STRR - Star Royalties Announces Copperstone Stream Restructuring and Improved Project Economics

(TheNewswire)

October 03, 2023 - TheNewswire - TORONTO, ON – Star Royalties Ltd. (“ Star Royalties ”,or the “ Company ”)(TSXV:STRR ) ( OTC:STRFF) ispleased to announce the entering into of a non-binding agreement withSabre Gold Mines Corp. (“ SabreGold ”) (TSX: SGLD, OTCQB: SGLDF) to restructure the Company'sexisting gold streaming agreement on the Copperstone Gold Mine(“ Copperstone ”). Theproposed restructuring will revise the Copperstone gold stream from6.6% of gold produced with production-based step-downs to a flat 4% ofgold produced for the duration of Copperstone’s life-of-mine(“ LOM ”) and additionalconsideration of C$4.55 million being paid by Sabre Gold to StarRoyalties in a combination of cash and shares. Under the terms of thestreaming agreement, Star Royalties will continue to provide a cashpayment to Sabre Gold equal to 25% of the spot gold price for eachounce of gold delivered.

Transaction Highlights

• Stream revision: The Company’s gold stream on Copperstone will be revisedfrom 6.6% of gold produced (with a step-down to 2.2% after14,000 gold ounces have been delivered under the stream, and a furtherstep-down to 0.8% after 18,133 gold ounces have been delivered) to 4% of gold produced LOM. This proposed gold streamstructure would simplify its overall terms, its expected cash flowprofile, and would provide Star Royalties with enhanced exposure toexisting resource conversion and future exploration upside atCopperstone.

• Cash and sharesconsideration: As additional consideration for agreeing to therevised gold stream, Star Royalties will receive from Sabre GoldC$4.55 million in a combination of cash and shares in three tranches.Payment of the second and third tranches will be timed so as tocoincide with the payment by Victoria Gold Inc. (“ Victoria Gold ”) (TSX: VGCX) toSabre Gold of its second and third purchase price installments for itspurchase of Sabre Gold’s interest in the Brewery Creek Project andother certain mineral assets in the Yukon, which closed on September14, 2023. The Company will receive:

  • A first tranche of C$2.55 million, consisting of C$1.55million in cash on closing of the stream restructuring, expected inOctober 2023, and C$1 million in Sabre Gold shares, equal to 7,407,407shares based on a price of C$0.135 per common share of Sabre Gold. Assuch, the Company is expected to become a 9.4% shareholder of SabreGold.

  • A second tranche of C$1.2 million in a combination ofcash and shares of Victoria Gold (depending on how Victoria Goldelects to pay its second installment on the Brewery Creek purchase),payable in September 2024.

  • A third tranche of C$800,000 in a combination of cashand shares of Victoria Gold (depending on how Victoria Gold elects topay its third installment on the Brewery Creek purchase), payable inSeptember 2025.

• Cash consideration improves theCompany’s balance sheet: Star Royalties willmaintain a meaningful interest in Copperstone’s future goldproduction while converting a portion of its original gold streamvalue into cash and cash equivalents, thereby enhancing theCompany’s financial position.

• Sabre Gold debt restructuring: Sabre Gold’s debt position is expected to decline to C$3.25Mfrom C$13.2M (includes C$3M in accrued interest forgiveness). Theproposed terms also include the repurchase of an additional 1.5%royalty on the Copperstone mine for consideration of US$1.25M. Postrestructuring, Sabre Gold is projected to have a cash balance inexcess of C$3.5M.

• Enhanced projecteconomics: The stream revision and royaltybuyback are expected to improve Copperstone’s project economics,where the Company estimates an after-tax IRR of 58% post-restructuringat US$1,800/oz gold and cash costs of ~US$950/oz. The restructuringwill result in the fully-permitted Copperstone having a moreattractive 4.5% total royalty equivalent encumbrance which shouldenhance Sabre Gold’s ability to fund project construction.

