Welcome back, everyone. Next, we have U.S. Gold Corp., trades on the Nasdaq under the ticker USAU. It's a publicly traded U.S.-focused gold and copper exploration and development company with two exploration projects, Keystone Gold, located on the Cortez Trend in Nevada, about 11 mi south of Nevada Gold Mines' Cortez Hills Complex, and the Challis Gold Project , located in Idaho. We're happy to have Executive Chairman Luke Norman with us today. Luke, welcome to the conference. We look forward to hearing your presentation, and call me back when you're ready to dive into the questions.
Wonderful. Will do. Thank you, and thanks for everyone taking the time to listen in today. As mentioned, I'm the Executive Chair over at U.S. Gold Corp., also co-founder of the company. We're a purely Nasdaq-listed developer. We've got a development stage asset, CK, in Wyoming, and I'll look forward to giving you a little rundown on the company here today. I won't go through the forward-looking statement. Sorry. You'll find all that on our website, of course. Website is usgoldcorp.com. U.S. Gold, we're going to focus in here on the CK Gold project in Wyoming specifically this morning, but we will also touch on the Keystone project as well in Nevada. We won't have time for Challis Gold Project, but we have plenty of time for questions and long answers. U.S. Gold Corp., we are an established group of mining professionals who have worked in the industry for decades.
We understand our primary role is to harvest these projects and make as much shareholder value as possible. This is not a lifetime role or job that we've taken on here where we're just looking for lifestyle positions. This is an approach to make shareholders money, and that's what we work towards. As I mentioned, we are on Nasdaq, so we have a very unique share structure for our sector. Traditionally, these style companies are listed in Canada on the Toronto Stock Exchange or on one of the junior exchanges in Canada. With a Nasdaq listing, we have an extraordinarily tight share structure. You'll see there are only 16.5, approximately, million shares outstanding. So we are very well-leveraged to gold and copper when you buy shares in U.S. Gold Corp., of course.
The way this bull market has been riding lately, it's been a little bit of a challenge on investors in the space. But when things turn positive, you'll see U.S. Gold Corp. act very accordingly. We have approximately $25 million , of course, in treasury, and a market cap right now that's floating in around $200 million-$220 million. So I think a lot of valuation upside present in the company right now, and not reflected in the current share price. Just at the bottom of this page before I flip it is the Lassonde Curve. Pierre Lassonde, of course, very storied, probably most famous gold investor in the industry. He has developed this curve, and we are right in this value proposition here, pulling out of the trough and heading into that sort of development and ultimately production phase. So we are located, as I said, in Wyoming.
The CK project is anyway, excuse me. It is in the southeast corner of Wyoming. Just to give one geographical bearing, if one was to fly into Denver International Airport, about an hour and 15 drive north, you end up in the township or the city of Cheyenne. Cheyenne is the capital city of Wyoming, and CK itself is about 20 mi just due west of Wyoming. I am sorry, in Cheyenne. Cheyenne was a pivotal location for us, clearly because we have taken this project from its infancy in 2020 as a pure exploration project to now a fully permitted, shovel-ready development stage copper and gold asset. That location has been key to our ability to do that. Reason why, we are on state ground. State of Wyoming, a resource state, a big supporter of harvesting its resources.
We got to deal with state officials in terms of all the permit process. Federal grounds, anyone who has got a public company like ours dealing on federal grounds elsewhere in the U.S., it is a real slow process, let me tell you. It is leading to a lot of anger in the industry. We have that great fortune, of course, of being outside of Cheyenne but in the city of Wyoming. Sorry, the state of Wyoming. You will see running through this map, we have got running east to west here, the I-80. That is the I-80 corridor. It is a highway, rail, all that running from Chicago all the way through to San Francisco. What that does for us, we are 2.5 mil north of it, is that is a major logistic corridor for bringing in equipment.
