REG - East Star Resources - Half Year Report
30/09/2024 07:00
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RNS Number : 1119G East Star Resources PLC 30 September 2024
30 September 2024
East Star Resources Plc
("East Star" or the "Company")
Half Year Report for the Six Months Ended 30 June 2024
- Company Update
East Star Resources Plc (LSE:EST), which is exploring for copper in
Kazakhstan, is pleased to present its half year report for the six month
period ended 30 June 2024.
Operational Highlights - 3 Geological Copper Strategies
VMS Copper - Rudny Altai Belt
· Announced in April 2024 the publication of a maiden JORC Inferred
Mineral Resource for the Verkhuba Copper Deposit of 20.3Mt @ 1.16% copper,
1.54% zinc and 0.27% lead using a whole deposit cutoff grade of 0.86% copper
equivalent
· Announced in April 2024 the initiation of a formal process following
third-party interest including opening a data room for a potential joint
venture, farm-out, or sale of Verkhuba
o Further to the last update on 4 July 2024, while the Board continues
discussions with interested parties, including recent new inbound interest, it
has in addition determined that the Company can add significantly more value
to the asset and attract additional partner and finance interest by advancing
the resource, metallurgical test work, mine planning, and approvals,
demonstrating its low cost development potential and so intends on progressing
the project
Copper Porphyry - Balkash-Ili Volcanic Arc
· Announced in January 2024 a grant of US$0.5 million under the 2024
BHP Xplor programme to initiate a copper porphyry exploration strategy in
Kazakhstan
o Awarded first copper porphyry exploration licence (Ayagoz) in February
2024 - 79 km(2) tenement with a 3km long silica lithocap located ~80km north
of the large Aktogay copper mine (~2.5Bt @ 0.39% copper)
o Awarded second copper porphyry exploration licence (Snowy) in March 2024 -
121 km(2) tenement, with a 6km long and 3km wide silica lithocap, located
~150km north of the large Kounrad copper mine and smelter (~800Mt @ 0.62%
copper and up to 0.76g/t gold)
§ Conducted extensive soil sampling and spectral analysis of samples taken
from both licences - analysis ongoing
Sediment-hosted Copper
· Announced in February 2024 a joint venture agreement with Getech
Group Plc (AIM: GTC), a world-leading locator of subsurface resources, to
explore for sediment-hosted copper deposits in Kazakhstan - analysis ongoing
Corporate Highlights
· 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
· David Minchin stood down from his position as a Non-Executive
Director in May 2024 due to his other business commitments
Sandy Barblett, Non-Executive Chairman, commented:
"Kicking off the year with an endorsement and grant from BHP Xplor was a major
catalyst for the Company as we were one of only six successful selectees from
more than 500 applications. We've grown bigger in terms of people and
targets and undoubtably the Company's prospects have improved dramatically as
a result of this programme. We're enormously grateful to BHP for the
opportunity, their wisdom and their support. The Company now has a
three-pronged copper strategy, pursuing infrastructure-led VMS deposits, as
well as Tier 1 porphyry and sediment-hosted copper deposits. The Company has
refined its focus to copper - a strategic transition metal which is facing a
medium and long term supply deficit and is the subject of recent M&A
actions by global majors. New sources of supply are urgently needed, and
Kazakhstan is perfectly positioned to contribute. East Star has over the past
couple of years positioned itself as a go-to explorer, with boots on the
ground, for accessing this opportunity in Kazakhstan.
Activity in the first half was dominated by executing the BHP Xplor programme
and its associated learnings, undertaking significant initial fieldwork on the
porphyry licences, delivering a maiden JORC copper resource at Verkhuba and
positioning the Company to capture the maximum value from that Verkhuba asset
in due course.
Through the period, the Company continued regional exploration on the Rudny
Altai VMS licences and conducted additional desktop work and geological field
work on Verkhuba. We believe we can add significantly to the value of Verkhuba
by increasing confidence in, and potentially growing, the resource, and
understanding of the economics by conducting scoping and pre-feasibility
studies.
