Chairman DURHAM. The next witness is Mr. Vern Hughes, president of the Shoni Uranium Corp. STATEMENT OF VERN HUGHES, PRESIDENT, SHONI URANIUM CORP., RIVERTON, WYO. Mr. HUGHES. Mr. Chairman, gentlemen of the committee, I am Vern Hughes. I am president of the Shoni Uranium Corp., of Riverton, Wyo. I do not propose to impose unnecessarily on your time; my remarks will take much less than half the time allotted to me. I hope this brief statement is of benefit to you in conserving your time. I arrived in central Wyoming in July of 1954 on a uranium-prospecting trip and decided to stay. I immediately began staking claims and spending money. Very shortly I had a great many claims and no money. About this time I allowed a few friends to participate with me in this project and later formed a corporation known as Shoni Uranium Corp., pronounced Sho-nee. A public sale of this stock was completed in late 1956. After an expenditure of well over $200,000 we are today in proud possession of a substantial proven ore body from which we will be able to sustain a high rate of production. This is the culmination of an effort begun in 1954 in which 1,200 stockholders participate. We have elected to be a surviving independent and look with great misgiving upon any set of circumstances that tends to force us toward merger or consolidation with larger companies. We feel at this point that the only hazard left to our surviving is that of market. In the beginning, market was the only thing we felt we could be certain of. We have had satisfactory and encouraging conversations with both the lucky Mc Uranium Corp. and Fremont Minerals. Both these companies, I might identify, as companies which have been granted mills which are under construction. The latter company is about to begin construction of a 500-ton mill, and the former company is just completing the construction of a 750-ton per day mill. At a quota of 1,500 to 2,000 tons of ore per month we feel we have reserves at the present time adequate to sustain shipments for about 3 years. Our proporties remain largely unexplored. We have nearly exhausted our cash on hand. Our total investment in this business at the point of commencing shipments of ore will be nearly $350,000. At the rate of 2,000 tons per month of $15 base price ore, it will take us over a year to get out of the red. This we do not object to if, in return, we can enjoy the assurance of a continuing market for our product in keeping with the printed and implied promises and encouragement which led us into uranium mining in the beginning. We do not ask for a market that will permit us to make huge profits in the face of congressional uncertainty as to the amounts of yellow cake the Government should buy at this time, but we do ask that the rather minimal quota which we expect to get, which will permit us to operate with an eventual profit in sight, be graced by a contract of such duration as to provide us the market security readily apparent when one reads the duration of the ordinary mill contract. This, gentlemen, then, is our plea: That while we recognize we cannot expect to sell unlimited quantities of ore, we do feel that we are entitled to the market through 1966 that Atomic Energy Commission news releases and statements of other types have referred to, dependent upon our ability to produce salable ore. If you gentlemen have any questions, I would be happy to try to answer them. I wish to thank you, Mr. Chairman, and gentlemen of the committee. If you have any questions, I will be glad to try to answer them. Chairman DURHAM. Thank you very much. sir. You have not shipped any ore at all? Mr. HUGHES. We have not yet shipped any ore; that is true. Chairman DURHAM. Thank you very much for your statement. Representative HOSMER. No questions. Chairman DURHAM. The next witness is Mr. Cotter Ferguson, Gas Hills Uranium Corp. STATEMENT OF COTTER FERGUSON, ON BEHALF OF GAS HILLS URANIUM CO. Mr. FERGUSON. My Chairman, if I may, inasmuch as my brief is quite lengthy, with your permission I would like to depart from that brief and speak shortly and orally. Chairman DURHAM. That is perfectly all right. We will appreciate that very much. Without objection your statement will be placed in the record. (The statement referred to follows:) THE URANIUM MILL PROPOSAL OF THE GAS HILLS URANIUM Co.-FEDERAL URANIUM CORP. On some rare and unusual instances in the development of events, a situation presents itself where basic instincts of justice and equity rebel at the results of the application of official policy to a specific situation which has developed as the result of earlier stages of that same policy. Frequently in such instances, the adjustments of policy resulting from the rebellion of fair-minded men gives rise to a policy of much greater wisdom and general and public good than the policy which brought about the adjustment. Such is the situation with respect to the Gas Hills Uranium Co. Federal Uranium Corp. under the Atomic Energy Commission policy as established in October of 1957 and interpreted since that date. Such may well be the result if existing policy, as presently interpreted, is adjusted in accordance with the thinking of reasonable men and with