
                                                                   EXHIBIT 10.57

                              MANAGEMENT AGREEMENT

        THIS  AGREEMENT   regarding  the  Lincoln   Project  in  Amador  County,
California is made and entered into  effective as of the 22nd day of May,  1996,
by and between U.S.  Energy Corp., a Wyoming  corporation  ("USE") 877 North 8th
West, Riverton,  WY 82501 and Sutter Gold Mining Company ("SGMC") P.O. Box 1689,
Sutter Creek, CA 95685.

                                    RECITALS

        WHEREAS,  on August 4, 1994, USE acquired 78% of the outstanding  shares
of  SGMC  from  SGMC  for  USE's  ownership  interest  in  the  Lincoln  Project
("Project"); and

        WHEREAS,  SGMC does not have sufficient personnel or expertise to manage
the  exploration  and  development of the Lincoln Project into a operating mine;
and

        WHEREAS,  it is in the best  interest of all parties  that USE  conduct,
supervise,  care for and  maintain  the  operations  of the  Project  (including
assisting SGMC in seeking  private  placement  funds,  initial  public  offering
and/or a joint venture partner); and

        WHEREAS,  SGMC desires to engage USE for the above purposes  pursuant to
the terms of this Management Agreement.

        NOW,  THEREFORE,  IN  CONSIDERATION OF THE PROMISES AND MUTUAL COVENANTS
CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:

                                   SECTION ONE
                                   DEFINITIONS

        "Accounting Procedure"  means the procedures set forth in Exhibit A.

        "Assets:  means  the  leased  properties,  properties  held in fee or by
mining claims,  products and all other real and personal property,  tangible and
intangible, held by or for the benefit of SGMC.

        "Cost  Account"  means the account  maintained  in  accordance  with the
Accounting Procedure showing the charges and credits accruing to SGMC.

        "Development"  or  "Development  Operation"  shall  mean  the  activity,
operations,  or work of  preparing  for the removal of deposits of gold from the
mining properties, including


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without limitation:  primary excavations  required to expose and/or extract gold
bearing ores, the  construction or  installation of any  improvements to be used
for the  mining or  handling  of ores,  and  incline,  raise,  drift,  shaft and
cross-cut excavation.

        "Exploration" shall mean all activities directed toward ascertaining the
existence,  location, quantity, quality, or commercial value of deposits of gold
bearing ores.

        "Mining  of" or  "Mining  Operations"  or  "Operations"  shall  mean the
activity,  operations,  development  or work of  mining,  development  drilling,
extracting  and  producing  gold and of  storing  gold ores  upon or within  the
Properties  and all work  incident  thereto  performed in  connection  with such
mining, processing gold ores at the mill to be built and owned by SGMC.

        "Products" means all ores,  minerals and mineral resources produced from
the Properties under this Agreement.

        "Properties" means the properties owned or leased between the town sites
of Sutter Creek and Amador City, in Amador  County,  California by SGMC or other
properties  that may be acquired  for the purpose of mining by SGMC prior to the
termination of this Agreement.

                                   SECTION TWO
                                      TERM

        The term of this  agreement  is from June 1, 1996 to December  31, 1997,
unless  extended by the mutual  consent of the parties  hereto.  The  Accounting
Procedure's as set forth in Exhibit A shall take affect on June 1, 1996.

                                  SECTION THREE
                MANAGEMENT OF THE LINCOLN PROJECT (the "PROJECT")

        SGMC hereby  appoints  USE as the manager to care for and  maintain  the
Project,  with all  rights,  powers and duties of the  manager to  maintain  and
continue to permit,  develop,  explore and coordinate  efforts with SGMC to find
financing for the Project through  December 31, 1997, the term of this Agreement
or any  extensions  thereof.  USE shall have the full authority to take whatever
action  necessary  in either  obtaining  authority  to develop  and  operate the
Project, reclaim it, sell all or a portion thereof (private placement),  seek an
initial public  offering,  and/or acquire a joint venture  partner(s) to operate
the  Project.  The  intention  of the  parties  is to permit USE to serve as the
manager and operator of the Project and as such,  USE shall propose the programs
and budgets,  make and collect cash calls, incur expenditures and take any other
actions


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                                                                   EXHIBIT 10.57

and  exercise  all other  rights and powers in order to manage the  Project  and
property included therein.

