**

**THE      JOINT VENTURE PERIOD**

**ARTICLE      VIII**

**JOINT      VENTURE**

**8.1**
**Purpose**
*Lucky      Jack Joint Venture*

**8.2**
**Manager**
** **

----

**8.3**
**Initial      Participating Interests and Contributions.**
** **

| (a)   | After                the 50% Option Exercise Date, the JV Participants shall have the                following                initial Participating Interests: |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | After                the 50% Option Exercise Date, the JV Participants, subject to the                65%                Election and subject to any election permitted by                Section 9.4,                shall be obligated to contribute funds to adopted Programs and Budgets                in                proportion to their respective Participating                Interests. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**8.4**
**Changes      in Participating Interests**

| (a)   | upon                withdrawal or deemed withdrawal as provided in Section 8.6,                and ARTICLE                XIV; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------|

| (b)   | upon                an election by either JV Participant pursuant to Section 9.4                to                contribute less to an adopted Program and Budget than the percentage                equal                to its Participating Interest, or to contribute nothing to an adopted                Program and Budget; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | in                the event of default by either JV Participant in making its agreed-upon                contribution to an adopted Program and Budget, followed by an election                by                the other JV Participant to invoke any of the remedies in                Section 9.4; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | upon                Transfer by either JV Participant of part or all of its Participating                Interest in accordance with ARTICLE                XIII; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | upon                acquisition by either JV Participant of part or all of the Participating                Interest of the other JV Participant, however arising;                or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | in                accord with the 65% Election set out in Section 6.9(b). |
|-----------------|--------------------------------------------------------------------------------|

**8.5**
**Deemed      Expenditures**

| (a)   | Kobex’s                deemed expenditures to the Joint Venture shall be its percentage                interest                in the Joint Venture multiplied by its aggregate actual Expenditures                incurred until the formation of the Joint Venture;                and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | USE/CC’s                deemed expenditures to the Joint Venture shall be its percentage                interest                in the Joint Venture multiplied by Kobex’s aggregate actual Expenditures                incurred until the formation of the Joint                Venture. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**8.6**
**Conversion      of Minority Interest.**
** **

| (a)   | If                a JV Participant’s (the **“Reduced                Participant”**)                Participating Interest becomes less than 5%, that JV Participant’s                Participating Interest shall convert to a 5% Net Profits Interest                and                shall be deemed to have withdrawn from the Business. Such relinquished                Participating Interest shall be deemed to have accrued automatically                to                the other JV Participant. The Capital Account of the Reduced Participant                shall be transferred to the remaining JV Participant. Subject to                Section 15.3,                the Reduced Participant shall thereafter have no further right, title,                or                interest in the Assets or under this Agreement, with the exception                of the                5% Net Profits Interest detailed above, and any tax partnership that                may                have been created shall dissolve. In such event, the Reduced Participant                shall execute and deliver an appropriate conveyance of all of its                right,                title and interest in the Assets to the remaining JV                Participant.  |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The                relinquishment, withdrawal and entitlements for which this section                provides shall be effective as of the effective date of the recalculation                under Sections 9.4                or                10.5.                However, if the final adjustment provided under Section 9.5                for any recalculation under Section 9.4                results in a Participating Interest of 5% or more: (i) the                Participating Interest shall be deemed, effective retroactively as                of the                first day of the Program Period, to have automatically revested;                (ii) the Reduced Participant shall be reinstated as a JV Participant,                with all of the rights and obligations pertaining thereto; (iii) the                right to a Net Profits Interest under Section 8.6(a)                shall terminate; and (iv) the Manager, on behalf of the JV                Participants, shall make any necessary reimbursements, reallocations                of                Products, contributions and other adjustments as provided in                Section 9.5(d).                Similarly, if such final adjustment under Section 9.5                results in a Participating Interest for either JV Participant of                less than                5% for a Program Period as to which the provisional calculation under                Section 9.4                had not resulted in a Participating Interest of less than 5%, then                such                Participant, at its election within 30 days after notice of the final                adjustment, may contribute an amount resulting in a revised final                adjustment and resultant Participating Interest of 5%. If no such                election                is made, such JV Participant shall be deemed to have withdrawn under                the                terms of Section 8.6(a)                as                of the beginning of such Program Period, and the Manager, on behalf                of the                JV Participants, shall make any necessary reimbursements, reallocations                of                Products, contributions and other adjustments as provided in                Section 9.5(d),                including of any Net Profits Interest to which such JV Participant                may be                entitled for such Program Period. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**8.7**
**Continuing      Liabilities Upon Adjustments of Participating Interests**

----

*i.e.*
** **

**8.8**
**Documentation      of Adjustments to Participating Interests**

**8.9**
**Grant      of Lien and Security Interest.**
** **

| (a)   | Subject                to Section 8.10,                each JV Participant may grant to the other JV Participant a lien                upon and                a security interest in its Participating Interest, including all of                its right, title and interest in the Assets, whenever acquired or                arising,                and the proceeds from and accessions to the foregoing.  |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The                liens and security interests granted by Section 8.9(a)                shall secure every obligation or liability of the JV Participant                granting                such lien or security interest created under this Agreement, including                the                obligation to repay a Cover Payment in accordance with                Section 10.4.                Each JV Participant hereby agrees to take all action necessary to                perfect                such lien and security interest and hereby appoints the other JV                Participant its attorney-in-fact to execute, file and record all                financing                statements and other documents necessary to perfect or maintain such                lien                and security interest. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Where                Kobex commits to arrange all future financing for Operations on the                Property pursuant to Section 6.9(b),                to the extent that the Management Committee has approved any financing                of                the Operations, including Project Financing, each of the JV Participants                shall pledge, charge, mortgage, grant a lien, grant a security |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**8.10**
**Subordination      of Interests**

**8.11**
**Indemnity**

**8.12**
**Holding      of Property.**
** **

| (a)   | From                the date of the formation of the Joint Venture, during the term of                the                Joint Venture, the Property must be transferred to and held in the                names                of the JV Participants in proportion to their respective Participating                Interests from time to time. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Each                JV Participant must promptly at its own cost do all things (including                executing and if necessary delivering all documents) necessary or                desirable to give full effect to Section 8.12(a)                or                the formation of the Joint Venture. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**8.13**
**Holding      of Joint Venture Property. **

