Heliostar Boosts Production and Cash Flow with Strategic Mexican Mine Acquisition

Heliostar Metals Ltd. (TSX.V: HSTR) (OTCQX: HSTXF) (FSE: RGG1) has significantly enhanced its production and cash flow prospects with the strategic acquisition of a 100% interest in all of Florida Canyon Gold Inc.'s (FCGI) mining assets in Mexico. The acquisition, completed for a cash consideration of US$5,000,000, includes the San Agustin mine (formerly the El Castillo Complex), La Colorada mine, Cerro del Gallo project, and San Antonio project. This move transforms Heliostar into a gold producer with a robust development portfolio, providing immediate production and cash flow, expanding its asset base, increasing its resource base, and eliminating contingent payments on its flagship Ana Paula project.

Immediate Production and Cash Flow

The acquisition includes two producing mines, the San Agustin Mine and the La Colorada Mine, which will provide Heliostar with immediate gold production and cash flow. The San Agustin Mine, an open pit heap leach gold mine, and the La Colorada Mine, which is producing gold from residual leaching while on care and maintenance, will contribute to Heliostar's revenue stream. Additionally, pursuant to the share purchase agreement, all cash generated since July 11, 2024, less US$5 million in operating cash flow attributable to FCGI, has been for the benefit of Heliostar. This means that Heliostar will immediately start receiving financial benefits from the ongoing operations of the acquired mines and projects.



Expanded Asset Base and Resource Base

The acquisition adds two advanced development projects, Cerro del Gallo and San Antonio, to Heliostar's portfolio. These projects have the potential to generate additional production and cash flow in the future once they are developed and brought online. Furthermore, the acquisition increases Heliostar's measured and indicated resources to 3.5 million ounces of gold, in addition to the Cerro del Gallo historical resource. The acquisition cost of these measured and indicated resources is less than US$1.80 per ounce of gold, which is a significant addition to Heliostar's resource base at a relatively low cost.

Eliminating Contingent Milestone Payments on the Ana Paula Project

As part of the acquisition, Heliostar and FCGI entered into an agreement eliminating the outstanding US$20 million of contingent payments payable by Heliostar to FCGI pursuant to the agreement under which Heliostar previously acquired the Ana Paula project. This frees up capital that can be used for the development of the Ana Paula project, which remains Heliostar's focus. The elimination of these milestone payments also improves the project's economics and development timeline, potentially leading to a higher net present value (NPV) and internal rate of return (IRR), and expediting the project's development.

Heliostar's strategic acquisition of FCGI's mining assets in Mexico has significantly enhanced the company's production and cash flow prospects. With immediate production and cash flow from the acquired mines, an expanded asset base, increased resource base, and the elimination of contingent payments on the Ana Paula project, Heliostar is well-positioned to achieve its growth goals and establish itself as a dynamic growth company in 2025 and beyond. As the company expects to provide 2024 production guidance and present expansion plans of the La Colorada mine in the coming weeks, investors should keep a close eye on Heliostar's progress.