CANSTAR RESOURCES INC. (TSXV: ROX) (“
Canstar” or
the “
Company”) is pleased to announce that it has
signed a binding letter agreement with Altius Resources Inc.
(“
Altius”), a wholly owned subsidiary of Altius
Minerals Corporation (TSX: ALS), and other arm’s length parties for
the option to acquire a 100% interest in mineral claims covering
approximately 66,000 hectares (660 km2) located in southern
Newfoundland (Figure 1), which will be called the Golden Baie
Project. The acquisition of the Golden Baie Project allows Canstar
to build on its exploration focus in Newfoundland as a complement
to the Buchans-Mary March and Daniel’s Harbour projects and adds
significant exposure to precious metals exploration.
Prospecting at the Golden Baie Project over the
last three years by the arm’s length vendors resulted in the
discovery of several new gold occurrences in bedrock with multiple
grab samples containing coarse free gold occurring in quartz veins
in an area with limited historic drilling. Samples collected by the
vendors of the Project assayed as high as 2,213 g/t gold (sample
2019-33) and the re-assay of the associated rock pulp returned
4,485 g/t gold (sample 2019-33 (a)). Other rock grab samples
reported by the vendors near this location assayed 1,199 g/t gold
(sample 2019-34) and 471 g/t gold (sample 2019-35). All samples
were reportedly of argillite-hosted quartz veins. The Company has
not yet independently verified the vendors’ data.
In July of this year, Altius personnel visited
the Project site and confirmed the occurrences of visible gold in
outcrop. Altius’ check rock grab samples collected within a 30
metre radius of these samples and from similar material assayed 153
g/t gold (sample 19179), 178 g/t gold (sample 19180), and 11 g/t Au
(sample 19178). The true widths and known extent of the mineralized
zone have not yet been determined. Note that rock grab samples are
selective by nature and values reported may not represent the true
grade or style of mineralization across the property.
Exploration has been both sporadic and limited
on the Golden Baie Project over the past 40 years, with the last
program finishing up almost 10 years ago. The Project area has seen
no modern geophysics and only piecemeal soil and silt geochemistry.
Westfield Minerals Limited drilled approximately 60 shallow holes
in the region in the 1980s, of which 9 holes occur on the property,
and Mountain Lake Minerals Inc. drilled approximately 50 shallow
holes from 2009 to 2011, of which 38 occur on the property. Some of
the historic drill holes intersected gold mineralization, such as
hole DDH LR-09-02 which intersected 4.8 g/t Au over 3.0 metres
starting at 3.5 metres down hole. However, these exploration
programs appear to have missed the multiple occurrences of visible
gold in outcrops on the claims (Table 1).
Table 1- 2018 & 2019 Assay Highlights
(Source: Unpublished reports from Kendell & Northcott,
2020)
Sample ID |
Source |
UTM Easting |
UTM Northing |
Au (ppb) |
Comments |
2019-33 (A) |
Outcrop |
596832 |
5297889 |
4,485,400 |
pulp re-run of 2019-33 |
2019-33 |
Outcrop |
596832 |
5297889 |
2,213,867 |
|
2019-34 |
Float |
596829 |
5297888 |
1,198,620 |
|
2019-34 (A) |
Float |
596829 |
5297888 |
1,073,100 |
pulp re-run of 2019-34 |
2019-35 |
Outcrop |
596833 |
5297891 |
471,338 |
|
2019-35 (A) |
Outcrop |
596833 |
5297891 |
395,684 |
pulp re-run of 2019-35 |
LRCN18-12 |
Float |
596685 |
5298097 |
33,377 |
|
LRCN18-09 |
Outcrop |
598964 |
5301057 |
30,623 |
|
64296 |
Float |
596764 |
5298307 |
23,700 |
|
LRCN18-13 |
Float |
596685 |
5298082 |
20,150 |
|
LRCN18-10 |
Outcrop |
598956 |
5301061 |
18,787 |
|
LRCN18-01 |
Float |
599195 |
5301279 |
16,732 |
|
373374 |
Outcrop |
596809 |
5297889 |
12,080 |
|
2019-07 |
Float |
596701 |
5298184 |
11,814 |
|
2019-10 |
Float |
597297 |
5299085 |
10,846 |
|
CN-41-18 |
Float |
597960 |
5298927 |
10,373 |
|
Select rock grab samples > 10,000 ppb collected
and reported by Kendell and Northcott (2020) from the Golden Baie
Property. |
All samples have been assayed by Eastern Analytical
Ltd, Springdale, Newfoundland. |
UTM coordinates projected in NAD 27, Zone 21. |
|
|
Note: the reader is cautioned that rock grab
samples are selective by nature and values reported may not
represent the true grade or style of mineralization across the
property.
