----

| x      | Quarterly                  report pursuant to section 13 or 15(d) of the Securities Exchange                  Act of                  1934  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|   | For                  the quarter ended September 30, 2006 or                                                                                |
|   |                                                                                                                                        |
| o      | Transition                  report pursuant to section 13 or 15(d) of the Securities Exchange                  Act of                  1934 |
|   | For                  the transition period from ___________ to                  ____________                                                |

| **CRESTED                  CORP.**                                                    |
|---------------------------------------------------------------------------------------|
| (Exact                  Name of Company as Specified in its                  Charter) |

| **Colorado**                                                      |   | **84-0608126**                       |
|-------------------------------------------------------------------|--------|--------------------------------------|
| (State                  or other jurisdiction of                  |   | (I.R.S.                  Employer    |
| incorporation                  or organization)                   |   | Identification                  No.) |
|                                                              |   |                                 |
| **877                  North 8****th****West, Riverton, WY**      |   | **82501**                            |
| (Address                  of principal executive offices)         |   | (Zip                  Code)          |
|                                                              |   |                                 |
| Company's                  telephone number, including area code: |   | **(307)                  856-9271**  |

| Not                  Applicable                                                                        |
|--------------------------------------------------------------------------------------------------------|
| (Former                  name, address and fiscal year, if changed since last                  report) |

----

| Class                                          |   | Outstanding                  Shares at November 14, 2006 |
|------------------------------------------------|--------|----------------------------------------------------------|
| Common                  stock, $.001 par value |   | 17,182,704                                               |

----

**CRESTED        CORP.**

**INDEX**

|                          |                                                                              | Page                  No.     |
|-------------------------------|-----------------------------------------------------------------------------------|-------------------------------|
| **PART                  I.**  | **FINANCIAL                  INFORMATION**                                        |                          |
|                          |                                                                              |                          |
| ITEM                  1.      | Financial                  Statements:                                            |                          |
|                          |                                                                              |                          |
|                          | Balance                  Sheets                                                   |                          |
|                          | September                  30, 2006 (Unaudited) and December 31, 2005 (Audited)   | 4-5                           |
|                          |                                                                              |                          |
|                          | Statements                  of Operations (Unaudited)                             |                          |
|                          | Three                  and Nine Months Ended September 30, 2006 and 2005          | 6                             |
|                          |                                                                              |                          |
|                          | Statements                  of Cash Flows (Unaudited)                             |                          |
|                          | Nine                  Months Ended September 30, 2006 and 2005                    | 7-8                           |
|                          |                                                                              |                          |
|                          | Notes                  to Financial Statements (Unaudited)                        | 9-16                          |
|                          |                                                                              |                          |
| ITEM                  2.      | Management’s                  Discussion and Analysis of                    |                          |
|                          | Financial                  Condition and Results of Operations                    | 17-29                         |
|                          |                                                                              |                          |
| ITEM                  3.      | Quantitative                  and Qualitative Disclosures About Market Risk  | 29-31                         |
|                          |                                                                              |                          |
| ITEM                  4.      | Controls                  and Procedures                                          | 31                            |
|                          |                                                                              |                          |
| **PART                  II.** | **OTHER                  INFORMATION**                                            |                          |
|                          |                                                                              |                          |
| ITEM                  1.      | Legal                  Proceedings                                                | 32-34                         |
|                          |                                                                              |                          |
| ITEM                  2.      | Changes                  in Securities and Use of Proceeds                        | 34                            |
|                          |                                                                              |                          |
| ITEM                  3.      | Defaults                  upon Senior Securities                                  | 34                            |
|                          |                                                                              |                          |
| ITEM                  4.      | Submission                  of Matters to a Vote of Security Holders              | 34                            |
|                          |                                                                              |                          |
| ITEM                  5.      | Other                  Information                                                | 34                            |
|                          |                                                                              |                          |
| ITEM                  6.      | Exhibits                  and Reports on Form 8-K                                 | 35                            |
|                          |                                                                              |                          |
|                          | Signatures                                                                        | 36                            |
|                          |                                                                              |                          |
|                          | Certifications                                                                    | See                  Exhibits |