**8.14**
**Management      Committee**

----

**8.15**
**Facility.**

**ARTICLE      IX**

**PROGRAMS      AND BUDGETS**

**9.1**
**Operations      Pursuant to Programs and Budgets**

**9.2**
**Presentation      of Programs and Budgets**

**9.3**
**Review      and Adoption of Proposed Programs and Budgets**

| (a)   | notice                that the JV Participant approves any or all of the components of                the                proposed Program and Budget;  |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | modifications                proposed by the JV Participant to the components of the proposed                Program                and Budget; or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | notice                that the JV Participant rejects any or all of the components of the                proposed Program and Budget. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------|

----

**9.4**
**Election      to Participate.**
** **

| (a)   | By                notice to the Management Committee within 20 days after the final                vote                adopting a Program and Budget, and notwithstanding its vote concerning                adoption of a Program and Budget, a JV Participant may elect to                participate in the approved Program and                Budget: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | in                proportion to its respective Participating                Interest; |
|-----------------|---------------------------------------------------------------------------------------|

| (ii)   | in                some lesser amount than its respective Participating Interest,                or |
|------------------|----------------------------------------------------------------------------------------------------|

| (iii)   | not                at all. |
|-------------------|----------------------------|

| (b)   | If                a JV Participant elects to contribute to an adopted Program and Budget                some lesser amount than in proportion to its respective Participating                Interest, or not at all, and the other JV Participant elects to fund                all                or any portion of the deficiency, the Participating Interest of the                Reduced Participant shall be provisionally recalculated as                follows: |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | for                an election made before Payout, by dividing: (A) the sum of                (1) the total of all of the Reduced Participant’s contributions under                Section 8.3(b),                and (2) the amount, if any, the Reduced Participant elects to                contribute to the adopted Program and Budget; by (B) the sum of (1)                and (2) above for both Participants; and then multiplying the result                by                one hundred; or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | for                an election made after Payout, by reducing its Participating Interest                in                an amount equal to two times the amount by which it would have been                reduced under Section 9.4(a)(i)                if                such election were made before                Payout. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (c)   | Whenever                the Participating Interests are recalculated pursuant to this Section                9.4,                (i) the Equity Accounts of both JV Participants shall be revised to                bear the same ratio to each other as their recalculated Participating                Interests; and (ii) the portion of Capital Account attributable to                the reduced Participating Interest of the Reduced Participant shall                be                transferred to the other JV Participant. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**9.5**
**Recalculation      or Restoration of Reduced Interest Based on Actual      Expenditures.**
** **

| (a)   | If                a Participant makes an election under Sections 9.4(a)(ii)                or                9.4(a)(iii),                then within 30 days after the conclusion of such Program and Budget,                the                Manager shall report the total amount of money expended plus the                total                obligations incurred by the Manager for such                Budget. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | If                the Manager expended or incurred obligations that were more or less                than                the adopted Budget, the Participating Interests shall be recalculated                pursuant to Section 9.4(a)(i)                by                substituting each JV Participant’s actual contribution to the adopted                Budget for that JV Participant’s estimated contribution at the time of the                Reduced Participant’s election under Section 9.4(a). |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | If                the Manager expended or incurred obligations of less than 80% of                the                adopted Budget, within 30 days of receiving the Manager’s report on                Expenditures, the Reduced Participant may notify the other JV Participant                of its election to reimburse the other JV Participant for the difference                between any amount contributed by the Reduced Participant to such                adopted                Program and Budget and the Reduced Participant’s proportionate share (at                the Reduced Participant’s former Participating Interest) of the actual                amount expended or incurred for the Program, plus interest at two                percentage points above the Prime Rate. The Reduced Participant shall                deliver the appropriate amount (including interest) to the other                JV                Participant with such notice. Failure of the Reduced Participant                to so                notify and tender such amount shall result in dilution occurring                in                accordance with this ARTICLE                XI                and shall bar the Reduced Participant from its rights under this                Section 9.5(c)                concerning the relevant adopted Program and                Budget. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | All                recalculations under this Section 9.5                shall be effective as of the first day of the Program Period for                the                Program and Budget. The Manager, on behalf of both JV Participants,                shall                make such reimbursements, reallocations of Products, contributions                and                other adjustments as are necessary so that, to the extent possible,                each                JV Participant shall be placed in the position it would have been                in had                their Participating Interests as recalculated under this section                been in                effect throughout the Program Period for such Program and Budget.                If the                JV |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (e)   | Whenever                the Participating Interests are recalculated pursuant to this Section                9.5,                (i) the JV Participants’ Equity Accounts shall be revised to bear the                same ratio to each other as their recalculated Participating Interests;                and (ii) the portion of Capital Account attributable to the reduced                Participating Interest of the Reduced Participant shall be transferred                to                the other JV Participant. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**9.6**
**Budget      Overruns; Program Changes**

**9.7**
**Emergency      or Unexpected Expenditures**

**9.8**
**Development      Programs and Budgets; Project Financing.**

| (a)   | Unless                otherwise determined by the Management Committee, the Manager shall                not                submit to the Management Committee a Program and Budget including                Development of the mine described in a completed Feasibility Study                until                30 days following the receipt by the Manager of the Feasibility Study.                The                Program and Budget, which includes Development of the mine described                in                the completed Feasibility Study, shall be based on the estimated                cost of                Development described |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (b)   | Promptly                following adoption of the Program and Budget, which includes Development                as described in a completed Feasibility Study, but in no event more                than                30 days thereafter, the Manager shall submit to the Management Committee                a                report on material bids received for Development work (“**Bid                Report**”).                If bids described in the Bid Report result in the aggregate cost                of                Development work exceeding 10% of the Development cost estimates                that                formed the basis of the Development component of the adopted Program                and                Budget, the Program and Budget, which includes relevant Development,                shall                be deemed to have been re-submitted to the Management Committee based                on                the aggregate costs as described in the Bid Report on the date of                receipt                of the Bid Report and shall be reviewed and adopted in accordance                with                Sections 9.3                and 14.1.  |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | This                Section 9.8(c)                only applies where Kobex does not bear all operating and financing                costs                of the Joint Venture. If the Management Committee approves the Development                of the mine described in a Feasibility Study and also decides to                seek                Project Financing for such mine, each Participant shall, at its own                cost,                cooperate in seeking to obtain Project Financing for such mine;                *provided,                however,*                that all fees, charges and costs (including attorneys and technical                consultants fees) paid to the Project Financing lenders shall be                borne by                the Participants in proportion to their Participating Interests,                unless                such fees are capitalized as a part of the Project                Financing. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**9.9**
**Expansion      or Modification Programs and Budgets**

