South Star Announces Indicative Term Sheet for US$4M Debt Financing for the Santa Cruz Graphite Mine in Brazil and Appointment of New CFO

Executive Summary

• South Star Battery Metals Corp. signed a non‑binding indicative term sheet with Sprott Streaming for a US$4 million, 3‑year loan facility to fund Phase 1 development of the Santa Cruz Graphite Mine in Brazil.
• The loan will be drawn in tranches tied to milestones over a 24‑month period; initial tranche of US$200 k is conditional on an additional US$2 M equity or subordinated debt financing.
• Darren Prins was appointed Chief Financial Officer, replacing Samantha Shorter.

Key Details

• Loan Amount: US$4,000,000 total facility.
• Term: 3 years (36 months) from closing.
• Disbursement Schedule: Tranches based on agreed milestones over the first 24 months; initial tranche of US$200,000 at closing, subject to a concurrent US$2,000,000 equity/sub‑debt financing condition.
• Interest Rate: 12% per annum (compounded monthly) for the first 24 months; 18% per annum for months 25‑36.
• Grace Period: 12 months; accrued interest capitalized to principal.
• Repayment: Quarterly cash interest after grace period; amortization of principal and interest begins 18 months post‑closing, with 50% amortized over the subsequent 24 months and the remaining 50% due at maturity.
• Security: Senior security pari passu with existing Stream security package.
• Warrants: Up to 250,000 three‑year warrants to be issued to South Star (25% on documentation closing, remainder pro rata with draw amounts); strike price to be negotiated.
• Use of Proceeds: Equipment adjustments/upgrades, working capital, and process optimization at Santa Cruz to support 450 tpm concentrate production and transition toward 1,000 tpm; enhance operating robustness and financial flexibility.

• Closing Conditions: Subject to TSX Venture Exchange approval; definitive documentation being prepared on an expedited schedule.

• Executive Appointment: Darren Prins appointed Chief Financial Officer effective immediately, succeeding Samantha Shorter. Prins brings >20 years of finance experience across mining, oil & gas, agriculture, and private equity, including prior CFO roles at TSX‑listed companies and involvement in M&A transactions.

Notable Quotes

“We are very pleased to continue our financing partnership with Sprott Streaming… This facility provides flexible, milestone‑based funding that will allow us to continue advancing the Santa Cruz Graphite Mine into consistent production…” – Richard Pearce, President & CEO

“We are pleased to welcome Darren to the team and his extensive experience in senior finance roles will be invaluable as we advance through the upcoming milestones.” – Richard Pearce, President & CEO