REG - East Star Resources - Final Results
22/04/2025 07:00
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RNS Number : 6348F East Star Resources PLC 22 April 2025
22 April 2025
East Star Resources PLC
("East Star" or the "Company")
Final Results for the 12 Months Ended 31 December 2024
East Star Resources Plc (LSE:EST), which is exploring for copper and gold in
Kazakhstan, is pleased to present its annual financial results for the year
ended 31 December 2024.
Operational Highlights
VMS Copper - Rudny Altai Belt
• Published maiden JORC Inferred Mineral Resource for the Verkhuba Copper
Deposit of 20.3Mt @ 1.16% copper, 1.54% zinc and 0.27% lead
• Commenced Induced Polarisation survey on VMS licences, providing drill targets
for new discoveries below and adjacent to known deposits
• Commenced diamond core drilling programme to increase size of and confidence
in the Verkhuba resource model
○ Three drill holes completed in December 2024, all intersecting ore grade
mineralisation within open pit shell
Porphyry Copper & Epithermal Gold - Balkash-Ili Volcanic Arc
• Selected by BHP Xplor for US$0.5 million grant to initiate copper porphyry
exploration strategy in Kazakhstan
• Awarded first two copper porphyry exploration licences and collected 2,800
soil samples and conducted spectral analysis, leading to the identification on
the Snowy Licence of a copper porphyry target and a compelling epithermal gold
target
○ Follow-up geophysics planned
Sediment-hosted Copper
• Formed joint venture with Getech Group Plc (AIM: GTC), a world-leading locator
of subsurface resources, to explore for sediment-hosted copper deposits in
Kazakhstan at no upfront cost to East Star
Corporate Highlights
• Raised gross proceeds of £1.16 million with backing from existing major
shareholder, Directors and a resource-focused institution
• Chris van Wijk, a geologist who developed the porphyry exploration strategy
with East Star, joined the Board in January 2024 and became Technical Director
in February 2024
Sandy Barblett, Non-Executive Chairman, commented:
"Ask any mining investor in 2025 what they want - they'll tell you copper and
gold. Ask a seasoned mining executive where they see huge exploration
opportunity - they'll almost certainly list Kazakhstan. Look no further than
East Star which represents access to Tier 1 copper and gold discovery
opportunities in Kazakhstan. We've had boots on the ground for over three
years, have a JORC copper deposit that looks suitable for a low capex open pit
development, and several big prospects in play, targeting VMS, porphyry copper
and epithermal gold systems. I commend our CEO Alex Walker and his team for
steadfastly developing this exploration vehicle - now a well-oiled machine.
The exploration season is approaching. East Star will be drilling new targets
and conducting geophysics across multiple licences. 2025 is going to be huge
for East Star. Now is the time to make discoveries."
East Star Resources Plc
Alex Walker, Chief Executive Officer
Tel: +44 (0)20 7390 0234 (via Vigo Consulting)
SI Capital (Corporate Broker)
Nick Emerson
Tel: +44 (0)1483 413 500
Vigo Consulting (Investor Relations)
Ben Simons / Peter Jacob
Tel: +44 (0)20 7390 0234
About East Star Resources PLC
East Star Resources is focused on the discovery and development of copper and
gold in Kazakhstan. East Star's management are based permanently on the
ground, supported by local expertise. The Company is pursuing three
exploration strategies:
• A Volcanogenic Massive Sulphide (VMS) copper discovery with a maiden JORC MRE
of 20.3Mt @ 1.16% copper, 1.54% zinc and 0.27% lead, in an infrastructure-rich
region, amenable to a low capex development
• Porphyry copper and epithermal gold exploration, with multiple opportunities
for Tier 1 deposits, supported by an initial $500k grant from BHP Xplor in
2024
• Sediment-hosted copper exploration with Getech where the initial targeting
strategy is at no cost to East Star
Visit our website:
www.eaststarplc.com (http://www.eaststarplc.com)
Follow us on social media:
LinkedIn: https://www.linkedin.com/company/east-star-resources/
(https://www.linkedin.com/company/east-star-resources/)
X (formerly Twitter): https://twitter.com/EastStar_PLC
(https://twitter.com/EastStar_PLC)
Subscribe to our email alert service to be notified whenever East Star
releases news:
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The person who arranged for the release of this announcement was Alex Walker,
CEO of the Company.
This announcement contains inside information for the purposes of Article 7 of
Regulation 2014/596/EU which is part of domestic UK law pursuant to the Market
Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR"). Upon the
publication of this announcement, this inside information (as defined in UK
MAR) is now considered to be in the public domain.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the annual report for East Star Resources PLC (the
"Company", the "Group") or ("East Star") for the year ended 31 December 2024.
Most notably during 2024, East Star published a maiden JORC Mineral Resource
Estimate ("MRE") for our Verkhuba Copper Deposit and gained the support of BHP
Xplor to kick off a porphyry copper targeting strategy that has already led to
the generation of a porphyry copper target and a compelling epithermal gold
target within a newly granted exploration licence.
Review of Operations
VMS Copper
Verkhuba Copper Deposit
With the benefit of extensive historical drilling data and our own exploration
work, in April 2024 we announced a maiden JORC MRE comprising 20.3Mt @ 1.16%
copper, 1.54% zinc and 0.27% lead using a whole deposit cutoff grade of 0.86%
copper equivalent. The publication of the MRE represented a significant
milestone - the first critical mineral asset derived from an East Star
exploration programme. From that point East Star became not only an explorer
but an exploration and resource development company within the Rudny Altai VMS
region.
At over 20Mt, Verkhuba is already in the top third of this style of VMS
deposit globally. With copper in high demand and the prospect of a low capex
development in an infrastructure-rich region, we believe Verkhuba to hold
considerable value. For this reason, we are progressing the open pit
development concept through to a stage where economic feasibility can be
demonstrated. In practice, this means increasing confidence in, and
potentially growing, the resource and understanding of the economics by
conducting scoping and pre-feasibility studies. As such, in November 2024 we
began the next diamond core drilling programme which ran through to
mid-December when the crew paused for winter. This phase comprised three drill
holes, all of which intersected mineralisation outside of the existing
modelled ore bodies which make up the current MRE. This should potentially
lead to an increased MRE.
Other VMS Targets
In October 2024, the Company commenced an Induced Polarisation ("IP")
geophysical survey on its VMS licences in the Rudny Altai VMS region located
in close proximity to Verkhuba. Surveys were completed on the Talovskoye and
Nikolovskoye East targets. In total, 5.5-line km of IP was completed.
The results from the IP survey were processed by Mitre Geophysics in
Australia. The data was processed, and sections were generated to visualise
the IP response. Mitre noted a strong chargeable anomaly in the southernmost
line of the Talovskoye survey. As a result, East Star has planned 50m of
infill lines at Talovskoye when the snow recedes which is expected to be in
May 2025. East Star previously announced high grade rock chip results at
Talovskoye.
Further IP lines have been planned to the north and east of the Rulikha
target. Rulikha is a known deposit reported as 14.3Mt @ 1.2% Cu, 3.5% Zn, 0.28
g/t Au and 13.5 g/t Ag. The Company is in the process of collecting and
digitizing the historical data for this deposit to inform the interpretation
of the electro-magnetic (EM) and IP geophysical anomalies adjacent to the
deposit.
Porphyry Copper and Epithermal Gold Exploration on the Balkash-Ili Magmatic
Arc
In January 2024, we were delighted to announce that East Star had been
selected to receive a grant of US$0.5 million through the 2024 BHP Xplor
programme to initiate a copper porphyry exploration strategy in Kazakhstan.
This exploration strategy focuses on the paleozoic Balkash-Ili volcanic arc
known to host multiple copper and gold rich porphyry and skarn deposits. We
are proud that BHP chose to work with East Star. We have built a bigger team
as a result of that programme, and we have bigger targets that could lead to
significant outcomes for our shareholders.
In February and March 2024, we were awarded our first porphyry copper
exploration licences on the Balkash-Ili arc and were able to cover the costs
of all licence fees and initial work through the BHP Xplor grant. Over the
summer, our field team collected 2,800 soil samples and conducted spectral
analysis, leading to the identification on the Snowy licence of two
significant targets. Consequently, our focus has been refined to the Snowy
licence - a 121km(2) tenement with a 6km long and 3km wide silica lithocap,
located ~150km north of the large Kounrad open pit copper mine and smelter
(~800Mt @ 0.62% Cu and up to 0.76g/t Au).
