HSTR.V · 2024-07-17 12:00:00

Heliostar to Acquire Gold Portfolio of Producing Mines and Development Projects in Mexico for US$5M

Mergers & Acquisitions

Heliostar to Acquire Gold Portfolio of

Producing Mines and Development Projects in

Mexico for US$5M

HIGHLIGHTS:

 Strategic Acquisition of former Argonaut Gold Assets in Mexico - transforms Heliostar into

a gold producer with a robust development portfolio

 Expanded Asset Base - adds two producing mines, th e San Agustin Mine and the La

Colorada Mine, and two advanced development projects to Heliostar’s portfolio

 Increased Resource Base - Heliostar’s measured and indicated resources grow to 3.5 million

ounces of gold in addition to the Cerro del Gallo historical resource. Acquisition cost of

measured and indicated resources is less than US$1.80 per ounce of gold

 Improves Ana Paula Economics - eliminates up to US$20 millio n in contingent milestone

payments on the Company’s flagship Ana Paula Project

 Immediate Producti on and Cash Flow - financial benefits from ongoing operations

immediately accrue to Heliostar’s account until closing, less US$5 million in operating cash

flow to FCGI prior to closing

Vancouver, Canada, July 17, 2024 – H e l i o s t a r M e t a l s L t d . ( T S X . V : H S T R , O T C Q X : H S T X F , F R A : R G G 1 )

(“Heliostar” or the “ Company”) has entered into a binding agreement (“ Acquisition Agreement”) with

Florida Canyon Gold Inc. (“ FCGI”) to acquire (the “ Transaction”) a 100% interest in all of FCGI’s mining

assets in Mexico for consideration of US$5 million. Th e projects being acquired were recently spun out

from Argonaut Gold Inc. (“Argonaut”).

Heliostar CEO, Charles Funk, stated “This acquisition is transformative for Heliostar. The Company

transitions from single asset developer to a multi-asset producer. The addition of the two producing gold

mines provides cash flow to bring new production onlin e. In addition, this transaction eliminates up to

US$20 million in contingent payments on the Ana Paula project, freeing that capital for its development,

which remains the Company’s focus. Further it c ancels up to US$150 millio n in conditional option

payments on San Antonio. All in ex change for a total acquisition pric e of US$5 million. Perhaps of most

value is the addition of a strong management team in Mexico that expands our capability to deliver on

Heliostar’s growth goals”

Acquisition Details

Pursuant to the Transaction, Heliostar will acquire those FCGI subsidiaries which collectively own 100% of

the following properties (the “Projects”):

 La Colorada Mine, located in Sonora, producing gold from residual leaching of gold while on care

and maintenance (the “La Colorada Mine”);

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 San Agustin Mine (formerly the El Castillo Complex), an open pit heap leach gold mine, San

Agustin, and a closed open pit heap leach gold mine, El Castillo, located in Durango (the “ San

Agustin Mine”);

 Cerro del Gallo, an advanced gold developmen t project located in Guanajuato (the “ Cerro del

Gallo Project”); and

 San Antonio, an advanced gold development project located in Baja California Sur (the “ San

Antonio Project”).

The Company will acquire the Projects in exchange for US$5 million, payable on closing. The Transaction

is expected to close in October 2024.

As a condition to closing of the Transaction, Heliost ar and FCGI will enter into an agreement eliminating

(a) up to US$20 million in contingent payments, which become payable to FCGI pursuant to the agreement

under which Heliostar acquired the Ana Paula Project, and (b) up to US$150 million in conditional option

payments and the issuance of a 2% net smelter retu rns royalty on the San Antonio Project, which might

have become payable pursuant to the agreement under which Heliostar acquired an option on the San

Antonio Project.

The closing of the Transaction (“ Closing”) is subject to certain conditions, including approval of the TSX

Venture Exchange, other consents and regulatory approvals including approval from the Mexican Federal

Economic Competition Commission, an d the corporate entities holding the Projects having net working

capital of at least US$2 million. Closing is not subject to any financing condition.

