Company Registration No. 13025608 (England and Wales)
EAST STAR RESOURCES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
COMPANY INFORMATION
Directors Mr Alexander (“Sandy”) Barblett - Non-Executive
Chairman
Mr Alexander Walker – Chief Executive Officer and
Executive Director
Mr Christopher van Wijk – Technical Director
Mr David Minchin – Non-Executive Director
Mr Anthony Eastman – Non-Executive Director
Company Secretary Orana Corporate LLP
Company number 13025608
Registered office & place of operations Eccleston Yards
25 Eccleston Place
London SW1W 9NF
Independent Auditors Kreston Reeves LLP
2
nd
Floor
168 Shoreditch High St
London E1 6RA
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 – COMPANY NUMBER 13025608
CONTENTS
Page | 3
Page
Chairman’s statement 4
Key personnel 8
Strategic report 10
Directors’ report 14
Directors’ remuneration report 15
Corporate governance report 18
Independent auditors’ report 25
Consolidated statement of comprehensive income 37
Consolidated statement of financial position 38
Company statement of financial position 39
Consolidated statement of changes in equity 40
Company statement of changes in equity 41
Consolidated statement of cashflows 42
Company statement of cashflows 43
Notes to the financial statements 44
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 4
Introduction
I am pleased to present the annual financial results for East Star Resources PLC (the "Company" or "East
Star") for the period ended 31 December 2023.
At the beginning of the year, we had idenfied what we believed to be a substanal copper VMS deposit. Our
teams undertook extensive fieldwork to corroborate historical data before drilling in the summer. By the end
of the year, we had confirmed the Verkhuba Copper Deposit, which is located close to processing
infrastructure, and its potenal for open pit development. East Star is now well and truly a copper focused
company at ame of a global and dynamic shi in aenon towards a metal which is essenal for
electrificaon.
Review of Operations
Copper
VMS - Rudny Altai Belt
In January 2023, East Star announced the identification of a substantial copper-zinc-lead deposit located
within the 100% owned RA3 licence, centrally located in the world-class Rudny Altai VMS belt. The newly
identified polymetallic deposit known as the Verkhuba Copper Deposit is within the greater Verkhuba Ore
District on East Star’s licences which includes other high priority HEM anomalies.
East Star commissioned leading resource advisors AMC Consultants to determine an independent JORC-
compliant Exploration Target for the Verkhuba Deposit. This work resulted in March 2023 in the generation
of an Exploration Target of 19-23 Mt at 1.0-1.4% Cu and 1.0-1.4% Zn (1.4-1.9% CuEq), defined by 97 drill
holes comprising 42,178 m of historical diamond core drilling, reviewed by the East Star technical team over
the preceding 12 months.
In July 2023, we began to prepare the site for our own drilling. Our field teams undertook an extensive
geological traverse over the project area, mapping more than 70 historical collar locations and copper
outcrops.
During August 2023, we commenced diamond core drilling at the Verkhuba Copper Deposit. This initial
programme was aimed, amongst other things, at twinning existing boreholes with identified strong copper
mineralisation.
By November 2023, following assay results, East Star was able to confirm the presence of the massive and
disseminated sulphides containing high-grade copper We with 62 samples contained grades above the 1%
Cu and 1% Zn detection limits including:
VU_23_DD_001
• 2.9m @ 2.08% Cu from 19.4m,
• 15.0m @ 1.56% CuEq from 27.4m, and
• 6.2m @ 1.11% CuEq from 56.4m
VU_23_DD_002
• 11.8m @ 1.41% CuEq from 171.0m, and
• 10.3m @ 1.77% CuEq from 186.8m
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 5
These initial results demonstrated that the Verkhuba Copper Deposit contained relatively shallow high-grade
copper and provided further credibility to the historical data.
Following further review of the data, East Star confirmed in December 2023 the potential for open pit
resource development. We were delighted that we could definitively demonstrate that the Verkhuba Copper
Deposit has multiple copper-rich ore grade intervals at mineable depths. As announced, the grades were
relatively consistent with the 1.4 - 1.8% copper grade range derived from the 5-6Mt open-pit resource
calculated from the independent resource model.
Rare Earths
East Kostanay
In April 2023, we announced assay results from initial drilling in November 2022 to test the Talairyk project
for Rare Earth Element ("REE") concentrations. The results demonstrated high grade intersections across the
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.
Eight samples were sent for five-stage sequential leach test work to provide an initial indication as to the
leachability of the REEs from the clays. Sequential leach testing clearly demonstrated that a majority of REEs
were liberated from primary minerals during the weathering process and were now associated with other
mineral phases. Through this work, our understanding of the minerology and potential for economic
extraction of REEs from the Talairyk deposit improved; however, given our portfolio focus on copper and the
near-term development opportunity, we took the decision to rationalise the East Kostanay licences,
relinquishing the Talairyk 1 area and commencing the process of ceasing the joint venture with Phoenix
Mining on the Talairyk area.
Gold
Chu-Ili Orogenic Gold Belt
In February 2023, we announced results from diamond core drilling undertaken in 2022 on the Apmintas
Licence. The results demonstrated gold bearing systems in all three target areas. Eshkilitau II showed
potential for an extensive mineralised system with a strike of more than 1 km along a fault zone. High-grade
intersections at Southern Shabdar (32.15 g/t Au) and Eshkilitau (14.01 g/t Au) demonstrated the existence
of high-grade zones within the mineralised systems while gold occurrences mapped over 10 km of the
Eshkilitau trend demonstrated the exploration upside within the region.
In light of our copper focus, we have rationalised the Chu-Ili orogenic licence areas to concentrate on the
extensively mineralised Eshkilitau fault within the Apmintas Licence, while commencing the process to
relinquish the Dalny Licence and the less prospective areas of the Apmintas Licence.
Corporate Activities
In October 2023, we announced the Company had raised gross proceeds of £546,000 by way of a placing of
36,400,000 new ordinary shares at 1.5 pence per share. Alongside other existing and new investors, our Chief
Executive Officer and largest shareholder both participated. The funds raised have been put towards
advancing the potentially game-changing copper deposit at Verkhuba as well as preparing a number of other
targets for drill-ready status this season such as Talovskoye. We are grateful for those investors who
supported East Star and look forward to your Company soon being underpinned by a JORC Inferred copper
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 6
resource with near-term development potential and exploration upside across three copper exploration
strategies.
Post Year-End Events
Copper
Grant from BHP Xplor for Copper Porphyry Exploration - Balkash-Ili Magmatic Arc
We were delighted to announce in January 2023 that we had been selected to receive a grant of up to
US$500,000 under the 2024 BHP Xplor programme to initiate a copper porphyry exploration strategy in
Kazakhstan. We are extremely proud that BHP has chosen to work with East Star and provide non-dilutive
grant funding to look for major new copper porphyry deposits in the region. Porphyry deposits are the
primary deposit style for copper production in the world and Kazakhstan is host to several exceptional but
significantly underexplored regions that contain world-class copper porphyry mines.
