Canstar Options District-Scale, High Grade Gold Project in Newfoundland and Announces Private Placement
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220 Bay Street TSX-V: ROX
Suite 550
Toronto, ON M5J 2W4 www.canstarresources.com
Canstar Options District-Scale, High Grade Gold Project in Newfoundland and
Announces Private Placement
THIS NEWS RELEASE IS NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S.
NEWS AGENCIES
Golden Baie Project Highlights
• Approximately 2,600 mineral claims over 66,000 hectares covering more than 95 km of strike
length along a major regional gold structure.
• Recent prospecting along a 5 km strike length has identified new high-grade gold occurrences,
including multiple outcrop and float samples with visible gold in quartz stockwork and quartz
breccia associated with intense silicification.
• Excellent year-round access, simple permitting/logistics, and power nearby.
Toronto, Ontario – (GlobeNewswire – August 26, 2020) - 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 km 2) located in south ern
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 Buchan ’s-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 repor tedly 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).
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Figure 1- Golden Baie Project Location, Claims, and Mineral Occurrences
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
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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
Buchan’s/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 Offe ring 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 def ined 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 t he 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 sha reholder 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.
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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 re tention 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 issu ance of an aggregate of
2,000,000 common shares to the Optionors upon signing of the definitive agreements (the
“Definitive Agreements”);
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• 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, o n 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 recommend ed 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.
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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 develop ment 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 km 2) with recently discovered,
multiple outcropping gold occurrences . The Company also holds t he 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. Peterson
Chairman of the Board, Interim President and Chief Executive Officer
Email: [email protected]
www.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 "forw ard-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 exp ects 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 assumptio ns 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 fo rward-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, ex ploration 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 ant icipated 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
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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 effect s 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.