Santa Cruz Graphite Project - Road To Production in 2022 "Fundamental Value in a Premier Battery Metals Jurisdiction"
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TSXV: STS | OTCQB: STSBF
Santa Cruz
Graphite Project
Road To Production in 2022
July 2019 Corporate Presentation
“Fundamental Value in a Premier Battery Metals Jurisdiction”
Corporate Presentation: May 2021
Cautionary and Forward-Looking Statements
This presentation includes certain statements that constitute “forward-looking statements”, and the extent any forward-looking statements constitute future-oriented financial information or
“forward-looking information” within the meaning of applicable securities laws (“forward- financial outlook, such statements are being provided to describe the current anticipated
looking statements” and “forward-looking information” are collectively referred to as “forward- potential of the Company and readers are cautioned that these statements may not be
looking statements”, unless otherwise stated). These statements appear in a number of places appropriate for any other purpose, including investment decisions. Forward-looking statements
in this presentation and include statements regarding our intent, or the beliefs or current speak only as of the date those statements are made. Except as required by applicable law, we
expectations of our officers and directors. Such forward-looking statements involve known and assume no obligation to update or to publicly announce the results of any change to any
unknown risks and uncertainties that may cause our actual results, performance or forward-looking statement contained or incorporated by reference herein to reflect actual
achievements to be materially different from any future results, performance or achievements results, future events or developments, changes in assumptions or changes in other factors
expressed or implied by such forward-looking statements. When used in this presentation words affecting the forward- looking statements, except as required by law. If we update any one or
such as “believe”, “anticipate”, “estimate”, “project”, “intend”, “expect”, “may”, “will”, “plan”, more forward-looking statements, no inference should be drawn that we will make additional
“should”, “would”, “contemplate”, “possible”, “attempts”, “seeks” and similar expressions are updates with respect to those or other forward-looking statements. You should not place undue
intended to identify these forward-looking statements. Forward-looking statements may relate importance on forward-looking statements and should not rely upon these statements as of any
to the Company’s future outlook and anticipated events or results and may include statements other date. All forward-looking statements contained in this presentation are expressly qualified
regarding the Company’s future financial position, business strategy, budgets, litigation, in their entirety by this cautionary statement.
projected costs, financial results, taxes, plans and objectives. We have based these forward-
looking statements largely on our current expectations and projections about future events and Confidential Material - This document contains confidential and private material that shall not
financial trends affecting the financial condition of our business. These forward-looking be re-transmitted to other parties that not its original addressee. All information contained
statements were derived utilizing numerous assumptions regarding expected growth, results of herein are for informative purposes and shall not be regarded as an offer, solicitation for any
operations, performance and business prospects and opportunities that could cause our actual financial transaction nor a valuation or commitment of financial / technical performance.
results to differ materially from those in the forward looking statements. While the Company
considers these assumptions to be reasonable, based on information currently available, they Cautionary Note: This PEA is considered by STS to meet the requirements of a Preliminary
may prove to be incorrect. Accordingly, you are cautioned not to put undue reliance on these Economic Assessment as defined by Canadian Securities Administrators' National Instrument 43-
forward-looking statements. Forward-looking statements should not be read as a guarantee of 101 ("NI 43-101") Standards of Disclosure for Mineral Projects. The economic analysis contained
future performance or results. in the technical report is based, in part, on Inferred Resources (as defined in NI 43-101) and is
preliminary in nature. Mineral Resources that are not Mineral Reserves do not have
To the extent any forward-looking statements constitute future-oriented financial information demonstrated economic viability. There is no guarantee that all or any part of the Mineral
or financial outlooks, such statements are being provided to describe the current anticipated Resource will be converted into a Mineral Reserve. Inferred Resources are considered too
potential of the Company and readers are cautioned that these statements may not be geologically speculative to have mining and economic considerations applied to them and to be
appropriate for any other purpose, including investment decisions. Forward-looking statements categorized as Mineral Reserves (as defined in NI 43-101). Additional trenching and/or drilling
are based on information available at the time those statements are made and/or will be required to convert Inferred Mineral Resources to Measured or Indicated Mineral
management's good faith belief as of that time with respect to future events, and are subject to Resources. Mineral Resources that are not Mineral Reserves do not have demonstrated
known and unknown risks and uncertainties, including those risks and uncertainties outlined economic viability. There is no certainty that the reserve's development, production and
under “Risk Factors” in our most recent AIF, that could cause actual performance or results to economic forecasts on which the PEA is based will be realized.
