Toronto, Ontario – May 5, 2021 – CANSTAR RESOURCES INC. (TSXV: ROX & OTCPK: CSRNF)(“Canstar” or the “Company”) is pleased to announce a non-brokered private placement offering (the "Offering") for aggregate gross proceeds of up to $2,500,000 through the issuance of units of the Company (the "Units") at a price of $0.19 per Unit. Each Unit will consist of one common share (“Common Share”) and one common share purchase warrant (“Warrant”). Each Warrant entitles the holder to acquire one Common Share at an exercise price of $0.25 for a period of 24 months from the closing date of the Offering.
Mr. Eric Sprott has indicated his intention to subscribe for approximately $2,000,000 of the Offering. As a result, Mr. Sprott is expected to hold an approximately 12.3% equity stake in the Company on an undiluted basis upon closing of the Offering, assuming total gross proceeds of $2,500,000.
Rob Bruggeman, President & CEO of Canstar, commented: “We welcome Mr. Sprott as a strategic shareholder of the Company. This is an exciting time for Canstar because this year’s exploration program at the Golden Baie Project will be the first significant program with drilling on these claims in over a decade. The Golden Baie Project exhibits excellent potential to host orogenic style gold mineralization, given its location along a major tectonic boundary that is associated with other new gold discoveries in Newfoundland. Mr. Sprott’s recognition of the potential of Golden Baie’s potential is a strong endorsement of Canstar and the Golden Baie Project.”
The proceeds from the Offering will be used for exploration on the Company’s Golden Baie Project and other mineral exploration properties in Newfoundland and general working capital purposes. The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange and the securities regulatory authorities. All securities issued and issuable pursuant to the Offering will be subject to a four month hold period.
It is expected that certain directors, officers and other insiders of the Company (collectively, the “Insiders”) will participate in the Offering. The participation of Insiders in the Offering constitutes a “related party transaction”, as such terms are defined by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on an exemption from the formal valuation requirements of MI 61-101 available on the basis of the securities of the Company not being listed on specified markets, including the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ or certain overseas stock exchanges. The Company is also relying on the exemption from minority shareholder approval requirements under MI 61-101 as the fair market value of the participation in the Offering by the Insiders does not exceed 25% of the market capitalization of the Company.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.