the demands of basic justice. The Gas Hills Uranium Co. developed, by the effort and courage of a single man, who, against untold discouragement, pressed forward, based on representations of the Atomic Energy Commission, only to find himself blocked by the last-minute changes in policies of the AEC. Faced with a discontinuation by the Atomic Energy Commission of its practice of purchasing uranium ore at its buying station at Riverton, Wyo., and informed by that authority that it demanded uranium concentrate and not uranium ore, he bent his efforts in the direction of obtaining a uranium mill. He was informed by the Atomic Energy Commission that a contract for the purchase of uranium concentrate would be available to him if he proved sufficient reserves, obtained financing necessary for mill construction, and presented a process for extraction that was technically and economically feasible. With this assurance, he formed the Gas Hills Uranium Co. and transferred properties to it. He received the money of numerous investors who had faith in him, the properties concerned, and in the future of the industry, under publicly announced policy. He acquired further properties by location, applying to the task all the vision which he pos sessed and all of the knowledge which he could gather. Further properties were acquired by purchase, for money and for stock in the corporation. When the difficulty of the situation began to appear, small independent owners and producers who were unable to longer operate their properties, turned to him and, in exchange for stock in his company, allied their fortunes with his and looked to the success of his efforts for possibility for recompense. Mr. Ferguson, recognizing the elements which were missing from his organization, such as financing and technical knowledge, associated himself with an aggressive organization to supply those elements. The two organizations moved forward to meet the call as independent uranium operators. Extensive exploration was carried through; financing was assured; a mill proposal was prepared and presented to the Atomic Energy Commission, a proposal which, so far as they have been able to learn, is eminently satisfactory in every respect. Having accomplished all that had been specified to them as being necessary of accomplishment and being prepared to hazard extensive money and all of their efforts on their ability to successfully and efficiently mine the property and process the ore into concentrate, and seeking only the promised and assured market for the concentrate-they were informed that policy had changed and that uranium concentrate was no longer desired. Unlike many organizations in the field who have other interests and with whom uranium activity is only a phase of a wide field of activities, substantially the entire interest of both Gas Hills Uranium Co. and Federal Uranium Corp. is centered in the uranium field. Its very existence depends upon realization of the objective which it previously adopted. While Federal Uranium operates another mining property in another State, it is at the mercy of a mill operator, and its continued successful existence depends upon the establishment of this mill, and that was its primary objective in entering this field. Gas Hills Federal Uranium, after expending large amounts of money and making an excessive effort to reach their present position, are placed, for the purpose of their very existence, at the mercy of others, having relied on assurances that this would not be the case. They own the largest amount of property of any organization in the area. With only a small fraction of their property explored, they have proven over 1 million tons of ore. A large number of investors face profit or substantial loss of moneys invested. Former independent owners, those who efforts transformed this Nation from one not possessing uranium to one possessing an apparent abundance, look to it for any compensation they may receive for their efforts. The merits of the proposal advanced, and their ability and financial stability, have not been questioned. In the face of a recognized need for assured and sustained production, it, as much or more than any operation in the area, gives assurance of sustained production. With efficient extraction employed, and full utilization of reserves, its operations can continue far into the future. Such full utilization can be accomplished only by producing for its own mill. It is no answer that a market, to some degree, may be available at other mills. A producer for the mill of another is at the mercy of that other, and past and recent history has shown that the millowner, faced with his own needs and demands, is not unaware of the possibilities of the situation; either the ownership of the independent property ceases or productive activity upon it ceases. A choice is presented and available to the Government: Shall it disregard assurances given and, in exercise of the power which it indisputably possesses, turn its back upon those who have placed full reliance upon representations by it made, in pursuance of a policy of immediate expediency; shall, it rather, adopt a long-range policy of sustained production, based upon