US Gold Corp. (NASDAQ:USAU) has achieved several key milestones in advancing its flagship CK Gold Project in Wyoming. The company secured crucial permits over the past few months, positioning the project closer to production.

The Wyoming Department of Environmental Quality (WDEQ) issued a surface mine permit on May 15, 2024, enabling US Gold to advance work on updating the pre-feasibility study (PFS) of December 2021 which demonstrated CK’s robust economics based on significantly lower gold and copper prices today. The PFS update is expected to be completed around the third quarter of 2024. The company is also focused on completing a full feasibility study (FS) incorporating opportunities for project enhancements, including the high-quality aggregate representing considerable upside to the project’s economics.  According to US Gold Corp’s President and CEO, George Bee, substantial progress has already been made to the FS in terms of advanced engineering, plant design and equipment procurement. 

In accordance with the granting of the surface mine permit, the company completed two of three associated conditions – the pollutant discharge elimination system (WPDES) permit, and reclamation bond acceptance.  The final condition required for advancing the project, the air quality permit, is expected to be completed in the coming weeks, which aligns with the company’s previous guidance.

With the regulatory path mostly clear, US Gold Corp. has turned its attention to optimizing project economics and exploring financing strategies. Based on the PFS of December 2021, the project boasts strong fundamentals, outlining reserves of 1 million ounces of gold and 248 million pounds of copper, using conservative price assumptions of $1,625 per ounce of gold and $325 per pound of copper. Given current higher commodity prices, the project’s economics are even more favorable than initially projected.  Capital costs will also be expected to see an increase although ongoing optimization of the plant and engineering should enhance project economics.  

US Gold Corp. is considering multiple project financing avenues to minimize equity dilution, including non-traditional capital sources and the potential for municipal bonds. Wyoming has a history of funding mining projects through various business development funding, which could cover a portion of the capital expenditures at competitive rates. Additionally, the company is exploring prepayment agreements for forward-selling part of its initial production to offset capital costs.

A major part of US Gold Corp’s strategy includes the monetization of waste rock. The CK Gold project is expected to produce approximately 35-40 million tons of granodiorite during mining operations. This rock, typically viewed as waste, is highly suitable for rail ballasts and roads and could be sold as value-added aggregate. The company sees potential to generate significant revenue by selling this material which nearby Martin Marietta quarry charges $20-25 per ton for the same type of rock.  Adding a potential revenue stream from the aggregate presents optionality and opportunities to US Gold Corp. in addition to the State which would garner additional royalty payments. This represents a unique opportunity to enhance the project’s overall profitability.

Beyond production, US Gold Corp. is also considering the possibility of using the mine pit for water storage after the mine’s closure. This initiative could provide long-term benefits to the local community, contributing to the region’s infrastructure needs.

The CK Gold project is located just outside Cheyenne, Wyoming, approximately 1.5 hours from Denver, Colorado. The proximity to major infrastructure and skilled labor provides a logistical advantage for the development of the project.  Without a doubt, Wyoming’s mining-friendly policies have played a role in the relatively smooth permitting process, helping to keep the project on track.

With the remaining air quality permit expected soon, US Gold Corp. is tracking a timeline that few other companies have been able to achieve. The company continues to optimize its economic outlook in value-accretive ways and alternative financing methods to maximize returns for its investors and minimize dilution.

The CK Gold project is on the verge of becoming a major player in Wyoming’s gold and copper mining industry, with the potential for strong profitability and long-term benefits for the local community.

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