South Star Battery Metals Announces Selection by BNDES and FINEP for Strategic Minerals Funding Program, Maiden Shipment of Flake Graphite from the Santa Cruz Mine and Operational Update

Rhea-AI Summary

South Star Battery Metals has achieved two significant milestones: selection for Brazil's R$5B Strategic Minerals Funding Program and completion of its maiden graphite shipment from Santa Cruz Mine. The company was chosen by BNDES and FINEP for potential funding to expand production and innovation in strategic minerals. The first shipment of natural flake graphite left on June 5th, 2025 for North America, marking South Star's transition to commercial production. Santa Cruz Phase 1 represents the first new graphite production in the Americas since 1996, with permits allowing expansion to 50,000 tpy. However, the operation faces challenges including extreme weather conditions and underperforming equipment. The company has appointed Rogerio Barcellos Leite as Director of Operations to optimize processes and improve performance. The mine has maintained an impressive safety record with 916 days without lost-time incidents.

Positive

• First new graphite production in the Americas since 1996, with maiden shipment completed
• Selected for R$5B Brazilian Strategic Minerals initiative with potential funding access
• Excellent safety record: 916 days and 404,777 man-hours without lost-time incidents
• Fully licensed through Phases 2 and 3 for up to 50,000 tonnes per year capacity
• Successfully achieved plant mechanical availability of 92% and concentrate grade targets of 93-96% Cg

Negative

• Operational challenges with three major equipment pieces performing below design specifications
• Extreme rainfall and high winds (2.5x normal average) significantly impacting production
• Recovery rates still not meeting target of 82-84%
• Ongoing issues with throughput optimization and steady-state production

Highlights:

• South Star’s flagship graphite mine Santa Cruz was selected by Brazilian National Development Bank (“BNDES”) and Brazil’s Innovation Agency (“FINEP”) as part of the Transformation of Strategic Minerals initiative. The BNDES and FINEP partnership aims to promote investments to increase production, research and development as well as innovation in the processing of strategic minerals, such as graphite.
• The first shipment of natural flake graphite concentrates from the Santa Cruz Graphite Mine in Bahia, Brazil was shipped on June 5, 2025 to a North American client. The next orders are being prepared.
• Santa Cruz Phase 1 Operational Update.
  

VANCOUVER, British Columbia, June 16, 2025 (GLOBE NEWSWIRE) -- South Star Battery Metals Corp. (“South Star” or the “Company”) (TSXV: STS) (OTCQB: STSBF), is pleased to announce that it was selected by the R$5B (US$895M) Transformation of Strategic Minerals initiative sponsored by the BNDES and FINEP. The initiative targets increased production and transformation of minerals crucial for energy transition and decarbonization, focusing on developing supply chains for graphite, lithium, rare earth elements, and other strategic minerals in Brazil. The initiative is designed to accelerate the production and transformation of critical minerals essential for the global energy transition and decarbonization, with a strategic focus on building supply chains for priority resources.

South Star presented a work program and conceptual business plan for Santa Cruz Phase 2 and 3 expansions as well as the downstream transformation of graphite in Brazil for industrial and energy transition sectors. The Company will now submit a comprehensive business plan detailing market analysis, management, milestones, budgets, marketing strategy, operations plan, partnerships and socio-environmental impacts for increasing production with a phased, modular approach. South Star will work in partnership with BNDES and FINEP to assess the most appropriate potential financial structures for future funding, which could include credit facilities, equity participation, and grants to invest in productive capacity, research, development, and innovation (“RD&I”).

In addition, the Company is pleased to announce that the maiden shipment of graphite concentrates from Santa Cruz left the mine on June 5^th, 2025 and is enroute to North America. This significant milestone marks the transition of South Star into commercial production and underscores its commitment to establishing a reliable, scalable global supply chain with integrated graphite production in the Americas. Santa Cruz Phase 1 is the first new graphite production in the Americas since 1996 and is fully licensed and permitted through Phases 2 and 3, enabling total production capacity of up to 50,000 tonnes per year (“tpy”) of high-quality Brazilian graphite concentrates. The next orders are being produced and are planned to ship shortly.

