Chairman DURHAM. That policy has been adopted in some of the thinking of the Interior Department through the years. Of course, it costs a large amount of money. That has been a policy for years. Mr. McMEEN. The main thing is that it would not cost the Government as much money as it would to refine it into yellow cake or 235. In other words, if they buy it from me, they pay me on ten-hundredths, $3 a ton. Whereas, if they loan me money on it, they lend me 50 cents or a dollar.

Chairman DURHAM. Your theory there, of course, is the fact that there is a good deal more of it in the ground than we know about at the present time?

Mr. McMEEN. My theory is that we will not have to spend as much money. My theory is that it will be in the ground and it will be on call at any time.

Chairman DURHAM. You will know where to get it?

Mr. McMEEN. Yes, sir, and it cannot be destroyed by any means known to man today if it is under the ground.

Now, the other one that I propose there, the second, of course you are all familiar with the curtailment of the foreign purchases after the end of the current buying cycle that there be established independent buying stations for groups of small producers based on their blocked tonnage.

If the Government would inspect or go over these ore bodies and say, well, you have 100,000 tons here, you have 100,000 tons, now your economical operation will be 200 tons a day or 500 tons a day, now we will set up an ore-buying station here and you two companies can ship to this ore-buying station at a certain rate, then we can establish our cost and our income to get our investment back.

You see, nobody, except the promoter and the people that sold their properties have made any money out of uranium. It is all in the ground right now. We have been working 21⁄2 years to get this ore body in position to start shipping.

I can start shipping 500 tons a day tomorrow, but I have maybe a 20-ton-a-day allotment, so I cannot operate and expect to get the return of my investment in less than 20 years.

Chairman DURHAM. Somewhat like the farm program?

Mr. McMEEN. Yes, sir.

Mr. TOLL. Why is not a mill a better approach than a buying station, because, with a buying station, you have to stockpile the raw ore. In the mill you can stockpile the concentrate?

Mr. McMEEN. What I had in mind was a simple mill operated by all of the independent producers that have blocked ore. The people that have gone and put their money in the raw earth, they are the people that deserve to get the depreciation on the mill. The people that have blocked reserves, we could get together and centrally we could have a mill, and then we could have a buying station close to our properties. Then all of it could be shipped to this 1 mill or maybe 2 mills or 3 mills.

Chairman DURHAM. Would there be any way to find out the accurate amount of dollars that has been put into the uranium mining business by all companies as far as stockholders are concerned?

Mr. McMEEN. You mean as far as the investments that have been made by the individual public of America?

Chairman DURHAM. By the corporation such as you have. You have a corporation?

Mr. McMEEN. Yes, sir.

Chairman DURHAM. Is there any way we can find out how much you have invested in New Mexico?

Mr. McMEEN. I think the best way that you gentleman could find out how many dollars have been invested in the actual forming of companies and the actual development of ore would be through the AEC. That is about the only place I know. They know how much money I have spent. They know how many holes I have drilled. Chairman DURHAM. I was not thinking they had that kind of information.

Mr. McMEEN. You see, the AEC, prior to the latter part of last year, would come to your properties and log your holes and keep a complete record of your reserves. Now they do not even do that. They used to sort of half-way share the expense of it, but they quit last December, I believe; that is the last time I had a hole logged by the AEC.

Chairman DURHAM. Are there any further questions?
Representative DEMPSEY. No.

Chairman DURHAM. Thank you very much.

I will place in the record the following documents:

A statement submitted by Richard R. Spurrier, Santa Fe, N. Mex., on behalf of the Santa Fe Oil Co.

A letter dated February 15, 1958, from Black Jack Corp., Santa Fe, N. Mex., enclosing a statement submitted by the Black Jack Corp. Á letter from the Wyoming Uranium Corp., addressed to Senator Albert Gore.

A telegram dated February 24, from W. Rodney de Villiers, president, Rio de Oro Uranium Mines, Inc., Albuquerque, N. Mex.