FCGI has agreed that that cash generated in respect of the Projects until the Closing Date, less US$5M in

operating cashflow, will be for the benefit of Heliostar.

Financing Details

The Company is in advanced discussion s to enter a loan facility (the “ Debt Facility”) for the aggregate

principal amount of US$5-10 million. The Company inte nds to use the proceeds of the Debt Facility to

fund the Transaction. Heliostar anticipates to service and repay the Debt Facility through cash flow from

operations.

Advisors and Counsel

Trinity Advisors Corporation and TSCG Capital Inc. are acting as financial advisors to Heliostar.

Forooghian + Company Law Corporation is acting as Heliostar’s legal advisors.

Webinar Invitation

Further, the Company will host a webinar on July 25th at 11am Pacific/2pm Eastern Time, to provide a

detailed update on the Transaction and corporate pl ans for 2024 and 2025. Please use the link here to

Project Location and Key Statistics

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The Projects

San Agustin Mine (formerly the El Castillo Complex)

The San Agustin Mine is a gold-silver open pit and he ap leach mining operation in the State of Durango.

The property comprises nine titled concessions covering 5,884 hectares (“ha”).

The facilities include an open pit, two crushing plants with a combined total 30,000 tonnes per day (“tpd”)

capacity, conveyors, multi-lift leach pads, a carbon -in-column and a small Merrill Crowe plant. The San

Agustin Mine maintains water rights of 1,000,000 m3/year from one underground aquifer.

Operations at the San Agustin Mine began in 2017. Up to Marc h 2024, the mine has produced 383,598

ounces of gold and 1,911,648 ounces of silver (2017-2024). The San Agustin Mine is currently in operation

with 7,568 ounces of gold and 39,319 ounces of silver produced in 1Q 2024.

All technical information on the San Agustin Mine is based on a technical report entitled “ San Agustin

Gold/Silver Mine NI 43-101 Technical Report” with an effective date of May 15, 2024, filed on SEDAR by

Argonaut on May 29, 2024 (the “ San Agustin Technical Report ”). To the best of Heliostar’s knowledge,

information, and belief, the San Agustin Technical Re port is considered current pursuant to National

Instrument 43-101 – Standards of Di sclosure for Mineral Projects (“NI 43-101”) and there is no new

material scientific or technical information that wo uld make the disclosure of the mineral resources,

mineral reserves or results of the San Agustin Technical Report inaccurate or misleading.

While the Company considers the San Agustin Technica l Report to be current, it plans to prepare an

updated technical report based on its revised approach to developing the San Agustin Mine and will file

such technical report within 180 days of this news release.

The San Agustin Mine has four remaining mining phases with probable mineral reserves of 197,000 ounces

of gold and 6,709,000 ounces of silver contained.

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Heliostar recognises a range of opportunities for re source growth and exploration at the San Agustin

Mine, including:

 Oxide Reserves - The Company will review and optimize the mine plan considering the current

metals price environment

 The Corner Permit - The San Agustin Mine contains probable reserves of 8.1 Mt at 0.33 g/t gold

and 17.5 g/t silver (86,000 oz gold and 4.54 Moz silver) in a cutback that requires an expansion

permit. The Company intends to pursue this opportunity to add mine life to the San Agustin Mine

 Sulphide Potential – The San Agustin Mine has significant exploration potential in sulphides below

the current pit shell which have not been a focus for reserve growth

 Exploration Potential - In 2021, Argonaut acquired a large la nd package from Fresnillo for US$6

million that increased the land package by 538% to 5,884 Ha. The new ground has seen little

exploration since the acquisition. One target at San Agustin, the Consejo Zone, includes an

intercept of 1.3 m grading 3,234 g/t silver, 2.85 g/ t gold, 15.0% lead and 8.70% zinc (Consejo de

Recursos Minerales, 1985). This will be a priori ty area of exploration for the Company going

forward

Note: A qualified person has not been able to independently verify the assay results in the drill

intersections presented above and Heliostar plans on conducting additional work at the San Agustin Mine

to establish the grades and widths of targets on the property.

