Canstar Resources Inc.

Canstar Resources Inc.

January 03, 2007 09:14 ET

Canstar Closes $606,000 Financing With Canaccord Capital; Begins Planning 2007 Exploration Programs

TORONTO, ONTARIO--(CCNMatthews - Jan. 3, 2007) - The Directors of Canstar Resources Inc. (TSX VENTURE:ROX) are pleased to announce that the Company has completed a financing with Canaccord Capital Corporation raising $606,000 through the sale of 5,050,000 units of Canstar at $0.12 per unit on a private placement basis. Each unit consists of one common share and one share purchase warrant, which will be exercisable into one share at $0.15 per share for 24 months. Of the total units, 4,200,000 were comprised of Flow Through common shares and 850,000 units were comprised of non-Flow Through common shares. On closing, the company paid $60,600 in commission and $12,500 in fees and expenses to Canaccord Capital Corporation and issued 1,010,000 broker warrants, each exercisable into one common share at $0.12 for 24 months. All securities are subject to a four month hold.

The majority of the proceeds will be used on the Company's three drill-ready projects in Ontario: Shrimp Lake; Tahoe Lake and Sunday Lake, as well as the Mary March base and precious metal property in the Buchans area of Newfoundland, pending a successful conclusion to the current title dispute.

The 100%-owned Shrimp Lake property lies in a highly altered sequence of volcanic rocks and has been previously recognized as an ideal setting for both gold and base metal mineralization. In addition, numerous high-priority airborne and ground geophysical conductors exist on the property, none of which have ever been drill tested. The nearby 100%-owned Tahoe Lake property has seen limited exploration for iron ore in the 1970's, however, it represents a much stronger potential for gold and base metals. Geophysics indicates the presence of numerous volcanogenic massive sulphide (VMS) and structurally controlled gold targets. Both properties will be drilled during a single program as soon as a drill becomes available.

The Sunday Lake property lies north of Thunder Bay and represents an extremely interesting geophysical target. A recently completed airborne magnetic survey indicates the property is underlain by a well-developed ring complex of possible alkaline-affinity, i.e., carbonatite/kimberlite. The area has received recent attention from Kennecott Canada, which has staked a row of claims along the entire northern circumference of the property boundary. Drilling will commence once the airborne data has been modeled and representative targets are selected.

Prior to the title dispute, limited diamond drilling on the Mary March property resulted in the discovery of several Volcanic Massive Sulphide (VMS) zones of mineralization, similar to the high grade, past producing Buchans Mines. The best intersection returned 9.63 meters assaying 10.1% zinc, 1.68% lead, 0.64% copper, 122.1 g/ton silver, and 4.2 g/ton gold. A drilling program will begin as soon as a decision has been reached by the Newfoundland and Labrador Supreme Court.

Dr. David Palmer, President of Canstar, states, "2007 is shaping up to be a successful year for Canstar, with four exceptional properties that are drill-ready and sufficient resources to generate multiple, significant drill results. We have the support of our shareholders to begin an aggressive program of exploration and our Board is committed to advancing Canstar's place in the industry. I feel strongly that 2007 will be Canstar's year to capitalize on this current metals market."

Canstar's shares trade on the TSX Venture Exchange under the symbol ROX.

David Palmer, Ph.D., P.Geo., is the qualified person for all technical information in this release. To find out more about Canstar Resources, visit our website at

This News Release includes certain "forward-looking statements". All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding potential mineralization and reserves, exploration results and future plans and objectives of Canstar, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Canstar's expectations are exploration risks detailed herein and from time to time in the filings made by Canstar with securities regulators.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Contact Information