Dennis Peterson, Interim Chief Executive Officer
and Chairman of Canstar, commented: “We are extremely pleased to
acquire such a large, prospective gold exploration project in
Newfoundland to complement our existing portfolio of high-quality
projects, including Buchans/Mary March and Daniels Harbour. With
our already established base in Newfoundland and the concurrent
financing the Company will be able to begin work on the Golden Baie
Project immediately.”
Kerry Sparkes, Exploration Advisor to Canstar,
commented: “The Golden Baie project offers Canstar shareholders a
unique opportunity to participate in the early stages of a strong
gold bull market with the acquisition of an extensive,
underexplored, highly prospective land package in Newfoundland. The
recent discovery of significant occurrences of visible gold within
a belt that also displays many geological and mineralogical
similarities to other highly productive gold belts worldwide makes
this an exciting opportunity.”
Private Placement Details
The Company also announces that it plans to
complete a non-brokered private placement for gross proceeds of up
to $2,000,000 (the "Offering") through the sale of
up to 22,222,222 units of the Company at $0.09 per unit (each a
“Unit”). Each Unit will consist of one common
share in the equity of the Company (each, a "Common
Share") and one share purchase warrant (each, a
"Warrant"). Each Warrant will entitle the
subscriber to purchase one additional Common Share at a price of
$0.15 until the fourth (4th) anniversary of the closing date of the
Offering.
The Company intends to use the net proceeds
raised from the Offering for general corporate purposes, working
capital, and exploration expenses on the Company’s properties,
including Buchans/Mary March, Daniel’s Harbour, and Golden Baie.
The Company may pay finder's fees in respect to the Offering.
Closing of the Offering is expected on or about September 15, 2020.
The Offering is subject to the final approval of the TSX Venture
Exchange (“Exchange”). Securities issued pursuant
to the Offering shall be subject to a four-month plus one day hold
period commencing on the day of the closing of the Offering under
applicable Canadian securities laws.
It is expected that certain directors, officers
and other insiders of the Company (collectively, the “Insiders”)
will participate in the Private Placement. The participation of
Insiders in the Private Placement constitutes a “related party
transaction”, as such terms are defined by Multilateral Instrument
61-101 - Protection of Minority Security Holders in Special
Transactions (“MI 61-101”). The Company is relying on an exemption
from the formal valuation requirements of MI 61-101 available on
the basis of the securities of the Company not being listed on
specified markets, including the Toronto Stock Exchange, the New
York Stock Exchange, the American Stock Exchange, the NASDAQ or
certain overseas stock exchanges. The Company is also relying on
the exemption from minority shareholder approval requirements under
MI 61-101 as the fair market value of the participation in the
Offering and Private Placement by the Insiders does not exceed 25%
of the market capitalization of the Company.
Prior to entering into the Altius Agreement (as
defined below), Altius owned or controlled 3,669,024 common shares
of Canstar, representing approximately 7.5% of the total number of
issued and outstanding common shares. Following the completion of
the Altius Agreement and before closing the private placement,
Altius will own or control an aggregate of 7,669,024 common shares
representing approximately 14.0% of the total number of issued and
outstanding common shares. Under the Altius Agreement, Altius has
the right to receive additional common shares of Canstar on the
first and second anniversary of the Altius Agreement that would
increase Altius’ ownership to 12,169,024 common shares,
representing approximately 19.9% of the total number of issued and
outstanding shares without taking into account shares to be issued
in the Offering or any other share issuances outside of the Altius
Agreement.
In satisfaction of the requirements of National
Instrument 62-104 – Take-Over Bids and Issuer Bids and National
Instrument 62-103 – The Early Warning System and Related Take-Over
Bid and Insider Reporting Issues, an early warning report
respecting the acquisition of securities by Altius will be filed
under the Company’s SEDAR Profile at www.sedar.com.
