USAU - U.S. Gold Corp (NASDAQ: USAU) Buy Rating Reaffirmed By H.C. Wainwright – Higher Price Target
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By Faith Ashmore, Benzinga
H.C. Wainwright &Co. senior metals and mining analyst Heiko Ihle recently reaffirmedhis “Buy” rating for U.S. Gold Corp. (NASDAQ: USAU) andincreased his price target for the company following its recent updateon the CK Gold project and Feasibility Study (FS) progress, beingrevisited for factors such as energy price volatility, supply chainbottlenecks and inflation. The results of the study, conducted byindustry experts, are anticipated to exceed projections from the 2021Pre-Feasibility Study (PFS) while highlighting the outlook for theproject’s profitability.
The analyst report, released by H.C. Wainwright onJune 20th, weighed critical factors including mineral reserves,production costs, forecast revenues and market conditions. Thefindings offer further clarity for traders on the H.C. Wainwrightdecision to reaffirm its "Buy" rating and revise the pricetarget upwards. The move signifies the analyst's confidence inU.S. Gold Corp.'s near- and long-term future performance andgrowth prospects.
Commodities like gold and copper are currently in high demanddue to the economic environment, and U.S. Gold’s intent tocapitalize on this trend through its CK Gold project lends to thepotential long-term growth of this stock. During times of economicuncertainty – such as high inflation – commodities can serve as ahedge against losses in other asset classes. Commodities can also helpincrease the diversity of an investor's portfolio by providingexposure to an asset class that has historically proven uncorrelatedto traditional markets. This can help reduce systematic risk andimprove returns. As investors continue to seek out safe-haven assets,the demand for commodities is likely to remain strong.
Despite the anticipatedinput cost escalation for the CK Gold project, overall revenues fromgold and copper are expected to exceed the 2021 Prefeasibility Studyestimates. Analysts at H.C. Wainwright perceive the CK Gold project asa strong hedge against inflation and a favorable investmentopportunity given current economic conditions.
U.S. Gold iscontemplating optimization strategies to enhance productivity anddeliver improved economics. The company plans to incorporate thedrilling completed in 2021, which will likely capture additionalmineralization beyond the original targets. A stockpiling strategy canpotentially bring higher-grade material to the mill in the mine plan.The project may reflect inflationary trends by repricing capitalequipment, but analysts at H.C. Wainwright believe that proposedmodifications, targeting operational improvements and favorable spotprices should offset increased costs.
H.C. Wainwright is also revising itsforward-looking precious metals price deck upward due to the continuedstrength in commodity pricing; gold and silver prices are now forecastat $1,900 per ounce of gold and $25 per ounce of silver. The companyis 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 $12.00from $10.50. The company's valuation for the CK Gold project isbased on Pre-Feasibility Study metrics and a discount rate of 17.0%.
U.S. Gold’s management teamcontemplates publishing the Feasibility Study results in later 2023,while the permitting process is expected to continue throughout theremainder of 2023 and possibly into early-2024.
U.S. GoldCorp. is a publicly traded, U.S. focused gold exploration anddevelopment company. U.S. Gold Corp. has a portfolio of explorationproperties. Our CK Gold Project is located in Southeast Wyoming andhas a Preliminary Feasibility Study technical report, which wascompleted by Gustavson Associates, LLC. Our Keystone explorationproperty is on the Cortez Trend in Nevada. Our Challis Gold Project islocated in Idaho.
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