"U.S. GOLD CORP."

BERAL, INC.  
Andrew G. Racz  
Director of Research  
300 East 54 Street, 26C  
New York, New York 10022  
Telephone: (212) 319-6949  
Fax: (212) 753-1944  

Price:                  $2.40

Price range        50¢ - $2.60
2005

Capital Structure 

(September 30, 2005) 

Long-term debt:                 Ø

Stockholders' equity:         2,500,000

Common shares outstanding:
33,000,000

August 19, 2005

Change in Director or Principal Officers - Key Corporate Development

On August 18, 2005, William W. Read resigned as the President, Chief Executive Officer and a director of U.S. Gold Corporation and David C. Reid resigned as Vice President and a director of the Company. It is anticipated that the Reids will remain with the company until approximately September 30, 2005 as consultants.

Simultaneously with the resignation of the Messrs. William and David Reid, Robert M. McEwen was appointed Chairman of the Board of Directors and elected the Chief Executive Officer of the company to replace William Reid. Declain Costelloe was appointed to the Board of Directors to fill the vacancy created by the resignation of David Reid. These changes were anticipated in connection with the sale of the company's common stock to Mr. McEwen, announced on July 29, 2005.

As previously reported by the company, Mr. McEwen purchased 11,100,000 shares of the company's common stock, representing approximately 33.3% of the outstanding voting stock, for a total purchase price of $4 million. Mr. McEwen was granted the right to nominate up to four new members of the Board of Directors, including nominees to fill vacancies created by the departure of directors. The appointment of Messrs. McEwen and Costelloe were made pursuant to that agreement.

In addition to his new affiliation with the company, Mr. McEwen is also the Chairman of the Board of Goldcorp Inc., a position he has occupied for the last eighteen years. Until February, 2005, he was also the Chief Executive Officer of that company. Goldcorp is incorporated under the laws of the Province of Ontario, Canada, engaged in the exploration and production of gold with securities traded on the Toronto and New York Stock Exchanges.

CHAPTER ONE

U.S. GOLD AS IT APPEARS TODAY

This company for all intents and purposes is an unknown mining company with 33 million shares and a price of $2.50 with a market cap of about $90 million. It owns exploration rights and advanced exploration project in the Cortez Trends located in Nevada.

Is Cortez Trend the next Carlin?

The first major phase of the current Cortez Trend started in 1991 when Placer Dome discovered the Pipeline deposit. Placer Dome had been testing the area to ensure there was no gold beneath the surface in order to start construction for a subsequent deposit. Later that year, South Pipeline was discovered by the Placer Dome exploration team. Placer Dome made its Cortez Pediment Deposit discovery in 1998, followed by its South Pipeline Extension Deposit discovery in 2000. Many thought the Cortez Trend had the potential to produce other mines, but few believed it could host Carlin type deposits. However, the world of gold mining and the prospects of the Cortez Trend dramatically changed when Placer Dome announced the discovery of Cortez Hills in 2003.

Placer Dome reported the discovery of Cortez Hills in April, 2003, with an initial resource of 2.1 million ounces in measured and indicated resource plus an additional 932,000 ounces in interred resource. Shortly after, measured and indicated resources more than doubled to 4.5 million ounces. By June 30, 2004, the Cortez Hills deposit was estimated to contain 7.5 million ounces of proven and probable reserves.

In the Cortez Hills deposit, geologists are seeing similarities between it and the discoveries that make up the Carlin Trend. It is noted that the Cortez Pipeline and Cortez Hills deposits share in common with Newmont and Barrick's Carlin properties such geological characteristics as intrusive proximity, deep rooted fault, sediment host rocks, Carlin-type geochemistry, low silver to gold ratio, and micron-sized gold in Arsenian Pyrite.

Nevada is the world's third largest producer of gold, behind South Africa and Australia. The state is home to many of the largest gold deposits on earth, with the most significant discoveries occurring in the Carlin Trend. About 60 million ounces of gold have been produced from the Carlin Trend, with over 120 million still in the ground. This is the result of over 40 gold deposits being discovered in this one trend.

Barrick, North America's second largest gold company, started in Nevada and Newmont Mining, as well as Placerdome, are staking a large part of their future in these two Nevada-based gold territories. Nevertheless, U.S. Gold is a very small explorer and up until now, it has not created anything meaningful that the investing public should be excited about.

At the time of writing, one-third of the company is owned directly or indirectly by Robert McEwen, the chairman of Goldcorp. Another independent corporation, NovaGold, owns 16.5%. In August of this year, most of the old management resigned and Mr. Robert McEwen became chairman of the board with the obvious intention of nominating four more members of the board and basically take over the future of the company.

In the following table is the numerical ownership and the various nominee companies owned by Mr. McEwen that constitute the main stockholders' interest of U.S. Gold.

