Redstar Gold Corp. (TSX-V: RGC) is pleased to announce it has signed a letter of intent setting forth the terms and conditions of a transaction whereby Central Resources Corp. (TSX-V: CBC) can earn up to a 60% undivided interest in the Newman Todd property in Red Lake, Ontario. Pursuant to the letter both parties have agreed to negotiate a subsequent definitive option agreement.
Scott Weekes, President Redstar stated "With this agreement in place we can now start planning an aggressive drill program for this winter on our project in the Red Lake gold camp. This will be the largest drilling program on the project to date and allow us to follow up both the near surface gold mineralization and to test the depth potential of the system. In the Red Lake camp most of the important high-grade gold deposits are found at depths yet to be tested on the Newman Todd property. The near surface drill results clearly show the potential of this project with high grade gold intercepts within 250 metres of surface. Due to the high-grade nature of gold discoveries in this camp it is an area of intense interest to the gold mining investment community. We are very excited about the opportunity to get drilling underway shortly (to test the depth potential of our high-grade gold discovery) at the Newman Todd project in the prolific Red Lake gold camp."
Previous work by Redstar on the Newman Todd property has outlined gold mineralization within a silicified breccia zone that can be traced for at least two kilometres. Drilling done by Redstar has intersected values up to 61.02 g/t gold over 1.0 metre within a wider zone of 60.0 metres of 1.72 g/t gold in previous drill programs. The property has a very similar geologic setting to many of the major mines in the Red Lake camp such as Goldcorp's Campbell and Red Lake mines. Similarities include; large Fecarbonate and silica alteration zones, proximity to a major structure, secondary northwest-southeast trending structures, and proximity to a folded ultramafic body.
Under the terms of the agreement Central Resources can earn a 50 percent interest in the project over a four year period by funding $4.5 million in exploration and development work and issuing 500,000 shares to Redstar. Under the terms of the agreement Central must spend $1,000,000 on exploration expenses by September 31, 2010, and an additional $500,000 by December 31, 2010, followed by $1,000, 000 per year for three years starting in 2011. Central can earn an additional 10 percent interest in the project by funding $2,000,000 in exploration and development work and issuing 750,000 shares to Redstar by December 31, 2014.
Closing of the proposed transaction is subject to; satisfactory due diligence by Central Resources, acceptance for filing by the TSX Venture Exchange, and Central raising a minimum of $400,000. With Central's current working capital of $800,000 and the additional $400,000 will give them sufficient funds to carry out the proposed first phase exploration program. The due diligence period ends October 25, 2009.
On Behalf of the Board,
Redstar Gold Corp
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."