DALLAS, TX -- August 21, 2026 -- Heliostar Metals Ltd (TSXV: HSTR): Stonegate Capital Partners updates their coverage on Heliostar Metals Ltd (TSXV: HSTR). HSTR’s Q2 results improved the forward setup by strengthening the operating cash-flow bridge to Ana Paula and clarifying producing-asset earnings capacity. San Agustin reaching steady state and low-cost La Colorada production supported record production and a record cash balance, while the q/q net income decline reflected the annual option grant, higher taxes and FX rather than weaker mine performance. Near-mine reserve growth should improve visibility beyond 2026, while Ana Paula’s Expansion Zone provides potential upside beyond upcoming FS. Key markers remain reserve conversion, Veta Madre execution and Ana Paula permitting.
Producing Assets: Gold production increased 26% q/q to a record 14,803 oz, led by San Agustin, up 49% to 7,216 oz at steady state. Corner ore tonnes continue to reconcile above the reserve model; Management expects San Agustin to remain a key cash-flow contributor through 2H26, with positive ore reconciliation supporting production and mine-life extension potential. La Colorada produced 7,587 oz at $1,531/oz cash costs and $1,641/oz AISC. San Agustin should remain around Q2 steady-state levels q/q, while La Colorada should moderate in Q3 as residual leaching declines. Management expects La Colorada production around 1,300-1,400 oz/month through YE26 as injection leaching ramps, bridging production to Veta Madre. Capitalized waste stripping remains on track for August, with first ore targeted for late 2Q27.
Flagship Project: HSTR invested $5.6M at Ana Paula in Q2 on drilling, metallurgical testing and study work, while infill drilling supported resource conversion ahead of the Q2 2027 FS, including 99.8m at 10.9 g/t gold. The program targets reserves supporting a 10-year mine life. Underground permit submission is expected in early September/Q3, with approvals targeted around mid-2027. Management indicated deeper Expansion Zone will likely not be included in the FS despite mineralization below PEA mine plan, leaving potential upside. Decline work may slow into 2027 pending permitting feedback, though first gold remains targeted before YE28.
Exploration Portfolio: Veta Madre Plus targets approximately 20,000 additional ounces above the current 48k oz reserve, while San Agustin oxide mineralization extends more than 200 metres beyond the reserve boundary. Goldstrike adds 975k indicated and 90k inferred gold ounces; recent surface sampling returned up to 2.53% antimony and 0.61 g/t gold over 1.3m TW at Antimony Ridge and identified the new Antimony Knoll target 1.7km west. HSTR has commenced an initial ~1,500m RC drill program across both targets, with 852m in eight holes completed and assay results expected in Q4 2026.
Outlook: HSTR maintained 2026 guidance of 50,000-55,000 gold ounces at $1,850-$1,950/oz cash costs and $2,025-$2,125/oz AISC. YTD cash costs of $1,630/oz remain below guidance and should rise into the full-year range, while $2,155/oz AISC is modestly above guidance; management expects full-year AISC at or near the upper end. Revenue was $56.5M and mine operating earnings $31.1M, while net income declined to $8.0M from $14.1M q/q. Cash rose to a record $43.0M despite the $10.0M Goldstrike payment, with no debt.
Valuation: When valuing HSTR we apply a EV/NAV range of 0.4x to 0.6x with a midpoint of 0.5x which results in a valuation of $2.30 to $3.37 with a mid-point of $2.84. When using an EV/Reserves valuation method we apply a multiple range of 50.0x to 100.0x with a midpoint of 75.0x which results in a valuation of $2.03 to $3.91 with a mid-point of $2.97. Our DCF model returns a valuation range of $2.36 to $2.71 with a mid-point of $2.52.