----

**PART        I. FINANCIAL INFORMATION**

**ITEM        1. Financial Statements**

| **CRESTED                    CORP.**                                               |
|------------------------------------------------------------------------------------|
| **BALANCE                    SHEETS**                                              |
| **ASSETS**                                                                         |
|                                                                               |   |   |   |   |   |
|                                                                               |   | September                    30,  |   | December                    31, |   |
|                                                                               |   | 2006 |   | 2005 |   |
|                                                                               |   | (Unaudited) |   |   |   |   |
| CURRENT                    ASSETS:                                                 |   |   |   |   |   |   |   |
| Cash                    and cash equivalents                                  |   | $ | 4,521,600 |   | $ | 95,100 |   |
| Accounts                    receivable                                        |   |   | 27,800 |   |   | -- |   |
|                                                                               |   |   | 4,549,400 |   |   | 95,100 |   |
| INVESTMENTS:                                                                       |   |   |   |   |   |   |   |
| Affiliated                    companies                                       |   |   | 3,763,900 |   |   | 3,348,800 |   |
| Non-affiliated                    companies                                   |   |   | -- |   |   | 5,228,300 |   |
|                                                                               |   |   | 3,763,900 |   |   | 8,577,100 |   |
| PROPERTIES                    AND EQUIPMENT:                                       |   |   |   |   |   |   |   |
| Machinery                    and other equipment                              |   |   | 10,000 |   |   | 10,000 |   |
| Developed                    oil properties, full cost method                 |   |   | 886,800 |   |   | 886,800 |   |
|                                                                               |   |   | 896,800 |   |   | 896,800 |   |
| Less                    accumulated depreciation, depletion and amortization  |   |   | (886,800 | ) |   | (886,800 | ) |
|                                                                               |   |   | 10,000 |   |   | 10,000 |   |
|                                                                               |   | $ | 8,323,300 |   | $ | 8,682,200 |   |
|                                                                               |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                                                                    |
|-------------------------------------------------------------------------------------------------------|
| **BALANCE                  SHEETS**                                                                   |
| **LIABILITIES                  AND SHAREHOLDERS' DEFICIT**                                            |
|                                                                                                  |   |   |   |   |   |   |   |
|                                                                                                  |   |  September                  30,  |   |  December                  31, |   |
|                                                                                                  |   |  2006 |   |  2005 |   |
|                                                                                                  |   |  (Unaudited)  |   |   |   |   |
| CURRENT                  LIABILITIES:                                                                 |   |   |   |   |   |   |   |
| Current                  debt to affiliate                                                       |   | $ | 14,335,400 |   | $ | 10,821,800 |   |
| Accrued                  payable                                                                 |   |   | 700,000 |   |   | -- |   |
| Asset                  retirement obligation                                                     |   |   | 106,200 |   |   | 106,200 |   |
|                                                                                                  |   |   | 15,141,600 |   |   | 10,928,000 |   |
|                                                                                                  |   |   |   |   |   |   |   |
| COMMITMENT                  TO FUND EQUITY INVESTEES                                                  |   |   | 215,600 |   |   | 215,600 |   |
|                                                                                                  |   |   |   |   |   |   |   |
| ASSET                  RETIREMENT OBLIGATION                                                          |   |   | 1,194,300 |   |   | 1,045,200 |   |
|                                                                                                  |   |   |   |   |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                                                        |   |   | -- |   |   | -- |   |
|                                                                                                  |   |   |   |   |   |   |   |
| FORFEITABLE                  COMMON STOCK, $.001 par value                                            |   |   |   |   |   |   |   |
| 15,000                  shares issued, forfeitable until earned                                  |   |   | 10,100 |   |   | 10,100 |   |
|                                                                                                  |   |   |   |   |   |   |   |
| SHAREHOLDERS'                  DEFICIT                                                                |   |   |   |   |   |   |   |
| Preferred                  stock, $.001 par value;                                               |   |   |   |   |   |   |   |
