Heliostar Metals (TSXV:HSTR) - Mine Cash Flow to Fund $150M of Ana Paula Build

Stephen Soock (0:00)

I'm Stephen Soock, Vice President, Investor Relations and Development for Heliostar Metals. Heliostar is a gold growth company with production aiming to be a mid-tier gold producer. We have a clear path to go to 300,000 ounces of annual production by the end of the decade, and do that without any equity dilation.

SPEAKER_2 (0:17)

Well, isn't that a wonderful punchline there? We're going to get into seeing how true that is.

Ana Paula is the kind of the flagship, it's the kind of big play here, but supporting that, we've got La Colorada and obviously San Agustin, we just need to feed into that process. Can we catch up with where you are with those projects? Because that's going to be the cash that maybe helps contribute towards the actual build of Ana Paula, right?

Stephen Soock (0:45)

Yeah, so you've got it. The cash flow from those two over the next, call it two years, will fund about 150 million of the equity plug for Ana Paula, instead of going to market for that sort of cash, which is typical for a developer. So things are very much on track with those two assets. On Q2, results that came out a little while ago, we produced just under 15,000 ounces between both mines. Did that at about 2,200 ASIC year to date. Sort of generating some very strong margins there.

La Colorada, we have exhausted the stockpile material that we were mining last year that really let us flip to become a producer in very short order. We finished mining that in March, and now we've moved on to something called injection leaching. So a bit of a novel way to produce gold, but we have a big leach pad that's been stacked off and on since the 1990s, and not all of it's been optimally leached. So injection leaching allows us to give it another rinse in three dimensions, put simply, and we're producing about 1,000 ounces a month from this technology.

That'll let us bridge the gap while we do the waste stripping on the next open pit cutback, and then that'll really be a step up in production there.

SPEAKER_2 (1:52)

Okay. You look for some sort of contribution from like you've got Veta Madre and Veta Madre Plus.

We weren't sure. Yeah. What's the contribution from that?

Stephen Soock (2:03)

So right now we just started the waste stripping on that. So, you know, Veta Madre has now turned into Veta Madre Plus. While we haven't issued a new technical report, we're very confident we'll be able to add about another 20,000 ounces beyond the about 50,000 ounces in reserve on the books at Veta Madre.

So that waste stripping program goes through to about Q2 next year. And then from that point on, we'll start stacking fresh ore on the leach pad. And we've got about probably nine months of production, nine to 12 months from Veta Madre Plus. That'll be a strong cash generation period from that pit at La Colorada.

SPEAKER_2 (2:39)

Right. And obviously the idea is obviously build that cash up, but you're also spending at the same time.

Can we talk about, I'm going to leap forward to Ana Paula, and then we're going to come back and join the conversation around cash. So Ana Paula, where are you? Because we talked last September about being 34% advanced on the PFS. What's the update?

Stephen Soock (3:01)

Yeah, so we just recently released the Feasibility Study Progress Update before the Beaver Creek Conference that we're at here, and then headed off to Colorado Springs showing that our Feasibility Study is 34% complete towards being able to deliver that Q2 of next year. We've done 25,000 meters of drilling, mostly focused on infilling the inferred material that was included in the PEA, and now we're able to include that in the FS. We've got very good conversion of that on track to hit our target of 100,000 ounces over a 10-year mine life in the upcoming Feasibility Study. A bunch of that material has also then gone to metallurgical testing.

We're feeding into the optimized mine plan. All these workstreams continue in parallel with the design of the plant, the silver works, etc. We've also continued drilling but not in mineralization. We're doing what I call engineering drilling. Condemnation drilling, geotechnical drilling, hydrogeological modeling, all that sort of stuff continues at site.

All the things that go into how you de-risk a mine build.

SPEAKER_2 (4:02)

Is it a BIOS?

Stephen Soock (4:04)

The BIOS is part of that, yeah.

SPEAKER_2 (4:05)

Part of that, it's all part of that. Is there any kind of conclusion to that work?

Stephen Soock (4:10)

We're actually expecting the latest report on the BIOS testing next week. All the indications are that it still looks very amenable to the BIOS process. What we've been focused on is metallurgical variability testing because BIOS doesn't like variable ore feed. Ana Paula continues to prove that it's an amazingly consistent ore body throughout the geometry of the deposit. So we think BIOS is going to be an extremely good fit, something we're looking forward to kind of pioneering in North America.