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On July 21, 2026, Canstar Resources Inc. (TSXV:ROX) announced it secured an extra $2.0 million advance from VMS Mining Corporation to support its Mary March volcanogenic massive sulphide (VMS) project located in Central Newfoundland. Following the TSX Venture Exchange's acceptance on July 17, 2026, total funding from VMSC has reached $4.0 million, accelerating Phase 2 earn-in financing. Additionally, Canstar is establishing a credit facility of up to $500,000 to bolster corporate working capital as it progresses with its 2026 drilling campaign.
Key Points
- Canstar Resources Inc. (TSXV:ROX) received an additional $2.0 million from VMS Mining Corporation after TSX Venture Exchange approval on July 17, 2026.
- Total VMSC contributions now amount to $4.0 million, with $3.5 million deployed during 2026.
- The Mary March VMS Project covers roughly 122 square kilometres in Newfoundland’s Buchans District.
- Canstar plans a credit facility up to $500,000 to maintain treasury flexibility, pending Exchange approval and definitive agreements.
Acceleration of VMSC Funding and Joint Venture Details
The $2.0 million additional advance from VMS Mining Corporation significantly boosts Canstar’s flagship Mary March property funding. Under the Buchans and Mary March joint venture agreement, VMSC is earning an interest via staged investments. The existing funding note was amended to include this advance, accelerating part of the $4.0 million Phase 2 earn-in commitment while other joint venture milestones are completed.
These advances are unsecured loans with no interest until maturity in October 2026. Post-maturity, a 2% annual interest applies only if the advances remain unpaid shortly after maturity. Funding will be credited against VMSC’s Phase 2 subscription, contingent on exercising the Phase 2 earn-in option and forming the joint-venture operating company. If the option is not exercised by maturity, advances must be repaid per terms. VMSC is expected to earn its project interest upon exercising the Phase 2 option and joint-venture formation.
Mary March Project Location and Geological Importance
The Mary March VMS Project spans about 122 square kilometres in the Buchans District, Central Newfoundland. This mining camp is renowned for some of North America’s highest-grade volcanogenic massive sulphide deposits, providing a strong geological framework for Canstar’s exploration. The company’s targeted approach focuses on VMS mineralization within this established mining jurisdiction.
Canstar also holds the Skellefte VMS Project, covering approximately 68,000 hectares in northern Sweden’s Skellefte VMS belt, another proven VMS district. Additionally, the Golden Baie Project in southern Newfoundland is under an option agreement with Churchill Resources Inc. This diversified portfolio enables Canstar to advance multiple VMS exploration prospects in recognized mining regions.
2026 Drilling Campaign and Preliminary Visual Findings
Canstar launched its 2026 drilling program at Mary March with promising initial visual observations from the first drill hole. On July 8, 2026, the company released preliminary findings, emphasizing that visual results are not a substitute for pending assay data. These assay results are expected shortly as drilling continues.
The additional VMSC funding fully supports the ongoing robust drill program at Mary March. With drilling underway and initial geological observations reported, investors await laboratory assay results to quantify mineralization. The company anticipates further results in the near term as the campaign progresses and analyses complete.
Corporate Credit Facility to Enhance Treasury Management
Canstar plans to establish a credit facility of up to $500,000 to support corporate treasury and working capital needs. While the drill program funding is provided through VMSC advances, this facility addresses separate corporate financial requirements. The term sheet specifies a 12% annual interest rate, with interest accrued and capitalized rather than paid in cash.
The facility will mature nine months after closing and be secured by Canstar’s 15,834,097 common shares of Churchill Resources Inc., representing roughly 5.0% of Churchill’s outstanding shares at issuance. An origination fee payable in company shares may apply, subject to Exchange approval. An interim promissory note dated July 17, 2026, has already provided US$171,000 in liquidity and is expected to convert into the facility upon final documentation and Exchange acceptance. The facility allows prepayment without penalty and is expected to be repaid from available sources, including potential future financings or proceeds from Churchill shares.
Related Party Transaction and Director Disclosure
The credit facility is provided by an entity controlled by J. Paul Austin III, a Canstar Resources director, constituting a related party transaction under Multilateral Instrument 61-101 protecting minority security holders. Mr. Austin declared his interest and abstained from board discussions and approval. The board reviewed the facility terms and found them consistent with market conditions for similar credit arrangements.
Canstar intends to rely on exemptions from formal valuation and minority approval under MI 61-101, as the facility’s fair market value does not exceed 25% of the company’s market capitalization. A material change report was not filed more than 21 days before closing since terms were finalized shortly before this announcement. Mr. Austin expressed his support for the company and highlighted the high potential of Mary March and the Buchans district, which remain underexplored.
Use of Funds and Financing Strategy
The additional $2.0 million VMSC advance is allocated to outstanding exploration expenses and ongoing drilling at Mary March, sustaining momentum in the current campaign and supporting Canstar’s geology-driven exploration strategy. Depending on drilling outcomes, the company may extend the campaign beyond initial plans.
Once established, proceeds from the $500,000 credit facility will fund general corporate purposes and working capital. This dual funding approach—project-level financing via VMSC advances and corporate-level support through the credit facility—enables operational flexibility while advancing Mary March exploration without stressing treasury resources.
Churchill Resources Shareholding and Golden Baie Option Agreement
Canstar holds 15,834,097 common shares of Churchill Resources, received as the initial tranche under the Golden Baie Project option agreement. These shares represented approximately 5.0% of Churchill’s issued and outstanding shares at issuance. Additional share tranches may be issued over a 24-month option period, potentially increasing Canstar’s holding to 9.99% of Churchill.
This Churchill shareholding serves a dual role: as potential value from the Golden Baie option and as collateral securing the $500,000 credit facility. This arrangement reflects Canstar’s strategy to maintain financial optionality while prioritizing exploration capital allocation.
Management Insights and Strategic Outlook
Juan Carlos Giron Jr., President and CEO of Canstar Resources, stated that the additional VMSC funding underscores mutual confidence in VMS deposits and the Mary March project. He noted that disciplined, geology-driven target generation has laid a strong foundation for the 2026 and future drilling programs. Management is optimistic as drilling progresses and initial visual observations are reported, with assay results expected soon.
The company remains focused on advancing Mary March exploration through structured drilling informed by geological analysis. Preliminary visual observations support the project’s on-schedule progress with fully funded capacity. The VMSC partnership and corporate credit facility together position Canstar to maintain drilling momentum through 2026 and beyond.
Regulatory Approvals and Funding Progress
The TSX Venture Exchange approved the amended funding note on July 17, 2026, enabling immediate receipt of the $2.0 million advance. The $500,000 credit facility establishment remains subject to definitive documentation and Exchange acceptance, with terms conditional until final approval.
The interim promissory note dated July 17, 2026, has provided US$171,000 liquidity and is expected to convert into the credit facility upon completion of agreements and Exchange acceptance. This staged capital deployment approach demonstrates Canstar’s prudent liquidity management while navigating regulatory approvals for larger financing arrangements.