        It is understood  that SGMC shall prepare and fill all reports  required
of SGMC for the various permits, corporate reports, reports to Amador United and
any other royalty holders as may be required.

                                  SECTION FOUR
                           COMPENSATION FOR MANAGEMENT

        For managing the Project,  SGMC shall advance  moneys as may be required
by USE in sufficient amounts to meet the annual budgets on a monthly basis prior
to the fifth day of each month in advance of the month's  expenditures,  and for
such other  purposes as USE shall deem  necessary  to carry out the  purposes of
this Agreement.  Any advance in excess of expenditures  will be credited against
the budget  amount  for  subsequent  months.  Any  expenditure  in excess of the
monthly advance will be paid by SGMC when invoiced. The materials, services, and
other items for which USE shall charge SGMC are set forth in this  Agreement and
in the Accounting Procedure attached hereto and made a part hereof as Exhibit A.

                                  SECTION FIVE
                                  PLACE OF WORK

        SGMC will  deliver  all  information  necessary  for USE to perform  the
services  required under this Agreement to USE through  December 31, 1997. It is
understood that USE will provide its services primarily at its offices listed at
877 North 8th West, Riverton, WY, but USE will, when necessary and upon request,
travel to the Project to perform the services hereunder. USE shall be reimbursed
for all expenses relating to the travel to and from the Project.

                                   SECTION SIX
                                     BUDGETS

        USE will submit an annual  Budget to SGMC sixty days prior to the end of
each fiscal year.  In order to timely  submit such a budget SGMC must submit its
mine, mill,  development,  exploration and construction plans to USE one hundred
(100) days prior to year end.  After  submittal of plans and then budgets,  both
USE and SGMC will give  their  best  effort to resolve  areas of  conflict.  The
Annual  Budget shall be approved 15 days prior to the  beginning of a new fiscal
year.



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                                                                   EXHIBIT 10.57

6.1 DEADLOCK ON PROPOSED PROGRAMS AND BUDGETS. If USE and SGMC fail to approve a
Plan and Budget by the  beginning of the period to which the  proposed  Plan and
Budget applies,  or if they fail to present a Plan and Budget, a Plan and Budget
comparable to the last adopted Plan and Budget shall automatically be adopted.

6.2 BUDGET OVERRUNS. USE shall immediately notify SGMC of any material departure
from an adopted Plan and Budget.

6.3 EMERGENCY OF UNEXPECTED EXPENDITURES. In case of emergency, USE may take any
action it deems necessary to protect life,  limb or property,  to protect assets
or to comply with law or government  regulation.  Also USE may make expenditures
for unexpected  events which are beyond its reasonable  control and which do not
result  from a breach by it of its  standard  of care.  In the case of either an
emergency  or  unexpected  expenditure,  USE shall  promptly  notify SGMC of the
emergency or unexpected expenditure.

6.4 MONTHLY  ACCOUNTING.  USE shall  account  monthly in  reasonable  detail all
expenditures incurred as compared to approved budgeted.

                                  SECTION SEVEN
                             MATERIALS AND EQUIPMENT

        USE shall furnish, at USE's own expense,  all data processing  equipment
and related materials necessary to carry out the terms of this Agreement.

                                  SECTION EIGHT
                             EMPLOYMENT OF PERSONNEL

        USE shall provide qualified and experienced  personnel to perform or aid
in performing the work required under this  Agreement,  and shall be responsible
for and in full control of the work performed by such personnel.