The San Agustin Mine operates as part of the same mining complex with the nearby El Castillo gold mine.

Mining activities at the El Castillo mine were suspended by Argonaut in December 2023 and reclamation

activities have commenced. Re-leach ing at El Castillo is ex pected to finish in the third quarter of 2024.

Heliostar anticipates funds generated from operations at the San Agustin Mine will fund the future closure

of the El Castillo mine.

La Colorada Mine

The La Colorada Mine is a gold-silver open pit and heap leach mining operation in the State of Sonora. The

property comprises 41 titled concessions covering 10,085 ha.

The facilities include three open pits, a three-stag e crushing plant with 12,000 tpd capacity, conveyors,

multi-lift single-use leach pads, a carbon absorption circuit and a stripping and electro-winning circuit.

The La Colorada Mine operates a separate circuit to process loaded carbon received from the San Agustin

Mine.

Operations at the La Colorada Mine restarted in 201 2. As of December 31, 2023, the mine has produced

485,640 ounces of gold and 1,680,197 ounces of silver (2012-2023). The mine is currently re-leaching with

3,922 ounces of gold and 6,848 ounces of silver produced in 1Q 2024.

All technical information on the La Colorada Mi ne is based on a technical report entitled “ La Colorada

Gold/Silver Mine NI 43-101 Technical Report ” with an effective date of October 1, 2021, filed on

SEDAR by Argonaut on February 14, 2022 (the “ La Colorada Technical Report ”). To the best of

Heliostar’s knowledge, information, and belief, th e La Colorada Technical Report is considered

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current pursuant to NI 43-101 and th ere is no new material scientific or technical information that

would make the disclosure of the mineral resources, mineral reserves or resu lts of the La Colorada

Technical Report inaccurate or misleading.

While the Company considers the La Colorada Technical Report to be current, it plans to prepare an

updated technical report based on its revised approach to developing the La Colorada Mine and will

file such technical re port within 180 days of this news release.

The La Colorada Mine has two development projects: the El Creston cutback and the Veta Madre cutback.

The El Creston cutback is an expans ion to the existing El Creston pit with probable mineral reserves of

220,000 ounces of gold and 4,114,000 ounces of silver. The Veta Madre cutback is an expansion to the

existing Veta Madre pit with probable mineral rese rves of 163,000 ounces of gold and 1,009,000 ounces

of silver. Permits have been obtained for the El Creston cutback. Veta Madre is not permitted and the

company plans to submit a permit application in the coming months.

The La Colorada Mine has significant growth potential. Resources at all three pits are open along strike

and at depth providing both open-pit and underground mining potential.

Heliostar will assess four opportunities for resource growth at La Colorada:

 Waste to Ore Conversion – Within the proposed pit shell for the cutback at El Creston, large areas

are considered waste because those areas have not been drilled. The Company believes that

some of these areas may be mineralized. The Co mpany will prioritize drilling in these areas to

support mining studies in support of a new mine plan for the La Colorada Mine

 Depth Potential - The oxide mineralized zones within the three open pits remain open at depth

and warrant additional investigation assuming both open pit and underground mining methods

 Underground Potential - Mining and ore control in all three pits indicate that the mineralized

zones are open at depth, and not constrained by drilling. Argonaut in ternally evaluated the

potential for underground mining operations below the open pits, and Heliostar plans to explore

this opportunity

 Regional Exploration - A regional exploration program will be designed to test significant, yet

undrilled gold-in-soil anomalies. The area west and southwest of the Gran Central pit remains

underexplored and holds considerable potential for additional mineralization to be outlined in the

area.

San Antonio Project

The San Antonio Project is a gold development project in the State of Baja California Sur. The Project has

been optioned for purchase by Heliostar in 2023, subj ect to certain requirements and a final payment of

up to $150 million subject to the gold price at the time. The option will be nullified and ownership will be

to the full credit of the Company. The property comprises 15 titled conce ssions covering 46,328 ha. An

environmental permit for the project is pending.

