I alerted subscribers about USCorp (USCS.OB) on March 15th and wrote about their prospects on the same date. Fast-forward to today and their stock is currently up 65% on news that they have increased their resource estimates substantially. Subscribers were alerted when the stock was trading at $0.15, but even at today’s price of $0.28, I still believe the company is significantly undervalued. The stock price may pull back a bit from today’s massive gain, especially if gold falls below $935 and back towards $900. But I would not be surprised to see U.S. Corp stock price pushing towards $1.00 by the end of the year. Here is a snapshot of what I wrote about USCorp a month ago:
I recently came across a Nevada-based company that I think is one of the most undervalued and potentially explosive gold mining stocks available. The company is pathetically under-promoted, to the point that most gold investors, myself included until last week, have never heard of them. Their name has no reference to gold or mining and I am hard-pressed to find any investment sites mentioning them. But they have recently hired a well-known investor relations firm and have a very compelling story to tell.
The company acquired their properties just before the gold bull started kicking back in early 2002, when prices were still hovering around $300. They have since put together a solid management and operations team and recently completed feasibility studies on their two main properties. The results are extremely impressive for a company valued at just $10 million dollars and more in line with companies whose valuations are in the $100 – $200 million range.
They are currently securing financing and aiming at production before the end of 2008. I have spent a considerable amount of time performing due diligence and trying to punch holes in their story, but have failed to come up with an explanation for why they are so undervalued. It appears to simply fly under the radar of most investors, largely due to their lack of marketing skills. With the following feasibility results and the hiring of one of the top investment relations firms, I believe the market will take notice and this stock will soon be worth 10 to 20 times the current value. I know that sounds sensationalist, but let’s take a look at the actual numbers.
Between their two properties, the company has 3.5 million ounces of gold and 8.8 million ounces of silver (measured and indicated). The feasibility study estimates annual production of 100,000 ounces of gold at a cost of $260 per ounce, plus 126,000 ounces of silver. Assuming gold holds around $1,000 and silver around $20, this company will have revenues during the first year of production that are more than 10 times their entire market cap. This is all contingent on them being able to secure the necessary financing to put the projects into production, but with returns of this magnitude, I am sure they will have suitors. Speaking of suitors, they look like a really cheap takeover target for one of the major producers which already have mines on both sides of their properties.
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