|  100,000                  shares authorized none issued or outstanding                           |   |   | -- |   |   | -- |   |
| Common                  stock, $.001 par value; 100,000,000 shares                  authorized;  |   |   |   |   |   |   |   |
|  17,149,298                  shares issued and outstanding each period                           |   |   |   |   |   |   |   |
|  shares                  issued and outstanding                                                  |   |   | 17,200 |   |   | 17,200 |   |
| Additional                  paid-in capital                                                      |   |   | 11,814,400 |   |   | 11,814,400 |   |
| Accumulated                  deficit                                                             |   |   | (20,069,900 | ) |   | (15,348,300 | ) |
|                                                                                                  |   |   | (8,238,300 | ) |   | (3,516,700 | ) |
|                                                                                                  |   | $ | 8,323,300 |   | $ | 8,682,200 |   |
|                                                                                                  |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                                     |   |
|------------------------------------------------------------------------|--------|
| **Statements                  of Operations**                          |   |
| **(Unaudited)**                                                        |   |
|                                                                   |   |   |   |   |   |   |   |   |   |
|                                                                   |   | Three                  months ended September 30, |   | Nine                  months ended September 30, |   |
|                                                                   |   | 2006 |   | 2005 |   | 2006 |   | 2005 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |
| REVENUES:                                                              |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COSTS                  AND EXPENSES:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accretion                  of asset retirement obligation         |   |   | 49,300 |   |   | 22,700 |   |   | 149,100 |   |   | 68,100 |   |
| General                  and administrative                       |   |   | 198,800 |   |   | 50,700 |   |   | 348,200 |   |   | 161,500 |   |
|                                                                   |   |   | 248,100 |   |   | 73,400 |   |   | 497,300 |   |   | 229,600 |   |
| LOSS                  FROM CONTINUING OPERATIONS                       |   |   | (248,100 | ) |   | (73,400 | ) |   | (497,300 | ) |   | (229,600 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER                  REVENUES AND (EXPENSES):                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                          |   |   | 11,300 |   |   | 800 |   |   | 12,200 |   |   | 800 |   |
| Dividend                  income                                  |   |   | 27,000 |   |   | 12,400 |   |   | 27,000 |   |   | 12,400 |   |
| Gain                  (loss) on sale of investment                |   |   | 3,794,800 |   |   | (65,800 | ) |   | 3,794,800 |   |   | 5,816,700 |   |
| Loss                  on exchange of Enterra Acquisition shares   |   |   | -- |   |   | -- |   |   | (1,354,200 | ) |   | -- |   |
| (Loss)                  gain on sale of marketable securities     |   |   | (270,800 | ) |   | 448,300 |   |   | (324,300 | ) |   | 448,300 |   |
| Gain                  (loss) on valuation of derivatives          |   |   | -- |   |   | 258,000 |   |   | (223,600 | ) |   | 1,486,800 |   |
| Litigation                  settlement                            |   |   | (3,500,000 | ) |   | -- |   |   | (3,500,000 | ) |   | -- |   |
|                                                                   |   |   | 62,300 |   |   | 653,700 |   |   | (1,568,100 | ) |   | 7,765,000 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS                  BEFORE EQUITY GAIN (LOSS),                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AND                  PROVISION FOR INCOME TAXES                   |   |   | (185,800 | ) |   | 580,300 |   |   | (2,065,400 | ) |   | 7,535,400 |   |
| --                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY                  IN (LOSS) GAIN OF AFFILIATE                    |   |   | (2,311,900 | ) |   | 187,600 |   |   | (2,656,200 | ) |   | (902,700 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (LOSS)                  GAIN BEFORE PROVISION                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FOR                  INCOME TAXES                                 |   |   | (2,497,700 | ) |   | 767,900 |   |   | (4,721,600 | ) |   | 6,632,700 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PROVISION                  FOR INCOME TAXES                            |   |   | -- |   |   | -- |   |   | -- |   |   | (100,000 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  (LOSS) INCOME                                     |   | $ | (2,497,700 | ) | $ | 767,900 |   | $ | (4,721,600 | ) | $ | 6,532,700 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PER                  SHARE DATA                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  (LOSS) INCOME PER SHARE,                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  BASIC                  AND DILUTED                               |   | $ | (0.15 | ) | $ | 0.04 |   | $ | (0.28 | ) | $ | 0.38 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BASIC                  AND DILUTED WEIGHTED AVERAGE                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHARES                  OUTSTANDING                               |   |   | 17,149,298 |   |   | 17,149,298 |   |   | 17,149,298 |   |   | 17,145,298 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                                      |   |
|-------------------------------------------------------------------------|--------|