differ materially from those expressed in or suggested by the forward-looking statements. To
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 2
South Star Mining Highlights
Key Company Highlights
• Management team with proven track record of taking
projects into production & operations in Brazil
• Plant construction planned for H2 2021
• Current market capitalization only 2.5% of project NPV
(pre-financing)
• Strong graphite demand in Brazil: high-tech battery market as
well as steel-making, foundries, lubricants, electronics and
automotive industries
• Graphite uses include: lithium-ion batteries, graphene, fire
resistant insulation and coatings and construction materials
• Two-phased approach to minimize risks and intelligently
allocate capital for shareholder value:
✓ Phase 1 – 5,000tpy Concentrate Pilot Plant
✓ Phase 2 – 25,000tpy Concentrate Plant Industrial US$500 to US$2,500
graphite per tonne
• Low CAPEX (
Santa Cruz Graphite Project Advantages
KEY PROJECT HIGHLIGHTS
Santa Cruz project situated
in second largest flake graphite
LARGE &
producing district in the world EXTRA-LARGE “The larger the flake size,
• 14% of global production in 2018 graphite flakes the higher the price!”
GEOLOGY, EXPLORATION & RESOURCES
Large Geologic Upside
of project unexplored Entire
NI 43-101 PFS & updated
Resource Estimate completed
Open-pit deposit within
13,000 ha property
95% land package mineralized according
to Brazilian Mining Authority
Open at depth & along strike
10-15 Drill-ready targets
METALLURGY & PROCESS
Excellent large flake ore Additional tests yielded
Produced quality high purity, battery
Completed bench scale concentrates and Approximately quality products
& 30 tonne pilot plant marketable flake sizes
testing programs
65% of ore
95-99% Cg > 80 Mesh Low impurities & Highly
crystalline structure
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 4
STS Share Information
Stock Information as of March 2021
Cap Table (000s)*
Total Outstanding 71,569
Warrants @ $0.055 2,660 (Exp 04/2025)
Warrants @ $0.15 25,465 (Exp 02/2024)
Options @ $0.15 90 (Exp 06/2024)
Options @ $0.30 900 (Exp 05/2022)
Options @ $0.45 600 (Exp 07/2023)
Fully Diluted 101,283
Shares Outstanding 69.97 M
Market Cap @ CAD $0.24 $17.2 M
*Does not include convertible loan expiring in May 2021
“Graphite demand just for battery storage is expected to grow 494% by 2050 to a total demand of 4.6Mt.
That doesn’t even consider growth coming from industrial or other high tech uses like graphene or
expandable. It is one of the principal critical metals that will require the most investment. ”
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 5
Corporate Structure
• South Star Battery Metals Corp. is a public company
traded on the Toronto Venture Stock Exchange under South Star Battery
the symbol STS and on the OTCQB under symbol Metals Corp.
STSBF. (TSXV: STS)
• Brasil Graphite Corp. is a wholly owned subsidiary
incorporated in the Cayman Islands. 100%
• Brasil Grafite Mineração Ltda. (“BGSA”) is a is a wholly
owned exploration and development company
focused on developing the Santa Cruz Graphite Project Brasil Grafite Corp.
(“Project”) in the state of Bahia, Brazil.
• BGSA owns 100% of the Santa Cruz Graphite Project. 100%
Brasil Grafite
Mineração Ltda
100%
Santa Cruz
Graphite Project
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 6
Leadership Team
BOARD OF DIRECTORS
Dave McMillan
Chairman
Richard Pearce Felipe Alves Eric Allison Dan Wilton Marc Leduc
Exec. Director Exec. Director Exec. Director Indep. Director Indep. Director
MANAGEMENT
Richard Pearce
President & CEO
CHF Capital
Eric Allison Bennett Liu Felipe Alves
Markets
Business Dev. CFO Project Dev.