We sit right next to a city of 125,000 people, so employees, easy to get. We have full power grid within 16 mi of the project, which we have a power off-take agreement with, amortized to us at about $0.072 a kWh . We have roadways into the project. I can go on for a long time, but everything. Water. All the key ingredients we need to develop this mine and ultimately harvest gold and copper is sitting right there. The economics of the project we brought out earlier this year, very robust economics. It is about a 1.6 million ounce gold reserve, or gold equivalence reserve. So that is a combination of gold and copper.
There is a lot of upside to that within the resource parameters, and I will show you that in a coming slide. But we have established that here it shows an 11-year mine life plan.
We are actually embarking on exploiting it in about 10 years, bringing that total production up close to about 100,000 ounces of annual production. So a very meaningful project, meaningful size. A CapEx, so a build cost of just under $400 million. So bite size, very doable, very digestible. You can see the different variables here in terms of the price of gold. One thing that I must admit we have just realized is not brought into the variables of the price of gold increase is the increase in price of copper. So that is getting amended right now, but clearly at spot price around $4,000, this project has about a $1.3 billion NPV plus a lot more upside with the copper.
Critical kind of space right now with copper being in the critical minerals list now in the U.S., and then, of course, gold having always had its reverence within the U.S. and beyond. Very simple mining method here. We are going in, doing what is called an open pit, where we crush the rock. It is exposed right at surface. It goes through a grinding process into a flotation circuit, and ultimately, we will be shipping out a gold and copper concentrate. We will be selling a concentrate right at the gate, so we do not have to build smelting facilities or any of that, which helps, again, bring down cost of development. Project sits on a very small footprint, which is great also for costing. Here is the pit here.
These are about two square miles in size. The pit here, downhill haul for our run-of-mine pad, and then through the plant.
The concentrate is shipped out by the roadway. Of course, our waste material is stacked within this tailings pile. I will come back to that waste material in a moment, too, because not all waste is created equal. I mentioned the reserve size of the deposit, 1.6 million ounces. There is a heck of a lot more gold and a heck of a lot more copper to this deposit. That is just what we have outlined within the drilling confines that we put forward ourselves when we started this project. What we ran into in 2020 was still a bearish market, and we needed to establish a meaningful enough reserve that was going to give us 10 years of mine life and around 100,000 ounces of annual production. That was our focus with our drilling and ultimately our engineering work. However, this deposit is not designed around our drilling.
Our drilling was designed around it. The deposit continues to depth, and it has lateral extent as well. In fact, we envisage that there is a very good chance for this deposit to be economically viable at twice the size of what currently is reported at 1.6 million ounces. We do believe there is a great opportunity for this thing to increase to around three million ounces in size. Another interesting takeaway from this side view, you can see here, this is our reserve pit right here. That is the 1.6 million ounces. We have got our most enriched high-grade material, or mineralization, at surface right here in the center of that open pit, or proposed soon-to-be open pit. The second outline here is just some of the measured indicated mineral that we hit just by drilling through that pit.
There is another close to 800,000 ounces just exposed right there that does not calculate into our reserves yet. More to go on that in the future. I said I would bounce back to this, and I will just quickly. This waste material, again, tailings here, the tailings are not waste. The tailings actually contain gold. At some point, we will reenter those tailings, probably with some kind of other capture beyond flotation. There is upwards of close to 300,000 ounces that sneak into the tailings. We will work towards that as the mine is operating. There is also these two piles here, which are designated waste dumps. That waste is a very, very high spec granodiorite. Where we are located along this I-80 corridor, just to our south is Martin Marietta Materials, a $50 + billion New York Stock Exchange materials company.
They are harvesting granodiorite and selling it for $20-$25 a ton into a very hungry marketplace down in Colorado, also out to California. There is a huge amount of demand for high-quality aggregate source like this, in particular, rail ballast. We have been approached by one of the largest rail companies in the U.S. They want to purchase some of that material as rail ballast. We have done all the testing on it. We will end up with around 40 million-50 million tons of that material sitting on surface for free, having been mined through the gold and copper operation, and it will garner a value of somewhere to $20-$25 a ton at the back end. A lot of margin, a lot of potential profit there within just the waste material.
