News Summary
Heliostar Metals announced a positive Prefeasibility Study (PFS) for its 100% owned Cerro del Gallo gold project in Guanajuato, Mexico. The study outlines a 15.3-year open-pit, heap leach operation.
Key metrics from the base case study (at US$2,300/oz gold) include:
– After-tax Net Present Value (NPV) at a 5% discount rate of US$424 million.
– After-tax Internal Rate of Return (IRR) of 33.1%.
– Payback period of 2.3 years.
– Initial capital expenditure (CAPEX) of US$195.3 million.
– Average annual production of 85,700 gold equivalent ounces (GEOs).
– Life of Mine (LOM) All-In Sustaining Cost (AISC) of US$1,390 per GEO.
The CEO, Charles Funk, stated that this project fits the company’s growth trajectory and, following the development of the Ana Paula project, will help launch Heliostar towards 300,000 ounces of annual gold equivalent production by the end of the decade.
Material Impact
The release of a robust Prefeasibility Study for Cerro del Gallo is a material positive event that significantly de-risks a key asset in Heliostar’s portfolio and adds substantial, quantifiable value.
– Valuation Impact: The after-tax NPV of US$424 million (approximately C$580 million) is highly significant, representing approximately 92% of the company’s current market capitalization of C$634 million. This highlights that the market may be undervaluing the company’s total asset base, which also includes two producing mines and the flagship Ana Paula development project.
– Strategic Clarity: The PFS solidifies a clear, staged growth pipeline. Cash flow from the operating La Colorada and San Agustin mines is intended to fund development of the high-grade Ana Paula project first (targeting 101,000 oz/yr as per its PEA), followed by Cerro del Gallo (85,700 GEO/yr). This sequenced approach provides a credible path towards the company’s stated goal of becoming a 300,000 oz/yr producer.
– Financials and De-risking: The project shows strong economics with a 33.1% IRR and a quick 2.3-year payback at a reasonable gold price. The initial CAPEX of US$195.3 million, while substantial, is less than Ana Paula’s estimated US$300 million CAPEX, making it a more digestible second-phase development project. The AISC of US$1,390/GEO provides a healthy margin in the current gold price environment.
– Context of Historical News: This PFS delivers on a milestone for an asset acquired in the transformative transaction in late 2024. The company has consistently executed its plans throughout 2025: restarting production, generating cash flow, paying off acquisition debt, delivering excellent drill results from Ana Paula, and now delivering a strong economic study for its next major project. This builds management credibility.
In summary, the news is not routine; it fundamentally enhances the long-term value proposition by proving up a second major growth asset. This provides investors with a clearer picture of the company’s multi-year production profile and reduces reliance on the sole development of Ana Paula.
Catalysts
– Ana Paula Feasibility Study: The most significant near-term catalyst is the ongoing Feasibility Study for the flagship Ana Paula project. Any updates on drilling, metallurgy, and progress towards its completion will be critical.
– Q4 and Full-Year Financials: Results from the operating mines will be closely watched to see if cash flow generation remains strong and can support ongoing G&A and development study costs.
– Production Guidance for 2026: Any forward-looking statements on production and costs for the coming year.
– Permitting Updates: Progress on permits for the San Agustin restart and any new permit applications for Ana Paula’s underground development.
Materiality Conclusion
The news is Material – Positive. The Cerro del Gallo PFS adds a quantifiable after-tax NPV of US$424M, which is a substantial figure relative to the company’s market cap. It de-risks a core asset and provides a clear, long-term growth trajectory beyond the development of the Ana Paula project, reinforcing the company’s strategy to become a mid-tier producer.
