Company Registration No. 13025608 (England and Wales)

EAST STAR RESOURCES PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

EAST STAR RESOURCES PLC

COMPANY INFORMATION

Directors Mr Alexander (“Sandy”) Barblett - Non-Executive

Chairman

Mr Alexander Walker – Chief Executive Officer and

Executive Director

Mr David Minchin – Non-Executive Director

Mr Anthony Eastman – Non-Executive Director

Company Secretary Orana Corporate LLP

Company number 13025608

Registered office Eccleston Yards

25 Eccleston Place

London SW1W 9NF

Principal place of business / operations Eccleston Yards

25 Eccleston Place

London SW1W 9NF

Independent Auditors PKF Littlejohn LLP

15 Westferry Circus

Canary Wharf

London E14 4HD

Broker Peterhouse Capital Limited

80 Cheapside

London EC2V 6DZ

Registrars Share Registrars Limited

27/28 Endcastle Street

London W1W 8DH

Financial Public Relations Vigo Consulting

Sackville House, 40 Piccadilly,

London W1J 0HR

Bankers Alpha FX

2 Eastbourne Terrace

London WC 6LG

Website www.eaststarplc.com

EAST STAR RESOURCES PLC

CONTENTS

Page | 3

Page

Chairman’s statement 4

Key personnel 7

Strategic report 8

Directors’ report 12

Directors’ remuneration report 14

Corporate governance report 17

Independent auditors’ report 23

Consolidated statement of comprehensive income 31

Consolidated statement of financial position 32

Company statement of financial position 33

Consolidated statement of changes in equity 34

Company statement of changes in equity 35

Consolidated statement of cashflows 36

Company statement of cashflows 37

Notes to the financial statements 38

EAST STAR RESOURCES PLC

CHAIRMAN’S STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 4

On 10 January 2022, soon after the beginning of this Period under review, East Star raised gross proceeds of

£3.1 million by way of an oversubscribed placing and subscription and was readmitted to the Official List of

the London Stock Exchange by way of a Standard Listing following its acquisition of 100% of the share capital

of the mineral explorer, Discovery Ventures Kazakhstan Limited (“DVK”).

DVK was formed to take advantage of a convergence of what we believe to be ideal conditions to explore for

and develop mineral deposits in Kazakhstan. This is predicated on the availability of high-quality regional

data and mapping from historical exploration to which modern interpretation techniques can now be

applied, extensive underexplored areas, low operating and energy costs, established logistics, the number of

majors operating in-country, and a progressive regulatory framework. In the period since East Star set up in

Kazakhstan, both the European Union and the UK have forged MoUs for the supply of critical metals. In a

statement in October 2022, European Commission President, Ursula von der Leyen, acknowledged that

meeting green and digital economy goals would require minerals of which Kazakhstan is so rich.

The rapid maturation of East Star’s portfolio is testament to the conditions in-country. Indeed, the period

since listing has been nothing short of exceptional. We came to market as a greenfield explorer in early 2022

with four licences and have grown to nine licences – or three projects - covering 1,321.5 km

in three mineral

districts targeting multiple in-demand commodities. We have, since listing, conducted nearly 5,000 m of

diamond core drilling on gold licences, conducted and interpreted substantial helicopter-borne

electromagnetic surveying over VMS licences, RC drilled our REE deposit and conducted extensive fieldwork

and historical data analysis across all three projects. We have achieved all this on time and cost efficiently.

The outcome has been that in little over a year, East Star’s shareholders have gained exposure to forthcoming

brownfield resource drilling of potentially significant copper-zinc-lead and rare earth deposits, both with

significant exploration upside in prolific but underexplored mineral belts and potentially accelerated

development pathways. This, combined with the 10 km of strike with demonstrated gold at potential

economic grades on our Chu-Ili licences makes for a uniquely exciting portfolio which we believe is at this

moment vastly underappreciated by the stock market.

Review of Operations

Copper-Zinc-Lead – Rudny Altai VMS Belt

During the year the Company acquired two licences (80% held in DVK) in the Rudny Altai region, one of the

largest VMS provinces in the world, in a joint venture with the state mining company Tau Ken Samruk (20%

held in Tau Ken Samruk). On 15 August 2022, East Star announced the award of three additional contiguous

licences (100% East Star) incorporating two historical operating (extremely high grade), copper-lead-zinc

mines, one known deposit, and many historical mineral occurrences.

We conducted 3,640.2-line km of HEM survey between May and July 2022 over these licences resulting in

the generation of five 'Priority 1' targets - four drill-ready; three 'Priority 2' targets with minor field work

required prior to being drill-ready; and 40 additional targets.

On 25 January 2023 (post Period end) we announced the identification of a substantial copper-zinc-lead-

deposit located within East Star’s 100% owned 'RA3' licence (the “Verkhuba Deposit”). An independent JORC-

compliant Exploration Target of 19-23 Mt at 1.4-1.9% CuEq for the Verkhuba Deposit was announced on 21

March 2023. The Exploration Target has been defined by 97 drill holes comprising 42,178 m of historical

diamond drilling providing a reasonable level of confidence in the geological interpretation.

This is without doubt the most exciting development in the portfolio in the Period. We are now planning

verification and infill drilling to convert the Exploration Target to JORC-compliant resources with drilling

EAST STAR RESOURCES PLC

CHAIRMAN’S STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 5

expected to commence this summer. A conversion of the target to JORC resources offers the potential for a

transformational re-rating in East Star’s value just to equal the average value of peer group copper deposits,

before considering the potential for additional tonnage of the ore bodies, significant exploration upside from

HEM targets, and a potential route to low-CAPEX development leveraging the regional infrastructure already

in place and excess processing capacity from both Glencore (Kazzinc) and KAZ Minerals.

Rare Earths – East Kostanay

The critical need for REEs to support the energy revolution is well publicised. On 18 May 2022, East Star

announced a farm-in for up to 90% of the Talairyk Ionic Adsorption Clay (IAC) REE project. This represented

a low-cost and zero cash payment entry to a geologically de-risked IAC hosted REE deposit with a historical

resource (non-compliant) of 19,962 tonnes of yttrium plus REEs.

On 8 August 2022, we increased our exposure to REEs with the announcement of the award of an additional

contiguous exploration licence at Talairyk and began a work programme aimed ultimately at confirming and

expanding the historical resource and assessing recoverability potential of the REEs.

1,001 m of RC drilling was conducted by East Star between October and November 2022 to confirm historical

grades, width and extent of the mineralisation, and provide samples for metallurgical test work. On 3 April

2023 (post Period end), we announced assay results which demonstrate high grade intersections across the

entire tested area and broad intersections in every drill hole, validating historical data and providing a strong

indication of an REE deposit of consequential size and grade, with an average grade of 934.4 ppm and a peak

grade of 3m at 5,402 ppm TREO from 1m.

Leach test work to examine recoverability rates of the REEs is underway. Positive results will give us the

confidence to move rapidly into resource drilling of the historical deposit to bring it to JORC standards and

commence development studies.

Gold – Chu-Ili Orogenic Gold Belt

A huge amount of exploration activity has been conducted on East Star’s gold licences during the Period and,

while the exciting developments in our critical metals projects have understandably taken priority in recent

months given their near-term development potential, we have not lost sight of the potential to define a

million ounces of gold on acreage where our diamond drill results and shallow artisanal mines are a visible

sign of a working gold system especially at a time when gold is now above $2,000 per oz.

East Star’s exploration programme conducted throughout the period comprised analysis of historical data,

close spaced drone magnetics, and rock chip sampling leading up to nearly 5,000 m of diamond drilling on

both gold licences which commenced around 25 July 2022.

Assay results from the Apmintas Licence were announced on 13 February 2023 (post Period end) and

demonstrated anomalous gold mineralisation in all three target areas with potential economic grades in the

Eshkilitau II and Southern Shabdar targets. Eshkilitau II has potential for a mineralised system with a strike of

more than 1 km along a fault zone with significant regional exploration upside potential, while high-grade

intersections indicate the existence of high-grade zones within the mineralised systems at Southern Shabdar.

Detailed structural logging is underway, the analysis of which will determine the next steps to progress

exploration.

EAST STAR RESOURCES PLC

CHAIRMAN’S STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 6

Key East Star Financial Indicators

• Cash and cash equivalents at Period end were £1.456 million

• Loss before taxation for the Period was £3.106million (includes £1.73 million reverse acquisition

expense (non-cash) on acquisition of DVK)

• Net cash flow for the period was £1.437 million

• The Group held net assets at Period end of £3.812 million

Summary

This summer will see East Star drilling the significant copper-zinc-lead Verkhuba Deposit Exploration Target

on the Rudny Altai belt as we seek to upgrade it to a JORC-complaint resource. Given the extensive historical

drilling and Company data analysis that underpins this Exploration Target, we have a reasonable level of

confidence in achieving this. Success in this objective alone positions East Star for a significant re-rating.

At the same time, we intend to test priority HEM targets which offer the potential to become additional

copper deposits proximal to the Verkhuba Deposit, while conducting additional fieldwork and geophysics

to refine more exploration targets.

In relation to our rare earths project, following highly encouraging assay results from RC drilling, we eagerly

await the results of leach test work which will examine the recoverability potential of the valuable elements

before moving into resource drilling of the historical deposit this year.

On the Chu-Ili gold belt we are determining the next steps in exploration, likely to focus on 10 km of strike

along trend from high grade mines.

We believe Kazakhstan has the mineral wealth and political will to become a major supplier of critical and

strategic minerals. East Star’s first mover advantage is now evident in the portfolio, with the Company

positioned as the listed brownfield resource definition vehicle through which to access the next wave of

mineral discoveries in Kazakhstan.

I would like to take this opportunity to commend our CEO, Alex Walker, who is based permanently in

Kazakhstan, and our whole team in Kazakhstan, who have in the Period conducted successful work

programmes safely and cost effectively across three projects which now position East Star to deliver, this

year, JORC resources of metals needed for the energy revolution. As always, we thank shareholders for

their continued support.

…………………………………..

Sandy Barblett

Non-Executive Chairman

17 April 2023

EAST STAR RESOURCES PLC

KEY PERSONNNEL

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 7

Key personnel of the Group are comprised of the Directors:

Alexander Walker, Age 38 - Chief Executive Officer

Alex Walker is an investment banker and resources executive with more than 14 years’ experience in natural

resources investment with Norwegian Bank, Pareto Securities, London-based investment bank, Brandon Hill

Capital and Australian broking firm Patersons Securities. Mr. Walker co-founded and was the General

Manager of ScandiVanadium Ltd. He was also involved in the process of listing ScandiVanadium Ltd on the

Australian Securities Exchange. Mr. Walker holds a MSc in Mineral and Energy Economics from Curtin

University of Technology, Graduate Diploma of Applied Finance, BComm, BSocSci, and is a Graduate of the

Australian Institute of Company Directors.

Alexander (“Sandy”) Barblett, Age 56 - Non-Executive Director & Chairman

Sandy Barblett has over 20 years’ experience working with private and public listed international companies.

He sits as a director and advises companies both private and listed on AIM and the ASX in relation to raising

private equity and general fund raising, admission onto public markets, strategy and management selection.