In February 2024, we were awarded our first copper porphyry exploration licence – a 79 km
2
tenement with
a 3km long silica lithocap located ~80km north of the large Aktogay open pit copper mine (~2.5Bt @ 0.39%
Cu).
In March 2024, we were awarded a second copper porphyry exploration licence – a 121 km
2
tenement with
a 6km long and 3km wide silica lithocap, located ~150km north of the large Kounrad open pit copper mine
and smelter (~800Mt @ 0.62% Cu and up to 0.76g/t Au). The licence shows historical soil anomalism
indicating its potential prospectivity for a copper porphyry deposit.
Sediment-Hosted Copper Exploration JV with Getech
In February 2024, we announced that we had entered into a joint venture agreement with Getech Group PLC
(AIM: GTC) ("Getech"), a world-leading locator of subsurface resources, to explore for sediment-hosted
copper deposits in Kazakhstan. The JV will be conducted through a wholly owned East Star subsidiary
established specifically for this purpose. At no upfront cost to East Star, this play-type adds a third geological
strand to East Star's copper exploration strategy in addition to VMS and porphyry. We look forward to
working with Getech to apply its unparallelled database and modern geoscientific expertise to underexplored
basins in Kazakhstan.
Verkhuba Copper Deposit Update
In March 2024, we were pleased to announce that we have instructed independent experts AMC Consultants
to produce a maiden JORC Inferred Mineral Resource Estimate for the Verkhuba Copper Deposit, the
publication of which is due imminently.
In April 2024 we announced that because of interest in the Verkhuba Copper Deposit having been received
from several companies, we have initiated a formal process including the opening of a data room for a
potential joint venture, farm-out, or sale of the deposit. The process is expected to be finalised in June and
although there can be no certainty that a transaction will be concluded, the Company is confident of receiving
multiple commercial offers.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 7
Director Appointment
Alongside the BHP Xplor grant, we were pleased to announce the appointment of Chris van Wijk initially as
a Non-Executive Director and subsequently in February 2024 as the Technical Director of the Company. Chris
is an experienced geologist who specialises in project evaluation and project generation and developed the
porphyry exploration strategy with East Star. He brings a wealth of relevant experience, including base metal
and gold exploration in Africa, Europe, the Americas, and Australia as well as joint venture management and
project evaluation for major mining companies including BHP, IAMGOLD, First Quantum Minerals and
Fortescue Metals Group. Chris’ technical expertise is a valuable addition to our Board and exploration
portfolio. He brings outstanding geological pedigree, particularly with regard to sediment-hosted copper and
porphyry exploration which, when paired with East Star's proven ability to efficiently and effectively execute
exploration in Kazakhstan, will take the Company to the next level.
Key Financial Indicators
• Cash and cash equivalents at Year end were £635,000
• Loss before taxation for the Year was £1,528,000
• The Group held net assets at Year end of £2,813,000
Summary
I would like to congratulate Alex Walker and his team in Kazakhstan. While markets have been tough and
other battery metals have been under pressure, they have skilfully skewed the portfolio towards a potentially
highly rewarding copper strategy, with near-term development potential at Verkhuba and exploration upside
backed, in part, by a BHP Xplor grant.
This is an extraordinary yet largely unnoticed position to be in. We are now on the cusp of delivering a maiden
JORC Inferred resource before drilling again this season as a precursor to conducng an economic study to
demonstrate the low-cost development potenal of copper which has now entered a significant structural
deficit that is expected to connue for many years to come.
Forthcoming drilling will focus on further resource definition to convert the open pit area at the Verkhuba
Copper Deposit to JORC Indicated status as well as further testing the continuity of the underground ore
bodies to assess development potential. A very exciting field season is soon to get underway.
………………………………….
Sandy Barblett
Non-Executive Chairman
17 April 2024
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
KEY PERSONNNEL
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 8
Key personnel of the Group are comprised of the Directors:
Alexander Walker, Age 39 - 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 57 - Non-Executive 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 49 – 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.
Christopher van Wijk, Age 42 – Technical Director
Chris van Wijk is an experienced geologist, who specialises in project evaluation and project generation. Mr.
van Wijk brings to his role in East Star a wealth of relevant experience including base metal and gold
exploration in Africa, Europe, the Americas and Australia as well as joint venture management and project
evaluation for major mining companies including BHP, IAMGOLD, First Quantum Minerals and Fortescue
Metals Group. Mr. van Wijk has managed various successful exploration projects including the Scoping Study
at Mount Nimba in Guinea for BHP Billiton and the resource drilling at First Quantum’s Sentinel Project in
Zambia. Mr. van Wijk has a Master of Science in Ore Deposit Geology from the University of Western
Australia and is a member of the AUSIMM.
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
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
KEY PERSONNNEL
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 9
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 was the founding 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. Mr Minchin is currently Chairman of AIM listed helium exploration
company, Helix Exploration PLC.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 10
The Directors present their strategic report for the period ended 31 December 2023 for the Company and
all 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. Further,
international exploration companies such as RIO Tinto and First Quantum have reiterated their commitment
to exploration in Kazakhstan and BHP have started exploring in Kazakhstan via their Xplor Programme.
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 or of
Kazakhstan being the subject to any Western sanctions.
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 – COMPANY NUMBER 13025608
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 11
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.
We also note though that East Star is a founding member and its CEO, Alex Walker is a founding Director of
the Kazakhstan Chamber of Mines, which was established, largely to assist industry in ensuring productive
and open dialogue with the Government on laws effecting the sub soil. Notable members of the Chamber
include, RIO Tinto, Fortescue Metals Group, KAZ Minerals, Eramet and a number of other local and
international, public and private explorers and developers.
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 and private parties. 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. The Company has an in-house
environmental manager specifically for the purpose of maintaining and monitoring it’s legal and moral
obligations on these matters.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 12
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.
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. The Company
has proactively developed more depth of expertise to build redundancy. The Company now has a Technical
Director and has recently hired a very well qualified East Region exploration manager with a view to
becoming Exploration Manager or Country Manager in due course.
Future Developments
Future developments are detailed in the Chairman’s Statement.
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 in the Chairman’s statement.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 13
Gender analysis
A split of our employees and directors by gender during the year is shown below:
Male Female
Directors 5 -
Employees 2 5
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. Before work can commence on an awarded exploration licence, the total amount of
emissions and the total amount of work (drilling meters, sampling etc) is approved by the Government of
Kazakhstan. As part of its operations, each licence is required to report quarterly to on the environmental
impact, including emissions of the operations during that quarter. The Company manages these reports to
ensure approved emissions are not exceeded.
The Group, however 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.
In addition, certain staff members undertake training in Kazakhstan for workplace safety where certificates
are awarded for their completion.
……………………………
Sandy Barblett
Non-Executive Chairman
17 April 2024
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 14
The Directors present their report and financial statements for the year ended 31 December 2023.
Principal activities
In the 2023 year the Group was primarily concerned with the exploration and exploitation of its 8 mineral
licenses held through its various Kazakhstan based subsidiaries.
