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US Gold Corp. Reports Operating Results (10-Q)

May 06, 2011 | About:
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10qk

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US Gold Corp. (UXG) filed Quarterly Report for the period ended 2011-03-31.

U S Gold Corp has a market cap of $1.02 billion; its shares were traded at around $7.53 .

Highlight of Business Operations:

The company-wide exploration budget for 2011 is currently projected at approximately $29 million, including $21 million projected for Mexico and $8 million projected for Nevada, and may be re-evaluated at any time during 2011. Corporate general and administrative overhead for 2011 is expected to be consistent with 2010 at approximately $5 million with property holding costs projected at $4 million. We also expect to spend approximately $8 million in 2011 to acquire mineral property interests.

As of March 31, 2011, we had working capital of $111.2 million, comprised of current assets of $115.7 million, which includes $33.1 million of gold and silver bullion, and current liabilities of $4.5 million. This represents an increase of approximately $97.7 million from the working capital of $13.5 million at fiscal year end December 31, 2010. At March 31, 2011, the fair value of our gold and silver bullion held exceeded its book value by approximately $4.1 million.

Net cash used in operations for the three months ended March 31, 2011 increased to $9.3 million from $6.5 million for the corresponding period in 2010, mainly due to increases in cash paid to suppliers and employees. Cash paid to suppliers and employees increased to $9.3 million during the 2011 period from $6.5 million during the 2010 period, primarily reflecting increased exploration activities in Mexico and Nevada. Cash used in investing activities for the three months ended March 31, 2011 was $28.6 million, primarily due to additional purchases of gold and silver bullion of $30.2 million and partially offset by proceeds from the sale of gold bullion, as compared to $1.8 million in the comparable period of 2010.

For the three months ended March 31, 2011, we recorded a net loss of $8.7 million, or $0.07 per share, compared to a net loss for the corresponding period of 2010 of $6.9 million or $0.06 per share. The increase for the first quarter of 2011 compared to the first quarter of 2010 reflects our accelerated exploration efforts in Mexico and Nevada.

Property holding costs during the 2011 period decreased by $0.7 million to $0.9 million compared to $1.6 million for the same period in 2010. The main factor for the decrease in 2011 is the pending purchase of the Tonkin North claims as discussed in the Plan of Operation above. In the first quarter of 2010, we made lease payments of $0.8 million for the Tonkin North property. Exploration costs for the first quarter of 2011 increased by $2.7 million to $6.9 million as compared to $4.2 million for the same period of 2010, reflecting an increase in exploration activities at the Gold Bar and Limo projects in Nevada and at the El Gallo project in Mexico.

Accretion of the asset retirement obligation in Nevada and Mexico for the three months ended March 31, 2011 and 2010 remained constant at $0.1 million. During the first quarter of 2011, we sold 1,603 ounces of gold bullion which resulted in a realized gain of $0.5 million. We did not sell any gold bullion in the same period in 2010. During the first quarter of 2011, we recorded a foreign currency exchange gain of $0.2 million, reflecting a weakening US dollar against the Canadian dollar and its effect on the net monetary assets or cash that are denominated in Canadian dollars.

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