In the half a century that is behind us, the international industrial world has created many heroes and they in turn build world-famous companies. In the United States people like Bill Gates and Microsoft became better known than almost any cabinet minister today in the Bush administration. Their achievements speak for themselves and their contribution is even more startling.

Wilbur Ross, the bankruptcy expert who created International Steel, has become a household name and is currently putting together a package of automobile parts companies at a time when the automobile industry is going through a major transformation.

Names like Steve Wynn and Kirk Kerkorian created an industry, a city, namely Las Vegas, a state, namely Nevada, and now on the island of Macao, near Hong Kong, as the entertainment mecca of China. In the East, Donald Trump, self-created billionaire (he had more setbacks than billions!), represents in my mind a man of repeated and dogged desire for success and achievement.

All the names I mention are part of modern American history and the people's whose names I mention also represent a personal fortune of a billion dollars. None of them are known for leisure time, and each of them I think that they are helpful to create a world in the 21st century where the seven billion population of the world needs highly creative people to deliver the goods and services that seven billion people need. We are entering a period, and we are in the early stage of not only the results but particularly the difficulties of living in a world where people want to live well, where the middle class is developing left and right in the Far East in South America and Eastern Europe, where the services require hard commodities like iron or steel, aluminum or copper, silver, palladium, platinum, and we need in bigger and bigger quantities because the demand factor naturally grows.

I advised both President Bush and British Conservative leader Michael Howard on this vital subject. To rebuilt Mississippi, I also advised Senator Trent Lott on this matter.

This is an age of commodities! This is not the century of warfare. As a matter of fact, wars are criticized by enlightened leaders as a particular waste to the welfare of mankind. To my mind, President Putin is one of the most enlightened leaders in the world today. He accepted that half of the Soviet Union was cut out of Russia. He developed oil reserves and he developed monetary reserves and monetary strengths in Russia, which utilizing its surplus to build an infrastructure at the same time being one of the only so-called second-level superpowers with close to $100 billion monetary reserves at the governmental level. He is paying back debt, the only major country to do so.

As we face the 21st century, Russia with its incredible need for infrastructure and secondary industry, must have the reserves to cope with the demands of its 140 million people. President Putin is a modern-day common leader, in a way a modern billionaire leader of mankind.

In this atmosphere, one of the major problems facing the entire world is the value of its currency. There are today no reserve currencies. The Far East keeps two-thirds of its money in dollars. The European nations keep most of their money in Euros. South America is in between. Smaller countries, Eastern European countries, are in Euros, but each and every one of these countries has begun to think of gold as an alternative to Euro currencies, in fact, an alternative to all currencies in the world.

CHAPTER TWO

Gold as a store of value has survived well over a hundred years. Its initial progress was promoted by the South African leaders at the turn of the century, the Oppenheimers, Sir Cecil Rhodes, and others. In my first entree to gold in 1961, when I first visited South Africa, I saw a city of Johannesburg that was built on gold and the large financial houses, all owned by Anglo-Americans, DeBeers, the old historical giants of gold.

The role of gold has not changed in the second part of the 20th century, and it never became a currency. Also, some financiers such as the late Edmond Safra, the chairman of Republic Bank of New York, have tied gold to the Euro market which he created. There were a few serious industrialists. Perhaps the most famous is Mr. Peter Munk, the current chairman and former CEO of Barrick, a Hungarian immigrant who built a major company and initiated a trend which served him well, which unfortunately did not survive. See Table 2.

Mr. Munk made it mainstream to use hedging and currency futures trading to increase the value of his gold income. He made a lot of money but his pioneering spirit did not become a historical architect. After the disaster of 1979 and 1980, when gold reached $830 and then declined to $300, the gold industry was business as usual. There were no publications, no companies who could have begun to prepare for decades of gold-related financing at a time when government deficits have grown to almost unmanageable levels and it was obvious to almost every banker that the conventional ship from one reserve currency to another may not be satisfying to the financial world. These list the U.S. balance of payment deficit at $700 billion.

The emergence of China, together with Korea and Japan, and the last six or eight years of American deficit, has brought along a new era in international finance. The United States today is borrowing two billion dollars a day. The Chinese, the Koreans and the Japanese are accumulating dollar reserves and currency reserves at unprecedented levels, and recently started to diversify into gold.

What we have is a world with tremendously increased demand for services, higher prices, greater money supply in almost every country, and the need for a reserve currency that can absorb the surpluses in crisis and could create a new financing mechanism in the decades to come. The political leaders and even the financial leaders have not come to the conclusion that the way we were is over, and in this new century a new monetary system is about to begin. Neither Mr. Volcker nor Mr. Greenspan concentrated on the changing roles of international finance in which gold or something else could play a role and a calming role to cover the monetary needs of a developing egalitarian society of seven billion people.

