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South Star Battery Metals Announces Financing Update and Closing of $2.3 Million in the First Tranche of the Non-Brokered Private Placement

VANCOUVER, BC, Nov. 3, 2022 /CNW/ -  South Star Battery Metals Corp. ("South Star" or the "Company") (TSXV: STS) (OTCQB: STSBF), is pleased to announce that it has completed the first tranche of its previously announced non-brokered private placement of units (the "Private Placement" or the "Offering") for total proceeds of C$2,308,863. The majority of participation in the first tranche of the Offering was with global institutional investors who are very familiar with the battery metals and mining sectors. Net proceeds from the Private Placement will be used for exploration, development, construction activities, corporate G&A and general working capital requirements.

South Star Battery Metals Corp. Logo (CNW Group/South Star Battery Metals Corp.)
South Star Battery Metals Corp. Logo (CNW Group/South Star Battery Metals Corp.)

The funds for closing the second tranche of the financing, which the Company anticipates will exceed the amount required to meet the condition precedent to the Phase 1 closing under the Sprott Private Resource Streaming and Royalty Corp. ("Sprott") streaming agreement ("Agreement") (see April 5, 2022, April 18, 2022 and October 5, 2022 press releases) have been committed and received by the Company and are being held in escrow, pending TSX Venture Exchange review of a personal information form ("PIF"). The Company anticipates closing both the second tranche of the financing and the Phase 1 closing under the Sprott Agreement in November 2022.  With the release of the Phase 1 funds of US$10,000,000 for CAPEX due on closing under the Sprott Agreement, the Company will be fully funded for construction of the Phase 1 plant and mine at the Santa Cruz Graphite mine in Bahia, Brazil.

Richard Pearce, CEO of South Star, said, "We are pleased to be delivering this news to our shareholders, clients, and stakeholders. This truly is a watershed event for South Star in our march to production.  Once we complete the Phase 1 closing under the Sprott Agreement, we will be fully funded for Phase 1 CAPEX and will deliver on our promise and commitment to be the first new graphite production in the Americas since 1996. We are releasing contracts for major equipment and will start earthworks shortly. Commercial production is planned for end of 2023.  We delivered this during choppy capital markets, an increasingly difficult business environment and unprecedented world turbulence. One thing is certain, there hasn't been a better time in the last 20 years to be bringing a critical battery metals project into production, and the business case for graphite gets better with every passing month. This is truly a team victory and reinforces the superior nature of Santa Cruz, our great group and our continued commitment to stakeholders, sustainable development and transparent ESG principles as we transition from a development company into a producer. Many thanks to all those who contributed to our effort. It will be an exciting 12-18 months for us."

Michael Harrison, Managing Partner of Sprott, added "Sprott is pleased to partner with South Star by providing both equity financing and the construction capital for the Santa Cruz graphite project.  We have and will continue to provide financing required to increase production of minerals and metals critical to energy storage to further the energy transition to renewables."

The first tranche of the Private Placement consists of 4,356,346 units priced at C$0.53 per unit (the "Units"). Each Unit consists of one (1) common share and one (1) common share purchase warrant (the "Warrants"). Each Warrant entitles the holder to purchase one additional common share of the Company at an exercise price of C$1.25 per common share for a period of five years from the date of issue. The securities issued in this first tranche closing will be subject to a four-month hold period from the date of closing and approval by the TSXV, expiring March 4, 2023. In connection with the Private Placement, the Company issued an aggregate amount of 77,944 brokers' warrants in connection with the Private Placement and paid $129,541 in cash finders' fees to certain finders.

Acceleration Clause

If during a period of ten consecutive trading days between the date that is four (4) months following the closing of the Private Placement and the expiry of the Warrants the daily volume weighted average trading price of the common shares of the Company on the TSXV (or such other stock exchange where the majority of the trading volume occurs) exceeds C$2.50 for each of those ten consecutive days, the Company may, within 30 days of such an occurrence, give written notice to the holders of the Warrants that the Warrants will expire at 4:00 p.m. (Vancouver time) on the 30th day following the giving of notice unless exercised by the holders prior to such date. Upon receipt of such notice, the holders of the Warrants will have 30 days to exercise their Warrants. Any Warrants which remain unexercised at 4:00 p.m. (Vancouver time) on the 30th day following the giving of such notice will expire at that time.

Equity Plans

Following the Company's shareholder meeting on October 12, 2022 (the "Shareholders' Meeting"), the Company adopted a restricted share unit (collectively "RSUs") plan (the "RSU Plan") and a new stock option plan (the "2022 Stock Option Plan").

