Throughout the final quarter of this year, US Gold Corp (NASDAQ:USAU) put out a number of updates as to progress and development at its flagship projects. Here’s a look at these updates one by one with a discussion of what each means for the company and its shareholders and what to look for next as indicative of future value appreciation.
For anyone new to US Gold Corp, the company is (as its name suggests) a gold exploration company based in Nevada, US. It’s got two flagship projects – one, a gold resource located along the Cortez trend in Nevada called Keystone and another, this time a copper resource called Copper King, located in Wyoming.
There is also a third property, called Gold Bar North, which lies just south of the Keystone property. From a valuation perspective, however, this third property accounts for a very small portion of US Gold’s overall market capitalization based on its relatively junior exploration status.
As such, the focus of this discussion will be two updates related to Keystone and Copper King.
As noted, this one’s located along the Cortez trend, which is a trend that runs the southern portion of the Battle Mountain-Eureka Trend in north-central Nevada. It’s similar in size to the more well known Carlin trend and lies around 50 miles southwest of the latter.
It’s also home to some of the US’ biggest gold deposits and producing mines, including Barrick Gold Corporation (NYSE:ABX)’s Cortez property, which produced 1.06 million ounces of gold in 2016 and holds 10.2 million ounces of proven and probable gold reserves as of the end of last year.
In its latest update, management reported on a drilling program that is designed to underpin an updated resource estimate at the property.
Specifically, the company plans to drill a minimum of four scout holes, spread relatively widely across the property. Each of these holes is designed to provide an initial assessment of three of four gravity lows that were identified on the back of some early 2017 gravity surveys and that, according to management, closely match the north-northwest-trending corridor that frameworks Barrick’s Cortez deposit and vicinity.
Beyond this, two or three holes will be drilled at what US Gold calls its Sophia target zone, serving as a follow up to some promising geochemical results previously collected in the region.
What markets are hoping to see from these holes, then, is data that points towards mineralization at the project and – specifically – geochemical properties that are in line with those found at some of the producing resources along Cortez, such as the above mentioned Barrick property.
It’s going to be 2018 before any results hit press but, as relates to the Keystone project, it’s these results that markets are watching out for near term.
Moving on to Copper King, management put out an update as to progress at its Wyoming project at the start of last month.
As per the report, US Gold had recently completed what’s called an induced polarization (IP) survey, which is a geophysical imaging technique used to identify the electrical chargeability of subsurface materials, such as ore. Copper has a very specific conductibility and so these sorts of surveys can potentially identify regions within which copper density is at its highest and – in turn – can help a company like US Gold identify its most promising drill hole prospects.
On the back of this IP survey, the company has identified four promising regions and intends to drill one hole at each as part of a late 2017 drilling program. Again, the assumption is that we will see these drill holes completed before the end of the year and that – in turn – we should see results at some point during early 2018. This is a project for which a Preliminary Economic Assessment already exists, so the idea is to build on the results collected as part of the previous PEA (which was completed in 2012).
Management is also working to get permitting in place in Wyoming and Operations Manager Neil Whitmer is reportedly working closely with the local authorities to advance the project towards pre-feasibility and an eventual production permit.
Alongside any drill results, therefore, any progress on the drilling front could also serve as a near-term catalyst for the company.