Having been active in the field over the summer, our attention is turning to
forthcoming high-impact drilling on new VMS targets in addition to further
drilling at Verkhuba. Further success on this prolific belt with its existing
infrastructure and low economic threshold would add more assets which are
amenable to a 'quick-to-market' development at a time when copper is in high
demand. We look forward to a busy second half of the year."
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
Peterhouse Capital Limited (Corporate Broker)
Peter Greensmith
Tel: +44 (0) 20 7469 0930
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
other strategic minerals required for the energy revolution. With eight
licences covering >1,000 km² in three mineral rich districts
of Kazakhstan, East Star is undertaking an intensive exploration programme,
applying modern geophysics to discover minerals in levels that were not
previously explored. East Star's most advanced project is a copper deposit on
the world-class Rudny Altai VMS Belt where the Company delivered a JORC
compliant inferred resource of 20.3Mt @ 1.16% copper, 1.54% zinc and 0.27%
lead close to infrastructure, within trucking distance of third-party mills
with excess capacity. East Star's management are based permanently on the
ground, supported by local expertise, and a joint venture with the state
mining company on certain projects. In 2024, East Star was selected to receive
grant funding through the BHP Xplor programme for copper porphyry exploration.
Visit our website:
www.eaststarplc.com (http://www.eaststarplc.com)
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Subscribe to our email alert service to be notified whenever East Star
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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 half year report for the six months ended 30 June
2024 (the "Period").
During the Period, East Star continued to develop its strategy to unlock the
copper potential of Kazakhstan, a metal which has soared in value due to
looming supply shortages. The Company now has three copper exploration
strategies in play:
· Volcanogenic Massive Sulphide ("VMS") copper including the discovery
of the Verkhuba Deposit with a maiden JORC Mineral Resource Estimate ("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
· Copper porphyry exploration (supported in the Period by BHP Xplor),
targeting multiple opportunities to discover a tier 1 deposit
· Sediment-hosted copper through an initial targeting partnership with
Getech at no cost to East Star
In the Board's opinion, your Company could not be targeting a better metal in
a better country than copper in Kazakhstan at this time. The anticipated
global supply deficit has slowed from recent investment bank predictions of a
significant shortfall in 2024; however, the outlook remains extremely robust
with demand vastly outstripping supply in the medium to long term. Majors are
hunting for, and building, more copper exposure, and only new discoveries in
viable jurisdictions can address this imbalance at scale. We believe
Kazakhstan will be a leader among those emerging jurisdictions, with its vast
mineral endowment, low operating costs, proximity to Europe and Asia, and
supply relationships with the EU and UK.
East Star has over the past couple of years, accelerated by the BHP Xpor
programme in the Period, positioned itself as a go-to explorer, with boots on
the ground, for accessing this opportunity in Kazakhstan.
Review of Operations
VMS Copper
Verkhuba Copper Deposit
Having established the target from nearly 47,000 metres of historical
drilling, followed by our own drilling in 2023, in March 2024, we were able to
instruct independent experts, AMC Consultants, to produce a maiden JORC
Inferred Mineral Resource Estimate ("MRE") for the Verkhuba Copper Deposit.
This resulted in the publication in April 2024 of the 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 for East Star. In a little over a year and one exploration season,
we had transformed a historical copper deposit into a large JORC Inferred
Mineral Resource in an infrastructure-rich region. From that point, the
Company became underpinned not only by its highly prospective exploration
licences but by a significant critical metal asset in the ground with further
upside potential. At over 20Mt, Verkhuba is already in the top third of this
style of VMS deposit globally. With copper at around $9,000 per tonne and the
prospect of a low capex development, we believe Verkhuba to hold considerable
value.
Others shared our view and third-party interest in Verkhuba emerged in the
Period, triggering our initiation of a formal process including the opening of
a data room for a potential joint venture, farm-out, or sale of the deposit.
