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US Gold Corp (NASDAQ: USAU) Property, Claims, Cash, and One of Nevada's Most Successful Geologists

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Within the United States, no other state comes close to the gold production numbers from Nevada, year after year. Nevada is famous for large, high grade gold deposits since the discovery of Carlin-style gold systems more than 50 years ago in the Cortez Trend.

For example the Cortez Mine commenced production in 1969. It is one of the largest gold mines in the world and it is still in operation today. Last year the mine produced more than a million ounces of gold.

Several other enormous discoveries followed. The nearby Pipeline deposit amounted to over 21 million ounces of gold. Further down the trend, the Cortez Hills and Gold Rush deposits are each estimated to contain more than 15 million ounces of gold (and counting). These deposits are all clustered a few miles apart and demonstrate the prolific endowment of gold concentrated within this linear trend.

Continuing further to along this string of pearls is the Keystone property, held by an aspiring junior explorer, US Gold Corp. (NASDAQ: USAU). The proximity to some of the largest (and lowest cost) gold mines in Nevada is important and this twenty square mile property is ideally situated in the heart of the trend.

There are a number of positive factors that make Keystone even more attractive from an exploration point of view. The geological setting for the property is ideal, with significant fault zones contributing the 'plumbing' for mineralized fluid circulation that created the big gold deposits elsewhere in the district.

A preliminary drill program was completed earlier this year at Keystone, which intersected wide sections of the most prospective lower plate sedimentary unit, known as the Roberts Mountain Formation. It is within this limestone rock where the huge Carlin-style gold deposits are encountered.

Analysis of the drill core revealed anomalous gold values within extensive alteration zones. This confirms a gold-bearing system was active within the property area and the challenge now is to zero in on a 'hotspot' area of enrichment where a significant gold deposit may be awaiting discovery.

Following this promising start to the exploration, US Gold completed staking to add a new project area further to the southeast, the Gold Bar North (GBN) project. GBN represents another early stage prospect with extremely attractive signatures that indicate the potential for a gold deposit. And the property is also in very close proximity to several mines and gold deposits further along the trend to the south.

In the event the company is successful to discover a large scale gold deposit it becomes a much stronger value proposition to control larger property holdings around the discovery. However the flipside to this is during the early phases of an exploration program it can be more of a challenge to break down where the best targets may be located on a large land package.

The properties are served by modern roads and accessible year round. Another drill program is scheduled prior to the end of this year, to follow up on a thorough review of all data for both project areas. This will represent the first time that a systematic, modern exploration program has commenced for the two prospects under the same model.

Rounding out the suite of exploration holdings, the company also controls the Copper King project, located in Southeastern Wyoming. This property is actually much further advanced, with a gold-copper deposit defined that could be considered a development candidate. A Preliminary Economic Assessment (PEA) was completed in 2012 that outlined a potential mine plan at Copper King, for a deposit of nearly 60 million tons. This was based on an estimated Measured & Indicated resource of more than 900,000 ounces of gold plus nearly 250 million pounds of copper.

A significant inferred resource has also been outlined, and the Copper King deposit area remains open for the potential of further expansion as exploration work continues. A geophysical survey was recently completed that has outlined new promising geological indicators to the east and west of the existing deposit area. The company has scheduled a round of drilling commencing in November to test these targets.

While each of the projects has tremendous potential, it is the skills of the geologists that have the biggest impact on the success of an exploration program. With more than 35 years of experience in the field on his resume, much of it focused on the Cortez Trend, Dave Mathewson is a qualified and respected geologist to lead this company.

Serving as VP, Head of Exploration, Mathewson was involved in staking of the Keystone and GBN properties. He participated in several gold discoveries throughout Nevada over his career and he knows what to look for. More importantly, as US Gold embarks on its hunt for the next big deposit, Mathewson has the knowledge and intuition to evaluate the data, improving the odds for success.

There are dozens of companies involved in exploration for gold deposits, and a wide range of market valuations from one to the next. US Gold controls three excellent projects, and has over $4 million in cash in the treasury, so perhaps a premium value could be expected. However, with fewer than 15 million shares outstanding, the company carries a modest market cap in the range of $20 million.

Consider just the Copper King deposit. The PEA estimated a net present value of $159 million for the project, which is several times the current market value for the entire company. With more than 1 million ounces of gold resources established, Copper King would be the flagship property for most other juniors, but for US Gold it shares the spotlight along with exploration plans in Nevada.

The stock may be considered a bargain today but the greatest gains in shareholder value for an explorer occur at the discovery level. Nothing moves a stock higher like a high grade drill hole. With drill programs set to commence shortly at each of its three properties, US Gold is committed to an aggressive exploration strategy. The combination of experienced and capable management, several exceptional properties, and a well funded treasury makes US Gold Corp. an attractive story for speculators.


This article was written by Luke Douglas for on .

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

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