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Drill results from Heliostar Metals’ (TSXV: HSTR) Ana Paula gold project in Guerrero, Mexico, suggest potential for a resource increase and a new, near-surface find.
The Vancouver-based junior said Monday that hole AP-24-313 hit 6.1 metres grading 8.24 grams gold per tonne from 388.5 metres depth. This extends the zone called the High Grade Panel (HGP) by 115 metres at depth. Another drill hole AP-24-314, cut 16 metres grading 16.7 grams gold from 182 metres deep. It detected a new mineralized zone between the HGP and the Parallel Panel zone.
Heliostar has drilled 1,995 metres of its planned first-phase 2,600 metres, with a second program set to follow early next year. Success here will factor into an updated feasibility study due by the end of 2025.
The company has C$9.5 million in cash, boosted by recent financings to support its drilling and development plans.
It says it will continue drilling to find the new zone’s limits and to see if it connects to the broader Parallel Panel.
Heliostar reworked the Ana Paula project from an open-pit to an underground mine in 2023 to improve economics, targeting the HGP. With over $100 million invested in infrastructure, including a 53-man camp, surface rights, a portal, and a 412-metre decline, the first phase of production aims for 50,000 oz. gold yearly, doubling to 100,000 oz. in a subsequent development.
The 2023 feasibility study reported an after-tax net present value (5% discount) of $233 million and an internal rate of return of 34%, based on a gold price assumption of $1,400 per ounce.
3L Capital director of capital markets Kim MacIntyre said the results point to meaningful resource growth, not just incremental gains for Heliostar. “The potential for new zones boosts both the mine plan and future valuation,” McIntyre wrote in a note to clients.
The analyst suggested the new gold zone could add mineable ounces if future drilling confirms continuity. “With these results, Heliostar gains the flexibility to enhance the mine plan and extend Ana Paula’s lifespan, setting it up for long-term success,” MacIntyre said.
Over the past few months, Heliostar shifted its drill orientation from east-west to north-south. According to CEO Charles Funk, this revealed more high-grade mineralization. “We changed the drill direction by 90 degrees, and it paid off,” Funk said in a news release. “With each hole, Ana Paula keeps showing more high-grade gold.”
MacIntyre notes that the company’s share price of C$0.65 reflects only 0.32x its net asset value (NAV). According to her calculations, if Heliostar reaches the average 0.64x P/NAV of its peers, the stock could double. 3L Capital’s analysis places Heliostar’s base NAV at C$750 million, or C$2.03 per share.
Meanwhile, Heliostar has secured Mexican regulatory clearance for its C$5 million buy of Argonaut Gold’s former Mexican assets from Florida Canyon Gold. The company expects the deal to close early next month. The acquisition adds the San Agustin and La Colorada mines to its portfolio. They will provide cash flow to fund further development at the Ana Paula project.
The San Agustin mine, an open-pit heap leach operation produced 7,568 oz. of gold and 39,319 oz. of silver in the first quarter this year, and the La Colorada mine, currently on care and maintenance, yielded 3,922 oz. of gold and 6,848 oz. of silver in the same period from residual leaching.
Heliostar shares were down 1.5% at C$0.63 apiece in afternoon trading Monday, having touched C$0.17 and C$0.74 over the past year. It has a market capitalization of C$145.2 million.
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