        USE  reserves  the right to determine  which of its  personnel  shall be
assigned to any  particular  project and to replace or reassign  such  personnel
during a project.

        USE further reserves the right to subcontract to qualified third persons
any part or all of the  performance  of the  services  described  in any project
description order hereunder.

        USE  assumes   responsibility  for  its  personnel   providing  services
hereunder and will make all deductions  required of employers by state,  federal
and local laws, including deductions for


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social  security,  income taxes,  contributions  for  unemployment  compensation
funds, and shall maintain worker's  compensation and liability insurance for all
employees.

                                  SECTION NINE
                          RELATIONSHIP BETWEEN PARTIES

        The  parties to this  contract  intend  and agree that the  relationship
created by this contract is that of SGMC and USE as an  independent  contractor.
SGMC is interested  only in the results to be achieved under this contract.  USE
shall control the means of performing the work required under this contract. USE
is not to be  considered  an agent or  employee  of SGMC for any purpose and the
employees of USE are not entitled to any of the benefits provided by SGMC to its
employees,  including but not limited to health insurance, worker's compensation
coverage, unemployment insurance and retirement plans.

                                   SECTION TEN
                                 WORK STANDARDS

        USE will  adhere to industry  standards  and will  perform all  services
required under this  Agreement in a manner  consistent  with generally  accepted
procedures for payroll and  associated  services,  USE shall  reprocess at USE's
expense all work necessary to correct errors  directly caused by malfunctions of
USE's machines or mistakes of USE's personnel.

                                 SECTION ELEVEN
                          LIMITED LIABILITY OF SERVICER

        USE shall not be liable  for any  damages  caused by delay in  rendering
performance  hereunder  arising from any cause beyond the reasonable  control of
USE, or as a result of strikes, or work stoppage.

        USE shall not be liable for  breach of  warranty,  express  or  implied,
including without limitations any warranties of merchantability or fitness for a
particular  purpose  in  respect  to any  performance  by USE  pursuant  to this
Agreement.  USE  shall in no event be  liable  for any  incidental,  special  or
consequential  damages of any nature  whatsoever,  such as, but not  limited to,
loss of  anticipated  profits or other  economic  loss in  connection  with,  or
arising  out  of  services  provided  for  in its  Agreement,  or  for  specific
performance, unless otherwise expressly agreed to in writing.

        Because the failure of USE to fulfill  this  Agreement  would  result in
damages  or  injuries  that  may not be  readily  ascertained  by any  pecuniary
standard, the parties to this contract agree


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to  limit  USE's  liability  arising  out  of or in  any  way  connected  to its
performance  under this Agreement,  including the malfunction of USE's equipment
and defective programs,  failure or negligence of USE's employees and agents, to
general  money  damages in an amount not to exceed the total amount paid by SGMC
for services  performed by USE under this Agreement  during the period of thirty
(30) days immediately preceding the occurrence giving rise to any claim by SGMC.

                                 SECTION TWELVE
                              CORRECTION OF ERRORS

        USE shall have the right to  reprocess  SGMC data to correct  any errors
for  which  USE may be  responsible  in full  satisfaction  of all SGMC  claims,
provided  SGMC has  notified USE of any claimed  error  within  thirty (30) days
after receipt of service results and furnished supporting  documentation of such
claim.

                                SECTION THIRTEEN
                                 REVIEW OF WORK

        SGMC shall review all reports and data  submitted  by USE within  thirty
(30) days following delivery and notify USE of any discrepancies or deficiencies
contained  in  such  material.  All  services  furnished  hereunder  are  deemed
acceptable  to SGMC unless  proper  notice and  written  proof of claim are made
within that thirty (30) day period  after the receipt of the results of services
performed by USE.

                                SECTION FOURTEEN
                                 CUSTODY OF DATA

        USE shall be liable  for loss,  destruction  or damage of SGMC  supplied
materials  only if due to the  negligence of USE, and then only to the extent of
restoring the lost, destroyed,  or damaged materials;  provided such restoration
can be reasonably  performed by USE and SGMC  furnishes USE with all source data
necessary for such restoration.

