Magdalena Project

East - Central Oaxaca, Mexico

Under the Magdalena Option, in order to acquire a 100% interest in the project, the Company shall:
  • Pay to Minera Zalamera USD $5,000 (within 15 days following the execution of the option agreement but subject to Exchange approval);
  • Issue to Minera Zalamera a total of 1,550,000 Common Shares (200,000 within 15 days following the execution of the option agreement but subject to Exchange approval, 450,000 on the 1st anniversary, and 900,000 on the second anniversary); and
  • Incur work expenditures totalling USD $230,000 (USD $40,000 after Year 1, another USD $ 70,000 by Year 2 and USD $120,000 by Year 3 of the signing of the option agreement).
The Magdalena Project comprises a single 480-hectare property centered on highly altered volcanic rocks approximately 20 kilometers ENE of Gold Resource Corporation’s (GRC) producing Au-Ag-base metal deposits. Extensive felsic tuffs mapped by SGM are interpreted by Mr. David Jones, President of Paradex and Minera Zalamera, as a caldera setting, similar to that of the GRC mine area and Megastar’s recently acquired Rama de Oro Project. Historical sampling of strongly clay- and silica-altered rocks at Magdalena reported values up to 0.705 g/t Au, 15.2 g/t Ag, 2700 ppm As, 53 ppm Bi, 357 ppm Cu, 12,780 ppm Hg, 38 ppm Mo, 2730 ppm Pb, and 147 ppm Zn.
The area of coincident metals anomalies, clay and silica alteration, sulfate (gypsum) deposition, and minor rhyolite diking, lies along a prominent NW-SE structural trend (SGM mapping) adjacent to an inferred caldera margin. The presence of various types of chalcedonic and vuggy silica, elevated pathfinder metals (Hg, As), and extensive sulfate deposition (gypsum) indicates exposures at the highest levels of an anomalous Au-Ag- base metal system of excellent exploration potential.
Upon the successful completion of the Yautepec Option or the Magdalena Option by Megastar, as applicable, Minera Zalamera shall retain a royalty equal to 2% NSR on the project subject to the option. Megastar shall have the right to purchase 1% of the NSR, at any time and at its sole discretion, for a purchase price of USD $1,650,000.
All securities to be issued in connection with the transactions will be subject to a hold period of 4 months and one day from their date of issuance. Furthermore, the Transaction remains subject to regulatory approval.

Stephen R. Maynard, M.S., C.P.G. Consulting Geologist, a qualified person in accordance with NI 43-101, has reviewed and accepted the technical information in this news release.

MEGASTAR DEVELOPMENT

An emerging resource company engaged in the acquisition, exploration and development of mineral properties. Megastar owns gold and base metal properties in Mexico and Quebec.

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