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Dataram Corp Moves into US Gold

Bob Moriarty

May 11, 2017

This is going to be a little confusing; at least it was to me at first so stick with me.

There is a US company named Dataram (DRAM-NASDAQ) that makes memory chips. And there is a private US company named U.S. Gold formed in 2014 by two of the founders of Gold Standard Ventures. The two companies are going to merge on May 15th. The name will change to U.S. Gold and Dataram will become a subsidiary of U.S. Gold and remain in the computer chip business. Presently DRAM does about $20 million a year and nets about $1 million.

U.S. Gold is really the story of Dave Mathewson, one of the original founders behind the wildly successful Gold Standard Ventures. Dave is the go-to guy in Nevada for Carlin style deposits. He literally wrote the book and is considered the best Carlin geo in Nevada. Since 2007 he has been consolidating the entire Keystone Gold District. In 2014 a group led by Edward Karr started a private company named U.S. Gold. Dave was hired in 2016.

USG has two projects. Their first project was the Copper King copper/gold property located just 20 miles west of Cheyenne, Wyoming. Five different operators have drilled the deposit since 1970 with a PEA and 43-101 resource generated by MDA in 2012. The resource shows a 1.9 million ounce equivalent gold with a NPV of $159 million at $1,100 gold and $3 copper and a 31.2% IRR.

All of the claims on Copper King are on state ground and with Wyoming getting a 5% NSR on the project, the state government is anxious to get the project into production. USG is working on an updated PEA with MDA and expects to be releasing it by the end of the summer. USG budgeted $1.5 million to be spent on Copper King this year.

Copper King gives investors a number they can hang a hook on. There is a known gold and copper resource and a PEA showing a big NPV on a project with a good IRR. USG intends to advance the project, however, Keystone will be their primary focus.

The project with the home run potential is the Keystone property located in the center of the Cortez Trend. In the words of Dave Mathewson, “Reminds me of the Railroad project on steroids.” But here is where things get really interesting.

In my view and I have mentioned this hundreds of times to resource company management, the biggest problem with mining is that it is filled with over-educated people who couldn’t sell milk at a 7-11 at a profit. They have brains stuffed full with technical crap but rarely understand the basics of business including profit and loss. Most people in the resource sector think mining is spending money and it really should be about making money, not spending it.

Ah but USG is different. Ed Karr and Dave Mathewson were smart enough to consolidate the Keystone District for the very first time. That’s a home run all by itself. But when Gold Standard began to consolidate the Railroad District the market only gave them a $15 million market cap. The Copper King deposit allows investors to see solid value and allows for a lot of blue sky with the Keystone project.

However, like Gold Standard Ventures, USG is combining the business sense of Ed Karr with the geological brawn of Dave Mathewson. The company has added other former GSV team members and has hit the ground running. They conducted a scout drill program in 2016 and have budgeted $2.5 million for 2017 in exploration at Keystone.

There are subtle decisions that resource managements can make that can make an enormous difference in the market cap the company is given. Most of these choices are invisible but one is very important and I have tried with no success to convince resources CEOs to change their way of thinking on.

We all understand intuitively that it doesn’t appear to matter how many shares a company has. After all, the pie stays the same size no matter if it has 5 million shares or a billion outstanding. Stocks who list on the London AIM or in Australia typically have hundreds of millions of shares, sometimes billions. 20 years ago, Canadian stocks had 10-30 million shares and everyone was quite happy with that. Lately the Canadian juniors have exploded their share structure largely due to the market crash from 2011 to 2015.

So it really doesn’t matter how many shares a company has outstanding. Right?

Wrong, dead wrong.

Here’s why. While it doesn’t matter at all how many shares a company has outstanding, the price of the stock does affect who can buy it.

In the US a stock under $4 can’t be recommended by a broker and many trading firms simply will not allow punters to buy the penny dreadfuls. By allowing the share price to trade below $4 resource company managements are cutting their own throats. They should be creating a situation where as many investors as possible can buy their stock. By CEOs allowing hundreds of millions of penny shares in their companies to be outstanding probably 90% of investors cannot buy most junior mining companies. Their market cap is determined only by the 10% who can buy the shares and who have heard about them.

In the past year based on the strength of their chip business, DRAM has traded between $.81 and just over $5 a share. But Edward Karr wanted to open up the shares so everyone in the world could buy them. Part of the reason the deal was done with DRAM was because they are NASDAQ listed. As part of the merger agreement USG insisted on a 4-1 rollback. So DRAM’s $1.22 stock last Friday traded up to a close of $4.79 after the rollback on Monday.

With the geological genius of Dave Mathewson and the business acumen of Ed Karr, I expect U.S. Gold to become the go-to gold resource stock for US investors. They have the management bandwidth, the US listing, two world-class projects and a share price that allows everyone to be able to buy the shares. In addition, the company is well cashed up after having completed an $11.9 million raise last October.

When the merger is complete on the 15th there will be about 12.5 million shares of the merged company outstanding giving the combined entities a total market cap of about $62 million CAD.

U.S. Gold is an advertiser and I am naturally biased. I don’t own shares. Please do your own due diligence.

Dataram Corp
DRAM-NASDAQ $5.14 (May 10, 2017)

4.8 million shares

Dataram website


Bob Moriarty
President: 321gold

321gold Ltd

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