the results of those who clearly acted upon its representations, and thus assure a continued supply to meet the increasing power demands of the future and keep faith with those who furnished to it that which it announced it so desperately needed; shall it disregard assurances given; or shall it move forward in good faith and establish policies which will permit the survival of organizations which have been built on their assurances? No such choice is available to the Gas Hill Uranium Co-Federal Uranium Corp. organization. They are prepared to accept the ordinary risks of doing business and assume the burden of making their efforts successful. They are prepared to contribute to the economy of that State which has long awaited such development. The time for choice has passed. It ceased to be present when direction toward mill was taken. The entire organization has been geared to that ultimate objective. Without it, the organization ceases to exist. They have made commitments, based on assurances, which they cannot retract. HISTORY The Gas Hills area of Fremont County, Wyo., is a land of sagebrush, of rolling hills, of sudden gullies and abrupt upthrusts. Prior to the discovery of uranium in 1953, it was a remote area, 50 miles from the closest town, known only to the sheepherder, the cattleman, and occasional oil-exploration crews. It was a land of extremes of weather, with severe wind, and treacherous in suddenness and severity of cold. Public announcement of the discovery of uranium there was made in August of 1953. Shortly after that, Cotter Ferguson, an amateur, one unknown to mining and geology, but attracted by the situation, came to the area and commenced prospecting. He located one group of claims which proved to possess one of the major ore bodies in the area, and the income from that property, in the early days, gave him the means to move farther into the field. With the vision, courage, and imagination characteristic of Americans in time of testing challenge, he broadened his grasp of the field. Further claims were located. With the establishment of the Atomic Energy Commission ore-buying station in Riverton, he aimed toward production and sale of ore from properties discovered. That station, in its early period, announced a willingness to contract for all ore produced, and it purchased from producers all ore offered. Cotter Ferguson early recognized that the investment necessary for a stable and successful operation was too great for one individual to carry. At about the same time, a modification of the ore-purchase policy of the Atomic Energy Commission, by which ore purchases were to be drastically limited, was put into effect. The Commission announced that it would not provide a market for an established mining operation; that its policy was only to provide by ore-purchase capital necessary for exploration to prove reserves required for a mill, and that it was interested only in uranium concentrate. It adopted a quota system for the purchase of ores, and the quotas allowed were not sufficient to sustain any stable mining operation. Having acquired substantial properties, and seeing the trend of developing events, Mr. Ferguson sought the advice of Atomic Energy Commission officials at Grand Junction, Colo. He was there informed that that which the Government desired was uranium concentrate; that its entire efforts were directed toward acquisition of that concentrate; and that its ore-purchase program was only a means to the accomplishment of that objective. He was assured that if he could prove upon his property ore reserves adequate to assure successful operation of the mill, and if he could present assurances of financing necessary for its construction and operation and present a process that would efficiently extract the concentrate at a cost economically acceptable to the Government, the Commission would contract with him for the purchase of the output and it would assist him, within allowed official limits, in the process. Seeing that only here did any future exist in the field, Mr. Ferguson established the Gas Hills Uranium Co. A public offering of stock was made, investors' money was received, property was transferred to the corporation. Some exploration was commenced, and efforts were directed toward the acquisition of further properties. Mr. Ferguson, personally, and the Gas Hills Uranium Co., had many opportunities to dispose of the property concerned and at prices that might have seemed attractive. That, however, had not been the purpose of the organization. No dynamic industry could develop from such sales and, likewise, such transactions would have defeated the purpose of organization. Relying fully upon the assurances given to him and, further, by the continued public affirmation of the policy by the Atomic Energy Commission, he maintained the direction originally established. Of those organizations seeking alliance with his company, the one which most completely answered the needs, in seeking the milling arrangement, was the Federal Uranium Corp. It possessed experience in the field, and business and financial means and stability. All of its resources were centered in the uranium field. It, a mining