Investor Relations
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 7
Investment Highlights
Phase 1 Construction Ready
Mining Friendly District Open Pit Mining & No Drill & Blast
With 80 + years of graphite production
With Low Strip Ratio
Simple, Proven Flowsheet
Experienced Management & Technology
Proven Mine & Plant Builders
Simple
Operations
Excellent Infrastructure
With gas, electric and excellent logistics
No Tailings Dam
With small environmental footprint
Fully Permitted & Licensed
Ready for Construction
Environmental & mining
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 8
Investment Highlights
Phase 1 Derisked
All licenses & Stepping Low OPEX
Proven tested permits are valid into production Low in proven producing
process circuit & up-to-date in phases environmental risk district
MIDDLE
Low Low capital
geological risk intensity
LOW HIGH
PROJECT RISK
Established
utilities and Supply Supply chain Projected increase
infrastructure imbalance diversification In demand
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 9
Santa Cruz Graphite Project
Phase 1 Construction Ready
INFRASTRUCTURE COMPETITIVE ADVANTAGES
Excellent Infrastructure
Major port Experienced
Power, gas,
1.3km water all
of Ilheus is
270km away via workforce
from paved within 5km paved federal nearby
highway highways
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 10ESG & Sustainability
ESG & Sustainable Production is part of our Corporate DNA
ENVIRONMENTAL + SOCIAL + GOVERNANCE
✓ Renewable sources provide 80% of ✓ First major industry in the region ✓ Review, evaluate and update
Brazilian energy generation ✓ Committed to responsible, equitable regularly governance policies
✓ Low cost, tax-incentive solar power hiring practices in partnership w/ ✓ 2 Independent Directors
project being studied community/municipality ✓ Executive management primarily
✓ Sustainable tailings management ✓ Phase 1 - 60-65 Est. Direct Jobs lives in Brazil and is on-site and
with filtered tailings/dry stack ✓ Phase 1 – 350 Est. Indirect Jobs hands - on
✓ Effective water management & low ✓ Phase 2 - 120-125 Est Direct Jobs ✓ TSX and OTC listing
freshwater demand with process ✓ Phase 2 – 700 Est. Indirect Jobs ✓ Audited financials
water recirculated ✓ Committed to provide community ✓ Compensation tied to ESG
✓ Waste characterized as inert/non- training & educational opportunities performance
dangerous ✓ Focus on worker safety w/ ✓ Committed to joining key industry
✓ Low strip ratio compensation tied to performance organizations and ESG frameworks
✓ Low vegetation suppression for ✓ Committed to transparency and open ✓ Committed to transparency and
project construction (Global Markets
Projected Large Increase in Graphite Demand
• Brazil has large internal demand for natural graphite (80-90kt/p.a.)
• Graphite has many uses outside of battery metals
• High tech, graphene, military, etc…
• Natural graphite has advantages over synthetic:
• Lower cost
• Smaller environmental impacts
• Easier to scale
• Higher energy density
• Need 10-15 new mines by 2025 to meet 2x
demand
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 12Global Markets
Graphite Demand is in a Perfect Storm
2018 to 2050 For Battery Metals Supply
2050 Demand Kt
Growth % (t)
Aluminum 5,583
Graphite 494%
Lithium 488% Graphite 4,590
Cobalt 460% Nickel 2,268
Indium 231% Copper 1,378
Vanadium 189% Lead 781
Nickel 99% Manganese 694
Silver 56%
Cobalt 644
Neodymium 37%
Lithium 415
Lead 18%
Moly 11% Chromium 366
Aluminum 9% Vanadium 138
Copper 7% Moly 33
Manganese 4% Silver 15
Chromium 1% Neodymium 8
Iron 1%
Titanium 3
Titanium 0%
Indium 1.73
0% 100% 200% 300% 400% 500% 600%
0 1,000 2,000 3,000 4,000 5,000 6,000
Source: 2020 World Bank - Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition 2DS Scenario
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 13Global Battery Market
Brazil - Premier Battery Metals Jurisdictions
• Brazil is largest graphite producer of high-quality graphite outside of China with 80+ years of
continuous production and 3rd most important country in EV Battery Supply Chain.
Graphite Supply 2020 EV Supply Chain Ranking
by Country By Country
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 14Santa Cruz World-Class Flake Sizes
Representative Santa
Cruz Graphite Project Flake Percentage +80 Mesh
Concentrates
Mesh Size (#) Distribution %Cg
30# 4% 95%
50# 32% 95%
80# 27% 97%
140# 17% 97%
-140# 20% 97%
Recovery 88%
+50 mesh with 98% Cg and +99.9% Cg
concentrates were also produced during
testing.
63% of concentrates contained jumbo to large
flakes (+30, +50 and +80 mesh).
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 152019 Santa Cruz Update Resource Estimate*
The 2019 updated Resource Estimate shows strong geologic
potential and continuity of high-quality graphite
mineralization in friable, easily mined, weathered materials.
New areas with at-surface mineralization were discovered,
and the deposit is open both along strike and at depth.