A copper-molybdenum anomaly in the western portion of the licence is
prospective for a porphyry copper target, while another target is around 4km
long by 1km wide and displays anomalous gold (up to 0.28g/t) and silver (up to
7.2g/t) as well as arsenic, molybdenum and weak mercury in soils. This is
consistent with the nearby artisanal workings present at each end of the
anomaly, the eastern one of which, produced 21Kt @ 31.2 g/t Au and 2067 g/t Ag
from 1968 -1970. Both mines, which sit on topographical lows to the Snowy
alteration and geochemical signature, lend additional support to the presence
of mineralisation at the target. Confirmation of this epithermal gold target
through geological mapping is planned at the start of the forthcoming field
season with the expectation of conducting an IP survey over the pyrophyllite
section, before the target is drill ready. The Company anticipates drilling
this target in the 2025 field season. This is undeniably exciting given the
typically very large size and often very high grades of epithermal gold
deposits.
The region is well served by existing infrastructure. The Snowy licence is
approximately 35 km east of the main Almaty-Karaganda highway which is a
paved, all weather highway. The licence is directly accessed by a network of
tracks used to navigate between the regional villages.
Further work has been done on new targets in this belt and the Company expects
to make licence applications over these areas in the coming quarter.
Sediment-Hosted Copper Exploration JV with Getech
In February 2024, the Company announced a joint venture agreement with Getech
Group Plc (AIM: GTC) ("Getech"), a world-leading locator of subsurface
resources, to explore for sediment-hosted copper deposits in Kazakhstan. The
joint venture is being conducted through a wholly owned East Star subsidiary
established specifically for this purpose. At no upfront cost to East Star,
this play-type added a third geological strand to East Star's copper
exploration strategy in addition to VMS and porphyry. Getech has been
deploying its unique data set, geoscience expertise, AI-driven analytics, and
extensive GIS capabilities, to carry out initial targeting in return for
an option to obtain 5% of the JV company upon the granting of an exploration
licence within the outlined area of interest. East Star is in discussions with
potential partners to fund this exciting exploration strategy.
Corporate Activities
In October 2024, East Star raised gross proceeds of approximately £1.16
million from an oversubscribed subscription for, and placing of, 100,926,292
new ordinary shares at a price of 1.15 pence per share. The fundraising
included strong backing from our existing major shareholder and Directors and
saw the participation of a new resources-focused institutional cornerstone
investor. This fundraising put the Company in a position to undertake the next
phase of drilling at Verkhuba and continue with our exploration programmes
this spring/summer as we prepare to drill-test potentially company-making
targets.
Board Changes
Chris van Wijk was appointed initially as a Non-Executive Director in January
2024 and subsequently in February 2024 as the Technical Director of the
Company. Chris is an experienced geologist with a wealth of relevant
experience, including base metal and gold exploration in Africa, Europe,
the Americas, and Australia as well as joint venture management and project
evaluation for major mining companies including BHP, IAMGOLD, First Quantum
Minerals and Fortescue Metals Group. Chris has managed various successful
exploration projects, including the Scoping Study at Mont Nimba
in Guinea for BHP Billiton and the resource drilling at First Quantum's
Sentinel Project in Zambia.
In May 2024, David Minchin decided not to stand for re-election as a
Non-Executive Director of the Company at the Annual General Meeting due to his
other business commitments. Accordingly, he retired as a director with effect
from the AGM and we thank him for his valuable contribution to the Company.
Key Financial Indicators
· Cash and cash equivalents at year-end were £678,000 (2023:
£635,000)
· Loss before taxation for the year was £1,102,000 (2023: £1,528,000)
· The Group held net assets at year-end of £3,155,000 (2023:
£2,813,000)
· The Group held total assets at year-end of £3,271,000 (2023:
£2,928,000)
Movement of cash during the year reflects the capital raise in October 2024,
offset by capital and operating expenditure, whilst the decrease in loss
before taxation for the year was due to the significant decrease in impairment
in the current year compared to 2023, offset slightly by the increase in other
income reflective of the BHP Xplor grant received.
The increase in net assets and total assets in the current year primarily
represents the increase in capitalised exploration expenditure incurred during
the year.
Outlook
Ask any mining investor in 2025 what they want - they'll tell you copper and
gold. Ask a seasoned mining executive where they see huge exploration
opportunity - they'll almost certainly list Kazakhstan. Look no further than
East Star which represents access to Tier 1 copper and gold discovery
opportunities in Kazakhstan.
We've had boots on the ground for over three years, have a JORC copper deposit
that looks suitable for a low capex open pit development, and several big
prospects in play, targeting VMS, porphyry copper and epithermal gold systems.
Kazakhstan is a world class exploration destination. The copper market is in a
supply crunch, and Kazakhstan, with its vast mineral endowment,
infrastructure, low labour and power costs, skilled workforce, and proximity
to Europe and Asia is ideally suited for finding and developing new copper
deposits.
I commend our CEO Alex Walker and his team for steadfastly developing this
exploration vehicle - now a well-oiled machine. The exploration season is
approaching. East Star will be drilling, targeting, and conducting geophysics
across multiple licences. Now is the time to make discoveries.
Sandy Barblett
Non-Executive Chairman
17 April 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER
2024
Audited Audited
Year ended 31 December 2024
Year ended 31 December 2023
Note £'000 £'000
Continuing Operations
Revenue - -
Administrative expenses 4 (1,387) (710)
Share based payments 19 (47) (39)
Impairment 10 & 11 (62) (1,058)
Other income 394 279
Loss before taxation (1,102) (1,528)
Taxation on loss or ordinary activities 7 - -
Loss for the year from continuing operations (1,102) (1,528)
Other comprehensive income 8 233 (35)
Total comprehensive loss for the year attributable to shareholders from (869) (1,563)
continuing operations
Basic & dilutive earnings per share - pence 9 (0.42) (0.81)
The statement of comprehensive income has been prepared on the basis that all
operations are continuing operations.
The notes form an integral part of these consolidated financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2024
Audited Audited
As at 31 December
As at 31 December
2024
2023
Note £'000 £'000
NON-CURRENT ASSETS
Exploration assets 10 2,448 2,149
Earn in advance (financial asset) 11 - -
Property, plant and equipment 12 35 17
TOTAL NON-CURRENT ASSETS 2,483 2,166
CURRENT ASSETS
Cash and cash equivalents 14 678 635
Trade and other receivables 16 110 127
TOTAL CURRENT ASSETS 788 762
TOTAL ASSETS 3,271 2,928
CURRENT LIABILITIES
Trade and other payables 17 116 115
TOTAL CURRENT LIABILITIES 116 115
TOTAL LIABILITIES 116 115
NET ASSETS 3,155 2,813
EQUITY
Share capital 18 3,975 2,187
Share premium 18 9,178 6,052
Share capital to issue 20 - 3,750
Share based payments reserve 19 354 307
Foreign exchange reserve 264 31
Reverse acquisition reserve 20 (4,795) (4,795)
Retained earnings (5,821) (4,719)
TOTAL EQUITY 3,155 2,813
* Non-controlling interest of £29 (2023: £29) exists with business partner
(Tau Ken Samruk) not stated above
The Company has taken advantage of section 408 of the Companies Act 2006 and
consequently a profit and loss account has not been presented for the Company.
