Firesteel Subsidiary Acquires Strategic Oil Sands Properties



    VANCOUVER, Sept. 13 /CNW/ - Firesteel Resources Inc. (FTR - TSX:V) is
pleased to announce that its wholly owned Blacksteel Oil Sands subsidiary has
concluded a Letter of Intent (LOI) for the acquisition of a 100 percent
working interest in 12,160 additional acres (4,864 hectares (ha)) of oil sands
properties in the Peace River Area of Alberta. These properties increase
Blacksteel's land holdings in the region to 14,080 net acres (5,632 net ha).
These lands are located in two blocks and target two different types of oil
sands deposits.
    The first block of 1,280 acres (512 ha) is located approximately 25 km
northeast of the town of Peace River, Alberta, is within 5 km of highway 688
with year round access and is close to infrastructure including pipelines and
facilities. It is adjacent to Blacksteel's existing three sections of land
which, when combined, will form the Raven Project. The primary target is in
the Bluesky Formation with a secondary target in the Debolt Formation. The
Raven Project is adjacent to Shell's Carmon Creek Project which has over 100
wells on 8 sections producing about 20,000 barrels per day (bbl/d) with plans
to increase this production to 100,000 bbl/d. Shell's closest producing well
pad is about 5 km from Raven and planning has started for a well pad bordering
the Raven property. Husky, Murphy, Baytex and Penn West all have operations in
the area. These operations include both cold flow and thermal developments
within 20 km of Raven.
    The second block of 10,880 acres (4,352 ha) is located about 35 km north
of Peace River, is between highways 35 and 743 and is adjacent to lands just
north of this block owned by a private operator. Blacksteel has identified a
potentially large resource base with what it believes to be significant up
side potential in the carbonate reservoirs of the Debolt Formation. Several
oil sands operators are currently undertaking similar carbonate projects in
the Peace River and the Athabasca areas of Alberta including Shell's Grosmont
Project, the Shell/Talisman Pekisko mounds Chipmunk Project, Husky's Saleski
Project and others by OSUM, Laricina and Bronco Energy.
    Under the Letter of Intent Blacksteel (the Company) will acquire the oil
sands properties from two private equity groups in exchange for common shares
of the Company. The common shares of Blacksteel will be allocated to each
party, and to Firesteel, under a formula based on the discovered oil sands
resources (as defined below) contributed to the Company by each party, and
based on the market value per purchased barrel for each type of oil sand
deposit contributed by each party. These discovered resources will be
determined by a study to be completed prior to closing of the transaction by
an independent engineering firm. Preliminary estimates under the allocation
formula would give Firesteel about 46 percent of the common shares in
Blacksteel for the lands it will contribute to the Company.
    As part of the LOI Blacksteel has committed to an initial public offering
of its shares by the summer of 2008.
    Closing of the acquisition transaction, expected in about one month, will
require the execution of purchase agreements and a unanimous shareholders'
agreement.
    The new Blacksteel board of directors consists of Mr. Walter Wakula, as
Chair of the Board, and Mr. Steve Strawson who is also a director of
Firesteel. Two additional directors will be appointed by the private equity
groups.
    In announcing this second land acquisition Mr. Wakula, Chair of
Blacksteel, said, "We are thrilled to have now assembled a highly prospective
land position which we believe will give Blacksteel the critical mass to
launch an impressive new oil sands business. This also gives Firesteel a
unique opportunity to diversify its asset base with a new footprint into this
significant and exciting new business segment."

    Firesteel is a junior exploration company engaged in the minerals and the
oil sands businesses. It explores for and develops quality precious and base
metal prospects in British Columbia, the NWT and Mexico and oil sands
prospects in Alberta. The company has been actively drilling and trenching on
its Copper Creek property in northern British Columbia with excellent results.

    "Discovered Resource" is defined in accordance with the Canadian Oil and
Gas Evaluation Handbook as those quantities of oil and gas estimated on a
given date to be remaining in, plus those quantities already produced from,
known accumulations. Discovered resources are divided into economic and
uneconomic categories, with the estimated future recoverable portion
classified as reserves and contingent resources, respectively. Contingent
Resources, in turn, are estimated as low, best and high estimates.

    The TSX Venture Exchange does not accept responsibility for the accuracy
    of this release

    Certain statements may constitute forward-looking statements. Such
forward-looking statements involve risks, uncertainties and other factors,
which may cause actual results, performance or achievements of the Corporation
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements.

    %SEDAR: 00004336E




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