                                 SECTION FIFTEEN
                               PROPRIETARY RIGHTS

        All  programs,  specifications,   applications,  routines,  subroutines,
techniques,  ideas, or formulas  utilized or developed by USE in connection with
this  Agreement are and shall remain the sole  property of USE unless  otherwise
provided for in this Agreement.



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                                 SECTION SIXTEEN
                               INTEGRATION CLAUSE

        The entire Agreement  between parties with respect to the subject matter
hereunder is contained in this Agreement. Except as herein expressly provided to
the  contrary,  the  provisions  of this  Agreement  are for the  benefit of the
parties hereto solely and not for the benefit of any other person,  persons,  or
legal entities.

                                SECTION SEVENTEEN
              WAIVER OR MODIFICATION INEFFECTIVE UNLESS IN WRITING

        No waiver,  alteration, or modification of any of the provisions of this
Agreement  shall be binding  unless in writing  and signed by a duly  authorized
representative of both parties to this Agreement.

                                SECTION EIGHTEEN
                         REPRESENTATIONS AND WARRANTIES

        USE makes no  representations,  warranties,  or  guaranties,  express or
implied,  including  without  limitation  any warranties of  merchantability  or
fitness for intended use,  other than the express  representations,  warranties,
and guaranties contained in this Agreement.

                                SECTION NINETEEN
                                 WRITTEN NOTICE

        All written  communications  regarding this Agreement  should be sent to
USE at the address first above listed, unless notified to the contrary.

        Any written notice  hereunder  shall become  effective as of the date of
mailing by registered or certified mail and shall be deemed  sufficiently  given
if sent to the addressee at the address  stated in this  Agreement or such other
address as may hereafter be specified by notice in writing.



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                                 SECTION TWENTY
                                  GOVERNING LAW

        This Agreement shall be governed by the laws of the State of Wyoming. In
the event any dispute  arises  between the parties over the meaning of any terms
in this Agreement or performance thereunder, the parties agree to try to resolve
the dispute by discussion, conciliation or third party arbitration or mediation.
In the event it  becomes  necessary  to  litigate  any  dispute  not  capable of
resolution  by alternate  means,  the  prevailing  party shall be  entitled,  in
addition to any other relief obtained,  to assess the non-prevailing party court
costs and reasonable attorneys fee.

        Dated the day and year first above written.

                                            SUTTER GOLD MINING COMPANY (SGMC)
ATTEST:

                                            By:    /S/ MICHAEL E. SWEENEY
                                                 -------------------------------
    /S/ R. SCOTT LORIMER                           MICHAEL E. SWEENEY, President
-----------------------------

                                U.S. ENERGY CORP.
ATTEST:

                                            By:    /S/ JOHN L. LARSEN
                                                 -------------------------------
   /S/ R. SCOTT LORIMER                            JOHN L. LARSEN, President
-----------------------------


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                                                                   EXHIBIT 10.57

                                    EXHIBIT A
                              ACCOUNTING PROCEDURE

      The financial  and  accounting  procedures  to be followed by U.S.  Energy
Corp. ("USE") under the Management Agreement ("Agreement") to which this Exhibit
is attached  are set forth below.  References  in this  Accounting  Procedure to
Sections and Articles are to those located in this Accounting  Procedure  unless
it is expressly  stated that they are references to the Agreement.  In the event
of any inconsistencies  between the terms of the Agreement and the terms of this
Accounting Procedure, the terms of the Agreement shall control.