Additionally, he has previously held senior leadership roles within the technology sector, most notably with

former FTSE 250 company Pace Plc.

Mr. Barblett has a Bachelor of Business from Curtin University of Technology in Perth, Australia and a

Bachelor of Law from the University of Queensland; he previously worked for Minter Ellison as a solicitor.

Anthony Eastman, Age 48 - Non-Executive Director

Anthony Eastman is a member of the CAANZ and ICAEW and a Partner at Orana Corporate LLP. Mr. Eastman

has a number of years’ experience in financial management and corporate advisory services, primarily in the

natural resources sector, along with extensive experience in the public company environment, having been

a director and company secretary of a number of ASX and UK listed junior mining and oil & gas focused

companies. He has previously worked with Ernst & Young and CalEnergy Gas Ltd, a subsidiary of the Berkshire

Hathaway Group of Companies in both Australia and the United Kingdom.

David Minchin, Age 42 – Non-Executive Director

David Minchin is a geologist with over 15 years’ experience in production, exploration, and resource

investment. Mr. Minchin has worked for Rio Tinto and the British Geological Survey, as well working as Senior

Exploration Geologist for ICL-Boulby where he was closely involved in the discovery of the 3.2 billion tonne

polyhalite deposit that was subsequently put into production and extended operating mine life by over 30

years. Mr. Minchin has worked as Director of Geology for AMED Funds, a London based private equity group

that focuses on exploration projects in Africa. In this role, Mr. Minchin was part of the team responsible for

investing and monitoring approximately USD 450 million in projects from exploration through to feasibility

and across a range of commodities. Mr. Minchin is currently CEO of Helium One Global Limited, an AIM

quoted company developing a significant primary helium project in Tanzania and was formerly Managing

Director of ASX-listed ScandiVanadium.

EAST STAR RESOURCES PLC

STRATEGIC REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 8

The Directors present their strategic report for the period ended 31 December 2022 for the Company and

all of its subsidiaries collectively referred to as “the Group”.

Principal risks and uncertainties

There are a number of risks associated with entities focused on natural resources exploration, particularly in

Central Asia. The Board regularly reviews the risks to which the Company is exposed and endeavours to

minimise them as far as possible. They consider the following risks are of particular relevance to the

Company’s activities. It should be noted that the list is not exhaustive and that other risk factors not presently

known or currently deemed immaterial may apply.

Political and country risk

The unrest in Kazakhstan in January 2022 was well publicised and was quashed within days. The Government

of Kazakhstan has since demonstrated its ongoing commitment to protecting foreign investor interests. In

the past 12 months, both the European Commission and the United Kingdom have signed Memorandums of

Understanding with Kazakhstan on strategic partnerships including in the fields of raw materials.

In addition, the invasion by Russia into Ukraine is being watched carefully as Kazakhstan shares a border with

Russia. The Kazakhstan President Kassym-Jomart Tokayev has been in dialogue with both the presidents of

Ukraine and Russia since the start of the invasion. The Company is confident that Kazakhstan is managing

the situation very well and does not believe there is any significant risk of military conflict with Russia.

Exploration and development risks

There is a high degree of risk as mineral exploration and development can be highly speculative. The

economics of developing mineral properties are affected by many factors including the cost of operations,

variations of the grade of ore mined, fluctuations in the price of the minerals being mined, fluctuations in

exchange rates, costs of development, infrastructure and processing equipment and such other factors as

government regulations, including regulations relating to royalties, allowable production, importing and

exporting of minerals and environmental protection.

In addition, the grade of mineralisation ultimately mined may differ from that indicated by drilling results

and such differences could be material. As a result of these uncertainties, there can be no guarantee that

mineral exploration and development of any of the Company’s investments will result in profitable

commercial operations.

Industry-specific risks

The natural resources sector is inherently tied to the performance of the global economy and, in particular,

fluctuations in the price of global commodities. As a result, segments of the natural resources sectors (or

even the sector as a whole) could be affected by changes in general economic activity levels and others

changes which are beyond the Company’s control. The Company will be unable to control the prices for

commodities, which may adversely affect the Company’s business, results of operations, financial condition

or prospects.

EAST STAR RESOURCES PLC

STRATEGIC REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 9

Government regulation risk

The mineral exploration and development activities which are undertaken by the Company are subject to

various laws governing prospecting, development, production, taxes, labour standards and occupational

health, mine safety, toxic substances, land use, water use, land claims of local people and other matters.

Exploration and development activities may also be affected in varying degrees by government regulations

with respect to, but not limited to, restrictions on future exploration and production, price controls, export

controls, currency availability, foreign exchange controls, income taxes, delays in obtaining or the inability to

obtain necessary permits, opposition to mining from environmental and other non-governmental

organisations, limitations on foreign ownership, expropriation of property, ownership of assets,

environmental legislation, labour relations, limitations on repatriation of income and return of capital,

limitations on mineral exports, high rates of inflation, increased financing costs, and site safety. This may

affect both the Company’s ability to undertake exploration and development activities in respect of its

tenements, as well as its ability to explore and operate those tenements in which it currently holds an interest

or in respect of which it obtains exploration and/or development rights in the future.

No assurance can be given that new rules and regulations will not be enacted or that existing rules and

regulations will not be applied in a manner which could limit or curtail development or future potential

production.

Amendments to current laws and regulations governing operations and activities of mining and milling or

more stringent implementation thereof could have a substantial adverse impact on the Company.

Permitting risk

The Company’s operations may be subject to receiving and maintaining permits from appropriate

governmental authorities. There is no assurance that delays will not occur in connection with obtaining all

necessary renewals of such permits for future operations. Management believes it has received the

necessary permits for the current operations. Prior to any development on any tenements, the Company

must receive permits from appropriate governmental authorities. There can be no assurance that the

Company will obtain and/or continue to hold all permits necessary to develop or continue operating at any

particular tenement.

Environmental and other regulatory requirement risk

The event of a breach with any environmental or regulatory requirements may give rise to reputational,

financial or other sanctions, and therefore the Board considers these risks seriously and designs, maintains

and reviews its policies and processes so as to mitigate or avoid these risks.

Financing risk

The development of the Company’s tenements and its ability to earn into projects will require substantial

additional financing. Failure to obtain sufficient financing may result in delaying or indefinite postponement

of exploration, development or production on any or all of the Company’s tenements from time to time, or

even a loss of tenement interest. There can be no assurance that additional capital or other types of financing

will be available if needed or that, if available, the terms of such financing will be favourable to the Company.

EAST STAR RESOURCES PLC

STRATEGIC REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 10

Foreign currency risk

Fluctuations in currency exchange rates, principally between the British pound, US Dollar and Kazakhstan

Tenge, can impact the Company’s earnings and cash flows. If the value of the Tenge or US Dollar increases

relative to the British pound, the Company’s results of operations, financial condition and liquidity could be

materially adversely affected.

Market conditions

Market conditions, including general economic conditions and their effect on exchange rates, interest rates

and inflation rates, may impact the ultimate value of the Company regardless of its operating performance.

The Company also faces competition from other organisations, some of which may have greater resources

or be more established in Kazakhstan. The Board considers and reviews all market conditions to try and

mitigate any risks that may arise from these.

Key personnel risk

The Company has a small management team and the loss of a key individual or the inability to attract suitably

qualified personnel in the future could materially and adversely affect the Company’s business.

Section 172 Statement

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of

stakeholders and other matters in their decision making. The Directors continue to have regard to the

interests of the Group's employees and other stakeholders, the impact of its activities on the community,

the environment and the Group 's reputation for good business conduct, when making decisions. In this

context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of

the Group for its members in the long term. We explain in this annual report, and reference below, how the

Board engages with stakeholders.

We aim to work responsibly with our stakeholders, including suppliers. The key Board decisions made during

the period and post period end are set out below:

Significant events / decisions Key s172 matter(s) affected Actions and Steps

Completing the acquisition of

the enlarged share capital of

Discovery Ventures Kazakhstan

through a Reverse Takeover

transaction (“RTO”) in January

2022.

Shareholders and business

relationships

Completion of the RTO and re-

admission of the enlarged

share capital to the London

Stock Exchange leading to

greater likely outcomes for

shareholders in the future.

Gender analysis

A split of our employees and directors by gender during the year is shown below:

Male Female

Directors 4 -

Employees 2 5

EAST STAR RESOURCES PLC

STRATEGIC REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 11

The Group is committed to gender equality as evidenced by its fair distribution of genders in its workforce.

Corporate social responsibility

We aim to conduct our business with honesty, integrity and openness, respecting human rights and the

interests of our shareholders and employees. We aim to provide timely, regular and reliable information on

the business to all our shareholders and conduct our operations to the highest standards.

Greenhouse Gas (GHG) Emissions

The Group is aware that it needs to measure its operational carbon footprint in order to limit and control its

environmental impact. However, given the very limited nature of its operations during the period, it has not

been practical to measure its carbon footprint. In the future, the Group will only measure the impact of its

direct activities, as the full impact of the entire supply chain of its suppliers cannot be measured practically.

The Group has not made separate disclosures relating to energy consumption & efficiency as the entity

consumed less than 40,000 kWh of energy during the period.

Health and Safety

We strive to create a safe and healthy working environment for the wellbeing of our staff and create a

trusting and respectful environment, where all members of staff are encouraged to feel responsible for the

reputation and performance of the Group. We aim to establish a diverse and dynamic workforce with team

players who have the experience and knowledge of the business operations and markets in which we

operate. Through maintaining good communications, members of staff are encouraged to realise the

objectives of the Group and their own potential.

…………………………………..

Sandy Barblett

Non-Executive Chairman

17 April 2023

EAST STAR RESOURCES PLC

DIRECTORS’ REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 12

The Directors present their report and financial statements for the period ended 31 December 2022. The

Company extended their accounting reference date during the period by 1 month meaning that the reporting

period for the Company was 13 months and therefore not a directly comparable period to the previous year.

Principal activities

The Company was incorporated on 17

November 2020 under the name Cawmed Resources Limited before

changing its name to East Star Resources Limited on 27 January 2021. The Company later registered as a

public limited company (“plc”) on 3

March 2021. The principal activity of the Company is that of identifying

potential companies, businesses or asset/(s) that have operations in the natural resources exploration,

development and production sector.

As alluded to in the strategic report above, in pursuing its principal activities, the Company successfully

completed the acquisition of the entire enlarged share capital of Discovery Ventures Kazakhstan Limited on

10 January 2022. Further details of this transaction can be found at Note 24 in the notes accompanying the

financial statements.

Results

The Group (including the Company and it subsidiaries) recorded a loss for the year ended 31 December 2022

before taxation of £3.106 million (inclusive £1.73 million – (non cash) reverse acquisition expense – Note 24).

The Company recorded a loss for the 13 month period ended 31 December 2022 before taxation of £0.971

million.

Directors

The following directors have held office during the period and to the date of these financial statements:

Sandy Barblett

Anthony Eastman

Alex Walker (appointed 10 January 2022)

David Minchin (appointed 10 January 2022)

Charles Wood (resigned 10 January 2022)

Details of the Directors’ holding of Ordinary Shares and Warrants are set out in the Director’s Remuneration

Report from page 14.

Financial Risk & Management

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 can be

referenced in Note 25.

