U.S. Gold Corp. (USAU) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for attending this presentation of U.S. Gold Corp. My name is Edward Karr. I'm the Chief Executive Officer and Founder of the company and also a Director. So I'm going to be taking you through our presentation. This presentation is on our website. And we are a U.S. publicly traded company on the NASDAQ, symbol is USAU. And we're advancing high-potential projects in Wyoming, Nevada and also now Idaho. So during this presentation, I will be making some forward-looking statements. I'd kind of point out in this COVID world we're in right now, everything is a forward-looking statement. None of us know what's going to happen next month or next year. So keep that in mind. We'll start with an overview of the company. So in U.S. Gold Corp., we have 3 great projects -- actually, 4 projects in the company today. We founded the company with the asset on the left-hand side of your screen here called our CK Gold Project, formally known as Copper King. CK Gold Project is located in the state of Wyoming. This is an advanced exploration development property. We know we have a deposit out in the Wyoming country side. We do have a preliminary economic assessment. It was done by Mine Development Associates. It shows a really, really robust resource. We have about 1.8 million gold equivalent ounces, and that project is still open in multiple directions, which I'll talk more about. Then in the mid part of the screen, we have 2 district scale exploration opportunities in Nevada, Keystone on the Cortez Trend and Maggie Creek on the Carlin Trend. And we just picked up a new project with a recent acquisition. That's on the right-hand side of the screen. We acquired a company called Northern Panther Resource Corporation just a couple of weeks ago in August. They have the Challis Gold Project in Idaho. And that has a historic -- it's not a current but historic resource showing about a 313,000 ounce resource of gold. So I'll give you a little overview here of the company from a financial standpoint. We have an extremely tight share structure. We're very proud to be listed on the NASDAQ with a very few gold exploration companies on the NASDAQ. So if you look as recently just back in August, we only have 3.58 million common shares outstanding. We do have some preferreds that we picked up when we acquired the Northern Panther Resource Corporation. We issued some preferreds, and we also did some additional financing as well. We have some warrants outstanding. If all those warrants are exercised, we'll bring in approximately $15 million more in capital. Important things to point out, we have just under $10 million in cash in the company today, no debt. Very, very important, again, no debt in the company. So real clean market cap and balance sheet. When you look at on the right-hand side, 52-week low and high. Our stock price, like the whole sector, can be volatile. I think the last I looked we were around $10.50 a share. And those 3.5 million shares outstanding were about a $36 million, $37 million market cap, $10 million in cash, so about a $27 million enterprise value today. We do have 1 research analyst that covers us. That's Heiko Ihle over at H.C. Wainwright. And you can get a copy of his report. E-mail me, we'd be happy to send it over to you. So we'll get into the company, and we'll start talking about the projects. We're going to start off with our Copper King Project. That's in the state of Wyoming. State of Wyoming is a wonderful state to be mining in, very, very mining friendly state. It has a lot of natural resource projects in Wyoming, a lot of coal mines, a lot of oil and gas throughout the state. So I'm going to show you here exactly where our project is located. Just going very fast through our PowerPoint because our time is limited. I want to hit on most of the highlights here. And the important thing about our CK Gold Project in Wyoming is that it's on all state of Wyoming ground. So we have state of Wyoming claims, and that's important because we deal with the regulators in Cheyenne. We don't have to deal, we believe, with the federal regulators, the Bureau of Land Management, EPA in Washington, D.C. So you see in this image where we're located, state of Wyoming down in the southeast corner. If you were to fly in a Denver airport, rent a car, we could drive 2 hours north of Cheyenne, hook a left, head out West for 20 miles, and you could literally drive right on top of the Copper King deposit. So this is a really, really prospective resource that we have. When we look at our Copper King deposit, this is a highlight right out of our historic PEA. That Preliminary Economic Assessment is on our website. So the deposit, you can see in this image, it's kind of shaped like an American football, about 1,000 feet long, 300 feet wide, 300 feet deep. A lot of historic drilling has really defined it very well. If we were out there, the mineralization comes right up to surface. You can pick up rocks and see that great copper hue and so the gold and copper comes right up to surface. Copper King has a higher grade core surrounded by a lower-grade resource. The grades, you can see here, it is a lower grade deposit but the consistency of grade throughout this makes it very, very amenable for mining. Also coming right up to the surface, very low strip ratio. So you see we have about 1.1 million ounce MII gold, 300 million pounds MII copper at Copper King. When we look at the kind of the heart of that Preliminary Economic Assessment, this was done back in December of 2017. Mine Development Associates used $1,275 gold, $2.80 copper. I think everyone probably knows gold is touching $2,000 today and copper is above $3. So this is extremely conservative -- these numbers. But even at these numbers, the project throws off net cash flow of about $300 million and NPV 5% discount of $178 million, nice attractive IRR of 33%, reasonable CapEx to put a -- build a facility, put this into production. Copper King will produce a gold copper concentrate by flotation, probably with the gravity circuit. And look down the bottom right of this image, going to create well over 100 jobs at the mine site, probably well over 1,000 jobs in the local community, so give Wyoming a nice economic shot in the arm. We updated our internal economics on Copper King. Obviously, price of gold has been rising. So it's $1,600 gold and $2.80 copper. Look at how the NPV jumps up to $321 million. That IRR increases to 52%, so huge leverage for the U.S. Gold Corp shareholders with this asset. And I'll tell you, most of the development stage companies like U.S. Gold Corp. that have an asset at the PEA going to the pre-feasibility study level, they're trading in the market right now around 30% to 40% of NPV. I mean that could imply a $100 million market cap for us if we just catch up with the market norms. And here we are today with a $32 million market cap. So we believe that we're quite undervalued. And I'll tell you. At $2,000 gold and $3 copper, that net present value on Copper King actually increases to $600 million, the IRR goes up to 80%. So it's an incredible asset really for us. Very, very good valuation. When we look at $1,600 gold, obviously, our mined ore tonnage will increase, very attractive production profile. We know we can increase the processing rate to approximately 20,000 tons per day, if you're looking at a potential profile of like 80,000 ounce of gold and 20 million pounds of copper. And in our recent acquisition of Northern Panther Resource Corporation, we just recently announced, we also brought on a very, very senior mining industry executive. His name is George Bee. George Bee was, for many years, a senior executive with Barrick Gold. He was the Mine Manager of Goldstrike, 1 of the largest mines in North America, an illustrious career. George is 1 of the most accomplished mine builders and operators on the planet, and he is going great guns right now, pushing Copper King forward to the pre-feasibility study. And we know that this deposit is actually open in multiple different directions. We drilled out Wyoming 2017, 2018. We increased the deposit out to the West. That was very exciting for us. And then we turned around and we hired Datamine