South Star Mining Announces Positive Pre-Feasibility Study Results and Maiden Reserve Estimate for Santa Cruz Graphite Project
South Star Mining Announces Positive Pre-Feasibility Study Results and Maiden
Reserve Estimate for Santa Cruz Graphite Project
Toronto, ON, February 5, 2020 – South Star Mining Corp. (‘South Star’ or ‘the Company’) (TSX-V: STS) (OTC:
STSBF) is pleased to announce the positive pre-feasibility stud y (“PFS”) results for its 100%-owned Santa Cruz
Graphite Project (“Project”) located in Southern Bahia, Brazil. The PFS presents a two-phased approach to
production with an after tax NPV 5% of US$81.2M, an IRR of 35% and a 4-year payback. The study us ed the
current average basket price of US$1,287 per tonne which was held constant for the life of the project.
Phase 1 consists of a pilot plant with the capacity to produce 5,000t of concentrate per year, and the simple
layout includes a small open-pit processing plant with filtered tails technology, waste storage facility for co-
disposal of wasterock and filtered tails and civil infrastructu re. The goal of the Phase 1 operations is to test and
optimize the flowsheet, develop the key commercial relationship s and optimize the production of products
demanded in the marketplace, given the inherent, high-quality n ature of the concentrates produced to date.
Detailed engineering of the pilot plant was completed as part of the PFS.
Phase 2 is a larger plant with similar layout and technology, b ut with a capacity of 25,000t of concentrate per
year. It’s important to highlight that both Phases include the use of filtered tails technology and co-disposal of
tailings with wasterock to avoid the requirement of a Tailings Storage Facility. This is essential in facilitating the
permitting process and decreasing the environmental footprint of the facility.
PFS Highlights
x Combined Maiden Proven & Probable (P+P) Reserve Estimate of 12. 3M tonnes with strong conversion
of resource to reserves.
x The Mineral Reserve Estimate is listed below:
Mineral
Reserve
Estimate
Tonnage Cg In-situ
Graphite
(t) (%) (t)
Proven 3,989,635 2.49 99,340
Probable 8,318,795 2.35 195,490
Total P &P 12,308,500 2.40 295,400
Notes:
1) Mineral Reserves are as defined by the 2014 CIM Definition Stan dards for Mineral Resources and
Mineral Reserves.
2) Mineral Reserves are based on Mi neral Resources (Published on J uly 8th, 2019) estimated using
ordinary kriging method and a th ree-dimensional block model usi ng a cut-off grade of 0.75% and
1% Cg, depending on the modeled zones.
3) Numbers have been rounded.
4) Mineral Reserves have incorporated cut-off, pricing, costs, recovery & FX.
x Phase 1 Average Production of 5,000 tpy of 95% Cg Concentrate in Years 1 & 2
x Phase 2 Ramping up from 13,500 tpy of 95% Cg Concentrate in Yea r 3 to an average production of
25,000 tpy in years 4-11
x Average Basket Price of Products of US$1,287/t
x Open-pit mining with strip ratio of 1.6 Life of Mine (LOM)
x 12-Year LOM
x Exchange Rate of R$3.95 to US$1.00
x Post-Tax NPV5% of US$81.2M and internal rate of return of 35%
x US$129M Post-tax Cash Flow LOM
x Payback Period of 4 years
x CAPEX & OPEX Parameters for Each Phase are listed below:
Parameter
Phase 1
(US$)
Phase 2
(US$)
Phase 1 & 2
(US$)
CAPEX 7.3M 27.2M 34.5
OPEX ($/t Concentrate) 604 386 396
x Sensitivity Analysis for NPV using CAPEX, OPEX, Sales Price and FX as follows:
Richard Pearce, President and CEO of South Star , commented: “We have now submitted all the required
permitting and licensing documents for the Phase 1 production f acilities. We have a PFS highlighting a project
with robust economics, low capital intensity, and low OPEX desi gned around a simple, proven flowsheet in one
of the most prolific, high-quality graphite producing regions i n the world. The detailed design of the Phase 1
facility is complete.