The RSU Plan governs the granting of any RSU granted under the fixed RSU Plan, to directors, officers, employees and consultants of the Company or a subsidiary of the Company. The maximum number of RSUs issuable under the RSU Plan is 2,400,893 common shares, being 10% of the issued and outstanding common shares of the Company at the time the RSU Plan was implemented.

The number of stock options issuable under the 2022 Stock Option Plan may not exceed 10% of the number of issued and outstanding common shares of the Company as at the date of a grant. The 2022 Stock Option Plan is a "rolling" stock option plan which governs the granting of stock options to directors, officers, employees and consultants of the Company or a subsidiary of the Company for the purchase of up to 10% of the issued and outstanding common shares in the capital of the Company from time to time. The 2022 Stock Option Plan supersedes the Company's current stock option plan. Any stock options currently outstanding under the superseded stock option plan will remain outstanding as at the effective date, however new stock option grants will be subject to the 2022 Stock Option Plan. The Company currently has 1,439,000 options outstanding, leaving 961,893 options available for grant.

The RSU Plan and the 2022 Stock Option Plan received shareholder approval at the Shareholders' Meeting, and received final approval from the TSX Venture Exchange.

Further details regarding the RSU Plan and the 2022 Stock Option Plan are included in the management information circular of the Company filed on SEDAR in connection with the Shareholders' Meeting.

About South Star Battery Metals Corp

South Star Battery Metals Corp. is a Canadian battery metals project developer focused on the selective acquisition and development of near-term production projects in the Americas. South Star's Santa Cruz Graphite Project, located in Southern Bahia, Brazil is the first of a series of industrial and battery metals projects that will be put into production. Brazil is the second-largest graphite-producing region in the world with more than 80 years of continuous mining. Santa Cruz has at-surface mineralization in friable materials, and successful large-scale pilot-plant testing (>30t) has been completed. The results of the testing show that approximately 65% of Cg concentrate is +80 mesh with good recoveries and 95%-99% Cg. With excellent infrastructure and logistics, South Star is carrying its development plan towards Phase 1 production projected in Q4 2023.

South Star's next project in the development pipeline is a project in Alabama located in the middle of a developing electric vehicle, aerospace and defence hub in the southeastern United States.  The Project is a historic mine active during World Wars I & II.  Trenching, sampling, analysis and preliminary metallurgic testing has been completed.  The testing indicated a traditional crush/grind/flotation concentration circuit achieved grades of approximately 96-97% with approximately 86% recoveries. South Star is executing on its plan to create a multi-asset, diversified battery metals company with near-term operations in strategic jurisdictions.  South Star trades on the TSX Venture Exchange under the symbol STS, and on the OTCQB under the symbol STSBF.

South Star is committed to a corporate culture, project execution plan and safe operations that embrace the highest standards of ESG principles based on transparency, stakeholder engagement, ongoing education and stewardship. To learn more, please visit the Company website at http://www.southstarbatterymetals.com.

This news release has been reviewed and approved by Richard Pearce, P.E., a "Qualified Person" under National Instrument 43-101 and President and CEO of South Star Battery Metals Corp.

On behalf of the Board,

Mr. Richard Pearce
Chief Executive Officer

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CAUTIONARY STATEMENT

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Forward-Looking Information

This press release contains "forward-looking statements" within the meaning of applicable securities legislation. Forward-looking statements relate to information that is based on assumptions of management, forecasts of future results, and estimates of amounts not yet determinable. Any statements that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be "forward-looking statements". Forward-looking statements in this press release include, but are not limited to, statements regarding: moving Santa Cruz into production and scaling operations as well as advancing the Alabama project; and the Company's plans and expectations.

Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation: closing of the second trance of the financing and the Sprott Agreement, TSXV acceptance of the PIF, final TSXV approval of the financing, risks related to failure to obtain adequate financing on a timely basis and on acceptable terms; risks related to the outcome of legal proceedings; political and regulatory risks associated with mining and exploration; risks related to the maintenance of stock exchange listings; risks related to environmental regulation and liability; the potential for delays in exploration or development activities or the completion of feasibility studies; the uncertainty of profitability; risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits; risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; results of prefeasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with the Company's expectations; risks related to commodity price fluctuations; and other risks and uncertainties related to the Company's prospects, properties and business detailed elsewhere in the Company's disclosure record. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Investors are cautioned against attributing undue certainty to forward-looking statements. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from the Company's expectations or projections.

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