Yautepec Project

East - Central Oaxaca, Mexico

Under the Yautepec Option, in order to acquire a 100% interest in the project, the Company shall:
  • 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 $310,000 (USD $40,000 after Year 1, another USD $ 80,000 by Year 2 and USD $190,000 by Year 3 of the signing of the option agreement).
  • Incur work expenditures totalling USD $310,000 (USD $40,000 after Year 1, another USD $ 80,000 by Year 2 and USD $190,000 by Year 3 of the signing of the option agreement).
The Yautepec Project comprises 4,861 hectares of Tertiary volcanic rocks highly prospective for hosting epithermal precious metal mineralization similar to that in the nearby producing Arista and Switchback mines at Gold Resources El Aguila project (20 km to the WNW) and Cheaspeake Gold’s La Gitana project (8 km to the east-southeast). The project lies along a prominent northwest-southeast structural trend defined by small volcanic centers which include numerous identified Au-Ag prospects as identified in regional mapping by the Mexican Geological Survey (Servicio Geológico Mexicano (SGM)), none of which have been systematically explored by modern methods.
The mapped altered rocks along this trend are part of a nearly 100 kilometer-long structural- volcanic corridor that extends from the San Jose mine (Fortuna Silver) to the northwest, to Chesapeake Gold’s Gitana project to the southeast. Outside of areas of active mining, the region has seen little to no systematic exploration, and the Yautepec project is inferred to represent one of the most prospective segments of the trend.
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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