While companies remain in the data room, we believe we can add significantly
to the value of Verkhuba by increasing confidence in, and potentially growing,
the resource, and understanding of the economics by conducting scoping and
pre-feasibility studies.
Although the process and some associated discussions remain ongoing, for now
the Company remains the sole operator of the future work programme for 2024 to
progress the open pit development concept through to a stage where economic
feasibility can be demonstrated.
Other VMS Targets
Elsewhere on our Rudny Altai VMS belt licences, since the summer our
exploration team, led by Exploration Manager Tremain Woods, has been helping
better define our geology and refine numerous targets to a drillable number in
a forthcoming programme. Multiple copper occurrences have been observed - all
a short distance from the historical Nikolaevsky deposit (40Mt @ 2.4% copper,
3.2% zinc, and 1.1 g/t gold) - which are well served by infrastructure. Some
48 targets have been assessed and ranked, with high-impact drilling expected
to occur on at least three new VMS targets this year in addition to further
drilling at Verkhuba.
Copper Porphyry
Grant from BHP Xplor for Copper Porphyry Exploration on the Balkash-Ili
Magmatic Arc
We were delighted to announce in January 2023 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. We are
extremely proud that BHP chose to work with East Star and provide non-dilutive
grant funding to look for major new copper porphyry deposits in the region.
Porphyry deposits are the primary deposit style for copper production globally
and Kazakhstan is host to several exceptional but significantly
underexplored regions that contain world-class copper porphyry mines.
In February 2024, we were awarded our first copper porphyry exploration
licence (Ayagoz) a 79 km(2) tenement with a 3km long silica lithocap
located ~80km north of the large Aktogay open pit copper mine (~2.5Bt @ 0.39%
Cu).
In March 2024, we were awarded a second copper porphyry exploration licence
(Snowy) - a 121 km(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). The licence shows historical
soil anomalism indicating its potential prospectivity for a copper porphyry
deposit.
During the Period, the Company undertook extensive soil sampling and spectral
analysis of 2,800 samples taken from the Ayagoz and Snowy licences. We were
really impressed with the speed and quality of the work our team and
contractors had completed. When combined with the geochemistry results, we
will have a detailed map of the area, inferring the depth of the porphyry
target. The soils will also assist with the assessment of the historical
artisanal gold mines around Snowy and their potential to contain larger
epithermal gold deposits. The geochemical results from these two programmes
will dictate the follow-on work programme and provide information that will
assist in targeting throughout the rest of this proven mineral belt.
Sediment-Hosted Copper Exploration JV with Getech
In February 2024, we announced that we had entered into a joint venture
agreement with Getech, a world-leading locator of subsurface resources, to
explore for sediment-hosted copper deposits in Kazakhstan, which already
hosts one of the world's largest such deposits in Dzhezkazgan (22Mt contained
copper). The JV 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. The Getech partnership
combines proprietary datasets and basin analysis capabilities with East Star's
sediment-hosted copper exploration expertise and capabilities. The results of
analysis are pending. Once completed, fieldwork will be undertaken by the
Company before any initial licence applications are made.
Board Changes
Alongside the BHP Xplor grant, we were pleased to announce the appointment of
Chris van Wijk initially as a Non-Executive Director and subsequently in
February 2024 as the Technical Director of the Company. Mr van Wijk is an
experienced geologist who specialises in project evaluation and project
generation and developed the porphyry exploration strategy with East Star. He
brings 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. Mr
van Wijk's technical expertise is a valuable addition to our Board and
exploration portfolio. He brings outstanding geological pedigree, particularly
regarding sediment-hosted copper and porphyry exploration which, when paired
with East Star's proven ability to efficiently and effectively execute
exploration in Kazakhstan, will take the Company to the next level.
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 ("AGM")
due to his other business commitments. Accordingly, he retired as a director
with effect from the AGM. East Star wishes to thank Mr Minchin for his
valuable contribution over the last two years as the Company has listed on the
London Stock Exchange and made significant progress as a copper explorer in
Kazakhstan.
