NELLIGAN PROJECT

3,2 Million Inferred Ounces
“Discovery of the Year” award by the Quebec Mineral Exploration Association

The Nelligan project, currently includes the blocks of claims Emile and Miron contiguous to the original Nelligan property for a total of 158 mining map-designated cells and 8,216 hectares for the entire project, is located 50km to the south of Chapais. Access to the property is easy by the paved highway 113N that links Chapais to Chibougamau and by forestry gravel roads reaching to the center of the Nelligan property.

The Next Steps

In the coming months, additional metallurgical testing will be conducted to provide more information on the metallurgical recovery of the different mineralization zones including the mineral resources of the Nelligan gold deposit and to help optimize the parameters of the treatment chart.

Drilling program planning is underway and will include a number of objectives, including: additional definition drilling to improve the categorization of resources and convert inferred resources to indicated resources; assess the potential for increasing resources in deeper parts of the deposit and evaluate extensions of the resource along the deposit.

Regional exploration will also focus on defining and testing other priority exploration targets in the property.

Property Agreement

The Nelligan Project is held under an earn-in option to joint venture agreement with IAMGOLD (IMG-T). IAMGOLD holds an undivided 51% interest in the property following the execution of an Amending Agreement on February 27, 2018. Vanstar was paid an additional amount of $2,150,000 on the date of the Amending Agreement and the project now also includes the blocks of claims Emile and Miron contiguous to the original Nelligan property, for a total of 158 mining map-designated cells and 8,216ha. Since 2014, we understand that IAMGOLD shall have paid $2,550,000 in cash and $4,170,000 in exploration expenditures on Nelligan for the acquisition of the 51% interest.

IAMGOLD holds an option to earn a further 24% undivided interest in exchange for cash payments totaling $2,750,000 to Vanstar and the delivery of an NI 43-101 compliant Resource Estimate Technical Report before March 2022. The $2,750,000 sum shall be paid out in 3 annual payments of $400,000 and a final amount of $1,550,000 on or before the fourth anniversary of the acquisition of the 51% interest.

IAMGOLD shall be allowed to fulfill these conditions before the 4-year period, if they so elect. Upon the fulfillment of those conditions, Vanstar will cancel 50% of a 2% NSR royalty acquired in 2017 from the original prospectors and shall retain a 1% NSR as well as a 25% interest on the Nelligan project. In the event that IAMGOLD would decide not to complete the acquisition of the additional 24% interest, Vanstar would have the right to buyback IAMGOLD’s 51% interest for a sum equal to the total exploration expenses incurred by IAMGOLD on the Nelligan project.

Once vested to an undivided 75% interest, IAMGOLD shall have a further option to acquire an additional interest of 5%, to hold an ultimate 80% interest in the Nelligan project by completing and delivering a Feasibility Study. Vanstar shall then retain a 20% undivided non-contributory carried interest until the commencement of commercial production, after which: (1) the 20% undivided interest becomes participating; and (2) Vanstar shall pay its attributable portion of the total development and construction costs to the commencement of commercial production from 80% of its share of any ongoing distributions from the Joint Venture. Vanstar shall also retain a 1% NSR royalty on selected claims of the project.

Regional geology

The Nelligan Property is geologically located in the NE part of the Abitibi Greenstone Belt of the Superior Province. All rocks of the region are Archean in age except for Proterozoic diabase dikes. The Nelligan Property cover’s a small area of the large Caopatina segment belonging to the North Volcanic Zone of the Abitibi Belt. The property is centered on the E-W Druillette synclinal. This synclinal consists of the sediments of the Caopatina Formation resulting from the erosion of volcanic rocks and located in the central portion of the property. The sedimentary formation is bounded to the north and to the south by sub-marine volcanic rocks of the Obatogamau Formation and are of tholeiitic composition (basalts and gabbros). The North and South portions of the property are occupied by granodioritic to tonalitic intrusions. Granitic intrusions in the region belong to two groups: synvolcanic plutons observed in the core of regional anticlines, and syntectonic plutons. The synvolcanic plutons, typically polyphased, were emplaced before the regional deformation and are linked to the genesis of the volcanic sequences. The region was affected by the Kenorean orogeny which resulted in the formation of regional folds and the development of a main E-W schistosity. Important deformation corridors are related to EW faults and ductile-brittle NE faults which affect the entire Caopatina-Caopatina segment such as the Guercheville Deformed corridor located 5km north of the property.

In the Desmaraisville segment, the faults are grouped into 4 groups based on direction and overlapping relationships: EW, SE, NE, and NNE faults. The EW and SE longitudinal faults are the oldest and associated with the regional schistosity of the main deformation episode. The NE faults cut the regional schistosity and structures related to the EW faults. Late NNE faults are commonly related to the Grenvillian orogeny to the east.

