Watch for Share Price Reversal as Junior Explorer Raises Price to Exercise Warrants
Tuesday, May 24, 2022
When the markets are tough on microcaps, as they have been lately, it’s not uncommon for companies to adjust exercise prices for warrants. The logic is easy: if a stock price slides too far, what once was an incentive to invest more in a company becomes unattractive, so a tweaking happens. But, to see an exercise price get raised? Now that’s more of an anomaly and should get investor’s attention.
That’s exactly what King Global Ventures Inc.
(TSX-Venture: KING) did last week. (OTC: KGLDF)
King is a junior explorer that holds 100% interest in four highly prospective and previously explored gold exploration projects in the Gander Gold Belt Region of Newfoundland, Canada. The Gander Gold Belt has the potential to be the next great Canadian gold discovery, a contention trumpeted by billionaire gold and silver investor Eric Sprott. Sprott has made some significant investments in the gold belt, including counting himself as a large shareholder of KING.
In May 2020, King completed a private placement raising $600,000, issuing warrants along with common stock purchases to raise capital that was used to strengthen the fundamentals months ahead of acquiring a trio of properties in Newfoundland: Miss Pickle, Golden Nugget, and Gold Boulder. Gold Boulder is completely encased by New Found Gold Corp’s
(NYSE American: NFGC) Queensway project, for which Sprott has invested $130 million, (TSX-Venture: NFG) calling the project “special” as he looks for his next success that could rival his Kirkland Lake Gold investment. Sprott was an early investor in Kirkland Lake when it was a penny stock before it grew to a $13+ billion market cap and was acquired by Agnico Eagle Mines Ltd. (NYSE: AEM) . (TSX: AEM)
Being enveloped by Queensway means that New Found Gold is doing a lot of the heavy lifting for King with every bit of info proving the mineralization at Queensway. King can simply follow the data of NFG to identify drill targets on their land. Better yet, there’s the possibility that NFG wants the Gold Boulder project for itself.
King has completed early exploration activity at Miss Pickle and Golden Nugget, which have their own compelling characteristics. Exploration work – some by King and some by others previously – has demonstrated the potential for high-grade gold at both projects through near surface work, such as grab and channel samples.
The company is now awaiting results from a Multi-Parameter Airborne Geophysics Survey (M-PASS) completed this month by GoldSpot Discoveries Corp
(TSX-Venture: SPOT) . The data from the survey will be analyzed using Artificial Intelligence software and subsequently combined with the current database for final refinement of drill targets for the maiden drill program on Golden Nugget and Miss Pickle this summer, along with more sampling. (OTCQX: SPOFF)
Last week, King received approval from the TSX Venture Exchange to move the expiry date and raise the exercise price for the warrants associated with the aforementioned private placement in 2020. Instead of having an exercise price of 5 cents on May 19, 2022, the 40 million warrants now have two exercise prices and dates: 7.5 cents from May 20, 2022, to May 19, 2023; 8.5 cents from May 20, 2023, to May 19, 2024.
If exercised, the warrants will raise between $3.0 million and $3.4 million for King’s coffers.
Shares of KING are holding in a range between $0.04 and $0.045 this month, tightening a range from the months prior. Shares of KING hit a 52-week high of $0.115 set last June and a chart that has flattened, potentially signaling that the downtrend is over.
A key component for KING to validate a reversal will be a test of the 200-day moving average, currently at $0.051. Volume has been drying up during the recent channel, another sign selling is exhausted. Technical traders will be closely watching for a move towards the 200 DMA, while fundamental traders will be listening for news that drill rigs are on the move for King. The markets like catalysts, so it would seem when one happens the other one does too, unless traders start making a move early in preparation for the maiden drilling event.
King Global Ventures Inc. (TSX-Venture: KING) (OTC: KGLDF) Full Corporate Write-Up:
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