Results
The Group recorded a loss for the year ended 31 December 2023 before taxation of approx. £1,528,000
(2022: approx. £3,105,000), which included an impairment charge on exploration assets of approx.
£1,058,000 (2022: nil). The Company recorded a loss before taxation for the year ended 31 December 2023
of £488,178 (2022: £971,025).
Directors
The following directors have held office during the period and to the date of these financial statements:
Sandy Barblett
Anthony Eastman
Alex Walker
David Minchin
Christopher van Wijk (appointed 22 January 2024)
Details of the Directors’ holding of Ordinary Shares and Warrants are set out in the Director’s Remuneration
Report.
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 21.
Share Capital
Details of the Company’s issued share capital, together with details of the movements since incorporation,
are shown in Note 18. 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.
Substantial Shareholdings
At 17 April 2024, the Company had been informed of the following substantial interests over 3% of the issued
share capital of the Company:
* Executive Director of East Star Resources Plc
Number of Shares Percentage Holding
Ilwella Pty Ltd 36,452,313 16.7
Alexander Casey Walker* 21,279,201 9.7
TS Capital Limited 18,339,317 8.4
Reedbuck Nominees Pty Ltd 9,762,261 4.5
Rainer Heinz Ellmies 9,762,261 4.5
Oberon Investments Limited 9,380,000 4.3
Sebastian Marr 6,606,071 3.0
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
DIRECTORS’ REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 15
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.
The 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 a long-term incentive plan 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.
During the year each Director was paid at a rate per annum as follows:
Alex Walker £12,000 per annum
Sandy Barblett £23,000 per annum
Anthony Eastman £23,000 per annum
David Minchin £24,000 per annum
*Effective from 1 December 2023 all Non-Executive Directors apart from David Minchin voluntarily agreed
to take a 50% reduction in salary and defer the remaining portion until June 2024 when salaries will be
reviewed by the Board. David Minchin has agreed to reduce his salary in line with the other Directors from 1
March 2024.
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 2023 was:
*Approximately £47,000 of CEO Alexander Walker’s salary included here has been capitalised as attributable to
exploration assets in Kazakhstan
Salary
(UK)
£’000
Salary
(Kazakhstan)
£’000
Bonus
£’000
Warrants
£’000
Options
£’000
Total
£’000
Sandy Barblett 22 - - - 1 23
Anthony Eastman 22 - - - - 22
Alexander Walker* 11 129 - - 23 163
David Minchin 24 - - - 4 28
79 129 - - 28 236
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
DIRECTORS’ REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 16
Payments to past Directors
There are no payments to Directors from previous periods.
Bonus and incentive plans
On 28 March 2023 the Company implemented 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”)
CEO remuneration has reduced by 48% in the recent year. This has resulted partly from the lack of bonus
payments in the current year versus the previous period. The Board (including the CEO) also agreed to
suspend salaries from December 2023 to consolidate the cash position of the Group.
Directors’ interests in shares
The Group has no Director shareholder requirements.
The beneficial interest of the Directors in the Ordinary Share Capital of the Company at 17 April 2024 were:
Ordinary
Shares
#
Percentage of issued
share capital
17 April 2024
%
Sandy Barblett 550,000 0.25
Anthony Eastman 500,000 0.23
Alexander Walker 21,279,201 9.73
David Minchin 2,200,000 1.01
24,529,201 11.22
2022 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 – COMPANY NUMBER 13025608
DIRECTORS’ REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 17
The Directors held the following warrants at 17 April 2024:
Director
31 December
2022
Granted during
the period
Lapsed during the
period
17 April 2024
Sandy Barblett 150,000 - (150,000) -
Anthony Eastman 1,799,681 - (400,000) 1,399,681
David Minchin 2,000,000 - (2,000,000) -
Alexander Walker - 1,254,679 - 1,254,679
3,949,681 1,254,679 (2,550,000) 2,654,360
The Directors held the following options as at 17 April 2024:
Director
31 December
2022
Granted during
the period
Lapsed during
the period 17 April 2024
Sandy Barblett 250,000 289,855 - 539,855
Alexander Walker 8,000,000 2,898,511 - 10,898,511
Anthony Eastman - 289,855 - 289,855
David Minchin 1,500,000 289,855 - 1,789,855
9,750,000 3,768,076 - 13,518,076
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 only been listed for a relatively short period
of time. 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 second year the Group had
a CEO. The Directors will review the inclusion of this table for future reports.
Matters covered in the Strategic report
Items required under Schedule 7 to be disclosed in the directors' report are set out in the strategic report in
accordance with s.414C(11) CA 2006.
…………………………………………….
Sandy Barblett
Non-Executive Chairman
17 April 2024
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 18
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 Board has reviewed the recent changes to the code and have assessed their potential
impact on the management of the Group.
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 purpose, strategy and business model which promote long term value for shareholders;
2. Promote a corporate culture that is based on ethical values and behaviours;
3. Seek to understand and meet shareholder needs and expectations;
4. Take into account wider stakeholder interests, including social and environmental responsibilities, and
their implications for long term success;
5. Embed effective risk management, considering both internal controls and assurance activities,
considering both opportunities and threats, throughout the organisation;
6. Establish and maintain the board as a well-functioning balanced team led by the Chair;
7. Maintain appropriate governance structures and ensure that individually and collectively the directors
have the necessary up-to-date experience, skills and capabilities;
8. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement;
9. Establish a remuneration policy which is supportive of long-term value creation and the Company’s
purpose strategy and culture; and
10. Communicate how the Group is governed and is performing by maintaining a dialogue with
shareholders and other key 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
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
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 19
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
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 Three
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 participate in hearing the CEO who provides
regular updates on social media platforms.
Principle Four
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.
Principle Five
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. The Group has 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 Six
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 2 Executives. There are no mandatory hours for Directors to be
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 20
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 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 Seven
Appropriate governance structures
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
The Group audit committee comprises 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
The Group committee comprises 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 members of the committee shall serve for an initial term of three years from re-admission. 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.
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.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 21
Principle Eight
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 Nine
Remuneration policies
The Board is committed to ensuring that the creation of value for shareholders aligns with the interests of
executives and employees of the Group. Implementation during the year of a long-term incentive plan helps
to align these interests and the Board clearly communicates to employees how remuneration is linked to
the performance of the Group.
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.
Climate change risk - (TCFD)
The Board considers the impact that the Group has on the environment and aims to conduct its operations
in a responsible and sustainable way as it relates to climate change. The Kazakhstan government ensures
that Discovery Ventures Kazakhstan Limited (“DVK”) completes environmental surveys 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 also aware that as operations expand their energy consumption will increase along side.
Currently the Board do not consider the energy consumed in relation to drilling to be at a level where it needs
to put in place mitigators.
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.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 22
In line with the requirements of the Financial Conduct Authority’s Listing Rule 14.3.27R, and for the above
reasons, we note that we have not made the disclosures, in respect of the financial year ended 31 December
2023, in line with the recommendations and recommended disclosures of the TCFD.