| **STATEMENTS                  OF CASH FLOWS**                           |   |
| **(Unaudited)**                                                         |   |
|                                                                    |   | Nine                  months ended September 30, |   |
|                                                                    |   | 2006 |   | 2005 |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                  |   |   |   |   |   |
| Net                  (loss) income                                      |   | $ | (4,721,600 | ) | $ | 6,532,700 |   |
| Adjustments                  to reconcile net (loss) income to net cash |   |   |   |   |   |   |   |
| used                  in by operating activities:                       |   |   |   |   |   |   |   |
| Equity                  in loss of affiliate                            |   |   | 2,656,200 |   |   | 902,700 |   |
| Loss                  on exchange of Enterra units                      |   |   | 1,354,200 |   |   | -- |   |
| Loss                  (gain) on sale of marketable securities           |   |   | 324,300 |   |   | (448,300 | ) |
| Gain                  on sale of Pinnacle Gas                           |   |   | (3,794,800 | ) |   | -- |   |
| Gain                  on sale of affiliate                              |   |   | -- |   |   | (5,816,700 | ) |
| Noncash                  compensation                                   |   |   | 195,800 |   |   | 4,800 |   |
| Change                  in valuation of derivatives                     |   |   | 223,600 |   |   | (1,486,800 | ) |
| Accretion                  of asset retirement obligation               |   |   | 149,100 |   |   | 68,100 |   |
| Net                  changes in assets and liabilities                  |   |   | (27,800 | ) |   | -- |   |
| NET                  CASH USED IN OPERATING ACTIVITIES                  |   |   | (3,641,000 | ) |   | (243,500 | ) |
|                                                                    |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                  |   |   |   |   |   |   |   |
| Investment                  in non-affiliated companies                 |   |   | -- |   |   | (65,800 | ) |
| Proceeds                  from sale of marketable securities            |   |   | 2,991,000 |   |   | 2,177,800 |   |
| Proceeds                  from the sale of Pinnacle Gas                 |   |   | 4,830,000 |   |   | -- |   |
| Investment                  in affiliate                                |   |   | (3,071,300 | ) |   | (1,905,800 | ) |
| NET                  PROVIDED BY INVESTING ACTIVITIES                   |   |   | 4,749,700 |   |   | 206,200 |   |
|                                                                    |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVATES:                   |   |   |   |   |   |   |   |
| Net                  activity on debt to affiliate                      |   |   | 3,317,800 |   |   | 128,300 |   |
|                                                                    |   |   |   |   |   |   |   |
| NET                  INCREASE IN                                        |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS                              |   |   | 4,426,500 |   |   | 91,000 |   |
|                                                                    |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS AT                           |   |   |   |   |   |   |   |
| BEGINNING                  OF PERIOD                                    |   |   | 95,100 |   |   | 3,800 |   |
|                                                                    |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS AT                           |   |   |   |   |   |   |   |
| END                  OF PERIOD                                          |   | $ | 4,521,600 |   | $ | 94,800 |   |
|                                                                    |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                           |   |
|--------------------------------------------------------------|--------|
| **STATEMENTS                  OF CASH FLOWS**                |   |
| **(Unaudited)**                                              |   |
|                                                         |   | Nine                  months ended September 30, |   |
|                                                         |   | 2006 |   | 2005 |   |
|                                                         |   |   |   |   |   |
| SUPPLEMENTAL                  DISCLOSURES:                   |   |   |   |   |   |
| Interest                  paid                               |   | $ | -- |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |
| Income                  tax paid                             |   | $ | -- |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |
| NONCASH                  INVESTING AND FINANCING ACTIVITIES: |   |   |   |   |   |   |   |
| Exchange                  of Enterra Acquisition Shares for  |   |   |   |   |   |   |   |
| Enterra                  Trust Units                         |   | $ | 3,315,300 |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |
| Issuance                  of stock to outside directors      |   | $ | -- |   | $ | 4,800 |   |
|                                                         |   |   |   |   |   |   |   |
| Investment                  in Non-affiliated companes       |   | $ | -- |   | $ | 6,734,200 |   |
|                                                         |   |   |   |   |   |   |   |
| Investment                  in affiliate                     |   | $ | -- |   | $ | 651,300 |   |
|                                                         |   |   |   |   |   |   |   |
| Deferred                  gain on sale of Rocky Mountain Gas |   | $ | -- |   | $ | 424,500 |   |
|                                                         |   |   |   |   |   |   |   |
| Net                  activity on debt to affiliate           |   | $ | -- |   | $ | 200,400 |   |
|                                                         |   |   |   |   |   |   |   |

