RAMA DE ORO GOLD PROJECT

East - Central Oaxaca, Mexico

“We are very excited to have concluded on this agreement, the project has been on our radar for some time and brings with it two important ingredients for early stage exploration; location and expertise. On location, the property sits on the trend between two producing mines; the Switchback mine owned by Gold Resource Corp. to the north and the San Jose mine owned by Fortuna Silver Mines to the south. From a technical perspective, the property is being vended in by David Jones, a geologist with extensive experience and success in Mexico having been part of the finds of several, now-producing mines. David will also be an instrumental part of the exploration team, allowing us to benefit from his historical understanding of the property and its surrounding geology.”
The Project lies to the northwest of and borders the La Calavera and Cobre Grande copper-gold porphyry-skarn projects in east-central Oaxaca. It also lies to the north of the WNW-ESE San José structural zone defined by Gold Resource Corporation. The Project is hosted by caldera-related Tertiary volcanic rocks (e.g. El Aguila model) crosscut by hydrothermal veining inferred to be related to late- stage granitic magmatism locally exposed as dikes and underlying the adjacent ‘Nueve Puntos’ mountain. Similar intrusions are associated with a 43-101 inferred resource of 49.8 MT containing 0.5% Cu, 0.04% Mo, 0.22% Zn and 12.9 g/t Ag at the Cobre Grande skarn system, which lies 6 km to the east, along the same structural trend.
Access to the Project is by two-lane paved highway from Oaxaca followed by improved dirt roads from Santiago Matatlán to the western side of the project area. Numerous dirt farm roads and paths afford access to majority of the project area. Oaxaca City, Santiago Matatlán, and San Pablo Villa de Mitla are local sources of skilled workers, water, and power for the project.
To date, exploration work at Rama de Oro has consisted of reconnaissance geological mapping and rock-chip sampling. This work has outlined a 4 square-kilometre zone of quartz veining, silicification, and clay alteration of volcanic rocks inside and near the eastern margin of a Miocene caldera. Several rock samples assayed anomalous values of gold, silver, arsenic, mercury, and antimony, suggesting that the present-day surface represents high structural levels of a precious metal system.
In connection with the Option, Megastar has commissioned the preparation of a technical report (the “Report”) prepared in accordance with the requirements of National Instrument 43-101 (“NI 43-101”). Stephen R. Maynard, M.S., C.P.G. Consulting Geologist, and an independent qualified person under NI 43-101 prepared the Report. The Report has been submitted to the Exchange for review and approval. The Report will be filed on SEDAR (www.sedar.com) in the Company’s SEDAR profile shortly following the issuance of this news release.
The author of the Report recommends a 2-phase exploration program. The first phase consists of detailed geological mapping, rock- and soil-geochemical sampling, and an induced polarization- resistivity survey to define drill targets. The cost of the first phase is estimated at USD $167,750. A second phase, consisting of a 6-hole, 3,600-metre diamond-drilling program, would be dependent on results of the first part of the program. The cost of the second phase is estimated at USD $972,000.
Terms of the Rama de Oro Option:
In accordance with the Agreement, Minera Zalamera has granted Megastar the sole and exclusive right to acquire a 100% interest over a period of two (2) years following the execution of the Agreement in exchange for a cash payment of USD $35,000, the issuance of a total 2.9 million common shares of Megastar (the “Common Shares”) and total work expenditures of USD $350,000. As such, within a delay of fifteen (15) days following the execution of the Agreement, subject to the approval of the TSX Venture Exchange (the “Exchange”), Megastar shall pay to Minera Zalamera the sum of USD $35,000 and issue to Minera Zalamera 1,100,000 Common Shares.
Thereafter, over a 2-year period, Megastar shall issue the following Common Shares to Minera Zalamera and incur the following work expenditures:
MILESTONE SHARES EXPENDITURES
1st Yr 600,000 USD $150,000
2nd Yr 1,200,000 USD $200,00
Upon the successful completion of the Option by Megastar, Minera Zalamera shall retain a royalty equal to 2% net smelter return (the “NSR”). 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.

Maps

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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