Santa Cruz Graphite
2019 Mineral Resources Update
Summary*
Tonnage C In-situ Graphite
Category
(t) (%) (t)
Measured 3,947,550 2.40 94,740
Indicated 10,955,570 2.25 246,500
Total M&I 14,903,100 2.29 341,240
Inferred 7,911,450 2.32 183,550
* Cautionary Note: This updated resource estimate is considered by STS to meet the requirements of a
resource and reserve estimate technical report as defined by Canadian Securities Administrators' National
Instrument 43-101 ("NI 43-101") Standards of Disclosure for Mineral Projects. Mineral Resources that are
not Mineral Reserves do not have demonstrated economic viability. There is no guarantee that all or any
part of the Mineral Resource will be converted into a Mineral Reserve. Inferred Resources are considered
too geologically speculative to have mining and economic considerations applied to them and to be
categorized as Mineral Reserves (as defined in NI 43-101). Additional trenching and/or drilling will be
required to convert Inferred Mineral Resources to Measured or Indicated Mineral Resources.
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 162020 Santa Cruz Preliminary
Feasibility Study*
The financial analysis in 2020 PFS shows very favourable and
robust results that highlight the Santa Cruz Project’s advantages in Santa Cruz Graphite
the graphite sector. Mineral Reserves Summary*
Key Financial Results
Mineral In-situ
Post-tax NPV5% US$ 81,200,000 Tonnage Cg
Reserve Graphite
Post-tax all Equity IRR 35% p.a. Estimate
(t) (%) (t)
Post-Tax Free Cash Flow (LOM) US$129M
Proven 3,989,635 2.49 99,340
Payback Period 4 years
Probable 8,318,795 2.35 195,490
Total P&P 12,308,500 2.40 295,400
Key Parameters
Mining Method Open Pit
Process/Metallurgy Milling & Flotation
Life of Mine 12 years
Annual Production (years 1-2): 5,000 t p.a.
Annual Production (year 4-11): 25,000 t p.a
Capital Costs – Phase 1 US$ 7,300,000
Capital Costs – Phase 2 US$ 27,200,000
Avg. Operating Costs(LOM): US$ 396 per tonne of conc.
Avg. Weighted Price: US$ 1287/t
* Cautionary Note: This PFS is considered by STS to meet the requirements of a Preliminary Feasibility Study as defined by Canadian Securities Administrators' National Instrument 43-101 ("NI 43-101") Standards of Disclosure for Mineral Projects. The economic
analysis contained in the technical report is based, in part, on Inferred Resources (as defined in NI 43-101) and is preliminary in nature. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. There is no guarantee that
all or any part of the Mineral Resource will be converted into a Mineral Reserve. Inferred Resources are considered too geologically speculative to have mining and economic considerations applied to them and to be categorized as Mineral Reserves (as defined
in NI 43-101). Additional trenching and/or drilling will be required to convert Inferred Mineral Resources to Measured or Indicated Mineral Resources. There is no certainty that the reserve's development, production and economic forecasts on which the PEA is
based will be realized.
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 17STS Value Proposition
• Currently Undervalued When Compared to Peer Group
Enterprise Value as % of NPV Enterprise
Enterprise
Value
Value
per/ TT of
of Cg
Cg
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 18STS Value Proposition • Low CAPEX and First Quartile OPEX In a District with 80+ Years of Continuous Operations Capital Intensity US$/T of Capacity OPEX US$/T TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 19
STS Value Proposition
• Low CAPEX and High Return on Investments
CAPEX vs IRR (ATAX)
450
ZEN
400
GPH
Net Present Value
350
per Share
300 NOU
MNS
CAPEX - US$M
250 LLG Outstanding: C$2.52
Fully Diluted: C$2.13
200
SRG RNU EGR
FMS
150 WWR
NGC
TON
BEM BKT
100
NEXT GPX
LML
50 VRC STS
-
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%
IRR - ATAX
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 20STS Value Proposition
• Compelling Value Proposition with Construction Ready Project
Study Phase Vs. Market Cap
1000
NOU
TLG
Market Cap (Log $M Xchange Currency)
EGR
MNS NEXT
WWR SVM
100 BKT
FMS
GPH WKT BAT
CY GRAT SRG
RNU VRC
NG
LMR CVE HXG
BSM BEM
GEM
10 EGA LION
SJL STS Ph 1&2 STS Ph 1
1
0 TR
1 PEA
2 PFS
3 FS
4 Licensed
5 &
Study Phase Detailed Eng
Market Cap < C$20M C$20M < Market Cap < C$50M C$50M < Market Cap < C$100M Market Cap > C$100M
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 21Why South Star?