                                    ARTICLE I
                               GENERAL PROVISIONS

GENERAL  ACCOUNTING  RECORDS.  USE shall  maintain  detailed  and  comprehensive
accounting records in accordance with this Accounting  Procedure,  sufficient to
provide a record of expenditures  (and any revenues) and periodic  statements of
financial position and the results of operations for managerial, tax, regulatory
or other financial  reporting  purposes.  Such records shall be retained for the
duration of the period allowed Sutter Gold Mining Company  ("SGMC") for audit or
the period  necessary to comply with tax or other regulatory  requirements.  The
records shall reflect all obligations, advances and credits for SGMC.

      1.1(a)  AUDITS.  USE shall order an audit of the  accounting and financial
records  for  each  fiscal  year  (or  other  accounting  period).  All  written
exceptions  to and claims  upon USE for  discrepancies  disclosed  by such audit
shall be made not more  than six  months  after  receipt  of the  audit  report.
Failure to make any such  exception  or claim  within the six month period shall
mean the audit is correct and binding upon the Participants. The audits shall be
conducted  by a firm of certified  public  accountants  selected by USE,  unless
otherwise agreed to by the participants.

      1.1(b)  OPEN  BOOKS.  Both USE and USECC will make their books and records
available to SGMC or its auditors  during normal business hours at their offices
in  Riverton,  WY. SGMC will make its books and records  available to USE or its
auditors as they pertain to the  "Agreement"  during  normal  business  hours in
Sutter Creek, CA. Both Parties will arrange for


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working  space  for  such  records  to be  reviewed  upon  written  request  and
scheduling.  No  documents  requested  if  pertinent  to the  Agreement  will be
withheld.

      1.2.  BANK  ACCOUNTS.  USE shall  maintain  separate bank accounts for the
reimbursement  of monies from SGMC for the payment of all expenses to USE or its
affiliate USECC and the deposit of all receipts due to SGMC.

                                   ARTICLE II
                             CHARGES TO COST ACCOUNT

Subject to the limitations hereinafter set forth, USE shall create Cost Accounts
and charge the Cost Accounts with, and be entitled to receive from SGMC (subject
to the Budget in effect) the following:

      2.1 RENTALS, ROYALTIES AND OTHER PAYMENTS.  Property maintenance costs and
other payments necessary to maintain title to the Properties.

      2.2 LABOR AND EMPLOYEE BENEFITS.

          (a) Salaries and wages of USE or USECC employees  directly  engaged in
operations,  including  salaries  or  wages  of  employees  who are  temporarily
assigned to and directly employed by same.

          (b) USE's cost of holiday, vacation, sickness and disability benefits,
and other customary  allowances  applicable to the salaries and wages chargeable
under  Sections  2.2 (a) and 2.9.  Those  costs may be charged on a "when and as
paid basis" or by  "percentage  assessment" on the amount of salaries and wages.
If percentage assessment is used, the rate shall be applied to wages or salaries
excluding  overtime  and  bonuses.  Such  rate  shall be  based  on  USE's  cost
experience  and it shall be  periodically  adjusted  to ensure that the total of
such charges does not exceed the actual cost thereof to USE.

          (c) USE's actual cost of established  plans for employee's  group life
insurance,  hospitalization,  pension, retirement, stock purchase, thrift, bonus
and other  benefit  plans of a like  nature  applicable  to  salaries  and wages
chargeable under Section 2.2 (a) or 2.9,  provided that the plans are limited to
the extent feasible to those customary in the industry.


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          (d) Cost of governmentally  imposed assessments pertaining to salaries
and wages  chargeable  under  Sections  2.2(a) and 2.9,  including all penalties
except those resulting from the willful misconduct or gross negligence of USE.

      2.3 ASSETS.  Cost of all assets  purchased or furnished  solely for use in
connection with operations on the Properties.

      2.4 TRANSPORTATION. Reasonable transportation costs incurred in connection
with the transportation of employees, equipment, material and supplies necessary
for exploration, maintenance and operation of the Assets and Properties.

      2.5 SERVICES.

          (a) The cost of contract services,  outside  consultants and utilities
procured from outside sources,  other than services described in Section 2.8 and
2.10.  If contract  services  are  performed  by an  affiliate  of USE, the cost
charged to the Cost Accounts shall not be greater than that for which comparable
services and utilities are available in the open market.

