Gold Sector Gains CA$6 Million Boost with Strategic Private Placement

Source: Streetwise Reports 10/11/2024

Heliostar Metals Ltd. HSTXF announced a private placement financing of 10,000,000 units priced at CA$0.60 per unit on October 7, 2024. The company’s intervention was to raise CA$6 million in gross proceeds. Each unit includes one common share and a half-share purchase warrant, with each full warrant exercisable at CA$0.90 per share for a two-year period following the close of the offering.

The entire placement is expected to be subscribed to by Eric Sprott through his affiliated company, 2176423 Ontario Ltd. The transaction is set to close around October 11, pending customary conditions and approval from the TSX Venture Exchange. The net proceeds from the placement are designated for working capital and general corporate purposes, and all issued securities will carry a four-month and one-day hold period in line with securities regulations.

Precious Metals Shine Amid Economic and Technical Indicators

Gold’s position remained positive as of October 2024, supported by broad trends in both demand and price levels. According to The Speculative Investor on October 7, analysts anticipated that the upcoming U.S. presidential election, regardless of the outcome, would likely exert a downward trend on the U.S. dollar, effectively supporting the gold market over the next year. “Both Kamala Harris and Donald Trump espoused policies that would be bearish for the US$ and bullish for gold” the report noted, pointing to potential ongoing upward momentum for the precious metal.

On the technical side, The Daily Gold report on October 6 highlighted robust signals within gold’s recent chart performance. “The monthly chart remained very strong for Gold, with strength shown in the last three candles all closing near the month’s highs” illustrating resilience and a potentially extended upward trend. This analysis showed support for gold reaching toward a projected level of US$3,000, with strong momentum over recent months signaling growth potential.

In silver, The Daily Gold report further noted a strong September performance, where the metal gained 8% and closed at an 11-year high, overcoming recent technical barriers from 2020 and 2021. Silver now faces substantial resistance around US$32 to US$35 but could trend upward to US$36 or US$37.

Key Developments Fuel Heliostar’s Expansion Plans

This CA$6 million financing aligns with Heliostar’s strategic growth ambitions, with influential investor Eric Sprott’s involvement supporting the company’s drive to become a prominent mid-tier precious metals producer. According to Heliostar’s October 2024 investor presentation, the company has focused on advancing its diverse portfolio, which now includes two producing mines and multiple developmental assets in Mexico and Alaska. Heliostar has prioritized resource growth and development, with significant initiatives underway to expand output from existing resources. This includes the Creston pit cutback at La Colorada, a project containing probable reserves of 220,000 ounces of gold and 4.1 million ounces silver.

Further drilling and development have also resumed at the high-grade Ana Paula project, where Heliostar aims to increase resource size and explore connections between high-grade zones. A feasibility study for Ana Paula is anticipated for completion by the end of 2025.

In line with its growth strategy, Heliostar continues to make cost-effective acquisitions, including the US$10 million purchase of the Ana Paula project in 2023 and a recent US$5 million investment in Argonaut’s Mexican assets. These acquisitions are pivotal in Heliostar’s goal to achieve annual production capacity of over 150,000 ounces of gold through a phased development approach. This financing and resource development momentum underscores Heliostar’s commitment to establishing a robust production base, strategically positioning the company for long-term growth and value creation.

Ownership and Share Structure

As of October 10, Refinitiv lists ownership for Heliostar as 30.31% for institutions, 2.31% held by management and insiders, and 1.52% with corporations. The rest is retail.

Heliostar, as of the date of this writing, has a market capitalization of CA$126.68 Million and 196.29 million free float shares.

Important Disclosures:

1) James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.

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