Mr. Jonathan Armes reports

KAPUSKASING GOLD ANNOUNCES PRIVATE PLACEMENT TO EXISTING SHAREHOLDERS AND OTHER INVESTORS

Kapuskasing Gold Corp. intends to raise up to a total of $500,000 by way of a non-brokered private placement of flow-through units at a price of five cents per FT unit and non-flow-through units at a price of 2.5 cents per NFT unit pursuant to a discretionary waiver of the five-cent minimum pricing requirement granted by the TSX Venture Exchange. Subject to certain limitations discussed below, the offering is open to all existing shareholders of the company as well as pursuant to other available prospectus exemptions. The offering is subject to exchange final acceptance.

The offering

The maximum offering is up to 20 million common shares for gross proceeds of $500,000 consisting of:

• NFT units at 2.5 cents per NFT unit. Each NFT unit will consist of one NFT common share and one non-flow-through share purchase warrant. Each NFT warrant will entitle the holder to purchase one NFT share at five cents for 24 months from the date of issuance;
• FT units at five cents per FT unit. Each FT unit will consist of one FT common share and one NFT warrant. Each NFT warrant will entitle the holder to purchase one NFT share at five cents for 24 months from the date of issuance.

The offering is not subject to any minimum aggregate subscription.

A finder's fee of cash, shares or finder's warrants, or a combination thereof, may be paid to eligible finders with respect to any portion of the offering that is not subscribed for by existing shareholders.

Assuming the offering is fully subscribed, the company intends to allocate the net proceeds as follows: (1) approximately $350,000 for drilling and exploration, (2) approximately $60,000 for current liabilities (including approximately $6,500 to related parties); and (3) balance for general working capital purposes.

Although the company intends to use the proceeds of the offering as described above, the actual allocation of net proceeds may vary from the uses set forth above, depending on future operations or unforeseen events or opportunities. If the offering is not fully subscribed, the company will apply the proceeds of the offering to the above uses in priority and in such proportions as the board of directors and management of the company determine is in the best interests of the company.

All securities issued in connection with the offering will be subject to a four-month hold period in accordance with applicable securities laws.

Existing shareholder exemption

Depending on demand and regulatory requirements, a portion of the offering may be made in accordance with the provisions of the existing shareholder exemption contained in Multilateral CSA Notice 45-313 and B.C. Instrument 45-354 and the various corresponding blanket orders and rules of participating jurisdictions (the existing shareholder exemption is not available in Ontario or Newfoundland and Labrador and existing shareholders resident in countries other than Canada need to meet the applicable eligibility requirements, if any, in their jurisdiction of residence to participate). In addition to conducting the offering pursuant to the existing shareholder exemption, the offering will also be conducted among close personal friends and business associates of directors and officers of the company.

The company has set Feb. 11, 2016, as the record date for the purpose of determining existing shareholders entitled to purchase shares pursuant to the existing shareholder exemption. Subscribers purchasing shares under the existing shareholder exemption will need to represent in writing that they meet certain requirements of the existing shareholder exemption, including that they were, as of the record date, and continue to be as of the date of closing for their subscription, a shareholder of the company. The aggregate acquisition cost to a subscriber under the existing shareholder exemption cannot exceed $15,000 unless that subscriber has obtained advice from a registered investment dealer regarding the suitability of the investment.

If subscriptions received for the offering based on all available exemptions exceed the maximum offering amount of $500,000, subscriptions will be accepted at the discretion of the company such that it is possible that a subscription received from a shareholder may not be accepted by the company if the offering is oversubscribed. In accordance with the existing shareholder exemption, the company confirms there is no material fact or material change related to the company, which has not been generally disclosed.

We seek Safe Harbor.