operation, producing for the mill of another, recognized that the success of its future depended upon its obtaining a mill. It was willing to recognize the integrity and accord a continuing existence and identity to the Gas Hills Uranium Co. Alliance was made between the two organizations. That alliance was motivated, and the terms governed, solely by the common objective and by the mutual recognition of the fact that only by realization of that objective could continued existence and a chance for a successful future be assured. Aggressive exploration was commenced. Further property acquisitions were made. Smaller individuals and organizations allied themselves, for they saw in this organization greater recognition of their identity and greater chance for compensation than had been accorded them at other hands. At the same time, work went ahead rapidly on the mill proposal. Plans were drawn, flowsheets were prepared, technical data was assembled, cost analyses were made. When all was prepared, and after a very substantial expenditure, the proposal was presented to the Atomic Energy Commission. Since that time, no progress has been made. No negotiations have been permitted. Costs continue, exploration must go forward, and property rights must be maintained. Business decisions must be made, and the essential factor to govern those decisions, the availability of the milling contract, is absent and will not be accorded. Individual initiative has done its work; organized private business has performed its task; technical knowledge has made its contribution; all are prepared to proceed under the risks normal to business ventures; all of this has been done in response to requests made by the Government; yet, in face of all this, the Government, having laid the heavy hand of paralysis upon the developing venture, stands in indecision, and the time runs out. THE PROPERTY The Gas Hills, of Fremont County, Wyo., as it is considered among mining interests there concerned, consists of four general areas-west, central, east, and northeast. The divisions, of course, are artificial, and the areas merge into each other. The several areas have developed and received classification, and ore bodies of significance have been developed within them. Each of the areas has been developed through the efforts of one or two companies initially. The holdings of some of the organizations are confined to one area alone. Some are interested in two of the areas. The Gas Hills-Federal organization is the only organization with substantial holdings in all of the areas. Over 3,000 mining claims are owned by the Gas Hills-Federal organization. Some claims are fractional and not full size. The great majority, however, are full-size claims. When it is considered that a full-size mining claim is 600 by 1,500 feet, and contains slightly over 20 acres of land, the amount of the land owned becomes truly impressive. The burden of ownership more clearly emerges when one realizes that $100 per claim, or $300,000 per year, must be spent in development of this property, under applicable mining law. The location of the claims, in view of the development already accomplished in the area, is of great significance. The claims are located in all four of the areas and they cover the heart of those areas. When their location is considered in relation to other mining properties, the great importance of the property begins to emerge. Attached to this paper is a map of the property concerned. It shows the location of the various claim groups, the number of claims in the group, and the location of the various other mining properties which have seen varying degrees of development. It is readily apparent that no real development of this area can take place without development of these properties. The Government has long realized that the exploration for and the discovery and development of mineral resources is vital to the welfare of the Nation. It has also learned that true conservation of those resources is necessary; that conservation consists of efficient extraction and wise utilization. It has learned, further, that the time of need arisen is too late for discovery and development and that the world, and the preservation of the Nation, does not wait. True development of this property, through utilization of the mineral reserves, cannot take place unless the organization can produce for its own mill. To say that property of this extent, promising, in early exploration, the reserves already proven, must be subsidiary to and at the mercy of a smaller property is to speak folly. The amount of property owned bespeaks the motive which has inspired the organization. The cost of acquisition, of exploration, and the cost of maintenance clearly show that, here, all efforts have been directed toward the final end of production of uranium concentrate, and production of that concentrate in a manner which will provide business stability and assure to the country a longrange and continuing supply of the materials for power. That was the incentive held out to the people who directed the enterprise. That has been their one impelling motive and, by that motive, the building of the entire structure has been governed. |