Canstar Enters into Binding Letter of Intent for Golden Baie Transaction, Securing Cash, Equity, Royalty and $5M in Work Commitments to Accelerate Gold-Antimony Exploration in Newfoundland
Canstar Enters into Binding Letter of Intent for
Golden Baie Transaction, Securing Cash,
Equity, Royalty and $5M in Work Commitments
to Accelerate Gold-Antimony Exploration in
Newfoundland
Toronto, Ontario--(Newsfile Corp. - February 17, 2026) - Canstar Resources Inc. (TSXV: ROX) (OTCID:
CSRNF) ("Canstar" or the "Company") has executed a binding Letter of Intent with Churchill Resources
Inc. ("CRI") for an option agreement that unlocks the value of its Golden Baie gold-antimony project while
strengthening Canstar's capital position and strategic focus.
Under the option, which will allow CRI to earn a 100% interest in Golden Baie, Canstar will receive up to
9.99% ownership in CRI through fixed-percentage share issuances, retain a 0.5% perpetual royalty on
Golden Baie, secure approximately $208,167 in cash reimbursement, eliminate approximately
$600,000 in 2026 holding obligations, and benefit from a minimum $5 million work commitment -
including $2M in the first 12 months - to aggressively advance the asset.
Upon execution of the definitive option agreement, Canstar will receive an initial issuance of 15,834,097
common shares of CRI, representing approximately 5.0% of CRI's issued and outstanding shares on a
post-issuance basis. Based on CRI's closing share price of $0.14/share on February 13, 2026, the initial
tranche has an indicative current market value of approximately $2.2 million. The remaining 4.99%
ownership interest will be delivered in four additional tranches over 24 months, each calculated as a
fixed percentage of CRI's issued and outstanding shares at the time of issuance.
Juan Carlos Giron Jr., Canstar's President & CEO, stated:
"This is a strong and strategic agreement that delivers a compelling win-win for Canstar and Churchill
shareholders. Canstar benefits from approximately $3.3 million in near-term value - at least $2.4 million
of which is expected within 30 days of TSXV approval and definitive agreement execution - including
approximately $800,000 in hard dollar benefits for the treasury. The Golden Baie project cements
Churchill's position as a leading gold-antimony explorer in a Tier-1 mining jurisdiction, and because the
share consideration Canstar will receive is based on fixed ownership percentages in CRI rather than a
fixed dollar amount, the actual value realized by Canstar will evolve along with CRI's market valuation at
the time of each issuance, providing Canstar with strong economic leverage to the success of Golden
Baie as the project advances, in addition to Canstar's perpetual royalty on Golden Baie. All of this is
underpinned by exploration commitments from CRI, pointing to the potential for aggressive exploration at
Golden Baie in 2026 and 2027.
"The strategic benefits to Canstar are also compelling. Backed by the up to $11.5 million non-dilutive
joint venture commitment from VMS Mining Corporation, Canstar has sharpened its focus on high-grade
volcanogenic massive sulphide discovery in Newfoundland's historic Buchans District - where the
historic Buchans Mine produced 5 of the highest-grade deposits ever mined between 1928 and 1984,
rich in copper, gold, silver, lead and zinc. With strategic capital, elite geological expertise under the
technical direction of Dr. Harold Gibson and a modern, geology-first exploration strategy enhanced by a
partnership with
Khosla Ventures
and Rio Tinto-backed TerraAI, we believe Canstar is well-positioned to
accelerate exploration for new, high-grade polymetallic deposits in this proven, historic district. This
transaction further streamlines our focus and strengthens our balance sheet as we accelerate towards a
robust exploration drilling campaign at our Mary March project in Spring 2026."
Transaction Terms
Equity Consideration
Under the letter of intent, Canstar may receive up to 9.99% of the issued and outstanding common
shares of Churchill Resources Inc. ("CRI"), delivered in staged tranches over a 24-month option period.
The initial issuance will consist of 15,834,097 CRI common shares, representing approximately 5.0% of
CRI's issued and outstanding shares on a post-issuance basis, subject to TSXV approval.
The remaining ownership interest of up to 4.99% will be issued in four subsequent tranches of
approximately 1.25% each over the 24-month term.
Each subsequent tranche (other than the initial issuance) will be calculated as a fixed percentage of
CRI's issued and outstanding shares on a post-issuance basis at the time of issuance, subject to the
share caps described below. The number of shares issued in each tranche will therefore be determined
at the time of issuance based on CRI's capital structure.
In accordance with TSXV requirements, each 1.25% tranche is subject to a maximum issuance of
7,520,000 shares per tranche, and the aggregate maximum number of shares issuable to Canstar under
the option is 45,914,097 shares.
All securities issued in connection with the transaction will be subject to applicable statutory hold
periods.