out of Denver, Colorado. They've got state-of-the-art software for the mine exploration and development industry. And you can clearly see here this gold IsoShell upper part of the image and on the right the copper IsoShell, those higher grades are in red. Look down below too, and especially the bottom right, nice silver intercepts and we have no economic credit for silver in our PEA. So we think that, that can really, really increase. We are working on our PFS right now. So we're moving this project forward to a pre-feasibility study. This is being led by George Bee and his technical team. We are working with some of the top consultants out there in the industry, and our pre-feasibility study is going to be very, very robust. We're going to focus on metallurgy, baseline studies, hydrology, mine plan design. We know by this time next year we're going to be in a position to file that mine plan permit at Copper King. We are obviously expecting a very, very positive pre-feasibility study outcome. So we'll know that by the end of this year. And literally, right now, in early September, drill rigs are being deployed out to the project. We'll be drilling core for metallurgy. We'll also be drilling RC to try and expand the resource and add some of our inferred to the measured indicated category. So continue to watch the news on Copper King, a lot of news coming out here in the next couple of weeks and great catalyst for U.S. Gold Corp. So we're going to switch now towards Nevada and our big district scale exploration projects in Nevada. Nevada is a wonderful state to be exploring for the next gold deposit. And we're in a great, great location in Nevada. We are in North Central Nevada in the heart of 2 of the most world famous gold trends. You can see here Keystone on the Cortez Trend and Maggie Creek located on the parallel Carlin Trend. We're going to start with Keystone, go through it very quickly. This is a great project for us. Keystone, you can see where we're located here on the Cortez Trend. Just to our north, this is Barrick Gold country. So we've got the big joint venture now between Barrick and Newmont, Nevada Gold Mines. And you see these world famous mines to our north, Cortez, Cortez Hills, Pipeline, new discoveries like Goldrush going into deposit, ET Blue, Fourmile. It's a very, very prolific area. And we think Keystone shares many of these similarities. If you want to find a new gold deposit or build a new gold mine, a good place to be looking is around other gold deposits or other gold mines. And you can just see from this image in Google Earth that we're in a great neighborhood here on the Cortez Trend. Keystone is a big property package. It's the first time that 1 company has controlled this entire district. So we now control 100% of Keystone. There's about 12,000 acres, 20 square miles, about 6 miles long, 3.5 miles wide. And it looks extremely prospective. We've been doing a lot of work on this over the last 4 years, and we think we are very, very close to discovery success. So one of the first things we did when we consolidated all the claims is we mapped the entire district. This image was drawn by a gentleman named Tom Chapin. He worked many years for Barrick Gold. He's a senior geologist and mapper, and he mapped the entire district. We've also done a tremendous amount of geophysical surveys, soil geochemistry and, of course, drilling. You can see in this image how our claims have developed at the bottom over the years. By September 27, we had the whole district tied up. And the bottom right is an example of a gravity survey. We've done multiple gravity surveys at Keystone. You can clearly see this big North Northwestern trending structure coming through the property. This gets our geology team very excited led by Ken Coleman because that's where these massive Carlin-type deposits tend to form. The property is looking extremely prospective. We've done a lot of work out of Keystone over the last several years, and now we're getting these targeted zones. We know something's happening in our Sophia targeted area. You can see in the mid part of this image, and we're following up on that right now. We are designing and refining our 2020 drill programs. You look at our stratigraphy, the drilling at Keystone. Every single drill hole we've drilled has hit anomalous gold. We've seen incredible host rocks. These Carlin-type deposits are host in very specific limestone carbonates. We've got them all over the project. We've got a great look at Wenban. Every single drill hole has had wonderful brecciation, alteration. We've seen incredible pathfinders, realgar, orpiment, arsenic, literally off the chart. So everything is telling us a world-class discovery is just waiting for us. So continue to watch the news on Keystone. We'll be talking a lot about this in the next couple of weeks as we move forward on our 2020 exploration plans. Then we're going to switch to Maggie Creek. Maggie Creek is located on the famous Carlin Trend, parallel trend of the Cortez Trend. This is a great exploration project. We're down in the south part of the Carlin. You can see it right here. And we are right next door to Newmont's massive Gold Quarry deposit. So that is a really big deposit. I'm going to show you an image here directly from Google Earth, and you'll be able to clearly see here Newmont's Gold Quarry's Open Pit. You can see the Rainbow deposit right on our Maggie Creek claims. And we believe the mineralization, the trends go right from Newmont's Gold Quarry through that Rainbow deposit and potentially right on to our claims. We've just done a district-wide gravity survey. We're designing our 2020 exploration plans for Maggie Creek right now and stay tuned.It looks really prospective. Our newest gold project that we just picked up with the Northern Panther Resource Corporation acquisition is Challis. Challis in the state of Idaho, wonderful state to be exploring in, a lot of great companies and projects going on there right now. Challis -- it's very prospective. We have a historic 313,000 ounce gold resource there. We believe this is open to the potential of maybe 1 million to 1.5 million ounces. So we're following up on that right now, doing a lot of additional work, and we're going to be announcing our exploration plans here for Challis in the near future. So continue to watch the news on Challis. We'll put out a bunch of press releases here and talk about it. When you look at U.S. Gold Corp today in the market, we believe that we're highly undervalued. We're below a $40 million market cap today. Again, $10 million cash in the bank, no debt, so about a $30 million enterprise value. As this bull market runs, I think we're in the second inning of probably a 9-inning ball game. Our stock -- we really think it's going to rerate. Having a development asset like the CK Gold Project gives us incredible value in the company. And I think with the addition of George Bee, some other incredible shareholders from our Northern Panther acquisition, cash in the bank, we're very, very excited for our future. We've got a great team in the company. I'll point out just a couple of people. I have talked about George Bee, our new President, senior mine builder and operator. In addition, we've got a very active Board of Directors. We added last year the Secretary Ryan Zinke, Former Secretary of the Interior under the Trump administration. Tim Janke is a mine engineer, great Board, very, very active. Ken Coleman is our project geologist and running our exploration team, and we've got a bunch of great outside consultants that we work with as well. So in conclusion, I know this has been very fast. This presentation is up on our website. We got a great company here. You have no geopolitical risk at all in U.S. Gold Corp. We're in 3 of the best mining-friendly states of the United States: Wyoming, Nevada and Idaho. We've got cash in the bank. You've got incredible value in our CK Gold Project, very tight share structure, only 3.59 million shares, listed on NASDAQ, good liquidity in the stock. And we think we've got great, great potential. We'll have a lot of catalysts and a lot of news between now and the end of the year and really look forward to any questions that we might have coming in.