External Auditor
During the period the Audit Committee decided to change auditors from PKF Littlejohn to Kreston Reeves
LLP. 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.
Statement of directors’ responsibilities
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with
applicable laws and regulations.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 23
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 18 and 19 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 14. 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.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 24
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.
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 2024
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 25
Opinion
We have audited the financial statements of East Star Resources PLC (the ‘parent company’) and its
subsidiary (the ‘Group’) for the year ended 31 December 2023 which comprise the consolidated statement
of comprehensive income, consolidated and company statements of financial position, consolidated and
company statements of changes in equity, consolidated and company statements of cashflows and notes to
the financial statements, including a summary of significant Group accounting policies. The financial
reporting framework that has been applied in their preparation of the group financial statements is
applicable law and UK adopted international accounting standards as well as with the provisions of the
Companies Act 2006.
In our opinion, the financial statements:
• 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 2023 and of the Group’s loss for the year 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 United
Kingdom Generally Accepted Accounting Practice; 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 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 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.
Material uncertainty relating to going concern
We draw attention to note 2.2 in the financial statements, which discloses that the Group is in a exploratory
pre-revenue phase and that its ability to meet liabilities as they fall due at present is based on the ability of
the Group to continue to raise funds via debt and equity funding. This situation will remain the same for the
foreseeable future given the timescales involved in moving from the mining exploration stage into full
production stage. Additionally there is of course the inherent uncertainty over the long-term technical
feasibility and economic viability of such projects at this early exploration stage. These events or conditions,
along with other matters set forth in note 2.2, indicate that a material uncertainty exists that may cast
significant doubt on the Group’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 26
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. This conclusion is reached based on
the following procedures, we have:
• Evaluated the design and implementation of key internal controls over management’s assessment of
going concern, considering in detail the rationale provided and whether this was consistent with our
understanding as well as audit evidence obtained; and
• Evaluated the management’s going concern assessment for completeness of and reasonableness of
assumptions as well as ensuring that this is in line with the disclosures included in the financial
statements; and
• Considered the key financial data of the group and company at year end and assessed the financial
headroom available by reference to ongoing cash commitments over a period of at least 12 months from
the date of the approval of these financial statements; and
• Specifically considered the willingness and ability of shareholders to continue to provide equity finance to
the business based on historic track record of support, capital raises after the balance sheet date and
further audit evidence obtained from shareholders; and
• Specifically considered the ability of the Group to free up cash flows via other options, including external
finance partnerships, should this be required, to assess the likelihood and quantum of funds that could
be made available to the business; and
• Considered the accuracy of spending forecasts produced by management by reference to key
assumptions made as well as the historical accuracy of forecasts previously prepared by management,
taking into account variances that arose; and
• Considered the general trends and results of exploration activity to date in order to assess for audit
evidence that the long-term technical feasibility and economic viability of the various mining projects
might be in doubt.
Given our conclusions reached that there is a material uncertainty with respect to going concern this same
material uncertainty therefore also extends to related balances included within these financial statements.
Specifically, over the ultimate recoverability of investments in subsidiary of £6.3m (2022: £6.3m) and
intercompany receivables of £3.7m (2022: £2.7m) included in the company statement of financial position.
As well as the value of exploration assets of £2.1m (2022: £2.3m) in the consolidated statement of financial
position. This is as the realisation of these assets is based on the ultimate viability of developing a
commercially successful mining business.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report. However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the Group’s and Parent Company’s ability to continue as a going
concern.
Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term
viability and that part of the Corporate Governance Statement relating to the Group’s and Parent Company’s
compliance with the provisions of the UK Corporate Governance Code specified for our review.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 27
Based on the work undertaken as part of our audit, we have concluded that each of the following elements
of the Corporate Governance Statement is materially consistent with the financial statements or
our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on note 2.2;
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment
covers and why the period is appropriate set out on page 4;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set
out on pages 10 to 12;
• The section of the Annual Report that describes the review of effectiveness of risk management and
internal control systems set out on page 10 and
• The section describing the work of the Risk and Audit Committee set out on page 20.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements. In particular, we looked at where the directors made subjective judgements, for
example in respect of significant accounting estimates that involved making assumptions and considering
future events that are inherently uncertain. As in all of our audits 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 misstatement due to fraud.
Our application of materiality
Group financial statements Parent company financial
statements
Materiality £77,200 (2022: Per predecessor
auditor – £88,000)
£63,000 (2022: Per
predecessor auditor -
£87,000)
Basis for determining materiality ~2.5% of Gross assets ~2.5% of Gross assets -
Capped below group
materiality
Rationale for benchmark applied Gross assets - the group's
principal activity of that of a
mining exploration and
development vehicle. To this
end the business is highly asset
focused and has no operational
revenues at this stage. Therefore
a benchmark for materiality of
Gross assets - the company
primarily operating as a
holding company for the
group and has historically had
no material income.
Therefore a benchmark based
on the gross assets of the
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 28
the gross assets of the group is
considered to be appropriate.
Considering the group's listed
status we also considered loss
after tax and EBITDA, this usually
being a key benchmark for
investors. However, given the
business is pre-revenue there is
limited interest in these
performance indicators at
present for stakeholders in the
business.
company is considered to be
appropriate.
Performance materiality £57,900 (2022: Per predecessor
auditor - £61,600)
£47,250 (2022: Per
predecessor auditor -
£60,900)
Basis for determining
performance materiality
75% of materiality 75% of materiality – Capped
below group materiality
Rationale for performance
materiality applied
On the basis of our risk
assessments, together with our
assessment of the Group’s
overall control environment, our
judgement was that
performance materiality was
75% of our planning materiality.
In assessing the appropriate
level, we consider the nature,
the number and impact of the
audit differences identified in
the previous year’s audit.
On the basis of our risk
assessments, together with
our assessment of the Group’s
overall control environment,
our judgement was that
performance materiality was
75% of our planning
materiality. In assessing the
appropriate level, we consider
the nature, the number and
impact of the audit
differences identified in the
previous year’s audit.
Triviality threshold £3,510 (2022: Per the
predecessor auditor - £4,400)
£3,150 (2022: Per
predecessor auditor - £4,350)
Basis for determining triviality
threshold
5% of materiality 5% of materiality - Capped
below group materiality
We reported all audit differences found in excess of our triviality threshold to the directors and the
management board.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 29
For each Group company within the scope of our Group audit, we allocated a materiality that is less than our
overall Group materiality. The materiality allocated across each Group company was capped at the Group
materiality. The scope of our audit was influenced by our application of materiality as we set certain
quantitative thresholds for performance materiality and use these thresholds as a consideration tool to help
to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
We determined component materiality for the parent company to be capped at below group materiality.
This was also the case for group subsidiaries registered outside of the UK.. Performance materiality was set
in the range of 75% of each individual materiality.
Coverage overview
Group net assets
Totals at 31 December
2023:
£2,812,000
Full statutory audit
procedures (Kreston
Reeves)
£2,812,000 (100%)
Limited procedures £Nil (0%)
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion
on the financial statements as a whole, taking into account the structure of the Group and the parent
company, the accounting processes and controls, and the industry in which they operate.