**ARTICLE      X**

**ACCOUNTS      AND SETTLEMENTS**

**10.1**
**Monthly      Statements and Applications of this ARTICLE**

**10.2**
**Cash      Calls**

----

**10.3**
**Failure      to Meet Cash Calls**

**10.4**
**Cover      Payment**
**Cover      Payment**

**10.5**
**Remedies**
** **

| (a)   | The                defaulting JV Participant grants to the non-defaulting JV Participant                a                power of sale as to all or any portion of its interest in any Assets                or in                its Participating Interest that is subject to the lien and security                interest granted in Section 8.9                (whether or not such lien and security interest has been perfected),                upon                a default under Sections 10.3                or                10.4.                Such power shall be exercised in the manner provided by applicable                Law or                otherwise in a commercially reasonable manner and upon reasonable                notice.                If the non-defaulting JV Participant elects to enforce |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (b)   | The                non-defaulting JV Participant may elect to have the defaulting JV                Participant’s Participating Interest diluted or eliminated as                follows: |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(i)  * | For                a default occurring before Payout relating to a Program and Budget                covering in whole or in part Permitting, Exploration, Feasibility                Study                Operations, the reduced JV Participant’s Participating Interest shall be                recalculated by dividing: (X), (1) the total of all of the reduced JV                Participant’s contributions under Section 8.3(b),                and (2) the amount, if any, the reduced JV Participant contributed to                the adopted Program and Budget with respect to which the default                occurred;                by (Y) the sum of (1) and (2) above for both JV Participants; and                then multiplying the result by one hundred. For such a default occurring                after Payout, the reduced JV Participant’s Participating Interest shall be                reduced in an amount equal to two times the amount by which it would                have                been reduced if such default had occurred before Payout. For such                a                default, whether occurring before or after Payout, the Participating                Interest                shall then be further reduced for a default relating exclusively                to an                Exploration Program and Budget, by multiplying the recalculated                Participating Interest by the following percentage: 150%. |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | For                a default relating to a Program and Budget covering in whole or in                part                Development or Mining, at the non-defaulting JV Participant’s election,                the defaulting JV Participant shall be deemed to have withdrawn and                to                have automatically relinquished its interest in the Assets to the                non-defaulting JV Participant; *provided,                however*,                the defaulting Participant shall have the right to receive only a                10% Net                Profits Interest, if any, and not from any other source, an amount                equal                to 20% of the defaulting JV Participant’s Equity Account balance at the                time of such default. Upon receipt of such amount the defaulting                JV                Participant shall thereafter have no further right, title or interest                in                the Assets, but shall remain liable to the extent provided in                Section 8.7. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | Dilution                under this Section 10.5(b)                shall be effective as of the date of the original default, and                Section 9.5                shall not apply. The amount of any Cover Payment under                Section 10.4                and interest thereon, or any interest accrued in accordance with                Section 10.3,                shall be deemed to be amounts |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (iv)   | Whenever                the Participating Interests are recalculated pursuant to this                Section 10.5(b),                (A) the Equity Accounts of both JV Participants shall be adjusted to                bear the same ratio to each other as their recalculated Participating                Interests; and (B) the portion of Capital Account attributable to the                reduced Participating Interest of the reduced JV Participant shall                be                transferred to the other JV                Participant. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | If                a JV Participant has defaulted in meeting a cash call or repaying                a loan,                and if the non-defaulting JV Participant has made a Cover Payment,                then,                in addition to a reduction in the defaulting JV Participant’s                Participating Interest effected pursuant to Section 10.5(b),                the non-defaulting JV Participant shall have the right, if the                indebtedness arising from a default or Cover Payment is not discharged                within 10 days of the default and upon not less than 30 days advance                notice to the defaulting JV Participant, to elect to purchase all                the                right, title, and interest, whenever acquired or arising, of the                defaulting JV Participant in the Assets, including but not limited                to its                Participating Interest or a Net Profits Interest, together with all                proceeds from and accessions of the foregoing (collectively the                “**Defaulting                JV Participant’s Entire Interest**”)                at a purchase price equal to 75% of the fair market value thereof                as                determined by a qualified independent appraiser appointed by the                non-defaulting JV Participant. If the defaulting JV Participant conveys                notice of objection to the person so appointed within 10 days after                receiving notice thereof, then an independent and qualified appraiser                shall be appointed by the joint action of the appraiser appointed                by the                non-defaulting JV Participant and a qualified independent appraiser                appointed by the defaulting JV Participant; *provided,                however*,                that if the defaulting JV Participant fails to designate a qualified                independent appraiser for such purpose within 10 days after giving                notice                of such objection, then the person originally designated by the                non-defaulting JV Participant shall serve as the appraiser; *provided                further,*                that if the appraisers appointed by each of the JV Participants fail                to                appoint a third qualified independent appraiser within 5 days after                the                appointment of the last of them, then an appraiser shall be appointed                by a                judge of a court of competent jurisdiction in the state in which                the                Assets are situated upon the application of either JV Participant.                There                shall be withheld from the purchase price payable, upon transfer                of the                Defaulting Participant’s Entire Interest, the amount of any Cover Payment                under Section 10.4                and unpaid interest thereon to the date of such transfer, or any                unpaid                interest accrued in accordance with Section 14.3                to                the date of such transfer. Upon payment of such purchase price, the                defaulting JV Participant shall be deemed to have relinquished all                of the                Defaulting JV Participant’s Entire Interest to the non-defaulting                Participant, but shall remain liable to the extent provided in                Section 8.7.  |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**10.6**
**Audits.**
** **

| (a)   | During                the Joint Venture Period, within 60 days after the end of each calendar                year an audit shall be completed by certified public accountants                selected                by, and independent of, the Manager. The audit shall be conducted                in                accordance with GAAP and shall cover all books and records maintained                by                the Manager pursuant to this Agreement, all Assets and Encumbrances,                and                all transactions and Operations conducted during such calendar year,                including production and inventory records and all costs for which                the                Manager sought reimbursement under this Agreement, together with                all other                matters customarily included in such audits. All written exceptions                to and                claims upon the Manager for discrepancies disclosed by such audit                shall be                made not more than 3 months after receipt of the audit report, unless                either JV Participant elects to conduct an independent audit pursuant                to                Section 10.6(b)which                is ongoing at the end of such 3 month period, in which case such                exceptions and claims may be made within the period provided in Section                10.6(b).                Failure to make any such exception or claim within such period shall                mean                the audit is deemed to be correct and binding upon the Participants.                The                cost of all audits under this subsection shall be charged to the                Business                Account. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Sarbanes-Oxley      Act*

