from Financial Survival Network
Renowned geologist Dave Mathewson had been acquiring claims in the famed Nevada Cortez Hills Trend for many years. He connected with Edward Karr, a well known trader and founder of several investment management and investment banking firms. Thus was born US Gold Corp (an FSN Sponsor). Mathewson has high hopes for the project and so does Karr. It’s located nearby several other prolific mines that have been producing huge quantities of gold for decades, and its geology appears very similar. It could turn into a major discovery. And with over 40 years of Nevada exploration experience and numerous big finds under his belt, you have to take Mathewson seriously when he says. “It’s the best exploration project I have seen in my career.” As if that wasn’t enough, US Gold Corp acquired the Copper King Project in Wyoming, an advanced-stage gold and copper exploration and development, with an estimated $178 million net present value (according to the PEA). If things go right, there could be loads of value unlocked by US Gold Corp.
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Kerry Lutz: Welcome, you are listening to the Financial Survival Network. I’m Kerry Lutz, and hey, we’ve got a new sponsor. Exciting company. One that you might want to take a look at, and we’re really fortunate to have the CEO of that company. I should tell you what the company is first. It’s US Gold Corp. American company listed on the Nasdaq. And, we’ve got president, CEO, and director Edward Karr . Ed, welcome to the show.
Ed Karr: Kerry, thanks so much for having me and thanks for the interest in US Gold Corp.
Kerry Lutz: Hey, and likewise, we appreciate your support too. So, before I get started, I should mention that the only place you can find the US Gold Corp is on the Nasdaq, and it’s listed under USAU. And, right at this particular minute, it’s trading just shy of a buck. Ed, you’ve got a diverse background, you’ve been in finance all your life, and now you’re running a mining company.
Ed Karr: Yup, that’s exactly it. And, we’re actually an exploration company, not a mining company. So, I just kind of point that out. We have no producing properties currently, so we’re trying to really come with a world class discovery, and we believe if we can do that, it’ll create a lot of shareholder value. Kerry, I, as you pointed out rightly, I’m a financial guy, used to work on Wall Street. I’ve had several of my own companies for the last 20 plus years. I’ve raised a lot of money and a lot of capital for the junior natural resource industry. So, I know the industry well. I have a lot of battle wounds, a lot of losses, a couple of gains as well.
Ed Karr: But, the thing is with my background, I can really focus on the financing side of this industry, our capital table, our corporate structure, the corporate governance, running the company, dealing with shareholders, dealing with investors, dealing with auditors and lawyers, and Sarbanes-Oxley and all those sorts of things. And then our head geologist, Dave Mathewson, he’s really one of the preeminent early stage generative geologists out there, especially Nevada. Has a 40 year career in Nevada. Has found a lot of gold. So, it’s a great combination.
Ed Karr: I will never tell Dave where to put a drill hole. He handles that with our geological team and I really stick towards telling the story, raising the money, and making sure as well that we raise the right sort of money. We’ve been fortunate in this point. We’ve funded the company predominantly through equity raises. We haven’t had to bring on any debt so far. We don’t have any ratchets or resets, or any nasty sort of stuff like that. So, it’s a real plain vanilla cap table that we’re pretty proud of.
Kerry Lutz: Yeah, and you’re on the Nasdaq, which is kind of unusual for resource company, isn’t it?
Ed Karr: Yeah, it really is. It really is. We are one of the very few Nasdaq publicly traded gold exploration companies. We really like our symbol USAU, US Gold. We’re focused on gold and precious metal properties in the United States. We have two great projects currently in the company, that’s Copper King in the state of Wyoming and Keystone in the state of Nevada. Both are very mining friendly states and great places to be doing business.
Kerry Lutz: So, talking about Keystone, there’s a long story with Keystone and your VP of exploration, Dave Mathewson isn’t there?
Ed Karr: Yeah, there is. And, Keystone is located in north central Nevada. We are right in the heart of gold country. So, Keystone is on the Cortez Gold Trend, otherwise known as the Battle Mountain Eureka Gold Trend. And, we are 10 miles south of Barrick Gold’s Cortez Hills complex. So, they’ve got a massive mine there. Cortez Hills, another one just across the valley called Pipeline. Between those two mines, Barrick produces over a million ounces of gold a year. So, these are big, big world class mines.