Our scoping considerations for the Group audit were based both on financial information and risk. As noted
above limited assurance audit work – which is to say the audit of balances and transactions material at a
group level – was only applied in respect of a small element of the group. The below table summarises for
the parent company, and its subsidiaries, in terms of the level of assurance gained:
Group component Level of assurance
Discovery Ventures Kazakhstan Limited Statutory audit procedures (applying a
component materiality capped below group
materiality)
Chu Ili Resources Ltd Statutory audit procedures (applying a
component materiality capped below group
materiality)
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 30
Rudny Resources Ltd Statutory audit procedures (applying a
component materiality capped below group
materiality)
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) that 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. This is not a complete list of all risks identified by our audit.
Valuation/recoverability of investments (£6.3m) & receivables in subsidiary companies (£3.7m)
Significance and nature of key risk:
The monetary value of both the
investment figure and the trade
receivables balance with subsidiary
company (Discovery Ventures
Kazakhstan Limited) are highly
material. The recovery risk associated
with both figures is also raised due to
the subsidiary not currently being
revenue generating and having net
liabilities at the year end.
How our audit addressed the key risk:
We confirmed that the subsidiary company, including the
other subsidiary companies owned by this subsidiary, do not
have sufficient net assets in order to repay the receivable
balance
We obtained management’s assessment over recoverability
and audited the key assumptions included in this, these
being:
That the rights to explore the related reserve areas have
been secured via mining licenses. That continued exploration
of these areas is budgeted as part of the minimum spending
commitments as per each mining license. That early results
to date are positive and that there is no evidence to suggest
that the ultimate commercial viability of the business is
threatened at this stage. Initial technical reports produced
suggest the estimated net present value of returns are far in
excess of the value of these assets.
We have considered each assumption made and agree that
these are consistent with audit evidence available. We
interrogated the technical report, including assessing the
preparer of this to ensure it could be relied upon. We
performed stress testing over the estimates involved in
order to conclude that there is substantial headroom
between net present value and carrying value of related
assets.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 31
Key observations communicated to the Risk and Audit Committee
We have no concerns over the existence and monetary accuracy of these assets in the financial
statements based on audit evidence available. However, as noted in our going concern section, given
that there is a material uncertainty over the business as a whole there is therefore also a material
uncertainty over the recoverability of these balances. Given that the recoverability strategy is
ultimately dependent on a commercially successful mining operation.
Valuation/classification of exploration assets (£2.1m)
Significance and nature of key risk:
The exploration assets have the
potential to be materially overstated
due to the incorrect capitalisation of
exploration expenses as a result of not
meeting the IFRS 6 recognition criteria.
Additionally, impairment indicators
may exist which would trigger the
need for an impairment assessment
resulting in the assets being reduced in
value.
The assessment around whether IFRS
6 criteria is being met as well as the
overall impairment assessment
requires a significant level of
estimation and judgement from
management. As such this is
considered a key audit risk.
How our audit addressed the key risk:
We have considered the stage of all the current projects
being undertaken by the business and considered the
evidence available to determine if IFRS 6 is the appropriate
standard to consider for the accounting treatment of costs
incurred on these projects.
After determining that the IFRS 6 standard is the most
appropriate accounting basis we selected a sample of
additions for the current year. Supporting audit evidence
was obtained for each allowing us to determine if
capitalisation of the expenses as in accordance with IFRS 6.
We further determined whether the value and date of
capitalisation was appropriate.
We obtained management’s assessment over exploration
assets and audited the key assumptions which are as listed
in the ‘Valuation/recoverability of investments & receivables
in subsidiary companies’ audit risk assessment.
We have considered each assumption made and agree that
these are consistent with audit evidence available. We
scrutinised the technical report, including assessing the
preparer of this to ensure it could be relied upon. We
performed stress testing over the estimates involved in
order to conclude that there is substantial headroom
between net present value and carrying value of related
assets.
Key observations communicated to the Risk and Audit Committee
We have no concerns over the material accuracy of these assets in the financial statements based on
audit evidence available. However, as noted in our going concern section, given that there is a material
uncertainty over the business as a whole there is therefore also a material uncertainty over the
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 32
recoverability of these balances. Given that the recoverability strategy is dependent largely on a
commercially successful mining operation.
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 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.
Our opinion on the Remuneration Report
Kreston Reeves has audited the Annual remuneration report set out on pages 15 to 17 of the Annual Report
for the year ended 31 December 2023. The directors of the Company are responsible for the preparation and
presentation of the Remuneration Report in accordance with the Companies Act 2006. Kreston Reeves’
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with International Accounting Standards. In Kreston Reeves’ opinion, the Remuneration Report
of the Group for the year, complies with the requirements of the Companies Act 2006.
Our consideration of climate change related risks
The financial impacts on the Group of climate change and the transition to a low carbon economy (“climate
change”) were considered in our audit where they have the potential to directly or indirectly impact key
judgements and estimates within the financial statements.
The Group continues to develop its assessment of the potential impacts of climate change. Climate risks have
the potential to materially impact the key judgements and estimates within the financial report. Our audit
considered those risks that could be material to the key judgement and estimates in the assessment of the
carrying value of non-current assets and closure and rehabilitation provisions.
The key judgements and estimates included in the financial statements incorporate actions and strategies,
to the extent they have been approved and can be reliably estimated in accordance with the Group’s
accounting policies. Accordingly, our audit procedures address the audit risks presented to the Group from
climate change risk.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 33
Opinions on other matters prescribed by 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
• the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the Group and parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the directors’ report.
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 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
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement (set out on page 22), the directors are
responsible for the preparation of the 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 financial statements, the directors are responsible for assessing the Group’s and 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
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.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 34
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, and through discussion with the directors and other
management (as required by auditing standards), we identified that the principal risks of non-compliance
with laws and regulations related to health and safety, anti-bribery and employment law. We considered
the extent to which non-compliance might have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact on the preparation of the financial
statements such as the Companies Act 2006. We communicated identified laws and regulations throughout
our team and remained alert to any indications of non-compliance throughout the audit. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements
(including the risk of override of controls), and determined that the principal risks were related to: posting
inappropriate journal entries to reduce expenditure, management bias in accounting estimates and
judgemental areas of the financial statements such as the valuation of exploration assets. Audit procedures
performed by the group engagement team and component auditors included:
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group
and determined that the most significant are those that relate to the reporting framework and the
relevant mining regulations and tax compliance regulations in the jurisdictions in which the Group
operates. In addition, we concluded that there are certain significant laws and regulations that may have
an effect on the determination of the amounts and disclosures in the financial statements, mainly relating
to minimum spending commitments, health and safety, employee matters, bribery and corruption
practices and environmental requirements; and
• Detailed discussions were held with management to identify any known or suspected instances of non-
compliance with laws and regulations; and
• Identifying and assessing the design effectiveness of controls that management has in place to prevent
and detect fraud; and
• Challenging assumptions and judgements made by management in its significant accounting estimates.