Share Capital

Details of the Company’s issued share capital, together with details of the movements since incorporation,

are shown in Note 22. The Company has one class of Ordinary Share, and all shares have equal voting rights

and rank pari passu for the distribution of dividends and repayment of capital.

EAST STAR RESOURCES PLC

DIRECTORS’ REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 13

Substantial Shareholdings

At 14 April 2023, the Company had been informed of the following substantial interests over 3% of the issued

share capital of the Company:

Number of Shares Percentage Holding

JIM Nominees Limited 32,024,770 17.57

P H Nominees Limited 30,440,313 16.70

CGWL Nominees Limited 9,981,261 5.48

Hargreaves Lansdown Nominees Limited 8,552,728 4.69

Vidacos Nominees Limited 8,248,239 4.53

JIM Nominees Limited 8,134,084 4.46

Barnard Nominees Limited 7,418,000 4.07

Thomas Grant and Company Nominees Limited 7,403,563 4.06

EAST STAR RESOURCES PLC

DIRECTORS’ REMUNERATION REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 14

Directors’ Remuneration Report

Remuneration Policies

The remuneration policy of the Group is that each Director shall be entitled to a salary per annum from the

date of Admission to manage the operations of the Group.

Since re-admission a remuneration committee has been appointed to reassess an appropriate level of

Directors’ remuneration and it is envisaged that the remuneration policy will assist to attract, retain and

motivate Executive Directors and senior management of a high calibre with a view to encouraging

commitment to the development of the Group and for long term enhancement of shareholder value. The

Board believes that share ownership by Directors strengthens the link between their personal interests and

those of shareholders although there is no formal shareholding policy in place.

The current Directors’ remuneration comprises a basic fee and at present,

Service contracts

The Directors entered into Service Agreements with the Company and continue to be employed until

terminated by the Company. In the event of termination or loss of office the Director is entitled only to

payment of his basic salary in respect of his notice period. In the event of termination or loss of office in the

case of a material breach of contract the Director is not entitled to any further payment.

Each Director is paid at a rate per annum as follows:

Alex Walker £12,000 per annum

Sandy Barblett £24,000 per annum

Anthony Eastman £24,000 per annum

David Minchin £24,000 per annum

Effective from 1 September 2022 all Directors apart from Alex Walker voluntarily agreed to reduce their

salary from £36,000/annum to £24,000/annum to allow the Group increased free cash flow to support

operations.

Approval by members

The remuneration policy above will be put before the members for approval at the next Annual General

Meeting.

Particulars of Directors’ Remuneration

Particulars of Directors’ remuneration, including Directors’ warrants which, under the Companies Act 2006

are required to be audited, are given below.

Remuneration paid to the Directors’ during the year ended 31 December 2022 was:

Base

salary

£’000

Bonus

£’000

Warrants

£’000

Options

£’000

Total

£’000

Sandy Barblett 34 - - 2 36

Anthony Eastman 34 - 15 - 49

Alexander Walker* 153 75 - 80 308

Charles Wood 8 - 27 - 35

David Minchin 31 - - 15 46

260 75 42 97 474

EAST STAR RESOURCES PLC

DIRECTORS’ REMUNERATION REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 15

*During the period a bonus was paid to Alex Walker of $100,000 USD relating to conditions prior to the

acquisition of DVK on 10 January 2022. The East Star board of Directors agreed to pay this bonus post the

transaction occurring.

Payments to past Directors

There are no payments to Directors from previous periods

Payments for loss of office

There were no payments for loss of office.

Bonus and incentive plans

On 28 March 2023 the Directors of the Company resolved to implement a Long Term Incentive Plan available

to employees of the Group. Employees are incentivised to remain in the employ of the Group with share

options that vest based on service milestones.

Percentage change in the remuneration of the Chief Executive Officer (“CEO”)

As of last period end (30 November 2021) the Group did not have a CEO and hence there was no

remuneration. From 10 January 2022 Alex Walker was appointed as CEO and hence all remuneration is new

in the period. Going forward the Group will look to report changes in the salary of the CEO.

Directors’ interests in shares (unaudited)

The Group has no Director shareholder requirements.

The beneficial interest of the Directors in the Ordinary Share Capital of the Company at 14 April 2023 were:

Ordinary

Percentage of issued

share capital

14 April 2023

Sandy Barblett 550,000 0.30

Anthony Eastman 500,000 0.27

Alexander Walker 20,024,522 10.99

David Minchin 2,200,000 1.21

23,274,522 12.77

The Directors held the following warrants at 14 April 2023:

Director

1 December

2021

Granted during the

period

14 April 2023

Sandy Barblett 150,000 - 150,000

Anthony Eastman 400,000 1,399,681 1,799,681

David Minchin 2,000,000 - 2,000,000

2,550,000 1,399,681 3,949,681

EAST STAR RESOURCES PLC

DIRECTORS’ REMUNERATION REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 16

The Directors held the following options as at 14 April 2023:

Director

1 December 2021

Granted during the

period 14 April 2023

Sandy Barblett - 539,855 539,855

Alexander Walker - 10,898,551 10,898,551

Anthony Eastman 289,855 289,855

David Minchin - 1,789,855 1,789,855

- 13,518,116 13,518,116

UK 10-year performance graph

The Directors have considered the requirement for a UK 10-year performance graph comparing the Group’s

Total Shareholder Return with that of a comparable indicator. The Directors do not currently consider that

including the graph will be meaningful because the Company has been listed for under 24 months with a

significant portion of that as just a cash shell. The Group is not paying dividends and is currently incurring

losses and hence the remuneration of Directors is not specifically linked to performance. Therefore we do

not consider the inclusion of this graph to be useful to shareholders at the current time. The Directors will

review the inclusion of this table for future reports.

UK 10-year CEO table and UK percentage change table

The Directors have considered the requirement for a UK 10-year CEO table. The Directors do not currently

consider that including these tables would be meaningful given that this was the first year the Group had a

CEO. The Directors will review the inclusion of this table for future report.

…………………………………………………...

Sandy Barblett

Non-Executive Chairman

17 April 2023

EAST STAR RESOURCES PLC

CORPORATE GOVERNANCE REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 17

As a Group listed on the standard segment of the official list, the Group is not required to comply with the

provisions of the UK Corporate Governance Code. Nevertheless, the Directors are committed to ensuring

that appropriate standards of corporate governance are maintained, so far as is appropriate given the

Enlarged Group’s current stage of development, the size and composition of the Main Board and available

resources. The Board will aim to comply with the QCA Guidelines on Corporate Governance (“QCA

Guidelines”).

The QCA Code has ten principles of corporate governance that the Group applies to establish the

governance foundations of the business. These principles are:

1. Establish a strategy and business model which promote long-term value for shareholders;

2. Seek to understand and meet shareholder needs and expectations;

3. Take into account wider stakeholder and social responsibilities and their implications for long term

success;

4. Embed effective risk management, considering both opportunities and threats, throughout the

organisation;

5. Maintain the board as a well-functioning balanced team led by the Chair;

6. Ensure that between them the Directors have the necessary up to date experience, skills and

capabilities;

7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement;

8. Promote a corporate culture that is based on ethical values and behaviours;

9. Maintain governance structures and processes that are fit for purpose and support good decision-

making by the Board; and

10. Communicate how the Group is governed and is performing by maintaining a dialogue with

shareholders and other relevant stakeholders.

Here follows a short explanation of how the Group applies each of the principles, including where applicable

an explanation of why there is a deviation from those principles.

Principle One

Business Model and Strategy

The Group holds several mining licenses in Kazakhstan and is actively carrying out explorative activities

across a number of these licenses. It has a clear strategy of exploring these licenses and looking to capitalise

on future opportunities as detailed in the Strategic Report. Further to earlier comments on risk and strategy

the Group is committed to broadening its area and scope of operations as appropriate.

Principle Two

Understanding Shareholder Needs and Expectations

The Board is committed to maintaining good communication and having constructive dialogue with its

shareholders. They will be encouraged to attend the AGM and website communications will be improved

in the coming year.

Principle Three

Considering wider stakeholder and social responsibilities

The Board recognises that the long-term success of the Group is reliant upon open communication with its

internal and external stakeholders: investee companies, shareholders, contractors, suppliers, regulators

and other stakeholders. The Group has created close ongoing relationships with a broad range of its

stakeholders and will ensure that it provides them with regular opportunities to raise issues and provide

feedback to the Group. The Group is committed to delivering lasting benefit to the local communities and

environments where we work as well as to our shareholders, employees and contractors. As the Group

evolves we anticipate that this aspect of community engagement will evolve further.

EAST STAR RESOURCES PLC

CORPORATE GOVERNANCE REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 18

Principle Four

Risk Management

The Board is responsible for ensuring that procedures are in place and are being implemented effectively

to identify, evaluate and manage the significant risks faced by the Group. It is in the process of establishing

a framework of internal financial controls to address financial risk and regularly reviews the non-financial

risks to ensure all exposures are adequately managed. The Group maintains appropriate insurance cover

in respect of legal actions against the Directors as well as against material loss or claims against the Group.

The principal risks and uncertainties are as set out in the Strategic Report.

Principle Five

A Well Functioning Board of Directors

The Board will maintain a balance of executives and non-executive directors. Currently there are 3 non-

executives including the Chairman and 1 Executive. There are no mandatory hours for directors to be

available for Group business although the CEO is required to commit 100% of his working time to the Group.

The non-executive directors are available for any Group business when it may arise.

Further information about the directors can be found in the Key Personnel report on page 7 as well as the

Company website at www.eaststarplc.com. The Directors met 6 times throughout the year to discuss key

issues and to monitor the overall performance of the Group. All Directors attended all meetings during the

year.

Principle Six

Appropriate Skills and Experience of the Directors

The Group believes that the Directors have wide ranging experience working for/and/or advising businesses

operating within the natural resources sector. They also have an extensive network of relationships to reach

key decision-makers to help achieve their strategy. The Board recognises that it currently does not have any

female Directors however as it grows, it will look to recruit and develop a diverse and more gender-balanced

executive team.

Principle Seven

Evaluation of Board Performance

Internal evaluation of the Board, the Committees and individual Directors will be undertaken on an annual

basis in the form of peer appraisal and discussions to determine the effectiveness and performance against

targets and objectives. As a part of the appraisal the appropriateness and opportunity for continuing

professional development whether formal or informal is discussed and assessed.

Principle Eight

Corporate Culture

The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of

the Group as a whole which in turn will impact the Group’s performance. The Directors are very aware that

the tone and culture set by the Board will greatly impact all aspects of the Group and the way that

consultants or other representatives behave. The corporate governance arrangements that the Board has

adopted are designed to instil a firm ethical code to be followed by Directors, consultants and

representatives alike throughout the entire organisation. The Group strives to achieve and maintain an open

and respectful dialogue with representatives, regulators, suppliers and other stakeholders. Therefore, the

importance of sound ethical values and behaviours is crucial to the ability of the Group to successfully

achieve its corporate objectives. The Board places great importance on this aspect of corporate life and

seeks to ensure that this flows through everything that the Group does. The Directors are focused on

ensuring that the Group maintains an open culture facilitating comprehensive dialogue and feedback and

enabling positive and constructive challenge. The Group has adopted, a code for Directors' dealings in

EAST STAR RESOURCES PLC

CORPORATE GOVERNANCE REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 19

securities which is appropriate for a company whose securities are traded on this main market and is in

accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.