We do actually have some questions, plenty of time to address them. The first question -- this person would like to know, are there any sell-side analysts that cover the company? If so, who and from what firm?

Yes. That's the question. I did touch on that. We currently have 1 analyst that covers U.S. Gold Corp. That's Heiko Ihle over at H.C. Wainwright. So he has a buy recommendation, I believe, an $18 price target on us. If anyone wants to see that, my contact info is up on the website right now. You can just e-mail me, and I'd be happy to send you a copy of that report.

Excellent. The next question is what percentage of outstanding shares are held by insiders?

Yes. Good question. We're proud of the fact that management, insiders are quite significant shareholders of U.S. Gold Corp. Between management, insiders, officers, directors and a couple of key close shareholders, we control about 30% of the company. So it's a pretty decent amount of this. I'm one of the larger shareholders myself, as the Founder, and I participated in every private placement. I buy stock out of the market, take bonuses in stock and really believe in this company for the long term.

And then 1 final question. This person would like to know what percentage of the outstanding shares are held by institutional investors.

This has been pretty much an underfollowed institutional story so far. So our market cap has been sub-$50 million. We really hope with this gold market taking off right now and price of bullion going up like one of Elon Musk's rocket ships that our market cap picks up. And a lot of institutions want to see a minimum of a $50 million market cap before they get involved. So we have a huge retail following in our stock, over 14,000 shareholders on our Nobel list, and we're working on institutionalizing the company right now.

Very good. Well, ending right on time. And thank you for all the great information. And everyone, have a great day.