TriStar Gold Pursues Strategic Partnership for High-Return Brazil Project with 70% IRR Upside

• TriStar Gold released updated PFS showing 40% post-tax IRR at $2,200 gold, with over $1 billion pre-tax cash flow and $603 million post-tax NPV, significantly improved from 2021 study due to higher gold prices.
• Company successfully defended its environmental permit (LP) against public prosecutor challenge regarding indigenous consultation, with all parties confirming no impact on indigenous lands located hundreds of kilometers away.
• Recent financing will fund drilling program to extend high-grade reserves at Esperança South and advance toward installation license and feasibility study completion by the end of 2026.
• Management actively seeking mine builder/acquirer to partner on project development, targeting bringing partners in during the feasibility study phase rather than building mine themselves.
• Project benefits from existing highway access (15km), power lines, and infrastructure developed for regional soybean industry, requiring minimal additional infrastructure investment.

TriStar Gold (TSXV: TSG) represents a shining opportunity in Brazil's mining sector, with CEO Nick Appleyard recently outlining the company's progress on its Castelo de Sonhos project following a successful $10 million financing round. The interview provides crucial insights into the project's enhanced economics, recent permitting developments, and strategic direction as the company positions itself for partnership with established mine builders.

Enhanced Project Economics Drive Value Creation

The foundation of TriStar's investment thesis rests on significantly improved project economics driven by higher gold prices. The company released an updated Preliminary Feasibility Study (PFS) in May 2025, marking a substantial improvement from their initial 2021 study. 

"We released an update earlier on in May and we had some great numbers. The IRR now is 40% post-tax at $2,200 gold which I think is still quite a conservative number considering we're probably at $3,200 now." 

The updated economics showcase compelling returns with over $1 billion in pre-tax cash flow and a post-tax net present value of $600 million. These figures become even more attractive when considering current gold prices trading above the $2,200 consensus price used in the study. Management estimates the internal rate of return could exceed 70% at current gold prices around $3,200 per ounce, demonstrating significant leverage to continued gold price strength.

The project's production profile targets an average of 120,000 ounces annually over 11 years, with higher-grade production of approximately 150,000 ounces during the first six to seven years. This production scale positions Castelo as an attractive mid-tier asset for potential acquirers seeking quality assets in stable jurisdictions.

Permitting Milestone Achieved Despite Challenges

A critical development for TriStar involved successfully navigating a challenge to their environmental permit. The company obtained their License Prévia (LP) in August 2024 after nearly two years of detailed work with state environmental authorities. However, a public prosecutor subsequently questioned whether sufficient indigenous consultation had occurred, recommending permit suspension.

"They never questioned what we did. They're actually complimentary about us and said oh you guys did everything required. You did it all professionally. We're very happy with you. We just don't think SEMAS quite asked you to do enough with the indigenous groups." 

The company successfully defended against this challenge by demonstrating no impact on indigenous lands, some located over 700 kilometers away from the project. This response came from multiple parties including the state environmental authority, local township, and Tristar itself. Importantly, the permit was never actually suspended despite the recommendation, and the company maintains full permitting authority to proceed with development activities.

This permitting experience strengthens TriStar's regulatory position going forward. As Nick noted, 

"I think once that you've had a challenge like this, anytime you're in a country, which could be the US or Canada or Australia as well, where there are indigenous groups, there's frequently questions asked and if the questions been asked and answered, I think that puts you in a stronger position."

Strategic Drilling Program and Resource Optimization

The $10 million financing enables TriStar to execute a focused drilling program designed to extend high-grade reserves around the Esperança South area. This drilling represents a strategic investment in resource optimization ahead of the definitive feasibility study. 

"The first thing we'll be doing is we'll mobilise drill rigs do some drilling. We want to get some easy targets to extend the high-grade reserves around Esperança South." 

The drilling program serves multiple purposes beyond resource extension. Results will guide the scope of the upcoming feasibility study and potentially expand the area of direct impact in permitting applications. This approach allows TriStar to advance permitting activities in parallel with feasibility work, optimizing project development timelines.

Resource expansion at Esperança South specifically targets higher-grade material that could further enhance project economics. Given the project's current strong returns, additional high-grade ounces would provide incremental value while potentially extending mine life or increasing annual production during peak years.

Interview with CEO Nick Appleyard

Infrastructure Advantages and Operational Readiness

TriStar benefits from exceptional infrastructure positioning that significantly reduces capital requirements and development risk. The project sits just 15 kilometers from a major highway with existing road access requiring only upgrades rather than new construction. Power infrastructure is already in place, requiring only a 28-kilometer power line extension from the existing substation to the project site.

"We're super lucky on the location of this project because we're only 15 km off of a highway. So, we already have good roads from the highway to the project. They'll need upgrading and maintenance through operations, but you don't need to construct new roads.”

