Eagle Star Petroleum Corp.

Eagle Star Petroleum Corp.

February 25, 2010 09:30 ET

Eagle Star Petroleum Corp. Executes Earn in Agreement for Iron Ore Mining Exploration Permits in Brazil

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 25, 2010) - Eagle Star Petroleum Corp. (TSX VENTURE:EGE)(FRANKFURT:E6R) ("Eagle star" or "the Company") is pleased to announce it has entered into an arm's length earn in agreement ("the Agreement") under which it can earn an undivided 55% interest in Iron Ore mining exploration permits ("the Permits") located in the state of Piaui – Northeastern Brazil. The Permits cover an area of approximately 40,000 hectares and are divided into three primary blocs – Serra do Cavaleiro, Serra do O and Serrinha.

Under the terms of the Agreement, Eagle Star is required to make the following minimum expenditures as part of a three stage exploration program:

-Stage 1 - $500,000 USD in expenditures under a work program to commence 30 days after closing and to be completed within 8 months

-Stage 2 - $1,000,000 USD in expenditures under a work program to commence 60 days after completion of Stage 1 and to be completed within 8 months

-Stage 3 - $2,500,000 USD in expenditures under a work program to commence 60 days after completion of Stage 2 and to be completed within 8 months

In addition to the above investments, Eagle Star is required to pay the seller a total of $2,500,000 USD in three installments:

-$250,000 USD on closing.

-$750,000 USD 60 days upon successful completion of the Second Stage exploration program.

-$1,500,000 USD 60 days upon successful completion of the Third Stage exploration program.

Closing is subject to fulfillment of certain conditions including receipt of (1) satisfactory title opinion, (2) all necessary permits and approvals for exploration of the lands,(3) completion of a NI 43-101 report and (4) all requisite TSX Venture Exchange approvals. Upon fulfillment of conditions 1 and 2, Eagle Star is required to release $80,000 USD out of the $250,000 to the Seller with the balance of $170,000 USD to be paid on closing which will take place 3 business days after fulfillment of conditions 3 and 4.

Upon completion of stage 2 work expenditures and payment of a total of $1,000,000 to the seller, Eagle Star will have earned an undivided 25% interest in the Permits. Upon completion of stage 3 expenditures and payment of $1,500,000 USD Eagle Star will have earned an additional 30% undivided interest for a total 55% undivided interest in the Permits.

After having earned a 55% undivided interest in the Permits, Eagle Star will have a one time option for the duration of180 days to acquire up to an additional 45% interest in the Permits from the seller based on a fair value price as determined by a mutually appointed independent party under a NI 43-101 report. If Eagle Star elects not to exercise this option but still intends to proceed with development then the parties will form a joint venture for the purpose of developing a mine on the property.

Eagle Star is to pay a finder's fee to an arms length party for the acquisition in accordance with TSX Venture Exchange policies.

To finance the first stage of this transaction, Eagle Star has entered into a convertible loan agreement with an arm's length investor in the amount of $750,000 USD at an interest rate of 12% per annum payable on maturity which is 15 days after the 12 month from the date of the first advance. The loan and any accrued and unpaid interest is convertible into common shares of the Company at $0.085 and is repayable 12 months and 15 days after the date of the first advance. The Company on 10 days notice may pay any part or all without penalty. The first advance of $250,000 USD has been received.

Eagle Star announces that it has granted 2,000,000 incentive stock options to its management exercisable for a period of 5 years at a price of $0.10 per share.

Eran Friedlander, President and Chief Executive Officer of Eagle Star commented, "This is a significant acquisition for the Company as the large area of the Permits has extensive surface showings of iron and is located within 200 km of recently discovered major iron ore deposit. We look forward to working on the property and understanding its geology and potential."

About the Company

Eagle Star Petroleum Corp. is a Natural Resource company headquartered in Vancouver, British Columbia. The Company's shares are publicly traded on the TSXV under the symbol EGE and on Frankfurt Stock Exchange under the symbol E6R.F.

On behalf of the Board of Directors


Eran Friedlander, President

Forward-Looking Statements

This document includes forward-looking statements that are not historical facts. Forward-looking statements include, but are not limited to, statements that we can close an acquisition of an undivided 55% interest in permits to mine a large area, with extensive surface showings of iron that we can successfully fulfill the conditions to closing, and that we can borrow $750,000 USD on terms acceptable to a lender and to us. Although Eagle Star believes that its expectations reflected in these forward looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Factors that could cause actual results to differ materially include inability by either party to fulfill conditions to close, the uncertainty of the requirements demanded by regulatory agencies, the Company's ability to raise financing for operations, breach by parties with whom we have contracted, inability to maintain qualified employees or consultants, competition for equipment, inability to obtain permits, potential delays or obstacles in operations and interpreting data, and the likelihood that no commercial quantities of iron ore are discovered. Readers should also review the corporation's periodic filings with Canadian securities regulators for additional risk factors.

Neither the TSX Venture Exchange Inc. nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this press release.

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