Canstar Resources has received an additional $2.0 million from VMS Mining Corporation toward the Mary March volcanogenic massive sulphide (VMS) project in central Newfoundland. VMS deposits are metal-rich sulphide bodies formed on the seafloor by hydrothermal activity. The TSX Venture Exchange accepted the amended funding note on July 17, 2026, and the company says the money has been received in full.
The advance takes VMSC's funding to $3.5 million during 2026 and $4.0 million in total: a completed $2.0 million Phase 1 investment plus the first half of a $4.0 million Phase 2 earn-in at the Buchans and Mary March projects. VMSC is acquiring an interest in the projects through staged payments rather than an outright purchase.
The advances are unsecured loans that carry no interest until maturity in October 2026. Interest of 2% per year applies only if they are not repaid shortly after that date. They are to be credited against VMSC's Phase 2 subscription, but only if VMSC exercises the Phase 2 option and the joint-venture operating company is formed. If the option is not exercised by maturity, the money is repayable. So the earn-in is not yet locked in.
Proceeds are going to outstanding exploration costs and continued drilling at Mary March. Canstar reported visual observations from the first hole of its 2026 drill program on July 8; the company notes that assays are still pending and that visual observations do not substitute for them.
Separate corporate borrowing
Alongside the project funding, Canstar intends to establish a credit facility of up to $500,000 at 12% annual interest, accrued and capitalised rather than paid in cash, maturing nine months after closing. The facility is to be secured by Canstar's 15,834,097 common shares of Churchill Resources, and is expected to include an origination fee payable in Canstar shares — a dilution item whose size has not been disclosed.
The lender is an entity controlled by director J. Paul Austin III, making this a related-party transaction under MI 61-101. Austin declared his interest and abstained from the board vote. Canstar intends to rely on exemptions from formal valuation and minority approval on the basis that the facility's value does not exceed 25% of its market capitalisation. A promissory note dated July 17, 2026, has already supplied interim liquidity of US$171,000 and is expected to roll into the facility.
Canstar states that the drill program is funded at the project level through the VMSC advances, and that the facility addresses corporate working capital, which is a separate matter. Repayment is expected from future financings or proceeds from the Churchill stake. The facility still requires definitive documentation and Exchange acceptance.
The Churchill shares were the first tranche of consideration under an option agreement covering Canstar's Golden Baie project, representing roughly 5.0% of Churchill at the time of issuance, with further tranches issuable up to 9.99%.
Source: Newsfile
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