Gold Jr. Announces Private Placement, Share Consolidation

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StrikePoint Gold Inc. (SKP:TSX.V; STKXF:OTCQB) announced a private placement for up to CA$3 million to pay for continued exploration activities at its Nevada-based projects, the Cuprite Gold Project and the newly acquired Hercules Gold Project and general capital.

Before the placement, the company said it intends to consolidate its issued and outstanding common shares on the basis of 10 existing shares for one post-consolidation common share.

The consolidation is expected to happen within three trading days of obtaining approval from the TSX Venture Exchange. StrikePoint will continue under the symbol SKP, but the company said it will obtain new Cusip and international securities identification numbers for the new shares.

"This decision will better position the company to develop its existing assets and evaluate other investment opportunities that the company continues to review," President and Chief Executive Officer Michael G. Allen said. "This reverse stock split is a necessary step to move the company to a significantly better position to succeed and finance its multi-asset gold exploration projects in Nevada."

The private placement will consist of up to 15 million units of the company at a post-consolidation price of CA$0.20 per unit. Each unit shall be comprised of one post-consolidation common share and one post-consolidation common share purchase warrant, with each warrant exercisable into one post-consolidation common share at an exercise price of CA$0.30 cents for a period of 24 months from closing, StrikePoint said.

The warrants will be subject to an acceleration clause stipulating that should the post-consolidation shares close at or above CA$0.40 cents for 10 consecutive trading days, they will be called for exercise within 30 days of the company providing notice by way of regular news release or will expire.

According to the company, as of October 1, it has 263,894,207 shares, 24,344,500 options, and 26,873,250 warrants issued and outstanding, representing a fully diluted share capital of 315,111,957. After the consolidation, there will be approximately 26,389,420 common shares issued and outstanding (subject to any differences due to rounding), prior to the completion of the private placement.

Visible Gold Documented at Surface

StrikePoint recently announced that visible gold has been found in three locations at Hercules, which is in Nevada's Prospective Walker Lane Gold Trend just 20 kilometers east of the Comstock Lode where 14 million ounces gold (Moz Au) were produced.

"One of the significant outstanding features of the Hercules Gold Project is the scale of the gold and the scale of the property," Allen said at the time. "Visible gold has been documented at surface at three separate widely spaced locations. Additionally, previous geophysical surveys indicate the presence of an extensive alteration zone that is approximately 13 kilometers long and 6 kilometers wide that is coincident with the known mineralization, all of this is contained within the 100-square-kilometer property."

Cuprite and Hercules are "two big reasons" for liking the stock, Technical Analyst Clive Maund wrote on September 3.

The Comstock Lode generated fortunes in the 19th century that played a big role in the growth of Nevada and San Francisco. StrikePoint's flagship project, Cuprite also is in the Walker Trend.

Results released in June from an inaugural 3,100-meter drilling program by StrikePoint at Cuprite this year found gold and silver mineralization over five holes, including one hole that intersected 12.19 meters of 0.46 grams per tonne gold (g/t) Au and 10.10 g/t silver (Ag), including 6.1 meters of 0.74 g/t Au and 14.75 g/t Ag.

Cuprite and Hercules are "two big reasons" for liking the stock, Technical Analyst Clive Maund wrote on September 3.*

Maund noted that given the positive news of the Hercules acquisition and the "bright outlook for gold itself … we can expect it to generate another significant reversal to the upside."

"It is clear that investors are being presented with an exceptional opportunity here with StrikePoint Gold being at very low level and on the point of reversing to the upside," he wrote. "We, therefore, stay long, and the stock is rated an Immediate Strong Buy; in addition, this is a stock that is considered to be worth going overweight on."

Is US$3,000 Gold in Sight?

The company is exploring the projects just as gold is hitting new records and is on-track for its best quarter in four years. While spot gold was down 0.9% Monday, it has risen more than 13% so far this quarter and hit an all-time high of US$2,685.42 last week, Reuters reported.

The rise was "fueled by the U.S. Federal Reserve's half-percentage-point cut and flare-ups in the Middle East," author Sherin Elizabeth Varghese wrote.

The Fed's cut could "increase the tailwind for gold and pull forward the timing for attainment of US$3,000" per ounce for gold, Peter A. Grant, vice president and senior metals strategist at Zaner Metals, said in a Reuters report by Anushree Ashish Mukherjee and Anjana Anil.

"Gold market bulls are locking in bullion prices surging to fresh records, with a milestone of US$3,000 per ounce coming into focus, fired up by monetary easing by major central banks and a tight U.S. presidential election race," Mukherjee and Anil wrote.

Ownership and Share Structure

Reuters provided a breakdown of the company's ownership and shares structure, where management and insiders own approximately 1.49% of the company.

According to Reuters, Executive Chairman Shawn Khunkhun owns 0.44% of the company, President and CEO Michael G. Allen owns 0.72%, Director Ian Richard Harris owns 0.11%, and Director Adrian Wallace Fleming owns 0.03%.

Reuters reported that institutional and strategic investors own approximately 22.37% of the company, as mining financier Eric Sprott owns 11.3% of the company, Pathfinder Asset Management Ltd. owns 7.6%, U.S. Global Investors Inc. owns 1.04%, and Sprott Asset Management LP owns 0.95%.

According to Reuters, there are 263.89 million shares outstanding, while the company has a market cap of CA$6.6 million and trades in a 52-week range of CA$0.02 and CA$0.09.