I would like to introduce a simple example where, in my opinion, the world is headed. Recently we have heard that after patient diplomacy, the North Koreans might drop the idea of blowing up the world with nuclear weapons. North Korea has 18 million people. Just like the Vietnamese, it is not inconceivable that in five or ten years from now, it will become a capitalist country. If so, we would have 20 million more people who need steel, iron ore, shipping, food, wheat, and it has to become part of the world's monetary system. It would contribute to an increased money supply, increased borrowing and increased instability in the world. For the North Korean peace, we get 20 million consumers who are also borrowers. Is it a good deal?

CHAPTER THREE

THE PICTURE OF ROBERT McEWEN

My personal view of the world is that unusual times require unusual people. Robert McEwen, if anything, is in the 21st century's "The Man of Gold". His past and future activities in the gold market may make him the Andrew Carnegie of the current gold age. His life is tied to the precious metal and his achievements so far represent a dedication and understanding of what is required to build something so extraordinary that it has a contribution to mankind. Great people don't all have Jack Kennedy's colorful personality. Great people are usually good writers and good speakers, but their dedication is unquestionable. The son of a Canadian investment banker taught his son to invest in gold at an early age. He followed his father after college from the University of Western Ontario to Merrill Lynch.

In 1988, with a takeover battle, he acquired the Dickerson Mine there began in his field. He took over from his father and acquired a company called Goldcorp, a closed-end investment company. He stepped into the takeover business and acquired an underperforming Red Lake mine in 1966. He reduced a production cost of $360 per ounce to $59 per ounce. Goldcorp had a market value at an early stage of his career of $50 million. He changed the by-laws and by owning some small gold mining companies, eliminated the discount of a closed-end fund and became a premium gold mining producer. An investment company which at the time of his entree had a $50 million Canadian market value, became a $7 billion entity some eighteen years later.

The building of Goldcorp was a gradual process. He combined the purchase of mining assets, the mining process itself, the creation of profits, together building a portfolio of gold shares like a merchant bank. Being an innovative individual at a time when gold was just over $200, instead of selling the gold from his own mining, he built a gold bullion portfolio which at various times was greater than the gold reserves of 114 countries including Egypt, Pakistan, and India. He hedged like Barrick, and he played the futures market.

"Starting in 2001, I believed the price of gold had bottomed and was set to go higher, which led to the idea of holding back production for higher prices. In 2001, Goldcorp held back five percent of production. In 2002, ten percent was withheld and I also went into the market and purchased some gold. We started holding back gold when the price was U.S. $270 an ounce. Today it's above U.S. $400. At the peak, we held more gold than the Bank of Canada, more gold than what was held by 50 of the 114 central banks that hold gold," says Mr. McEwen.

Sitting at the top of Goldcorp, there was a diversity of mining process, mining profit, and the preservation of gold and constant reduction in the price of mining in the company. The company started with a hostile takeover battle. The combination of Dickinson Mines, Carlin Mines and Wharf Resources was acquired one by one. The most successful was called Dickinson, the name changed being the last leg. Operating performance converting a $50 million debt company into one of the most successful gold mining entities in the world.

About a year ago, when he merged his company with the Vancouver-based Wheaton River Minerals, the company had a million ounces of yearly gold production and an average mining cost of less than $60. This is equivalent to saying that the surplus cash flow of the company was $350 million and at a higher price of let's say $600 an ounce, the surplus cash flow annually would be $500 million.

Goldcorp in two decades became an international celebrity. Robert McEwen has become undoubtedly, if there is such a person in the gold mining industry, a man of the century. From mining, operating, allocating resources and utilizing gold and using it in every facet of the world from currencies, from bullion values, an empire was created which has to be written with a small "e" because its size cannot be compared with Mr. Sloan's General Motors, or Andrew Carnegie's U.S. Steel. Nor did it ever become a J.P. Morgan.

CHAPTER FOUR

U.S. Gold is a small company but as a securities analyst who analyzed every facet of this new company, of which the chairman and his resources and his desire and knowledge is important.    The conclusion may be reached that at least on a speculative level a new empire is about to begin.

Maybe in ten years, and it would be right if it happens, Goldcorp will own several mines. It could produce perhaps again a million ounces of gold. It would own bullion and may, in fact, have seats on a whole series of commodity trading markets all over the world. Maybe it would manage gold portfolios. Maybe it would become, like at some stage AT&T was, a one-stop shop for gold.

Mankind has advanced with U.S. Steel. Mankind has advanced with AT&T and Google. Mankind in fact advanced with the formation of the trillion dollar Fidelity. There is no reason that U.S. Gold will not represent something similar in an industry whose importance and significance is gradually becoming worldwide.

DISCLAIMER

(Article 9- posted September 29, 2005)

e-mail: mlikar@aol.com

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