The Company's total comprehensive loss for the financial period was £144,000
(2023: £488,000)
The financial statements were approved and authorised for issue by the board
on 17 April 2025 and were signed on its behalf by:
Sandy Barblett
Non-Executive Chairman
The notes form an integral part of these consolidated financial statements
COMPANY STATMEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2024
Audited Audited
As at 31 December
As at 31 December
2024
2023
Note £'000 £'000
NON-CURRENT ASSETS
Investment in subsidiary 13 6,269 6,268
Intercompany receivables 15 4,571 3,674
TOTAL NON-CURRENT ASSETS 10,840 9,942
CURRENT ASSETS
Cash and cash equivalents 14 658 509
Trade and other receivables 16 52 47
TOTAL CURRENT ASSETS 710 556
TOTAL ASSETS 11,550 10,498
CURRENT LIABILITIES
Trade and other payables 17 67 82
TOTAL CURRENT LIABILITIES 67 82
TOTAL LIABILITIES 67 82
NET ASSETS 11,483 10,416
EQUITY
Share capital 18 3,975 2,187
Share premium 18 9,178 6,052
Share capital to issue 20 - 3,750
Share based payments reserve 19 354 307
Retained Earnings (2,024) (1,880)
TOTAL EQUITY 11,483 10,416
The financial statements were approved and authorised for issue by the board
on 17 April 2025 and were signed on its behalf by:
Sandy Barblett
Non-Executive Chairman
The notes form an integral part of these consolidated financial statement
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2024
Share Capital Share Premium Share based payment reserve Foreign exchange reserve Reverse acquisition reserve Share Capital to be issued Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2022 1,823 5,891 268 66 (4,795) 3,750 (3,191) 3,812
Loss for period - - - - - - (1,528) (1,528)
Other comprehensive income - - - (35) - - - (35)
Total comprehensive income for year - - - (35) - - (1,528) (1,563)
Transactions with owners in own capacity
Ordinary Shares issued in the period 364 182 - - - - - 546
Share Issue Costs - (21) - - - - - (21)
Share based payments - - 39 - - - - 39
Transactions with owners in own capacity 364 161 39 - - - - 564
Balance at 31 December 2023 2,187 6,052 307 31 (4,795) 3,750 (4,719) 2,813
Loss for period - - - - - - (1,102) (1,102)
Other comprehensive income - - - 233 - - - 233
Total comprehensive income for year - - - - - - (1,102) (869)
Transactions with owners in own capacity -
Ordinary Shares issued in the period 1,788 3,178 - - - (3,750) - 1,216
Share Issue Costs - (52) - - - - - (52)
Share based payments - - 47 - - - - 47
Transactions with owners in own capacity 1,788 3,126 47 - (3,750) - 1,211
Balance at 31 December 2024 3,975 9,178 354 264 (4,795) - (5,821) 3,155
COMPANY STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2024
Share capital Share premium Share based payment reserve Share capital to issue Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2022 1,823 5,891 268 3,750 (1,392) 10,340
Loss for period - - - - (488) (488)
Other comprehensive income - - - - - -
Total comprehensive income for year - - - - (488) (488)
Transactions with owners in own capacity
Ordinary shares issued in the period 364 182 - - - 546
Share based payments - - 39 - - 39
Share issue costs - (21) - - - (21)
Transactions with owners in own capacity 364 161 39 - - 564
Balance at 31 December 2023 2,187 6,052 307 3,750 (1,880) 10,416
Loss for period - - - - (144) (144)
Other comprehensive income - - - - - -
Total comprehensive income for year - - - - (144) (144)
Transactions with owners in own capacity
Ordinary shares issued in the period 1,788 3,178 - (3,750) - 1,216
Share issue costs - (52) - - - (52)
Share based payments - - 47 - - 47
Transactions with owners in own capacity 1,788 3,126 47 (3,750) - 1,211
Balance at 31 December 2024 3,975 9,178 354 - (2,024) 11,483
CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER 2024
Year ended Year ended
31 December 2024
31 December 2023
Note £'000 £'000
Cash flow from operating activities
Loss before taxation for the financial year (1,102) (1,528)
Adjustments for:
Share based payments 19 47 39
Settlement of fees through issue of equity 10 -
Impairment charge on exploration assets * 62 887
Foreign exchange movements 395 97
Depreciation 31 10
Changes in working capital:
Decrease in trade and other receivables 9 6
Increase / (decrease) in trade and other payables 5 (12)
Net cash outflow from operating activities (543) (501)
Cash flows from investing activities
Investment in exploration assets 18 (578) (888)
Purchase of property, plant & equipment (33) (2)
Cash acquired on acquisition of subsidiary - -
Net cash flow from investing activities (611) (890)
Cash flows from financing activities
Proceeds from issue of shares 19 1,196 546
Share issue costs 19 (52) (21)
Net cash flow from financing activities 1,144 525
Net increase in cash and cash equivalents (10) (866)
Cash and cash equivalents at beginning of the period 635 1,456
Foreign exchange effect on cash balance 53 45
Cash and cash equivalents at end of the period 14 678 635
* Impairment charge is adjusted to reflect the true cash impact in the period
and hence will not reconcile directly to the value in the Statement of
Comprehensive Income.
The notes form an integral part of these consolidated financial statements
COMPANY STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER 2024
Year ended Year ended
31 December 2024
31 December 2023
Note £'000 £'000
Cash flow from operating activities
Loss for the financial year (144) (488)
Adjustments for:
Share based payments 19 47 39
Settlement of fees through issue of equity 20 -
Foreign exchange movements - (1)
Changes in working capital:
(Increase) / decrease in trade and other receivables (5) (31)
(Decrease) / increase in trade and other payables (15) (2)
Net cash outflow from operating activities (97) (483)
Cash flows from investing activities
Investment in subsidiaries 13 (1) -
Loans to subsidiaries (897) (940)
Net cash flow from investing activities (898) (940)
Cash flows from financing activities
Proceeds from issue of shares 19 1,196 546
Share issue costs 19 (52) (21)
Net cash flow from financing activities 1,144 525
Net increase in cash and cash equivalents 149 (898)
Cash and cash equivalents at beginning of the period 509 1,407
Cash and cash equivalents at end of the period 14 658 509
The notes form an integral part of these consolidated financial statements
1. General Information
East Star Resources PLC ("the Company") was incorporated on 17 November 2020
in England and Wales and remains domiciled there with Registered Number
13025608 under the Companies Act 2006, under the name Cawmed Resources
Limited. The Company subsequently changed its name to East Star Resources
Limited on 27 January 2021 and on 3 March 2021 re-registered as a PLC.
The address of its registered office and principal place of business is
Eccleston Yards, 25 Eccleston Place, London SW1W 9NF, United Kingdom.
The principal activity of the Group is to explore opportunities in the natural
resources sector specifically in relation to gold and copper extraction.
The Company originally listed on the London Stock Exchange ("LSE") on 4 May
2021. The Company was suspended from trading on 19 July 2021 whilst managing a
reverse takeover transaction and was then re-admitted to trading on 10 January
2022. The Company successfully completed the acquisition of its Kazakhstan
based subsidiary - "Discovery Ventures Kazakhstan Limited" on 10 January 2022
and since then has been increasing exploration operations within the region.
The consolidated financial statements are presented for the Company and all of
its subsidiaries ("the Group").
The Group Financial Statements have been prepared and approved by the
Directors in accordance with UK-adopted International Accounting Standards
("IAS UK"), International standards and Interpretations (collectively IFRSs)
issued by the International Accounting Standards Boards (IASB) and with those
parts of the Companies Act 2006 applicable to those companies reporting under
IFRS.
2. Accounting policies
The principal accounting policies applied in preparation of these financial
statements are set out below. These policies have been consistently applied
unless otherwise stated.
2.1 Basis of preparation
The consolidated and parent company financial statements ("financial
statements") for the period ended 31 December 2024 have been prepared by East
Star Resources PLC in accordance with UK-adopted International Accounting
Standards ("IAS UK"). The Financial Statements have also been prepared under
the historical cost convention, as modified by the revaluation of financial
assets at fair value through profit or loss.
The functional currency for each entity in the Group is determined as the
currency of the primary economic environment in which it operates. The
functional currency of the Company is Pounds Sterling (£) as this is the
currency that finance was raised in.
The functional currency of its subsidiaries is the Kazakhstan Tenge. For all
subsidiaries these are the currencies that mainly influence labour, material
and other costs of providing services. However, the presentational currency
for the subsidiaries is United States Dollar ($) as this is the currency that
the subsidiaries are required to report to national mining authorities in.
The Group has chosen to present its consolidated financial statements in
Pounds Sterling (£), as the Directors believe it is a more convenient
presentational currency for users of the consolidated financial statements.
Foreign operations are included in accordance with the policies set out below.
The accounting period for the Group covers the year ending on 31 December
2024. The financial statements are presented in Pounds Sterling and rounded to
the nearest thousand (£'000).
Basis of measurement
The consolidated financial statements have been prepared on a historical cost
basis, except for the following items (refer to individual accounting policies
for details):
- Financial instruments - fair value through profit or loss
- Financial instruments - fair value through other comprehensive
income
- Contingent consideration
- Cash settled share-based payment liabilities
Reverse acquisition accounting treatment
During the period ended 31 December 2022, the Company acquired the entire
share capital of Discovery Ventures Kazakhstan Ltd. As the Company
("accounting acquiree") was purely a cash shell at time of acquisition it did
not constitute a business and therefore the acquisition was treated as a
reverse acquisition of DVK ("accounting acquirer") and outside the scope of
IFRS 3.
Critical accounting judgements and key sources of estimation uncertainty are
disclosed in note 2.17.
2.2 Going concern
The Directors have prepared financial forecasts to estimate the likely cash
requirements of the Group over the 12 months from sign off of the annual
report. Given its stage of development and lack of recurring revenues, in
preparing these financial forecasts, the Directors have made certain
assumptions with regards to the timing and amount of future expenditure over
which they have control. The Directors have considered the sensitivity of the
financial forecasts to changes in key assumptions, including, among others,
potential cost overruns within committed spend and changes in exchange rates.
The Directors have reasonable expectations that sufficient cash will be raised
to fund the planned operations of the Group for a period of at least 12 months
from the date of approval of these financial statements. The funding
requirement indicates that a material uncertainty exists which may cast
significant doubt over the Group's ability to continue as a going concern, and
therefore its ability to realise its assets and discharge its liabilities in
the normal course of business. This has been detailed in the auditors report.
