US Gold Soars as McEwen Hits Paydirt in Nevada
By Ben Abelson
13 Apr 2007 at 05:29 PM GMT-04:00
resourceinvestor.com
CHICAGO (ResourceInvestor.com) -- Times are good for former Goldcorp CEO Rob McEwen. After a year-long regulatory battle, McEwen's new firm, US Gold [AMEX:UXG; TSX:UXG] has wrapped up its mammoth Nevada merger deal. In the meantime, new exploration results from Tonkin Springs have sent the stock soaring - and appear to have at least borne out McEwen's initial optimist over the Cortez Trend.
Released on Tuesday, the best results came from Tonkin's "middle area," where one hole encountered 3.3 g/t over 18.14 metres, including an area of 25 g/t over 1.52 metres. In all, decent gold mineralization was found in the bulk of the 30 drill holes assayed. It is worth noting, however, that the bulk of the drilling to date has been focused around known mineralization and past producing areas - so the high levels of gold found shouldn't be that surprising.
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After opening at US$4.40, shares of US Gold climbed as high as $6.30 on Tuesday, before closing at $5.45. The enthusiasm, coupled with strong industry-wide stock gains this past week, led the shares to close out the week at US$6.67 - a gain of some 52% on the week. The company also received a tout from several newsletter writers on the results, which likely helped move the shares along.
Finally, US Gold's acquisition of Nevada Pacific [TSXv:NPG], Tone Resources and White Knight Resources is all but complete, with the bulk of those companies' shareholders having tendered their shares. Shareholders of the companies will receive shares of US Gold Canadian Acquisition Corp., which can then be exchanged for shares in US Gold itself.
As the company churns it through its estimated $15-$20 million exploration budget this year, part of the plan will certainly include the integration and exploration of those companies' assets, according to McEwen.
“US Gold has reached a significant milestone. Our consolidation of four companies into one creates a strategic land position that rivals Barrick’s Cortez Joint Venture, where past production, current reserves and mineralized material of 33 million ounces of gold have been discovered,” stated McEwen, who currently holds some 25% of US Gold’s shares.
“I am excited about US Gold’s prospects and the potential for discovering another large gold deposit in the Cortez Trend.”
When reached for comment, a representative for US Gold declined to speak on the specifics of the remainder of the year's exploration plan, citing the need to analyze the newly acquired data from Nevada Pacific, Tone and White Knight.
McEwen’s overall bullishness on the price of gold itself certainly hasn’t waned in the past months. In a recent interview on Bloomberg TV, McEwen reaffirmed his long-held predictions of gold hitting $850 an ounce before the end of 2008, and “multiples of that, north of $2000 and ounce” by the end of 2010.
He also revealed that he is no longer a major stakeholder in Goldcorp [TSX:G; NYSE:GG], and only has a “few shares left” in the company he built from the ground up. |
