South Star Battery Metals Announces Non-Brokered Private Placement and Share Consolidation

VANCOUVER, May 19, 2022 - South Star Battery Metals Corp. (“South Star” or the “Company”) (TSXV: STS) (OTCQB: STSBF), is pleased to announce that it intends to complete a non-brokered private placement of units (the “Private Placement” or the “Offering”) to raise approximately C$2,000,000. Concurrently, the Company plans to consolidate its common shares on the basis of one (1) post-consolidation common share for every five (5) pre-consolidation common shares (the “Consolidation”). The closing of the Offering and the Consolidation are subject to customary conditions, including the receipt of all necessary approvals, including the approval of the TSX Venture Exchange (the “TSXV”).


Private Placement

The Private Placement on a pre-Consolidation basis will consist of approximately 13,333,333 units priced at C$0.15 per unit (the “Units”). Each Unit will consist of one (1) common share and one (1) common share purchase warrant (the “Warrants”). Each Warrant will entitle the holder to purchase one additional common share of the Company at an exercise price of C$0.25 per common share for a period of five years from the date of issue.

The Company may pay finders' fees under the offering in accordance with applicable securities laws and the policies of the TSX Venture Exchange. The securities will be subject to a four-month hold period from the date of closing. The Private Placement is subject to a 25% over-allotment option and to an acceleration clause. See below for further details.

Common Shares issued pursuant to the Private Placement will be issued on a post-Consolidation basis. The Warrants issued in the Consolidation will be issued on a post-Consolidation basis, and upon the completion of the Consolidation will automatically be adjusted to the post-Consolidation terms disclosed above (five pre-Consolidation Warrants will entitle the holder to acquire one post-Consolidation Warrant at a price of $1.25).


Acceleration Clause

If during a period of ten consecutive trading days between the date that is four (4) months following the closing of the Private Placement and the expiry of the Warrants the daily volume weighted average trading price of the common shares of the Company on the TSXV (or such other stock exchange where the majority of the trading volume occurs) exceeds C$0.50 on a pre-Consolidation basis for each of those ten consecutive days, the Company may, within 30 days of such an occurrence, give written notice to the holders of the Warrants that the Warrants will expire at 4:00 p.m. (Vancouver time) on the 30th day following the giving of notice unless exercised by the holders prior to such date. Upon receipt of such notice, the holders of the Warrants will have 30 days to exercise their Warrants. Any Warrants which remain unexercised at 4:00 p.m. (Vancouver time) on the 30th day following the giving of such notice will expire at that time.


Consolidation

In connection with the closing of the Offering, the board of directors of South Star has approved the Consolidation of all of South Star’s outstanding Common Shares on the basis of five (5) pre-Consolidation Common Shares for one post-Consolidation Common Share. The reasons for the Consolidation are to increase the Company’s flexibility in the marketplace and to make the Company's securities more attractive to a wider audience of potential investors. Subject to approval by the TSXV, the Consolidation is expected to take effect on the Closing Date.

South Star currently has 102,533,520 Common Shares issued and outstanding. Assuming no changes in the number of the Common Shares outstanding, after giving effect to the Consolidation (prior to taking into account the Common Shares issued in the Offering described above), the Company would have approximately 20,506,704 Common Shares issued and outstanding.

Any fractional interest in Common Shares resulting from the Consolidation will be rounded down to the nearest whole Common Share. Registered shareholders will receive a letter of transmittal from Computershare Trust Company of Canada, South Star's transfer agent, with information on how to replace their old share certificates with the new share certificates. Brokerage firms will handle the replacement of share certificates on behalf of their shareholders’ accounts. If approved by the TSXV, the Consolidation will occur immediately prior to the closing of the Offering (as defined above).

The exercise price and number of Common Shares issuable upon the exercise of South Star's outstanding stock options and warrants will be proportionately adjusted to reflect the Consolidation in accordance with the terms of such securities. Adjustments will depend on the terms of each particular security, but in general terms the number of common shares which may be acquired pursuant to a convertible security such as an option or warrant will be one-fifth of the pre-Consolidation number and the exercise price per common share will be five times the pre-Consolidation exercise price.


ABOUT SOUTH STAR BATTERY METALS CORP

South Star Battery Metals Corp. is a Canadian battery metals project developer focused on the selective acquisition and development of near-term production projects in the Americas. South Star’s Santa Cruz Graphite Project, located in Southern Bahia, Brazil is the first of a series of industrial and battery metals projects that will be put into production. Brazil is the second-largest graphite-producing region in the world with more than 80 years of continuous mining. Santa Cruz has at-surface mineralization in friable materials, and successful large-scale pilot-plant testing (>30t) has been completed. The results of the testing show that approximately 65% of Cg concentrate is +80 mesh with good recoveries and 95%-99% Cg. With excellent infrastructure and logistics, South Star is carrying its development plan towards Phase 1 production projected in Q2 2023.

South Star’s next project in the development pipeline is a project in Alabama located in the middle of a developing electric vehicle, aerospace and defence hub in the southeastern United States. The Project is a historic mine active during World Wars I & II. Trenching, sampling, analysis and preliminary metallurgic testing has been completed. The testing indicated a traditional crush/grind/flotation concentration circuit achieved grades of approximately 96-97% with approximately 86% recoveries. South Star is executing on its plan to create a multi-asset, diversified battery metals company with near-term operations in strategic jurisdictions. South Star trades on the TSX Venture Exchange under the symbol STS, and on the OTCQB under the symbol STSBF.

South Star is committed to a corporate culture, project execution plan and safe operations that embrace the highest standards of ESG principles based on transparency, stakeholder engagement, ongoing education and stewardship. To learn more, please visit the Company website at http://www.southstarbatterymetals.com.

This news release has been reviewed and approved by Richard Pearce, P.E., a "Qualified Person" under National Instrument 43-101 and President and CEO of South Star Battery Metals Corp.


On behalf of the Board,

Mr. Richard Pearce
Chief Executive Officer



For additional information, please contact:

South Star Investor Relations (Canada IR)
Email: invest@southstarbatterymetals.com

RBMG – RB Milestone Group LLC (IR US)
Trevor Brucato, Managing Director
Email: southstar@rbmilestone.com

Twitter: https://twitter.com/southstarbm
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CAUTIONARY STATEMENT

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

FORWARD-LOOKING INFORMATION

This press release contains "forward-looking statements" within the meaning of applicable securities legislation. Forward-looking statements relate to information that is based on assumptions of management, forecasts of future results, and estimates of amounts not yet determinable. Any statements that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be "forward-looking statements". Forward-looking statements in this press release include, but are not limited to, statements regarding: moving Santa Cruz into production and scaling operations as well as advancing the Alabama project; and the Company’s plans and expectations.

Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation: risks related to failure to obtain adequate financing on a timely basis and on acceptable terms; risks related to the outcome of legal proceedings; political and regulatory risks associated with mining and exploration; risks related to the maintenance of stock exchange listings; risks related to environmental regulation and liability; the potential for delays in exploration or development activities or the completion of feasibility studies; the uncertainty of profitability; risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits; risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; results of prefeasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with the Company's expectations; risks related to commodity price fluctuations; and other risks and uncertainties related to the Company's prospects, properties and business detailed elsewhere in the Company's disclosure record. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Investors are cautioned against attributing undue certainty to forward-looking statements. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from the Company's expectations or projections.