| (b)   | Notwithstanding                the annual audit conducted by certified public accountants selected                by the                Manager, each JV Participant shall have the right to have an independent                audit of all Business books, records and accounts, including all                charges                to the Business Account. This audit shall review all issues raised                by the                requesting JV Participant, with all costs borne by the requesting                JV                Participant. The requesting JV Participant shall give the other JV                Participant 30 days prior notice of such audit. Any audit conducted                on                behalf of either JV Participant shall be made during the Manager’s normal                business hours and shall not interfere with Operations. Neither JV                Participant shall have the right to audit records and accounts of                the                Business relating to transactions or Operations more than 24 months                after                the calendar year during which such transactions, or transactions                related                to such Operations, were charged to the Business Account. All written                exceptions to and claims upon the Manager for discrepancies disclosed                by                such audit shall be made not more than 3 months after completion                and                delivery of such audit, or they shall be deemed waived.  |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE      XI**

**DISPOSITION      OF PRODUCTION**

**11.1**
**Taking      In Kind**

----

**Exhibit      J**

**11.2**
**Failure      of Participant to Take In Kind**

**11.3**
**Hedging**

**ARTICLE      XII**

**SUPPLEMENTAL      BUSINESS AGREEMENT**

**12.1**
**Supplemental      Business Agreement. **
**Supplemental      Business**
**Supplemental      Business Agreement**

----

**ARTICLE      XIII**

**TRANSFER      OF INTEREST; PREEMPTIVE RIGHT**

**13.1**
**General**

**13.2**
**Limitations      on Free Transferability**

| (a)   | neither                JV Participant shall Transfer any interest in this Agreement or the                Assets                (including, but not limited to, any royalty, profits, or other interest                in                the Products) except in conjunction with the Transfer of part or                all of                its Participating Interest; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | no                JV Participant shall Transfer any interest in this Agreement or the                Property until the selling JV Participant offers to the other JV                Participant the opportunity to purchase the portion of the selling                JV                Participant’s interest it intends to sell (“**Right                of First Refusal**”)                at a price chosen by the selling JV Participant. If the other JV                Participant fails to purchase the interest within 20 days, the selling                JV                Participant may proceed with the sale of the interest pursuant to                this                section. The sale may not be for a price less than that offered to                the                non-selling JV Participant. No transferee of all or any part of a                JV                Participant’s Participating Interest shall have the rights of a JV                Participant unless and until the transferring JV Participant has                provided                to the other JV Participant notice of the Transfer, except as provided                in                Section 13.2(f),                the transferee, as of the effective date of the Transfer, has committed                in                writing to assume and be bound by this Agreement to the same extent                as the                transferring JV Participant; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | neither                JV Participant shall make a Transfer that shall violate any Law,                or                without the consent of the other JV Participant, or result in the                cancellation of any permits, licenses, or other similar                authorization; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | no                Transfer permitted by this Article XIII shall relieve the transferring                JV                Participant of its share of any liability, whether accruing before                or                after such Transfer, which arises out of Operations conducted prior                to                such Transfer or exists on the Effective                Date; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | neither                JV Participant, without the consent of the other JV Participant,                shall                make a Transfer that shall cause termination of the tax partnership                established in **Exhibit                C**.                If such termination is caused, the transferring JV Participant shall                indemnify the other JV Participant for, from and against any and                all loss,                cost, expense, damage, liability or claim therefore arising from                the                Transfer, including without limitation any increase in taxes, interest                and                penalties or decrease in |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (f)   | if                the Transfer is the grant of an Encumbrance in a Participating Interest                to                secure a loan or other indebtedness of either JV Participant in a                bona                fide transaction, other than a transaction approved unanimously by                the                Management Committee or Project Financing approved by the Management                Committee, such Encumbrance shall be granted only in connection with                such                JV Participant’s financing payment or performance of that JV Participant’s                obligations under this Agreement and shall be subject to the terms                of this                Agreement and the rights and interests of the other JV Participant                hereunder (including without limitation under Section 8.10).                Any such Encumbrance shall be further subject to the condition that                the                Chargee of such Encumbrance first enters into a written agreement                with the                other JV Participant in form satisfactory to the other JV Participant,                acting reasonably, binding upon the Chargee, to the effect                that: |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | the                Chargee shall not enter into possession or institute any proceedings                for                foreclosure or partition of the encumbering JV Participant’s Participating                Interest and that such Encumbrance shall be subject to the provisions                of                this Agreement; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | the                Chargee’s remedies under the Encumbrance shall be limited to the sale of                the whole (but only of the whole) of the encumbering JV Participant’s                Participating Interest to the other JV Participant, or, failing such                a                sale, at a public auction to be held at least 30 days after prior                notice                to the other JV Participant, such sale to be subject to the purchaser                entering into a written agreement with the other JV Participant whereby                such purchaser assumes all obligations of the encumbering JV Participant                under the terms of this Agreement. The price of any pre-emptive sale                to                the other JV Participant shall be the remaining principal amount                of the                loan plus accrued interest and related expenses, and such pre-emptive                sale                shall occur within 60 days of the Chargee’s notice to the other JV                Participant of its intent to sell the encumbering JV Participant’s                Participating Interest. Failure of a sale to the other JV Participant                to                close by the end of such period, unless failure is caused by the                encumbering JV Participant or by the Chargee, shall permit the Chargee                to                sell the encumbering JV Participant’s Participating Interest at a public                sale; and |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | the                charge shall be subordinate to any then-existing debt, including                Project                Financing previously approved by the Management Committee, encumbering                the                transferring JV Participant’s Participating Interest; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PART      IV**

