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U.S. Gold hopeful on higher gold prices
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U.S. Gold hopeful on higher gold prices

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U.S. Gold Corp.’s president and chief executive officer, Edward Karr, hopes exploration drilling this season uncovers new evidence the company is on the right track for potential gold projects, and he believes the higher gold prices bode well for raising project capital.

The company’s three active projects are Keystone and Maggie Creek in Nevada and Copper King in Wyoming. Copper King is the most advanced, with a prefeasibility study started, while Maggie Creek is the newest project.

The Keystone exploration project on the Cortez Trend is “just south of Nevada Gold Mines’ Cortez Complex,” said Karr, who is optimistic based on earlier drilling results and NGM’s Four Mile discovery. “We’re still trying to find the next Cortez. Our challenge is to drill into a high-grade feeder zone.”

Keystone is a 20-square-mile property that includes the historic Keystone silver mine, but Karr said the current exploration targets are miles from the old mine. U.S. Gold acquired the Keystone district in 2016.

“I really believe there may be multiple deposits on Keystone,” he said. “We’ve been drilling four years, and this will be our fifth year. Every year has been better and better.”

U.S. Gold stated back in May that the company planned to drill at Keystone pending funding, and the company now has the money, Karr said in a telephone interview. He said U.S. Gold has $2.5 million, and there are financial warrants that could bring in another $2.5 million for exploration spending.

He described investors as “quite friendly” at a time when gold prices rose were pushing on the door of $2,000 per an ounce and copper was above $3 per pound. Karr predicted the gold price would go higher, and he said the higher price will continue to attract investors.

“The rest of 2020 and 2021 should be an exciting time,” he said. “I think the gold market will have longevity. We get calls from investors and banks offering money. That hasn’t happened in years.”

The drilling plan for Keystone in Eureka County is to follow up on results from earlier drilling, including gold mineralization found at the Nina Skarn area and at Sophia and Tip Top sites, and the plan also called for drilling in the Greenstone Gulch target area.

U.S. Gold’s project geologist, Ken Coleman, said in late July that if there is funding, “we will absolutely be drilling at Keystone.”

He said drilling could start in September but the work this year won’t cover the whole exploration plan outlined in May because the company would still need U.S. Bureau of Land Management approval of an amended plan of operations and then need to bond for reclamation. The proposed new roads and drill pads also will require cultural surveys for the BLM.

Drilling at Keystone could be both reverse-circulation and core drilling, Coleman said.

Copper KingAlthough the company is still hoping for the next Cortez gold deposit at Keystone in Nevada, there is already a gold, silver and copper deposit at the company’s Copper King project in Wyoming, and this will be U.S. Gold’s first place for drilling this year.

Coleman said U.S. Gold was waiting in late July for the Wyoming Department of Environmental Quality to accept the reclamation bond for Copper King work, and he expected drilling would be under way in August or September.

“The big thing is core drilling,” he said, which will provide metallurgical samples to be used in the prefeasibility study.

Kyle Wendtland, administrator for DEQ’s Land Quality Division, said his office has approved a drilling plan for Copper King for 17 drill pads and 17 drill holes and was waiting to complete the bonding process.

He said COVID-19 restrictions have DEQ staffers working remotely, which causes some delays because people aren’t all in the same place for necessary signatures, but “we’re all doing the best we can. We’re in unprecedented, uncharted territory.”

Staffers are still able to do field inspections, Wendtland said.

While drilling is under way at Copper King, a 1,120-acre property roughly 20 miles west of Cheyenne, U.S. Gold is doing a prefeasibility study on the economics of developing a copper and gold mine there, and Karr said “we’re really excited to be working with top consultants.”

He said the high gold and copper prices make Copper King a “very robust” project with a net value of $650 million, although the study will likely use lower prices for the study.

Karr also said a gold and copper mine would be a “nice shot in the arm” for Wyoming, which has been hit with low oil and gas prices and a downturn in the coal market.

Copper King would directly employ roughly 200 people but create many related jobs under the proposal to mine 100,000 gold equivalent ounces per year for 17 years, he said.

U.S. Gold leases the section of land for Copper King project site from the State of Wyoming and the mineral rights for the whole site from the state, Coleman said. The company leases the surface rights for another section from private landowners.

Wyoming would further benefit from gold, silver and copper production at the site. The state would receive a royalty on any production.

If the prefeasibility study points to mine potential, the next step would be a full feasibility study. Karr predicted the prefeasibility study would be completed this year for Copper King, and if that is favorable “we move right into the final feasibility study and start the permitting process and raising capital.”

The current plan for Copper King is for an open pit mine, and Karr said preliminary plans call for a new road to be constructed for ore trucks, so they would be kept separate from Curt Gowdy State Park visitors in the area. There would be a community outreach effort, he said.

Ore would be transported to a site in Cheyenne with a rail spur, where a processing facility would be built.

Karr said he has his eye on the Martin Marietta aggregate site, which has a rail spur, as a potential site for the Copper King processing plant. That site is a few miles south of Copper King.

At this point, Karr said the hope is to then ship ore concentrate via rail from the plant to Rio Tinto’s Brigham Canyon Mine near Salt Lake City for final processing.

He said there have been “high-level talks” about the processing and shipping ideas but nothing would be decided until after the feasibility study.

Wendtland said that for approval to develop an operating mine, U.S. Gold would need to file an application to mine with the DEQ that would be detailed and meet environmental requirements, and the state would put out notifications for public comment.

The project is only at the exploration stage now, he said.

Coleman said he is “very optimistic” about Copper King. “It’s a great, continuous deposit.”

U.S. Gold could be the miner, hire a contractor miner or sell the project to another company, if the feasibility study shows the project could be a viable money-maker, Karr said.

Copper King is the site of historic mining. The underground workings are covered but an old mill is still visible. Copper King is in the Silver Crown Mining District.

Maggie CreekThe 3-square-mile Maggie Creek exploration project is near the Gold Quarry Mine north of Carlin and has exploration targets U.S. Gold has yet to drill.

U.S. Gold acquired the option to earn up to a 70 percent interest in the Maggie Creek project from Renaissance Gold when U.S. Gold acquired Orevada Metals Inc. in September 2019, and the company announced in May it had completed a detailed gravity survey at Maggie Creek to help with ongoing mapping and determining drill targets.

The survey found that major geological structures on the property are parallel to the Good Hope fault with northeast trending structural intersections that deserve detailed exploration.

Coleman said there are no plans completed for drilling at Maggie Creek this year, which is “just getting started,” but there are targets at depth, and the gravity survey was the “first big step.” The Maggie Creek site has been drilled in the past, but they were mainly “very shallow 1980s holes,” he said.

Gold Bar North in Eureka County is also a U.S. Gold property, but there are no exploration projects there.

The COVID-19 pandemic’s impact on U.S. Gold has been mainly permitting and bonding delays when government offices are not fully staffed, Karr said.

Coleman is the sole person at the Elko office, and he said he is often working from home.

Karr travels to tell the U.S. Gold story and lives in Switzerland, where there are “a lot of investors and gold funds,” as well as gold refineries, he said. The company’s chief operating officer, David Rector, lives in California, and the chief financial officer, Ted Sharp, works out of Idaho.

Karr said U.S. Gold also has a “good board of directors,” including former Interior Secretary Ryan Zinke, Chairman John Braca, Timothy Janke, Andrew Kaplan and Douglas Newby.

U.S. Gold went public in May 2017.

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