Altius is acquiring the common shares of Canstar
for investment purposes only, and depending on market and other
conditions, Altius may from time to time in the future increase or
decrease its ownership, control or direction over securities of the
Company, through market transactions, private agreements, or
otherwise. The head office of Altius is located at 38 Duffy Place,
2nd Floor, St John's, NL A1B 4M5. For further information regarding
this share acquisition by Altius, please contact Chad Wells,
Vice-President, Business Development, Altius Minerals Corporation,
Tel. 1-877-576-2206.
Adventus Mining Corporation (TSXV: ADZN), which
currently owns approximately 36% of outstanding shares of Canstar
and is its largest shareholder, supports this transaction and
associated financing to reinvigorate the Company just as new gold
exploration interest in Newfoundland is developing.
Golden Baie Project Terms
The Company has entered into a binding letter
agreement with Altius (the “Altius Agreement”)
that sets out the principal terms and conditions upon which Altius
will grant to the Company the exclusive right and option (the
“Option”) to acquire, subject to retention by
Altius of certain rights related to a 2% net smelter return
(“NSR”) royalty, its 100% interest in mineral in
the Baie d’Espoir region of Newfoundland (the “Baie
d’Espoir Claims”). Altius has also agreed to assign a
binding letter agreement (the “Little River
Agreement”) to Canstar that sets out the principal terms
and conditions under which Corwn Northcott and Colin Kendell
(collectively the “Optionors”) will grant the
exclusive right and option to acquire, subject to retention by the
Optionors of a royalty, their 100% interest in mineral claims known
as the Little River Claims (the “Little River
Claims”). Collectively, the Baie d’Espoir Claims and the
Little River Claims, as well as any future claims added within a
defined area of interest around the Little River Claims and the
Baie d’Espoir Claims, will be called the Golden Baie Project.
Under the Altius Agreement and the Little River
Agreement, Canstar can earn a 100% undivided interest in the Baie
d’Espoir Claims and Little River 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;
- 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”);
- 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 $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 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. In the event that Canstar proposes to issue shares (or
units consisting of shares and warrants) in a financing at any time
after the first anniversary of the Definitive Agreements (a
“Financing”), Canstar shall grant to Altius a
right, exercisable in Altius’ sole discretion, to sell shares of
Canstar (and an option on shares of Canstar, in the event that the
Financing includes warrants) for up to 15% of the Financing on a
secondary sale basis for as long as Altius owns 9.9% or more of the
outstanding shares of Canstar on a partially-diluted basis, and
provided that the market capitalization of Canstar is at least
$50.0 million. Altius also agreed that during the term of the
Definitive Agreements, for so long as it owns 9.9% or more of the
outstanding shares of Canstar on a partially-diluted basis that it
will vote its shares of Canstar on any matter to be voted upon at a
meeting of shareholders in the manner recommended by the management
of Canstar.
The parties expect to enter into Definitive
Agreements by September 15, 2020. Canstar has also agreed to raise
a minimum of $500,000 by way of an equity private placement prior
to September 15, 2020.
Qualified Persons, Technical
Information, and Quality Control & Quality
Assurance
Roderick Smith, P.Geo., Chief Geologist of
Altius Resources Inc., and a Qualified Person within the meaning of
National Instrument 43-101 Standards of Disclosure for Minerals
Projects, has reviewed and approved the technical and scientific
information presented herein as accurate and approved this news
release.
About Canstar Resources
Inc.
Canstar Resources is a mineral exploration and
development company focused on creating shareholder value through
discovery and development of economic mineral deposits in
Newfoundland, Canada. Canstar is in the process of completing
option agreements on the Golden Baie Project in south Newfoundland,
a large claim package (660 km2) with recently discovered, multiple
outcropping gold occurrences. The Company also holds the
Buchans-Mary March project and other mineral exploration properties
in Newfoundland and Labrador, Canada. Canstar Resources is based in
Toronto, Canada and is listed on the TSX Venture Exchange and
trades under the symbol ROX-V.
For further information, please contact:
Dennis H. PetersonChairman of the Board, Interim
President and Chief Executive OfficerEmail:
info@canstarresources.comwww.canstarresources.com
Forward-Looking Statements
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.
A photo accompanying this announcement is
available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/ba5228f3-1db4-4cc4-90d1-3ce5a5d89cbf
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