**PROVISIONS      APPLICABLE TO BOTH **

**OPTION      PERIOD AND JOINT VENTURE PERIOD**

**ARTICLE      XIV**

**MANAGEMENT      COMMITTEE**

**14.1**
**Meetings**
**of      Management Committee**

| (a)   | The                Management Committee shall hold regular meetings at least quarterly                at a                location to be mutually agreed upon. The Manager shall give 20 days                notice                to Kobex and USE/CC (either referred to in this ARTICLE                XIV                as                an “**MC                Participant**”)                of such meetings. Additionally, either MC Participant may call a                special                meeting upon 7 days notice to the other MC Participant. In case of                an                emergency, reasonable notice of a special meeting shall suffice.                There                shall be a quorum if at least one member or alternate representing                each MC                Participant is present; *provided,                however*,                that if a MC Participant fails to attend two consecutive properly                called                meetings, then a quorum shall exist at the second meeting if the                other MC                Participant is represented by at least one appointed member, and                a vote of                such MC Participant shall be considered the vote required for the                purposes                of the conduct of all business properly noticed even if such vote                would                otherwise require unanimity. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | If                business cannot be conducted at a regular or special meeting due                to the                lack of a quorum, either MC Participant may call the next meeting                upon 10                days notice to the other MC Participant. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Each                notice of a meeting shall include an itemized agenda prepared by                the                Manager in the case of a regular meeting or by the MC Participant                calling                the meeting in the case of a special meeting, but any matters may                be                considered if either MC Participant adds the matter to the agenda                at least                5 days before the meeting or with the consent of the other MC Participant.                The Manager shall prepare minutes of all meetings and shall distribute                copies of such minutes to the other MC Participant within 10 days                after                the meeting. Either MC Participant may electronically record the                proceedings of a meeting with the consent of the other MC Participant.                The                other MC Participant shall sign and return or object to the minutes                prepared by the Manager within 30 days after receipt, and failure                to do                either shall be deemed acceptance of the minutes as prepared by the                Manager. The minutes, when signed or deemed accepted by both MC                Participants, shall be the official record of the decisions made                by the                Management Committee. Decisions made at a Management Committee meeting                shall be implemented in accordance with adopted Programs and Budgets.                If a                MC Participant timely objects to minutes proposed by the Manager,                the                members of the Management Committee shall seek, for a period not                to exceed                30 days from receipt by the Manager of notice of the objections,                to agree                upon minutes acceptable to both MC Participants. If the Management                Committee does not reach agreement on the minutes of the meeting                within                such 30 day period, the minutes of the meeting as |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**14.2**
**Action      Without Meeting in Person**

