Composite Score 18/25

Management Skin-in-the-Game

3/5

CEO Charles Funk leads Heliostar with strong institutional backing: Eric Sprott holds approximately 13% of the company and Franklin Resources holds approximately 12%, together representing over 25% ownership from respected institutional mining investors. Individual investors hold a further 56% of shares outstanding. Insiders (management and directors collectively) hold approximately C$30M in shares in the C$700M company, representing roughly 4.3% — a reasonable but not exceptional management ownership level.

The concern that tempers this score is recent insider behavior: SEDI data shows insiders have been net sellers over the past three months, which is inconsistent with the bullish production growth narrative heading into 2026. This is a yellow flag when the company is guiding to 47-61% production growth and an active resource conversion program at Ana Paula.

Score rationale: Sprott's 13% strategic stake is a meaningful alignment proxy — Sprott typically participates as a strategic co-investor when he has high conviction in both the asset and management. This provides an important backstop. However, the management-level selling tempers the score from a potential 4 to a neutral 3. Monitoring whether insiders resume buying as catalysts approach will be an important signal.

Project Geology Quality

4/5

Ana Paula is an exceptional high-grade epithermal-style gold deposit in Guerrero State, Mexico. The current NI 43-101 resource includes Measured and Indicated resources of 710,920 oz Au at 6.60 g/t gold (320,204 oz Measured, 390,716 oz Indicated) plus 447,512 oz Inferred at 4.24 g/t — approximately 1.16M oz total at exceptional grade.

A 28,000m resource conversion and expansion drill program is actively delivering results that consistently confirm and extend mineralization. Highlights include: 101m at 5.34 g/t Au (hole AP-25-374, Expansion Zone), 88m at 8.82 g/t (resource conversion), 30.2m at 6.29 g/t (first conversion holes), and 25.45m at 8.26 g/t (first down-dip holes into the expansion zone). Mineralization is hosted in westerly-dipping calcareous sediments and tuffs intruded by felspar porphyry sills, with an east-west fault system providing the key gold control. The third drill rig was added at Ana Paula during the program, indicating management confidence in the discovery potential.

Risk: La Colorada and San Agustin operations are lower-grade mines that provide current cash flow but are not the long-term geological story. Ana Paula is the growth engine and is still in resource conversion — the deposit has not yet advanced to a PEA or Feasibility Study. The score is 4 rather than 5 because the development stage of Ana Paula leaves capital costs, mine design, and economics unquantified.

Capital Structure Health

4/5

As of December 31, 2025, Heliostar held C$40.6M in cash, working capital of C$49.0M, and no debt — a clean, unlevered balance sheet for an emerging producer at this stage. The company plans to invest C$27.0M in exploration across the portfolio in 2026, which is fully funded from existing cash and operating cash flow without near-term dilution requirements.

Shares outstanding are 252 million — a manageable float for a C$700M company. The most recent formal warrant program (the C$5.2M warrant incentive program closed December 2023, leaving 28.7M warrants outstanding post-exercise) has been substantially absorbed. Total cash cost of C$1,541/GEO in 2025 came in well below the C$1,800-1,900/GEO guidance, indicating the company's operations are generating better-than-expected margins at current gold prices.

Score rationale: No debt, C$49M working capital, and operating margins that beat guidance are hallmarks of a well-managed capital structure. The score is held to 4 rather than 5 due to the recent insider selling signal and the expectation that developing Ana Paula will eventually require an equity raise. The current balance sheet, however, is a genuine strength.

Catalyst Proximity

4/5

2026 is a high-catalyst year for Heliostar. Production guidance of 50,000-55,000 oz gold represents a 47-61% increase over 2025 actual production of 34,098 GEOs, driven primarily by the San Agustin mine restart in Durango and operational improvements at La Colorada. This is a quantifiable, near-term production re-rating catalyst with defined timing.

The 28,000m Ana Paula drill program is expected to deliver an updated mineral resource estimate in 2026. Given the expansion drill results (multiple intercepts above 6.0 g/t Au and down-dip hits in previously undrilled areas), resource growth is highly probable. Additional catalysts include the first commissioning updates for San Agustin and down-dip expansion zone intercepts that could demonstrate a materially larger Ana Paula footprint than the current estimate.

Score: 4 — High-confidence near-term catalysts with quantifiable magnitude. The combination of a 47%+ production growth target and a material resource update from active drilling are both expected within the 2026 calendar year, creating a series of re-rating events rather than a single binary outcome.

Comparable Acquisition Value

3/5

At a C$700M market cap with C$40.6M cash and no debt, Heliostar's enterprise value is approximately C$659M. Against 1.16M oz of M&I gold at 6.60 g/t, this implies approximately C$568/M&I oz — a fair-to-premium valuation for a high-grade developer-producer in Mexico.

Comparable recent transactions support the benchmark: Coeur Mining's C$1.7B acquisition of SilverCrest (high-grade Mexico epithermal) was completed at a significant premium to resource NAV. Mexico-focused gold and silver transactions have generally commanded C$400-700/M&I oz depending on grade, stage, and jurisdiction. At 6.60 g/t Au, Heliostar's Ana Paula sits at the high end of the grade spectrum, justifying a premium to average developer multiples.

Score: 3 — Fairly to moderately valued at the current market cap relative to comparable transactions; not deeply discounted but not overpriced. The key dynamic: as the Ana Paula resource expands through the 28,000m conversion program, the $/M&I oz metric improves without a corresponding market cap increase (assuming no additional dilution), potentially creating a re-rating as the resource outpaces the current valuation.

Analyst Summary

HSTR earns a composite score of 18/25 — WATCH. The standout factor is Geology: Ana Paula is a genuinely exceptional high-grade deposit (6.60 g/t Au M&I) with an active 28,000m drill program consistently delivering strong intercepts that are extending both the depth and width of mineralization. Combined with a clean balance sheet (no debt, C$49M working capital) and a 47%+ production growth catalyst for 2026, the near-term setup is one of the stronger narratives in the Mexico gold space.

The factor that tempers a BUY rating is management alignment: insiders are net sellers in recent months despite the bullish growth narrative. This is inconsistent with the level of operational confidence communicated in press releases and is worth monitoring closely. Sprott's 13% strategic ownership provides an important backstop validation, but management-level selling at the threshold of a major production ramp introduces doubt. Additionally, the current producing mines (La Colorada and San Agustin) are lower-grade operations — HSTR's growth thesis depends on a successful San Agustin restart and eventual development of Ana Paula, neither of which is fully de-risked.

The catalyst to watch in 2026 is the updated Ana Paula mineral resource estimate following completion of the 28,000m conversion program. If the M&I resource grows to 1.5M oz while maintaining grade above 6.0 g/t Au, a reassessment to BUY would be warranted — particularly if insider buying resumes alongside the announcement. The San Agustin restart is the shorter-term production catalyst; confirmation of full operations and 2026 guidance tracking by Q2 2026 is the first checkpoint.

Heliostar Metals Ltd.