This is another important step on our path to production. Pilo t plant operations with a very modest CAPEX are
expected to provide short-term cash flow from operations and al low us to qualify bulk samples in the
marketplace and establish future, firm offtake agreements. We have been working diligently to develop
commercial relationships with key players, both in Brazil and in ternationally, and have received excellent
feedback on our sample materials shipped to date. We will moni tor closely the permitting and licensing
process and will be using the first half of 2020 to get the fin ancing in place to construct and commission the
pilot plant facilities. Phase 1 construction is expected to take approximately 8-10 months. We are excited to be
moving past project development and focusing all our efforts an d attention on near-term construction,
commissioning and production.”
The technical information contained in this news re lease pertaining to the Santa Cruz Graphite Project
has been prepared, reviewed and approved by Lu iz Eduardo Pignatari, an independent qualified
person under National Instrument 43-101 –Standards of Disclosure for Mineral Projects ("NI43-101").
The qualified person has verified the information disclosed herein, including the sampling, preparation,
security and analytical procedures underlying such in formation, and is not aware of any significant
risks and uncertainties that could be expected to aff ect the reliability or confidence in the information
discussed herein.
About South Star Mining Corp.
South Star Mining Corp. is focused on the selective acquisition and development of near-term mine production
projects in Brazil to maximize shareholder value. STS has an ex perienced executive team with a strong history
of discovering, developing, building and operating profitable mines in Brazil.
The Santa Cruz Graphite Project is located in Southern Bahia in the third largest graphite producing region in
the world with over 70 years of continuous mining. The Project has at surface mineralization in friable
materials, and successful large-scale pilot plant testing (>30t ) has been completed. The results of the testing
show approximately 65% of Cg concentrate is +80 mesh with good recoveries and 95-99% Cg. With excellent
infrastructure and logistics, South Star is carrying its development plan towards production projected at the end
of 2020.
To learn more, please visit the Company website at http://www.southstarmining.ca.
On behalf of the Board,
Mr. Richard Pearce
Chief Executive Officer
Ph: +1 (314)266-0793 (US)
Ph: +55 (11) 2308-6839 (Brazil)
Email: [email protected]
For additional information, please contact:
Mr. Dave McMillan
Chairman
Ph: +1 778-773-4560
Email: [email protected]
Mr. Eric Allison
Director
Ph: +1 203 918-3098
Email: [email protected]
CHF Capital Markets
Cathy Hume, CEO
Phone: 416-868-1079 x231
Email: [email protected]
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FORWARD-LOOKING INFORMATION
The information contained herein contains "forward-looking stat ements" within the meaning of applicable securities
legislation. Forward-looking statements relate to information t hat is based on assumptions of management, forecasts of
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Forward-looking statements are subject to a variety of risks an d uncertainties which could cause actual events or results to
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adequate financing on a timely basis and on acceptable terms; r isks related to the outcome of legal proceedings; political
and regulatory risks associated with mining and exploration; ri sks related to the maintenance of stock exchange listings;
risks related to environmental regulation and liability; the po tential for delays in exploration or development activities or
the completion of feasibility st udies; the uncertainty of profi tability; risks and uncertainties relating to the interpretatio n of
drill results, the geology, grade and continuity of mineral dep osits; risks related to the inhe rent uncertainty of production
and cost estimates and the potential for unexpected costs and e xpenses; results of prefeasibility and feasibility studies, and
the possibility that future explo ration, development or mining results will not be consistent with the Company's
expectations; risks related to gold price and other commodity price fluctuations; and other risks and uncertainties related to
the Company's prospects, proper ties and business detailed elsew here in the Company's disclosure record. Should one or
more of these risks and uncertainties materialize, or should un derlying assumptions prove incorrect, actual results may vary
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differ materially from the Company's expectations or projections.