All eyes are on the prize, the copper-gold, the 1.6 million ounces that we are going to be harvesting at around all-in sustaining costs of about $1,700-$1,800. What we can also do is use the sale of that waste material to further bring down the cost of production. A great economic robust deposit. There is a lot of exploration upside beyond just the CK deposit itself. We are going to embark on additional exploration. We want to look at beyond our reserve, but we also want to look at other opportunities for repeat deposits similar to CK. Keep that in mind as we enter into the tail end of this year and all important next year. Another thing we are working towards, of course, is project finance. I think there is a real misconstrued understanding of how these projects are built, too.
We float somewhere around a $220 million market cap right now. We have been as high as $300 + million . The capital required to build this is not just done through pure equity dilution, and I think that is where some confusion, frustration lies. There is a lot of interest right now in funding this project, particularly from off-takers, people who need to purchase this copper and gold concentrate. The $400 million, we expect to see the vast majority of it in debt, and there are other instruments we can use that will not hit the equity side of the balance sheet too hard. As you noticed right from that first or that third slide, 16.5 million shares out.
We are very conscious and aware of maintaining a tight share structure and keeping the shareholders well-leveraged. The project is a win-win for the state. It is fully permitted, as I said.
It is ready to go. We are in discussions with them here beyond development, beyond production, post-production. George Bee, our CEO there, talking to the park board about utilizing the pit as a water source after we are finished, which would expand their current reservoir network, which is in nearby Curt Gowdy State Park. We have got lots of upside potential, as I mentioned. The aggregates, recovering additional gold beyond our flotation circuit, and then the increase in size to the deposit. All of these factors we are going to be working towards and helping establish value to those benefits, those add-ons well into 2027 as we finalize project financing and build this out. About an 18-month build.
That is fully permitted. All the advanced engineering. We have got some really interesting studies completed on the aggregates. We understand the aggregate marketplace very well. Lots of interest in financing the project.
Here we are through all our engineering and ready to go into construction at CK. I am going to touch on the Keystone project very quickly, too. I have mentioned it multiple times. In fact, it was our flagship asset prior to going into the development of CK. What is really appealing and interesting about Keystone is it is a 20-square-mile district, a standalone domal district right next to Nevada Gold Mines' Cortez series of projects, Cortez Hills, ET Blue, and the new Fourmile discovery. So close to 80 million ounces in gold inventory at our neighbor's project, and we have very similar geology. We are on strike with them. This 20 square miles lays up with a beautiful west-northwest bearing structural corridor with multiple intrusives. So what you end up with is this. You have got the all-important Wenban project. So Cortez, here they are.
Their Wenban, that is the host for all their large mineralization, their big gold deposits in and around their district with all the same intrusive package. You can see here on a long section of Keystone, we have got massive swaths of the Wenban. We have done some scout drilling back in 2018, 2019. We identified the Wenban was heavily altered. We saw all the right ingredients there, all the right pathfinders for huge deposits of gold. Our expectation is there is multiple occurrences of gold deposits at this project. Just some of that drilling with the lithology here, which is all important, and it stacks up very much almost identical to the Cortez complex. So something to keep in mind. That is a wrap on U.S. Gold Corp. I would like to hand the mic back so that we can maybe get some questions and give some answers.
All right. Let us jump into these questions. First of all, Richard says, "Congrats on the progress. Given the current gold price and the financing alternatives you have been exploring with project debt, silver streaming, off-take prepayments, et cetera, should shareholders realistically be underwriting $30 million-$50 million of new equity to finance CK Gold, or is something closer to $100 million more likely? What is the biggest obstacle to achieving the lower number?
Well, not really an obstacle. The biggest, I think, item would be doing the silver stream to keep that total equity number low, as low as possible. However, some of the term sheets we have already seen that we are kind of working through slowly right now, but looking to ramp things up with a new advisory here pretty quick. We are looking at equity that is potentially at premiums to market. Not just premium to market, but convertible equity, so it does not actually represent as equity upfront. It actually is far less dilutive, and as we develop this, obviously we would expect, with the financing package in hand, there to be a significant rerate to the upside on the project. So, some pretty exciting options there for project financing.
