Megastar Development Corp.
TSX VENTURE : MDV
FRANKFURT : M5Q

Megastar Development Corp.

February 02, 2010 09:00 ET

Megastar Development Corporation: Drilling Begins on Megastar's Simkar Gold Project

VANCOUVER, BRITISH COLUMBIA and VAL-D'OR, QUEBEC--(Marketwire - Feb. 2, 2010) - Megastar Development Corporation ("Megastar" or the "Company") (TSX VENTURE:MDV)(FRANKFURT:M5Q) is pleased to announce that its joint venture partner Eloro Resources Ltd. (TSX VENTURE:ELO) ("Eloro") has commenced a 6,000 m surface diamond drilling program at Simkar Gold Project (the "Project"), a former gold producing mine. The Project, wholly-owned by Megastar and under option to Eloro, is located in Louvicourt Township 20 km east of Val-d'Or, Quebec in the prolific Abitibi Greenstone Belt - Simkar presentation can be viewed online at www.megastardevelopment.com/doc/pdf/simkar.pdf.

The drilling program is expected to validate historic intersections and the down plunge extension of the historic gold zones, and will incorporate the results into the 3-D mine model to help refine the projection of the gold structures from surface to below the 200 m level. Eloro is of the opinion that the presence of higher grade tension veins intersected on the Project by Megastar in 2007 surface diamond drilling (140.0 g/t gold over 0.5 m, 99.8 g/t gold over 0.3 m, 33.9 g/t gold over 1.0 m, and 31.0 g/t gold over 0.5 m) represents strong evidence of the similarities of the Simkar Gold Deposit with the 9 million ounce Sigma–Lamaque Gold Deposit located 20 km to the west.

Megastar and Eloro are in the first year of a Formal Option and Joint Venture Agreement (the "Agreement"), executed August 14, 2009. The Agreement provides Eloro with the option to earn a 50% undivided interest in the Project by completing $4 million in exploration work on the Project over a 3 year period, whereby $750,000 would be incurred in the first year, $1.25 million in the second year and $2 million in the third year; paying Megastar $350,000 cash over a three year period, and issuing 4.5 million common shares of Eloro to Megastar as follows: (1) 750,000 common shares issued upon execution of the Agreement (2) 750,000 common shares on the first year anniversary of the Agreement, (3) 1.5 million common shares on each the second and third anniversary of the Agreement. Should Eloro elect to utilize the six month extension on either the second or third year's exploration commitments, Eloro would issue an additional 100,000 common shares to Megastar. Eloro is the Project manager and operator.

The Simkar Gold Project

The Project is located within the Abitibi Greenstone Belt and hosts a thick sequence of east-west trending, near vertical dipping volcanic flows and pyroclastics of the Malartic Group (the "North Rhyolite") that also includes quartz-feldspar porphyry dykes and sills, closely associated with the lode gold vein mineralization and the, little-investigated to date, Noranda- or Matagami-type volcanogenic massive sulphide (or "VMS") deposits. The higher gold grade, intrusion-centered gold-quartz-tourmaline vein system is similar to the 9 million ounce Sigma-Lamaque Gold Deposit in Val-d'Or and many other gold deposits in the Abitibi Belt. Prior gold production on the Project (1946-1949) came from extensive underground workings along three main zones (A, B and C Zones). More recent exploration outlined three new gold zones (Pillar Zone, F Zone, and Montana Zone) and identified one high potential structure, the East Zone Shear.

The Project has been the subject of two National Instrument ("NI") 43-101 compliant technical reports, one in 2004 and a second in 2008. The first was titled "Technical Report (NI 43-101 F1) on the 2004 drilling Program, Simkar Property (Val-d'Or, Quebec), Louvicourt Township, Province of Quebec, Canada (NTS: 32C04)", by C. Pelletier, B. Sc., P. Geo. (of InnovExplo Inc.), dated December 6, 2004. The 2008 report was titled "Technical Report (NI 43-101) Simkar Property , Val d'Or, Quebec" (the "Report") was prepared by M. Bourgoin, P. Geo., of MRB & Associates, and R. Sandefur, P. Eng., of Chlumsky, Armbrust and Meyer LLC. Both reports are available on SEDAR at www.sedar.com (under Megastar Development Corp).

Following the original discovery, the Project produced 261,590 tons of ore grading 0.123 oz/ton gold for 30,500 ounces of gold from 1947 to 1949. This production was from the A, B and C Zones. Operations were suspended due to increased mining costs at a time of fixed gold prices.

From 1987 to 1993, over $12 million of surface exploration and underground development work was completed on the Project. The exploration work successfully defined significant gold mineralization in the extensions of the previously mined A,B and C Zones, as well as defining new gold resources in three new gold bearing structures, the East, F, and Pillar Zones. Subsequently, the existing underground workings were dewatered and new underground development was completed to access the East Zone on two levels. This underground development work led to the extraction of 71,068 tonnes grading 8.42 g/t gold for approximately 20,000 ounces of gold.

Megastar acquired all rights, titles and interests of the Project in 1996. Since then, Megastar completed ground geophysics; surface diamond drilling totaling 8,000 m in 26 holes; and integrated the former Simkar Gold Mine underground workings into a GEMCOM™ GEMS 3-D mine model. This work led to the Report and mineral resource estimates in 2008 which are outlined in the following table to a vertical depth of -200 m:

SIMKAR GOLD DEPOSIT
TOTAL INFERRED RESOURCES*
CUT-OFF
(g/t gold)
TONNES GRADE
(g/t gold)
TOTAL CONTAINED GOLD OUNCES
1.0 1,482,000 3.01 143,160
2.0 641,050 5.10 105,100
3.0 347,400 7.32 81,800
5.0 188,750 10.23 62,100

* Numbers are rounded.

The technical information contained in this news release was prepared and revised by Martin Bourgoin, P. Geo., a Qualified Person as defined by National Instrument 43-101.

ABOUT MEGASTAR DEVELOPMENT CORP.

Megastar Development Corp. is an emerging resource company engaged in the acquisition, exploration and development of mineral properties in Canada. Megastar owns gold and base metal properties in Quebec and British Columbia, including the Simkar Gold Project in Val d'Or, Quebec for which a NI 43-101 compliant independent Technical Report concludes that the Project is estimated to have a remaining (post-historic mining) Inferred Resources of about 140,000 ounces, based on parameters appropriate for a reasonable underground mining scenario. For further information, investors and shareholders are invited to visit the Company's website at www.megastardevelopment.com, call the office at 604-683-6648 and watch the Smartstox interview with President and CEO, Dušan Berka, P. Eng. (www.smartstox.com/interviews/mdv).

ON BEHALF OF THE BOARD OF DIRECTORS

Dušan Berka, P. Eng., 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.

Contact Information

  • Megastar Development Corporation
    Dusan Berka, P. Eng.
    President & CEO
    (604) 683-6648
    (604) 683-1350 (FAX)
    www.megastardevelopment.com