By Faith Ashmore, Benzinga
H.C. Wainwright & Co. senior metals and mining analyst Heiko Ihle recently reaffirmed his “Buy” rating for U.S. Gold Corp. (NASDAQ: USAU) and increased his price target for the company following its recent update on the CK Gold project and Feasibility Study (FS) progress, being revisited for factors such as energy price volatility, supply chain bottlenecks and inflation. The results of the study, conducted by industry experts, are anticipated to exceed projections from the 2021 Pre-Feasibility Study (PFS) while highlighting the outlook for the project’s profitability.
The analyst report, released by H.C. Wainwright on June 20th, weighed critical factors including mineral reserves, production costs, forecast revenues and market conditions. The findings offer further clarity for traders on the H.C. Wainwright decision to reaffirm its "Buy" rating and revise the price target upwards. The move signifies the analyst's confidence in U.S. Gold Corp.'s near- and long-term future performance and growth prospects.
Commodities like gold and copper are currently in high demand due to the economic environment, and U.S. Gold’s intent to capitalize on this trend through its CK Gold project lends to the potential long-term growth of this stock. During times of economic uncertainty – such as high inflation – commodities can serve as a hedge against losses in other asset classes. Commodities can also help increase the diversity of an investor's portfolio by providing exposure to an asset class that has historically proven uncorrelated to traditional markets. This can help reduce systematic risk and improve returns. As investors continue to seek out safe-haven assets, the demand for commodities is likely to remain strong.
Despite the anticipated input cost escalation for the CK Gold project, overall revenues from gold and copper are expected to exceed the 2021 Prefeasibility Study estimates. Analysts at H.C. Wainwright perceive the CK Gold project as a strong hedge against inflation and a favorable investment opportunity given current economic conditions.
U.S. Gold is contemplating optimization strategies to enhance productivity and deliver improved economics. The company plans to incorporate the drilling completed in 2021, which will likely capture additional mineralization beyond the original targets. A stockpiling strategy can potentially bring higher-grade material to the mill in the mine plan. The project may reflect inflationary trends by repricing capital equipment, but analysts at H.C. Wainwright believe that proposed modifications, targeting operational improvements and favorable spot prices should offset increased costs.
H.C. Wainwright is also revising its forward-looking precious metals price deck upward due to the continued strength in commodity pricing; gold and silver prices are now forecast at $1,900 per ounce of gold and $25 per ounce of silver. The company is also increasing its copper price forecast to $3.75 per pound from $3.25 per pound.
Based on their revised price decks and positive indicators, H.C. Wainwright has increased U.S. Gold's price target to $12.00 from $10.50. The company's valuation for the CK Gold project is based on Pre-Feasibility Study metrics and a discount rate of 17.0%.
U.S. Gold’s management team contemplates publishing the Feasibility Study results in later 2023, while the permitting process is expected to continue throughout the remainder of 2023 and possibly into early-2024.
U.S. Gold Corp. is a publicly traded, U.S. focused gold exploration and development company. U.S. Gold Corp. has a portfolio of exploration properties. Our CK Gold Project is located in Southeast Wyoming and has a Preliminary Feasibility Study technical report, which was completed by Gustavson Associates, LLC. Our Keystone exploration property is on the Cortez Trend in Nevada. Our Challis Gold Project is located in Idaho.
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