Ed Karr: As you’ve pointed out, Kerry, I mean, Dave has a really long career in Nevada. In the mid 1980’s, he was the exploration geologist for a company called Atlas Gold Corp, and Atlas had the Gold Bar mine. They minded it. It was a nice deposit, and Dave was out looking for new deposits and that’s when he first, about 30 years ago, went into the Keystone district. And, he liked it so much, Dave actually staked some claims in the Keystone district. And, he’s been following this area for years.
Ed Karr: There was a large part of the district that was controlled by Placer Dome. Placer Dome was acquired by Barrick Gold in 2007, predominantly for the Cortez Hills mine. And then, Barrick kind of dropped a lot of those exploration claims. They just focused on their production, and Dave’s slowly and methodically started consolidating the whole Keystone district. He really liked what he saw. He likes the geology. There is a domed window on the Cortez Trend. There are multiple intrusives. There is incredible looking surface exposed rock on the project. So, all the conditions, all of the makings look like this is a world class property.
Ed Karr: And, finally, in 2015, Dave and a partner of his consolidated the entire district. We’ve known each other, Dave and I, for quite some time, well more than a decade. And, he called me up and told me about Keystone, told me about the opportunity, and said, “Ed, this is the best exploration project I have seen in my career.” And, when he told me that Kerry, we just knew that we had to do a deal, and we did. And, we acquired Keystone and Dave came onto the company full time.
Kerry Lutz: Oh, amazing. And, Dave is getting on in his years. He could be enjoying a very comfortable retirement and not bothering with any of this. So, for him to be doing this really says a lot.
Ed Karr: Yeah, that’s true. And, Dave could be down in Florida playing golf, or in Colorado skeet shooting, or whatever he does in retirement. But, what I really love about Dave and, really everyone in the company at US Gold Corp, is that we all still have a lot of enthusiasm and passion for what we do. So, Dave will get up early in the morning, four, five o’clock in the morning. He loves gold exploration. I mean, he lives, breathes, and eats gold exploration. So, does all our team, Ken Coleman, Tom Chapin, Brion Theriault, all of our guys.
Ed Karr: And, sometimes Dave will call me as early as four or five o’clock in the morning talking about what he’s seen either in the assays of historic drill holes, maybe some new geochemical results that we’ve done, geophysics, some geology and mapping, maybe an academic study on the property about intrusives. So for him, this is an a huge academic and mental challenge. Gold exploration is like the ultimate three dimensional Rubik’s Cube puzzle. We’re trying to find a very, very, very small gold deposit in a 20 square mile land package that we are convinced is out there. So, it’s really stimulating, and I think he enjoys this much more than golfing down in Florida., You’ve got to have challenges in your life, no matter what part of your life you’re in. And, what greater challenge than finding a major gold deposit. I mean,. he’s done it, what, five times before, so why not number six, right?
Ed Karr: Yeah, that’s exactly right. Dave has had a tremendous amount of success, especially in Nevada. And, again, to hear a guy like him, as you rightly point out, he is up there in years. But, all those years bring a lot of experience and wisdom, and when you look at a guy that is 40 to 50 years experience just in the state of Nevada, and he tells you this is the best exploration project he has seen. Wow, that’s got to excite people, that’s got to carry a lot of weight. And, why is that? Dave, when when you look at these gold exploration projects, all geologists get excited about their project. And, Kerry, you’ve interviewed-
Kerry Lutz: Of course.
Ed Karr: … tons of companies, tons of CEOs, tons of geologists. They’re all excited. But, at Keystone we genuinely believe that we are on to something special here. And, gold exploration is not unlike New York City real estate. People are willing to pay more for Park Avenue real estate than some real estate just out in the plains of Kansas. It’s all about location, location, location. These major gold trends of North Central Nevada have some of the biggest mines in the world. And again, we are just south, 10 miles south, of Barrick’s Pipeline and Cortez Hills mine.
Ed Karr: All of the conditions we’re seeing at Keystone to us are identical to Cortez Hills. We have the right host rocks. It’s very important. The rocks look incredible. Our drill holes show us incredible alteration, incredible brachiation, pathfinders, the metals associated with big gold systems off the chart, anomalous gold. It’s not big economic grade deposits, but anomalous gold in every hole. That means there’s a major gold event, a major gold system. The gold has been pushed out throughout the entire district, and we now have to narrow in on that high grade feeder zone.