Issues of bribery and corruption are taken seriously. The Group has a zero-tolerance approach to bribery

and corruption and has recently put an anti-bribery and corruption policy in place to protect the Group, its

employees and those third parties to which the business engages with.

Principle Nine

Maintenance of Governance Structures and Processes

The Group’s governance structures are appropriate for a Group of its size. The Board also meets regularly

and the Directors continuously maintain an informal dialogue between themselves. The Chairman is

responsible for the effectiveness of the Board as well as primary contact with shareholders, while the

execution of the Group’s investment strategy is a matter reserved for the Chief Executive. The current

Governance structure is outlined below:

Audit Committee

From re-admission on 10 January 2022 the Group put in place an audit committee comprising two members,

being, Anthony Eastman (as Chair) and Sandy Barblett which will have primary responsibility for monitoring

the quality of internal control and ensuring that the financial performance of the Group is properly measured

and reported on and for reviewing reports from the Group’s auditors relating to the Group’s accounting and

internal controls.

The committee is also responsible for making recommendations to the Board on the appointment of auditors

and the audit fee and for ensuring that the financial performance of the Enlarged Group is properly

monitored and reported. The audit committee has met twice during the year and will meet to approve these

financial statements.

Remuneration Committee

From re-admission on 10 January 2022 the Group has instituted a remuneration committee comprising two

directors, Mr. Sandy Barblett (as Chair) and Mr. Anthony Eastman, being responsible for both the review and

recommendation of the scale and structure of remuneration for senior management. In reviewing the

remuneration policy of the Group, this will include any bonus arrangements or the award of share options

with due regard to the interests of the Shareholders and the performance of the Group.

The remuneration committee has met twice during the year.

Nominations Committee

No nominations committee has been established with all matters to be considered by the Board as a whole.

Principle Ten

Shareholder Communication

The Board is committed to maintaining good communication and having constructive dialogue with its

shareholders in compliance with regulations applicable to companies quoted on the LSE’s Main Market. All

shareholders are encouraged to attend the Company's Annual General Meeting where they will be given the

opportunity to interact with the Directors. Investors also have access to current information on the Group

through its website, (www.eaststarplc.com).

The Board takes feedback from a wide range of shareholders (large and small) and endeavours at every

opportunity to pro-actively engage with all shareholders (via regular news reporting-RNS) and engage with

any specific shareholders in response to particular queries they may have from time to time. The Board

considers that its key decisions during the year have impacted equally on all members of the Group.

EAST STAR RESOURCES PLC

CORPORATE GOVERNANCE REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 20

Impact of operations on the community and environment

Now that the Group is engaged in exploration activities it has significant interaction with the environment

and has to comply with laws and regulations in Kazakhstan. Before beginning activities on any license DVK

must complete an environmental impact survey detailing impacts on the environment and particular the soil.

This survey also assesses estimated costs to restore any drilling site to its original condition. As a result of

this DVK outlays significant funds to ensure adequate Sub Soil insurance to cover its obligations.

The Board are aware of the extended climate disclosures for listed entities specifically alluded to in the listing

rules however are yet to undertake any substantive planning or governance around the issue.

The Directors consider that the environmental compliance requirements imposed on them by the Kazakhstan

Government to be sufficient and hence have not explored any additional reporting. The Directors will

continue to monitor the requirements in Kazakhstan and will look to potentially include in future annual

reports when the information becomes material to shareholders and other key stakeholders.

External Auditor

PKF Littlejohn were appointed auditors to the Group and have expressed their willingness to remain in office.

The Audit Committee has met with the auditor at least twice a year to consider the results, internal

procedures and controls and matters raised by the auditor. The Board considers auditor independence and

objectivity and the effectiveness of the audit process. It also considers the nature and extent of the non-

audit services supplied by the auditor reviewing the ratio of audit to non-audit fees and ensures that an

appropriate relationship is maintained between the Group and its external auditor.

As part of the decision to recommend the appointment of the external auditor, the Board considers the

tenure of the auditor in addition to the results of its review of the effectiveness of the external auditor and

considers whether there should be a full tender process. There are no contractual obligations restricting the

Board’s choice of external auditor. The Group has a policy of controlling the provision of non-audit services

by the external auditor in order that their objectivity and independence are safeguarded.

Internal financial control

Financial controls have been established so as to provide safeguards against unauthorised use or disposition

of the assets, to maintain proper accounting records and to provide reliable financial information for internal

use.

Key financial controls include:

• a schedule of matters reserved for the approval of the Board;

• evaluation, approval procedures and risk assessment for acquisitions; and

• close involvement of the Directors in the day-to-day operational matters of the Group.

Shareholder Communications

The Group uses a regulatory news service and its corporate website (www.eaststarplc.com) to ensure that

the latest announcements, press releases and published financial information are available to all

shareholders and other interested parties.

The Annual General Meeting is used to communicate with both institutional shareholders and private

investors and all shareholders are encouraged to participate. Separate resolutions are proposed on each

issue so that they can be given proper consideration and there is a resolution to approve the Annual Report

and Financial Statements. The Company counts all proxy votes and will indicate the level of proxies lodged

on each resolution after it has been dealt with by a show of hands.

EAST STAR RESOURCES PLC

CORPORATE GOVERNANCE REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 21

Statement of directors’ responsibilities

The Directors are responsible for preparing the Annual Report and financial statements in accordance with

applicable laws and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law

the directors have prepared the financial statements in accordance with UK-adopted international

accounting standards for the group and, as regards to the Parent Company Financial Statements, as applied

in accordance with the Companies Act 2006. Under company law the directors must not approve the

financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the

Group and the profit and loss of the Group for that period.

In preparing the financial statements the Directors are required to:

• Select suitable accounting policies and then apply them consistently;

• Make judgements and accounting estimates that are reasonable and prudent;

• Ensure statements comply with UK adopted International Accounting Standards in conformity with

the Companies Act 2006 for the period; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume

that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and

explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of

the Group enabling them to ensure that the financial statements comply with the Companies Act 2006. They

are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities

The financial statements are published on the Company’s website www.eaststarplc.com. The work carried

out by the Auditor does not involve consideration of the maintenance and integrity of this website and

accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial

statements since they were initially presented on the website. Visitors to the website need to be aware that

legislation in the United Kingdom covering the preparation and dissemination of the financial statements

may differ from legislation in their jurisdiction.

Disclosure and Transparency Rules

Details of the Company’s share capital and warrants and options are given in Notes 22 and 23 respectively.

There are no restrictions on transfer or limitations on the holding of the ordinary shares. None of the shares

carry any special rights with regard to the control of the Company. There are no known arrangements under

which the financial rights are held by a person other than the holder and no known agreements or restrictions

on share transfers and voting rights. As far as the Group is aware there are no persons with significant direct

or indirect holdings other than the Directors and other significant shareholders as shown on page 13. The

provisions covering the appointment and replacement of directors are contained in the Company’s articles,

any changes to which require shareholder approval. There are no significant agreements to which the

Company is party that take effect, alter or terminate upon a change of control following a takeover bid and

no agreements for compensation for loss of office or employment that become effective as a result of such

a bid.

Requirements of the Listing Rules

Listing Rule 9.8.4 requires the Group to include certain information in a single identifiable section of the

Annual Report or a cross reference table indicating where the information is set out. The Directors confirm

that there are no disclosures required in relation to Listing Rule 9.8.4.

EAST STAR RESOURCES PLC

CORPORATE GOVERNANCE REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 22

Auditor Information

The Directors who held office at the date of approval of the Directors’ Report confirm that, so far as they are

each aware, there is no relevant audit information of which the Group’s Auditor is unaware;

and each

Director has taken all the steps that he ought to have taken as a Director to make himself aware of any

relevant audit information and to establish that the Group’s Auditor is aware of that information

Political Donations

The Group did not make any donations to political parties in the Period.

Events after the reporting period

See note 32 in the consolidated financial statements.

Directors’ Indemnity Provisions

The Group has implemented Directors and Officers Liability Indemnity insurance.

Going concern

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources

to continue in operational existence for the foreseeable future. Further details are given in Note 2.2 to the

Financial Statements. For this reason, the directors continue to adopt the going concern basis in preparing

the financial statements.

On behalf of the board:

…………………………………………………...

Sandy Barblett

Non-Executive Chairman

17 April 2023

EAST STAR RESOURCES PLC

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 23

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

Opinion

We have audited the financial statements of East Star Resources PLC (the ‘parent company’) and its

subsidiaries (the ‘group’) for the period ended 31 December 2022 which comprise the Consolidated

statement of comprehensive income, the Consolidated and Parent company statements of financial

position, the Consolidated and Parent company statements of changes in equity, the Consolidated and

Parent company statements of cashflow and notes to the financial statements, including significant

accounting policies. The financial reporting framework that has been applied in their preparation is

applicable law and UK-adopted international accounting standards and as regards the parent company

financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

• the financial statements give a true and fair view of the state of the group’s and of the parent

company’s affairs as at 31 December 2022 and of the group’s loss for the period then ended;

• the group financial statements have been properly prepared in accordance with UK-adopted

international accounting standards;

• the parent company financial statements have been properly prepared in accordance with UK-

adopted international accounting standards and as applied in accordance with the provisions of the

Companies Act 2006; and

• the financial statements have been prepared in accordance with the requirements of the Companies

Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the Auditor’s

responsibilities for the audit of the financial statements section of our report. We are independent of the

group and parent company in accordance with the ethical requirements that are relevant to our audit of the

financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities,

and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe

that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other matter

Comparative information in the consolidated group financial statements is derived from the group's prior

period financial statements which were not audited.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of

accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’

assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of

accounting included reviewing the group’s and parent company’s forecast financial information which covers

a period of 12 months from when the financial statements are authorised for issue. Key Management

judgements and estimates have been challenged and agreed to supporting documentation, such as post

period-end bank statements to 31 March 2023, post period-end general ledgers, and post period-end RNS

announcements. We have further assessed the mathematical accuracy of the forecast and compared the

forecast to the performance of the group and the parent company post period end.

EAST STAR RESOURCES PLC

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 24

We also assessed the budgets in line in with our understanding of the entity and management plans. From

the detailed going concern review, we have concluded that the use of going concern basis of preparation is

reasonable.

Based on the work we have performed, we have not identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast significant doubt on the group’s or parent company's

ability to continue as a going concern for a period of at least twelve months from when the financial

statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in

the relevant sections of this report.

Our application of materiality

Entity

Overall

materiality

Performance

materiality

Clearly trivial

threshold

Basis for

materiality

Consolidated

financial

statements

£88,000

£61,600 £4,400 2% of gross assets

East Star Resources

Plc – Parent

company financial

statements

£87,000 (2021:

£34,000)

£60,900

(2021: £22,100)

£4,350 (2021:

£1,700)

2% of gross assets

The scope of our audit was influenced by our application of materiality. The quantitative and qualitative

thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit

procedures. The materiality applied to the consolidated financial statements was set at £88,000, with

performance materiality set at £61,600.

