McEwen’s U.S. Gold looks to consolidate Cortez Trend

Vancouver – Robert McEwen’s U.S. Gold (USGL-O) has launched takeover offers for four TSX Venture-listed companies in an anticipated maneuver to fuse together a large, strategic land position around its Tonkin Springs project in Nevada’s Cortez Trend.

U.S. Gold is looking to acquire White Knight Resources (WKR-V, WITNF-O), Nevada Pacific Gold (NPG-V, NVPGF-O), Coral Gold Resources (CGR-V, CGREF-O) and Tone Resources (TNS-V, TONRF-O) in an all share transaction with a consolidated valuation of about $290 million (based on the March 3rd closing price). U.S. Gold proposes to issue:

• 0.35 of a common share for each White Knight share;
• 0.23 of a common share for each Nevada Pacific share;
• 0.63 of a common share for each Coral Gold share; and
• 0.26 of a common share for each Tone Resources share.

U.S. Gold chairman and CEO McEwen also happens to be a major shareholder in all of the target companies.

In mid-2005, the ex-chief of Goldcorp (G-T, GG-N) boosted his interest in White Knight to 10.5% through a private placement of almost 5.7 million shares at about 80 apiece. Then in late-2005, McEwen bought an 18.2% stake in Nevada Pacific (12.5 million units priced at 40, for proceeds of $5 million), an almost 20% interest in Coral Gold (1.5 million shares at $3.00 apiece) and then an initial 12.2% position in Tone Resources by way of a 1.77 million unit private placement priced at 20 per unit.

Given his significant investments into the quartet of Nevada explorers, the market largely anticipated that McEwen would look to piece together a new gold venture. Upon acquiring its four target companies, the “new” U.S. Gold will emerge as one of three major landholders in the Cortez Trend, along with Barrick Gold (ABX-T, ABX-N), following its recent acquisition of Placer Dome, and Newmont Mining (NMC-T, NEM-N).

In a prepared statement, Rob McEwen describes the company’s goal as “to build the premier exploration company in Nevada.” He further states, “The new combined company could provide the land package of a major, the balance sheet strength and market liquidity of an intermediate and the upside price leverage to discovery of a junior.”

U.S. Gold’s Tonkin Springs deposit contains an estimated 26.5 million tonnes of mineralized material grading 1.2 grams gold per tonne (over 1 million oz. of contained gold) and includes an existing 1,500-tonne-per-day mill facility. Tonkin Springs operated briefly in the mid-1980s and again in 1990. The 36 sq. mile land package covers a prospective portion of the trend that has seen renewed interest.

Having recently closed a US$75-million private placement, U.S. Gold has earmarked US$30 million for exploration, to include about 120,000 metres of drilling, on its Cortez Trend landholdings over the next two years.

In mid-2005, McEwen purchased a one-third interest in U.S. Gold through a private placement of 11.1 million shares at US$0.36 apiece and took over the helm of the company. Following the release of its acquisition plans, shares of U.S. Gold rose to the US$6.30-level, making Mr. McEwen’s initial US$4 million investment now worth about US$70 million.

With trading resumed after announcement of the proposed takeovers, shares of White Knight closed up 19% at the $2.15-level, Nevada Pacific was up almost 16% to $1.40 per share, Coral Gold rallied 27% to the $4.10-level and Tone Resources notched upwards about 19% to close at $1.60.