Key Financial Indicators
· Cash and cash equivalents at period end were £411,000
· Profit before taxation for the period was £9,000
· The Group held net assets at period end of £2,891,000
Outlook
Kicking off the year with an endorsement and grant from BHP Xplor was a major
catalyst for the Company as we were one of only six successful selectees from
more than 500 applications. We've grown bigger in terms of people and targets
and undoubtably the Company's prospects have improved dramatically as a result
of this programme. We're enormously grateful to BHP for the opportunity, their
wisdom and their support.
Having been active in the field over the summer, our attention is turning to
forthcoming high-impact drilling on new VMS targets. Further drilling is also
expected to occur at Verkhuba as we progress the open pit development concept
through to a stage where economic feasibility can be demonstrated as a
precursor to a mining licence.
Further success on this prolific belt with its existing infrastructure and low
economic threshold would add more assets which are amenable to a
'quick-to-market' development at a time when copper is in high demand. We look
forward to a busy second half of the year.
Sandy Barblett
Non-Executive Chairman
30 September 2024
EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
FOR THE 6 MONTH PERIOD ENDING 30 JUNE 2024
Unaudited Unaudited
Period ending Period ending
30 June
30 June
2023
2024
Note £'000 £'000
Continuing Operations
Administrative expenses 5 (385) (260)
Other income 6 394 -
Operating profit / (loss) 9 (260)
Finance income - -
Profit / (loss) before taxation 9 (260)
Taxation - -
Profit / (loss) after taxation 9 (260)
Other comprehensive income 21 (60)
Total comprehensive profit / (loss) for the period 30 (320)
Basic & dilutive earnings per share - (£ pence) 7 0.004 (0.143)
The notes form an integral part of the Condensed Consolidated Interim
Financial Statements.
EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
Unaudited Audited Unaudited
As At As At As At
30 June
31 December
30 June
2024
2023
2023
Note £'000 £'000 £'000
NON-CURRENT ASSETS
Exploration assets 2,431 2,149 2,543
Earn in advance (financial asset) - - 57
Property, plant and equipment 14 17 19
TOTAL NON-CURRENT ASSETS 2,445 2,166 2,619
CURRENT ASSETS
Cash and cash equivalents 411 635 765
Trade and other receivables 104 127 180
TOTAL CURRENT ASSETS 515 762 945
TOTAL ASSETS 2,960 2,928 3,564
CURRENT LIABILITIES
Trade and other payables 69 115 70
TOTAL CURRENT LIABILITIES 69 115 70
TOTAL LIABILITIES 69 115 70
NET ASSETS 2,891 2,813 3,494
EQUITY
Share capital 2,196 2,187 1,823
Share premium 6,069 6,052 5,891
Share based payment reserve 329 307 270
Share capital to be issued 3,750 3,750 3,750
Foreign exchange reserve 52 31 6
Reverse acquisition reserve (4,795) (4,795) (4,795)
Retained earnings (4,710) (4,719) (3,451)
Non-controlling interest (0.03) (0.03) (0.03)
TOTAL EQUITY 2,891 2,813 3,494
The notes form an integral part of the Condensed Consolidated Interim
Financial Statements.
The Condensed Consolidated Financial Statements were approved and authorised
by the Board of Directors on 30 September 2024:
…………………………….
