South Star Battery Metals Announces Proposed Earn-in for Graphite Project in Alabama,Joins the Critical Metals Institute and Retains Market Digital PR Newswire VANCOUVER, BC, Nov. 3, 2021 VANCOUVER, BC, Nov. 3, 2021 /PRNewswire/ - South Star Battery Metals Corp. ("SouthStar" or the "Company") (TSXV: STS) (OTCQB: STSBF), today announces that it has agreed tothe key terms of a proposed earn-in to the Ceylon Graphite Project ("Project") in Alabamawith Hexagon Energy Materials Limited ("Hexagon") (ASX: HXG) and U.S. Critical MineralsLLC ("USCM"), a privately-held exploration company incorporated in the United States.South Star and the vendors intend to negotiate the terms of a formal agreement which willallow South Star to earn-in up to 75% of the Project. The transaction is subject tocustomary conditions, including preparation, finalisation and execution of formalagreements and the receipt of all necessary approvals, including the approval of the TSXVenture Exchange (the "TSXV"). Richard Pearce, South Star's CEO, said: "This is another important step towardscreating a multi-asset, diversified battery metals company. We are potentially bringingon the next project in the pipeline in another important jurisdiction for the sector. Thegeology and processing flow sheets are very similar to our Brazil graphite asset, and webelieve we can leverage our commercial relationships and technical experience to scalethe project into near-term production. The infrastructure is excellent with access,energy, and the Mobile port facility near-by. The Southeast corridor of the US istransforming itself into an electric vehicle hub, and the Project in Coosa County isright in the middle of the action. The Project is on private land, and we believe thepermitting and licensing efforts should be fairly straight-forward. I am very excited tobe working with our partners on moving this Project forward in the coming years." Hexagon's Managing Director Merrill Gray said: "South Star is an experienced graphiteproject developer and operator with significant technical resources and the ambition tomove this expertise into North America. This earn-in deal could accelerate the CeylonGraphite project's development, unlocking value for Hexagon and allowing the company tofocus on the progression of our core Australian projects, in Hydrogen and Nickel, growingour energy materials portfolio beyond Ceylon Graphite." CEYLON GRAPHITE PROJECT IN ALABAMA Currently, Hexagon owns 80% of the Project, and USCM with a small group of individualsowning the remaining 20% of the Project. The Project is located on the northeast end ofthe Alabama Graphite Belt and covers approximately 500 acres in Coosa County, Alabama.The Project is an historic mine active during World Wars I & II. The Ceylon Graphite minehistorically targeted friable outcropping graphite mineralization, averagingapproximately 3%-5% graphitic carbon. Mineralization is at surface, and the graphitichost rock was mined historically with shovels and excavators with no drilling andblasting required. A comprehensive preliminary exploration program and bench-scale process have beencompleted by Hexagon. Work completed to date includes: -- Regional scale and local geologic and structural mapping and sampling program. -- 29 trenches totaling 2,769 linear metres were dug to a maximum depth of approximately 2 metres. The trenches were mapped, logged and 765 samples plus standards and duplicates (5 per 100 samples) were analyzed. -- 100 tonnes of bulk ore samples were collected from across the claims, and a bench-scale process circuit using ten (10) representative samples was tested at GIRCU Laboratory in Guangzhou, China. The testing indicated a traditional crush/grind/floatation concentration circuit achieved grades of approximately 96%-97% with approximately 86% recoveries. In general, approximately 75%-80% of the ore concentrates (by mass) is -80 mesh material and the balance being +80 mesh material. The ore was described as well-liberated and easy to process. PROPOSED EARN-IN TERMS The following is a summary of the key terms of the proposed earn-in: -- South Star to complete drilling, resource estimation, and analysis needed to produce a NI 43-101 compliant Preliminary Economic Assessment (PEA) within three years from the signing of the final agreements ("Earn-in Period"). -- South Star to fund an annual minimum expenditure of CAD$250,000 (CAD$750,000 total minimum) during the Earn-in Period to earn 75% of the Project. -- South Star to extend or renew, as needed, and as part of the earn-in expenditure, the existing mineral leases and surface agreements on the Project to ensure they are valid for a period of a minimum of 12 months beyond the Earn-in Period. -- Upon satisfaction of the first three items listed above, South Star shall have the right, but not the obligation, exercisable within an agreed period, to acquire 75% of the Project, following which (subject to the put option described below) the parties would operate the Project as a joint venture. -- For a period of six months following the exercise of the 75% earn-in option ("Option Period"), Hexagon and USCM individually have the right, but not the obligation, to sell their remaining 25% interest in the Project for an aggregate payment of CAD$250,000 in South Star shares ("Put Option"). -- During the Option Period, any expenditures will be shared pro rata. Failure by any party to pay their share shall result in a proportional dilution of interest in the Project. -- Should South Star's interest in the Project increase to 90% or greater, South Star shall have the right, but not the obligation, to purchase the entire remaining interest not owned or under its control on a basis proportional to the Put Option. -- Within six months of the Ceylon Graphite Project achieving commercial production, South Star shall make a payment of CAD$250,000 in South Star shares ("Production Bonus"). The Production Bonus shall be proportionately reduced to reflect any reduction in the remaining 25% interest held by the parties. Hexagon, USCM and South Star are currently negotiating the proposed formal agreementsto reflect the above terms, with the intention of finalising and executing thoseagreements (if final terms are agreed) during November.
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