After due consideration of these forecasts, current cash resources, including
the sensitivity of key inputs, the Directors consider that the Group will have
adequate financial resources to continue in operational existence for the
foreseeable future (being a period of at least 12 months from the date of this
report) and, for this reason, the financial statements have been prepared on a
going concern basis. The financial statements do not include the adjustments
that would be required should the going concern basis of preparation no longer
be appropriate.
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 December each year. Per IFRS 10, control is achieved when the Company:
· has the power over the investee;
· is exposed, or has rights, to variable returns from its involvement
with the investee; and
· has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control listed above. When the Company has less than a majority
of the voting rights of an investee, it considers that it has power over the
investee when the voting rights are sufficient to give it the practical
ability to direct the relevant activities of the investee unilaterally. The
Company considers all relevant facts and circumstances in assessing whether or
not the Company's voting rights in an investee are sufficient to give it
power, including:
· the size of the Company's holding of voting rights relative to the size
and dispersion of holdings of the other vote holders;
· potential voting rights held by the Company, other vote holders or
other parties;
· rights arising from other contractual arrangements; and
· any additional facts and circumstances that indicate that the Company
has, or does not have, the current ability to direct the relevant
activities at the time that decisions need to be made, including voting
patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains control over the
subsidiary and ceases when the Company loses control of the subsidiary.
Specifically, the results of subsidiaries acquired or disposed of during the
year are included in profit or loss from the date the Company gains control
until the date when the Company ceases to control the subsidiary. Where
necessary, adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with the Group's accounting
policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between the members of the Group are eliminated on
consolidation.
2.4 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and demand
deposits with banks and other financial institutions. The Group holds the
majority of group funds in Lloyds bank equivalent accounts through a forex
platform (Alpha FX). Supplementary working capital funds are held in online
banking platforms in the UK (Revolut) and physical banks in Kazakhstan.
2.5 Equity
Share capital is determined using the nominal value of shares that have been
issued.
The share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the share premium account, net of any
related income tax benefits.
Equity-settled share-based payments are credited to a share-based payment
reserve as a component of equity until related options or warrants are
exercised or lapse.
Retained losses includes all current and prior period results as disclosed in
the income statement.
Foreign currency differences are recognised in other comprehensive income and
accumulated in the foreign exchange reserve except to the extent that the
translation difference is allocated to non-controlling interests.
(https://www.lawinsider.com/clause/reverse-acquisition-reserve) The reverse
acquisition reserve was recognised during the formation of the Group when the
legal acquiree was considered to be the accounting acquirer under the rules of
IFRS 3. As the accounting acquiree was not a business under IFRS 3, a part of
the transaction was outside the scope of IFRS 3. This resulted in the
recognition of a 'reverse acquisition reserve' on consolidation and is set out
in more detail in note 20.
Share capital to issue reserve relates to shares to be settled via the issue
of the Company's shares at the year-end which meet the definition of equity
per IAS 32 are classified as shares to be issue within equity and are held at
fair value.
2.6 Foreign currency translation
The results and financial position of all the Group entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
i) assets and liabilities for each statement of
financial position presented are translated at the closing rate at the date of
that statement;
ii) income and expenses for each income statement are
translated at spot exchange rates (unless the spot is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions); and
iii) all resulting exchange differences are recognised in
the Statement of Comprehensive Income and accumulated in the foreign exchange
reserve in equity.
When a foreign operation is disposed of in its entirety or partially such that
control is lost, the cumulative amount in the translation reserve related to
that foreign operation is reclassified to profit or loss as part of the gain
or loss on disposal. Exchange differences arising, if any, are recognised in
other comprehensive income and accumulated in a foreign exchange reserve
(attributed to non-controlling interests as appropriate).
2.7 Financial instruments
IFRS 9 requires an entity to address the classification, measurement and
recognition of financial assets and liabilities.
a) Classification
The Group classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at fair value (either through
Other comprehensive income or through profit or loss);
· those to be measured at amortised cost; and
· those to be measured subsequently at fair value through profit or
loss.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded either
in profit or loss or in OCI. For investments in equity instruments that are
not held for trading, this will depend on whether the Group has made an
irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income (FVOCI).
b) Recognition
Purchases and sales of financial assets are recognised on trade date (that
is, the date on which the Group commits to purchase or sell the asset).
Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit
or loss.
Debt instruments
Amortised cost: Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and interest,
are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in
profit or loss and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a separate line
item in the statement of profit or loss.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where
the Group's management has elected to present fair value gains and losses on
equity investments in OCI, there is no subsequent reclassification of fair
value gains and losses to profit or loss following the derecognition of the
investment. Dividends from such investments continue to be recognised in
profit or loss as other income when the Group's right to receive payments is
established. Changes in the fair value of financial assets at FVPL
are recognised in other gains/(losses) in the statement of profit or loss as
applicable. Impairment losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported separately from other changes
in fair value.
d) Impairment
The Group assesses, on a forward-looking basis, the expected credit losses
associated with any debt instruments carried at amortised cost.
The impairment methodology applied depends on whether there has been a
significant increase in credit risk. For trade receivables, the Group applies
the simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables.
2.8 Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest method, less any
allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days.
2.9 Trade and other payables
These amounts represent liabilities for goods and services provided to the
consolidated entity prior to the end of the financial year and which are
unpaid. Due to their short-term nature, they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within
30 days of recognition.
2.10 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any accumulated impairment losses.
When the Group acquires any plant and equipment it is stated in the accounts
at its cost of acquisition less a provision.
Depreciation is charged to write off the costs less estimated residual value
of plant and equipment on a straight basis over their estimated useful lives
being:
- Plant and Equipment 5-7 years
- Furniture and fittings 5-7 years
- Computer Equipment 3 years
- Motor vehicles 5 years
Estimated useful lives and residual values are reviewed each year and amended
as required.
2.11 Exploration and evaluation assets
Intangible assets represent exploration and evaluation assets (IFRS 6 assets),
being the cost of acquisition by the Group of rights, licences and know-how.
Such expenditure requires the immediate write-off of exploration and
development expenditure that the Directors do not consider to be supported by
the existence of commercial reserves.
All costs associated with mineral exploration and investments, are capitalised
on a project-by-project basis, pending determination of the feasibility of the
project. Costs incurred include appropriate technical and administrative
expenses but not general overheads and these assets are not amortised until
technical feasibility and commercial viability is established. If an
exploration project is successful, the related expenditures will be
transferred to "mining assets" and amortised over the estimated life of the
commercial ore reserves on a unit of production basis.
The recoverability of all exploration and development costs is dependent upon
the discovery of economically recoverable reserves, the ability of the Group
to obtain necessary financing to complete the development of reserves and
future profitable production or proceeds from the disposition thereof.
Exploration and evaluation assets shall no longer be classified as such when
the technical feasibility and commercial viability of extracting mineral
resources are demonstrable. When relevant, such assets shall be assessed for
impairment, and any impairment loss recognised, before reclassification to
"Mine development".
2.12 Share based payments
The Group has made awards of warrants and options on its unissued share
capital to certain parties in return for services provided to the Group. The
valuation of these warrants involved making a number of critical estimates
relating to price volatility, future dividend yields, expected life of the
options and interest rates. These assumptions have been integrated into the
Black Scholes Option Pricing model and the Monte Carlo valuation model to
derive a value for any share-based payments. These assumptions are described
in more detail in the notes.
2.13 Taxation
Tax currently payable is based on taxable profit for the period. Taxable
profit differs from profit as reported in the income statement because it
excludes items of income and expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
group or parent company financial statements and the corresponding tax bases
used in the computation of taxable profit and is accounted for using the
balance sheet liability method. As there is no reasonable expectation of
future revenues to which tax losses could be applied no deferred tax asset has
been recognised.
2.14 Leases
The Group recognises the guidelines set out in "IFRS 16 - Leases" and are
allocated between principal and finance cost. The finance cost is charged to
profit or loss over the lease period. Right-of-use assets are measured at cost
which comprises the following:
- The amount of the initial measurement of the lease liability;
- Any lease payments made at or before the commencement date less any lease
incentives received;
- Any initial direct costs; and
- Restoration costs.
Payments associated with short-term leases (term less than 12 months) and all
leases of low-value assets (generally less than £5k) are recognised on a
straight-line basis as an expense in profit or loss. The short term lease
exemption has been utilised by the Group in relation to property leases held
in the Kazakhstan and the UK. These leases are on a rolling month-month basis
and hence there is no long term commitment entered into and are also low-value
assets.
2.15 Contingent asset
A contingent asset is a possible asset that arises from past events, and whose
existence will be confirmed only by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the control of the entity.
Contingent assets in these financial statements relate to VAT that is only
offsetable against future revenue and hence these amounts are contingent on
this occurrence and are classified as so.
