Lone Star Gold, Inc. Agrees to Cancel 30 Million Issued and Outstanding Company-Held Shares to Support Shareholder Equity

ALBUQUERQUE, NM--(Marketwire -01/17/12)- Lone Star Gold, Inc. (OTC.BB: LSTG.OB - News) ("Lone Star" or "the Company") is pleased to announce the Company and two of its largest shareholders have agreed that Lone Star will redeem and cancel a total of 30 million issued and outstanding shares of LSTG.OB. Half of the shares issued by Daniel Ferris, the Company President, will be cancelled (i.e., 7.5 million shares to be cancelled), and half of the shares held by a third party investor will be cancelled (i.e., 22.5 million shares to be cancelled). Both of the shareholders in question will still hold strong positions in the Company following the cancellation: Mr. Ferris will hold 7.5 million shares while the other investor will hold 22.5 million shares. All of the shares to be cancelled are unregistered, restricted shares, meaning they are not presently traded on the OTC BB.

For the cancellation to take place, Mr. Ferris will sign a Board resolution authorizing the redemption of the stock and its subsequent cancellation. A Redemption Agreement will then be signed to complete the cancellation. The documents needed to complete the cancelations and commence the process were signed on Jan 16, 2012. The two shareholders will receive no, or minimal, consideration for the shares.

The cancellation will effectively reduce Lone Star's total outstanding shares from 116.7 million to 86.7 million, or a reduction of 25.7%. The move is also intended to enhance the Company's ability to continue to draw down from its USD$15 million equity financing agreement with equity investor North American Gold Corp. due to the expectation of yielding a higher stock price.

Lone Star's Company President, Daniel Ferris, commented: "I view this as a positive decision and the right thing to do. It's about doing what's necessary to build a stable company, reach our target of being a mid-tier producer in the short term, and respect our shareholders along the way. By effectively increasing the potential value of our remaining outstanding stock at this time, we hope to benefit our current and future shareholders going forward."

Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We may use certain terms in this press release, such as "measured," "indicated," and "inferred" "resources," which the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10-K which may be secured from us, or from our website at http://www.sec.gov/edgar.shtml.

ADDITIONAL INFORMATION
To learn more about the Company and regular news updates, visit Lone Star Gold's official website: http://www.lonestargold.com.

ABOUT LONE STAR: Lone Star Gold, Inc. is a publicly traded (OTC.BB: LSTG.OB - News) gold exploration and development company based in Albuquerque, New Mexico. The Company's aggressive acquisition and exploration approach is strategically focused on proven, stable precious metal regions in America and Mexico. Currently, Lone Star has a 70% Working Interest in concessions covering 800 hectares in the La Candelaria project in Chihuahua, Mexico, which the Company is evaluating to determine the potential sites that represent the best potential for silver and gold deposits. Lone Star also has an option to purchase a 70% interest in the Ocampo Project, a 570-hectare gold-silver project in Chihuahua State, Mexico, and an option to purchase an undivided 65% interest in the San Antonio del Potrero mine tailings project in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico.

ON BEHALF OF THE BOARD OF DIRECTORS,

Lone Star Gold, Inc.
Daniel Ferris, Company President

This press release contains statements that are forward-looking and which involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in question are based on Lone Star Gold, Inc.'s current expectations and projections about future events, based on information currently available. The forward-looking statements found in this press release may also include statements relating to Lone Star Gold, Inc.'s anticipated financial performance, business prospects, new developments, strategies, and similar matters. Lone Star Gold, Inc. provides no assurance regarding the actual outcome of the events contemplated by any forward-looking statements included in this release. Lone Star Gold, Inc. disclaims any obligation to update any of its forward-looking statements, except as may be required by law.