Materiality has been calculated as 2% of the benchmark of gross assets at the end of the period, which we

have determined, in our professional judgement, to be the principal benchmark within the financial

statements relevant to members of the group and the parent company in assessing financial performance.

A benchmark of 70% performance materiality was applied during our audit of the group as we believed this

would give sufficient coverage of significant and residual risks within the financial statements.

For each component in the scope of our group audit, we allocated a materiality that was less than our overall

group materiality. We agreed with the audit committee that we would report to them misstatements

identified during our audit above £4,400 at group level.

We applied the concept of materiality both in planning and performing the audit, and in evaluating the effect

of misstatement.

EAST STAR RESOURCES PLC

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 25

Our approach to the audit

In designing our audit, we determined materiality, as above, and assessed the risk of material misstatement

in the financial statements. We tailored the scope of our audit to ensure that we performed enough work to

be able to give an opinion on the financial statements as a whole, considering the structure of the group. We

looked at areas requiring the directors to make subjective judgements, for example in respect of carrying of

intangible assets, recoverability of investments and intragroup balances, the treatment of the acquisition of

discovery ventures in the period (identified as a key audit matter), treatment of share based payments and

selection of accounting policies, compliance with accounting policies and disclosure in accordance with UK-

adopted international accounting standards, the Companies Act 2006, Disclosure & Transparency Rules and

the Listing Rules, and the consideration of future events that are inherently uncertain. We also addressed

the risk of management override of internal controls, including evaluating whether there was evidence of

bias by the directors that represented a risk of material misstatements due to fraud. The parent company’s

key accounting function is based in the United Kingdom and in Kazakhstan for the subsidiaries. Our audit was

performed by our team in London with regular contact maintained with the group throughout including with

the client team in Kazakhstan.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the financial statements of the current period and include the most significant assessed risks of

material misstatement (whether or not due to fraud) we identified, including those which had the greatest

effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the

engagement team. These matters were addressed in the context of our audit of the financial statements as

a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter How our scope addressed this matter

Key Audit Matter 1

Carrying value of intangible

exploration and evaluation assets

(group & parent company) – see

note 11 in the financial statements

The group and parent company

hold material intangible assets

relating to capitalised costs in

respect of a number of mineral

exploration projects.

There is the risk that the assets are

overstated as a result of additions

being incorrectly capitalised

through not meeting the criteria of

IFRS 6 Exploration for and

Evaluation of Mineral Resources

and that indicators of impairment

exist as at 31 December 2022 which

Our work included:

• Discussing with management and evaluating the

development of the projects during the period, and

subsequent to the period end, for evidence of impairment

indicators in accordance with IFRS 6;

• Where applicable, obtaining and reviewing

correspondence and agreements (JV agreements, license

agreements) to ensure transactions are accounted for in

accordance with the terms therein;

• Confirming good title to the projects exist as at the period

end;

• Evaluating and challenging management’s impairment

assessment;

• Obtaining a sample of asset additions in the period,

considering the appropriateness for capitalisation

according to IFRS 6; and

EAST STAR RESOURCES PLC

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 26

would trigger the need for an

impairment assessment.

Particularly for early stage

exploration projects where the

calculation of the recoverable

amount via value in use calculations

is not possible, management’s

assessment of impairment under

IFRS 6 requires estimation and

judgement.

We consider this to be a Key Audit

Matter given the significant

judgements that are made within

the impairment assessment carried

out by management.

• Reviewing the disclosures in the financial statements,

including those relating to estimates and judgements used.

Based on the work performed, nothing has come to our attention

which would cause us to doubt management’s assessment that no

impairment should be recognised in relation to intangible assets as

at 31 December 2022.

We noted that management had incorrectly classified “Earn In

advances” paid against the Phoenix license as an intangible asset.

This was discussed with management and subsequently correctly

classified as a financial asset in the financial statements.

Key Audit Matter 2

Recoverability of investments in

subsidiaries and intragroup

balances (parent company) – see

note 14 and 16 in the financial

statements

Investments in subsidiaries are

significant assets in the parent

company's financial statements.

Their recoverability is directly linked

to the recoverability of intangible

assets in those

entities, and hence

there is a risk that these may not be

fully recoverable.

Our work in this area included:

• Confirming ownership of investments by reviewing

incorporation documents and register of companies in

Kazakhstan; and

• Considering the recoverability of investments making

reference to underlying net asset values and projects.

Based on the work performed, we consider the recoverability of

investments and loan balances to be reasonable.

Key Audit Matter 3

Reverse acquisition and LSE re-

admission - see note 24 in the

financial statements

On 10 January 2022, the parent

company completed the acquisition

of 100% of the share capital of

Discovery Ventures Kazakhstan

Limited. The enlarged group was re-

admitted to trading on the LSE on

the same date. The transaction has

been accounted for as a reverse

acquisition. The reverse acquisition

does not constitute a business

combination and is accounted for in

accordance with IFRS 2 Share-based

Our work in this area included:

• Reviewing the Admission Document and other applicable

documentation to ensure the terms of the reverse

acquisition are understood;

• Checking the basis for calculating the ‘deemed acquisition

cost’, comprising the consideration shares, together with

the fair value of the assets and liabilities acquired at the

date of acquisition within Discovery Ventures Kazakhstan;

• Re-performing the calculations; and

• Checking the presentation and disclosure of the reverse

acquisition in the financial statements against the

requirements of IFRS 2.

EAST STAR RESOURCES PLC

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 27

Payments and associated IFRIC

guidance.

There is a risk the share-based

payment charge arising from the

transaction has been incorrectly

calculated and that the reverse

acquisition has been incorrectly

presented and disclosed. We

consider this to be a Key Audit

Matter given the significant

judgements involved in the above.

Through the performance of the aforementioned procedures, we

found that that the reverse acquisition was correctly assessed as

falling outside of the scope of IFRS 3 Business Combinations. It was

also found that the acquisition was accounted for in accordance

with IFRS 2 with a share based payment charge being recognised

equal to the difference between the deemed cost of the

investment and the net assets of East Star Resources Plc at the

time of acquisition and a reverse acquisition reserve being

recognised.

The treatment is in line with our understanding of the

transactions and requirements of IFRS, no issues noted.

Other information

The other information comprises the information included in the annual report, other than the financial

statements and our auditor’s report thereon. The directors are responsible for the other information

contained within the annual report. Our opinion on the group and parent company financial statements does

not cover the other information and, except to the extent otherwise explicitly stated in our report, we do

not express any form of assurance conclusion thereon. Our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the financial

statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially

misstated. If we identify such material inconsistencies or apparent material misstatements, we are required

to determine whether this gives rise to a material misstatement in the financial statements themselves. If,

based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in

accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the financial year for which

the financial statements are prepared is consistent with the financial statements and those reports

have been prepared in accordance with applicable legal requirements;

• the information about internal control and risk management systems in relation to financial

reporting processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6

in the Disclosure Rules and Transparency Rules sourcebook made by the Financial Conduct Authority

(the FCA Rules), is consistent with the financial statements and has been prepared in accordance

with applicable legal requirements; and

• information about the company’s corporate governance code and practices and about its

administrative, management and supervisory bodies and their committees complies with rules 7.2.2,

7.2.3 and 7.2.7 of the FCA Rules.

EAST STAR RESOURCES PLC

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 28

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment

obtained in the course of the audit, we have not identified material misstatements in:

• the strategic report or the directors’ report; or

• the information about internal control and risk management systems in relation to financial

reporting processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6

of the FCA Rules.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006

requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for

our audit have not been received from branches not visited by us; or

• the parent company financial statements and the part of the directors’ remuneration report to be

audited are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit; or

• a corporate governance statement has not been prepared by the parent company.

Responsibilities of directors

As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the

preparation of the group and parent company financial statements and for being satisfied that they give a

true and fair view, and for such internal control as the directors determine is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the group and parent company financial statements, the directors are responsible for assessing

the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable,

matters related to going concern and using the going concern basis of accounting unless the directors either

intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative

but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes

our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted

in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can

arise from fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of these financial

statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of

irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,

including fraud is detailed below:

• We obtained an understanding of the group and parent company and the sector in which they

operate to identify laws and regulations that could reasonably be expected to have a direct effect on

EAST STAR RESOURCES PLC

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 29

the financial statements. We obtained our understanding in this regard through discussions with

management and industry research.

• We determined the principal laws and regulations relevant to the group and parent company in this

regard to be those arising from FCA Rules, Companies Act 2006, Anti- Money Laundering Act 2008,

Bribery Act 2010, UK-adopted international accounting standards and local laws and regulations in

Kazakhstan.

• We designed our audit procedures to ensure the audit team considered whether there were any

indications of non-compliance by the group and parent company with those laws and regulations.

These procedures included, but were not limited to:

o Enquiries of management;

o Review of board minutes; and

o Review of RNS publications.

o Review of legal expenses incurred in the period

• We also identified the risks of material misstatement of the financial statements due to fraud.

Aside from the non-rebuttable presumption of a risk of fraud arising from management override of

controls, the potential for management bias was identified in relation to the Carrying value of

intangible exploration and evaluation assets, Recoverability of investments in subsidiaries and

intragroup balances (parent company), Treatment of Reverse acquisition and Share based

payments .We addressed this by challenging the assumptions and judgements made by

management when auditing that significant accounting estimate.

• We addressed the risk of fraud arising from management override of controls by performing audit

procedures which included, but were not limited to: testing over all journals on a risk based

approach to identify any unusual transactions that could be indicative of fraud; reviewing

accounting estimates for evidence of bias; evaluating the business rationale of any significant

transactions that are unusual or outside the normal course of business; and reviewing transactions

through the bank statements to identify potentially large or unusual transactions that do not

appear to be in line with our understanding of business operations.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,

including those leading to a material misstatement in the financial statements or non-compliance with

regulation. This risk increases the more that compliance with a law or regulation is removed from the events

and transactions reflected in the financial statements, as we will be less likely to become aware of instances

of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error,

as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.

This description forms part of our

auditor’s report.

EAST STAR RESOURCES PLC

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR RESOURCES PLC

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 30

Other matters which we are required to address

We were appointed by Board of Directors on 7 January 2022 to audit the financial statements for the period

ending 30 November 2021 and subsequent financial periods. Our total uninterrupted period of engagement

is two years, covering the periods ending 30 November 2021 to 31 December 2022.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent

company and we remain independent of the group and the parent company in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s

members those matters we are required to state to them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the

company and the company's members as a body, for our audit work, for this report, or for the opinions we

have formed.

Eric Hindson (Senior Statutory Auditor) 15 Westferry Circus

For and on behalf of PKF Littlejohn LLP Canary Wharf

Statutory Auditor London E14 4HD

17 April 2023

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

AS AT 31 DECEMBER 2022

Page | 31

Audited

Period ended 31

December 2022

Unaudited

Year ended 31

December 2021

Note £'000 £'000

Continuing Operations

Revenue

- -

Administrative expenses 4 (1,131) (47)

Share based payments

(244)

Operating loss

(1,375) (47)

Finance expenses 5 - (39)

Reverse acquisition expense 24 (1,730)

Loss before taxation

(3,105) (86)

Taxation on loss of ordinary activities 8 - -

Loss for the year from continuing operations

(3,105) (86)

Other comprehensive income 9 70 (4)

Total comprehensive loss for the year

attributable to shareholders from continuing

operations

(3,035) (90)

Basic & dilutive earnings per share - pence 10 (1.72) (0.07)

The statement of comprehensive income has been prepared on the basis that all operations are continuing

operations.