----

**CRESTED            CORP.**

**Notes            to**
**            Financial Statements (Unaudited)**

----

**CRESTED              CORP.**

**Notes              to**
**              Financial Statements (Unaudited)**

----

**CRESTED            CORP.**

**Notes            to Financial Statements (Unaudited)**

| Balance                December 31, 2005            |   | $      | 1,151,400 |   |
|-----------------------------------------------------|--------|--------|-----------|--------|
| Addition                to Liability                |   |   |      |   |
| Liability                Settled                    |   |   |      |   |
| Accretion                Expense - 8% discount rate |   |   | 149,100   |   |
| Balance                September 30, 2006           |   | $      | 1,300,500 |   |

----

**CRESTED            CORP.**

**Notes            to Financial Statements (Unaudited)**

----

**CRESTED            CORP.**

**Notes            to Financial Statements (Unaudited)**

**SUBSEQUENT      EVENTS**

----

**CRESTED            CORP.**

**Notes            to Financial Statements (Unaudited)**

| Date                or                |   |   | Option    |   |   |         |   |
|---------------------------------------|--------|--------|-----------|--------|--------|--------------|--------|
| Anniversary*                          |   |   | Payment   |   |   | Expenditures |   |
|                                  |   |   |      |   |   |         |   |
| 10                business days       |   |   |      |   |   |         |   |
| after                Effective Date** |   | $      | 1,450,000 |   |   | -0-          |   |
|                                  |   |   |      |   |   |         |   |
| By                first anniversary   |   | $      | 500,000   |   | $      | 3,500,000    |   |
|                                  |   |   |      |   |   |         |   |
| By                second anniversary  |   | $      | 500,000   |   | $      | 5,000,000    |   |
|                                  |   |   |      |   |   |         |   |
| By                third anniversary   |   | $      | 500,000   |   | $      | 5,000,000    |   |
|                                  |   |   |      |   |   |         |   |
| By                fourth anniversary  |   | $      | 500,000   |   | $      | 2,500,000    |   |
|                                  |   |   |      |   |   |         |   |
| By                fifth anniversary   |   | $      | 500,000   |   |   | ***          |   |
|                                  |   | $      | 3,950,000 |   | $      | 16,000,000   |   |

| *      | Anniversary                of Effective Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **     | If                paid in KBX stock, 10 business days after Canadian regulatory and                stock                exchange approval.                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***    | Delivery                of a bankable feasibility study (“BFS”) on the Property. If the total                Option Payments and Expenditures and costs to prepare the BFS are                less                than $50 million, KBX will pay U.S. Moly the difference in cash.                If the                total is more than $50 million before the BFS is completed, U.S.                Moly and                KBX each will pay 50% of the balance needed to complete the BFS. |

----

**CRESTED            CORP.**

**Notes            to Financial Statements (Unaudited)**

----

**CRESTED            CORP.**

**Notes            to Financial Statements (Unaudited)**

----

**CRESTED      CORP.**

**ITEM      2. **
**Management's      Discussion and Analysis of Financial Condition and Results of      Operations**
**.**

**General      Overview**

**Uranium**

**Gold**

----

**Molybdenum**

| ·   | Whether                USECC can negotiate terms with industry partners which will return                a                substantial profit to the Company for its retained interest and the                project’s development costs to that point in time;                and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Whether                a feasibility study will show volumes and grades of mineralization                and                manageable costs of mining, transportation and processing, which                are                sufficient to make a profit and to bring industry partners or other                investors to the point of further                investment. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Forward      Looking Statements**

**Critical      Accounting Policies**

*Asset      Impairments*

*Asset      Retirement Obligations*

*Use      of Accounting Estimates*

----

*Income      Taxes*

*Marketable      Securities*

**Recent      Accounting Pronouncements**

**SFAS      123(R)**

**Liquidity      and Capital Resources**

----

**Capital      Resources**

----

**sxr      Uranium One Agreement**

----

**Capital      Requirements**

----

**Maintaining      Mineral Properties**

**Uranium      Properties**

**Sutter      Gold Mining Inc. (SGMI) Properties**

**Lucky      Jack Molybdenum Property**

----

**Other**

**Results      of Operations**

**Quarter      and Nine Months Ended September 30, 2006 compared with the Quarter and Nine      Months Ended September 30, 2005**