Work Commitments
Pursuant to the option contemplated by the letter of intent, to earn a 100% interest in the Golden Baie
Project, CRI must incur:
A minimum of $2,000,000 in exploration expenditures within the first 12 months; and
A minimum of $5,000,000 in total exploration expenditures within 24 months.
The staged equity issuances are sequenced over the same 24-month period.
Reversion
If CRI does not satisfy the required minimum exploration expenditures within the specified timeframes,
the option will terminate and the Golden Baie Project will revert to Canstar, subject to the terms of the
definitive agreement.
Royalty
Upon exercise of the option and acquisition of a 100% interest in the project, Canstar will retain a 0.5%
net smelter return royalty on any future mineral production from Golden Baie. The royalty does not include
a buyback provision.
The Golden Baie Project is currently subject to an existing 2.0% net smelter return royalty held by Altius
Minerals.
Cash Consideration and Bond Obligations
Upon execution of the definitive agreement, CRI will make a cash payment of approximately $208,167 to
Canstar to reimburse existing cash bonds posted on the property, which will be returned to CRI in the
event that the option is not exercised.
In addition, Canstar will no longer be responsible for an assessment expenditure of approximately $600k
in assessment expenditures that is required by August 2026 to maintain the project in good standing.
Regulatory Approvals
The transaction remains subject to:
Execution of definitive agreements;
Completion of due diligence by CRI and Canstar; and
Approval of the TSXV.
Qualified Person Statement
Bob Patey B.Sc. (Hons), Vice President for Exploration for Canstar and a Qualified Person as defined in
NI 43-101, has reviewed and approved all scientific and technical information disclosed in this news
release.
Acknowledgement
Canstar acknowledges the financial support of the Junior Exploration Assistance ("JEA") Program from
the Government of Newfoundland and Labrador Department of Industry, Energy and Technology, which
has been a valuable contribution to the exploration programs on the Company's Buchans-Mary March
and Golden Baie projects.
About Canstar Resources Inc.
Canstar Resources Inc. (TSXV: ROX) is an exploration company focused on critical minerals and gold.
The Company's 100%-owned Golden Baie Project (489.5 km
2
) hosts high-grade gold and antimony
showings along a major mineralized structure that also hosts a large number of gold deposits. The
Buchans and Mary March projects (142.1 km
2
) are located within the world-class, past-producing VMS
zinc-, copper-, gold- and silver-rich Buchans Mining Camp and boast high-grade zinc and copper
discoveries.
For further information, please contact:
Juan Carlos Giron, Jr.
President & Chief Executive Officer
Email :
Phone : (647) 557-3442
Website:
www.canstarresources.com
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
.
Forward-Looking Statements
This news release contains "forward-looking statements" and "forward-looking information" within the
meaning of applicable Canadian securities laws (collectively, "forward-looking information"). Forward-
looking information is based on management's expectations and assumptions as of the date hereof
and is subject to known and unknown risks, uncertainties and other factors that may cause actual
results to differ materially. Words such as "expect", "intend", "plan", "anticipate", "believe", "estimate",
"may", "will", "should", "could" and similar expressions are intended to identify forward-looking
information.
Forward-looking information in this news release includes, without limitation, statements relating to:
the negotiation and execution of definitive agreements and the completion of the transactions
contemplated by the letter of intent with Churchill Resources Inc. ("CRI"); receipt of TSXV approval
and satisfaction of other conditions (including due diligence); the timing, number and Company's
resulting ownership interest from CRI share issuances (including the staged tranches over 24
months); any statements regarding the indicative or expected value of consideration (including
statements based on CRI's trading price and any near-term value expectations and timing
statements); the expected cash reimbursement and the elimination of holding/assessment
obligations described herein; CRI's incurrence of exploration expenditures within the timeframes
described and any expectations regarding the advancement of exploration at Golden Baie in 2026
and 2027; and the royalty terms described, including the Company's anticipated retention of a 0.5%
royalty and the existence of any third-party royalty referenced herein.
Forward-looking information is based on assumptions that the parties will enter into definitive
agreements on acceptable terms, that required approvals (including TSXV approval) will be obtained,
that conditions (including due diligence) will be satisfied, and that market and other conditions
(including CRI's share price and capital structure) will not materially adversely affect the transaction or
the value or timing of consideration. Risks include, without limitation: failure to execute definitive
agreements or complete the transaction; delay or denial of TSXV approval; inability to satisfy
conditions; changes in CRI's share price or capital structure affecting the timing, number and value of
shares issuable; the risk that anticipated cash/holding obligation impacts are not realized as
described; and risks inherent in mineral exploration. Additional risks are described in the Company's
public filings on SEDAR+.
Readers are cautioned not to place undue reliance on forward-looking information. The Company
undertakes no obligation to update or revise forward-looking information except as required by
applicable law.
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/284109