U.S. Gold Corp. (USAU:NASDAQ) just gave shareholders a holiday surprise.
The company's geologists and engineers needed more information about the CK Gold Deposit. Specifically, for the metallurgy. That way, the company could plan, in detail, how to get the gold and copper out of the ore. As this isn't a new project, most analysts weren't looking too hard at the project or the company.
Imagine our surprise when the company reported much higher-grade material, over much longer lengths than previously reported.
This is a surprise because CK Gold is a brownfields deposit. It hosted a working mine from 1881 to 1910. That mine was high grade—about 3 grams per ton (g/t) gold, 53.9 g/t silver and 4% copper. However, the larger deposit was much lower grade.
As I said, in my November 2020 essay, CK Gold had some economic tailwinds. That's why U.S. Gold President and CEO George Bee liked it in the first place.
The resource sits at the surface, so the first shovel full of rock moved will go straight to the mill. And surface samples collected by U.S. Gold field work showed glimpses of high grade. The company issued a press release on November 5, 2020, that showed seven surface samples in excess of 5 g/t gold. Three of them were over 10 g/t. And the copper grades went as high as 2.3%.
But surface samples don't trump drill results. And the resource laid out in the Preliminary Economic Assessment was just 0.5 g/t on average.
But some of the historical drill results showed promise, as I wrote in the past:
Several of the holes held long intercepts of solid gold and copper grades. ASARCO's A2 hole held 92 meters of 2.71 g/t gold and 0.51% copper. Compass Minerals' CCK1 hold hit 110 meters of 4.21 g/t gold and 0.58% copper.
Those are excellent intersections. What they show us, as investors, is that there is an economic engine to drive this project. In addition, there must be more exploration. Nearly all (80%) of the drill holes ended in mineralization.
That's why these new drill results are so exciting. They confirm the presence of higher-grade material in the heart of the deposit. Here's a quick summary:
Drill Hole |
From (m) |
To (m) |
Length (m) |
Gold Grade |
Silver Grade |
Copper % |
CK20-01c |
1.1 |
30.5 |
29.4 |
1.5 g/t |
1.7 g/t |
0.35% |
CK20-01c |
30.5 |
151.2 |
116.8 |
0.5 g/t |
1.4 g/t |
0.19% |
CK20-01c |
151.2 |
182.9 |
31.3 |
1.3 g/t |
1.2 g/t |
0.25% |
CK20-02c |
0.5 |
145.7 |
141.5 |
0.8 g/t |
1.5 g/t |
0.22% |
CK20-02c |
145.7 |
182.9 |
35.3 |
0.4 g/t |
0.6 g/t |
0.11% |
CK20-03c |
Assays Pending |
|||||
CK20-04cA* |
0.3 |
29.6 |
29.2 |
3.7 g/t |
5.2 g/t |
0.96% |
CK20-04cB |
0.8 |
79.9 |
78.3 |
4.5 g/t |
3.6 g/t |
0.88% |
CK20-04cB |
79.9 |
109.7 |
29.8 |
0.5 g/t |
0.7 g/t |
0.14% |
CK20-04cB |
109.7 |
214.9 |
104.5 |
1.1 g/t |
1.0 g/t |
0.26% |
CK20-04cB |
214.9 |
244.1 |
29.3 |
0.4 g/t |
0.5 g/t |
0.10% |
Data from Company Press Release; Intervals with no recovery excluded; *hole lost at 29.2 meters. |
||||||
These drill results are interesting, but they need more context. We can view these results in the deposit in 3-D here.
What I take away from these results is that U.S. Gold needs to do more exploration drilling. There appears to be good potential to upgrade the existing resource's average grade. And I'm curious to see if there will be a viable silver credit, once they complete the metallurgical study. Because that will also improve the economics.
The good news is, we will have a chance to hear from management about how these results impact the plan at CK Gold. Executive Chairman Edward Karr will give an update and answer questions. Right now, the company has four webinars scheduled for January 2021. You can find the links to sign up here.
You know I'll be attending. This is a great surprise and I expect to see U.S. Gold continue to bring us good news into the new year.
--Matt Badiali
Matt Badiali is a geologist and independent financial analyst. He spent fifteen years researching and writing about great investments inside the natural resources sectors. He can be reached at www.mattbadiali.net.
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