US Gold Corp. Reports Operating Results (10-Q)
Us Gold Corp. has a market cap of $406 million; its shares were traded at around $3.51 . UXG is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations: The company-wide exploration budget for 2010 is approximately $17.2 million which may be re-evaluated during the year. The initial allocation between Nevada and Mexico for exploration spending is $3.9 million for Nevada and $13.3 million for Mexico which is also subject to re-evaluation based on actual exploration results and permitting status. These amounts also include expenditures for resource updates and Preliminary Economic Assessments for our projects. Corporate general and administrative overhead costs for 2010 is anticipated to be approximately $4.9 million with property holding costs projected to be an additional $4.5 million.
As of March 31, 2010, we had working capital of $35.2 million, comprised of current assets of $37.6 million, which includes $3.6 million of gold bullion, and current liabilities of $2.4 million. This represents a decrease of approximately $7.3 million from the working capital of $42.5 million at fiscal year end December 31, 2009.
Net cash used in operations for the three months ended March 31, 2010 increased to $6.5 million from $3.8 million for the corresponding period in 2009. Cash paid to suppliers and employees increased to $6.5 million during the 2010 period from $3.8 million during the 2009 period, primarily reflecting increased exploration activities in Mexico and Nevada. Cash used in investing activities for the three months ended March 31, 2010 was $1.8 million, primarily due to additional purchases of gold bullion and land in Mexico, compared to cash provided by investing activities of $29,764 in the comparable period of 2009.
For the three months ended March 31, 2010, we recorded a net loss of $6.9 million, or $0.06 per share, compared to a net loss for the corresponding period of 2009 of $4.8 million or $0.05 per share. The increase for the first quarter of 2010 compared to the first quarter of 2009 reflects our accelerated exploration efforts, especially in Mexico.
Property holding costs during the 2010 period slightly increased by $0.1 million to $1.6 million compared to $1.5 million for the same period in 2009. Exploration costs for the first quarter of 2010 increased by $2.5 million to $4.2 million as compared to $1.7 million for the same period of 2009, 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, 2010 and 2009 remained constant at $0.1 million. Interest income in the 2010 period decreased to $16,382 compared to $34,759 in 2009, reflecting lower average yields on interest-bearing deposits during 2010. During the first quarter of 2010, we recorded a foreign currency exchange gain of $0.6 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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