US Gold Corp.

Roth Capital Partners: U.S. Gold Corp. Buy $3.00

USAU: Announces $5 Million Financing; Update CK PEA

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On January 18, 2018, USAU announces a $5.0 million registered direct offering to fund the remainder of fiscal 2018 activities. Additionally, on January 11, 2018, the company released he results of an updated PEA on its Copper King project. However, we continue to believe the major catalyst for USAU will be drill results in the coming weeks. Thus, we are maintaining our Buy rating and $3.00 price target.

  • Financing should fund remainder of 2018. On January 18, 2018, U.S. Gold Corp. announced a $5.0 million registered direct offering comprised of Series E preferred stock (convertible into 2.5 million common shares) and 1.25 million warrants. We believe this financing should fund the remainder of the company's fiscal 2018 exploration program. Additionally, we note that we previously anticipated an equity raise of $5-6 million before the end of fiscal 2018. Thus, this announcement had a minimal impact on our valuation of USAU.
  • PEA demonstrates impact of improved pricing. On January 11, 2018, the company provided the results of an updated PEA on its Copper King asset. /The updated PEA demonstrated a small increase in capex and a significant increase in NPV with a new estimated NPV of $178.5 million, in our view. We had previously stated that we believed updating the PEA to current commodity prices could result in an NPV closer to $200 million and we believe this update confirms that view. We note that the pricing used in the PEA was still somewhat below current price levels.
  • Drill results remain key catalyst. As stated above, the announced financing had no material impact on our valuation of USAU as we previously anticipated a financing of this magnitude. Additionally, we continue to view Copper King as providing a floor value to the company, but saw no reason to update our estimates at this time as there were no major changes in the revised PEA. We continue to believe the company's pending drill results will provide a much more significant catalyst than these two announcements. Thus, we are maintaining our Buy rating and $3.00 price target.


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