2.16 Other comprehensive income
Gains or losses on the translation of currencies into the presentational
currency are recognised as other comprehensive income in the Statement of
Profit and Loss and Other Comprehensive Income and transferred to a separate
foreign exchange reserve under equity.
2.17 Critical accounting judgements and key sources of
estimation uncertainty
The preparation of the financial statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expense. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected. The areas
involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are
disclosed below:
Impairment of investments and loans to subsidiaries - Note 13 & 15
The Group and the Company assess at each reporting date whether there is any
objective evidence that investments in and loans to subsidiaries are
impaired. The value of the Company's investment in DVK amounts to £6.268
million (2023: £6.268 million) and intercompany loans amount to £4.497
million (2023: £3.674 million). To determine whether there is objective
evidence of impairment, a considerable amount of estimation is required in
assessing the ultimate realisation of these investments/receivables, including
valuation, creditworthiness and future cashflows. As at the year end the
Directors do not assess there to be any impairment of these amounts.
Recoverable value of exploration assets - Note 10
Costs capitalised in respect of the Group's mining assets are required to be
assessed for impairment under the provisions of IFRS 6. In 2024 this amounted
to £2.448 million (2023: £2.149 million). Such an estimate requires the
Group to exercise judgement in respect of the indicators of impairment and
also in respect of inputs used in the models which are used to support the
carrying value of the assets. Such inputs include estimates of mineral
reserves, production profiles, commodity prices, capital expenditure,
inflation rates, and pre-tax discount rates that reflect current market
assessments of (a) the time value of money; and (b) the risks specific to the
asset for which the future cash flow estimates have not been adjusted.
Management have concluded that it is appropriate to process an impairment
charge in the year in relation to exploration assets and can be further
evidenced at note 10.
Share based payments - Note 19
The Group issues options and warrants to its employees, directors, investors
and advisors. These are valued in accordance with IFRS 2 "Share-based
payments" with expense for the year being £0.05 million (2023: £0.04
million). In calculating the related charge on issuing shares and warrants
the Group will use a variety of estimates and judgements in respect of inputs
used including share price volatility, risk free rate, and expected life.
Changes to these inputs may impact the related charge.
In the period the Group implemented a long-term incentive program for
employees which can be evidence further at note 19. These options have various
vesting dates and conditions and have been valued using the Black-Scholes
method to assign an appropriate value in the financial statements.
2.18 New standards and interpretations adopted by the Group in
the Year
The standards and interpretations that are relevant to the Group, effective in
this financial year are listed below. There has been no impact on the
financial statements from the adoption of these standards.
Standard Impact on initial application Effective date
Amendments to IAS 1 -Classification of Liabilities as current or non- current Clarifies that the classification of liabilities as current or noncurrent Annual periods beginning on or after 1 January 2024
should be based on rights that exist at the end of the reporting period.
Amendments to IAS 1 - Noncurrent Liabilities with Covenants Clarifies that only those covenants with which an entity must comply on or Annual periods beginning on or after 1 January 2024
before the end of the reporting period affect the classification of a
liability as current or non-current.
Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback 4 Specifies requirements relating to measuring the lease liability in a sale and Annual periods beginning on or after 1 January 2024
leaseback transaction after the date of the transaction.
Amendments to IAS 7 and IFRS 7 -Supplier Finance Arrangements 4 5 Requires an entity to provide additional disclosures about its supplier Annual periods beginning on or after 1 January 2024
finance arrangements.
2.19 Future new standards and interpretations not yet adopted by
the Group
The standards and interpretations that are relevant to the Group, effective in
future financial years are listed below. The Directors do not expect there to
be an impact on the financial statements from the adoption of these standards
when they do become effective.
Standard Impact on initial application Effective date
Amendments to IAS 21 - Lack of Exchangeability The amendments have been made to clarify: 1 January 2025 (early adoption permitted)
- When a currency is exchangeable into another currency; and
- How a company estimates a spot rate when a currency lacks
exchangeability.
Amendment to IFRS 9 and IFRS 7 - Classification and Measurement of These amendments: 1 January 2026 (early adoption permitted)
Financial Instruments
- Clarify the requirements for the timing of recognition and
derecognition of some financial assets and liabilities, with a new exception
for some financial liabilities settled through an electronic cash transfer
system;
- Clarify and add further guidance for assessing whether a financial
asset meets the solely payments of principal and interest (SPPI) criterion;
- Add new disclosures for certain instruments with contractual terms
that can change cash flows (such as some instruments with features linked to
the achievement of environment, social and governance (ESG) targets); and
- Make updates to the disclosures for equity instruments designated at
Fair Value through Other Comprehensive Income (FVOCI).
IFRS 18 - Presentation and Disclosure in Financial Statements This is the new standard on presentation and disclosure in financial 1 January 2027 (early adoption permitted)
statements, with a focus on updates to the statement of profit or loss. The
key new concepts introduced in IFRS 18 relate to:
- The structure of the statement of profit or loss;
- Required disclosures in the financial statements for certain profit or
loss performance measures that are reported outside an entity's financial
statements (that is, management-defined performance measures); and
- Enhanced principles on aggregation and disaggregation which apply to
the primary financial statements and notes in general.
IFRS 19 - Subsidiaries without Public Accountability: Disclosures This new standard works alongside other IFRS Accounting Standards. An 1 January 2027 (early adoption permitted)
eligible subsidiary applies the requirements in other IFRS Accounting
Standards except for the disclosure requirements and instead applies the
reduced disclosure requirements in IFRS 19. IFRS 19's reduced disclosure
requirements balance the information needs of the users of eligible
subsidiaries' financial statements with cost savings for preparers.
IFRS 19 is a voluntary standard for eligible subsidiaries.
A subsidiary is eligible if:
- it does not have public accountability; and
- it has an ultimate or intermediate parent that produces consolidated
financial statements available for public use that comply with IFRS Accounting
Standards.
3. Segmental analysis
The Group manages its operations in two segments, being exploration activities
in Kazakhstan and corporate functions in the United Kingdom. The results of
these segments are regularly reviewed by the board as a basis for the
allocation of resources, in conjunction with individual investment appraisals,
and to assess their performance.
The Group generated no revenue during the year ended 31 December 2024 (2023:
£nil).
31 December 2024 United Kingdom Kazakhstan Total
£'000 £'000 £'000
Administrative expenses (491) (896) (1,387)
Share based payments (47) - (47)
Impairment charge - (62) (62)
Other income 394 - 394
Operating loss from continued operations per reportable segment (144) (958) (1,102)
Reportable segment assets 785 2,486 3,271
Reportable segment liabilities (67) (49) (116)
Total 718 2,437 3,155
31 December 2023 United Kingdom Kazakhstan Total
£'000 £'000 £'000
Administrative expenses (449) (261) (710)
Share based payments (39) - (39)
Impairment charge - (1,058) (1,058)
Other income - 279 279
Operating loss from continued operations per reportable segment (488) (1,040) (1,528)
Reportable segment assets 557 2,372 2,929
Reportable segment liabilities (83) (33) (116)
Total 474 2,339 2,813
Segment assets and liabilities are allocated based on geographical location.
4. Administrative expenses
Administrative expenses for the Group can further be broken down as per below:
Year ended Year ended
31 Dec 2024
31 Dec 2023
£'000 £'000
Professional fees (196) (189)
Directors' fees * (116) (161)
Salaries & wages (82) (55)
Geological consulting and exploration costs (15) (111)
Insurance (6) (7)
Consultants (52) (29)
Travel (33) -
Foreign Exchange (788) 9
Other administrative expenses (99) (167)
Administrative expenses (1,387) (710)
* As per Directors remuneration report, £167,000 of directors salary was
capitalised as exploration assets in the year (2023: £47,000). All amounts
were paid at year end.
5. Employees
The average number of persons employed by the Group (including directors)
during the period ended 31 December 2024 was:
2024 2023
Management 5 5
Non-management 8 7
13 12
The highest paid director received total remuneration of £147,000 including
share-based payments (2023: £163,000).
6. Auditor's Remuneration
Year ended 31 December 2024 Year ended 31 December 2023
£'000
£'000
Fees payable for the audit of the Group's financial statements 46 44
46 44
7. Taxation
Year ended Year ended
31 December 2024 31 December 2023
£'000 £'000
A reconciliation of the tax charge appearing in the income statement to the
tax that would result from applying the standard rate of tax to the results
for the year is:
Loss per accounts (1,102) (1,528)
Tax credit at the weighted standard average rate of corporation tax in the UK (227) (298)
of 25% and Kazakhstan of 20%
Adjustment for items disallowable for tax 47 7
Tax losses for which no deferred tax is recognised 180 291
Tax expense recognised in accounts - -
The Group has estimated tax losses carried forward of £3,870,000 (2023:
£2,768,000) The taxed value of the unrecognised deferred tax asset is
£722,000 (2023: £542,000) and these losses do not expire. No deferred tax
assets in respect of tax losses have been recognised in the accounts as there
is currently insufficient evidence of the timing of suitable future taxable
profits against which they can be recovered.