----

**Quarter      and Nine Months Ended September 30, 2005 compared with the Quarter and Nine      Months Ended September 30, 2004**

----

**Contractual      Obligations**

**Subsequent      Events**

**Kobex      Resources Ltd. - Lucky Jack Molybdenum Property**

----

| Date                or                |   | Option  |      |         |   |
|---------------------------------------|--------|---------|-----------|--------------|--------|
| Anniversary*                          |   | Payment |      | Expenditures |   |
|                                  |   |    |      |         |   |
| 10                business days       |   |    |      |         |   |
| after                Effective Date** |   | $       | 1,450,000 |         |   | -0- |   |
|                                  |   |    |      |         |   |   |   |
| By                first anniversary   |   | $       | 500,000   |         | $      | 3,500,000 |   |
|                                  |   |    |      |         |   |   |   |
| By                second anniversary  |   | $       | 500,000   |         | $      | 5,000,000 |   |
|                                  |   |    |      |         |   |   |   |
| By                third anniversary   |   | $       | 500,000   |         | $      | 5,000,000 |   |
|                                  |   |    |      |         |   |   |   |
| By                fourth anniversary  |   | $       | 500,000   |         | $      | 2,500,000 |   |
|                                  |   |    |      |         |   |   |   |
| By                fifth anniversary   |   | $       | 500,000   |         |   | *** |   |
|                                  |   | $       | 3,950,000 |         | $      | 16,000,000 |   |

| *      | Anniversary                of Effective Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **     | If                paid in KBX stock, 10 business days after Canadian regulatory and                stock                exchange approval.                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***    | Delivery                of a bankable feasibility study (“BFS”) on the Property. If the total                Option Payments and Expenditures and costs to prepare the BFS are                less                than $50 million, KBX will pay U.S. Moly the difference in cash.                If the                total is more than $50 million before the BFS is completed, U.S.                Moly and                KBX each will pay 50% of the balance needed to complete the BFS. |

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**Special      Committee of Newly Appointed Directors**

**ITEM      3. **
**Quantitative      and Qualitative Disclosures About Market Risk**

**Risk      Factors **

**The      following risk factors should be considered in evaluating the information in      this Form 10-Q.**

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**Uncertainties      in the value of the mineral properties**

| ·   | In                the event that SXR does not purchase our uranium assets, the Company                and                USE will have to continue to pursue an equity or industry partner                to                assist in the development of the properties. Profitability of the                uranium                properties will depend on several factors which include continued                sustained higher prices for uranium oxide, cost controls at the Shootaring                Canyon Mill and the surrounding uranium properties including mining,                transportation and milling of ores and successful financing and commence                refurbishment of the mill. Additional mineral properties in the vicinity                of the Shootaring Canyon Mill or ore from contract miners in the                area may                need to be acquired to feed the                mill. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   |   |
|--------------------|--------|

| ·   | The                Lucky Jack molybdenum property has had extensive work conducted by                prior                owners, but this data will have to be updated to the level of a current                feasibility study to determine the viability of starting mining                operations. Obtaining mining and other permits to begin mining the                molybdenum property may be very difficult, and, like any mining operation,                capital requirements for a molybdenum mine/mill operation will be                substantial. There is a history of opposition by local government                entities                and environmental organizations to the prior owners seeking permits                to                mine this property. This opposition has been expressed in litigation                from                time to time. Continued legal challenges may delay putting the Lucky                Jack                Property into production. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company and USE have not yet obtained feasibility studies on any                of our                mineral properties. These studies would establish the economic viability,                or not, of the different properties based on extensive drilling and                sampling, the design and costs to build and operate gold and                uranium/vanadium mills, the cost of capital, and other factors.                Feasibility studies can take many months to complete. These studies                are                conducted by professional third party consulting and engineering                firms,                and will have to be completed, at considerable cost, to determine                if the                deposits contain proved reserves (amounts of minerals in sufficient                grades                that can be extracted profitably under current pricing assumptions                for                development and operating costs and commodity prices). A feasibility                study                usually must be completed in order to raise the substantial capital                needed                to put a property into production. The Company and USE has not established                any reserves (economic deposits of mineralized materials) on any                of our                molybdenum, uranium/vanadium or gold properties, and future studies                may                indicate that some or all of the properties will not be economic                to put                into production. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Compliance      with environmental regulations may be costly**