Specifically, in considering the appropriateness to capitalise expenditure as Exploration assets under IFRS
6; and
• Performing analytical procedures to identify any unusual or unexpected relationships, including related
party transactions, that may indicate risks of material misstatement due to fraud; and
• Confirmation of related parties with management, and review of transactions throughout the period to
identify any previously undisclosed transactions with related parties outside the normal course of
business; and
• Reading minutes of meetings of those charged with governance, and reviewing correspondence with
relevant regulatory authorities; and
• Performing integrity testing to verify the legitimacy of banking records obtained from management; and
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 35
• Review of significant and unusual transactions and evaluation of the underlying financial rationale
supporting the transactions; and
• Identifying and testing journal entries, in particular any manual entries made at the year end for financial
statement preparation.
• We ensured our audit team had appropriate industry experience of the mining sector. Our audit planning
included considering external market factors, for example geopolitical risk, the potential impact of
climate change and other major trends in the industry.
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.
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s or the parent company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group or the parent company to cease to continue
as a going concern.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EAST STAR
RESOURCES PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 36
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
Other matters which we are required to address
We were appointed by the audit committee in the year to audit the financial statements.
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 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.
Anne Dwyer BSc (Hons) FCA (Senior Statutory Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
Date:
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 37
Audited
Year ended 31
December 2023
Audited
Period ended 31
December 2022
Note £'000 £'000
Continuing Operations
Revenue
- -
Administrative expenses
4
(710) (1,131)
Share based payments
19
(39) (244)
Impairment charge
10 & 11
(1,058) -
Other income
279 -
Operating loss
(1,528) (1,375)
Reverse acquisition expense
- (1,730)
Loss before taxation
(1,528) (3,105)
Taxation on loss or ordinary activities
7
- -
Loss for the year from continuing operations
(1,528) (3,105)
Other comprehensive income
8
(35) 70
Total comprehensive loss for the year
attributable to shareholders from continuing
operations
(1,563) (3,035)
Basic & dilutive earnings per share - pence
9
(0.81) (1.72)
The statement of comprehensive income has been prepared on the basis that all operations are continuing
operations.
The notes form an integral part of these consolidated financial statements
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
Page | 38
Audited
As at 31 December
2023
Audited
As at 31 December
2022
Note
£'000 £'000
NON-CURRENT ASSETS
Exploration assets
10
2,149 2,268
Earn in advance (financial asset)
11
- 57
Property, plant and equipment
12
17 25
TOTAL NON-CURRENT ASSETS
2,166 2,350
CURRENT ASSETS
Cash and cash equivalents
14
635 1,456
Trade and other receivables
16
127 133
TOTAL CURRENT ASSETS
762 1,589
TOTAL ASSETS
2,928 3,939
CURRENT LIABILITIES
Trade and other payables
17
115 127
TOTAL CURRENT LIABILITIES
115 127
TOTAL LIABILITIES
115 127
NET ASSETS
2,813 3,812
EQUITY
Share capital
18
2,187 1,823
Share premium
18
6,052 5,891
Share capital to issue
20
3,750 3,750
Share based payments reserve
19
307 268
Foreign exchange reserve
31 66
Reverse acquisition reserve
20
(4,795) (4,795)
Retained earnings
(4,719) (3,191)
TOTAL EQUITY
2,813 3,812
*Non-controlling interest of £29 exists with business partner (Tau Ken Samruk) not stated above
The Company has taken advantage of section 408 of the Companies Act 2006 and consequently a profit and loss account
has not been presented for the Company. The Company’s total comprehensive loss for the financial period was
£488,178 (2022: £971,025)
The financial statements were approved and authorised for issue by the board on 17 April 2024 and were signed on
its behalf by:
……………………………….. Non-Executive Chairman – Sandy Barblett
The notes form an integral part of these consolidated financial statements
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
Page | 39
The financial statements were approved and authorised for issue by the board on 17 April 2024 and were
signed on its behalf by:
………………………………..
Non-Executive Chairman – Sandy Barblett
The notes form an integral part of these consolidated financial statement
Audited
As at 31 December
2023
Audited
As at 31 December
2022
Note
£'000 £'000
NON-CURRENT ASSETS
Investment in subsidiary
13
6,268 6,268
Intercompany receivables
15
3,674 2,734
TOTAL NON-CURRENT ASSETS
9,942 9,002
CURRENT ASSETS
Cash and cash equivalents
14
509 1,407
Trade and other receivables
16
47 16
TOTAL CURRENT ASSETS
556 1,423
TOTAL ASSETS
10,498 10,425
CURRENT LIABILITIES
Trade and other payables
17
82 85
TOTAL CURRENT LIABILITIES
82 85
TOTAL LIABILITIES
82 85
NET ASSETS
10,416 10,340
EQUITY
Share capital
18
2,187 1,823
Share premium
18
6,052 5,891
Share capital to issue
20
3,750 3,750
Share based payments reserve
19
307 268
Retained Earnings
(1,880) (1,392)
TOTAL EQUITY
10,416 10,340
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2023
Page | 40
Share
Capital
Share
Premium
Equity
reserve
SBP
reserve
Foreign
exchange
reserve
Reverse
acquisition
reserve
Share
Capital
to be
issued
Retained
Earnings
Total
Equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
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
Loss for period - - - - - - - (1,528) (1,528)
Other comprehensive income - - - - (35) - - - (35)
Total comprehensive income for year - - - - (35) - - (1,528) (1,563)
Transactions with owners in own capacity
Ordinary Shares issued in the period 364 182 - - - - - - 546
Share Issue Costs - (21) - - - - - - (21)
Share based payments - - - 39 - - - - 39
Transactions with owners in own capacity 364 161 - 39 - - - - 564
Balance at 31 December 2023 2,187 6,052 - 307 31 (4,795) 3,750 (4,719) 2,813
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
COMPANY STATEMENT OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2023
Page | 41
Share
capital
Share
premium
SBP
reserve
Share
capital
to
issue
Retained
earnings
Total
equity
£'000 £'000 £'000 £'000 £'000 £'000
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
Loss for period - - - - (488) (488)
Other comprehensive income
- - - - - -
Total comprehensive income for year
- - - - (488) (488)
Transactions with owners in own capacity
Ordinary Shares issued in the period
364 182 - - - 546
Share Issue Costs
- (21) - - - (21)
Share based payments - -
39 - - 39
Transactions with owners in own capacity
364 161 39 - - 564
Balance at 31 December 2023 2,187 6,052 307 3,750 (1,880) 10,416
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 42
Year ended
31 December 2023
Period ended
31 December 2022
Note £'000 £'000
Cash flow from operating activities
Loss before taxation for the financial year
(1,528) (3,105)
Adjustments for:
Share based payments
19
39 244
Reverse acquisition share-based payment
expense
- 1,730
Settlement of fees through issue of equity
- 18
Impairment charge on exploration assets*
887 -
Foreign exchange movements
97 70
Depreciation & amortization
10 9
Changes in working capital:
(Increase) / decrease in trade and other
receivables
6 830
Increase / (decrease) in trade and other payables
(12) 87
Net cash outflow from operating activities
(501) (117)
Cash flows from investing activities
Investment in exploration assets
(888) (1,449)
Purchase of property, plant & equipment
(2) (9)
Cash acquired on acquisition of subsidiary
- 22
Net cash flow from investing activities
(890) (1,436)
Cash flows from financing activities
Proceeds from Issue of Shares
18
546 3,100
Share Issue Costs
18
(21) (118)
Net cash flow from financing activities
525 2,982
Net increase in cash and cash equivalents
(866) 1,429
Cash and cash equivalents at beginning of the
period
1,456 16
Foreign exchange effect on cash balance
45 11
Cash and cash equivalents at end of the period
14
635 1,456
* Impairment charge is adjusted to reflect the true cash impact in the period and hence will not reconcile directly to the value in the
Statement of Comprehensive Income.