**14.3**
**Matters      Requiring Approval**

**ARTICLE      XV**

**MANAGER**

**15.1**
**Powers      and Duties of Manager**

| (a)   | The                Manager shall manage, direct and control Operations, and shall prepare                and                present to the Management Committee proposed Programs and Budgets                as                provided in ARTICLE                VII                during the Option Period and ARTICLE                IX                during the Joint Venture Period. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The                Manager shall implement the decisions of the Management Committee,                shall                make all Expenditures necessary to carry out adopted Programs, and                shall                promptly advise the Management Committee if it lacks sufficient funds                to                carry out its responsibilities under this                Agreement. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | The                Manager shall use reasonable efforts to: (i) purchase or otherwise                acquire all material, supplies, equipment, water, utility and                transportation services required for Operations, such purchases and                acquisitions to be made to the extent reasonably possible on the                best                terms available, taking into account all of the circumstances;                (ii) obtain such customary warranties and guarantees as are available                in connection with such purchases and acquisitions; and (iii) keep                the Assets free and clear of all Encumbrances, except any Permitted                Encumbrances and those Encumbrances specifically approved by the                Management Committee. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | The                Manager shall: (i) make or arrange for all payments required by                leases, licenses, permits, contracts and other agreements related                to the                Assets; (ii) pay all taxes, assessments and like charges on                Operations and Assets except taxes determined or measured by a JV                Participant’s sales revenue or net income and taxes, including production                taxes, attributable to a JV Participant’s share of Products, and shall                otherwise promptly pay and discharge expenses incurred in Operations;                *provided,                however*,                that if authorized by the Management Committee, |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (e)   | The                Manager shall: (i) apply for all necessary permits, licenses and                approvals; (ii) comply with all Laws; (iii) notify promptly the                Management Committee of any allegations of substantial violation                thereof;                and (iv) prepare and file all reports or notices required for or as a                result of Operations. The Manager shall not be in breach of this                provision                if a violation has occurred in spite of the Manager’s good faith efforts                to comply consistent with its standard of care under                Section 15.2.                In the event of any such violation, the Manager shall timely cure                or                dispose of such violation on behalf of both JV Participants through                performance, payment of fines and penalties, or both, and the cost                thereof                shall be charged to the Business                Account. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | The                Manager shall prosecute and defend on behalf of the Joint Venture,                but                shall not initiate without consent of the Management Committee, any                litigation or administrative proceedings arising out of Operations.                The                non-managing JV Participant shall have the right to participate if                it                chooses to participate individually, at its own expense, in such                litigation or administrative proceedings. The non-managing JV Participant                shall approve in advance any settlement involving payments, commitments                or                obligations in excess of one hundred thousand Dollars ($100,000)                in cash                or value. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | The                Manager shall provide insurance for the benefit of the JV Participants                as                provided in **Exhibit K**                or                as may otherwise be determined from time to time by the Management                Committee. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | The                Manager may dispose of Assets, whether by abandonment, surrender,                or                Transfer in the ordinary course of business, except that Property                may be                abandoned or surrendered only as provided in ARTICLE                XVIII.                Without prior authorization from the Management Committee, however,                the                Manager shall not: (i) dispose of Assets in any one transaction (or                in any series of related transactions) having a value in excess of                seventy                five thousand Dollars ($75,000); (ii) enter into any sales contracts                or commitments for Product, except as permitted in                Section 11.2;                (iii) begin a liquidation of the Business; or (iv) dispose of                all or a substantial part of the Assets necessary to achieve the                purposes                of the Business. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | The                Manager shall have the right to carry out its responsibilities hereunder                through agents, Affiliates or independent                contractors. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (j)   | The                Manager shall perform or cause to be performed all assessment and                other                work, and shall pay all Governmental Fees, required by Law in order                to                maintain the unpatented mining claims, mill sites and tunnel sites                included within the Property. The Manager shall have the right to                perform                the assessment work required hereunder pursuant to a common plan                of                exploration and continued actual occupancy of such claims and sites                shall                not be required. The Manager shall not be liable on account of any                determination by any court or governmental agency that the work performed                by the Manager does not constitute the required annual assessment                work or                occupancy for the purposes of preserving or maintaining ownership                of the                claims, provided that the work done is pursuant to an adopted Program                and                Budget and is performed in accordance with the Manager’s standard of care                under Section 15.2.                The Manager shall timely record with the appropriate county and file                with                the appropriate United States agency any required affidavits, notices                of                intent to hold and other documents in proper form attesting to the                payment                of Governmental Fees, the performance of assessment work or intent                to hold                the claims and sites, in each case in sufficient detail to reflect                compliance with the requirements applicable to each claim and site.                The                Manager shall not be liable on account of any determination by any                court                or governmental agency that any such document submitted by the Manager                does not comply with applicable requirements, provided that such                document                is prepared and recorded or filed in accordance with the Manager’s                standard of care under Section 15.2. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | If                authorized by the Management Committee, the Manager may: (i) locate,                amend or relocate any unpatented mining claim or mill site or tunnel                site,                (ii) locate any fractions resulting from such amendment or                relocation, (iii) apply for patents or mining leases or other forms                of mineral tenure for any such unpatented claims or sites,                (iv) abandon any unpatented mining claims for the purpose of locating                mill sites or otherwise acquiring from the United States rights to                the                ground covered thereby, (v) abandon any unpatented mill sites for the                purpose of locating mining claims or otherwise acquiring from the                United                States rights to the ground covered thereby, (vi) exchange with or                convey to the United States any of the Property for the purpose of                acquiring rights to the ground covered thereby or other adjacent                ground,                and (vii) convert any unpatented claims or mill sites into one or                more leases or other forms of mineral tenure pursuant to any Law                hereafter                enacted. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | The                Manager shall keep and maintain all required accounting and financial                records pursuant to the procedures described in **Exhibit B**                and in accordance with customary cost accounting practices in the                mining                industry, and shall ensure appropriate separation of accounts unless                otherwise agreed by the JV Participants. All accounting practices                and                audits shall comply with the GAAP and all reports, reviews of internal                controls, and related activities shall be conducted in compliance                with the                requirements of the *Sarbanes                Oxley Act of 2002*. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (m)   | After                the formation of the Joint Venture, the Manager shall maintain Equity                Accounts for each JV Participant. Each JV Participant’s Equity Account                shall be |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (n)   | The                Manager shall keep the Management Committee advised of all Operations                by                submitting in writing to the members of the Management Committee:                (i) monthly progress reports that include statements of expenditures                and comparisons of such expenditures to the adopted Budget;                (ii) periodic summaries of data acquired; (iii) copies of                reports concerning Operations; (iv) a detailed final report within                sixty (60) days after completion of each Program and Budget, which                shall                include comparisons between actual and budgeted expenditures and                comparisons between the objectives and results of Programs; and                (v) such other reports as any member of the Management Committee may                reasonably request. Subject to ARTICLE                XX,                at all reasonable times the Manager shall provide the Management                Committee, or other representative of a JV Participant upon the request                of                such JV Participant’s member of the Management Committee, access to, and                the right to inspect and, at such Participant’s cost and expense, copy the                Existing Data and all maps, drill logs and other drilling data, core,                pulps, reports, surveys, assays, analyses, production reports, operations,                technical, accounting and financial records, and other Business                Information, to the extent preserved or kept by the Manager, subject                to                ARTICLE                XX.                In addition, the Manager shall allow the non-managing JV Participant,                at                the latter’s sole risk, cost and expense, and subject to reasonable safety                regulations, to inspect the Assets and Operations at all reasonable                times,                so long as the non-managing JV Participant does not unreasonably                interfere                with Operations. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (o)   | The                Manager shall prepare, for Management Committee approval, an Environmental                Compliance plan for all Operations consistent with the requirements                of any                applicable Laws or contractual obligations and shall include in each                Program and Budget sufficient funding to implement the Environmental                Compliance plan and to satisfy the financial assurance requirements                of any                applicable Law or contractual obligation pertaining to Environmental                Compliance. To the extent practical, the Environmental Compliance                plan                shall incorporate concurrent reclamation of Property disturbed by                Operations. The Environmental Compliance plan shall not be implemented                until approved by the Management                Committee. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (p)   | The                Manager shall undertake to perform Continuing Obligations when and                as                economic and appropriate, whether before or after termination of                the                Business. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (q)   | The                funds that are to be deposited into the Environmental Compliance                Fund                shall be maintained by the Manager in a separate, interest bearing                cash                management account, which may include, but is not limited to, money                market                investments and money market funds, and/or in longer term investments                if                approved by the Management Committee. Such funds shall be used solely                for                Environmental Compliance and Continuing Obligations, including the                committing of such funds, interests in property, insurance or bond                policies, or other security to satisfy Laws regarding financial assurance                for the reclamation or restoration of the Property, and for other                Environmental Compliance                requirements. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (r)   | If                Participating Interests are adjusted in accordance with this Agreement                the                Manager shall propose from time to time one or more methods for fairly                allocating costs for Continuing                Obligations. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (s)   | The                Manager shall undertake all other activities reasonably necessary                to                fulfill the foregoing, and to implement the policies, objectives,                procedures, methods and actions determined by the Management                Committee. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (t)   | For                further clarification, as set out in Section 7.4,                during the Option Period the Manager shall not be responsible to                operate                the Facility and during the Joint Venture Period, the Manager shall                be                required to operate the Facility as directed by the Management                Committee. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**15.2**
**Standard      of Care**

**15.3**
**Resignation;      Deemed Offer to Resign**

----

| (a)   | the                aggregate Participating Interest of the Manager and its Affiliates                becomes                less than 25%; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the                Manager is in Material Breach of an obligation imposed upon it under                this                Agreement and such failure continues for a period of 60 days after                notice                from the other JV Participant demanding                performance; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the                Manager fails to pay or contest in good faith its bills and Business                debts                as such obligations become due; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | a                receiver, liquidator, assignee, custodian, trustee, sequestrator                or                similar official for a substantial part of its assets is appointed                and                such appointment is neither made ineffective nor discharged within                60 days                after the making thereof, or such appointment is consented to, requested                by, or acquiesced in by the Manager;  |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | the                Manager commences a voluntary case under any applicable bankruptcy,                insolvency or similar law now or hereafter in effect; or consents                to the                entry of an order for relief in an involuntary case under any such                law or                to the appointment of or taking possession by a receiver, liquidator,                assignee, custodian, trustee, sequestrator or other similar official                of                any substantial part of its assets; or makes a general assignment                for the                benefit of creditors; or takes corporate or other action in furtherance                of                any of the foregoing; or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | entry                is made against the Manager of a judgment, decree or order for relief                affecting its ability to serve as Manager or a substantial part of                its                Participating Interest or its other assets by a court of competent                jurisdiction in an involuntary case commenced under any applicable                bankruptcy, insolvency or other similar law of any jurisdiction now                or                hereafter in effect. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**15.4**
**Administrative      Charges and Services Agreement**

| (a)   | The                administration charges of Kobex as Manager shall be a deemed an                Expenditure charge which is no greater than 5% of all the actual                Expenditures incurred during both the Option Period and Joint Venture                Period, and administrative charges on capital expenditures shall                be no                greater than 1% (collectively the **“Administrative                Charges”**). |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Kobex                and USE/CC shall enter into a Services Agreement to provide for                compensation to U.S. Energy for the use of its employees to perform                administrative and operating functions, as further provided in                **Exhibit** **L**. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**15.5**
**Transactions      With Affiliates**