The notes on pages 38 to 62 form an integral part of these consolidated financial statement

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

Page | 32

*Non-controlling interest of £33 exists with Joint Venture 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

£971,025 (2021: £421,212)

The financial statements were approved and authorised for issue by the board on 17 April 2023 and were signed on

its behalf by:

……………………………….. Director - Anthony Eastman

The notes on pages 38 to 62 form an integral part of these consolidated financial statements

Audited

As at 31 December

2022

Unaudited

As at 31 December

2021

Note

£'000 £'000

NON-CURRENT ASSETS

Exploration assets

2,268 -

Earn in advance (financial asset)

57 -

Property, plant and equipment

25 25

TOTAL NON-CURRENT ASSETS

2,350 25

CURRENT ASSETS

Cash and cash equivalents

1,456 17

Trade and other receivables

133 964

TOTAL CURRENT ASSETS

1,589 981

TOTAL ASSETS

3,939 1,006

CURRENT LIABILITIES

Trade and other payables

127 40

Loan notes

- 765

Borrowings

- 75

TOTAL CURRENT LIABILITIES

127 880

TOTAL LIABILITIES

127 880

NET ASSETS

3,812 126

EQUITY

Share capital

1,823 53

Share premium

5,891 132

Other equity reserve

- 31

Share capital to issue

3,750 -

Share based payment reserve

268 -

Foreign exchange reserve

66 (4)

Reverse acquisition reserve

(4,795) -

Retained earnings

(3,191) (86)

TOTAL EQUITY

3,812 126

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

Page | 33

Audited

As at 31 December

2022

Audited

As at 30 November

2021

Note £'000 £'000

NON-CURRENT ASSETS

Investment 14 6,268 -

Intercompany receivables 16 2,734

TOTAL NON-CURRENT ASSETS

9,002 -

CURRENT ASSETS

Cash and cash equivalents 15 1,407 1,248

Trade and other receivables 17 16 72

Loan notes 18 - 608

Other current assets

- 10

TOTAL CURRENT ASSETS

1,423 1,938

TOTAL ASSETS

10,425 1,938

CURRENT LIABILITIES

Trade and other payables 19 85 139

TOTAL CURRENT LIABILITIES

85 139

TOTAL LIABILITIES

85 139

NET ASSETS

10,340 1,799

EQUITY

Share capital 22 1,823 695

Share premium account 22 5,891 1,501

Share capital to issue 24 3,750 -

Share based payment reserve 23 268 24

Retained Earnings

(1,392) (421)

TOTAL EQUITY

10,340 1,799

The financial statements were approved and authorised for issue by the board on 17 April 2023 and were

signed on its behalf by:

………………………………..

Director – Anthony Eastman

The notes on pages 38 to 62 form an integral part of these consolidated financial statements

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AS AT 31 DECEMBER 2022

Page | 34

Capital

Premium

Equity

reserve

SBP

reserve

Foreign

exchange

reserve

Reverse

acquisition

reserve

Capital

issue

Retained

Earnings

Total

Equity

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Balance at 31 December

2020

45 - - - - - - - 45

Loss for period - - - - - - - (86) (86)

Other comprehensive

income

- - - - (4) - - - (4)

Total comprehensive

expense for year

(4) - - (86) (90)

Transactions with

owners in own capacity

Ordinary shares issued 8 132

- - - - - 140

Equity value of

convertible loan notes

- - 31 - - - - - 31

Transactions with owners

in own capacity

8 132 31

171

Balance at 31 December

2021

53 132 31

(4) -

(86) 126

Loss for period - - - - - - - (3,105) (3,105)

Other comprehensive

income

- - - - 70 - - - 70

Total comprehensive

income for year

- - - - 70 - - (3,105) (3,035)

Transactions with

owners in own capacity

Recognition of PLC equity

at acquisition date

695 1,501 - 24 - 1,257 - - 3,477

Remove share capital of

DVK

(53) (132) (31) - - 216 - - -

Issue of shares for

acquisition of subsidiary

504 2,014 - - - (6,268) 3,750 - -

Issue of shares for placing 624 2,494 - - - - - - 3,118

Share issue costs - (118) - - - - - - (118)

Broker warrants issued - - - 132 - - - - 132

Employee options issued - - - 112 - - - - 112

Transactions with owners

in own capacity

1,770 5,759 (31) 268 - (4,795) 3,750 - 6,721

Balance at 31 December

2022

1,823 5,891 - 268 66 (4,795) 3,750 (3,191) 3,812

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

COMPANY STATEMENT OF CHANGES IN EQUITY

AS AT 31 DECEMBER 2022

Page | 35

capital

premium

SBP

reserve

capital

to issue

Retained

earnings

Total

equity

£'000 £'000 £'000 £'000 £'000 £'000

Loss for period

- - - - (442) (442)

Other comprehensive income - - - - 21 21

Total comprehensive expense for

year

- - - - (421) (421)

Transactions with owners in own

capacity

Ordinary Shares issued in the period

695 1,588 - - - 2,283

Broker Warrants Issued

- - 24 - - 24

Share Issue Costs

- (87) - - - (87)

Transactions with owners in own

capacity

695 1,501 24 - - 2,220

Balance at 30 November 2021 695 1,501 24 - (421) 1,799

Loss for period - - - - (971) (971)

Other comprehensive income

- - - - - -

Total comprehensive income for year

- - - - (971) (971)

Transactions with owners in own

capacity

Ordinary Shares issued in the period

1,128 4,508 - - - 5,636

Performance shares on acquisition

- - - 3,750 - 3,750

Advisor warrants issued

- - 132 - - 132

Employee options issued

- - 112 - - 112

Share Issue Costs

- (118) - - - (118)

Transactions with owners in own

capacity

1,128 4,390 244 3,750 - 9,512

Balance at 31 December 2022 1,823 5,891 268 3,750 (1,392) 10,340

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

CONSOLIDATED STATEMENT OF CASHFLOWS

FOR PERIOD ENDED 31 DECEMBER 2022

Page | 36

During the period there were the following material non-cash transactions:

- 50.35 million shares as consideration on the acquisition of Discovery Ventures Kazakhstan

- Settlement of East star convertible loan notes through issue of equity

- Settlement of Ilwella convertible loan notes through issue of equity

The notes on pages 38 to 62 form an integral part of these consolidated financial statements

Audited

Period ended

31 December

2022

Unaudited

Year ended

31 December

2021

Note £'000 £'000

Cash flow from operating activities

Loss for the financial year

(3,105) (90)

Adjustments for:

Share based payments

244 -

Reverse acquisition expense 1,730 -

Depreciation & amortization

9 -

Interest charge on convertible loan note

- 39

Settlement of fees through issue of equity

18 -

Foreign exchange movements

70 (4)

Changes in working capital:

Decrease / (increase) in trade and other receivables

830 (922)

Increase in trade and other payables

87 629

Net cash outflow from operating activities (117) (348)

Cash flows from investing activities

Purchase of property, plant and equipment

(9) (25)

Investment in exploration and financial assets

(1,449) -

Cash acquired on acquisition of subsidiary

22 -

Net cash flow from investing activities (1,436) (25)

Cash flows from financing activities

Proceeds from issue of shares

3,100 138

Share issue costs

(118) -

Issue of convertible loan notes

- 249

Net cash flow from financing activities 2,982 387

Net increase in cash and cash equivalents 1,429 14

Cash and cash equivalents at beginning of the period

16 9

Foreign exchange effect on cash balance

11 (7)

Cash and cash equivalents at end of the period 15 1,456 16

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

COMPANY STATEMENT OF CASHFLOWS

FOR THE 13 MONTH PERIOD ENDED 31 DECEMBER 2022

Page | 37

Audited

13 months ended

31 December 2022

Audited

Period ended

30 November 2021

Note £’000 £’000

Cash flow from operating activities

Loss for the financial year

(971) (421)

Adjustments for:

Share based payments

244 24

Settlement of fees through issue of equity

18 (21)

Revaluation adjustments to fair value

- (77)

Changes in working capital:

Decrease / (increase) in trade and other

receivables

66 (81)

(Decrease) / increase in trade and other payables

(53) 139

Net cash outflow from operating activities (696) (437)

Cash flows from investing activities

Purchase of convertible loan notes

- (511)

Loans to subsidiaries

(2,127) -

Net cash flow from investing activities (2,127) (511)

Cash flows from financing activities

Proceeds from Issue of Shares

3,100 2,283

Share Issue Costs

(118) (87)

Net cash flow from financing activities 2,982 2,196

Net increase in cash and cash equivalents 159 1,248

Cash and cash equivalents at beginning of the

period

15 1,248 -

Cash and cash equivalents at end of the period 15 1,407 1,248

During the period there were the following material non-cash transactions:

- 50.35 million shares as consideration on the acquisition of Discovery Ventures Kazakhstan

- Settlement of East star convertible loan notes through issue of equity

The notes on pages 38 to 62 form an integral part of these consolidated financial statements

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 38

1. General Information

East Star Resources Plc 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 is Eccleston Yards, 25 Eccleston Place, London SW1W 9NF, United

Kingdom.

The principal activity of the Company is to seek suitable investment opportunities primarily in the natural

resources sector.

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 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”).

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 2022 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.

During the period the Company changed its accounting reference date from 30

November to 31

December

to align itself with its newly acquired subsidiary. Consequently, the current year covers a 13 month period,

whereas the prior year is a 12-month period and so is not entirely comparable year on year. This change in

periods relates only to the parent company financial statements. Consolidated financial statements are

prepared to 31 December for 2021 and 2022.

2.2 Going concern

The financial statements have been prepared on a going concern basis, which assumes that the Group will

continue to meet its liabilities as they fall due.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 39

In January 2022 the Company successfully completed a Reverse Takeover (“RTO”) whilst simultaneously

completing a placing that allowed the Group to raise £3.1m gross. Post transaction the Group had in excess

of £3.5m in cash (£1.456m at period end) and consequently exhibits a strong balance sheet position.

On acquisition of Discovery Ventures Kazakhstan Limited the Group acquired the rights to multiple mining

licenses within Kazakhstan. The forecast capital commitments of the Group have been analysed carefully in

relation to expected spends on each one of the mining licenses and the board is comfortable that the working

capital commitments can be fully satisfied by the current cash position. The major capital commitments of

DVK and its subsidiaries can be seen in Note 29.

These considerations combined with other mitigating factors (Directors are prepared to forego salaries if

necessary to support the Company) that the directors have a reasonable expectation that the Group has

adequate resources to continue in operational existence for the foreseeable future. Accordingly, they

continue to adopt the going concern basis in preparing the financial statements.