Sandy Barblett
Non-Executive Chairman
EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTH PERIOD ENDING 30 JUNE 2024
Share Capital Share Premium SBP reserve Foreign exchange reserve Reverse acquisition reserve Share Capital to issue 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 the period - - - - - - (1,528) (1,528)
Other comprehensive income - - - (35) - - - (35)
Total comprehensive expense for year - - - (35) - - (1,528) (1,528)
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
Profit for the period - - - - - - 9 9
Other comprehensive income - - - 21 - - - 21
Total comprehensive income for period - - - 21 - - 11 30
Transactions with owners in own capacity
Ordinary shares issued in the period 9 17 - - - - - 26
Share based payments - - 22 - - - - 22
Transactions with owners in own capacity 9 17 22 - - - - 48
Balance at 30 June 2024 2,196 6,069 329 52 (4,795) 3,750 (4,710) 2,891
EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
STATEMENT OF CASHFLOWS
FOR THE 6 MONTH PERIOD ENDING 30 JUNE 2024
Unaudited Unaudited
6 month period ended 6 month period ended
30 June
30 June
2023
2024
£'000 £'000
Cash flow from operating activities
Profit / (loss) before taxation for the period 9 (320)
Adjustments for:
Depreciation 5 7
Share based payments 22 2
Foreign exchange 36 54
Changes in working capital:
Decrease / (increase) in trade and other receivables 14 (102)
Increase / (decrease) in trade and other payables (38) (46)
Net cash outflow from operating activities 48 (405)
Cash flows from investing activities
Investment in fixed assets (2) (1)
Spend on exploration assets (300) (275)
Net cash flow from investing activities (302) (276)
Cash flows from financing activities
Proceeds from exercise of warrants 26 -
Net cash flow from financing activities 26 -
Net increase in cash and cash equivalents (228) (681)
Cash and cash equivalents at beginning of the period 635 1,456
Foreign exchange impact on cash 4 (10)
Cash and cash equivalents at end of the period 411 765
EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 6 MONTH PERIOD ENDING 30 JUNE 2024
1. General information
East Star Resources Plc was incorporated under the Companies Act 2006 on 17
November 2020 in England and Wales under the name Cawmed Resources Limited and
remains domiciled there with Registered Number 13025608. The Company
subsequently changed its name to East Star Resources Limited on 27 January
2021 and on 3rd March 2021 re-registered as a plc. The following condensed
consolidated interim financial statements are consolidated to include the
Company and all its subsidiaries ("the Group").
The address of its registered office 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. In
prior periods the Company successfully completed the acquisition of Discovery
Ventures Kazakhstan ("DVK"), a Kazakhstan based subsidiary which jointly holds
multiple exploration licenses. During this period the Group has under taken
significant exploration activities across these licenses and regularly
reported to the market on the immense potential of the area.
2. Accounting policies
IAS 8 requires that management shall use its judgement in developing and
applying accounting policies that result in information which is relevant to
the economic decision-making needs of users, that are reliable, free from
bias, prudent, complete and represent faithfully the financial position,
financial performance and cash flows of the entity.
2.1 Basis of preparation
The unaudited condensed consolidated interim financial statements ("interim
financial statements") have been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" (IAS 34).
The interim financial statements do not include all disclosures that would
otherwise be required in a complete set of financial statements but have been
prepared in accordance with the existing accounting policies of the company.
The interim financial statements for the 6-month period from 1 January 2024 to
30 June 2024 are unaudited. Comparatives have been provided for the comparable
period ending 30 June 2023.
The interim financial statements have been prepared using the measurement
bases specified by IFRS for each type of asset, liability, income and expense.
The interim financial statements do not constitute statutory accounts within
the meaning of section 434 of the Companies Act 2006. The accounting policies
adopted are consistent with those applied in the Company's last audited annual
financial statements ending 31 December 2023. and can be viewed on the
Company's website (www.eaststarplc.com (http://www.eaststarplc.com) ).
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's subsidiaries is the Kazakhstan Tenge. The
presentational currency of the Group is Pounds Sterling as this is the
functional currency of the parent entity and also the currency in which equity
fundraising has been facilitated. Amounts have been rounded to the nearest
£'000.
The performance of the Group is not affected by seasonal factors and the risk
factors applicable to the Group have not changed materially since the
publication of the annual report and financial statements for the period
ending 31 December 2023.
New standards, amendments and interpretations adopted by the Group
During the current period the Group adopted all the new and revised standards,
amendments and interpretations that are relevant to its operations and are
effective for accounting periods beginning on 1 January 2024. This adoption
did not have a material effect on the accounting policies of the Group.