**15.6**
**Activities      During Deadlock**

**ARTICLE      XVI**

**WITHDRAWAL      AND TERMINATION**

**16.1**
**Termination**

| (a)   | Termination                on Terms or by Agreement.                This Agreement shall terminate as expressly provided herein under                Sections                6.4,                6.10,                7.14(c)                and this ARTICLE                XVI,                unless earlier terminated by written agreement by the                Parties. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Termination                by Notice.                Kobex may terminate this Agreement at any time by written notice                to USE/CC                (including during an event of force majeure as set out in Section                21.6),                subject to paying the Initial Expenditure if not incurred yet. Upon                any                termination of this Agreement, Kobex must file all work and/or pay                all                such fees to maintain the Property in good standing for a period                of three                months after such notice, and other than filing such work or paying                such                fees shall have no further obligations to                USE/CC. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**16.2**
**Termination      by Deadlock**

----

**16.3**
**Withdrawal**

**16.4**
**Continuing      Obligations and Environmental Liabilities**
** **

**16.5**
**Disposition      of Assets on Termination**

**16.6**
**Non-Compete      Covenants**

----

**16.7**
**Right      to Data After Termination**

**16.8**
**Continuing      Authority**
** **

**ARTICLE      XVII**

**ACQUISITIONS      WITHIN AREA OF INTEREST**

**17.1**
**General**
**“Rights”**
**Acquiring      Party**
**“Parties”**
**“Party”**

**17.2**
**Notice      to Non-Acquiring Party**
*i.e.*

----

**17.3**
**Election      to Acquire**

| (a)   | During                the Option Period, within 30 days after receiving the Acquiring Party’s                notice, the non-acquiring Party may notify the Acquiring Party of                its                election to include such acquired interest in the Property and make                it                subject to the terms of this Agreement. Upon such election such acquired                interest shall be included in the Property thereafter for all purposes                of                this Agreement. If the Acquiring Party is USE/CC, then Kobex shall                reimburse it for the acquisition costs that it or its Affiliate has                incurred. When paid by Kobex in the first instance on acquisition,                or                reimbursed by Kobex when acquired by USE/CC, the acquisition costs                for any                acquired interests will be deemed to constitute Expenditures to the                credit                of Kobex pursuant to Section 6.1                hereunder. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | During                the Joint Venture Period, within 30 days after receiving the Acquiring                Party’s notice, the non-acquiring Party may notify the Acquiring Party                of                its election to accept a proportionate interest in the acquired interest                equal to its Participating Interest. Promptly upon such notice, the                Acquiring Party shall convey or cause its Affiliate to convey to                the                non-acquiring Party, in proportion to their respective Participating                Interests, by special warranty deed with title held as described                in                Section 8.12,                all of the Acquiring Party’s (or its Affiliate’s) interest in such                acquired interest, free and clear of all Encumbrances arising by,                through                or under the Acquiring Party (or its Affiliate) other than those                to which                both Parties have agreed. The acquired interests shall become a part                of                the Property for all purposes of this Agreement immediately upon                such                notice. The non-acquiring Party shall promptly pay to the Acquiring                Party                its proportionate share of the latter’s actual out-of-pocket acquisition                costs. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**17.4**
**Election      to Acquire Not Exercised**

**ARTICLE      XVIII**

**ABANDONMENT      AND SURRENDER OF PROPERTIES**

**18.1**
**Abandonment      and Surrender of Property - Option Period.**
**Error!      Reference source not found.**

**18.2**
**Abandonment      and Surrender of Property - Joint Venture Period. **

----

**ARTICLE      XIX**

**DISPUTES**

**19.1**
**Governing      Law**
*situs*

**19.2**
**Dispute      Resolution**
** **

**19.3**
**Mediation**

**19.4**
**Arbitration.      **

----

**AAA**
**AAA      Rules**

| (a)   | **Number                of Arbitrators**.                The Parties shall appoint a sole arbitrator agreeable to them to                resolve                any dispute; *provided*,                *however*,                that should the Parties fail to agree upon a sole arbitrator within                30                days after the initiation of the arbitration, then there shall be                3                arbitrators. The claimant shall name the first arbitrator within                thirty                days after the expiration of the above-described deadline to appoint                a                single arbitrator. The respondent shall appoint the second arbitrator                within 30 days after the appointment of the first arbitrator. The                two                Party-appointed arbitrators shall appoint the third arbitrator within                thirty days after the appointment of the second arbitrator. If                (i) the respondent fails to appoint an arbitrator or (ii) the                two Party-appointed arbitrators fail to appoint a third arbitrator                within                the above-described time limitations, then the AAA shall appoint                the                second and/or third arbitrator, as applicable. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | **Place                of Arbitration**.                Unless otherwise agreed in writing by all Parties to the arbitration,                the                situs of the arbitration under this Agreement shall be Denver, Colorado,                U.S.A. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | **Language**.                The arbitration proceedings shall be conducted in the English                language. |
|-----------------|---------------------------------------------------------------------------------------------------------------------|

