Heliostar’s Ana Paula Story Shifts From Discovery to Execution

0:18Mining Stock Daily: All right, everybody. Just a quick programming note. It's only been a few days since we've heard from HelioStarMetals. In fact, we did an update with them last week. So a quick turnaround this week here at the Beaver Creek Precious Metals Summit. They do trade on the venture with HSTR and on the OTCQX with HSTXF. Charles Funk, CEO of the company. So Charles, welcome back to Colorado. Great to see you in person. Yeah, how have you been? How was the first couple days? Very busy. It's incredible to see. I think there's a calmness to this market that's unusual. There's euphoria last year. Yeah, that's probably the best way to describe it.

0:58Mining Stock Daily: So people have been asking me, like, was this year any different than last year? I was like, honestly, it felt like last year was very jubilant. This year, it's almost like cautious, like cautious jubilation. But I like the way you put it. No, I think people are just getting on with their business and people can afford to because they're funded. So it's clearly a bull market. Yeah, yeah. We've been able to settle into$4 ,000 gold without actually celebrating the milestone we've actually been here before. Isn't that insane? It's insane that that's the new normal. All right. Okay, let's kind of jump in and follow up from last week's conversation.

1:32Mining Stock Daily: But, you know, a few days ago, you did give us that Anapala update kind of quickly. That feasibility study is 34 % complete, I believe is what you said. What have you learned in that first third of this study here for Anapalas? That's going to be a huge milestone for you guys. Yeah, I think the biggest thing that we've learned today was that we had a nine-year mine life in the PEA. and we were targeting 10 years at 100 ,000 in the FS. I think we're quite confident with that trajectory, having done 25 ,000 metres of drilling. So I think that's the biggest step change. We've also got some optimisations that we're working on as well that I think will lower our costs and increase the economics of Annapurna.

2:07Mining Stock Daily: Okay. Resources in the final stages. You've had more spectacular hits, more exploration. Tell us kind of where that direction with the drill programme is going now. Yeah, there's two parts of it. We had to do quite a bit of inferred resource conversion to make the feasibility study, and that's gone very well for us. You get blasé at drilling 50 to 100 metre intercepts at 10 grams per tonne gold. It's a unique ore body. Where we've had particular joy recently, and we're continuing to drill, and we have some more results to come, is in the expansion zone underneath. We should have probably stopped drilling at the 25 ,000 metres in a strict sense of what will be the feasibility study.

2:47We've done about another 10 ,000 meters because of the results down deep. We've hit 100 meters at 5 grams. We consistently drill 10 to 20 meters at 5 to 25 grams per tonne gold down there, and it's open. So we've pushed that a little bit, and we think even within the bounds of the feasibility study, I think there's more resources beyond that. That's what this information and drilling is showing us.

3:10Mining Stock Daily: Feasibility study is obviously a huge de-risking moment. If we look back at the last six months, what are the major things from Annapala technically that have been removed from the risk category? In comparison, looking ahead six months, what are some of those technical risks that still need to be answered? Yeah, so I think the biggest two things we've removed is the confidence that resource is there to support the mine life. We've also effectively completed all the metallurgy that we need for the feasibility study. So getting them out of the way helps set a cutoff grade that then leads into the mine design work.

3:43So looking forward, we're about a third of the way through the mine design, the mill design and the tailings work. So having the resource and the MET done then allows us to move and de-risk those steps. We'll also submit the updated permit to change from the open pit to underground in the next couple of weeks. And obviously that's a huge de-risking step to have done and in progress.

4:03Mining Stock Daily: Yep, yep. Anything on the MET recovery stuff that needs to be optimized? Do you feel confident where it's at? No. One of the good takeaways is the flow sheet hasn't changed from the PEA. The bulk sample and the variability analysis is coming in pretty similarly to the PEA. So that gives you a lot of confidence when you're not seeing significant change from one step to the other. And you produce a Dore bar? We will. What's interesting is we'll do float CIL, and we've also got that Biox to improve the recoveries of the refractory part of Annapola. will produce Dore with a 90 % recovery, which we think is actually going to open up some pretty creative growth scenarios in the future, being experts on bikes in North America.