A letter dated February 20 from Green Mountain Uranium Corp., Douglas, Ariz.

A letter dated February 18 from Minor, Mee & Co., Sante Fe, N. Mex.

(The material referred to follows:)

My name is Richard R. Spurrier. My residence is in Santa Fe, N. Mex. I am here representing Santa Fe Oil Co.

My experience in uranium has been as a consulting engineer and geologist making evaluation reports. I have done a limited amount of prospecting, but have seen tens of prospects. I was, for nearly 9 years, State geologist and director of the Oil Conservation Commission of New Mexico. I resigned in 1954 to consult in uranium, oil, and gas.

My attitude is that this committee is looking for constructive criticism of the Atomic Energy Commission and its methods of operating and policy. I believe that the Atomic Energy Commission made a very serious error in the October announcement by making the policy known out of a blue sky, without notice or hearing.

As a suggestion to this committee, I recommend that the Atomic Energy Commission should be required by statute to give notice and allow hearing before making policy decisions of such far-reaching effect. The most unfortunate aspect of the October declaration was its effect upon the individual prospector and operator. He was, in many cases, forced out of business. The major companies with proven ore and mill contracts can weather the storm.

I do not intend to pit the so-called little man against the mighty majors; rather, I aim to suggest to the committee methods of maintaining a healthy situation in exploration, financing, and production of uranium.

For nearly 25 years the oil industry has been policed by State regulatory bodies, and the effect has been to (1) avoid Federal control, (2) give every oil producer an opportunity to produce and market his fair share, (3) avoid waste both above and underground.

If the Atomic Energy Commission continues to negotiate every contract lower than the previous one, and give foreign producers a better price, none of the above can be accomplished.

The Atomic Energy Commission now claims about 100 million tons of commercial uranium proven; this I doubt. This reserve is calculated to last beyond 10 years at the present rate of consumption. This is fine, but what will happen at the end of the 10- to 12-year period if there is no encouragement for exploration in the meantime?

It is not my recommendation that existing contracts within the Nation be cut, rather that a system be employed to provide for milling and marketing new ore and thereby maintain the incentive to explore.

BLACK JACK CORP., Santa Fe, N. Mex., February 15, 1958.

Mr. JAMES T. RAMEY, Executive Director,

Joint Committee on Atomic Energy,

Congress of the United States, Washington, D. C.

DEAR MR. RAMEY: I am enclosing a copy of the statement prepared by me for Black Jack Corp. which will be submitted by one of the witnesses in triplicate for the record during the 202 hearings February 24 and 25, 1958, to be held by the Joint Committee on Atomic Energy.

I want to take this opportunity to thank you for your cooperation on behalf of the uranium industry. I cannot see how the picture of this industry can be changed any way but for the better.

Sincerely yours,

LYLE E. TEUTSCH, Jr.,
Vice President.

STATEMENT PREPARED BY BLACK JACK CORP. TO BE SUBMITTED DURING THE 202 HEARINGS OF THE JOINT COMMITTEE ON ATOMIC ENERGY

Black Jack Corp., a Delaware corporation, was formed by the private subscription of $350,000 during September 1957. The corporation was the successful bidder on 15,436.14 acres of Indian lands at a Navaho alloted land sale. The total bonus bid on this acreage was $270,118.24, of which 25 percent was paid at the sale and the remaining 75 percent was to be paid 30 days after approval by the Bureau of Indian Affairs. This acreage is the sole asset of Black Jack Corp. and was acquired just prior to the speech on October 28, 1957, of Mr. Jesse C. Johnson, Director, Raw Materials Division of the Atomic Energy Commission.

Under the terms of the Indian leases it is necessary to spend $10 per acre per year to explore for uranium, and if uranium in commercial grade is found, it must be diligently mined. However, under the policy stated by Mr. Johnson, there are to be no additional commitments on mill capacity, and therefore there would be no market for any ore found on the Indian allotted lands. It would be impossible to operate under the terms of the Indian leases in the light of Mr Johnson's statements. Black Jack Corp., therefore, requested and was granted an extension until March 5, 1958, for paying the $218,509.82 which represents the 75 percent balance due on the bid at the Navaho allotted land sale. The reason for the Department of Interior granting this extension was the hope that Congress would take such action to insure a market for Indian ores as they are developed.