The notes form an integral part of these consolidated financial statements
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
COMPANY STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 43
Year ended
31 December 2023
Period ended
31 December 2022
Note £'000 £'000
Cash flow from operating activities
Loss for the financial year
(488) (971)
Adjustments for:
Share based payments
19
39 244
Settlement of fees through issue of equity
18
Foreign exchange movements
(1)
-
Changes in working capital:
Decrease / (increase) in trade and other receivables
(31) 66
(Decrease) in trade and other payables
(2) (53)
Net cash outflow from operating activities
(483) (696)
Cash flows from investing activities
Loans to subsidiaries
(940) (2,127)
Net cash flow from investing activities
(940) (2,127)
Cash flows from financing activities
Proceeds from Issue of Shares
18
546 3,100
Share Issue Costs
18
(21) (118)
Net cash flow from financing activities
525 2,982
Net increase in cash and cash equivalents
(898) 159
Cash and cash equivalents at beginning of the period
1,407 1,248
Cash and cash equivalents at end of the period
14
509 1,407
The notes form an integral part of these consolidated financial statements
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 44
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 and principal place of business 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”).
The Group Financial Statements have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards (IFRS), International standards and Interpretations (collectively
IFRSs) issued by the International Accounting Standards Boards (IASB) and with those parts of the Companies
Act 2006 applicable to those companies reporting under IFRS.
2. Accounting policies
The principal accounting policies applied in preparation of these financial statements are set out below.
These policies have been consistently applied unless otherwise stated.
2.1 Basis of preparation
The consolidated and parent company financial statements (“financial statements”) for the period ended 31
December 2023 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.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 45
The accounting period for the Group covers the year ending on 31 December 2023 and is therefore not
directly comparable to the prior period as this covered a 13 month period. The financial statements are
presented in Pounds Sterling and rounded to the nearest thousand (£’000).
Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except for the
following items (refer to individual accounting policies for details):
- Financial instruments – fair value through profit or loss
- Financial instruments – fair value through other comprehensive income
- Contingent consideration
- Investment property
- Revalued property, plant and equipment
- Net defined benefit liability
- Cash settled share-based payment liabilities
Reverse acquisition accounting treatment
During the last 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.
As a result of this comparatives of the consolidated financial statements have been prepared to reflect the
consolidated results of the Group from acquisition date on 10 January 2022. The comparative 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.
Critical accounting judgements and key sources of estimation uncertainty are disclosed in note 2.17.
2.2 Going concern
The Directors have prepared financial forecasts to estimate the likely cash requirements of the Group over
the 12 months from sign off of the annual report. Given its stage of development and lack of recurring
revenues, in preparing these financial forecasts, the Directors have made certain assumptions with regards
to the timing and amount of future expenditure over which they have control. The Directors have considered
the sensitivity of the financial forecasts to changes in key assumptions, including, among others, potential
cost overruns within committed spend and changes in exchange rates.
The Directors plan to raise further funds during 2024 and have reasonable expectations that sufficient cash
will be raised to fund the planned operations of the Group for a period of at least 12 months from the date
of approval of these financial statements. The funding requirement indicates that a material uncertainty
exists which may cast significant doubt over the Group’s and Company’s ability to continue as a going
concern, and therefore its ability to realise its assets and discharge its liabilities in the normal course of
business. This has been detailed in the auditors report.
After due consideration of these forecasts, current cash resources, including the sensitivity of key inputs, the
Directors consider that the Group will have adequate financial resources to continue in operational existence
for the foreseeable future (being a period of at least 12 months from the date of this report) and, for this
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 46
reason, the financial statements have been prepared on a going concern basis. The financial statements do
not include the adjustments that would be required should the going concern basis of preparation no longer
be appropriate.
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 31 December each year. Per IFRS 10, control is
achieved when the Company:
• has the power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above. When the Company has less than
a majority of the voting rights of an investee, it considers that it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.
The Company considers all relevant facts and circumstances in assessing whether or not the Company’s
voting rights in an investee are sufficient to give it power, including:
• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of
the other vote holders;
• potential voting rights held by the Company, other vote holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Company has, or does not have,
the current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when
the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of
during the year are included in profit or loss from the date the Company gains control until the date when
the Company ceases to control the subsidiary. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between the members of the Group are eliminated on consolidation.
2.4 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and demand deposits with banks and other
financial institutions. The Group holds the majority of group funds in Lloyds bank equivalent accounts
through a forex platform (Alpha FX). Supplementary working capital funds are held in online banking
platforms in the UK (Revolut) and physical banks in Kazakhstan.
2.5 Equity
Share capital is determined using the nominal value of shares that have been issued.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 47
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 20.
Share capital to issue reserve relates to shares to be settled via the issue of the Company’s shares at the
year-end which meet the definition of equity per IAS 32 are classified as shares to be issue within equity and
are held at fair value.
2.6 Foreign currency translation
The results and financial position of all the Group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
i) assets and liabilities for each statement of financial position presented are translated at the
closing rate at the date of that statement;
(ii) income and expenses for each income statement are translated at spot exchange rates (unless the
spot is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the rate on the dates of the transactions);
and
ii) all resulting exchange differences are recognised in the Statement of Comprehensive Income
and accumulated in the foreign exchange reserve in equity.
When a foreign operation is disposed of in its entirety or partially such that control is lost, the cumulative
amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of
the gain or loss on disposal. Exchange differences arising, if any, are recognised in other comprehensive
income and accumulated in a foreign exchange reserve (attributed to non-controlling interests as
appropriate).
2.7 Financial instruments
IFRS 9 requires an entity to address the classification, measurement and recognition of financial assets and
liabilities.
a) Classification
The Group classifies its financial assets in the following measurement categories:
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 48
• those to be measured subsequently at fair value (either through Other comprehensive income or
through profit or loss);
• those to be measured at amortised cost; and
• those to be measured subsequently at fair value through profit or loss.
