Mr. Charles Funk reports

HELIOSTAR ARRANGES DEBT FACILITIES UP TO US$10M TO SUPPORT ACQUISITION OF PRODUCTION ASSETS

Heliostar Metals Ltd. has arranged two debt facilities for aggregate gross proceeds of up to $10-million (U.S.).

Highlights:

• Up to $5-million (U.S.) working capital facility with Ocean Partners USA Inc.:
  • Immediately available;
  • Interest rate -- three-month SOFR (secured overnight financing rate) plus 4 per cent (currently 9.4 per cent);
  • Matures on Dec. 31, 2025;
• Up to $5-million (U.S.) transaction closing facility with Deans Knight Capital Management Ltd.:
  • Available to finance $5-million (U.S.) closing payment to acquire a Mexican asset portfolio from the former Argonaut Gold;
  • Interest rate -- 15 per cent;
  • Matures on Nov. 30, 2026;
• Provides capital required to close the acquisition with less-than-1-per-cent equity dilution;
• Principal and interest amounts to be repaid from operating cash flow.

Heliostar chief executive officer Charles Funk commented: "This financing is a significant advancement for Heliostar and our shareholders. These facilities demonstrate the power of production as we were able to secure debt financing at significantly more favourable rates than previously contemplated in the gold-linked letter of intent for Ana Paula. We are now in the enviable position of having all the capital required to close the acquisition of Mexican assets from the former Argonaut Gold and accelerate the development of our assets for less-than-1-per-cent equity dilution. Following the closing of the acquisition, which remains on track for November, 2024, Heliostar will become a producing gold company with immediate cash flow, a healthy working capital balance and a strong position to grow our production base to 150,000 ounces per year over the next three years."

The company announces that it will no longer proceed with the previously announced letter of intent for a $20-million (U.S.) gold-linked debt facility (see news release dated May 7, 2024).

Details of the debt facilities

The company has entered into a purchase contract with Ocean Partners, pursuant to which Ocean Partners has agreed to buy 100 per cent of the gold from the leach pads located at the San Agustin mine for a minimum period of six full calendar months and with a minimum delivery of 7,500 ounces of payable gold (the working capital facility). The San Agustin mine is one of the assets to be acquired by the company pursuant to the previously announced transaction with Florida Canyon Gold Inc.

From the date of the purchase contract until Dec. 31, 2025, the company has the right to request an advance payment of up to $5-million (U.S.) in three equal monthly tranches, subject to a maximum of 40 per cent of the estimated recoverable gold to be delivered in the following three-month period. Each tranche of the advance payment must be repaid before a subsequent tranche can be drawn. The advance payment is subject to a fee equal to three-month CME term SOFR reference rates plus 4 per cent. For each $1-million (U.S.) of advance payment drawn by the company, 750 ounces of payable gold will be added to the minimum deliveries under the working capital facility.

The company intends to use the net proceeds from the working capital facility for general working capital requirements and to finance the advancement of its development projects.

The company has also signed note purchase agreements for up to $5-million (U.S.) in senior secured term notes (the transaction closing facility) from Deans Knight, on behalf of certain investors. The notes mature on Nov. 30, 2026.

The company has no obligation to draw from the transaction closing facility. The drawn portion of the transaction closing facility bears interest at 15 per cent per annum.

The company intends to use the net proceeds from the transaction closing facility to finance the final closing payment in connection with the acquisition.

Implementation of the working capital facility and the transaction closing facility is subject to regulatory approval.

The company has agreed to issue 1.5 million common shares for loan establishment.

Adviser

TSCG Capital acted as adviser to Heliostar for the transaction closing facility.

About Heliostar Metals Ltd.

Heliostar aims to grow to become a mid-tier gold producer. The company is focused on developing the 100-per-cent-owned Ana Paula project in Guerrero, Mexico, and has recently entered into an agreement to acquire a portfolio of production and development assets in Mexico.

We seek Safe Harbor.