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 consolidatio

Reverse acquisition accounting treatment

During the period East Star Resources Plc acquired the entire share capital of Discovery Ventures Kazakhstan

Ltd. As East Star Resources (“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.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 40

As a result of this the consolidated financial statements have been prepared to reflect the consolidated

results of the Group from acquisition date on 10 January 2022. The consolidated period is the 12 month

period ending 31 December 2022 and incorporates results from DVK for the entire period and results from

East Star from acquisition date on 10 January 2022. Comparatives have been prepared to reflect the results

of the accounting acquirer for the year ending 31 December 2021.

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.

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 24.

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:

(iii) 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

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 41

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 OCI 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.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 42

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

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.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 43

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 note 23.

The expense charged to the Statement of Comprehensive Income during the year in relation to share based

payments was £244,283.

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 Convertible loan notes, borrowings and borrowing costs

Convertible loan notes classified as financial liabilities and borrowings are recognised initially at fair value,

net of transaction costs. After initial recognition, loans are subsequently carried at amortised cost. Any

difference between the proceeds (net of transaction costs) and the redemption value is recognised in the

statement of comprehensive income over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are capitalised as a prepayment for liquidity services and

amortised over the period of the loan to which it relates.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement

of the liability or at least 12 months after the end of the rep

orting period.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 44

2.16 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.

2.17 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.

2.18 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 14 & 16

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. 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 11

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. The Directors concluded that there was no impairment as at 31

December 2022.

Share based payments – Note 23

The Group issues options and warrants to its employees, directors, investors and advisors. These are valued

in accordance with IFRS 2 “Share-based payments”. 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.

Valuation of contingent consideration payable – Note 24

The Group has recorded a contingent consideration liability of £3.75m as at 31 December 2022 relating to

the reverse acquisition of DVK. An estimate must be made when determining the value of contingent

consideration to be recognised at each balance sheet date. Changes in assumptions could cause an increase,

or reduction, in the amount of contingent consideration payable, with a resulting charge or credit in the

consolidated income statement.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 45

The contingent consideration (in the form of performance shares) is based upon the achievement of

performance milestones relating to confirmation of a mineral resource on one of the Licences of at least one

million ounces of gold equivalent at an average grade of at least two grammes per tonne of gold equivalent

as defined by an independent professional firm appointed by the Group to either JORC Code or NI 43-101-

classification standards. The Directors believe that there is a moderate probability that these conditions will

be met however not in the 12 month period so it has been classified as a non-current liability in the statement

of financial position.

2.19 New standards and interpretations not yet adopted

At the date of approval of these financial statements, the following standards and interpretations which have

not been applied in these financial statements were in issue but not yet effective (and in some cases have

not yet been adopted by the UK):

Standard	Impact on initial application	Effective date
Annual Improvements	2018-2020 Cycle	1 January 2023
IAS 1	Classification of liabilities Current	1 January 2023
IAS 8	Accounting estimates	1 January 2023
IAS 12	Deferred tax arising from a single
	transaction
		1 January 2023

The effect of these amended Standards and Interpretations which are in issue but not yet mandatorily

effective is not expected to be material.

The Directors are evaluating the impact that these standards may have on the financial statements of Group.

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 2022 (2021:£0).

	United Kingdom

		Kazakhstan

			Total
	£'000	£'000

			£'000
Administrative expenses
	(675)

		(177)

			(852)
Share based payments
	(244)

		-

			(244)
VAT write off
	-

		(279)
			(279)
Operating loss from continued
operations per reportable segment
	(919)	(456)	(1,375)

Reportable segment assets
	1,423

		2,516

			3,939
Reportable segment liabilities
	(85)

		(42)

			(127)
Total	1,338

		2,474

			3,812

Segment assets and liabilities are allocated based on geographical location.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 46

4. Administrative expenses

Administrative expenses for the Group can further be broken down as per below:

	Period ended 31
	December 2022
	£'000

		Year ended 31
		December 2021
		£'000
Professional fees	(340)

		-
Directors fees	(335)

		(3)
Salaries & wages	(89)

		(31)
Insurance	(25)

		-
Travel & entertainment	(33)

		-
Foreign exchange	83

		-
VAT write off	(279)	-
Other administrative expenses	(113)

		(13)
Total	(1,131)

		(47)

5. Finance expenses

Finance income consists of the revaluation of loan notes to fair value:

	Period ended
	31 December
	2022
	£'000
		Year ended 31
		December
		2021
		£'000

Interest expenses	-	(39)
	-	(39)

6. Employees

The average number of persons employed by the Group (including directors) during the period ended 31

December 2022 was:

	31 December
	2022
	No of
	employees
		31 December
		2021
		No of
		employees
Management	4	3
Non-management	7	-
	11	3

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 47

Aggregate payroll costs of these person were as follows:

	Period ended
	31 December
	2022
	£'000
		Year ended 31
		December
		2021
		£'000

Management	335	3
Non-management	108	31
	443	34

The highest paid director received total remuneration of £308,000 (2021: £14,000)

7. Auditor’s Remuneration

	Period ended
	31 December
	2022
	£'000
		Year ended 31
		December
		2021
		£'000

Fees payable for the audit of the Group’s financial statements	45	35
Fees payable for review of the Group’s interim financial
statements
	3	-
Fees payable for other services – Reporting accountant services
in respect to reverse acquisition
	-	15
	48	50

8. Taxation

	Period ended
	31 December
	2022
	£’000

		Year ended
		31 December
		2021
		£’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	(3,105)	(421)
Tax credit at the weighted standard average
rate of corporation tax in the UK of 19% and
Kazakhstan of 20%

	(606)

		(80)
Adjustment for items disallowable for tax	375	57
Tax losses for which no deferred tax is
recognised

	231

		23
Tax expense recognised in accounts	-	-

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 48

The Group has total carried forward losses of £1,250k. The taxed value of the unrecognised deferred tax

asset is £238k and these losses do not expire. No deferred tax assets in respect of tax losses have not been

recognised in the accounts because there is currently insufficient evidence of the timing of suitable future

taxable profits against which they can be recovered.

On 15 March 2023 it was announced that from 1 April 2023 the UK corporation tax rate would increase from

19% to 25% for profits over £250,000. Profits made under the £250,000 threshold will continue to be taxed

at a rate of 19%. The Group will continue to calculate the effective tax rate at 19%.

9. 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:

	Period ended
	31 December
	2022
	£'000
		Year ended 31
		December
		2021
		£'000
Foreign currency movements	70	(4)
	70	(4)

10. 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
	31 December
	2022
		Year ended
		31 December
		2021
Loss attributable to shareholders of East Star Resources Plc - £’000	(3,105)
		(86)
Weighted number of ordinary shares in issue	180,843,292	123,231,836
Basic & dilutive earnings per share from continuing operations –
pence
	(1.72)
		(0.07)

The weighted average number of shares is adjusted for the impact of the reverse acquisition as follows:

Prior to the reverse takeover, the number of shares is based on DVK, adjusted using the share exchange ratio

arising on the reverse takeover; and from the date of the reverse takeover, the number of share is based on

the Company. The prior year number of shares is also adjusted using the share exchange ratio.

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. See note 23 for

further details.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 49

11. Exploration assets

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Exploration & evaluation assets	2,268	-	-	-

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-Lli belt, East Kostanay region and

Rudny Altai belt. The majority of investment in the assets has been across the Chu-Lli and Rudny held licenses

to date.

12. Earn in advance (financial asset)

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Earn in advance (financial asset)	57	-	-	-

The asset held jointly with Phoenix Mining Ltd is classified below as a financial asset as it does not currently

satisfy all the requirements of IFRS 6 to be capitalised as an exploration asset

13. Property, plant & equipment

Group

	Plant and
	equipment
	£’000


		Furniture
		and
		fittings
		£’000
			Computer
			equipment
			£’000
				Total
				£’000
Cost
Opening balance – 1 January 2021	-	-	-	-
Additions	26	1	3	30
At 31 December 2021	26	1	3	30

Depreciation
Opening balance – 1 January 2021	-	-	-	-
Charge for the period	(5)	-	-	(5)
At 31 December 2021	(5)	-	-	(5)

Net book value 31 December 2021	21	1	3	25

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 50

	Plant and
	equipment
	£’000


		Furniture
		and
		fittings
		£’000
			Computer
			equipment
			£’000
				Total
				£’000
Cost
Opening balance – 1 January 2022	26	1	3	30
Additions	3	1	4	8
At 31 December 2022	29	2	7	38

Depreciation
Opening balance – 1 January 2022	(5)	-	-	(5)
Charge for the period	(7)	-	(1)	(8)
At 31 December 2022	(12)	-	(1)	(13)

Net book value 31 December 2021	21	1	3	25
Net book value 31 December 2022	17	2	6	25

14. Investment in subsidiaries

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Investment in DVK	-	-	6,268	-
	-	-	6,268

On 10 January 2022 the Company completed the successful acquisition of DVK through a reverse takeover.

The Company issued 50,350,000 shares at £0.05 to the shareholders of DVK in order to acquire the entire

share capital of DVK. As part of the investment the Company has also recognised a contingent liability to

issue 75,000,000 shares at £0.05 on the satisfaction of specific performance milestones. The transaction was

treated as a reverse acquisition as detailed in note 24.

Name	Business Activity
		Country of
		Incorporation	Registered Address
				Percentage
				Holding
Discovery Ventures
Kazakhstan Limited
	Mineral
	exploration
		Kazakhstan
			Block C4.3, Office 140, Z05T3F5, Nur
			Sultan, Kazakhstan
				100%
Chu Lli Resources
ltd*
	Mineral
	exploration
		Kazakhstan
			Mangilik Yel 55/22, Block C4.3, Office
			140, Z05T3F5, Nur Sultan, Kazakhstan
				80%
Rudny Resources
ltd*
	Mineral
	exploration
		Kazakhstan
			Mangilik Yel 55/22, Block C4.3, Office
			140, Z05T3F5, Nur Sultan, Kazakhstan
				80%

*Subsidiaries held indirectly through Discovery Ventures Kazakhstan

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 51

15. Cash and cash equivalents

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Cash at bank	1,456	17	1,407	1,248

16. Inter-company receivable

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Inter-company loan – DVK	-	-	2,734	-
	-	-	2,734	-

17. Trade and other receivables

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
VAT receivable	15	-	6	72
Prepayments	24	2	-	-
Receivable
from joint venture
	-	876	-	-
Other debtors	94	86	10	-
	133	964	16	72

Receivable from Tau-Ken Samruk (“TKS”) relates to exploration costs spent on the joint venture specifically

relating to Licence 1067EL. The JV agreement with TKS allows for reimbursement of exploration funds

which were reimbursed in the 2022 year.

18. Loan notes

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Convertible loan note	-	-	-	608
	-	-	-	608

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 52

As part of the binding term sheet entered into on 31 October 2021 the Company subscribed for convertible

loan notes in Discovery Ventures Kazakhstan (DVK). On completion of the acquisition of DVK on 10 January

2022 the notes converted to an inter-company loan with the Company being the lender and DVK the

borrower.

19. Trade and other payables

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Trade payables	54	11	32	90
Accruals	54	-	45	49
Other payables	19	29	8	-
	127	40	85	139

20. Loan notes

	Group		Company
	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Convertible loan note – Illwella
1
	-	243	-	-
Convertible loan note – East Star
2
	-	522	-	-
	-	765	-	-

On 14 January 2021 DVK issued a convertible note to Ilwella Pty Ltd. This note was settled as part of the

acquisition by East Star Resources through the issue of 5,350,000 shares at a value of £0.05 (see note 24).