New standards, amendments and interpretations not yet adopted by the Group.
The standards and interpretations that are relevant to the Group, issued, but
not yet effective, up to the date of these interim Financial Statements have
been evaluated by the Directors and they do not consider that there will be a
material impact of transition on the financial statements.
2.2 Going concern
The Directors have assessed the Group's ability to continue as a going concern
and are satisfied that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Group's auditors
included a material uncertainty related to going concern in the last annual
report based on the ability of the Group to source additional funding in the
12 months from signoff of the annual report for 31 December 2023. The
Directors are confident in the ability of the Group to satisfy this condition
and hence continue to adopt the going concern basis in preparing these interim
financial statements.
2.3 Risks and uncertainties
The Directors continuously assess and monitor the key risks of the business.
The business has not materially changed since the end of the last period and
hence risks pertaining to the business remain materially similar. Overall the
Board feels that the team and risk mitigation factors that are in place are
sufficient to reasonably deal with any risks that may arise.
3. Critical accounting estimates and judgements
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amount of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised, if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current
and future periods. 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:
Recoverable value of exploration assets - Note 7
Costs capitalised in respect of the Group's mining assets are required to be
assessed for impairment under the provisions of IFRS 6. 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.
For the year ended 31 December 2023, the Directors made an assessment and
concluded that it is appropriate to process impairment charges in the year
specifically relating to licenses held within the joint venture agreement held
with Phoenix Mining Limited in relation to the rare earths exploration. As
this agreement was terminated the Directors believed it was necessary to
impair the entirety of the investment.
During the current period, the Directors concluded that, since 31 December
2023, circumstances have not changed since then to indicate that there would
be any impairment at 30 June 2024.
4. Segment reporting
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.
Contributions per segment to loss before taxation are detailed below:
United Kingdom Kazakhstan Total
£'000 £'000 £'000
Administrative expenses (225) (160) (385)
Other income - 394 394
Operating loss from continued operations per reportable segment (225) 234 9
Reportable segment assets 364 2,596 2,784
Reportable segment liabilities (28) (42) (49)
Total 336 2,554 2,891
5. Administrative expenses
Period ended Period ended
30 June 2024 30 June 2023
£'000 £'000
Consultancy expense (36) (135)
Professional fees (50) (53)
Wages and salaries (90) (44)
Depreciation (2) (7)
Foreign exchange (83) 36
Other administrative expenses (124) (57)
(385) (260)
6. Other income
Other income in the period of £394,000 relates to monies received from BHP
under the 2024 BHP Xplor programme to initiate a copper porphyry exploration
strategy in Kazakhstan.
Period ended Period ended
30 June 2024 30 June 2023
£'000 £'000
BHP Xplor program 394 -
394 -
7. Earnings per share
The calculation for basic and diluted earnings per ordinary share is based on
the total comprehensive loss after income tax attributable to equity
shareholders for the period and is as follows:
Unaudited Unaudited
6 month period ended 6 month period ended
30 June
30 June
2024
2023
Net profit / (loss) for the period attributable to ordinary equity holders for 9 (260)
continuing operations (£'000)
Weighted average number of ordinary shares in issue 219,517,164 182,250,164
Basic and diluted earnings per share for continuing operations (pence) 0.004 (0.143)
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 period presented.
See note 23 for further details.
8. Exploration & evaluation assets
£'000
Opening balance - 1 July 2023 2,543
Exploration expenditure across licenses 613
Foreign exchange (75)
Impairment on Licenses (932)
As at 31 December 2023 2,149
Exploration expenditure across licenses 300
FX impact on additions (18)
As at 30 June 2024 2,431
Exploration and evaluation assets relate specifically to mining licenses held
in the Kazakhstan based subsidiaries. The Group holds a total of 8 licenses
plus one jointly through a farm in arrangement with Phoenix Mining Ltd across
3 mineral districts being specifically the Chu-Ili belt, East Kostanay region
and Rudny Altai belt. The majority of investment in the assets has been across
the Chu-Ili and Rudny held licenses to date.
