Heliostar Metals (TSXV:HSTR) - Self-Funding Path From 40K to 300K Ounces by 2030

Helioar Metals: Growth Trajectory & Portfolio Deep Dive – Transcript Summary

Key Concepts:

• Internal Financing: Helioar’s strategy to fund growth without shareholder dilution.
• Step-wise Progression: A phased approach to increasing gold production.
• Cash Flow Generation: Utilizing existing assets (Lac Colorada, St. Augustine) to fund future projects (Anapola, Sarah Degayo).
• De-risking: Mitigating technical, permitting, and operational risks.
• All-In Sustaining Cost (AISC): A key metric for profitability, targeted to be in the bottom 15% of the global cost curve for Anapola.
• Permitting Timeline: A critical path item, particularly for St. Augustine restart.
• Longhole Open Stoping: The underground mining method planned for Anapola.
• Bioxidation Plant: A facility planned for Anapola to increase gold recovery rates.
• NPV (Net Present Value): Used to assess the economic viability of projects like San Antonio.
• M&I Resources: Measured and Indicated mineral resources, representing a higher level of geological confidence.

1. Company Overview & Growth Strategy

Helioar Metals is a gold producer focused on growth, aiming to increase production from 30-40,000 ounces in 2025 to 300,000 ounces by the end of the decade. A core tenet of their strategy is internally financing this expansion, avoiding equity dilution. This is achieved through maximizing cash flow from existing assets and strategically deploying capital into high-return projects. Steven Suk, VP of Investor Relations and Development, emphasizes the company’s ability to execute a “step-wise progression” towards this goal.

2. 2025 Achievements & Key Drivers

The primary driver of success in 2025 was bringing the Lac Colorada mine back into production after acquiring the Mexican portfolio from Argonaut Gold in November 2024. This rapid turnaround to cash flow, combined with a strong gold price environment, enabled the execution of growth initiatives. The restart of St. Augustine, completed recently, is expected to further bolster cash flow.

3. St. Augustine – Cash Flow Engine

St. Augustine is positioned as a key “ATM” for Helioar, generating significant cash flow. Current reserves are estimated at 68,000 ounces of gold, with planned production of 45,000 ounces over a 14-month mine life. Drilling programs are underway to extend the mine life, with expectations of adding 2-3 years of production. The operation is described as a simple, low-cost open-pit truck and shovel operation. The company anticipates generating approximately $65 million in cash flow from St. Augustine through 2026, impacting Q1 results significantly.

4. Lac Colorada – Low-Grade, Low-Strip Operation

Lac Colorada is a low-grade (but low strip ratio – 6:1) operation. While sensitive to gold price fluctuations (economic viability shown at $2400/oz, with upside potential at $3000/oz), the low strip ratio provides downside protection. Opportunities exist to optimize production and potentially expand resources at Beta Madre Plus. Additional releaching initiatives are being explored to maximize gold recovery from existing leach pads.

5. Anapola – The Core Growth Project

Anapola represents the most significant growth catalyst for Helioar. The Preliminary Economic Assessment (PEA) outlines a $300 million capex for a mine producing 100,000 ounces per year at an all-in sustaining cost (AISC) of just over $1,000/oz, with a 9-year mine life. A 20,000-meter drill program is underway to extend the mine life to 10+ years by converting inferred resources to measured and indicated, and identifying additional mineralization. The deposit’s unique combination of high-grade (5.5 g/ton) and bulk tonnage is expected to position Anapola in the bottom 15% of the global cost curve.

6. Anapola – Mining Method & Metallurgy

The planned mining method for Anapola is longhole open stoping, utilizing existing underground access. The ore body is described as competent due to a silica flooding event. A $50 million bioxidation plant is included in the capex to achieve a 90% gold recovery rate (80% conventional recovery without the plant). Metallurgical testing and flow sheet optimization are key de-risking activities.

7. Sarah Degayo – Long-Term Potential

Sarah Degayo is a large-scale, open-pit heap leach operation with a 15-year mine life, producing approximately 85,000-87,000 ounces of gold equivalent per year. The project includes a sulfur recovery (SR) plant to process copper byproduct. While the current mine plan utilizes 1.3 million ounces of a 5 million ounce gold equivalent resource, opportunities exist to expand the resource through additional drilling and land acquisition. It is positioned as a project to be developed after Anapola, contributing to the 300,000 ounce/year target.

8. San Antonio – A Longer-Term Opportunity

San Antonio, with a NPV exceeding $1 billion at current gold prices, is a promising project hampered by permitting challenges in Baja California. The state’s infrastructure is geared towards tourism, creating hurdles for mining development. Helioar is engaging with local communities and state government to explore potential permitting pathways. The company has no immediate plans to divest the project due to its significant potential.

9. 2026-2028 – Key Growth Factors & Timeline

• 2026: Continued production at St. Augustine, expansion opportunities at Lac Colorada (Veta Madre Plus), and ongoing drilling at Anapola.
• 2028: Anapola is expected to come online, marking a significant step change in production and profitability.
• Post-Anapola: Development of Sarah Degayo, contributing to the 300,000 ounce/year production target.

10. Capital Allocation & Valuation

Helioar does not currently anticipate raising additional capital, as existing assets are expected to internally fund growth initiatives. The company believes it is still undervalued, trading at a spot PNAV of around 28, and has significant upside potential through exploration and project development. The focus remains on executing existing plans and demonstrating de-risking through the drill bit.

Notable Quote:

“We’re treating it [St. Augustine] a little bit like an ATM.” – Steven Suk, describing the cash flow generating potential of St. Augustine.

Conclusion:

Helioar Metals is executing a well-defined growth strategy centered around internally funded expansion and de-risking key projects. The company’s ability to rapidly bring assets like St. Augustine into production demonstrates its operational expertise. Anapola represents the core growth driver, with significant potential to transform Helioar into a substantial gold producer. The company’s commitment to disciplined capital allocation and a focus on margin over sheer production volume positions it for sustained success in a favorable gold price environment.