A few questions from Ken Woods. You might have touched upon this, but let's make sure his question's answered. Can you provide an up-to-date progress report on financing?
Yeah. We're handling that right now. We are, as I mentioned, we've got about $25 million in treasury, so our day-to-day operations, we're good for years, obviously, clearly. The big one is the project-level financing, and we're actively working on that right now. We're engaging with several advisors right now and just finalizing who's going to handle response to the many term sheets that we've seen on it.
Talk a little bit about fuel cost. It's pretty challenging in the mining business, so has the cost of fuel hurt your potential for profit?
If it stays ceteris paribus, it will definitely impact it. But right now, as it is war-driven and no one knows the finality of that situation going on out in the Middle East, that we are maintaining our status quo that eventually fuel prices will rebalance back. Through the construction it's not that impactful, but obviously through the ongoing production, it will have a very large impact. So yeah, we're aware of it, just as everyone else is, but we are hoping that the world settles down and the war ends for many reasons, not just fuel.
Absolutely. You've discussed potentially separating your Keystone Gold project into a standalone company. Would existing U.S. Gold shareholders receive shares in that company? Could the transaction allow management to focus its capital on CK Gold while preserving shareholder exposure? What do you have to say about that?
Yes, I've mentioned that and shown that as our intent multiple times over the last 12 months or more. The challenge is it's a heck of a lot more. It's a little more challenging with a U.S. company than it is a Canadian company. We're working through all the legalese on that right now, actually. I would like to get that up and going. This is the right time of the cycle to have an exploration asset like that. It needs to be self-funded. There's no way we want to go into the massive size of exploration that Keystone represents, doing that, diluting a development stage asset, clearly. We are working towards it, but it's far more complicated than one would have wished and hoped.
I would've thought it was just as simple as issuing shares in a subsidiary to our shareholder base, and then going ahead and listing that in Canada, but we're working towards it.
When can you expect production to start in Wyoming, and can you address why financing has taken so long?
I don't know who said or thinks that this financing has taken long. These things take a long time. I feel like we're moving lightning speed. If you wanted to go and deal with one of the traditional banks, you're looking at 18 months just for the financing package. We don't publicly release every conversation we have around a stack of project finance, but we're moving at light speed. We have been with this company and this project all the way along. Again, let's look at this. 2020 is when George Bee came and joined the company, August of 2020, picked up tools, and now we're at the point of ready-to-go construction and just completing our financing stack. So, it will be about an 18-month build, and we're ready to go. We just need to finalize the project-level finance.
What about the ESG implications? What are they on your new projects going forward?
Thankfully, we don't have to worry about that stuff as much anymore. I joke a little bit, but I'm not really. It's become less and less of a concern. Look, in Wyoming, it was just as arduous a process for us to deal with all of the permit processes, which there are many, many different permits that we had to file, obviously to get this up into a full permit to mine. The environmental impact of this project is so negligible. In fact, it's going to be an environmental asset post development production. With that waste material being used as aggregate source for building, as the pit being used as a water reservoir to tie into the local network, possibly also as a pumped storage facility, as well as potable water held within it. So, this project's more highly above within compliance and beyond.
We do actually have an ESG report out that we've completed through Digbee. It is on our usgoldcorp.com. But over at Keystone, that's Nevada. You're dealing now federal bureaucracies. So that's going to be a little bit more of a process. We didn't hit much water up in the Keystone drilling that we did, scout drilling, so there's hope that we don't need to get into water table issues there. It's not really an issue for us. It will be for whoever develops it in the future, but we're plain sailing thus far. Under plan of operation at Keystone, not many people recognize that, but a plan of operation to drill these days takes three years. We've got one in hand.
Let's talk about your cash. I guess it's $27.1 million in cash. How much of that cash is available for project development, and how do you plan to preserve sufficient liquidity while negotiating the much larger construction financing?