It is well known that the aim of the Department of Interior through the Indian Commissioner is to make the Indian a citizen of equal standing as soon as possible. This can only be accomplished by the development of their natural resources.

It is the hope of Black Jack Corp. that a policy can be established which would insure the corporation the sale of any uranium discovered on Indian land over a period of 10 years. In other words, if the corporation through exploration and development defines a commercial grade ore body, it would be granted the right by the Atomic Energy Commission for milling capacity which would insure the mining of the ore discovered over a 10-year period. This milling

capacity could either be granted to the corporation as a new mill or the facilities of an existing mill could be increased. A solution of this nature is going to be necessary in the uranium industry to insure exploration and development. Even the major companies have stopped their exploration and development programs because of the uncertainty in the AEC policy. No one is sure now what the reserve picture is in this country or what the needs for uranium will be in the future. I do know that unless steps are taken to correct the effects of Mr. Johnson's speech, the uranium industry will stagnate and when uranium is needed in the future, it will not be available.

Hon. ALBERT GORE,

Senate Office Building, Washington, D. C.

CORAL GABLES, FLA.

DEAR SENATOR GORE: I am writing to you, as chairman of the Subcommittee on Raw Materials (Joint Committee on Atomic Energy), on behalf of the 6,000 stockholders of the Wyoming Uranium Corp. We would appreciate any efforts which you or your committee might make on our behalf with the Atomic Energy Commission. We desire to obtain an interest in a mill as an outlet for our ore. If we do not obtain a substantial mill capacity, our stockholders will suffer considerable financial loss. They purchased their stock on the good faith that the Government would provide a market. This faith was based on many statements and actions of both the AEC and the Congress. Enclosed is a copy of a letter I sent to our stockholders on November 15, 1957.

WYOMING URANIUM CORP., Lander, Wyo., November 15, 1957.

SPECIAL REPORT TO STOCKHOLDERS

YOUR NEW CORPORATION: GREEN MOUNTAIN URANIUM CORP.

Green Mountain Uranium Corp. is, in effect, a merger of the uranium properties of Wyoming Uranium Corp. with the needed financial backing and mining knowhow of the Phelps Dodge Corp. On September 3, 1957, Phelps Dodge Corp. organized Green Mountain Uranium Corp. under the laws of Delaware. On October 11, 1957, a directors meeting was held for further organizational purposes. Class B stock of Green Mountain (51 percent of the stock outstanding) was issued to Phelps Dodge and Phelps Dodge transferred $250,000 to the new corporation for initial mining operations, which should begin in the near future. Wyoming Uranium stockholders will receive one share of stock in Green Mountain Uranium Corp. for each share of Wyoming. This will be a tax-free exchange. Wyoming Uranium stockholders will receive class A stock in Green Mountain, which entitles them to receive 75 percent of the first $1 million in dividends and 49 percent thereafter. Dividends to Wyoming Uranium stockholders in Green Mountain will be based on both mining and milling profits as may be available to Green Mountain.

Hepburn T. Armstrong, president of Wyoming Uranium Corp., and C. Allen Elggren, legal counsel for Wyoming Uranium Corp., will be directors in Green Mountain Uranium Corp. The other three members of the board and the active officers of the new corporation have been selected from the executive staff of the Phelps Dodge Corp.

Instructions and letter of transmittal relative to this exchange of stock are enclosed herewith and should be read and followed carefully by all stockholders.

