Mr. Vince Sorace reports

DESERT STAR RESOURCES AND PROVIDENCE RESOURCES AGREE TO A STRATEGIC BUSINESS AMALGAMATION AND DESERT STAR ANNOUNCES A $1.5 MILLION FINANCING

Desert Star Resources Ltd. and Providence Resources Corp. have entered into a letter of intent to amalgamate the two companies. The amalgamated entity (Amalco) will have a primary focus on the identification, acquisition and development of copper and gold projects in the southwestern United States.

"The amalgamation of Desert Star and Providence is a good strategic fit as both companies share several individuals who comprise their management and exploration teams. The amalgamation exploits an opportunity to combine the prospective assets of Desert Star with the cash position of Providence. The combined entity will result in a unified strategic focus and will be well positioned to continue developing prospective assets in the southwestern U.S. and pursuing innovative generative programs to feed a pipeline of prospective opportunities," stated Vince Sorace, president and chief executive officer of Desert Star and Providence Resources.

The amalgamation

The respective boards of directors of Providence and Desert Star have approved a proposed amalgamation of the two companies pursuant to the provisions of the Business Corporations Act (British Columbia). In reviewing the proposed amalgamation, the independent members of the board of directors of each of the amalgamating companies considered the merits and fairness of the transaction to its shareholders. The proposed amalgamation is subject to the approval of the shareholders of Providence and Desert Star and the approval of applicable regulatory authorities. The amalgamating companies plan on holding special meetings of their respective shareholders on such a date as agreed to with regulators to consider the proposed amalgamation and matters related thereto. The proposed amalgamation will require the statutory approval of at least two-thirds of the shareholders of each company voting on the matters.

A joint information circular in respect of the special meeting of shareholders of each of the amalgamating companies will be mailed to the shareholders when formal notices of the special meetings are given.

Loan

In connection with the amalgamation, Providence will advance Desert Star $250,000 as an unsecured, non-interest-bearing loan, which loan will be fully refundable to Providence within 30 business days if the amalgamation does not complete.

Independent directors and amalgamation ratio

Providence's directors are Steve Bajic, Mr. Sorace and Keith Henderson. Desert Star's directors are Martin Bajic, Chris Taylor, Mr. Sorace and Mr. Henderson. As Desert Star has two directors in common with Providence, being Mr. Sorace and Mr. Henderson, Mr. Bajic is the only independent director of Providence, and Mr. Bajic and Mr. Taylor are the independent directors of Desert Star.

The independent directors of Desert Star and Providence determined the applicable share exchange ratios, for which the existing common shares of the respective amalgamating companies will be exchanged for Amalco common shares to former shareholders of the amalgamating companies, based on the following share exchange ratio:

• For every one common share of Providence, shareholders will receive approximately 0.3 of an Amalco common share and 0.3 of a common share purchase warrant of Amalco. Each Amalco warrant will entitle the holder to acquire an additional share of Amalco for a period of two years at a price of 25 cents per Amalco warrant share.
• For every one common share of Desert Star, shareholders will receive one Amalco common share.

The amalgamating companies intend that Amalco will adopt a new 10-per-cent rolling stock option plan concurrent with the completion of the amalgamation. A resolution for the adoption of the new stock option plan will be presented at the special meetings and will be subject to approval by a majority vote.

Convertible securities

Desert Star's outstanding warrants will be converted into warrants of Amalco, on a one-for-one basis, on the same terms and conditions of as the Desert Star warrants. Desert Star has outstanding convertible loans in the aggregate amount of $495,000. The convertible loans are convertible into units of Desert Star composed of one common share and one transferable share purchase warrant. Each warrant is exercisable by the holder to purchase an additional common share of Desert Star for a period of 12 months from the issuance of the warrant at an exercise price of 25 cents per share. On completion of the amalgamation, the convertible loans will become liabilities of Amalco and will be convertible to acquire units of Amalco on the same terms and conditions set forth herein.

Advance notice policy for nominating directors

Both of Desert Star and Providence have adopted an advance notice policy to provide their shareholders, directors and management with a clear framework for nominating directors. The policy is meant to: (i) facilitate an orderly and efficient annual general and/or special meeting process; (ii) ensure all shareholders receive adequate notice of director nominations and sufficient information with respect to all nominees; and (iii) allow shareholders to register an informed vote, having been afforded reasonable time for appropriate deliberation. The articles of Amalco will include advance notice provisions as set forth in the policy.

Related-party transaction

If the amalgamation is deemed to be a related-party transaction as that term is defined under Multilateral Instrument 61-101 (protection of minority securityholders in special transactions), Desert Star and Providence will need to obtain majority-of-the-minority approval of the amalgamation after excluding the votes cast in respect of common shares held by certain directors and officers of Desert Star and Providence.

Private placement

Desert Star will use its best efforts to complete a private placement for gross proceeds of up to $1.5-million through the issuance of units of Desert Star, at a price of 15 cents per unit. Each unit is composed of one common share and one common share purchase warrant. Each warrant entitles the holder to acquire one additional share of Desert Star for a period of two years from the date of issuance at a price of 25 cents per share.

Desert Star will pay finders' fees in accordance with TSX Venture Exchange policies. Proceeds of the private placement will be used for the continued exploration of Desert Star's properties and for general working capital purposes. All securities issued pursuant to the private placement will be subject to a four-month-and-a-day hold period.