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**Possible      Dilution to Shareholders.**

**ITEM      4. **
**Controls      and Procedures**

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**PART      II. OTHER INFORMATION**

**ITEM      1. **
**Legal      Proceedings**

**Phelps      Dodge Litigation**

**Mt.      Emmons Patents Litigation**
**.      **

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**Plateau      Resources Ltd.**

**Enterra      Energy Trust Indemnification on Rocky Mountain Gas,      Inc.**

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**ITEM      2. **
**Changes      in Securities and Use of Proceeds**

**ITEM      3. **
**Defaults      upon Senior Securities**

**ITEM      4. **
**Submission      of Matters to a Vote of Security Holders**

**ITEM      5. **
**Other      Information**

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**ITEM      6. **
**Exhibits      and reports on Form 8-K**

|   | (a)    | Exhibits. |                                                                                                                                                                                  |
|--------|--------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |      |                                                                                                                                                                                  |
|   |   | 31.1      | Certification                of President Pursuant to Rule 13a-15(e) / Rule                15d-15(e)                                                                                  |
|   |   | 31.2      | Certification                of Chief Financial Officer Pursuant to Rule 13a-14(a) / Rule                15(e)/15d-15(e)                                                              |
|   |   | 32.1      | Certification                of President Pursuant to 18 U.S.C. Section 1350, as adopted by Section                906                of the Sarbanes-Oxley Act of 2002               |
|   |   | 32.2      | Certification                of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as                adopted                by Section 906 of the Sarbanes-Oxley Act of 2002 |
|   |   | 10.1      | The                Settlement Agreement with Phelps Dodge Corporation                                                                                                                 |
|   |   | 10.2      | Purchase                and Sale Contract with DLJ Merchant Banking III, Inc. without                attachments                                                                      |

|   | (b)    | **Reports                on Form 8-K.**                The Company filed 3 reports on Form 8-K for the quarter ended September                30, 2006. The events reported were as follows: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                         |   |
|   |   | 1.                                                                                                                                                                                           | The                report filed on July 13, 2006, under Item 8.01 referenced the signing                of                an Exclusivity Agreement with sxr Uranium One Inc. |
|   |   |                                                                                                                                                                                         |   |
|   |   | 2.                                                                                                                                                                                           | The                report filed on July 28, 2006, under Item 8.01 referenced the U.S.                District Court’s Order for Payment of Attorney Fees and Costs related to                litigation with Phelps Dodge Corporation and U.S. Tenth Circuit Court                of                Appeals Affirmation of Court dismissal of Challenges to Mt. Emmons                Patents. |
|   |   |                                                                                                                                                                                         |   |
|   |   | 3.                                                                                                                                                                                           | The                report filed on September 22, 2006, under Item 1.01 referenced signing                of                a stock purchase agreement with DLJ Merchant Banking III, Inc., Item                2.01                referenced sale of Pinnacle Gas Resources Gas, Inc. shares under                the stock                purchase agreement and Item 8.01 referenced entering into a settlement                agreement and the payment of $7.0 million to Phelps Dodge Corporation                to                resolve outstanding litigation and the sale of 100% of the Enterra                Energy                Trust units by the Company. |

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**SIGNATURES**

|                                   |   | CRESTED                CORP.                   |   |
|----------------------------------------|--------|------------------------------------------------|--------|
|                                   |   | (Company)                                      |   |
|                                   |   |                                           |   |
|                                   |   |                                           |   |
|                                   |   |                                           |   |
| Date:                November 14, 2006 | By:    | /s/Harold                F. Herron             |   |
|                                   |   | HAROLD                F. HERRON,               |   |
|                                   |   | CHAIRMAN                and President          |   |
|                                   |   |                                           |   |
|                                   |   |                                           |   |
|                                   |   |                                           |   |
|                                   |   |                                           |   |
| Date:                November 14, 2006 | By:    | /s/Robert                Scott Lorimer         |   |
|                                   |   | ROBERT                SCOTT LORIMER            |   |
|                                   |   | Principal                Financial Officer and |   |
|                                   |   | Chief                Accounting Officer        |   |

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