South Star Battery Metals Announces Closing of $2.3 Million of the Non-Brokered Private Placement and Phase 1 Construction Updates

Rhea-AI Summary

South Star Battery Metals Corp. (TSXV: STS, OTCQB: STSBF) has completed the second tranche of its non-brokered private placement, raising C$2,326,700 from global institutional investors. These funds will support exploration, development, and working capital, with Phase 1 commercial production slated for Q4 2023. The company is poised to meet the conditions for closing a US$10,000,000 streaming agreement with Sprott, ensuring full funding for the Santa Cruz graphite mine construction in Brazil. The company aims to be the first new graphite producer since 1996.

Positive

• Raised C$2,326,700 through second tranche of private placement.
• Secured US$10,000,000 in funding for Phase 1 construction.
• Phase 1 production planned for Q4 2023.

Negative

• None.

VANCOUVER, BC, Nov. 16, 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 second tranche of its previously announced non-brokered private placement of units (the "Private Placement" or the "Offering") for total proceeds of C$2,326,700. The entire second tranche of the Offering was with global institutional investors who are very familiar with the battery metals and mining sectors. Net proceeds from the Private Placement will be used for exploration, development, construction activities, corporate G&A and general working capital requirements. Phase 1 commercial production is planned for Q4 2023.

With the closing of the second tranche of the financing, the Company should meet all the condition precedents to the Phase 1 closing under the Sprott Private Resource Streaming and Royalty Corp. ("Sprott") streaming agreement ("Agreement") (see April 5, 2022, April 18, 2022 and October 5, 2022 press releases). The Company anticipates the Phase 1 closing under the Sprott Agreement in November 2022.  With the release of the Phase 1 funds of US$10,000,000 for CAPEX due on closing under the Sprott Agreement, the Company will be fully funded for construction of the Phase 1 plant and mine at the Santa Cruz Graphite mine in Bahia, Brazil.

Richard Pearce, CEO of South Star, said, "We have successfully partnered with strong, long-term institutional investors familiar with Brazil, mineral resources and battery metals sector. We should close the Sprott Agreement in short order and will be fully funded for Phase 1 CAPEX. The owner's team is in place for construction, and we have started signing contracts as well as making down payments on critical path major equipment. Earthworks and civil infrastructure contractors are signed with mobilization planned in early December 2022. All the other contractors for Phase 1 have been prequalified, and we are finalising the negotiations for the balance of the contracts. We will deliver on our promise and commitment to be the first new graphite production since 1996. Our team is looking forward to putting shovels in the ground and moving the Project off the paper and into reality. Having started investing in Santa Cruz in 2010, we are very excited to have near-term production and cashflows on the horizon."

The second tranche of the Private Placement consists of 4,390,000 units priced at C$0.53 per unit (the "Units"). Each Unit consists of one (1) common share and one (1) common share purchase warrant (the "Warrants"). Each Warrant entitles the holder to purchase one additional common share of the Company at an exercise price of C$1.25 per common share for a period of five years from the date of issue. The securities issued in this first tranche closing will be subject to a four-month hold period from the date of closing and approval by the TSXV, expiring March 16, 2023. In connection with closing of the second tranche of the Private Placement, the Company issued an aggregate amount of 73,300 finders' warrants and paid $116,547 in cash finders' fees to a certain finder.  Each finders' warrant entitles the holder to acquire one common share of the Company for a period of five years from the date of issue at a price of $0.53.  These finders' warrants are in addition to 77,944 finder's warrants issued in connection with the closing of the first tranche of the Private Placement.  An aggregate of 8,750 of the finder's warrants issued in connection with the first tranche were exercisable at a price of $1.25 for five years from the date of issue.   An aggregate of 69,194 of the finders' warrants issued in connection with the first tranche were exercisable at a price of $0.53 for five years from the date of issue.

Acceleration Clause

If during a period of ten consecutive trading days between the date that is four (4) months following the closing of the Private Placement and the expiry of the Warrants the daily volume weighted average trading price of the common shares of the Company on the TSXV (or such other stock exchange where the majority of the trading volume occurs) exceeds C$2.50 for each of those ten consecutive days, the Company may, within 30 days of such an occurrence, give written notice to the holders of the Warrants that the Warrants will expire at 4:00 p.m. (Vancouver time) on the 30th day following the giving of notice unless exercised by the holders prior to such date. Upon receipt of such notice, the holders of the Warrants will have 30 days to exercise their Warrants. Any Warrants which remain unexercised at 4:00 p.m. (Vancouver time) on the 30th day following the giving of such notice will expire at that time.

Two directors of the Company subscribed in the Private Placement for an aggregate of 137,736 units for gross proceeds of $73,000.  Each transaction with the directors constitutes a "related party transaction" as defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on the exemptions under section 5.5(a) and section 5.7(1)(b) from the formal valuation and minority shareholder approval requirements of MI 61-101, as the fair market value of the Private Placement, insofar as it involves related parties, does not exceed 25% of the Company's market capitalization (as determined under MI 61-101). The Company did not file a material change report at least 21 days before the closing of the private placement as the details of the private placement and the participation therein by related parties of the Company were not settled until shortly prior to closing and the Company wished to close on an expedited basis for sound business reasons.

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 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 (>30t) has been completed. The results of the testing show that approximately 65% of Cg concentrate is +80 mesh with good recoveries and 95%-99% Cg. With excellent infrastructure and logistics, South Star is carrying its development plan towards Phase 1 production projected in Q4 2023.

South Star's next project in the development pipeline is a project in Alabama located in the middle of a developing electric vehicle, aerospace and defence hub in the southeastern United States.  The Project is a historic mine active during World Wars I & II.  Trenching, sampling, analysis and preliminary metallurgic testing has been completed.  The testing indicated a traditional crush/grind/flotation concentration circuit achieved grades of approximately 96-97% with approximately 86% recoveries. 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 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 Board,

Mr. Richard Pearce
Chief Executive Officer

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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: moving Santa Cruz into production 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: closing of the second trance of the financing and the Sprott Agreement, TSXV acceptance of the PIF, final TSXV approval of the financing, 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.

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SOURCE South Star Battery Metals Corp.

FAQ

What is the purpose of the private placement by South Star Battery Metals Corp. (STSBF)?

The private placement is intended to raise funds for exploration, development, construction activities, and general working capital.

When is Phase 1 production planned for South Star Battery Metals Corp.?

Phase 1 commercial production is planned for Q4 2023.

How much did South Star Battery Metals Corp. raise in the second tranche of the private placement?

South Star Battery Metals Corp. raised C$2,326,700 in the second tranche.

What are the implications of the US$10 million Sprott streaming agreement for South Star?

The Sprott streaming agreement will provide US$10 million for capital expenditures, fully funding the Phase 1 plant and mine at the Santa Cruz graphite mine.