Here Are The Key Points From The Most Recent U.S. Gold Corp. (NASDAQ:USAU) Presentation

At the end of last week (at session close on July 13, 2017), U.S. Gold Corp. (NASDAQ:USAU) management hosted a live webinar. Hosted by the company’s President and CEO, Edward Karr, the webinar was set up to outline a number of key recent developments and to discuss how these developments play into US Gold Corp’s strategy going forward.

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Since the webinar took place, the company’s share price is up close to 20%. This suggests market interpretation of US Gold Corp’s recent activity, coupled with management’s plans to leverage recent notable operational advances, is positive and indicative of further upside strength as the company matures along its strategic development pathway.

With this in mind, here’s a look at the highlights of the webinar and why the company is gaining strength on the back of its release.

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A quick introduction to the company

For those new to this company, US Gold Corp (NASDAQ:USAU) is a Nevada based mining and exploration company. It’s got two primary projects in its roster as things stand, Keystone and Copper King, both of which we will get to in a little more detail shortly. Management consists of the above-noted Karr, an investment banker who sits on the Board of Directors at numerous natural resource companies in the US and internationally; Head of Exploration Dave Mathewson, who most recently discovered and developed a number of producing resources at Gold Standard Ventures Corp (GSV) and who previously headed up the development of some of Nevada’s biggest deposits in his role at Newmont Mining Corporation (NEM); and Operations Manager Neil Whitmer, who also worked with Mathewson at Gold Standard Ventures and has a background in law and land acquisition.

The presentation – an introduction and a takeaway

It kicked off with a top down look at the two primary assets, the above-noted Keystone and Copper King. Included in the Keystone section was a second property called Gold Bar North (GBN), which is – again – something that we’ll zoom in on in a little more detail later on in this discussion.

For now, it’s enough to say that Keystone is a gold mining project located along the Cortez trend in Nevada, which is a trend that has repeatedly proven its worth as a viable production region for some of the biggest names in the sector – Barrick, Newmont and more – all of which are currently mining deposits that are producing in excess of a million ounces of gold annually.

The Copper King project is located in Wyoming (very close to the Nevada border, but Wyoming nonetheless) and is a far more advanced property in terms of development than its Keystone counterpart. It’s a copper mine, which isn’t surprising given its name, and it’s already got a completed Preliminary Economic Assessment (PEA) in place.

The key takeaway from these early introductions to the projects is that the company is diversified across two stages of development – one being an early stage blue sky type project that is likely going to account for the vast majority of forward valuation and the other a more run of the mill project, but one that is far more advanced along its development pathway and has the potential to provide bread and butter type revenues for the company as it pushed for the blockbuster return on its Keystone project.

In other words, one project to provide long term high-level returns, a second to provide lower, but steady revenues to help fund the former.

The projects in detail – Keystone

Moving on, the presentation then looked at these two projects in a little more detail and injected some numbers into the equation.

First up, Keystone.

The company noted that the project resides well within what is generally regarded as the Nevada Elephant County, within a large mining and processing infrastructure that includes numerous >20-million-ounce gold deposits. This, of course, far from guarantees Keystone this degree of a resource count but it does serve to strengthen the chances of the company uncovering rich mineralization based on the geographical proximity (and, in turn, the geological similarities) between Keystone and its surrounding deposits. So of the more notable of these are Cortez Hills, Battle Creek, Railroad, Pinion and Gold Bar (note: not the Gold Bar North referenced above).

Keystone – geology

Looking at the geology, the project is what’s called a tertiary, intrusive centered dome formation, with a permissive carbonate lower-plate window. As noted, this geology has strong similarities to some of the surrounding deposits and a key near term strategy for Keystone and its exploration team is demonstrating that this similarity can translate to mineable mineralization.

Keystone – exploration

There has never been systematic modern-day, model-driven exploration undertaken at the location and US Gold Corp is currently making strides towards fixing this shortfall. The company has just completed a district-wide, 2800 station, detailed gravity survey and the interpretation of this study is going to inform the exploratory program as it moves forward.

So the exploration programs at the site have been limited to date, but what can these limited programs reveal about Keystone’s potential?

Keystone – the data

A look at the limited historical data reveals that High grade and thick intercepts of gold have been encountered in what has generally amounted to very shallow historical drilling. The image below is a snapshot from the presentation, detailing some of the locations and grades within the project:


And here’s a quote from Mathewson (the above mentioned Head of Exploration who spearheaded Elephant-sized discoveries in this very trend while at Newmont):

“(Keystone is) … The best exploration project I have seen in my career… reminds me of the Railroad project on steroids”

For reference, Railroad is one of the now producing deposits he worked to explore and develop through to production while at Gold Standard Ventures.

As far as exploration progress is concerned, the company has completed five scout drill holes and intends to drill a couple more before the end of this year. There’s also plans to drill three exploratory holes within a close proximity to one of the scout holes (a hole called KEY16-03c) during 2017.

Gold Bar North

Touching briefly on the Gold Bar North deposit, then, this is an extension of the Keystone district to the South that was recently acquired and adds 49 lode claims to the total district-wide claim count. It’s geologically similar to the Gold Bar deposit that McEwen Mining Inc. (MUX) is about to start mining (which, in turn, lies just south of Gold Bar North) and looks like a promising addition to the company’s claims in the region. It seems to be a shallower opportunity than the primary deposits at Keystone, meaning it may be a more economical program from cost perspective longer term.

Just as is the case with Keystone, the company plans to conduct some exploratory drill target identification at the project throughout 2017 and then move onto a drilling program designed to establish resource estimate.

The projects in detail – Copper King

So that’s Keystone. Let’s move on to Copper King.

This one, as alluded to earlier, is a development stage gold and copper and gold project located in southeast Wyoming, 20 miles west of Cheyenne. It has shown considerable promise on the back of a range of historic programs and, since 1938, at least nine historic drilling campaigns by seven companies plus the U.S. Bureau of Mines have been conducted, with drilling by five different operators since 1970 confirming said mineralization. It’s also located entirely on state land making the process of picking up permitting for future production far cheaper and easier than it otherwise might be.

Copper King – PEA

From the PEA that’s already been conducted, we’ve got a far more detailed idea of what this deposit holds in terms of copper and gold resources than we do for gold at the Keystone project. The base case for the resource suggests a 17 year projected mine life, with around 34,000 ounces’ gold per year and 8.8 million lbs. copper per year. Based on a $104 million CAPEX requirement and a $273 million net cash flow (and assuming gold prices at $1,100 and copper at $3.00), pointing to a net present value of $159.5 million (at a 5% discount rate).

The forward plan for this one is rooted in the bringing of the PEA up to date and then, once the updated estimates are in place, the on-boarding of a team that can carry the project forward while Mathewson and his team focus on Keystone and GBN.

That just about sums up the operational side of the presentation and brings readers up to date with the company, its projects, and its forward strategy as far as the advancing of these projects towards production is concerned.

Some company metrics

US Gold Corp (NASDAQ:USAU) completed an $11.92 million equity offering back in October last year and – subsequent to this offering – had cash on hand of a little over $7.58 million at January 31, 2017. This cash means the company is fully funded from an exploration perspective throughout 2017, removing any near term dilution risk.

At last count, US Gold Corp traded for a market capitalization was $29.2 million based on a share price of $2.65.

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