| (d)   | **Entry                of Judgment**.                Judgment on the award of the arbitral tribunal may be entered by                any court                of competent jurisdiction. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | **Qualifications                and Conduct of the Arbitrators**.                All arbitrators shall be and remain at all times wholly impartial                and                shall provide the Parties with a statement that they can and shall                decide                the case impartially. No arbitrator shall have any financial interest                (directly or indirectly) in the dispute or any financial dependence                (directly or indirectly) upon any of the Parties. All arbitrators                shall be                knowledgeable of the mining industry or the law applicable to such                business. The AAA’s Rules of Ethics shall be applicable to all                arbitrators. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (f)   | **Interim                Measures**.                The arbitrators, or in an emergency the presiding arbitrator acting                alone                in the event one or more of the other arbitrators are unable to be                involved in a timely fashion, may grant interim measures including                injunctions, attachments and conservation orders in appropriate                circumstances, which measures the Parties agree may be immediately                enforced by the arbitrators or by court order. Hearings on requests                for                interim measures may be held in person, by telephone or by video                conference, and requests for relief, responses, briefs or memorials                may be                sent to, and orders or awards received from, the arbitrators by facsimile                or other similar means which include a confirmation of delivery.                Notwithstanding the requirements for alternative dispute resolution                procedures (such as negotiation and mediation), prior to the constitution                of the arbitration tribunal and thereafter as necessary to enforce                the                arbitrators’ rulings or in the absence of the jurisdiction of the                arbitrators to rule on interim measures in a given jurisdiction,                any Party                may apply to a court for interim measures, and the JV Parties agree                that                seeking and obtaining such measures shall not waive the right to                arbitration. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | **Costs                and Attorney’s Fees**.                The arbitral tribunal is authorized to award attorney’s fees or allocate                them between the Parties. The costs of the arbitration proceedings                shall                be borne in the manner determined by the arbitral tribunal, with                the                exception of the arbitrators’ fees. The Parties shall divide the cost of a                single arbiter, with Kobex paying 50% of the fee and the U.S. Energy                Group                paying the remaining 50%. In the event that three arbitrators are                appointed, each of Kobex and the U.S. Energy Group shall pay the                fee of                the arbitrator it appoints and 50% of the fee of the third                arbitrator. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | **Currency                of Award**.                The arbitral award shall be made and payable in Dollars free of any                tax or                other deduction. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | **Punitive                Damages**.                Penal, punitive, treble, multiple, consequential, incidental or similar                damages may not be recovered or                awarded. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | **Confidentiality**.                Except to the extent necessary to enforce the arbitration, agreement                or                award, to enforce other rights of the Parties, or as required by                law, the                Parties, their employees, officers, directors, counsel, consultants,                and                expert witnesses, shall maintain as confidential the fact of the                arbitration proceeding, the arbitral award, contemporaneous or historical                documents exchanged or produced during the arbitration proceeding,                and                memorials, briefs or other documents prepared for the                arbitration. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | **Waiver                of Appeals**.                To the extent permitted by law, right to appeal from or to cause                a review                of any arbitral award by any court is hereby waived by the JV                Participants. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | **Summary                Disposition**.                The arbitrators are hereby authorized, if they consider it appropriate,                to                decide any disputes by summary disposition on the documents and written                testimony without hearing oral                testimony. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (m)   | **Draft                of the Proposed Award**.                Prior to rendering the final award, the arbitral tribunal shall submit                to                the Parties an unsigned draft of the proposed award and each Party,                within                10 Business Days after receipt of such draft award, may serve on                every                other Party and file with the tribunal a written statement commenting                upon                any alleged errors of fact, law, computation, or otherwise. The tribunal                shall endeavour to render its final award within 10 Business Days                after                the receipt of the letter of the written statements of the                Parties. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE      XX**

**CONFIDENTIALITY,      OWNERSHIP, **

**USE      AND DISCLOSURE OF INFORMATION**

**20.1**
**Business      Information**

**20.2**
**Party      Information**
**Enhancements**
** **

**20.3**
**Permitted      Disclosure of Confidential Business Information**

| (a)   | to                a Party’s officers, directors, partners, members, employees, Affiliates,                shareholders, agents, attorneys, accountants, consultants, contractors,                subcontractors or advisors, for the sole purpose of such Party’s                performance of its obligations under this                Agreement; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to                any party to whom the disclosing Party contemplates a Transfer of                all or                any part of its Participating Interest, for the sole purpose of evaluating                the proposed Transfer;  |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (c)   | to                any actual or potential lender, underwriter or investor for the sole                purpose of evaluating whether to make a loan to or investment in                the                disclosing Party; or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | to                a third party with whom the disclosing Party contemplates any independent                business activity or operation. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

*bona      fide*
** **

**20.4**
**Disclosure      Required By Law**

| (a)   | such                disclosure is legally required to be made in a judicial, administrative                or                governmental proceeding pursuant to a valid subpoena or other applicable                order; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | such                disclosure is legally required to be made pursuant to the rules or                regulations of a stock exchange or similar trading market applicable                to                the disclosing JV Participant;                or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | such                disclosure is legally required to be made by the rules and regulations                of                any regulatory authority. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

**20.5**
**Permitted      Disclosure.**

| (a)   | to                another Party or the Manager; |
|-----------------|-------------------------------------------------|

| (b)   | with                the prior written consent of all the other                Parties; |
|-----------------|----------------------------------------------------------------------------------------|

----

| (c)   | to                a bank or other financial institution considering the provision of                or,                which has provided financial accommodation to, a Party or an Affiliate                of                a Party or to a trustee, representative or agent or such a bank or                financial institution; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | to                a third party, provided that such third party has first agreed in                writing                to maintain the confidentiality of the Confidential                Information; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | by                a Party to legal, financial and other professional advisers, auditors                and                other consultants, officers and employees of a Party or a Party’s                Affiliate, provided that such Party or Party’s Affiliate has first agreed                in writing to maintain the confidentiality of the Confidential                Information; and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | to                the extent that the Confidential Information was publicly available                at the                Effective Date or becomes publicly available subsequent to the Effective                Date without breach of this                Agreement. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**20.6**
**Public      Announcements**

**ARTICLE      XXI**

**GENERAL      PROVISIONS**

**21.1**
**Notices**
**Notices**

----

**21.2**
**Currency**
**dollars**
**$**

**21.3**
**Headings**
**Exhibits**

**21.4**
**Waiver**

----

**21.5**
**Modification**

**21.6**
**Force      Majeure**

----

**21.7**
**Rule      Against Perpetuities**

**21.8**
**Further      Assurances**

**21.9**
**Entire      Agreement; Successors and Assigns**

**21.10**
**Memorandum**

----

**21.11**
**Counterparts**

| **U.S.                MOLY CORP.** |
|------------------------------------|
|                               |   |
| Per:                               |    /s/              Mark J. Larsen |
|                               | *President* |

| **U.S.                ENERGY CORP.** |
|--------------------------------------|
|                                 |   |
| Per:                                 |    /s/              Mark J. Larsen |
|                                 | *President* |

| **CRESTED                CORP.** |
|----------------------------------|
|                             |   |
| Per:                             |    /s/              Keith G. Larsen |
|                             | *Co-Chair* |

| **KOBEX                RESOURCES LTD.** |
|-----------------------------------------|
|                                    |   |
| Per:                                    |    /s/              Roman Shklanka |
|                                    | *Chairman* |

----