South Star Battery Metals Announces Non-Brokered Private Placement, Amendment to Stream Agreement and Extension of Promissory Note

Rhea-AI Summary

South Star Battery Metals Corp. (TSXV: STS, OTCQB: STSBF) announced a C$5.25 million non-brokered private placement at C$0.53 per unit. Each unit includes a common share and a warrant exercisable at C$1.25 for five years. The company has amended its stream agreement with Sprott, extending the deadline to satisfy conditions until December 14, 2022. Proceeds will support exploration, development, and operational costs. The company aims to produce from the Santa Cruz Graphite Project in Q4 2023, enhancing its position in the battery metals sector.

Positive

• Plans to raise C$5.25 million through a private placement.
• Extended timeline to satisfy conditions for the stream agreement.
• Proceeds will support exploration and development of the Santa Cruz Graphite Project.

Negative

• Subject to customary closing conditions, which may delay financing.
• Dependence on Sprott for funding and project development.

NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

VANCOUVER, British Columbia, Oct. 05, 2022 (GLOBE NEWSWIRE) -- South Star Battery Metals Corp. (“South Star” or the “Company”) (TSXV: STS) (OTCQB: STSBF), is pleased to announce that it intends to complete a non-brokered private placement (the “Private Placement”) of units (the “Units”) at a price of C$0.53 per Unit to raise up to C$5,250,000. Management expects the private placement to be fully subscribed. The Company has also amended the terms of its previously announced (see April 5, 2022 and April 18, 2022 press releases) stream agreement (the “Stream Agreement”) and promissory note (the “Promissory Note”) with Sprott Private Resource Streaming and Royalty (B) Corp. (“Sprott”) for the Santa Cruz Graphite Project in Brazil. Canaccord Genuity Corp. was engaged as a financial advisor to South Star on this placement.

Private Placement

Each Unit will consist of one (1) common share of the Company and one (1) common share purchase warrant (“Warrant”). Each Warrant will entitle the holder to purchase one (1) additional common share of the Company at an exercise price of C$1.25 per share for a period of five years from the date of issue. The Warrants will be subject to an acceleration clause (described in more detail below).

Closing of the Private Placement is subject to customary closing conditions, including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange (the “TSXV”). Proceeds from the Private Placement will be used for exploration, development, construction activities, corporate G&A and general working capital requirements. Proceeds from the Private Placement, when aggregated with the proceeds from the private placement that closed on June 23, 2022, are expected to satisfy the condition precedent of the Stream Agreement that the Company raise a minimum of C$6 million.

The Company may pay finders' fees to eligible finders, in accordance with applicable securities laws and the policies of the TSXV. The securities issued pursuant to the Private Placement will be subject to a four-month hold period. The Company may, in its sole discretion, exercise an over-allotment option pursuant to which it may increase the size of the Private Placement by up to 15%.

The acceleration clause of the Warrants will provide that, if, during any period of ten (10) 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 on each day, the Company may, within thirty (30) days of such an occurrence, give written notice to the holders of the Warrants that all unexercised Warrants will expire at 4:00 p.m. (Vancouver time) on the 30th day following the giving of such notice. Upon receipt of such notice, the holders of the Warrants will have thirty (30) days to exercise their Warrants and any Warrants that remain unexercised will expire.

Stream Agreement Amendment and Promissory Note Extension

The Company has entered into an agreement (the “Amendment”) with Sprott to amend the Stream Agreement. Pursuant to the Amendment, Sprott has, among other things, granted the Company a 60-day extension (to December 14, 2022) to satisfy the Phase 1 conditions precedent for the Stream Agreement. The Company and Sprott also amended the Promissory Note pursuant to which Sprott advanced US$2 million to provide for, among other things, a maturity date of December 14, 2022 and interest being calculated on the principal amount beginning on October 4, 2022 at a rate of 1% per month, compounding monthly.

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 press release has been reviewed and approved by Richard Pearce, P.E., a "Qualified Person" under National Instrument 43-101 and the President and CEO of South Star Battery Metals Corp.

On behalf of the Board,

Mr. Richard Pearce
Chief Executive Officer

For additional information, please contact:

South Star Investor Relations (Canada IR)

Email:	invest@southstarbatterymetals.com
	+1 (604) 706-0212 x 1

RBMG – RB Milestone Group LLC (IR US)
Trevor Brucato, Managing Director
Email: southstar@rbmilestone.com

Twitter: https://twitter.com/southstarbm
Facebook: https://www.facebook.com/southstarbatterymetals
LinkedIn: https://www.linkedin.com/company/southstarbatterymetals/
YouTube: South Star Battery Metals - YouTube

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; the Stream Agreement, including satisfying the conditions precedent to the Stream Agreement; moving the Santa Cruz project 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: 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 purpose of South Star Battery Metals' private placement?

The private placement aims to raise C$5.25 million for exploration, development, and corporate operations.

What is the closing date for the private placement by South Star Battery Metals?

The closing of the private placement is subject to customary conditions and approvals, with no specific date mentioned.

What are the terms of the warrant associated with the private placement?

Each warrant allows the purchase of one common share at C$1.25, valid for five years.

What is the significance of the amended stream agreement for South Star Battery Metals?

The amendment allows a 60-day extension to meet conditions precedent, now due by December 14, 2022.

When is South Star Battery Metals expected to start production at the Santa Cruz Graphite Project?

Production is projected to begin in Q4 2023.