          (b) The direct costs of using and  servicing  USE's  exclusively-owned
facilities  as provided in Section 3.5,  including  any charge for  depreciation
thereof.

      2.6 INSURANCE  PREMIUMS.  Premiums paid or accrued for insurance  required
pursuant to Exhibit B of the Agreement.

      2.7  DAMAGES  AND  LOSSES.  All  costs in  excess  of  insurance  proceeds
necessary  to repair or replace  damage or losses to (but not  damages or losses
resulting  from USE use of) any Assets  resulting  from any cause other than the
willful misconduct or negligence of USE.

      2.8 LEGAL  EXPENSE.  All legal costs and expenses of  litigation  in which
SGMC is named as a dependent or in which SGMC initiates legal action. .

      2.9  NON-OPERATING  EXPENSES.  A pro rata  portion of (i) the salaries and
expenses of USE's  superintendent  and other employees serving  Operations whose
time is not  allocated  directly  to such  Operations,  and  (ii)  the  costs of
maintaining and operating any necessary suboffice and (iii) all necessary camps,
including  housing  facilities for employees,  used solely for Operations on the
Properties. The expense of those facilities shall include depreciation or a fair
monthly rental in lieu of depreciation of the investment.  Such charges shall be
apportioned  for all  properties  served by the employees  and  facilities on an
equitable basis consistent with USE's general accounting  practice and generally
accepted accounting principles.


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                                                                   EXHIBIT 10.57

      2.10 ADMINISTRATIVE CHARGE. USE shall charge the Cost Account each month a
sum as provided in the annual  Budget,  which shall  reimburse  USE for its home
office  overhead  and  general  administrative   expenses  for  its  conduct  of
Operations.   The  following  representative  list  of  items  comprising  USE's
principal  business office expenses are expressly covered by the  administrative
charge provided in this Section 2.10.

      2.10 (a) Administrative  Supervision,  which includes services rendered by
officers and directors of USE, except to the extent that such services represent
a direct charge to SGMC.

             (i)  Accounting,  billing  and record  keeping in  accordance  with
governmental regulations and the provisions of the Agreement, and preparation of
reports;

             (ii) Handling of all tax matters,  including  any protests,  except
any outside professional fees which SGMC may approve as a direct charge.

             (iii) Routine legal services by USE's legal staff;

             (iv)  Records  and  storage  space,  telephone  service  and office
supplies.

             (v) Receptionists,  secretaries,  accountants, accounting and other
clerks,   data  processing   personnel  and  engineering  and  geologic  support
personnel.

      2.10 (b) In the  alternative  SGMC and USE can adopt a  percentage  method
during  each  annual   budgeting   process.   The  procedures  for  general  and
administrative expenditures on a percentage basis is as follows:

             (i) Each  Month  USE  shall  charge  SGMC a sum for  each  phase of
Operations as provided below which shall be a liquidated amount to reimburse USE
for its home office overhead and general and administrative  expenses to conduct
each phase of Operations, and which shall be in lieu of any management fee:

                 (1) EXPLORATION PHASE - ten percent (10%) of Allowable costs'

                 (2) MAJOR  CONSTRUCTION  PHASE - two percent  (2%) of Allowable
                     costs; (3) MINING PHASE - two and one-half percent (2 1/2%)
                     of Allowable Costs;

Provided,  however, that the Participants shall negotiate a fixed sum management
fee in lieu of the above stated  percentages to be effective two years after the
commencement of the Mining Phase. In the event that the  Participants are unable
to agree upon a fixed sum  management  fee,  the above stated  percentages  will
remain in effect.

