TriStar Gold's Castelo de Sonhos: A Rare Gem in a Gold-Scarce World

In a global gold market grappling with supply shortages and escalating geopolitical tensions, TriStar Gold's Castelo de Sonhos project in Brazil emerges as a compelling investment opportunity. With a freshly updated pre-feasibility study (PFS) showcasing robust economics, de-risked permitting, and strategic advantages, this development-stage asset is positioned to capitalize on the current gold price rally. Here's why investors should take notice.

Why Castelo de Sonhos Stands Out

The Castelo de Sonhos gold project is a textbook example of a high-reward, low-risk asset in a sector starved for quality. The May 2025 PFS update reveals eye-catching metrics:

• After-tax IRR of 40% at a gold price of $2,200/oz (the base case), rising to 72% at current prices of $3,200/oz.
• NPV5% of $603 million at the base case, soaring to $1.35 billion at $3,200/oz.
• A 2-year payback period, reflecting swift capital returns.

The project's 11-year mine life targets 121,000 oz of gold annually, with the first six years delivering 146,000 oz/year—a production profile that maximizes exposure to today's elevated gold prices.

The Regulatory Milestone That De-Risks the Project

One of the most significant developments for Castelo de Sonhos is the resolution of its legal and permitting challenges. A Federal Public Prosecutor's (MPF) objections to the project's environmental permit—specifically concerns over Indigenous land impacts—were dismissed by independent legal opinions. Key points:

• The project's proximity to Indigenous lands was found to be over 700 km away, with no direct impact.
• The Environmental Impact Assessment (EIA) was validated as complete, and SEMAS, Brazil's regulatory authority, reaffirmed the validity of the License Prévia permit.

This resolution eliminates a major overhang, positioning Castelo de Sonhos as a de-risked project with a clear path to construction.

Cost Management and Infrastructure Efficiency

The project's cost structure is another strength. While the capital cost has risen to $296 million (including a 20% contingency) from $261 million in 2021, this reflects inflation and updated exchange rates—not technical issues. Critically:

• Infrastructure leverage: The site is 15 km from a major highway and within 28 km of existing power lines, minimizing construction needs.
• Operational simplicity: A conventional open-pit design with a 10,000-tpd mill and 98% metallurgical recovery (via agitation leaching) ensures low execution risk.

These factors reduce both upfront costs and operational complexity, making Castelo de Sonhos a high-margin asset.

Strategic Partnerships and Market Timing

TriStar is wisely leveraging its strong economics to secure strategic partners. With a target to onboard a mine builder or acquirer within 12–18 months, the company aims to offload construction risk while retaining upside. Key points:

• Definitive feasibility study (DFS): Expected by late 2026, the DFS will refine costs and production timelines, further de-risking the project.
• Institutional credibility: Eric Sprott's 10% stake and Auramet's position as the largest shareholder signal confidence in the asset's value.

Risks and Considerations

No investment is without risk, but Castelo de Sonhos mitigates many typical pitfalls:

1. Gold price volatility: While a $2,200/oz base case is conservative, the project's sensitivity to higher prices (e.g., $3,200/oz) offers asymmetric upside.
2. Currency fluctuations: Brazil's inflation and currency (BRL) pose risks, but 60% of costs are USD-denominated, buffering against BRL devaluation.
3. Regulatory tailwinds: Brazil's mining-friendly policies and SEMAS's support reduce political risk.

Investment Thesis: A Leveraged Play on Gold's Upside

Castelo de Sonhos is a rare bird in today's gold sector: a permitted, high-grade asset with $1 billion+ NPV at current prices, short payback period, and minimal infrastructure costs. With gold prices near record highs and global supply constrained by environmental and geopolitical factors, this project's timing is ideal.

Recommendation:
- Buy: Investors seeking exposure to gold's upside should consider TriStar as a leveraged play. The stock is undervalued post-permitting resolution and stands to re-rate once the DFS is completed.
- Hold: For conservative investors, wait for DFS results to confirm cost and production estimates.

TriStar Gold's Castelo de Sonhos project exemplifies the scarcity-driven opportunity in gold development. With robust economics, de-risked permits, and strategic execution, this asset is poised to deliver outsized returns in a market hungry for quality.