• Improved long-term optionality: The revised stream will be maintained acrossCopperstone’s entire LOM, providing meaningfully higher resourceconversion and exploration upside exposure to the Company.Approximately 52% of the existing resource at Copperstone was notcaptured in Sabre Gold’s preliminary economic assessment announcedon June 20, 2023 and reflected in its National Instrument 43-101Technical Report PreliminaryEconomic Assessment for the Copperstone Project, La Paz County,Arizona, USA prepared by Hard Rock Consulting,LLC dated August 2, 2023 and filed on Sabre Gold’s profile on SEDAR+on such date. The Copperstone deposit also remains open at depth withadditional high-priority regional targets remaining to betested.

Alex Pernin, Chief Executive Officer of Star Royalties, commented:“After working closely with Sabre Gold management, we are pleased tohave achieved a positive restructure of our Copperstone gold stream.Through this agreement, we will maintain increased exposure toCopperstone’s future production profile and significant explorationpotential, while converting a portion of its value into immediate andnear-term cash and liquid securities. Importantly, we believe this newstructure will provide improved flexibility for Sabre Gold to securefinancing and advance Copperstone to production.”

CONTACT INFORMATION

For more information, please visit our website at starroyalties.com or contact:

Alex Pernin, P.Geo. DmitryKushnir, CFA
Chief Executive Officer and Director Vice President, InvestorRelations
apernin@starroyalties.com        dkushnir@starroyalties.com
+1 647 494 5001 +1 647 494 5088

About Star Royalties Ltd.

Star Royalties Ltd. is a precious metals and carbon credit royalty andstreaming company. The Company innovated the world’s first carboncredit royalties in forestry and regenerative agriculture through itspure-green joint venture, Green Star Royalties Ltd., and offersinvestors exposure to precious metals and carbon credit prices. TheCompany’s objective is to provide wealth creation by originatingaccretive transactions with superior alignment to both counterpartiesand shareholders.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this news release may constitute"forward-looking statements", including those regardingfuture market conditions for metals and minerals, future valuation ofVictoria Gold, full permitting of Copperstone, the net cash positionof Sabre Gold, the Company’s position in Copperstone’s future goldproduction, the net cash position of the Company, and future capitalraising opportunities are statements that address or discussactivities, events or developments that the Company expects oranticipates may occur in the future. When used in this news release,words such as "estimates", "expects","plans", "anticipates", "will","believes", "intends" "should","could", "may" and other similar terminology areintended to identify such forward-looking statements. Forward-lookingstatements are made based upon certain assumptions and other importantfactors that, if untrue, could cause the actual results, performancesor achievements of Star Royalties to be materially different fromfuture results, performances or achievements expressed or implied bysuch statements. Forward-looking statements should not be read as aguarantee of future performance or results and will not necessarily bean accurate indication of whether or not such results will beachieved.

A number of factors could cause actual results,performances or achievements to differ materially from suchforward-looking statements, including, without limitation, changes inbusiness plans and strategies, market and capital finance conditions,ongoing market disruptions caused by the Ukraine and Russian conflict,metal and mineral commodity price volatility, discrepancies betweenactual and estimated production and test results, mineral reserves andresources and metallurgical recoveries, mining operation anddevelopment risks relating to the parties which produce the metals andminerals Star Royalties will purchase or from which it will receiveroyalty payments, risks inherent to the development of the ESG-relatedinvestments and the creation, risks inherent to royalty companies,title and permitting matters, activities by governmental authorities,currency fluctuations, the global, federal and provincial social andeconomic climate in particular with respect to addressing and reducingglobal warming, natural disasters and global pandemics,dilution, risk inherent to any capital financingtransactions. These risks, as well as others, could cause actualresults and events to vary significantly. Accordingly, readers shouldexercise caution in relying upon forward-looking statements and theCompany undertakes no obligation to publicly revise them to reflectsubsequent events or circumstances, except as required by law.

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