Groundstar Resources Limited
TSX VENTURE : GSA

Groundstar Resources Limited

June 06, 2006 12:36 ET

Groundstar Resources Limited Announces Private Placement

CALGARY, ALBERTA--(CCNMatthews - June 6, 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) announces that it has engaged Blackmont Capital to complete a private placement with limited termination provisions pursuant to which Groundstar will issue 5,833,333 Units at a price of $1.20 per Unit. In addition, Groundstar has granted Blackmont an option exercisable until closing to issue an additional 875,000 Units at $1.20 per Unit, resulting in a maximum offering of up to 6,708,333 Units to raise gross proceeds of up to $8,049,999. Each Unit will consist of one Common Share of Groundstar and one-half of one share purchase warrant. Each whole share purchase warrant ("Warrant") will entitle the holder to acquire one additional Common Share at a price of $2.00 for a period of 18 months following the closing. If, after one year following the closing, the closing price of the Common Shares of Groundstar on TSX Venture Exchange is $2.40 or greater for a period of 20 consecutive trading days, Groundstar may provide an earlier expiry of Warrants, in which case the Warrants shall expire 21 days after giving such notice.

Completion of the financing is subject to the approval of the TSX Venture Exchange. The Units will be subject to a statutory hold period expiring four months and one day following the closing.

A commission of 7% of the gross proceeds raised from the financing will be paid to Blackmont. In addition, Blackmont will receive a number of compensation warrants that is equal to 7% of the total number of Units sold under the financing. Each compensation warrant shall be exercisable by the holder to acquire one Unit at a price of $1.20 per Unit for a period of 18 months following the closing.

The proceeds from the private placement will primarily be used in Groundstar's proposed exploration work and drilling program in Egypt currently being negotiated with an arm's length third party 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.

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