TSX-V: MDV VANCOUVER, Jan. 3 /CNW/ - Megastar Development Corp. (TSX-V: MDV) is pleased to announce that it has completed the flow-through share portion of the non-brokered private placement announced on December 23, 2005. Subject to TSX Venture Exchange approval, the company will issue 794,000 flow-through units at a price of 15 cents per unit for gross proceeds of $119,100, being an increase from the $90,000 previously announced on December 23, 2005. Each unit will consist of one share and one share purchase warrant; two warrants will entitle the holder to purchase one additional non-flow-through common share of the company at a price of 20 cents for a period of one year. The shares issued under the private placement will be subject to a four-month hold period from the date of TSX Venture Exchange approval. The proceeds from the private placement will be used by Megastar for exploration purposes primarily on its 100% owned RALLEAU property located in Ralleau Township, approximately 40km east of QuDevillon, Quebec. The project area consists of 12 designated cells covering an area of 676 hectares accessible via a series of forestry roads emanating from the Val d'Or- Chibougamau provincial road and is situated about 20km southeast of the Langlois mine, currently being developed by Breakwater (TSX: BWR). For a map of the project area, refer to www.megastardevelopment.com/properties/ralleau.php . If warranted, a portion of the proceeds may be incurred on other Quebec mineral properties in which the Company holds an interest. The second tranche of the non-brokered private placement is anticipated to close on or about January 20, 2006. ON BEHALF OF THE BOARD OF DIRECTORS "Dusan Berka" Dusan Berka, P. Eng. President & CEO THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.