Mr. Charles Funk reports

HELIOSTAR ANNOUNCES LETTER OF INTENT FOR A US$20M GOLD LINKED DEBT FACILITY TO ADVANCE ANA PAULA DEPOSIT

Heliostar Metals Ltd. has entered into a non-binding letter of intent in respect of a senior secured debt facility for the aggregate principal amount of $20-million (U.S.) with an expected fixed 10-per-cent rate of interest with a syndicate of lenders led by a New York-based financial institution (together, the lenders).

The net proceeds of the facility will be used to advance the underground decline and complete test mining to process a bulk sample from the Ana Paula deposit in Guerrero, Mexico.

The facility is expected to have a 30-month term and is subject to an annual interest rate of 10 per cent, payable semi-annually. The facility is expected to be assured by customary security commitments, including over the Ana Paula project. The facility allows for the early repayment of the facility at any time, and upon the sale of gold ounces. The facility calls for Heliostar to make repayments equal to the number of ounces of gold sold multiplied by $1,850 (U.S.) per ounce (the reference price) after deducting operating expenses.

Heliostar chief executive officer Charles Funk commented: "Finding a self-funded solution that diminishes the amount of equity dilution to advance the development of the Ana Paula project and undertake a test mining program has been the company's focus in 2024. Today's announcement puts Heliostar on the front foot to continue to derisk the Ana Paula project and accelerate its path to commercial production. Funding from the financing will be used to complete the decline and undertake test mining. It will additionally, permit drilling to add more ounces to the high-grade core of the Ana Paula deposit. Funds from the sale of gold produced from the bulk sample are anticipated to repay the principal and interest of the loan and the floor price for a portion of the test mining ounces minimizes completion risk. We are excited to advance towards our goal of mining the first gold ounces from the Ana Paula project in 2025!"

Test mining

The company considers test mining to be a compelling development approach at Ana Paula as it provides several advantages, including:

• Producing cash flow from the sale of gold produced from the bulk sample to pay for the decline and test mining infrastructure to significantly reduce equity dilution;
• Financing drilling with a focus of adding additional high-grade gold ounces, which can have a significant impact on the net present value of the project;
• Decreasing the forecasted capital expenditure of the full scale project by developing the decline and initial stopes in advance;
• Providing valuable information to further derisk grade reconciliation, stope design and metallurgical recoveries prior to final mine design;
• Decreasing infill and expansion zone drilling costs by providing underground drilling platforms.

Ana Paula's current infrastructure, including its open-pit mine permit, partially completed decline and connection to grid power, should allow for this bulk sample plan to proceed quickly. Engineering undertaken in first quarter 2024 has been completed to ensure the design for test mining maximizes the long-term mine plan at Ana Paula.

Financing details

Interest payment: The facility is expected to bear a 10-per-cent-per-annum coupon, calculated and payable semi-annually, and will mature after a 30-month term.

Gold-price-linked premium: Heliostar is expected to enter into gold swaps with the Lenders at closing of the financing tied to a gold price equal to the reference price of $1,850 (U.S.). At certain dates in the future tied to Heliostar's production and sale of gold from test mining, if the spot price of gold is greater than the reference price, Heliostar will pay the lenders the difference between the spot price and the reference price, multiplied by the payment swap ounces. Payment swap ounces is the lesser of: (i) the ounces sold by Heliostar that triggered the mandatory revenue prepayment and (ii) the difference between the total swap ounces and the sum of all previous payment swap ounces sold by Heliostar. If the spot price of gold is less than the reference price, the lenders will pay Heliostar the difference between the spot price and the reference price, multiplied by the payment swap ounces.

Warrants: In connection with the facility, the company will issue to the lenders an aggregate of 17,239,668 share purchase warrants. Each warrant will entitle the lenders to acquire one common share within 30 months of closing at an exercise price of (i) as to 8,619,834 of the warrants, 40 cents per share, and (ii) as to 8,619,834 of the warrants, 55 cents per share.

Use of proceeds: The net proceeds of the facility are expected to be used to finance (i) development of the decline and test mining of a bulk sample; (ii) drilling at the Ana Paula deposit; and (ii) facility interest until production has commenced.

Closing: Closing is subject to the execution of definitive documents, receipt of all necessary approvals and the completion of the lenders' technical due diligence. There is no assurance that the facility will be completed on the terms set forth above or at all. Closing is anticipated in Q3 2024.

There can be no assurance that a definitive agreement with respect to the facility will be executed or, if executed, whether the financing will be consummated.

The company intends to pay a qualified non-related party a finder's fee equal to 2 per cent of the loan amount. Subject to approval by the TSX Venture Exchange, the company intends to pay the finders' fee half in cash and half in common shares at a deemed price of 30 cents per share.

Statement of qualified person

Stewart Harris, PGeo, a qualified person, as such term is defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, has reviewed the scientific and technical information that forms the basis for this news release and has approved the disclosure herein. Historical information contained in this news release cannot be relied upon as Mr. Harris has not prepared nor verified such information.

About Heliostar Metals Ltd.

Heliostar is a junior mining company with a portfolio of high-grade gold projects in Mexico and Alaska.

The company is focused on developing the 100-per-cent-owned Ana Paula project in Guerrero, Mexico. In addition, Heliostar is working with the Mexican government to permit the San Antonio gold project in Baja Sur, Mexico. The company continues efforts to explore the Unga gold project in Alaska, United States.

Ana Paula hosts measured and indicated resources of 710,920 ounces of gold (320,204 measured and 390,716 indicated ounces) at 6.60 grams per tonne gold and an inferred resource of 447,512 ounces of gold at 4.24 g/t gold. The asset is permitted for open-pit mining and contains significant existing infrastructure including a portal and a 412-metre-long decline.

We seek Safe Harbor.