Groundstar Resources Limited
TSX VENTURE : GSA

Groundstar Resources Limited

June 01, 2006 19:30 ET

Groundstar Resources Limited Announces Closing of Private Placement

CALGARY, ALBERTA--(CCNMatthews - June 1, 2006) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES. THE UNITS HAVE NOT AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE "US SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO ANY US PERSON EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

Groundstar Resources Limited (TSX VENTURE:GSA) ("Groundstar") confirms that it has today closed its previously announced private placement and issued 5,750,333 Units at a price of $0.60 per Unit, for gross proceeds of $3,450,200, which includes the exercise of an over-allotment option of 750,333 Units by the agent, Blackmont Capital, Inc. ("Blackmont"). Each Unit consists of one common share of Groundstar and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional common share at a price of $1.00 for a period of 18 months following the closing date ("Closing") of the private placement. The Units will be subject to a statutory hold period expiring four months and one day following the Closing. If, after eight months following the closing, the closing price of common shares of the company on TSX Venture Exchange is $1.20 or greater for a period of 20 consecutive trading days, Groundstar may provide an earlier expiry of share purchase warrants, in which case the warrants may expire 21 days after giving such notice.

A commission of 7% of the gross proceeds raised from the financing has been paid to Blackmont. In addition, Blackmont has received an agent's option entitling it to purchase 402,523 Units (the "Broker Units") at an exercise price of $0.60 per Broker Unit for a period of 18 months from the Closing. Each Broker Unit consists of one common share of Groundstar and one-half of one share purchase warrant. Each whole warrant shall be exercisable by the holder to acquire one additional common share at a price of $1.00 for a period of 18 months following the Closing.

The proceeds from the private placement will primarily be used in the exploration work and drilling program in the Takutu Basin of Guyana, South America in accordance with the Petroleum Prospecting Licence granted to Groundstar by the Guyana Geology and Mines Commission on July 18, 2005 and for general corporate purposes.

Groundstar is a publicly traded Canadian junior oil and gas company actively pursuing exploration opportunities in Guyana, Central Asia and North Africa.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this release.

Contact Information