             (ii) The  term  "Allowable  Costs"  as used in this  Section  for a
particular  phase of Operation  shall mean all charges to SGMC excluding (1) the
administrative charge referred to


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                                                                   EXHIBIT 10.57

herein;  (2)  depreciation,  depletion or amortization of tangible or intangible
assets,  USE shall  attribute  such  Allowable  costs to a  particular  phase of
Operations by applying the following guidelines:

                 (1) The "Exploration   Phase"  shall  cover  those   activities
                     conducted to ascertain the existence,  location,  extent or
                     quality of any deposit of ore or mineral.  Such phase shall
                     cease when a commercially recoverable reserve is determined
                     to exist.

                 (2) The "Major Construction Phase" shall cover those activities
                     conducted to access a commercially  feasible ore body or to
                     extend production of an existing ore body, and to construct
                     or install  related  fixed  assets,  and shall  include all
                     activities  involved in the  construction of a mine,  mill,
                     smelter or other ore processing facilities.

                 (3) The "Mining  Phase" shall include all other  activities not
                     otherwise  covered above,  including  activities  conducted
                     after mining operations have ceased.


             (iii) The following is a  representative  list of items  comprising
USE's  principal  business  office  expenses that are  expressly  covered by the
administrative charge provided in this Section.

                 (1) Administrative   supervision,   which   includes   services
                     rendered by managers, department supervisors,  officers and
                     directors of Use for Operations,  except to the extent that
                     such services represent a SGMC.

                 (2) Rentals and other charges  for office and  records  storage
                     space, telephone service, office equipment and supplies.

      2.10 (c ) In the event that USE and SGMC can not agree  upon a  percentage
for general and administration expenses, section 2.10 (a) will remain in effect.

      2.11 AUDIT.  Cost of annual  audits under  Sections 1.1 (a) and 1.1 (b) of
the accounting procedure.


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                                                                   EXHIBIT 10.57

      2.12 TAXES.  All taxes of every kind and nature assessed or levied upon or
in connection with the Assets,  the production of Products or Operations,  which
have been paid by USE for the benefit of SGMC.

      2.13  TAX  PREPARATION  EXPENSES.  The  services  of tax  counsel  and tax
administration  employees  for all tax  matters,  including  preparation  of the
Federal and State Tax Return and any protests.

      2.14 OTHER EXPENDITURES.  Any costs not described herein but which are set
forth  in the  Agreement  or  Annual  Budget  as  being  chargeable  to the Cost
Accounts.

                                   ARTICLE III
                        BASIS OF CHARGES TO COST ACCOUNT

      3.1 PURCHASES.  Materials,  equipment,  machinery and supplies (hereafter,
"Material") purchased, and services procured, solely for use in Operations shall
be charged  at prices  actually  paid by USE after  deduction  of all  discounts
actually received.  USE shall maintain  reasonable  inventory levels adequate to
sustain Operations in accordance with the guidelines set by SGMC.

      3.2 MATERIAL  FURNISHED BY USE. At its discretion USE may furnish Material
from its stocks under the following conditions:

          (a) NEW MATERIAL  (CONDITION  "A"): New Material  transferred from the
USE's properties  shall be priced f.o.b.  the nearest  reputable supply store or
railway  receiving  point,   where  like  Material  is  available,   at  current
replacement cost of the same kind of Material (hereafter, "New Price").

          (b) USED MATERIAL (CONDITION "B" AND "C"):

             (1) Material in sound and  serviceable  condition  and suitable for
                 reuse without  reconditioning  shall be classified as Condition
                 "B" and priced at seventy-five percent (75%) of New Price.

             (2) Other used Material as defined hereafter shall be classified as
                 Condition "C" and priced at fifty percent (50%) of New Price:

                    (A) Used Material which after reconditioning will be further
serviceable for original  function as good secondhand  Material,  Condition "B",
or:


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                                                                   EXHIBIT 10.57

                    (B) Used Material which is serviceable for original function
but not substantially suitable for reconditioning.

                 (3) Material  which cannot be  classified  as Condition  "B" or
                     Condition "C" shall be priced at a value  commensurate with
                     its use.