Simple. We're actually sitting around $25 million, or actually under $25 million as I speak right now. We don't plan to use that for development at all. That is our operating capital that we'll continue to hold onto in case there's some black swan event. The intent is to raise the full $400 million and do it through predominantly debt, maybe a silver stream. We do have about two or three million ounces of silver that's captured within the concentrate that we are in the discussions, not negotiations yet, but discussions on streaming that out, and then ultimately taking our equity in a way that will be the least dilutive form as possible. We've seen term sheets with premium equity in there, and again, that's convertible premium.
Okay. Thank you. In August, you had the second half of 2026 had an 18- 24 month construction period and possible first production in late 2028. With financing discussions continuing, is that schedule still achievable? What must happen before year-end to keep it on track?
Yeah, we believe so. We'd like to see ourselves in definitive agreement somewhere before, in January, actually, around project financing, we hope. From there, we will immediately commence the development of the project. Obviously, equity would come in at the front end of it. We wouldn't want to extract into the debt straight away. We see those timelines as still being achievable somewhat. They dragged on a little, but
Okay. You identified the potential to recover additional gold from flotation tailings with recoveries around 95%. What additional processing equipment or capital is required, and how much could that improvement increase cash flow and at the present value?
To be continued. We are working towards that. There are all sorts of methodologies. I have spat out in the past, maybe CIL. CIL is just one form of recovery. I am not going to get into the economic benefits of it, but clearly we are not going to leave close to 300,000 ounces of gold sitting in the tailings at some point in time. We are going to play around with some of the technologies that are out there that are in use, that are abundant, and we will recover that, and it will be very beneficial, obviously, because it is not accounted or paid for. It is not accounted for, sorry, in our revenues from the current mining operations.
Okay.
Planned mining operations.
Have you had discussions with commercial buyers? Could aggregate sales meaningfully offset mining costs or generate revenue after gold and copper production ends?
Yes to all. Yes, we've had a lot of interest in the aggregate, some by way of partnerships whereby they can deliver us ore and they can keep the aggregate, or if we're selling it directly to market. We've explored all of that. The good thing with the aggregate is it is all a net benefit to the project. Whether we can see the net benefit right up front, get a partner who wants to come in and give us a cash infusion, or whether it shows up in around the second year of production, it's still going to be a huge benefit to this company and this project overall. In fact, the legacy of the aggregates component of CK will ultimately well outlive the CK gold copper production itself.
Are you primarily seeking a financing partner to build CK independently, or would management consider selling the company if a major offered an attractive premium?
We'll qualify that, or clarify that. I don't see a major wanting to come in because 100,000 ounces approximate production per annum, and some of the other additional benefits to it don't really fit in the scope of what a major is looking for. There is a lot of mid-tier companies out there, certainly, who are aware of us, who are aware of what we've got sitting here. A fully permitted standalone project like this is very, very rare and in such a good quality or high-quality jurisdiction. I would argue that it's the best jurisdiction relative to where we are located, possibly in the U.S., with a captive audience of employees right there, relatively flat topography, major highway system, et cetera. It goes on. So, yeah, there's a lot of interest from mid-tier and even companies who want to get into the development of gold copper projects.
We do deal with them. We deal with them as interest shows up. We are working with an advisor on that side of the equation, and we just continue to do so. Our focus is on developing this. This project is worth so much more than our current market cap with project financing in hand, sorry, through development and ultimately into production. The re-rate on this is massive. We want to be greedy for our shareholders because we are shareholders. This is not a lifestyle company by any stretch of the imagination.
Well, Luke, thank you so much for this thorough presentation and answering all these questions. We certainly want to follow along with the journey of U.S. Gold Corp as the new year comes our way.
Yeah. Thank you, and thanks for everyone taking the time again, and look, we are working very, very quickly on this project. I know there has not been a hell of a lot of press out in the latest on the near term, sorry, but we expect that to change here in the coming weeks.
Perfect. All right. Thank you so much. We will see you again real soon.