Heliostar hikes value, cost for gold-silver Cerro del Gallo

An updated prefeasibility study for Heliostar Metals’ (TSXV: HSTR; US-OTC: HSTXF) Cerro del Gallo gold-silver project in central Mexico more than doubles the project’s value while also raising costs compared with the initial study from 2020. Shares rose.

The post-tax net present value (at a 5% discount) rises 142% to $424 million over the original study prepared when Heliostar predecessor Argonaut Gold owned the project. The new study assumes a base case gold price of $2,300 per oz., reflecting the yellow metal’s climb.

Initial capital costs rise 45% to $195.3 million, likely due to the study’s more complex processing circuit, and the internal rate of return (IRR) gains 13% to 33%, while the payback period is shortened by more than one-third to 2.3 years. The project is located in Guanajuanto state, about 360 km northwest of Mexico City.

“With this study the value of Cerro del Gallo to Heliostar has now been established, having been delayed due to our initial focus on operations following the acquisition of the mines and properties in November 2024,” Heliostar CEO Charles Funk said in a release. “This study confirms Cerro del Gallo as an important development project in the Heliostar portfolio, and the company plans to continue technical work, permitting and community engagement to advance the project to a feasibility level.”

Mexico policy headwinds

The study shows that junior exploration companies in Mexico are still able to advance projects through economic studies despite continued restrictions on mining from the Claudia Sheinbaum government. Interest in the project may be buoyed by record gold and silver prices this year.

Heliostar shares gained 4% to $2.64 apiece on Thursday morning in Toronto, for a market capitalization of $684 million. The stock has traded in a 12-month range of 54¢ to $2.71.

The PFS outlines total production of 1.3 million gold-equivalent oz. over a 15.3-year mine life, a 6% rise in output from the 2020 study.

Silver grew, gold fell

The project’s proven and probable reserves are pegged at 91.9 million tonnes grading 0.51 gram gold per tonne, 15.25 grams silver and 0.1% copper for 1.4 million oz. gold, 45 million oz. silver and 94,740 tonnes copper.

Those amounts are mostly unchanged from the 2020 study, though contained gold and grade has decreased by 8%, while silver and copper’s grade and contained amounts grew by about 15% and 11%, respectively.

Indicated resources gained about 19% to 239.9 million tonnes grading 0.38 gram gold for 2.94 million ounces. Inferred tonnage almost quadrupled to 25.4 million tonnes at 0.28 gram gold, and contained gold roughly tripled to 220,000 ounces. 

More processing

The initial PFS envisioned Cerro del Gallo as as an open-pit heap leach mine using a SART (sulphidization, acidification, recycling and thickening) plant, which is to recover silver and copper dissolved in solution, Heliostar said. But the updated study calls for a larger SART facility with more filtration capacity as well as a large heap leach pad, thus increasing general costs.

The company plans further conversion of resources to reserves and increasing resources through additional drilling, though it didn’t specify amounts. Flowsheet refinement and permitting are also on its agenda to prepare for a feasibility study. 

The development of a mine at Cerro del Gallo would happen after Heliostar’s main Ana Paula project has been commissioned and starts production. Ana Paula is located in the southwestern Guerrero state.