                 (4) Material no longer  suitable  for is  original  purpose but
                     usable  for some other  purpose  shall be priced on a basis
                     comparable with items normally used for such other purpose.

      3.3 PREMIUM PRICE.  Whenever Material is not readily  obtainable at prices
specified  in Section  3.1 and 3.2,  USE may charge  the Cost  Accounts  for the
required  Material on the basis of USE's  direct cost and  expenses  incurred in
procuring such Material;  provided,  however,  that prior notice of the proposed
charge is given to SGMC,  whereupon SGMC shall have the right,  by notifying USE
within ten days of the  delivery of the notice from USE, to furnish at the usual
receiving  point  all or part of its  share  of  Material  suitable  for use and
acceptable  to USE.  If SGMC so  furnishes  Material  in kind,  USE  shall  make
appropriate credits to its account.

      3.4  WARRANTY OF MATERIAL  FURNISHED  BY USE OR SGMC.  Neither USE or SGMC
warrants the Material furnished beyond any dealer's or manufacturer's warranty.

      3.5  EXCLUSIVELY-OWNED  FACILITIES.  The  following  rates  shall apply to
services rendered from equipment or facilities owned exclusively by USE:

          (a) Water,  fuel,  power,  compressor and other auxiliary  services at
rates currently prevailing in the vicinity;

          (b) Equipment at a fair rate sufficient to cover maintenance, repairs,
depreciation and related services, provided that the charges do not exceed those
currently prevailing in the vicinity; and

          (c)  Laboratory  services at a fair rate,  provided the charges do not
exceed those of other outside service laboratories for services in the vicinity.



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                                                                   EXHIBIT 10.57

                                   ARTICLE IV
                              DISPOSAL OF MATERIAL

      4.1 DISPOSITION GENERALLY. USE shall have no obligation to purchase SGMC's
interest in Material.  SGMC shall  determine  the  disposition  of all Material,
provided USE shall have the right to dispose of normal accumulations of junk and
scrap material either by transfer to SGMC as provided in Section 4.2 or by sale.
USE shall credit SGMC for all Material sold hereunder.

      4.2 SALES.  Sales of  Material to third  parties  shall be credited to the
Cost Accounts at the net amount received. Any damages or claims by SGMC shall be
charged back to the Cost Accounts if and when paid.

                                    ARTICLE V
                                   INVENTORIES

      5.1  PERIODIC  INVENTORIES,  NOTICE  AND  REPRESENTATION.   At  reasonable
intervals,  inventories  shall be taken by USE,  which  shall  include  all such
Material  as is  ordinarily  considered  controllable  by  operators  of  mining
properties.

      5.2  RECONCILIATION  AND  ADJUSTMENT  OF  INVENTORIES.  Reconciliation  of
inventory with charges to the Cost Account shall be made, and a list of overages
and shortages shall be determined by USE. Inventory adjustments shall be made by
USE to the Cost  Account  for  overages  and  shortages,  but USE  shall be held
accountable to SGMC only for shortages due to lack of reasonable diligence.


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                                                                   EXHIBIT 10.57

                                   EXHIBIT B
                                   INSURANCE

        U.  S.  Energy  Corp.  ("USE")  shall,  at all  times  while  conducting
Operations,  comply fully with the  applicable  worker's  compensation  laws and
purchase  insurance  protection  for USE, as well as Sutter Gold Mining  Company
("SGMC"), comparable to that provided under standard form insurance policies for
(i)  comprehensive  public liability and property damage with combined limits of
One Million  Dollars for bodily  injury and  property  damage;  (ii)  automobile
insurance with combined  limits of One Million  Dollars:  and (iii) adequate and
reasonable  insurance  against risk of fire and other risks  ordinarily  insured
against in similar  operations (Ten Million  Dollars).  These limits are minimum
limits, and shall not be construed as a limit on USE's liability to SGMC.



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