Canstar Closes Option Agreement on the Golden Baie Project, Exploration Work Underway
Toronto, Ontario – November 18, 2020 – CANSTAR RESOURCES INC. (TSXV:ROX & OTCPK: CSRNF) (“Canstar” or the “Company”) is pleased to announce that it has closed the Golden Baie Project option agreement (the “Option Agreement”) entered into with Altius Resources Inc. (“Altius”), a wholly owned subsidiary of Altius Minerals Corporation (TSX: ALS), and other arm’s length parties, as originally announced by news release on August 26, 2020. Details of the Option Agreement are provided below. The Company is also pleased to announce an update on field exploration activities currently taking place at the Golden Baie Project.
Golden Baie Project Exploration Program
The Golden Baie Project lies within the Coast of Bays region of south-central Newfoundland and covers 61,150 hectares under 47 Mineral Exploration Licences. Access is provided by Route 360, a paved highway which bisects the project area.
With the support of technical staff from Altius, the Company has been conducting field exploration work on the Golden Baie Project for the past two months. The main objectives of the Phase I program are to understand the structural and chemical parameters controlling gold mineralization at the Kendell Prospect, discover additional gold mineralization, develop exploration tools for future exploration programs and establish drill targets for Phase II follow up.
The Phase I exploration program, as recommended in the recently filed technical report on the Golden Baie Project, consists of:
- Main access trail remediation to provide ATV and excavator access
- Compilation and interpretation of data from historical exploration programs
- Analyze existing data including geophysical and geochemical data
- Prospecting work concentrating initially on the immediate Kendell Prospect and then expanding focus more regionally as time and weather permit
- Reconnaissance and locally detailed mapping and structural analysis
- Infill soil sampling and resampling of selected historic soil grids to confirm historic soil data
- Trenching and channel sampling on the Kendell Prospect
- Structural mapping and interpretation of the Kendell Prospect.
Prospecting and trenching programs can typically run until freeze-up and this can vary from mid- to late November. Five trenches were recently completed at the Kendell Prospect with assay results expected before the end of the year.
Rob Bruggeman, President & CEO, commented: “Optioning the Golden Baie Project in Newfoundland pivots Canstar into gold exploration in Newfoundland at a time when the island is seeing a surge of new exploration interest due to the prospectivity for orogenic gold deposits. The Golden Baie Project offers very compelling exploration potential as it covers about 95 km of a crustal-scale fault zone. Gold mineralization, including some grab samples with visible gold, have already been discovered at the Project, with a lot more ground to be covered. While weather will limit our field season this year, we are encouraged by the work so far and eagerly anticipate assay results.”
Golden Baie Project Option Terms
The Option Agreement is between the Company and Altius, Corwin Northcott, and Colin Kendell (collectively the “Optionors”) and it grants to the Company the exclusive right and option (the “Option”) to acquire, subject to retention by the Optionors of certain rights related to a 2% net smelter return (“NSR”) royalty, a 100% interest in mineral claims in the Baie d’Espoir region of Newfoundland (the “Golden Baie Claims”).
Under the Option Agreement, Canstar can earn a 100% undivided interest in the Golden Baie Claims over a four year period as follows:
- Issuance of 4,000,000 common shares of the Company to Altius upon receipt of Exchange approval (issued);
- Payment of an aggregate cash payment of $50,000 and issuance of an aggregate of 2,000,000 common shares to the Optionors upon signing of the definitive agreements (the “Definitive Agreements”) (paid and issued);
- Issuance of 2,000,000 common shares to Altius on the first anniversary of the signing of the Definitive Agreements;
- Payment of an aggregate cash payment of $50,000 and issuance of an aggregate of 1,000,000 common shares to the Optionors on the first anniversary of the Definitive Agreements;
- Issuance of 2,500,000 common shares to Altius on the second anniversary of the Definitive Agreements;
- Payment of an aggregate cash payment of $50,000 and issuance of an aggregate of the lesser of $250,000 worth of common shares or 1,000,000 common shares to the Optionors on the second anniversary of the Definitive Agreements; and
- Payment of an aggregate cash payment of $100,000 and issuance of an aggregate of the lesser of $250,000 worth of common shares or 1,000,000 common shares to the Optionors on the third anniversary of the Definitive Agreements.
As further consideration for the Option, Canstar is required to commit to fund exploration expenditures of a minimum of $1,250,000 over a four-year period. The minimum expenditure commitment for the first year will be $500,000.
In addition, the Optionors will be entitled to an aggregate milestone payment of $1,000,000 by the Company to the Optionors upon the Golden Baie Project claims achieving National Instrument 43-101 defined measured and indicated mineral resources of at least one million contained gold ounces.
The Optionors will transfer title to the Little River Claims to Canstar subject to the Optionors retaining a 2.0% Net Smelter Royalty from all commercial production on the Golden Baie Project (the “Royalty”). Altius shall maintain the right to purchase from the Optionors 1% of the Royalty for the total sum of $1,500,000. Altius will also have a first right of refusal on the purchase of the remaining 1% of the Royalty.
So long as Altius owns more than 9.9% of the Company’s shares outstanding, on any equity financing during the term of the Option, Altius shall have the right, at its sole discretion, to participate in 19.9% of such financing on the same terms as other investors and subject to it not becoming a control person.
Bob Patey, B.Sc., P.Geo, a Qualified Person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects, is responsible for the scientific and technical data presented herein and has reviewed and approved this release.
About Canstar Resources Inc.
Canstar Resources is focused on the discovery and development of economic mineral deposits in Newfoundland and Labrador, Canada. Canstar has an option to acquire a 100% interest in the Golden Baie Project, a large claim package (over 61,000 hectares) with recently discovered, multiple outcropping gold occurrences on a major structural trend in south-central Newfoundland. The Company also holds the Buchans-Mary March project and other mineral exploration properties in Newfoundland. Canstar Resources is based in Toronto, Canada, and is listed on the TSX Venture Exchange under the symbol ROX and trades on the OTCPK under the symbol CSRNF.
For further information, please contact:
Rob Bruggeman P.Eng., CFA
President & CEO
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This News Release includes certain “forward-looking statements” which are not comprised of historical facts. Forward looking statements include estimates and statements that describe the Company’s future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward looking statements may be identified by such terms as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “would”, “will”, or “plan”. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company provides no assurance that actual results will meet management’s expectations. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward looking information in this news release includes, but is not limited to, the Company’s objectives, goals or future plans, statements, exploration results, potential mineralization, the estimation of mineral resources, exploration and mine development plans, timing of the commencement of operations and estimates of market conditions, as well as the anticipated size of the Offering, the Offering price, the anticipated closing date and the completion of the Offering, the anticipated use of the net proceeds from the Offering and the receipt of all necessary approvals. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to failure to identify mineral resources, failure to convert estimated mineral resources to reserves, the inability to complete a feasibility study which recommends a production decision, the preliminary nature of metallurgical test results, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, inability to fulfill the duty to accommodate First Nations and other indigenous peoples, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects, capital and operating costs varying significantly from estimates and the other risks involved in the mineral exploration and development industry, an inability to complete the Offering on the terms or on the timeline as announced or at all, an inability to predict and counteract the effects of COVID-19 on the business of the Company, including but not limited to the effects of COVID-19 on the price of commodities, capital market conditions, restriction on labour and international travel and supply chains, and those risks set out in the Company’s public documents filed on SEDAR. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.