PRESENT VALUE OF WYOMING'S PROPERTY

The gross value of uranium ore drilled out to date and in the ground on Wyoming Uranium's property is $42 million. This figure is based upon a calculation by the independent consulting firm of Ford & Fox of 1,670,000 tons of good-grade uranium ore (containing 0.30 percent uranium oxide). Based upon end products at the mill, this gross value may be as high as $71 million. Utah Construction Co. engineers independently calculated Wyoming Uranium's orereserve potential at a reported figure of 1,350,000 tons; this calculation was made because Utah Construction is interested in acquiring our ore for their Lucky Mc

mill. These gross values give no consideration to mining, milling, and other costs. It should be emphasized that these calculations do not include any value for ores which will be developed by further drilling.

MILLING PROFITS

The question of milling profits, which are above and apart from the mining profits, is still being resolved. Phelps Dodge is presently negotiating with the Utah Construction Co. (Lucky Mc Uranium Corp.) to expand the Lucky Mc mill capacity sufficiently to handle the milling of Green Mountain ores. The expanded Lucky Mc uranium mill will be the third largest in the United States. These negotiations are subject to approval by the Atomic Energy Commission, which, we believe, will be forthcoming in the near future.

In a letter to Wyoming Uranium dated July 12, 1957, Phelps Dodge stated that, subject to working out finances, "Phelps Dodge will be entirely willing for. the new corporation (Green Mountain Uranium) to be substituted in place of Phelps Dodge under the proposed arrangements (with Lucky Mc) and the new corporation would realize the entire milling profit." Wyoming's stockholders would thereby receive 49 percent of the profits from the milling of ore from Wyoming's property. Such milling profits may amount to several million dollars, in addition to the profits from mining. Phelps Dodge has stated, in effect, that funds must be borrowed on behalf of Wyoming's stockholders to cover the minority 49 percent of the mill financing, but Wyoming's officers interpret the leaseand-option agreement otherwise. Therefore, a friendly suit was filed which is designed to obtain a declaratory judgment from the court on this point. The filing of this suit will not in any way affect the going forward with the operations intended to be carried out under the terms of the agreement.

PROFITABLE FUTURE FOR URANIUM INDUSTRY

Your management is most optimistic about both the long- and short-term prospects of the uranium industry. The application of atomic energy to great numbers of peaceful, commercial uses is increasing daily and the demands for uranium ores in the future should be unabated. Recent pronouncements by leaders of this industry are already expressing concern for the sufficiency of reserves of uranium to meet foreseeable demands.

In a recent speech in New York City, Jesse C. Johnson, Director of Raw Materials Division of the Atomic Energy Commission, said: "The search for new uranium supplies must be continued on a broad scale if we are to achieve the atomic-power development anticipated in the next 10-20 years."

The Wyoming Uranium Corp. will now be dissolved in accordance with resolutions (copies enclosed) adopted at the stockholders meeting on June 14, 1956. Your management wishes to express its thanks for the confidence which our 6,000 stockholders have shown during the period of our association. We wish to express our belief that your association with Green Mountain Uranium Corp. will be pleasant and profitable.

Very truly yours,

WYOMING URANIUM CORP.,
HEPBURN T. ARMSTRONG,

President.

In this and previous letters I indicated a market. Prior to November 1957, our stockholders paid an average price of 25 cents per share for almost 14 million shares, or a total value of $3,500,000. For them to receive a return of investment capital and a fair profit, we must have substantial mill capacity. We have the necessary ore, and Phelps Dodge will finance the operation through a subsidiary corporation, Green Mountain, in which our stockholders acquired stock in exchange for their Wyoming Uranium stock. The details of this arrangement are contained in the November 15, 1957, letter. If the AEC statement of November 1957 to cut out or curtail drastically milling is applied to our ore, then our stockholders will suffer sharp losses due solely to what I would term would be a breach of faith of the AEC. We have a potential of 2,000,800 tons of ore and, probably, substantially more-it is on this basis (as stated in our letter of November 15, 1957) and the prospect for a market for this ore that our stockholders made their investment. To mill this tonnage it would require a capacity of 550 tons per day. It is my impression, however, that the AEC might not allow us any capacity or might curtail our quota to something in the 23671-58--10