Heliostar buying Florida Canyon assets in Mexico, shares rise
Heliostar Metals Ltd. [HSTR-TSXV, HSTXF-OTCQX, RGG1-FRA] has entered into a binding deal with Florida Canyon Gold Inc. [FCGV-TSXV] to acquire a 100% interest in all of Florida’s mining assets in Mexico for US$5.0 million.
Heliostar shares rallied on the news in active trading. The shares rose 9.7% or $0.03 to 34 cents on volume of 1.2 million, and currently trade in a 52-week range of 36 cents or 17.5 cents. Florida Canyon shares were down 14.6% or 11 cents to 64 cents, after previously trading in a 52-week range of 81 cents and 69 cents.
The assets that are part of the deal include:
- La Colorada Mine in Sonora, which is producing gold from residual leaching while on care and maintenance.
- San Agustin Mine, (formerly the El Castilo Complex) an open pit heap leach gold mine, St Agustin, and a closed open pit heap leach mine, El Castillo, located in Durango.
- Cerro del Gallo, an advanced gold development project in Guanajuato.
- San Antonio, an advanced gold development project located in Baja California Sur.
“The addition of two producing gold mines provides cash flow to bring new production on line,’’ said Heliostar CEO Charles Funk.
Heliostar said it is in advanced talks to secure a loan facility of US$5.0 million to US$10 million, funds that will be used to finance the transaction, which is expected to close in October, 2024.
Heliostar was previously focused on developing the Ana Paula project in Guerrero, Mexico. In addition, Heliostar is working with the Mexican government to permit the San Antonia Project in Baja California Sur, Mexico. The company has also said it continues with efforts to explore the Unga Project in Alaska.
The Ana Paula Project deposit contains proven and probable minerals reserves of 1.08 million ounces of gold (630,000 proven and 451,000 probable ounces) at 2.38 g/t and 2.54 million ounces of silver at 5.61 g/t silver (1.32 million proven and 1.22 probable ounces).
Measured and indicated resources stand at 1.46 million ounces of gold at 2.16 g/t and 3.6 million ounces of silver at 5.3 g/t. The project is permitted for open pit mining and contains significant existing infrastructure, including a portal and a 412-metre-long decline.
San Antonio is a high-grade oxide gold deposit containing a measured and indicated mineral resource of 1.73 million ounces of gold at 0.83 g/t. A preliminary economic assessment for Argonaut was completed in 2012.
As a condition to closing of the transaction, Heliostar and Florida Canyon will enter into an agreement eliminating US$20 million in contingent payments, which became due under a deal in which Heliostar acquired the Ana Paula project, and up to US$150 million in conditional option payments and the issuance of a 2.0% net smelter return royalty on the San Antonio project, which might have become payable pursuant to an agreement under which Heliostar acquired an option on the San Antonio project.
Heliostar said it is in advanced talks to secure a loan facility of US$5.0 million to US$10 million, funds that will be used to finance the transaction.