There are no other factors following this change that may affect future tax
charges.
8. Other comprehensive income
Items credited to the other comprehensive income line in the statement of
comprehensive income relate to the impact of foreign exchange movements when
translating the statement of financial position from functional to
presentational currencies on consolidation. The corresponding movement is
offset against the foreign exchange reserve in the statement of financial
position:
Year ended 31 December 2024 Year ended 31 December 2023
£'000
£'000
Foreign currency movements 233 (35)
233 (35)
9. Earnings per share
The calculation of the basic and diluted earnings per share is calculated by
dividing the profit or loss for the year by the weighted average number of
ordinary shares in issue during the year.
Year ended Year ended
31 December 2024 31 December 2023
Loss attributable to shareholders of East Star Resources PLC - £'000 (1,102) (1,528)
Weighted number of ordinary shares in issue 264,288,870 189,850,164
Basic & dilutive earnings per share from continuing operations - pence (0.42) (0.81)
There is no difference between the diluted loss per share and the basic loss
per share presented. Share options and warrants could potentially dilute basic
earnings per share in the future but were not included in the calculation of
diluted earnings per share as they are anti-dilutive for the year presented.
10. Exploration assets
Group £'000
Cost and carrying value - 1 January 2023 2,268
Additions 888
Foreign exchange (75)
Impairment on licenses (932)
At 31 December 2023 2,149
Additions 578
Foreign exchange (249)
Impairment on licenses (30)
At 31 December 2024 2,448
Exploration and evaluation assets relate specifically to expenditure to
support the exploitation of exploration licenses held in the Kazakhstan based
subsidiaries. The Group holds a total of 8 licenses across 3 mineral districts
being specifically the Chu-Ili belt, East Kostanay region and Rudny Altai
belt.
In accordance with IFRS 6, the Directors undertook an assessment of the
following areas and circumstances which could indicate the existence of
impairment:
• The Group's right to explore in an area has expired, or will
expire in the near future without renewal;
• No further exploration or evaluation is planned by the Company or
in conjunction with potential joint venture partners;
• The Board may consider to discontinue exploration and evaluation
in an area due to the absence of a commercial level of reserves;
• Existing joint venture agreements have been terminated;
• Sufficient data exists to indicate that the book value may not be
fully recovered from future development and production.
The Directors concluded that an impairment charge needed to be processed in
the current year in relation to the licenses as detailed below:
i) Being further committed expenditure on licenses
previously relinquished.
The Directors concluded that an impairment charge needed to be processed in
the prior year in relation to the licenses as detailed below:
i) License 670 - Dalny: The exploration asset relating
to license 670 was fully impaired in the period. No further exploration is
planned by the Group.
ii) License 774 - Apmintas: The exploration asset
relating to license 774 has been partially impaired in the period. The Company
is in the process of relinquishing 40% of the tenement package considered to
be less prospective for a commercial gold discovery.
A 10% movement either way in the KZT/GBP exchange rate would change the fair
value by approximately £245,000 (2023: £215,000).
11. Earn in advance (financial asset)
Group £'000
Cost and carrying value - 1 January 2023 57
Additions 57
Foreign exchange 12
Impairment on licenses (126)
At 31 December 2023 -
Additions 32
Impairment on licenses (32)
At 31 December 2024 -
The licenses held jointly with Phoenix Mining Ltd in relation to rare earths
are referred to above as a financial asset as they do not currently satisfy
all the requirements of IFRS 6 to be capitalised as an exploration asset.
In the current year, an amount of £32,000 was incurred with respect to
potential rehabilitation costs for the Talyryk licenses which was impaired
immediately.
In the prior year, as the joint venture agreement with Phoenix Mining Ltd was
terminated, an impairment charge of £126,000 was included in the accounts to
write down the value of the assets to their fair value.
12. Property, plant & equipment
Group Motor vehicle £'000 Plant and equipment £'000 Furniture and fittings £'000 Computer equipment £'000 Total
£'000
Cost
Opening balance - 1 January 2024 - 31 2 7 40
Additions 31 - - 2 33
Foreign exchange (3) - - (2) (5)
At 31 December 2024 28 31 2 7 68
Depreciation
Opening balance - 1 January 2024 - (19) (1) (3) (23)
Charge for the year (1) (7) - (2) (10)
At 31 December 2024 (1) (26) (1) (5) (33)
Net book value 31 December 2023 - 12 1 4 17
Net book value 31 December 2024 27 5 1 2 35
Group Plant and equipment £'000 Furniture and fittings £'000 Computer equipment £'000 Total
£'000
Cost
Opening balance - 1 January 2023 29 2 7 38
Additions 2 - - 2
At 31 December 2023 31 2 7 40
Depreciation
Opening balance - 1 January 2023 (12) - (1) (13)
Charge for the year (7) (1) (2) (10)
At 31 December 2023 (19) (1) (3) (23)
Net book value 31 December 2022 17 2 6 25
Net book value 31 December 2023 12 1 4 17
13. Investment in subsidiaries
Company £'000
Cost and carrying value - 31 December 2022 6,268
Additions during the year -
At 31 December 2023 6,268
Additions during the year 1
At 31 December 2024 6,269
During the year, the Company acquired MVLKAZ Holdings Limited upon the
establishment of the joint venture with Getech Group plc.
List of Subsidiaries
Name Business Activity Country of Incorporation Registered Address %age Holding 2024 %age Holding 2023
Discovery Ventures Kazakhstan Limited Mineral exploration Kazakhstan VP 32, building 12/1, Dinmuhamed Konaev street, Yesil district, Astana, 100% 100%
Z05H9B0, Kazakhstan
Chu Ili Resources ltd* Mineral exploration Kazakhstan bld. 12/1, VP 32, 3rd floor, IHUB coworking, D. Konayev Street, Yessil 80% 80%
district, Astana city, Z05H9B0, Kazakhstan
Rudny Resources ltd* Mineral exploration Kazakhstan bld. 12/1, VP 32, 3rd floor, IHUB coworking, D. Konayev Street, Yessil 80% 80%
district, Astana city, Z05H9B0, Kazakhstan
Copperland Limited * Mineral exploration Kazakhstan bld. 12/1, VP 32, 3rd floor, IHUB coworking, D. Konayev Street, Yessil 100% -
district, Astana city, Z05H9B0, Kazakhstan
MVLKAZ Holdings Limited Holding company United Kingdom Eccleston Yards, 25 Eccleston Place, London, SW1W 9NF 100% -
MVLKAZ Limited ** Mineral exploration Kazakhstan VP 32, building 12/1, Dinmuhamed Konaev street, Yesil district, Astana, 100% -
Z05H9B0, Kazakhstan
* Subsidiaries held indirectly through Discovery Ventures Kazakhstan
** Subsidiary held indirectly through MVLKAZ Holdings Limited
14. Cash and cash equivalents
Group Company
As at As at As at As at
31 December 2024
31 December 2023
31 December 2024
31 December 2023
£'000
£'000
£'000
£'000
Cash at bank 678 635 658 509
15. Inter-company receivable
Company
As at 31 December 2024 As at 31 December 2023
£'000
£'000
Inter-company loan receivable 4,571 3,674
4,571 3,674
16. Trade and other receivables
Group Company
As at As at As at As at
31 December 2024
31 December 2023
31 December 2024
31 December 2023
£'000
£'000
£'000
£'000
VAT receivable 23 17 23 17
Prepayments 24 39 19 20
Other debtors 63 71 10 10
110 127 52 47
Expected credit loss model under IFRS 9 has not been applied with respect to
receivables due to this being inappropriate for the above receivables.
17. Trade and other payables
Group Company
As at As at As at As at
31 December 2024
31 December 2023
31 December 2024
31 December 2023
£'000
£'000
£'000
£'000
Trade payables 71 71 22 38
Accruals 44 44 44 44
Other payables 1 - 1 -
116 115 67 82
18. Share capital and share premium
Group Ordinary Shares Share Capital Share Premium Total
# £'000 £'000 £'000
At 31 December 2022 182,250,164 1,823 5,891 7,714
Issue of ordinary shares(1) 36,400,000 364 182 546
Share issue costs - - (21) (21)
At 31 December 2023 218,650,164 2,187 6,052 8,239
Issue of ordinary shares - exercise of warrants 1,200,333 12 24 36
Issue of ordinary shares - performance shares milestones reached (2) 75,000,000 750 3,000 3,750
Issue of ordinary shares - share placement (3) 100,926,292 1,009 151 1,160
Issue of ordinary shares - fees settled in shares (3) 1,739,130 17 3 20
Share issue costs - - (52) (52)
At 31 December 2024 397,515,919 3,975 9,178 13,153
(1) On 16 October 2023, the Company issued 36,400,000 ordinary shares at
£0.015 as part of a share placement.