9. Investment in subsidiaries
Name Business Activity Country of Incorporation Registered Address Percentage Holding
Discovery Ventures Kazakhstan Limited Mineral exploration Kazakhstan Astana City, Yesil district, Sauran st., building 3/1, 717, Z05K6G, Kazakhstan 100%
Chu Ili Resources ltd* Mineral exploration Kazakhstan Astana City, Yesil district, Sauran st., building 3/1, 717, Z05K6G , 80%
Kazakhstan
Rudny Resources ltd* Mineral exploration Kazakhstan Astana City, Yesil district, Sauran st., building 3/1, 717, Z05K6G, Kazakhstan 80%
Copperland Resources * Mineral exploration Kazakhstan Astana City, Yesil district, Sauran st., building 3/1, 717, Z05K6G, Kazakhstan 100%
MVLKAZ Holdings Limited Holding company England and Wales Eccleston Yards, 25 Eccleston Place, London, SW1W 9NF 100%
MVLKAZ Limited ** Mineral exploration Kazakhstan Astana City, Yesil district, Sauran st., building 3/1, 717, Z05K6G, Kazakhstan 100%
* Subsidiaries held indirectly through Discovery Ventures Kazakhstan
** Subsidiary held directly through MVLKAZ Holdings Limited
10. Share capital and share premium
Ordinary Shares Share Capital Share Premium Total
# £'000 £'000 £'000
As at 30 June 2023 182,250,164 1,823 5,891 7,714
Issue of ordinary shares 36,400,000 364 182 546
As at 31 December 2023 218,650,164 2,187 6,052 8,239
Shares issue upon exercise of warrants 867,000 9 17 26
As at 30 June 2024 219,517,164 2,196 6,069 8,265
11. Share based payments reserve
The following options over ordinary shares have been granted by the Group and
are outstanding at period end:
£'000
Opening balance - 1 January 2024 307
Employee options - charge release for the period 22
As at 30 June 2024 329
Warrants
As at 30 June 2024
Weighted average exercise price Number of
warrants
Brought forward at 1 January 2024 4.0p 45,213,505
Exercised in period 3.0p (867,000)
Outstanding at 30 June 2024 3.4p 44,346,505
Exercisable at 30 June 2024 3.4p 44,346,505
Options
As at 30 June 2024
Weighted average exercise price Number of
options
Brought forward at 1 January 2024 4.8p 14,934,500
Vested in period 4.3p 2,125,584
Outstanding at 30 June 2024 4.8p 14,934,500
Exercisable at 30 June 2024 4.6p 5,875,584
12. Related party transactions
Provision of services
During the period, £24,150 was paid to Orana Corporate LLP for the provision
of administrative and corporate accounting services of which £3,630 remains
owing at 30 June 2024. Anthony Eastman is a Director of the Company and a
partner of Orana Corporate LLP.
Other than these there were no other related party transactions.
13. Events subsequent to period end
Exercise of warrants
Subsequent to period end, the following Company receiving notification for the
exercise of warrants over 333,333 new ordinary shares in the Company at an
exercise price of 3 pence per share, providing the Company with proceeds of
£16,500, the Company issued 333,333 ordinary shares.
Issue of performance shares to CEO
Additionally, pursuant to the achievement of the Mineral Resource Estimate
performance threshold as announced on 8 July 2024, 75,000,000 Ordinary Shares
were due to be issued to the vendors of Discovery Ventures Kazakhstan Limited
(the "DVK Vendors") pursuant to the share purchase agreement with DVK Vendors,
and as set out in the Company's Prospectus dated 14 December 2021.
On 15 July 2024, only the 31,874,202 Performance Shares due to Mr Walker,
being a director and employee of the Company are to be issued with the balance
of 43,125,798 to be issued at such time in the future when the Company has all
necessary approvals to admit them to trading, which, inter-alia, is likely to
require the publication of an approved Prospectus.
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