On 31 October 2021 DVK issued 4 convertible notes to East Star Resources. On completion of the acquisition

of DVK on 10 January 2022 the notes converted to an inter-company loan with the Company being the lender

and DVK the borrower.

21. Borrowings

	Group		Company

	As at
	31 December
	2022
	£’000
		As at
		31 December
		2021
		£’000
			As at
			31 December
			2022
			£’000
				As at
				30 November
				2021
				£’000
Loan – East Star Resources	-	75	-	-
	-	75	-	-

In December 2021 the Company agreed to a short term, interest free loan with DVK to service its working

capital requirements until the acquisition. This loan was repaid in the first quarter of 2022.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 53

22. Share capital and share premium

Group

	Ordinary
	Shares
		Share
		Capital
			Share
			Premium	Total
	#	£’000	£’000	£’000
At 1 January 2021	60,000	45	-	45
Issue of ordinary shares	10,590	8	132	140
At 31 December 2021	70,590	53	132	185
Transfer of capital to reverse acquisition
reserve
1
	(70,590)	(53)	(132)	(185)
Share capital of the Company at
acquisition
2

	69,540,164	695	1,501	2,196
Issue of shares for acquisition of
subsidiary
3

	50,350,000	504	2,014	2,518
Issue of ordinary shares
4
	62,360,000	624	2,494	3,118
Share issue costs	-	-	(118)	(118)
At 31 December 2022	182,250,164	1,823	5,891	7,714

On 10 January 2022 the Group eliminated the share capital of DVK as part of the reverse acquisition

On 10 January 2022 the Group brought to account the pre-existing share capital of East Star Resources as

part of the reverse acquisition

On 10 January 2022 the Company issued 50,350,000 shares at £0.05 to the shareholders of DVK as

consideration for the acquisition.

On 10 January 2022 the Company issued 62,360,000 shares at £0.05 as part of a share placement

accompanying the readmission to the London Stock Exchange.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 54

Company

	Ordinary
	Shares
		Share
		Capital
			Share
			Premium	Total
	#	£’000	£’000	£’000
Issue of ordinary shares on incorporation	100,000	1	-	1
Issue of ordinary shares	5,900,000	59	-	59
Issue of ordinary shares	23,850,217	238	-	238
Issue of ordinary shares	39,689,947	397	1,588	1,985
Share issue costs	-	-	(87)	(87)
At 30 November 2021	69,540,154	695	1,501	2,196
Issue of shares for acquisition of
subsidiary
1

	50,350,000	504	2,014	2,518
Issue of ordinary shares
2
	62,360,000	624	2,494	3,118
Share issue costs	-	-	(118)	-
At 31 December 2022	182,250,164	1,823	5,891	7,714

On 10 January 2022 the Company issued 50,350,000 shares at £0.05 to the shareholders of DVK as

consideration for the acquisition.

On 10 January 2022 the Company issued 62,360,000 shares at £0.05 as part of a share placement

accompanying the readmission to the London Stock Exchange.

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. All ordinary shares have equal voting rights and rank pari passu for

the distribution of dividends and repayment of capital.

23. Share based payment reserves

	Group
	£’000
		Company
		£’000
Opening balance – 1 December 2021
	-	24
Acquired equity as part of acquisition	24	-
Advisor warrants issued
1
	132	132
Employee options issued
2
	112	112
As at 31 December 2022	268	268

On 10 January 2022, 5,467,505 warrants were issued to advisors and have been fair valued in accordance

with IFRS 2 at the fair value of the services received. This amount is attributable to the cost of re-admission

to the LSE and therefore has been accounted for in the Share based payments reserve.

On 10 January 2022, 2,146,000 warrants were issued to the Company’s broker Peterhouse Capital and

have been fair valued in accordance with IFRS 2 at the fair value of the services received. This amount is

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 55

attributable to the cost of re-admission to the LSE and therefore has been accounted for in the share based

payments reserve.

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.

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 in the period:

Warrants

Grant date

	Number

		Share price
		£
			Exercise price
			£
				Volatility
				%
					RF Rate
					%
						Technique

10/01/2022	5,467,505	0.05	0.05	50	3.1	Black Scholes
10/01/2022	2,146,000	0.05	0.05	50	3.1	Black Scholes

Options

Grant date	Number
		Share price
		£
			Exercise price
			£
				Volatility %	RF Rate %	Technique
13/12/2021	3,750,000	0.05	0.05	50	3.1	Black Scholes
13/12/2021	3,750,000	0.05	0.05	50	3.1	Monte Carlo
13/12/2021	3,750,000	0.05	0.05	50	3.1	Monte Carlo

Warrants

As at 31 December 2022

	Weighted average
	exercise price
		Number of
		warrants
Brought forward at 1 November 2021	5p	7,200,000
Granted in period	5p	7,613,505
Vested in period	5p	7,613,505
Outstanding at 31 December 2022	5p	14,813,505
Exercisable at 31 December 2022	5p	14,813,505

The weighted average time to expiry of the warrants as at 31 December 2022 is 2.03 years.

Options

	As at 31 December 2022

	Weighted average
	exercise price	Number of options
Brought forward at 1 November 2021	5p	-
Granted in period	5p	11,250,000
Vested in period	5p	3,750,000
Outstanding at 31 December 2022	5p	11,250,000
Exercisable at 31 December 2022	5p	3,750,000

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 56

The weighted average time to expiry of the options as at 31 December 2022 is 3.95 years.

The option vesting conditions of the 11,250,000 employee options are listed below:

Vesting
Event
	Trigger for Vesting	Number of options vested on date of
		vesting
1
	Six months from the date of RTO
	admission
		One third of the total options issued
2
	Share price traded at £0.075 for at
	least 5 consecutive days
		One third of the total options issued
3
	Share price traded at £0.10 for at least
	5 consecutive days
		All remaining unvested options not
		having vested following vesting event 1
		& 2

24. Reverse acquisition

On 10 January 2022, the Company acquired, 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

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 57

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 (£3,477,008) and the fair value of the net assets assumed above of

£1,747,053 resulted in £1,729,955 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)

Recognition of pre-acquisition equity of East Star as at 10 January 2022.

DVK had equity at the date of acquisition of £216,050. As these financial statements present the capital

structure of the legal parent entity, the equity of DVK is eliminated.

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 issue of 5.35m shares at £0.05

(£267,500)

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.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 58

25. 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

$USD
	31 Dec 2022
	$’000

Cash and cash equivalents	49
Trade and other receivables	443
Trade and other payables	(33)

	459

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 59

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

party being unable to

service its obligations.

No financial assets have indicators of impairment.

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 2022, the Group was financed by cash raised through equity funding.

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

2022 on the basis of their earliest possible contractual maturity.

	Total
	£’000
		Within 2
		months
		£’000
			Within 2-6
			months
			£’000
At 31 Dec 2022
Trade payables	54	54	-
Payroll Accruals	19	19	-

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 60

26. Financial assets and liabilities

	Financial assets/liabilities at fair
	value through profit or loss
			Financial assets/liabilities at
			amortised cost

Group – Year ended 31 Dec	2022	2021	2022	2021

	£'000	£'000	£'000	£'000
Trade and other receivables
1

	-	-	109	964
Cash and cash equivalents
	-	-	1,456	17
Loan notes
	-	-	-	(765)
Borrowings
	-	-	-	(75)
Trade and other payables
2

	-	-	(73)	(40)

	-	-	1,492	101

	Financial assets/liabilities at fair
	value through profit or loss
			Financial assets/liabilities at
			amortised cost

Company – Period ended 31 Dec	2022	2021	2022	2021
	£'000	£'000	£'000	£'000
Trade and other receivables
1

	-	-	15	71
Loan notes
	-	-	-	608
Cash and cash equivalents
	-	-	1,407	1,248
Trade and other payables
2

	-	-	(40)	(90)

	-	-	1,382	1,837

Trade and other receivables excludes prepayments

Trade and other payables excludes accruals

27. Related Party Transactions

Directors remuneration

During the period Directors received the following remuneration:

	Base salary
	£’000
		Bonus
		£’000
			Total
			£’000
Sandy Barblett	34	-	34
Anthony Eastman	34	-	34
Alexander Walker*	153	75	228
Charles Wood	8	-	8
David Minchin	31	-	31
	260	75	335

*During the period a bonus was paid to Alex Walker of $100,000 USD relating to milestones achieved prior

to the acquisition of DVK on 10 January 2022. The East Star board of Directors agreed to pay this bonus post

the transaction occurring and has been recognised in the accounts of DVK.

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 61

	Warrants
	#

		Warrants
		£’000

			Options
			#

				Options
				£’000
Sandy Barblett	-	-	250,000	2
Anthony Eastman	1,399,681	15	-	-
Alexander Walker	-	-	8,000,000	80
Charles Wood	2,536,922	27	-	-
David Minchin	-	-	1,500,000	15
	3,936,603	42	9,750,000	97

Provision of services

During the year, £95,643 was paid to Orana Corporate of which both Anthony Eastman and Charles Wood

were directors of East Star and Orana during the period. The breakdown of fees is detailed below:

- Corporate finance fees: £40,000

- Accounting and company secretary fees: £31,413

- Commission on fundraise: £24,230

Other than these there were no other related party transactions.

28. Ultimate Controlling Party

As at 31 December 2022, there was no ultimate controlling party of the Group.

29. Capital Commitments

The Group is committed to the following minimum expenditure across various licenses within 12 months

from 31 December 2022:

License area	License	Owner
			Annual minimal
			expenditures on exploration
			£
Apmintas	774-EL	Chu-lii Resources Limited	101,161
Dalny	670-EL	Chu-lii Resources Limited	47,552
Novo 2	847-EL	Rudny Resources Limited	128,601
Novo 1	914-EL	Rudny Resources Limited	132,478
RA 1	1799-EL	Discovery Ventures Kazakhstan Limited	29,197
RA 2	1794-EL	Discovery Ventures Kazakhstan Limited	10,904
RA 3	1795-EL	Discovery Ventures Kazakhstan Limited	16,887
Talyryk 1	1796-EL	Discovery Ventures Kazakhstan Limited	43,992
Talyryk	1067-EL	Phoenix Mining Ltd (DVK farming in)	12,369

EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2022

Page | 62

30. Contingent assets

VAT recoverable

The subsidiaries of East Star Resources had accrued an amount of £279,174 relating to VAT incurred on

expenditure on the various mining licenses to 31 December 2022. As the Group is currently not generating

revenue these amounts can not 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.

31. Contingent liabilities

There were no contingent liabilities over the Group as at 31 December 2022.

32. Events Subsequent to period end

Long term incentive plan

On 1 March 2023 the remuneration committee approved the adoption of a long term incentive plan ("LTIP").

On the recommendation of the Remuneration Committee, the Company has granted an aggregate of

4,794,686 options over new ordinary shares in the Company to employees and non-executive directors of

the Company (the "Options") to be approved by shareholders at the next Annual General Meeting.

There were no other events subsequent to period end requiring disclosure.