Richard Pearce, CEO of South Star, commented, "We are honored to be selected for this landmark strategic minerals initiative in Brazil. We are also proud of delivering the first new graphite production in the Americas since 1996 at a time when global supply chains have few options and political tensions are increasing. As a leading global producer of critical minerals, Brazil plays a pivotal role in supplying the metals essential for defense, industrial, energy transition, and stationary storage applications. Among Western jurisdictions, Brazil holds the greatest potential to rapidly scale production and drive innovation across the entire value chain—from raw materials to advanced manufacturing—supported by a skilled workforce, robust industrial base, clean energy and excellent infrastructure. Our selection is a strong endorsement of graphite’s growing strategic importance, as well as of our long-term vision and commitment to supporting Brazil, our local communities, and our global clients. This support could be transformational for the expansion of our Santa Cruz operations and a key step toward unlocking long-term value for all stakeholders.”

Operational Update

As of the end of May 2025, South Star has achieved 916 days and 404,777 man-hours without a lost-time incident, which covers the entire construction, commissioning, and ramp-up phases of the Santa Cruz operation. The mine is performing well, and average grade and strip ratios are reconciling closely with the mine plan. There are approximately 35,000 tonnes of ore stockpiled on the run of mine ore (“ROM”) pad.

The ramp-up process is ongoing and focused on achieving the following performance goals:

• Complete construction and commissioning - (Achieved)
• Plant mechanical availability of 92% - (Achieved)
• Concentrates grade of 93-96 % graphitic carbon, (“Cg”) - (Achieved)
• Recoveries of approximately 82-84% - (On-going)
• Constant Throughput of 30 tph of ore - (On-going)
• Cost reductions initiatives - (On-going)

Santa Cruz has experienced several operational challenges during ramp-up:

• Extreme rainfall and high winds in April and May (2.5x normal average), which significantly impacted production.
• 3 Pieces of major equipment are performing below the design performance specification for 450/500 tpm of production
  • High frequency screen
  • Entrance to rod mill
  • Tailings filter press
    

The performance bottlenecks are being reviewed by the South Star team and the equipment manufacturers. Active steps are being taken to resolve the issues quickly. In addition, the team is working through a thorough evaluation of the metallurgical mass and water balance and working to achieve a steady-state throughput to improve recoveries. All relevant factors including pulp densities, reagents dosing, ball size, mill RPMs and residence times are being optimized to improve recoveries and grade while maintaining the flake size. The Company is working diligently to resolve bottlenecks, evaluate new suppliers and equipment manufacturers to ensure qualified suppliers that can provide robust alternatives for maintenance and wear parts. The team is working to improve the preventative maintenance plans and minimum inventories to ensure efficient operations.

In addition, the Company is pleased to announce that Mr. Rogerio Barcellos Leite has been appointed as the Santa Cruz Director of Operations. A chemical engineer with a broad industrial and mining background, Mr. Barcellos Leite will lead process optimization, data-driven performance improvements, and the development of systems that drive operational clarity and culture.

Richard Pearce, CEO of South Star, commented, "We are pleased to welcome Rogerio to the team and look forward to working closely with him to clear bottlenecks and scale operations quickly at Santa Cruz. He has over 20 years of experience in mining and industry, with a proven track record of delivering operational excellence, a culture of continuous improvement, safety leadership, and sustainable growth across a range of commodities. As we stabilize and scale production at Santa Cruz to advance the strategic initiatives, Rogerio’s expertise in operational strategy, workforce development, and continuous improvement will be instrumental in driving performance.”

ABOUT SOUTH STAR BATTERY METALS CORP.

South Star is a Canadian battery-metals project developer focused on the selective acquisition and development of near-term production projects in the Americas. South Star’s Santa Cruz Graphite Project, located in Southern Bahia, Brazil is the first of a series of industrial- and battery-metals projects that will be put into production. Brazil is the second-largest graphite-producing region in the world with more than 80 years of continuous mining. Santa Cruz has at-surface mineralization in friable materials, and successful large-scale pilot-plant testing (> 30 tonnes) has been completed. The results of the testing show that approximately 65% of graphite concentrate is +80 mesh with good recoveries and 95%-99% graphitic carbon (Cg). With excellent infrastructure and logistics, South Star Phase 1 is ramping up commercial production with first sales expected to be delivered in October 2024. Santa Cruz Phase 1 commercial production has a nameplate capacity of 12,000 tpy and is the first new graphite production in the Americas since 1996. Phase 2 production (25,000 tpy) is partially funded and planned for 2026, while Phase 3 (50,000 tpy) is scheduled for 2028.