Ed Karr: We have intrusives at Keystone. The intrusivenes are these ancient volcanoes. They are the engines, the drivers of the system. The magma comes up from below the Earth’s crust. It gets pushed out either in volcanic eruptions or impulses, and ultimately that liquid gold mineralization will cool down and form a gold deposit. So, we have to look for these feeders zones. We have to look at these big trending structures and cross cuts, and this tends to be where these gold deposits form. All those indications are at Keystone.
Ed Karr: We’ve also now have scientifically dated the intrusives at Keystone, and we know that they are the exact same age and from these same geological system as Cortez Hills to the north. So, all the indications to us is that there is a big major world class discovery just lurking in the shadows.
Kerry Lutz: Wow. It’s pretty exciting. And, best of all, it’s not your only project. You’ve got Copper King, that’s coming along too.
Ed Karr: It really is. And, we’re very excited as well about Copper King in Wyoming. A lot of times people want to hear about Keystone because it’s exciting. It’s the exploration unicorn. And, if we hit a discovery hole there, it could really create some shareholder value. But, when you look at our company today, Kerry, we have just 19 and a half, approximately, million shares outstanding. I think our stock is somewhere around the 90 cent range. So, we’re a $17 million market cap. We still have cash in the bank. So, our enterprise value is about $14 million. Our project Copper King has $178 million net present value. I’ll repeat that. $178 million. That’s just based on the resource that we know is there. The metal that’s in the ground today.
Ed Karr: Copper King is a nice deposit. It comes right up to surface. It is a gold, copper, silver, zinc deposit, a porphyry. So, we have multiple metals, the consistency and grade of the mineralization is very uniform across that deposit. Copper King, it being in Wyoming, it’s on all state of Wyoming ground, the claims. That means we only have to deal with the state of Wyoming regulators. We don’t have to deal with the BLM or the EPA. State of Wyoming would really like to help us and see this go into production because they have a five percent NSR. So, they’ll make a lot of money off this project and it’s robust. I mean, at current metals prices, this project has a projected internal rate of return of 33 percent, so we’re really excited about it.
Kerry Lutz: Yeah, you can’t beat that. And, also to develop it. It’s really low capex here. You’re not talking about a big capital investment to bring this into production.
Ed Karr: That’s exactly right. Estimated capex to put Copper King into production is about 113 million. It’s very manageable. In fact, we’ve had a lot of interest already yet, giving us some term sheets for project finance. There’s plenty of debt available out there in the markets with interest rates as low as they are globally. So, we’re very confident we can raise the money to put this into production. We’re confident that we’re going to get this permitted, but before we do that, the very first thing for us is we believe there’s additional exploration upside of the deposit.
Ed Karr: And, last year we contracted with Datamine out of Denver, Colorado to do a brand new exploration model for us. They looked at all the historic drill database plus the new drilling we did in 2018. They put that into a new model and they’ve clearly shown gold isoshells, copper isoshells, silver and zinc isoshells with economic grade metal throughout the deposit. And, we think now the deposit is really open, specifically down to the southeast. Seems like some of the historic drilling actually stopped short of some of the highest grade gold intercepts. So, we’re going to drill out there this summer in 2019. We’re going to try adding more ounces of gold, more pounds of copper, and as we do that and we get a real feel for how big this deposit can become, then we’ll be in a position to ultimately file a mine permit plan.
Kerry Lutz: I find it interesting that the capex is less than the net current present value of the project. That’s unheard of here.
Ed Karr: Yeah, look, it’s a really, really nice little project. Copper King, it’s not huge. It’s about 1.1 million ounces of gold and 300 million pounds of copper currently. So, if you look at our PEA, our preliminary economic assessment report, which is on our website, MDA did that, Mine Development Associates. They look at a 17 year projected mine life with about 41,000 ounces of gold and 10 million pounds of copper per year. So, it’s a small project. It’s not really gonna get the attention of the majors, but for a mid tier company, or even US Gold Corp, putting this into production ourselves, this thing throws off some extremely attractive revenue and cash flows each year.