4:44Mining Stock Daily: You're targeting mid-2027 construction decisions, so you and I got less than a year, right? And I can't wait to have that conversation with you. It'll be fun. Yeah, it's going to be a good one. First gold before end of 2028. Is there anything, like any single item That could be a critical path that could move that schedule, either earlier or even postponing it. I think there's many things that can adjust the schedule. A couple to speak to, we touched on permitting. You're never fully in control. It's a government-interactive process, although we're confident with those timelines. The advantage of having the cash flow that we've got is we can commit to our early lead time items.

5:22Our longest lead time items are our transformers and our ball mill in that order. And so having cash means we're able to do that work and order those. So, no, we've looked very closely at what's our critical path. There's always plenty of things that can go wrong in this process. But as yet, we've kept the feasibility timeline now for coming up on 12 months. We haven't seen any major slippage in our timeline, and at the moment we don't foresee any.

5:47Mining Stock Daily: You have mentioned to me about the kind of work in progress with debt financing arrangements for Anapala. We're not in a terribly favorable rate market right now, obviously. So can you give us a lay of land of what you're learning about mine financing on the debt side in this, you know, this bear market of rates we're at? Obviously, capital is getting more expensive. What is the appetite right now for not only for the consumer of the debt, but obviously the lender of the debt? You've got to be pretty ecstatic right now. Yeah, well, actually, you'll find it's the opposite of what you're talking about in the general markets.

6:24It's actually a great time to be debt financing mines for a couple of reasons. One is you've seen the significant cash flows from our sector. A large number of debt financiers to our sector have had their capital repaid and they're looking to deploy it. And there's not a significant amount of new mine builds coming online this year and next year. I think 2930, we're going to see a huge glut of those. So there's actually a lot of financing chasing very few new mine builds. The terms that I think we can get today, I think are materially better than I thought we could have got 18 months ago. The other side is, as you see the deterioration in debt in those broader markets, people are wanting hard commodities.

7:04So actually you're seeing a demand for the kind of product like new gold mines. So incredibly, we're seeing a very competitive debt space. We've selected Hanneman Partners to lead this for us. We think it'll be a major catalyst to bring that online. We think approximately 100 to 150 of cash coming from our operations, 150 to 200 million of debt, will be a very attractive debt financing, which I think will be better than we thought was possible, given the current market conditions.

7:36Mining Stock Daily: You are kind of at this, or maybe getting to an inflection point, where the story of Heliostar is not, especially Annapala, it's not necessarily going to be about the geology, the exploration. It's going to be about the execution. What kind of confidence do you think your shareholders have watching things transpire with like Law of Colorado and the other projects, trusting that the execution is going to work with Anapala, although that's going to be a much bigger, different animal compared to what you acquired from the other assets a number of years ago? Yeah, I'd say we've well moved past geology being the critical factor at Anapala.

8:12It is execution. It is the biggest single risk in Heliostar is delivering Anapala. You know, risk goes both ways. We see it on the upside with the success and the potential of things to go wrong when we embark on something of this scale. The confidence that we have comes from our team. You know, our team's built and operated mines in Mexico, operated mines just down the road in Guerrero with our COO, Greg Bush. So we're confident that we have the technical team. We're using M3, a very well-known conservative study lead who built the Media Luna underground 20Ks away. So what we've done is put the best people that we know of in place to lead this.

8:51And hopefully the track record that we've had in restarting two mines gives our shareholders some confidence. But no, I don't think you should ever sugarcoat the significance of a new build and the risk and reward that comes with that for a company like Elystar.

9:04Mining Stock Daily: Any sort of different conversations you've been having at Beaver Creek this year compared to what you had last year? Yeah, I think there's a lot more confidence that we can deliver what we said, which is building out a pool without equity. So I think it's people understanding that it's becoming a reality, not one of the possible outcomes. Okay, very good. Last topic of conversation. Archie Wilson from Frankston, South Victoria, Nebraska punter, two-footed punter. How do you like your Cornhuskers this year? First of all, I love my punters to have two feet as a general rule. And if I can kick from both, even better.

9:40we are starting well as a proud Go Big Red fan. That's my boy. I have some nervousness about as we move into the next few weeks, but we started strong. We've got a great quarterback, and hopefully our boy from Frankston doesn't do a lot of punting.

9:56Mining Stock Daily: Hopefully. All right. Charles, good to see you. Always a pleasure. Thanks so much for the update once again. We'll talk to you here in the next few weeks. Thank you very much. The information presented should not be considered investment advice. Mining Stock Daily and its affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.