(2) In July 2024, the Mineral Resource Estimate performance threshold of 1Moz
at 2 g/t gold equivalent as per the share purchase agreement with the vendors
of DVK was met resulting in the issue of 75m performance shares. The value of
these shares of £3.75m were transferred from Shares to be Issued.
(3) On 16 October 2024, the Company issued 100,926,292 ordinary shares at
£0.0115 as part of a share placement along with 1,739,130 ordinary shares at
the same price in settlement of £20,000 accrued director fees.
The share premium represents the difference between the nominal value of the
shares issued and the actual amount subscribed less; the cost of issue of the
shares, the value of the bonus share issue, or any bonus warrant issue.
The Company has only one class of share, being ordinary shares at a nominal
value of £0.01 (2023: £0.01). All ordinary shares have equal voting rights
and rank pari passu for the distribution of dividends and repayment of
capital.
19. Share based payments reserve
Group Company
£'000 £'000
As at 31 December 2022 268 268
Employee options issued (1) 32 32
LTIP options issued (2) 7 7
As at 31 December 2023 307 307
Employee options issued (1) 32 32
LTIP options issued (2) 15 15
Broker warrants (3) - -
As at 31 December 2024 354 354
(1) On 13 December 2021, 11,250,000 employee options were granted. These
options have an exercise price of £0.05 and expire 5 years from the grant
date. Value attributed to the share based payments reserve in the current
period represents the pro-rata portion of the expense brought to account over
the vesting period.
(2) On 1 March 2023 the remuneration committee approved the adoption of a
long-term incentive plan ("LTIP"). Value attributed to the share based
payments reserve in the current period represents the pro-rata portion of the
expense brought to account over the vesting period.
(3) A total of 1,865,086 warrants were issued to brokers in relation to the
capital raise completed in October 2024, with 1,578,130 having an exercise
price of £0.03 and expiring 1 year from issue and 286,956 having an exercise
price of £0.0115 and expiring in 3 years from issue.
Share based payments valuation
The charges associated with the share based payments have been applied to the
statement of profit or loss and other comprehensive income. The following
tables summarises the valuation techniques and inputs used to calculate the
values of share based payments:
Warrants
Grant date Number Share price Exercise price Volatility % RF Rate % Technique
£ £
16 Oct 2024 1,578,130 0.0115 0.030 50 3.1 Black Scholes
16 Oct 2024 286,956 0.0115 0.0115 50 3.1 Black Scholes
Options
Grant date Number Share price Exercise price Volatility % RF Rate % Technique
£ £
1 Mar 2023 4,251,167 0.035 0.043 77 3.5 Black Scholes
Warrants
As at 31 December 2024
Weighted average exercise price Number of warrants
Brought forward at 1 January 2023 14,813,505
Lapsed in period 5p (6,000,000)
Granted in period 3p 36,400,000
Vested in period 3p 36,400,000
Outstanding at 31 December 2023 4p 45,213,505
Exercisable at 31 December 2023 4p 45,213,505
Brought forward at 1 January 2024 4.00p 45,213,505
Lapsed in period 5.00p (1,200,000)
Exercised in period 3.00p (1,200,333)
Granted in period 3.00p 1,578,130
Granted in period 1.15p 286,956
Outstanding at 31 December 2024 3.33p 44,678,258
Exercisable at 31 December 2024 3.33p 44,678,258
The weighted average time to expiry of the warrants as at 31 December 2024 is
0.92 years (2023: 1.06 years).
Options
As at 31 December 2024
Weighted average exercise price Number of options
Brought forward at 1 January 2023 5p 11,250,000
Granted in period 4.3p 4,794,644
Cancelled in period 4.3p (1,110,144)
Vested in period - -
Outstanding at 31 December 2024 5p 14,934,500
Exercisable at 31 December 2024 3,750,000
Brought forward at 1 January 2024 5p 14,934,500
Granted in period -
Cancelled in period -
Vested in period 4.3p 2,125,584
Outstanding at 31 December 2024 4.8p 14,934,500
Exercisable at 31 December 2024 4.7p 5,875,584
The weighted average time to expiry of the options as at 31 December 2024 is
3.68 years (2023: 4.67 years).
The option vesting conditions of the LTIP options are as below:
- 50% of the Shares under Option (rounded down to the nearest whole
number) shall Vest on the first anniversary of the Date of Grant;
- 25% of the Shares under Option (rounded down to the nearest whole
number) shall Vest on the second anniversary of the Date of Grant;
- 25% the remaining number of the Shares under Option shall Vest on
the third anniversary of the Date of Grant.
20. Other Reserves
Share capital to issue reserve
Shares to be issued as part of acquisition based on performance milestone.
Foreign exchange reserve
Foreign exchange differences arising on translating into the reporting
currency.
Share based payment reserve
Cumulative charge recognised under IFRS 2 in respect of share-based payment
awards.
Reverse acquisition reserve
Represents the preacquisition value of the equity of the Parent Company and
the investment in DVK, net of expenses that was made when DVK reversed into
the company.
Retained earnings
Retained earnings represents cumulative profits and losses net of dividends
and other adjustments.
21. Reverse acquisition
On 10 January 2022, the Company acquired the share capital of Discovery
Ventures Kazakhstan Limited ("DVK"), through an issue of 45,000,000
consideration shares the entire share capital of DVK, whose principal activity
is to undertake exploration activities relating to gold and copper mineral
resources in Kazakhstan.
Although the transaction resulted in DVK becoming a wholly owned subsidiary of
the Company, the transaction constitutes a reverse acquisition as in
substance, it has resulted in a fundamental change in the business of the
Company with the sole director of DVK becoming the Chief Executive Officer of
the Company. Thus, the executive management of DVK now exerts significant
influence over the executive management of the Company.
The shareholders of DVK acquired a 27.63% interest in the Company and the
transaction has therefore been accounted for as a reverse acquisition. As the
Company's activities prior to the acquisition were purely the maintenance of
the Main Market LSE Listing, acquiring DVK and raising equity finance to
provide the required funding for the operations of the acquisition the
directors did not consider this to meet the definition of a business in
accordance with IFRS 3.
Accordingly, this reverse acquisition does not constitute a business
combination. Although, the reverse acquisition is not a business combination,
the Company has become a legal parent and is required to apply IFRS 10 and
prepare consolidated financial statements. The Directors have prepared these
financial statements using the reverse acquisition methodology, but rather
than recognising goodwill, the difference between the equity value given up by
the DVK shareholders and the share of the fair value of net assets gained by
the DVK shareholders is charged to the statement of comprehensive income as a
share-based payment on reverse acquisition, and represents in substance the
cost of acquiring a Main Market LSE listing.
In accordance with reverse acquisition accounting principles, these
consolidated financial statements represent a continuation of the consolidated
statements of DVK and its subsidiaries and include:
- The assets and liabilities of DVK and its subsidiaries at their
pre-acquisition carrying value amounts and the results for both periods; and
- The assets and liabilities of the Company as at 10 January 2022 and
its results from the date of the reverse acquisition on 10 January 2022 to 31
May 2022.
On 10 January 2022, the Company issued 45,000,000 ordinary shares to acquire
the entire share capital of DVK. As part of the acquisition the Company also
agreed to settle a separate convertible loan note held by DVK through the
issue of 5,350,000 shares. On the same date, the Company was readmitted to the
Main Market of the LSE, after completing its second placing round with a
placing share price of £0.05 and therefore the Company has valued the
investment in DVK at £6,267,500. (This figure includes both the initial
consideration mentioned above as well as the contingent consideration on
completion milestones)
Because the legal subsidiary, DVK, was treated on consolidation as the
accounting acquirer and the legal Parent Company, East Star, was treated as
the accounting subsidiary, the fair value of the shares deemed to have been
issued by DVK was calculated at £3,477,008 based on an assessment of the
purchase consideration for a 100% holding of East Star of 69,540,164 shares at
a weighted average placing price of £0.05 per share (being the share price of
East Star at acquisition).
The fair value of the net assets of East Star at acquisition was as follows:
£'000
Cash and cash equivalents 1,835
Convertible loan notes 609
Other receivables 151
Trade and other payables (848)
Net assets 1,747
The difference between the deemed cost (£3,477,000) and the fair value of the
net assets assumed above of £1,747,000 resulted in £1,730,000 being expensed
within "reverse acquisition expenses" in accordance with IFRS 2, Share Based
Payments, reflecting the economic cost to DVK shareholders of acquiring a
quoted entity.
