South Star Battery Metals Anno

VANCOUVER, BC, November 22, 2022

VANCOUVER, BC, November 22, 2022 /PRNewswire/ – South Star Battery Metals Corp. (“South Star” or the “Company”) (TSXV: STS) (OTCQB: STSBF), is pleased to announce that it has completed the Phase 1 Deposit (the “Phase 1 Deposit”) transaction under the previously announced purchase- and metal sales agreement (the “Agreement”) with Sprott Private Resource Streaming and Royalty Corp. (“Sprott”) (cf April 5, 2022, April 18, 2022 and October 5, 2022 press releases). With the completion of the recent private placements and the receipt of the Phase 1 down payment to fund CAPEX under the Agreement, the Company believes it is fully funded for the construction of the Phase 1 plant and mine in the Santa Cruz Graphite- mine in Bahia, Brazil (the “Santa Cruz or Project”).

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The Agreement includes a total cash consideration of up to 28 million dollars as an upfront payment for graphite concentrates from the Santa Cruz project. South Star will act as a sales agent for Sprott for the percentage of the production in favor of Sprott and subject to the Agreement.

Stream Agreement Highlights:

  • The Phase 1 Deposit is 10 million dollarswhich is expected to fund 100% of the required Phase 1 CAPEX, with commercial production planned for Q4 of 2023.
  • The Phase 1 Deposit will also be used to repay the outstanding principal and interest under the previously announced redemption 2 million dollars loan from Sprott.
  • The Phase 2 Deposit (the “Phase 2 Deposit”) is minimal 9 million dollars and maximum 18 million dollars cash consideration for partial financing of Phase 2 CAPEX ($27 million1), subject to phase 2 due diligence by Sprott, as well as investment committee update and approval and customary closing conditions.
  • South Star issued 1.2 million warrants to Sprott in connection with the closing of the Phase 1 Deposit (being the 6 million previously announced warrants, on a post-consolidation basis). Each full warrant entitles Sprott to purchase one additional ordinary share of the Company at an exercise price of €0.72 for a period of three years from the closing date of the Phase 1 Deposit, subject to acceleration in certain circumstances.
  • Repayment of the 2 million dollars loan.
  • Minimum dilution of equity to maximum 28 million dollars cash compensation.
  • South Star has the option to buy back 100% of the Phase 2 deposit.
  • Automatic phase-out of 50% of the Phase 1 Deposit after sale and delivery of 75,000 tons of concentrate.
  • Excellent post-stream LOM EBITDA margin of 51% (Phase 1 Deposit + 100% Phase 2 Deposit).
  • Attractive combined cost of capital with significantly lower total cost of financing compared to other available capital market alternatives.

(1) Based on the study in the report entitled “NI 43-101 Technical Report, Updated Resources and Reserve Assessment and Pre-Feasibility Study, Santa Cruz Graphite Project, Bahia, Brazil”, effective January 31, 2020 and is available on the company’s SEDAR profile at www.sedar.com.

Richard PearceCEO of South Star, said: “We have successfully partnered with strong long-term institutional investors who are familiar with Brazil, mineral resources and the battery metals sector. We are fully funded for Phase 1 construction with commissioning and commercial production scheduled for late 2023. We have successfully completed highly flexible financing while minimizing shareholder dilution and at a very reasonable cost of capital. We expect to deliver on our promise and commitment to be the first new graphite producer since 1996. Thanks to the Sprott team for laying the foundations for a bright future and an exciting 2023.”

About South Star Battery Metals Corp

South Star Battery Metals Corp. is a Canadian battery metals project developer focused on the selective acquisition and development of short-term production projects in the Americas. South Star’s Santa Cruz Graphite Project, located in South Bahia, Brazil is the first of a series of industrial and battery metal projects to enter production. Brazil is the second largest graphite producing region in the world with over 80 years of continuous mining. Santa Cruz has surface mineralization in friable materials and successful large-scale pilot plant tests (>30t) have been completed. The results of the tests show that approximately 65% ​​of the Cg concentrate is +80 mesh with good recoveries and 95%-99% Cg. With excellent infrastructure and logistics, South Star is executing its development plan towards Phase 1 production, projected in Q4 2023.

South Star’s next project in the development pipeline is one in Alabama located in the middle of a developing hub for electric vehicles, aerospace and defense in the Southeastern United States. The Alabama project is a historic mine that was active during the First and Second World Wars. Trenching, sampling, analysis and preliminary metallurgical testing are completed. The tests showed that a traditional crush/gravel/flotation concentration circuit achieved degrees of approximately 96-97% with approximately 86% recovery. South Star is executing on its plan to create a multi-asset, diversified battery metal business with short-term operations in strategic jurisdictions. South Star is traded on the TSX Venture Exchange under the symbol STS and on the OTCQB under the symbol STSBF.

South Star is committed to a corporate culture, project execution plan and safe operations that embrace the highest standards of ESG principles based on transparency, stakeholder engagement, continuing education and stewardship. For more information, visit the company’s website at http://www.southstarbatterymetals.com.

This press release has been reviewed and approved by Richard Pearce, PE, a “Qualified Person” under National Instrument 43-101 and President and CEO of South Star Battery Metals Corp.

On behalf of the Board,

Mr. Richard Pearce
Director

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WARNING

Neither the TSX Venture Exchange nor its regulatory service provider (as that term is defined in the TSX Venture Exchange’s policies) assumes responsibility for the adequacy or accuracy of this press release.

Forward-Looking Information

This press release contains “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements relate to information that is based on management’s assumptions, projections of future results and estimates of amounts that cannot yet be determined. Any statements expressing predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be “forward-looking statements”. Forward-looking statements in this press release include, but are not limited to, statements regarding: full financing for Phase 1 CAPEX and partial financing for Phase 2 CAPEX and the impact of the Agreement; moving the Santa Cruz project into production and scale operations and the timing of such milestones, as well as advancing the Alabama project; and company plans and expectations.

Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual events or results to differ from those reflected in the forward-looking statements, including, but not limited to: the closing of the Phase 2 Deposit, risks associated with obtaining adequate financing in a timely manner and on acceptable terms; risks associated with the outcome of legal proceedings; political and regulatory risks associated with mining and exploration; risks associated with maintaining stock exchange listings; environmental regulatory and liability risks; the possibility of delays in exploration or development activities or the completion of feasibility studies; the uncertainty of profitability; risks and uncertainties related to the interpretation of drilling results, the geology, grade and continuity of mineral deposits; risks associated with the inherent uncertainty of production and cost estimates and the possibility of unexpected costs and expenses; results of feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with the Company’s expectations; risks associated with commodity price fluctuations; and other risks and uncertainties regarding the Company’s prospects, property and business described elsewhere in the Company’s disclosure file. If one or more of these risks and uncertainties materialize, or if underlying assumptions prove incorrect, actual results could differ materially from those described in any forward-looking statements. Investors are cautioned not to place undue reassurance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no obligation to update or revise them to reflect new events or circumstances. Actual events or results may differ materially from the Company’s expectations or projections.

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SOURCE South Star Battery Metals Corp.

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