The EW faults, mainly represented by the Kapunapotagen and Guercheville faults, are parallel to the trend of the regional schistosity and are typical of the east trending ductile faults that crosscut the Abitibi Subprovince (Cadillac-Larder, Casa Berardi, Detour deformation zones). They are generally characterized by pure shear with dextral reactivation with widths up to 1km as well as characterized by an intense schistosity, the presence of mylonitic zones, and carbonate- and sericite-rich alteration.

The NE faults are well documented in the Fancamp Deformation Corridor between the Eau Jaune Complex and the Verneuil Pluton and has an average width of 600m, steeply dipping (80°) toward the SE. Several gold showings, such as the Chevrier deposit ((1.8Mt at 5.1g/t), Phillibert deposit (1.5Mt at 5.4g/t) are spatially associated and the only mine in the eastern part of the Caopatina-Desmaraisville segment was the former Joe Mann mine which produced 4.7Mt @ 8.26 g/t Au and 0.3% Cu.

Local geology

On the local scale, the Nelligan project contains several gold showings including Liam and Dan Zones discovered by drilling in 2013 ( drill hole NE-13-04 ( Liam ) – 20.7m @ 2.04 gt / Au ) and 2014 ( drill hole NE-15-26 ( Dan ) – 10.20m @ 2.47 gt / Au ) and the historical Lake Eu showing with grades of 2.17 g/t Au and 3.5 g/t Au (drill holes 94-13 and 95-01) on respective widths of 4.4m and 10m.

New gold zones were intersected to the north of the known gold showings and revealed the widespread presence of gold over a strike length of more than 1km, over a width of a few hundred metres and a depth of over 450m vertical (Zones 36 and Renard). These zones remain open along strike and at depth and appear to fall within a corridor highlighted in the regional magnetic data identified over a potential strike length of several kilometres.

The area of Lake Eu was discovered in the 1990s and is located about 500m NE of the Liam-Dan area. Liam and Dan showings were discovered by drilling in 2013 and 2014. These gold structures were intersected by drilling over 400m and remain open both at depth and laterally.

The 2016 exploration drilling program intercepted wide zones of alteration and mineralization that delineated the 36 and Renard zones. Further drilling in 2018 has confirmed depth extensions as well extensions to the west of the Renard zone structure over 1.3 km. This gold corridor, associated with a large hydrothermal gold system of >2.3km strike length, corresponds to a Magnetic low anomaly and remains open along strike and at depth. Recent drilling results (32 holes totaling 13,360 m) disclosed in 2018-2019 indicate significant drill results from the Renard and 36 zones.

The presence of gold is relatively constant throughout the drilling campaigns that we estimate totals nearly 37,000m (in 146 holes) since the late 1970’s with the majority of these holes focused in the Dan, Liam, Zone 36 and Renard area since 2014 by Vanstar and IAMGOLD.

The Nelligan project is affected by several structures and deformed zones and contains several interesting gold showings. The Nelligan deposits (Liam, Dan, 36, Renard) are essentially blind deposits where exploration vectors have permitted to advance subsequent exploration phases. The characteristics of the mineralized zones Dan, Liam, Zone 36 and Renard appear to be of variant type, style and of potential. Saliently, significant alteration and associated gold mineralization has been intersected over wide intervals at Zones 36 and Renard over a strike length of more than 1.1km, to a depth of over 450 vertical metres

The geological modelling of the drilled area on Nelligan remains on-going and interpretation suggest that drill holes are located within a vast hinge zone where folding, faulting and transposition occur. Molybdenite appears as a gold tracer and breccias units intersected in drillhole may have different signatures and some breccia type may be more auriferous than others.

Gold showings at Nelligan can be grouped according to their style of mineralization: i) quartz-sulphide vein type mineralization and ii) disseminated pyrite mineralization. Trace molybdenite and infrequently visible gold are also observed. We note the density of the hydrothermal system with the 4 zones and their scale (300m to 1.1 km strike length, 5 to 150m widths and depth beyond 450m). This may lead to the probable presence of a robust auriferous hydrothermal system amenable to open pit and underground operations.

The 2018 drilling, totalling 32 holes for 13,362m, has intersected large gold zones within a vast hydrothermal system characterized by a carbonate, sericite, phlogopite alteration and an omnipresent silicification affecting the host meta-sedimentary sequence. This drilling program, with ongoing geochemical and structural studies, should likely serve in potentially establishing a preliminary deposit model and an initial National Instrument 43-101 compliant resource estimate by Q3/2019.

Remaining unknowns are the metallurgical recoveries for the different zones and RQD of rock types. However, we anticipate potential good gold recoveries (~92-97%) and highlight that there are no deleterious minerals such as arsenopyrite.