WOW! What a story is unfolding here. Strikepoint Gold (TSX-v: SKP) / (OTCQB: STKXF) closed on a game-changing acquisition that was 10x its market cap, not including two US$25M (contingent, success-based) payments to Newmont several years away with 2-3 years between them.
When I first learned of this transaction, I couldn’t imagine how management could raise the roughly C$100M. Not that I doubted CEO Mike Allen and his team, but it seemed like a reach with gold juniors not doing well over the past several months.
Nor did I doubt the attractiveness of the Northumberland project in the Walker Land Trend of Nevada. It was an orphan at Newmont, but with ~4.4M Au Eq. ounces, grading ~1.4 g/t Au Eq., its a no-brainer for a strong team to drive it forward. Did I mention it’s in Nevada?!?
Think about it, 1.4 g/t Au Eq. is like 2.8 g/t when Au was half today’s price, less than three years ago. And, a significant 68% of the tonnage is in the Indicated category.
Not only did CEO Allen raise C$100M to pay Newmont, he took in an additional C$90M for C$190M in total, enough to fund Strikepoint for two years. But wait, for a C$10M company to raise so much, the warrants must have been brutal. Nope, no warrants on the C$190M! (but some broker warrants).
Talk about a vote of confidence in Strikepoint’s team, Northumberland & Nevada. No warrants, no debt issued. The new enterprise value {market cap + debt – cash} at C$1.61/shr., with C$90M in the treasury, is ~C$84M. That equates to ~C$19 per resource ounce. Compare that to the following peers.
If one adds C$71M to the enterprise value for two contingent earn out payments, years from now, Strikepoint’s valued at ~C$39/oz. For both payments to be triggered, Northumberland would have to be 120 days past the start date of commercial production…
Look at the table, Strikepoint has far fewer shares outstanding, a much higher # of ounces, meaningfully better grade, yet is valued at a substantial discount. I caught up with CEO Allen to ask him about this truly momentous event.
I truly believe in the team Mike has in place, especially Mike himself, and including world-class advisors, the project scale (still growing), a solid grade, the Nevada location (in the Walker Lane Trend) and of course –> C$90M in cash!
You say drilling should start within a month, with new targets possibly drilled in 2027. What type of holes will come first, (shallow/deep, infill/step-out) when might first results be available?
Great question! This is such an interesting “new” deposit to StrikePoint that prioritization becomes key. We have directors with a metallurgical leaning that want met samples ASAP, and we have other directors that want exploration holes, they want to step out and swing for the fences.
From my perspective, a technically simple hole is probably the first one that I would like to do. Something that we can easily access and execute. I had a great talk with the on-site team yesterday, their request is to get a representative hole on the table.
Then, we will know what the ground drills like, what the different geological units look like, and obviously hopefully put numbers up on the board! That resonated with me on a lot of levels so it’s probably where we’ll go.
A moderate depth, infill hole would be where we’re leaning, but we’re finalizing that first hole as we speak. To answer your question about timing of first results, there’s a lot of variables, but I would estimate December or maybe even January 2027, by the time we get a batch of holes back from the lab.
You have ~C$90M in cash, how much might it cost (all-in) per meter drilled?
When we drilled at our Hercules Gold Project in early 2026, our all-in cost for reverse circulation drilling was about US$300/m, the hole, geos, water, assaying, dirt work, everything. We’re going to be doing more meters at Northumberland, and the program will be a blend of core and RC drilling.
So, I’d estimate that we’re going to run in the neighborhood of US$400-500/m when you consider core is more expensive, but we should be more efficient by spreading out the fixed costs over more meters.
Assays from over 1,500 drill holes were used in the latest resource estimate of 4.46M Au eq. ounces at 1.42 g/t Au Eq. What does that imply for future exploration?
The obvious implication is we’re dealing with a sizable and strong system! A lot of ounces, at very strong grades, implies the system has “thump” and room to grow.
Something as simple as a gold in soil anomaly becomes a lot more real when you know there’s a massive system producing very interesting grades “just over the hill” from your exploration targets.
A fairly technical disclosure about recoveries can be seen in the following image. Please explain what it means. What are the goals for metallurgy in the coming year or two?
To constrain the resource we labelled each block by it’s potential metallurgical performance as outlined, oxide vs. fresh, low, medium and high PRV based on historical test work before we allowed the algorithm to “mine” the mineralization to create the pit constrained resource we reported.
There’s a potential refinement to the resource model that we need to consider. “Transitional material”, which as the name implies, refers to the transition from fresh to oxide. The last technical work on Northumberland was before this refinement was widely adopted in the industry.
There’s some evidence in the date that there could be a significant amount of transitional material. In addition to defining how much transitional material we have, the question becomes what is the best flowsheet to create value for the complete project, so there will be significant work done on that.
Northumberland is now the main asset. What happens to Hercules, including the open near-surface zone and planned maiden resource?
Corporately, when we got traction on the Northumberland transaction, we became completely focused on getting the transaction over the line. Now that the transaction is closed, our heads are up and we can think again. We’ll be looking at the portfolio and evaluating how to best create value for shareholders.
Although Strikepoint is cashed up for roughly two years, through a PEA and beyond, might the Company look to secure a strategic investor?
Another great question. Post transaction, we have 3 shareholders that own ~40% of the Company, so they’re potentially acting as strategic investors already. Obviously, StrikePoint, and the “Big 3” have the goal of advancing the Northumberland asset as quickly as we can.
That implies that if someone was able to entice the group to speed up the advancement, we’d be open for business, but we’d have to evaluate the situation if it were to arise.
Thank you Mike, a very insightful and promising update. Strikepoint is cashed up for two years with blue-sky potential ahead. Congratulations again on closing on Northumberland.
Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER] ) about Strikepoint Gold, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Strikepoint Gold are highly speculative, and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.
At the time this article was posted, Strikepoint Gold was an advertiser on [ER] and Peter Epstein owned shares in the company.
Readers understand and agree that they must conduct due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reason whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector, or investment topic.