Kerry Lutz: And, when you consider the market cap of US Gold Corp is so small, because you got less than 20 million shares outstanding. I mean, I can’t think of another exploration development company out there with that kind of tight capital structure.
Ed Karr: Yeah, it’s true. But, you know Kerry, it’s a tough market. I mean, I’ve been investing in this sector for 25 years. This is one of the longest and most difficult bear markets, the last seven, eight years that-
Kerry Lutz: Brutal.
Ed Karr: … that we’ve seen. Yeah. Brutal.
Kerry Lutz: Brutal.
Ed Karr: And, most of the stocks and the equities are down 90 percent from their highs. If you look at the juniors today, almost just about every company is trading at a 52 week low. Of course, there are exceptions, but we are starting to see some light at the end of the tunnel. It really seems like the precious metals, even the base metals, want to break out. Gold has been holding around the $1,300 range. You see the Federal Reserve do a complete 180 degree turn. They’re tightening.
Kerry Lutz: Oh, yeah.
Ed Karr: All of a sudden, they stopped and they’re probably going to start even loosening monetary policy and cutting interest rates probably at the end of 2019. Global growth seems to be decelerating. Central banks around the world are still printing tons of money and quantitative easing from the BOJ to the BOE. So, I really think that precious metals could do really well. And, if they do, this whole sector could finally start to move out. I mean, I know it’s been such a difficult last seven or eight years. But, for any of your listeners, any of the investors out there, if they’re new to this sector, this is good timing overall. It really is because I think that you look at a company like ours, they’ve just thrown the baby out with the bath water.
Kerry Lutz: Totally.
Ed Karr: The whole institutional market and we actually have real value. Everything in society, from your smart phone, to the chair you’re sitting on, to your computer, to the airplane, to the car you drive needs metal. We could not have an industrial society without mining, without metal. And, these metals have real values. There is real, real value in the ground. I mean our Copper King deposit has over a billion dollar in situ value of those metals sitting in the ground.
Kerry Lutz: Remarkable. And, remarkable that the sector could stay this depressed for this long. But, like you say, I think it’s showing signs of breaking out, the way that the metals are trading now, totally different than a couple of years ago. The trading patterns. I mean you’re a trader, you can see that you have these upside reversals during the day. We haven’t seen that in years where the price is down at the open, or shortly thereafter, and then turns around mid-afternoon and closes higher, which is definitely a potentially bullish signal here. So, I assume you’re going to be having a lot of news coming up, especially now that we’re in drilling season. So, I guess the best thing is if you’re interested here, go take a look at the company’s website. It’s definitely going to be worth your while, www.usgoldcorp.gold. Easy to remember. It’s got gold in its name twice, and hopefully that’s an indication of the future potential payoff off there, Ed.
Ed Karr: Yeah, we certainly hope so. And, the industry is really at an interesting time. You see the joint venture between Barrick and Newmont in Nevada. A lot more focus on Nevada, on the sector. So, we think we’re in a right place at the right time. Really excited about our two projects. Constantly on the lookout for other opportunities out there. We’ve got a good team, we’ve got a solid board, tight share structure, and we hope a lot of upside. And, we’re out there every day trying to build a lot of value for the shareholders here at US Gold Corp.
Kerry Lutz: Okay. So, just check it out. Check out on the Nasdaq. The symbol is USAU, and take a look at the website. Good information on there. Really exciting times here, Ed. I can understand why Dave, even at his age, can’t get to sleep at night.
Ed Karr: Yeah, exactly.
Kerry Lutz: All right. Well, thank you so much, Ed, and we will be in touch with you again shortly.
Ed Karr: Kerry. We really, really appreciate the time and interest, and if anyone ever has any questions, they can reach out to any of us at the company directly. We’re available 24/7.
Kerry Lutz: Yeah, and that’s always a great thing. You want accessibility with the juniors. Really, Ed, the only sector around where you can just pick up the phone or send an email to management and they actually call you back.
Ed Karr: Right.
Kerry Lutz: All right. We’ll talk to you again soon. Good luck.
Ed Karr: Thanks a lot, Kerry.
from Kerry Lutz Podcasts – Financial Survival Network http://bit.ly/2VsgCSv
