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South Star Battery Metals Announces US$28 Million Streaming Agreement with Sprott Resource Streaming and Royalty Corp for the Santa Cruz Graphite Project in Brazil
“The Agreement will provide full funding for South Star’s Santa Cruz Phase 1 CAPEX and partial funding for Phase 2 CAPEX. First new graphite production in the A
About this update from South Star Battery Metals Corp
[{"type":"text","content":" “The Agreement will provide full funding for South Star’s Santa Cruz Phase 1 CAPEX and partial funding for Phase 2 CAPEX. First new graphite production in the Americas in over a decade with operations planned for Q2 2023.” VANCOUVER, British Columbia, April 05, 2022 (GLOBE NEWSWIRE) -- South Star Battery Metals Corp. (“South Star” or the “Company”) (TSXV: STS) (OTCQB: STSBF), is pleased to announce that it has entered into a binding streaming agreement (“Agreement”) with Sprott Resource Streaming and Royalty Corp (“Sprott” or “SRSR”) for a total cash consideration of up to US$28 million as prepayment for graphite concentrates from the Santa Cruz Graphite Project (“Santa Cruz or Project”) in Brazil. South Star will act as sales agent for SRSR on the percentage of production subject to the Agreement. STREAM AGREEMENT HIGHLIGHTS: The Phase 1 Stream payment (“Phase 1 Stream”) has a US$10M cash consideration (“Phase 1 Consideration”) to fund 100% of required Phase 1 CAPEX, which allows South Star to start construction in the next 45-60 days with commercial production scheduled for Q2 of 2023. The Phase 2 Stream payment (“Phase 2 Stream”) has a minimum of US$9M and up to US$18M cash consideration for partial funding of Phase 2 CAPEX (US$27M1), subject to SRSR Phase 2 due diligence as well as investment committee update and approval. US$2M advance loan payable on signing of the Promissory Note with use of proceeds to be used for equipment down payments, land acquisition, contractor mobilization and engineering support services. Minimal shareholder equity dilution for up to US$28M cash consideration. South Star has the option to buy back 100% of Phase 2 Stream. Automatic stepdown of 50% of Phase 1 Stream after sales and delivery of 75,000 tonnes of concentrate. Excellent post-stream LOM EBITDA margin of 51% (Phase 1 Stream + 100% Phase 2 Stream). Compelling combined cost of capital with significantly lower total financing costs compared to other available capital market alternatives. (1) Based on 2020 PFS Study Richard Pearce, CEO of South Star, said, “We are delighted to have a long-term strategic partner like Sprott. This financing delivers excellent value for South Star shareholders by minimizing equity dilution while giving the Company a lot of...