Goldstar Resources NL (ASX: GDR)

GOLDSTAR LAUNCHES EXPANDED GOLD STRATEGY

·        Proposed co-development of Tubal Cain/Eureka to deliver increased gold production.

·        Processing Plant now to be located at Southern Crown, near Tubal Cain, delivering a production hub 3 years ahead of schedule.

·        Eureka Feasibility Study supports expanded Tubal Cain strategy.

·        Combined 400,000tpa operation to underpin long-term production of +100,000oz pa at targeted cash costs of A$420-560/oz.

·        SRK Consulting confirms that diamond drilling alone can deliver JORC resources.

·        Intensive drilling underway at Tubal Cain to deliver initial JORC resource by June Quarter 2008.

Goldstar Resources NL (ASX: GDR) today announced an expanded two-mine development strategy for its 100%-owned Walhalla Gold Project in Victoria based on plans to accelerate development of the large-scale Tubal Cain Project by almost three years alongside the nearby Eureka Project.

Goldstar said today (Friday) that the new strategy would enable it to bring forward a much higher production level to take advantage of the current strength in the gold market, with indications that a co-development of Tubal Cain and Eureka would support an annual production level of over 100,000oz at a targeted cash cost level of between A$420 and A$560/ounce.

The centrepiece of the strategy is the proposed locating of the modular 200,000tpa processing facility to a new site called Southern Crown, near Tubal Cain, with production expanding rapidly to a 400,000tpa level fed by ore from Tubal Cain and Eureka, 4km to the south.

“The Eureka Feasibility Study has confirmed the technical viability of Eureka as a production opportunity, however it also provides a compelling case for the co-development of Tubal Cain – which we see as a potential company-maker for Goldstar,” said Andrew King, Goldstar’s Managing Director.

“Also, an expanded, dual development of the deposits would significantly enhance the economic viability of Eureka compared with an initial standalone development based on Eureka followed several years later by Tubal Cain, as originally envisaged,” he added.

The new development strategy is supported by a number of factors, including key outcomes from the Eureka Feasibility Study, the identification of the new plant site and the independently verified ability to deliver JORC resources in the Walhalla Field by diamond drilling alone.

“Our Independent Geological Consultant, SRK Consulting, has produced a report confirming the ability to deliver JORC resources at both Eureka and Tubal Cain from diamond drilling alone, thereby eliminating the cost and time involved in bulk sampling,” Mr King commented. “This is a very important outcome and potentially transforms our approach to the exploration and development of the dyke bulge-style deposits within the field.”

The Eureka Feasibility Study has delivered the first-ever JORC Code compliant resource for the Walhalla Field, an initial Reportable Resource of 153,000 tonnes at 10.0g/t Au for 48,000 ounces to a depth of 350 metres. This occurs within a revised Geological Model for Eureka totalling 827,000 tonnes of quartz reef to a depth of 550 metres, itself representing a 15% increase on the previously announced tonnage of 720,000 tonnes.

“Importantly, only 12% of the deposit has been covered by a detailed assessment, and the SRK Report provides the basis for the balance of these tonnages to be potentially upgraded to the Indicated category, subject to positive results from drilling,” Mr King said.

Goldstar also confirmed that it had submitted its application for a Mining Licence at Walhalla covering the Eureka, Tubal Cain and Southern Crown operating areas, with the application now in the final stage of the approval process.

“While we remain focused on moving into production as rapidly as possible, it has always been our approach to deliver sustainable gold production from the Walhalla Field,” Mr King said. “We would rather take a measured approach to achieve the maximum possible return to shareholders at an acceptable risk profile.”

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GOLDSTAR RESOURCES NL – Key Company Statistics

ASX Code:                             GDR                                       Cash Reserves                                   ~$7.0 million (@ 31 December 2007)

Shares on Issue:                    140.2M                                   Market Capitalisation:                      ~$30 million

Key Project:                           Walhalla Gold Project            Key Deposits:                                               Eureka, Tubal Cain

                                                (100%)

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BACKGROUND – GOLDSTAR RESOURCES NL

Goldstar Resources NL (ASX Ticker: GDR) is an Australian gold company which is focused on building a profitable, long-term gold business in the historic and richly endowed Walhalla-Woods Point Gold Field in Victoria’s East Gippsland region.

Goldstar’s Walhalla Gold Project encompasses an extensive tenement package covering more than 700km² and places the Company in a commanding position within the Walhalla-Woods Point Goldfield. Goldstar is drawing on its extensive knowledge base built up over the past few years regarding the overall exploration potential of the region to develop a pipeline of high-priority exploration targets which are expected to deliver future production opportunities.

In addition to unlocking the broader potential of the field, Goldstar is focused in the short term on developing a sustainable gold production hub at Southern Crown fed initially by ore from the nearby Tubal Cain deposit and the Eureka deposit, approximately 4km to the south.

Goldstar has completed a Feasibility Study and initial JORC compliant resource estimate for Eureka, confirming its “Proof of Concept” approach to the development of the dyke bulge deposits in the field. The in-situ Reportable Resource for Eureka of 153,000 tonnes at 10.0g/t (48,000oz) to 350m depth covers only small portion of the orebody. A Geological Model of 827,000 tonnes has been defined for Eureka to a depth of 550m and remains open at depth.

Tubal Cain represents a much larger, potentially company-making opportunity for Goldstar, with a defined Geological Model of over 3.6 million tonnes to a depth of 1,000 metres and intensive in-fill drilling well advanced in the upper 500 metres. The Company has announced a Conceptual Exploration Target for Tubal Cain of 900,000 ounces.

Goldstar is pursuing an expanded strategy based on the co-development of Tubal Cain and Eureka, drawing on the positives of the ability to locate the processing facility at Southern Crown, near Tubal Cain, the capacity to achieve Indicated Resources by diamond drilling alone, and the correlation of Bulk Sampling to drilling at the dyke bulge deposits.

Indications from the Eureka Feasibility Study and Tubal Cain Scoping Study are that a combined operation could support a production level of over 100,000 ounces per annum at a targeted cash cost level of A$420-560 per ounce. Intensive diamond drilling programs are underway at Tubal Cain designed to deliver an Inferred JORC compliant resource during the June 2008 Quarter and an Indicated Resource by the end of the year.

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