The reverse acquisition reserve which arose from the reverse takeover is made
up as follows:
£'000
Pre-acquisition equity(1) (473)
DVK share capital at acquisition(2) 216
Investment in DVK(3) (6,268)
Reverse acquisition expense(4) 1,730
(4,795)
1. Recognition of pre-acquisition equity of East Star as at 10
January 2022.
2. DVK had equity at the date of acquisition of £216,000. As these
financial statements present the capital structure of the legal parent entity,
the equity of DVK is eliminated.
3. The value of the shares issued by the Company in exchange for the
entire share capital of DVK as at the share price used in the placing that
occurred simultaneously (£0.05). The above entry is required to eliminate
the balance sheet impact of this transaction.
I. Initial consideration: 45 million shares at £0.05 (£2,250,000)
II. Contingent consideration: 75 million shares at £0.05 (£3,750,000)
III. Convertible loan notes settled on behalf of DVK through the issue of
5.35m shares at £0.05 (£267,500)
4. The reverse acquisition expense represents the difference between
the value of the equity issued by the Company, and the deemed consideration
given by DVK to acquire the Company.
22. Financial Instruments and Risk Management
Capital management
The Group manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders. The overall strategy of the Company and the Group is to minimise
costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity
holders of the parent, comprising issued share capital, share premium, reverse
acquisition reserves, foreign exchange reserves and retained earnings as
disclosed in the Consolidated Statement of Changes of Equity.
The Group is exposed to a number of risks through its normal operations, the
most significant of which are interest, credit, foreign exchange and liquidity
risks.
The management of these risks is vested to the Board of Directors. The
sensitivity has been prepared assuming the liability outstanding was
outstanding for the whole period. In all cases presented, a negative number in
profit and loss represents an increase in expense/decrease in income.
General objectives and policies
As alluded to in the Directors report the overall objective of the Board is to
set policies that seek to reduce risk as far as practical without unduly
affecting the Group's competitiveness and flexibility. Further details
regarding these policies are detailed below.
Principal financial instruments
The principal financial instruments used by the Group from which the financial
risk arises are as follows:
Policy on financial risk management
The Group's principal financial instruments comprise cash and cash
equivalents, other receivables, trade and other payables. The Group's
accounting policies and methods adopted, including the criteria for
recognition, the basis on which income and expenses are recognised in respect
of each class of financial asset, financial liability and equity instrument
are set out in note 2 - "Accounting Policies".
The Group does not use financial instruments for speculative purposes. The
carrying value of all financial assets and liabilities approximates to their
fair value.
Derivatives, financial instruments and risk management
The Group does not use derivative instruments or other financial instruments
to manage its exposure to fluctuations in foreign currency exchange rates,
interest rates and commodity prices.
Foreign currency risk
The Group operates in a global market with income and costs arising in a
number of currencies and is exposed to foreign currency risk arising from
commercial transactions, translation of assets and liabilities and net
investment in foreign subsidiaries. Exposure to commercial transactions arise
from sales or purchases by operating companies in currencies other than the
Group's functional currency. Currency exposures are reviewed regularly.
The Group has a limited level of exposure to foreign exchange risk through its
foreign currency denominated cash balances, trade receivables and payables:
31 December 2024
£GBP £'000
Cash and cash equivalents 19
Trade and other receivables 58
Trade and other payables (49)
28
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group
has adopted a policy of only dealing with creditworthy counterparties. The
Group's exposure and the credit ratings of its counterparties are monitored by
the Board of Directors to ensure that the aggregate value of transactions is
spread amongst approved counterparties.
The Group applies IFRS 9 to measure expected credit losses for receivables,
these are regularly monitored and assessed. Receivables are subject to an
expected credit loss provision when it is probable that amounts outstanding
are not recoverable as set out in the accounting policy.
The Group's principal financial assets are cash and cash equivalents. Cash
equivalents include amounts held on deposit with financial institutions.
The credit risk on liquid funds held in current accounts and available on
demand is limited because the Group's counterparties are banks with high
credit-ratings assigned by international credit-rating agencies.
The Group has zero trade receivables and therefore there is no risk relating
to a 3(rd) party being unable to service its obligations.
The Group's maximum exposure to credit risk is limited to the carrying amount
of financial assets recorded in the financial statements.
Interest rate risk
The Group currently has no borrowings. The Group's principal financial assets
are cash and cash equivalents. Cash equivalents include amounts held on
deposit with financial institutions. The effect of variable interest rates is
not significant.
Liquidity risk
During the period ended 31 December 2024, the Group was primarily financed by
cash raised through equity funding and supplemented by funds provided through
the BHP Xplor program. Funds raised surplus to immediate requirements are held
as cash deposits in Sterling except for minor working capital requirements
held in subsidiary bank accounts.
In managing liquidity risk, the main objective of the Group is to ensure that
it has the ability to pay all of its liabilities as they fall due. The Group
monitors its levels of working capital to ensure that it can meet its
liabilities as they fall due.
The table below shows the undiscounted cash flows on the Group's financial
liabilities as at 31 December 2024 on the basis of their earliest possible
contractual maturity.
Total Within 2 months Within 2-6 months
£'000 £'000 £'000
At 31 December 2024
Trade payables 71 71 -
23. Financial assets and liabilities
Financial assets/liabilities at amortised cost
Group - Year ended 31 December 2024 2023
£'000 £'000
Trade and other receivables (1) 86 88
Cash and cash equivalents 678 635
Trade and other payables (2) (72) (71)
692 652
Financial assets/liabilities at amortised cost
Company - Year ended 31 December 2024 2023
£'000 £'000
Trade and other receivables (1) 33 27
Cash and cash equivalents 658 509
Trade and other payables (2) (23) (38)
668 498
(1) Trade and other receivables excludes prepayments
(2) Trade and other payables excludes accruals
24. Statement of Net Debt
Year ended 31 December 2024 Year ended 31 December 2023
£'000
£'000
Total bank loans and overdraft - -
Less: cash and cash equivalents 658 509
Net debt 658 509
Total equity attributable to shareholders of the parent 11,483 10,416
Gearing n/a n/a
25. Related Party Transactions
Orana Corporate LLP - Service Agreement
During the year, £45,000 of fees were accrued to Orana Corporate LLP (2023:
£58,300), of which £5,430 was owing at year end (2023: £9,660) for the
provision of corporate accounting services. In addition, £11,607 (2023:
£nil) was accrued for corporate finance services. Anthony Eastman is a
director of East Star Resources PLC and Orana.
Other than these there were no other related party transactions.
Directors remuneration
See Directors report for details on Directors remuneration in the period.
26. Ultimate Controlling Party
As at 31 December 2024, there was no ultimate controlling party of the Group.
27. Capital Commitments
The Group is committed to the following minimum expenditure across various
licenses within 12 months from 31 December 2024:
License area License Owner Annual minimal expenditures on exploration
£'000
Apmintas 774-EL Chu-Ili Resources Limited 89
Novo 2 847-EL Rudny Resources Limited 109
Novo 1 914-EL Rudny Resources Limited 175
RA 1 1799-EL Discovery Ventures Kazakhstan Limited 39
RA 3 1795-EL Discovery Ventures Kazakhstan Limited 25
Snowy 2506-EL Copperland 47
Total 492
28. Contingent assets
VAT recoverable
The subsidiaries of East Star Resources had accrued an amount of £38,000
(2023: £293,000) relating to VAT incurred on expenditure on the various
mining licenses to 31 December 2024. As the Group is currently not generating
revenue these amounts cannot be offset but are retained in the event that
revenue is generated in a period of 5 years from incurring the expense.
Per "IAS 37 - Provisions, Contingent Liabilities and Contingent Assets" this
amount should not be recognised as an asset due to the uncertainty of economic
benefits flowing to the Group but is disclosed as a contingent asset as the
inflow of economic benefits is probable.
29. Contingent liabilities
There were no contingent liabilities over the Group as at 31 December 2024.
30. Events subsequent to year end
Subsequent to year end the Company granted 8,458,688 options over new ordinary
shares in the Company to employees and directors of the Company pursuant to
the Company's Long Term Incentive Plan ("LTIP") (the "Options").
The Options have an exercise price of 1.5p and vest on the first anniversary
of the grant date, being 11 March 2025, and expire on 10 February 2035.
1,601,489 of the Options were granted to the Company's Chief Executive
Officer, Alex Walker, 2,500,000 of the Options granted to the Company's
Technical Director, Chris van Wijk, and 1,020,290 of the Options granted to
the Company's non-executive directors. The remaining 3,336,909 Options were
granted to employees of the Company in Kazakhstan on the same terms as
described above.
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