South Star’s second project in the development pipeline is strategically located in Alabama, U.S.A. in the center of a developing electric-vehicle, aerospace, and defense hub in the southeastern United States. The BamaStar Project includes a historic mine active during the First and Second World Wars. A NI 43-101 Preliminary Economic Assessment will be filed on SEDAR+. Trenching, Phase 1 drilling, sampling, analysis, and preliminary metallurgical testing have been completed. The testing included a traditional crush/grind/flotation concentration circuit that achieved grades of approximately 94-99% Cg with approximately 90% recoveries. The vertically integrated production facilities include a mine and industrial concentrator in Coosa County, AL and a downstream value-add plant in Mobile, AL, which will be upgrading natural flake graphite concentrates from both Santa Cruz and BamaStar mines. South Star is executing on its plan to create a multi-asset, diversified battery-metals company with near-term operations in strategic jurisdictions. South Star trades 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, ongoing education, and stewardship. To learn more, please visit the Company website at http://www.southstarbatterymetals.com.

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

On behalf of the South Star Board of Directors,

MR. RICHARD L. PEARCE,
President & Chief Executive Officer

For additional information, please contact:

South Star Investor Relations
Email: invest@southstarbatterymetals.com
Phone: +1 (604) 706-0212
Website: www.southstarbatterymetals.com

Twitter: https://twitter.com/southstarbm
Facebook: https://www.facebook.com/southstarbatterymetals
LinkedIn: https://www.linkedin.com/company/southstarbatterymetals/
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CAUTIONARY STATEMENT

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts 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 legislation. Forward-looking statements relate to information that is based on assumptions of management, forecasts of future results, and estimates of amounts not yet determinable. Any statements that express 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 the Private Placement, including the closing date, the use of proceeds and potential acceleration of Warrants and Finder’s Warrants, production at Santa Cruz, and scaling operations as well as advancing the Alabama project; and the Company’s plans and expectations.

Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation: risks related to failure to obtain adequate financing on a timely basis and on acceptable terms; risks related to the outcome of legal proceedings; political and regulatory risks associated with mining and exploration; risks related to the maintenance of stock exchange listings; risks related to environmental regulation and liability; the potential for delays in exploration or development activities or the completion of feasibility studies; the uncertainty of profitability; risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits; risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; results of prefeasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with the Company's expectations; risks related to commodity price fluctuations; and other risks and uncertainties related to the Company's prospects, properties and business detailed elsewhere in the Company's disclosure record. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Investors are cautioned against attributing undue certainty to forward-looking statements. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from the Company's expectations or projections.

FAQ

What is the significance of South Star Battery Metals' selection for the BNDES and FINEP funding program?

The selection gives South Star access to potential funding from a R$5B initiative aimed at increasing production and innovation in strategic minerals, which could support the company's expansion plans and downstream operations in Brazil.

When did STSBF make its first graphite shipment from Santa Cruz Mine?

South Star made its maiden shipment of natural flake graphite concentrates on June 5th, 2025, destined for a North American client.

What is the current production capacity of South Star's Santa Cruz Mine?

The Santa Cruz Mine is permitted through Phases 2 and 3 for a total production capacity of up to 50,000 tonnes per year of graphite concentrates.

What operational challenges is STSBF currently facing at Santa Cruz?

The company faces challenges including extreme weather conditions, underperforming equipment (high frequency screen, rod mill entrance, and tailings filter press), and ongoing optimization of recovery rates and throughput.

Who is the new Director of Operations at Santa Cruz Mine?

Rogerio Barcellos Leite, a chemical engineer with over 20 years of mining and industry experience, has been appointed as the Santa Cruz Director of Operations.