U.S. Gold Corp. Updated Economics of the Copper King Deposit

Written by Danny Abramov

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March 24, 2020

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U.S. Gold Corp. (NASDAQ: USAU) stock jumped more than 120% Tuesday after the gold exploration company announced that it has internally updated the economics of the Copper King deposit to reflect the recent rise in gold prices.  Mine Development Associates’ (MDA) Preliminary Economic Assessment (PEA), dated December 5, 2017 which was based upon $1275 gold and $2.80 copper prices.

The Company indicates that gold prices have risen substantially since the Copper King PEA was published.  U.S. Gold Corp. used $1600 gold and $2.80 copper for its internally updated economic calculation, which was completed in early March, 2020.  Highlights of the updated internal calculations show:

Investment Highlights based on PEA

  • At $1600 gold and $2.80 copper, based on preliminary data, Copper King is projected to generate Pre-Tax Cash Flow of $510.54 million
  • The Net Present Value (NPV), based on preliminary data, at a 5% discount rate, is projected to be $321.60 million
  • The Pre-Tax Internal Rate of Return (IRR) based on preliminary data, is projected to be 52%
  • At $1600 gold, Copper King deposit economics are 80% gold and 20% copper
  • The updated internal analysis can be viewed at: https://www.usgoldcorp.gold/properties/copper-king/pea-highlights/1600-update

Mr. Timothy Janke, U.S. Gold Corp. Director states:

 “The Copper King deposit is a project of merit.  With gold recently above the $1600 level, we thought it appropriate to review what the updated potential Copper King economics look like at $1600 gold and $2.80 copper. We modified the PEA cash flow model to reflect metal prices for the above listed economic results. We did not change the economic resource from the PEA which was based on $1250 Au and $2.25 Cu. At $1600 Au, the ore tonnage increases from 133Mt to 170Mt. The contained gold equivalent ounces increase from 1.30 million to 1.48 million. With my experience as a mine engineer, I believe the resource increase at $1600 Au easily allows a doubling of the proposed PEA processing rate; from 10,000 tons per day to 20,000 tons per day, while still maintaining an 11-year project mine life. We also believe this could be likely extended through additional exploration, as the deposit is still open for further growth at depth, to the south-east and west. CAPEX is estimated to increase by approximately 60% from the original PEA figure for the doubling of throughput.”

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