I have been recommending US Gold in my Mining Stock Journal since late 2017. US Gold is working on advancing its CK Gold project into a valuable gold-copper mine in Wyoming. If everything proceeds according to the planned time-table, CK Gold could be producing metal before 2024. The Company is funded through the completion of a bankable Feasibility Study. General consensus is that if the Company can show project with 100,000 oz of Au-Eq and 12-15yr mine life, the CK Gold project could be worth US$233-$389 million using the current price of gold and copper (plus there’s potentially silver in the mineralization which, if economic, would had a nice “kicker” to the prospective mine’s value. The current market cap of the stock is US$101 million.
USAU also has three highly prospective gold projects: Keystone in Nevada’s Cortez Trend, about 10 miles the south of Barrick’s Cortez Hills Complex; Maggie Creek in Nevada’s Carlin Trend, 10 miles northeast of Newmont’s Gold Quarry mine; and Challis project in Idaho, with low-sulfidation mineralization, an existing non-compliant gold resource consisting of 313,825 ozs of gold at 1.22 grams per ton and considerable exploration upside.
I presented an update of US Gold to my subscribers in the last issue of my Mining Stock Journal, after U.S. Gold released its 2021 summer plans for advancing CK Gold :
US Gold released its 2021 summer plans for advancing the CK Gold project (Copper King was changed to CK Gold to reflect the fact that the resource is more gold-weighted than copper with a gold price above $1600). The PFS remains on track for mid-year release. The program is designed to gather the information necessary to have a Feasibility Study prepared by the end of 2021 or early 2022.
The FS will be needed for the project financing used to build a mine plus the data will be necessary for final permitting. This includes geotechnical work for mine slope stability and for hyrdology and environmental studies. The Company also continues to advance metallurgic testing with regard to recovering copper gold and silver from the ore.
The CEO, George Bee, said the Company expects to be able to submit an environmental permit application in early 2022. The identified project footprint has been declared non-jurisdictional by the Army Corp of Engineers and is fully under the jurisdiction of Wyoming’s regulatory bodies. This is a big benefit in terms of the time it takes for the environmental permit process to play out.
Because the project won’t require a tailings dam or include smelter stack emissions from a processing plant and because the metal recovery process is a gravity and flotation process, it’s quite possible that the final permits will be fast-tracked for approval. With a 5% NSR on the project, it’s in the interests of the State of Wyoming to expedite the timeline for this project.
Just based on the economics of the CK Gold project, USAU is dirt cheap relative to peer companies in the U.S. with open pit projects:
The chart above is from USAU’s latest presentation on its website. The last column is the most relevant. It shows the market cap (in C$) of USAU and its peers relative to the NAV for each company. The NAV is based on the NPV calculus from each company’s most recent PEA/PFS studies (the NPV for USAU is based on the internally updated PEA NPV). The mean Price/EV for the peer group is 0.43x vs 0.23x for USAU.
I exchanged emails with George Bee who said the Company has enough cash into next year. He also said there should be some news flow besides the PFS and the reserve/resource update that could be a catalyst to move the stock price. Ed Karr mentioned to me USAU will be drilling at Maggie Creek and will hopefully have assays by late summer. Also the Company is working on a summer 2021 Keystone exploration program that will be announced in a few weeks.
USAU has 7.07 million primary shares shares outstanding, of which insiders and long term investors control 50-60%, making the free-float more like 3.5 million. Fully-diluted there’s just 8.6 million shares outstanding. The low share float likely prevents large mining stock funds from buying enough shares to make a difference in their ROR performance even if USAU doubles or triples from here and that may explain the considerable undervalution.
What this means is that, assuming the CK Gold project is successful, USAU shares will reprice rapidly at some point. The “trigger” could be a buyout offer for the project or a buyout of USAU in its entirety.
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That’s a small preview of the type of content provided in every issue. I look for early stage and advancing junior exploration development companies, ideally ideas that are not yet well-followed. I also will point out stocks to avoid with a brief rationale when subscribers ask my opinion on stocks I do not cover. A good example is Americas Gold and Silver (USAS), which I recommended avoiding a couple years ago.
I also recently started a “mid/large cap corner” in which I present some shorter term trading ideas in larger producing miners when I believe the market has made a mistake in taking down the price of specific stocks. This would include call option ideas if applicable.
The mining stocks are once again historically cheap. At some point this year I will be raising the subscription price, though existing subscribers will be grandfathered at the current monthly rate. If you would like some ideas for investing in mining stocks, take a look at my Mining Stock Journal.