This infrastructure exists primarily due to the thriving soybean industry in the region, with TriStar positioned to benefit from ongoing maintenance and expansion driven by agricultural activity. The highway sees daily soybean truck traffic requiring continuous maintenance, while power infrastructure continues expanding to serve agricultural operations. These factors eliminate major infrastructure development costs while providing reliable, maintained access to the project.

Partnership Strategy and Value Realization

Perhaps most significantly for investors, TriStar has clearly articulated its strategy as a project developer rather than mine builder. Management actively seeks partnerships with established mining companies capable of funding and operating the project through production. 

"We're not a mine builder. During the next 12 to 18 months, we'll be looking for a partner, acquirer, a mine builder to come in and help build this project." 

This strategy reflects management's recognition that optimal value creation comes through partnering with experienced operators rather than attempting to build mining expertise internally. The approach also acknowledges that successful mine development requires operator input during feasibility study development. 

"Whoever's going to run this mine needs to have a say in the feasibility study. You know, that's my personal philosophy." 

The partnership timeline targets bringing a strategic partner onboard within the next 12 months, ideally before or during feasibility study completion. This timeline aligns with the project's technical advancement while capitalizing on current market conditions favoring gold assets. The sub-$300 million capital cost estimate opens partnership opportunities with a broader range of potential acquirers beyond just major mining companies.

Community Relations and Social License

TriStar has invested significantly in community relations, focusing particularly on education initiatives in local communities. This investment proved valuable during the recent permitting challenge, with strong community support helping defend the project. 

"The support from the town, the support from the whole community around us was massive and that reflected in them pushing the township to respond on behalf of and favorably for the company."

The company's community engagement strategy differs from typical approaches by involving technical staff directly in community work rather than maintaining separate community relations teams. Current initiatives include school rebuilding projects, environmental education programs, and healthcare support. This grassroots approach has built genuine community support that provides valuable social license protection.

Market Position and Valuation Opportunity

Management believes the stock trades below fair value due to the temporary uncertainty created by the permitting challenge. The successful $10 million financing at attractive terms suggests institutional recognition of this value gap. Notable participants included Eric Sprott taking approximately 10% of the company, providing third-party validation of the investment opportunity.

"I think people recognized that there was an artificial depression on the share price which is probably going to be unwound now." 

With permitting issues resolved and drilling programs commencing, the company expects improved news flow to drive valuation re-rating.

The current shareholder base remains approximately 61% retail investors, though management expects natural evolution toward institutional ownership as financing requirements increase through development phases. This evolution typically occurs organically as larger funding rounds attract institutional participation.

The Investment Thesis for TriStar Gold

• Exceptional Economics: 40% post-tax IRR at $2,200 gold with potential for 70%+ returns at current gold prices around $3,200, supported by over $1 billion pre-tax cash flow generation
• De-risked Permitting: Environmental permit successfully defended against challenge, with clear regulatory pathway and strengthened position for future development phases
• Strategic Partnership Timeline: Active engagement with potential mine builders targeting partnership within 12 months, providing clear catalyst for value realization and project advancement
• Infrastructure Cost Advantages: Minimal infrastructure capex required due to existing highway access, power lines, and regional soybean industry infrastructure, supporting sub-$300 million total project cost
• Resource Expansion Potential: Funded drilling program targeting high-grade reserve extensions at Esperança South, offering opportunity for further economic enhancement and extended mine life
• Strong Community Support: Proven social license through community engagement programs that provided crucial support during permitting challenges, reducing future operational risk
• Institutional Validation: Recent $10 million financing with Eric Sprott participation and Auramet as largest shareholder provides third-party validation of project quality and investment merit
• Optimal Market Timing: Project advancement coincides with strong gold market fundamentals and increased appetite for quality development assets among potential strategic partners

Macro Thematic Analysis

The current gold market environment provides exceptional tailwinds for advanced development projects like TriStar's Castelo. With gold prices reaching multi-year highs above $3,200 per ounce, mining companies are generating unprecedented cash flows that enable aggressive acquisition strategies for quality development assets. This environment particularly benefits projects with strong economics at conservative gold price assumptions, as they offer significant leverage to continued price appreciation.

Brazil's mining sector has experienced renewed international interest as the country demonstrates commitment to foreign investment and streamlined regulatory processes. The resolution of TriStar's permitting challenge exemplifies this improved environment, where transparent regulatory processes and community engagement can successfully navigate typical development hurdles. Infrastructure development driven by agricultural expansion in regions like Pará state creates additional benefits for mining projects through shared infrastructure costs and maintained access routes.

The strategic partnership trend among mid-tier miners reflects capital allocation priorities favoring acquisition of advanced development projects over early-stage exploration. Projects offering immediate production potential with strong economics attract premium valuations, particularly when supported by existing infrastructure and resolved permitting. This market dynamic strongly favors companies like TriStar that have advanced projects through feasibility stages while maintaining partnership optionality.