Near-term graphite producer with responsible and sustainable production, committed to tangible,
long-term benefits for employees, communities, and stakeholders.
✓ PFS NI43-101 & updated
Santa Cruz Resource Time ✓ Expanding demand in
Project ✓ Pilot plant testing
Brazil
completed
✓ Growing Li-Ion battery
✓ High proportion of large
market
flakes
✓ New markets developing
✓ 1st Quartile OPEX
✓ First production by
✓ Low CAPEX
the end of 2022
✓ Robust economics
✓ Large geological upside
✓ Mining friendly
Brazil jurisdiction Team ✓ Management &
Location ✓ Great infrastructure Directors hold ~25%
✓ Great logistics ✓ Experienced mine
✓ Prolific graphite builders, operators and
producing region financiers
✓ Experienced workforce ✓ Decades of experience
✓ Large internal market for in Brazil
graphite in Brazil ✓ ESG is in our DNA
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 22TSXV: STS | OTCQB: STSBF For more information, please contact: CHF Capital Markets Iryna Zheliasko, Manager Phone: 416 868 1079 x 229 Email: iryna@chfir.com Mr. Dave McMillan, Chairman Email: davemc@telus.net Email: info@southstarbatterymetals.com Web: www.southstarbatterymetals.com Twitter: @southstarbm Facebook: @southstarbatterymetals LinkedIn: @southstarbatterymetals Suite 1200 - 750 West Pender Street R. Barão do Triunfo, 612 – Cj 2210 Vancouver, British Columbia Brooklin Paulista – São Paulo SP Canada, V6C 2T8 Brasil, 04602-002
APPENDIX 1 - PHASE 1 PROJECT DETAILS (5,000 TPY PILOT PLANT) 20 Year Mine Life with Terminal Value TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 24
Path to Production – Macro Schedule
2021 Key Milestones
▪ Secure Offtake/Supply Agreement
▪ Complete Debt/Equity Finance for
Phase 1
▪ Begin Construction within 2-3
months of financing
▪ 10-12 month construction schedule
Santa Cruz Graphite Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Q2-2022 Q3-2022 Q4-2022
Environmental License 19/02
Mining License GU (ANM)
31/12
Project Financing 31/07
Detailed Engineering 30/06
Community interface/Prep
Go/No Go & Start of Project 31/07
Mobilization & Preconstruction 31/08
Construction 30/06
Commissioning 01/09
Commercial Production 01/09
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 25PHASE 1 – LICENSING & PERMITTING • Environmental Permit Approved for 4 Years • Mining License Approved for 3 Years by ANM on Dec 31, 2020 • Phase 1 Operations are fully licensed • Permits and licenses can be renewed TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 26
PHASE 1 – FUNDING REQUIREMENTS
• US$12-15M Funding Requirement
• US$7M in Debt
• US$8M in Equity
• Uses and Proceeds
• US$10M CAPEX/Commissioning/ Sustaining Capital/Land Acquisition
• US3M Exploration/Phase 2 Licensing & Permitting
• US$2M Corporate Expenses & Working Capital
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 27PHASE 1 – ROBUST FINANCIAL METRICS & POTENTIAL RETURNS
• 12-month Construction Schedule
• Currently Trading at 4% of Phase 1 NPV or 2% of Phase 1+2 NPV
• Target Valuation in 24-36 Months
• C$50M = US$36M
• Conservative Approach to Valuation
• Comparables (6-8x EBITDA)
• 75% Phase 1 NPV or 44% of Phase 1 + 2 NPV
NPV5% US$ 30,9M
NPV5% + Terminal Value US$ 51,8M
IRR 32% p.a.
Cash Flow (LOM) US$62M
Payback Period (From Construction Kickoff) 3.4 years
Mining Method Open Pit
Process/Metallurgy Milling & Flotation
Life of Mine (LOM) 20 years
Annual Production (years 1): 3,000 t p.a.
• Graphite amounts to over 95% of anode
Annual Production (years 2): 5,000 t p.a.
material for commercial battery
Annual Production (year 3-20): 6,000 t p.a
technologies
Capital Costs – Phase 1 US$ 7,300,000
• No substitutes on the horizon
Avg. Operating Costs(LOM): US$ 546 per tonne of conc.
Avg. Weighted Price: US$ 1287/t Source: Benchmark Mineral Intelligence
TSXV: STS | OTCQB: STSBF www.southstarbatterymetals.com 28You can also read