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The San Antonio Project hosts a meas ured and indicated mineral resource estimate of 1,735,000 ounces

of gold (553,000 measured and 1,182,000 indicated ounces) at 0.83 g/t gold in 65,090,000 tonnes and an

inferred resource of 67,000 ounces of gold at 0. 34 g/t gold in 6,215,000 tonnes (Source: San Antonio

Technical Report, as defined below).

All technical information on the San Antonio Proj ect is based on a technical report entitled “ NI 43-

101 Technical Report on Resources San Antonio Project” with an effective date of September 1, 2012,

filed on SEDAR by Argonaut Gold on October 15, 2012 (the “ San Antonio Technical Report ”). To the

best of Heliostar’s knowledge, information, and belief, the San Antonio Technical Report is

considered current pursuant to NI 43-101 and there is no new material scientific or technical

information that would make the disclosure of the mineral resources or results of the San Antonio

Technical Report inaccurate or misleading.

While the Company considers the San Antonio Technical Report to be current, it plans to prepare an

updated technical report based on its revised appr oach to developing the San Antonio Project and

will file such technical report within 180 days of this news release.

Cerro del Gallo Project

The Cerro del Gallo Project is a gold-silver developmen t project in the State of Guanajuato. The property

comprises 14 titled concessions covering 15,276 h a, and surface rights to land totalling 445 ha. An

environmental permit for the project is pending.

Reserve and Resource Estimates

Table 1: Mineral Reserve Estimates

Project

Probable Reserves

Tonnes

(1000’s) Gold (oz) Silver (oz) Gold (g/t) Silver (g/t)

San Agustin 13,319 197,000 6,709,000 0.46 15.7

La Colorada 19,459 383,000 5,123,000 0.61 8.19

Total: 32,778 580,000 11,832,000

Table 2: Measured and Indicated Mineral Resource Estimates; Inclusive of Mineral Reserves

Project

Measured Indicated Measured + Indicated

Tonnes

(1000’s)

Gold

(oz)

Silver

(1000’s oz)

Tonnes

(1000’s)

Gold

(oz)

Silver

(1000’s oz)

Tonnes

(1000’s)

Gold

(oz)

Silver

(1000’s oz)

Gold

(g/t)

Silver

(g/t)

Ana Paula 1,100 320,204 - 2,240 390,716 - 3,340 710,920 - 6.60 n/a

San Agustin - - - 27,187 427,000 16,096 27,187 427,000 16,096 0.49 18.4

La Colorada 38,858 658,000 9,088 38,858 658,000 9,088 0.57 7.9

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Project

Measured Indicated Measured + Indicated

Tonnes

(1000’s)

Gold

(oz)

Silver

(1000’s oz)

Tonnes

(1000’s)

Gold

(oz)

Silver

(1000’s oz)

Tonnes

(1000’s)

Gold

(oz)

Silver

(1000’s oz)

Gold

(g/t)

Silver

(g/t)

San Antonio 19,000 553,000 - 46,090 1,182,000 - 65,090 1,735,000 - 0.83 n/a

Total: 20,100 873,204 - 114,374 2,657,716 25,184 134,475 3,530,920 25,184

Table 3: Inferred Mineral Resource Estimates

Project

Inferred

Tonnes

(1000’s)

Gold

(oz)

Silver

(oz)

Gold

(g/t)

Silver

(g/t)

Ana Paula 3,280 447,512 - 4.24 n/a

San Agustin 3,087 47,000 1,840,000 0.47 18.5

La Colorada 3,414 62,000 1,384,000 0.57 12.6

San Antonio 6,215 67,000 - 0.34 n/a

Unga 866 384,318 986,321 13.8 35.4

Total: 16,862 1,007,830 4,210,321

Table 4: Cerro Del Gallo Historical Mineral Reserve Estimate

Reserve