US Gold Corp (NASDAQ: USAU) has provided an update on the engineering and optimization efforts for its flagship CK Gold Project in Wyoming. After securing essential permits earlier this year, the company is now focusing on refining the project’s economics and advancing exploration in the region.
With gold, copper, and silver prices nearing historic highs, US Gold Corp is taking steps to optimize its operations and leverage these favorable market conditions. The updated pre-feasibility study (PFS) for the CK Gold Project, initially set for completion in mid-2024, has been delayed to incorporate these new engineering insights and the impact of rising commodity prices. This strategic decision aims to establish a more efficient and profitable mining operation that aligns with the long-term vision of the company.
Permitting and Pre-Feasibility Study Update
In April 2024, US Gold Corp secured its Mine Operating Permit from the Wyoming Department of Environmental Quality (WDEQ), marking a key regulatory milestone. This permit allows the company to move forward with site preparation and construction while simultaneously resuming work on updating its December 2021 PFS. The updated study, which restarted in June 2024, will take into account changes required by permit commitments, engineering optimizations, and rising metal prices.
US Gold Corp’s management believes that this is an opportune moment to finalize the engineering optimization studies that could significantly improve project economics. The company is positioning itself to capitalize on the current high prices of gold, copper, and silver, making it essential to establish a durable and efficient mining operation before finalizing any production decisions.
In commenting on the engineering studies in a recent press release, George Bee, President and CEO said, “The time to make changes to a project is during the initial engineering so that the Feasibility Study (FS) is well thought out and durable. Nothing upsets project controls and cost management more than change orders once construction has started, and we will go into development with a well-engineered project consistent with the permit constraints and optimized for the best possible outcome.”
Luke Norman, Chairman added, “While gold, copper and silver prices are pushing new highs, the equity markets in the junior sector remain laggard in their response. Although the CK Project is permitted in principle and ready for development, we have time to accomplish these optimization opportunities. Testing alternative, mine-proven flotation technologies offers potential to further increase the economic framework of the mine. Furthermore, we are still looking to build value, based on investigations to commercialize the rock that we mine and set aside to extract the gold and copper ore. Adding a potential revenue stream from the aggregate could also offer additional benefits to both U.S. Gold Corp. and the State which would garner additional royalty payments. This commercialization also has the potential to offer alternative closure scenarios where the exhausted pit could serve as future water storage to reduce cost and disruption in the nearby Curt Gowdy Park where the current city reservoirs are situated.” Mr. Norman added, “Of course any of these potential changes would be subject to discussion with interested parties and additional permitting.”
Engineering Optimization for Tailings and Water Management
One of the critical areas under review is the optimization of the Tailings Management Facility (TMF). US Gold Corp has enlisted the expertise of Tierra Group International (TGI), a Denver-based geotechnical engineering firm, to evaluate the TMF’s design. The goal is to improve the stacking sequence and road access to the facility, potentially lowering capital costs without altering the TMF footprint or design concepts. As part of this effort, the TMF will now incorporate a membrane composite liner rather than the modified soil liner initially considered in the 2021 PFS.
Water management is another area where the company sees opportunities for improvement. In June 2024, the CK Gold Project received its water discharge permit (WYPDES) from the WDEQ, which established specific standards for water use and discharge. In response, US Gold has tasked TGI with revising the site-wide water management plan and water balance model. TGI is exploring ways to enhance water harvesting within the project’s property boundaries, which would reduce the amount of external water the company needs to purchase. US Gold already has an agreement in place with the Cheyenne Board of Public Utility to buy water for its operations, but improved internal water management could significantly lower costs.
Process Plant Trade-off Study Aiming for Higher Efficiency
Another focal point of US Gold’s ongoing studies is optimizing the process plant. The 2021 PFS outlined plans for a 20,000 ton-per-day sulfide concentrator, which uses conventional crushing, grinding, and flotation to generate a sulfide concentrate. However, recent advancements in flotation technology have prompted the company to reconsider this approach.
US Gold Corp has begun investigating alternative flotation equipment that could improve metal recovery rates and reduce operational costs. Specifically, the company is exploring the use of Jameson Cells and IsaMill technology, which have demonstrated potential benefits in other mining operations. These technologies offer the possibility of improving metal recoveries, lowering the capital requirements by reducing the mill building size, and cutting operational costs by decreasing energy consumption and labor needs.
To determine the suitability of these technologies for the CK Gold Project, US Gold Corp has shipped 150 kilograms of ore-grade material to a metallurgical laboratory for testing. The results of these tests will be crucial in shaping the final design of the processing plant, with the goal of improving overall efficiency and maximizing output.
Project Economics and Future Potential
US Gold Corp’s ongoing efforts to optimize the CK Gold Project come at a time when the project’s economics already appear strong. The 2021 PFS projected 1 million ounces of gold and 248 million pounds of copper in reserves, with all-in sustaining costs (AISC) of $800 per ounce of gold. These estimates were based on conservative metal price assumptions—$625 per ounce of gold and $325 per pound of copper.
With current market prices far exceeding those assumptions, the project’s financial outlook has improved considerably. This positions the CK Gold Project as a potentially highly profitable operation, even in the face of fluctuating commodity markets.
In addition to refining its production model, US Gold Corp is also exploring innovative financing options. Traditional equity financing would dilute current shareholders, so the company is considering alternatives such as municipal bonding, aggregate sales, and prepayment agreements. The potential sale of 35 million tons of granodiorite, which will be extracted during mining operations, as aggregate material could provide a significant additional revenue stream. This waste rock is similar to material sold by nearby quarries for $20-25 per ton, offering a unique opportunity to enhance the project’s profitability.
Expansion of Exploration Efforts in Wyoming
While advancing the CK Gold Project, US Gold Corp is also expanding its exploration efforts in Wyoming. The company views the region as a mining-friendly jurisdiction with untapped potential. Cheyenne, located just 1.5 hours from Denver, offers proximity to major infrastructure, further strengthening the project’s long-term viability.
The CK Gold Project’s location in a sparsely populated area with favorable air and water quality conditions has contributed to a relatively smooth permitting process. The company has secured most of the necessary permits, including industrial siting, mine operating, and water discharge permits. The final air quality permit is expected soon, which will fully clear the regulatory path to production.
Finalizing the Pre-Feasibility Study and Moving Toward Production
US Gold Corp’s next steps include completing the engineering optimization studies and finalizing the updated PFS by the end of 2024. With these enhancements, the company expects to significantly improve project economics and prepare for the decision to move toward full-scale production.
While the CK Gold Project continues to advance, US Gold remains committed to finding creative solutions to reduce costs and maximize the project’s value. The company’s focus on operational efficiency, water management, and innovative technologies is setting the stage for a more sustainable and profitable mining operation in Wyoming.
With most of the key regulatory permits in hand and ongoing engineering work nearing completion, the CK Gold Project is well-positioned to move forward. As US Gold Corp continues to optimize the project and explore expansion opportunities, it is clear that the CK Gold Project could become a major project for Wyoming’s gold and copper mining industry.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.
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