Chesstown Capital Inc.

February 09, 2010 11:28 ET

Chesstown Capital Inc. (TSXV:CHC.P) Announces the Signing of a Non-Binding Letter of Intent for Its Proposed Qualifying Transaction, Resignation of Director and Sale of Escrowed Shares

BURLINGTON, ONTARIO--(Marketwire - Feb. 9, 2010) -

Letter of Intent

Chesstown Capital Inc. (TSX VENTURE:CHC.P)("Chesstown") is pleased to announce that on February 5th, 2010, it entered into an arm's length and non-binding letter of intent ("LOI") with Canadian Star Minerals Limited ("CSML") pursuant to which Chesstown will, subject to a number of conditions, acquire certain assets of CSML, namely an undivided one hundred percent legal and beneficial interest in and to certain mining claims located near High Lake in northwestern Ontario (the "Transaction"). 

Chesstown is a Capital Pool Company under the policies of the TSX Venture Exchange ("TSXV") and it is intended that the Transaction, if completed, will constitute Chesstown's Qualifying Transaction under TSXV policies. It is anticipated that the Resulting Issuer will meet the Tier 2 listing requirements of the TSXV for a Mining Issuer upon completion of the Transaction.

A comprehensive news release will be issued upon the reaching of an Agreement in Principle between Chesstown and CSML.

Resignation of Michael Gerrior from Board of Directors

Chesstown also announces the resignation from the board of directors of Chesstown (the "Board") of Michael Gerrior ("Gerrior"). Gerrior is tendering his resignation in consideration of the fact that Chesstown has requested that Mr. Gerrior provide legal services to the company. Gerrior has made a strong contribution to the leadership of Chesstown and his continued involvement in the company in the role of legal counsel is appreciated.

Sale of Shares

Chesstown announces the entering into of an agreement for the sale of 50,000 shares of Chesstown (the "Gerrior Shares") from Gerrior to Christopher North and Lawrence Anderson dated the day of February, 2010 (the "Gerrior Share Purchase Agreement"). The Gerrior Shares are subject to an escrow agreement between Chesstown, Equity Transfer and Trust Company and the security holders of Chesstown dated the 25th day of September, 2007 (the "Escrow Agreement") and the Gerrior Share Purchase Agreement remains subject to TSXV approval.

Chesstown announces the entering into of an agreement for the sale of 1,150,000 shares of Chesstown (the "Treelawn Shares") from Treelawn Investment Corp. to Christopher North, Lawrence Anderson and Vernon Drylie dated the day of February, 2010 (the "Treelawn Share Purchase Agreement"). The Treelawn Shares are subject to the Escrow Agreement. The Treelawn Share Purchase Agreement is conditional upon the closing of the Transaction as well as TSXV approval.

TSXV Approval

Completion of the Transaction as well as the closing of the Share Purchase Agreements is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

For Investors

This press release may include statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Chesstown cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what Chesstown currently foresees. Discussion of the various factors that may affect future results is contained in Chesstown's recent filings, available on SEDAR.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

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