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Mary March

Located in central Newfoundland, 20 km northeast of, and within the same geological group that hosts the former producing Buchans mine, discovery holes drilled by Phelps Dodge in 1999 and 2000 produced some of the highest grade base and precious metal intersections ever achieved in the area outside the Buchans mine.

Canstar has the option to earn from from Phelps Dodge Corp., a 50% interest in the Mary March zinc-lead-copper-silver-gold prospect in central Newfoundland. Canstar has first right-of-refusal to acquire the remaining 50% interest from Xstrata (formerly Noranda).

Discovery holes drilled by Phelps Dodge in 1999 and 2000 produced some of the highest grade base and precious metal intersections ever achieved in the area outside the Buchans mine. The Buchans mine produced 16.2 million tonnes averaging 14.50 per cent Zn, 7.56 per cent Pb, 1.33 per cent Cu, 126 grams per tonne (g/t) Ag and 1.37 g/t Au over its 56-year mine life. By comparison, the discovery holes drilled at Mary March by Phelps ran 10.33% Zn, 118.1g/t Ag, 1.62% Pb, 4.1 g/t Au, 0.66% Cu over 9.23 m; 16.8% Zn, 660 g/t Ag, 12.2 g/t Au, 5.44% Pb, 0.18% Cu over 0.91m; and 3.02% Zn, 1.08% Pb, 72.4 g/t Ag, 0.13% Cu, over 20.6m.

The Mary March dispute began in 2000, when a privately held Newfoundland company, Vinland Resources Limited, filed applications seeking Map Staking Licenses over the core Mary March discovery areas. The Mineral Claims Recorder (Newfoundland), on the basis of evidence that the lands in question had been privately held since 1905, rejected the applications, however, on December 20, 2000, Vinland filed a grievance with the Mineral Rights Adjudication Board, asking that the Mineral Claims Recorder's decision be overturned.

In a favourable decision to Canstar, the Supreme Court overturned the decision of the Mineral Rights Adjudication Board. Vinland filed notice of appeal in August 2006 and Phelps Dodge-Canstar responded with a cross-appeal asking that Vinland's claim be dismissed without a rehearing. Final summations began on May 25th, 2009 and a decision was expected to be rendered within 90 days thereafter. On August 19, 2009, the Board requested and was granted an extension of time and a decision is now expected by the end of October 2009.

On Friday Oct. 23rd, 2009 the Mineral Rights Adjudication Board of the Province of Newfoundland and Labrador unanimously rejected the grievance filed by Vinland Resources Limited. This grievance had been filed after the Mineral Claims Recorder for the Government of Newfoundland and Labrador refused to issue a licence to Vinland for lands in which Canstar Resources Limited holds rights. Vinland had claimed that the areas in question had been excluded from lands taken by the Anglo-Newfoundland Development Company Limited pursuant to legislation in 1905, and on that basis had been open for staking. In its 55 page ruling, the Board upheld the position taken by the Mineral Claims Recorder and Canstar Resources Ltd., following a careful review of the evidence it had heard.

Under the Mineral Act, an appeal on a point of law could be taken to the Trial Division of the Supreme Court of Newfoundland and Labrador, and Vinland did filed an appeal just prior to the November 23 deadline. The Canstar board of directors believes that the grounds for the appeal are erroneous and will confer with its legal counsel and the government with regard to further action by the Company. It is very important to note that the matter was previously considered by the Court of Appeal and the re-hearing by the Board followed the direction of that Court.

ADDITIONAL PROPERTIES

In April 2009, the Company acquired by staking, 100 % interest in mineral claims totaling 850 hectares adjoining its Mary March property. The new claims are located to the north and east of the property and may cover a portion of the eastward extension of the volcanic stratigraphy which hosts the high grade base and precious metals deposits. On February 23, 2010, the Company optioned the property to On-Strike Gold Inc., which can earn 50% interest in the claims by fulfilling the following considerations:

- Cash payments of $ 175,000 - $25,000 on signing agreement (paid), $50,000 on the first anniversary of the agreement, $100,000 on the second anniversary.
- 500,000 On-Strike shares (currently being issued).
- Exploration Expenditures - $100,000 in the first year, $250,000 in the second year, $500,000 in the third year.

On earning 50% interest, On-Strike will enter into a joint venture agreement with industry standard terms. The Directors feel that this agreement is very important for Canstar's exploration plans for this area. It provides for comprehensive exploration on these well located and highly prospective claims while allowing Canstar to focus on the Mary March property, pending the anticipated resolution of the property title dispute.


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This page was created on Thu Sep 9, 2010 at 12:31:20 AM Pacific Time.