Redstar Gold Corp. (TSX.V:RGC) (the "Company") has signed a letter agreement with Strategic Merchant Bancorp Ltd (TSX.V:SMB) ("SMB") giving SMB the right to earn 65% of the Company's North Bullfrog project. The North Bullfrog project is the third Nevada project SMB has optioned from the Company within the last three weeks. Redstar will act as operator for all projects and is in the process of planning exploration programs to begin in early spring.
To acquire a 65% interest in the North Bullfrog project, SMB must pay $125,000 in cash, issue 500,000 shares and make expenditures of $2,800,000 over four years.
The North Bullfrog area shares similarities to the productive gold mineralization at the Bullfrog mine six miles to the south, where Barrick Gold Corporation recovered approximately 2.3 million ounces of gold from several open pits between 1989 and 1999. The North Bullfrog project area covers extensively altered volcanic rocks with widespread low-grade gold mineralization and high-grade veins. Sampling by the Company confirmed the presence of low grade gold mineralization (0.01 - 0.03 ounces per ton [opt] gold) associated with extensive areas of altered volcanic rocks. Sampling also confirmed the presence of high grade veins reaching 0.85 opt gold and silicified wallrock to veins returning values up to 0.27 opt gold. No significant exploration has been conducted in the area since the mid 1990's.
Scott Weekes, President of Redstar states: "Redstar now has three properties in Nevada under option to SMB with minimum first year expenditures totaling $600,000. The Company, through its strategic alliance with SMB, is continuing to move forward on our strategy of exploration through partnership. The fact Redstar will act as operator for all three Nevada projects means our technical team will develop and implement exploration programs, will explore the properties aggressively and will be disseminate news in a timely fashion. Redstar is also actively developing new opportunities in Nevada based on the extensive geological database acquired from AngloGold Ashanti. Redstar is well on its way to becoming a significant player in Nevada gold exploration"
This agreement and the previously signed agreements with SMB are not at arms length as both companies have two directors in common.
The foregoing is subject to regulatory acceptance.
On Behalf of the Board,
Redstar Gold Corp
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