Heliostar Metals (TSXV: HSTR; US-OTC: HSTXF) has more than doubled the estimated value of its Cerro del Gallo gold-silver project in central Mexico, according to an updated prefeasibility study (PFS), even as higher capital costs reflect a more complex development plan and a stronger metals price environment.
The revised study lifts the project’s post-tax net present value (NPV), discounted at 5%, by 142% to $424 million, compared with the initial 2020 assessment completed under previous owner Argonaut Gold. The updated economics are underpinned by a higher base-case gold price assumption of $2,300 per oz., reflecting the sharp rise in bullion prices over the past two years amid global economic uncertainty and sustained central bank buying.
Initial capital expenditures increase 45% to $195.3 million, largely due to an expanded processing flowsheet and higher infrastructure requirements. Despite the higher upfront cost, the internal rate of return (IRR) improves by 13 percentage points to 33%, while the payback period shortens by more than one-third to 2.3 years. Cerro del Gallo is located in Guanajuato state, roughly 360 km northwest of Mexico City, a region with a long history of mining activity.
“With this study, the value of Cerro del Gallo to Heliostar has now been clearly established,” CEO Charles Funk said in a statement. “Progress on the project was delayed as we initially focused on integrating and operating the mines and properties acquired in November 2024. The updated PFS confirms Cerro del Gallo as a meaningful development asset in our portfolio, and we plan to continue advancing technical work, permitting and community engagement toward a feasibility study.”
The updated PFS outlines total life-of-mine production of approximately 1.3 million gold-equivalent ounces over a 15.3-year mine life, a 6% increase from the 2020 study. The improvement reflects changes in the mine plan and processing strategy, as well as updated cost and recovery assumptions.
Heliostar shares rose 4% to $2.64 on Thursday morning in Toronto, valuing the company at about $684 million. The stock has traded in a 12-month range between 54¢ and $2.71, benefiting this year from renewed investor interest in precious metals producers and developers.
Reserves stable, silver and copper improve
Proven and probable reserves at Cerro del Gallo total 91.9 million tonnes grading 0.51 gram gold per tonne, 15.25 grams silver and 0.1% copper, containing an estimated 1.4 million oz. of gold, 45 million oz. of silver and 94,740 tonnes of copper. While overall reserve tonnage remains largely unchanged from 2020, contained gold and gold grades declined by about 8%. In contrast, silver and copper grades and contained metal increased by roughly 15% and 11%, respectively.
Indicated mineral resources rose by about 19% to 239.9 million tonnes grading 0.38 gram gold, for 2.94 million oz. of contained gold. Inferred resources also expanded significantly, with tonnage nearly quadrupling to 25.4 million tonnes at 0.28 gram gold, lifting contained gold to roughly 220,000 oz.
Processing changes drive costs
The original PFS envisioned Cerro del Gallo as an open-pit heap leach operation incorporating a SART (sulphidization, acidification, recycling and thickening) circuit to recover dissolved silver and copper. The updated study calls for a larger SART facility with additional filtration capacity, as well as an expanded heap leach pad. These changes are expected to improve recoveries and operational flexibility but contribute to higher capital and operating costs.
Heliostar said it plans to continue drilling to convert additional resources to reserves and to grow the overall resource base, although no specific drilling targets were disclosed. Further flowsheet optimization, permitting work and stakeholder engagement are also planned as the company works toward a feasibility-level study.
Mexico policy backdrop
The study comes as mining developers in Mexico continue to navigate policy uncertainty under President Claudia Sheinbaum’s administration, which has maintained restrictions on new concessions and tightened regulatory oversight. Despite these headwinds, rising gold and silver prices have improved project economics across the sector, allowing companies to advance studies and attract investor interest.
Development of Cerro del Gallo would follow the commissioning of Heliostar’s flagship Ana Paula gold project in Guerrero state, which the company views as its primary near-term production asset. Cerro del Gallo is positioned as a longer-term growth project within Heliostar’s development pipeline.