The classification depends on the Group’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For
investments in equity instruments that are not held for trading, this will depend on whether the Group has
made an irrevocable election at the time of initial recognition to account for the equity investment at fair
value through other comprehensive income (FVOCI).
b) Recognition
Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group
commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash
flows from the financial assets have expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition
of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Debt instruments
Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows
represent solely payments of principal and interest, are measured at amortised cost. Interest income from
these financial assets is included in finance income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together
with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the
statement of profit or loss.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has
elected to present fair value gains and losses on equity investments in OCI, there is no subsequent
reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognised in profit or loss as other income when the
Group’s right to receive payments is established. Changes in the fair value of financial assets at FVPL
are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and
reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from
other changes in fair value.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 49
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.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 50
The recoverability of all exploration and development costs is dependent upon the discovery of economically
recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of
reserves and future profitable production or proceeds from the disposition thereof.
Exploration and evaluation assets shall no longer be classified as such when the technical feasibility and
commercial viability of extracting mineral resources are demonstrable. When relevant, such assets shall be
assessed for impairment, and any impairment loss recognised, before reclassification to “Mine
development”.
2.12 Share based payments
The Group has made awards of warrants and options on its unissued share capital to certain parties in return
for services provided to the Group. The valuation of these warrants involved making a number of critical
estimates relating to price volatility, future dividend yields, expected life of the options and interest rates.
These assumptions have been integrated into the Black Scholes Option Pricing model and the Monte Carlo
valuation model to derive a value for any share-based payments. These assumptions are described in more
detail in the notes.
2.13 Taxation
Tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported
in the income statement because it excludes items of income and expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible. The liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying
amounts of assets and liabilities in the group or parent company financial statements and the corresponding
tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability
method. As there is no reasonable expectation of future revenues to which tax losses could be applied no
deferred tax asset has been recognised.
2.14 Leases
The Group recognises the guidelines set out in “IFRS 16 – Leases” and are allocated between principal and
finance cost. The finance cost is charged to profit or loss over the lease period. Right-of-use assets are
measured at cost which comprises the following:
- The amount of the initial measurement of the lease liability;
- Any lease payments made at or before the commencement date less any lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Payments associated with short-term leases (term less than 12 months) and all leases of low-value assets
(generally less than £5k) are recognised on a straight-line basis as an expense in profit or loss. The short term
lease exemption has been utilised by the Group in relation to property leases held in the Kazakhstan and the
UK. These leases are on a rolling month-month basis and hence there is no long term commitment entered
into and are also low-value assets.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 51
2.15 Contingent asset
A contingent asset is a possible asset that arises from past events, and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the entity. Contingent assets in these financial statements relate to VAT that is only offsetable
against future revenue and hence these amounts are contingent on this occurrence and are classified as so.
2.16 Other comprehensive income
Gains or losses on the translation of currencies into the presentational currency are recognised as other
comprehensive income in the Statement of Profit and Loss and Other Comprehensive Income and
transferred to a separate foreign exchange reserve under equity.
2.17 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with IFRSs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed below:
Impairment of investments and loans to subsidiaries – Note 13 & 15
The Group and the Company assess at each reporting date whether there is any objective evidence that
investments in and loans to subsidiaries are impaired. The value of the Company’s investment in DVK
amounts to approx. £6.275 million and intercompany loans amount to approx. £3.674 million. To determine
whether there is objective evidence of impairment, a considerable amount of estimation is required in
assessing the ultimate realisation of these investments/receivables, including valuation, creditworthiness and
future cashflows. As at the year end the Directors do not assess there to be any impairment of these amounts.
Recoverable value of exploration assets – Note 10
Costs capitalised in respect of the Group’s mining assets are required to be assessed for impairment under
the provisions of IFRS 6 (2023: approx. £2.149 million) Such an estimate requires the Group to exercise
judgement in respect of the indicators of impairment and also in respect of inputs used in the models which
are used to support the carrying value of the assets. Such inputs include estimates of mineral reserves,
production profiles, commodity prices, capital expenditure, inflation rates, and pre-tax discount rates that
reflect current market assessments of (a) the time value of money; and (b) the risks specific to the asset for
which the future cash flow estimates have not been adjusted. Management have concluded that it is
appropriate to process an impairment charge in the period in relation to exploration assets and can be
further evidenced at note 10.
The Directors have made an assessment and concluded that it is appropriate to process impairment charges
in the year specifically relating to licenses held within the joint venture agreement held with Phoenix Mining
Limited in relation to the rare earths exploration. As this agreement has been terminated the Directors
believe it necessary to impair the entirety of the investment and this charge can be seen in the statement of
comprehensive income.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 52
Share based payments – Note 19
The Group issues options and warrants to its employees, directors, investors and advisors. These are valued
in accordance with IFRS 2 “Share-based payments” (2023: approx. £0.04 million). In calculating the related
charge on issuing shares and warrants the Group will use a variety of estimates and judgements in respect of
inputs used including share price volatility, risk free rate, and expected life. Changes to these inputs may
impact the related charge.
In the period the Group implemented a long-term incentive program for employees which can be evidence
further at note 19. These options have various vesting dates and conditions and have been valued using the
Black-Scholes method to assign an appropriate value in the financial statements.
2.18 New standards and interpretations 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:
Standard Effective date Overview
Amendments to IAS 1
Classification of
Liabilities as Current or
Non-current
1 January 2024
(early adoption
permitted)
The standard has been amended to clarify that the classification
of liabilities as current or non-current should be based on rights
that exist at the end of the reporting period.
In order to conclude a liability is non-current, the right to defer
settlement of a liability for at least 12 months after the reporting
date must exist as at the end of the reporting period.
The amendments also clarify that (for the purposes of
classification as current or non-current), settlement is the
transfer of cash, the entity’s own equity instruments (except as
described below), other assets or services.
Amendments to IAS 1
Non-current Liabilities
with Covenants
1 January 2024
(early adoption
permitted)
The standard confirms that only those covenants with which an
entity must comply on or before the end of the reporting period
affect the classification of a liability as current or non-current.
Amendments to IFRS 16
Lease Liability in a Sale
and Leaseback
1 January 2024
(early adoption
permitted)
The amendments address the accounting that should be applied
by a seller-lessee in a sale and leaseback transaction when the
leaseback contains variable lease payments, such as turnover
rentals, that do not depend on an index or rate.
Specifically, they confirm that the ‘lease payments’ or the
‘revised lease payments’ arising from the leaseback arrangement
are measured in such a way that no gain or loss is recognised on
the right of use retained by the seller-lessee.
Amendments to IAS 7
and IFRS 7
Supplier Finance
Arrangements
1 January 2024
(early adoption
permitted)
The amendments require an entity to disclose information about
its supplier finance arrangements to enable users of financial
statements to assess the effects of those arrangements on the
Supplier Finance
Arrangements
entity’s liabilities and cash flows and on the entity’s exposure to
liquidity risk.
Amendments to IAS 21 –
Lack of Exchangeability
1 January 2025
(early adoption
permitted)
The amendments have been made to clarify:
- when a currency is exchangeable into another currency; and
- how a company estimates a spot rate when a currency lacks
exchangeability.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 53
The effect of these amended Standards and Interpretations which are in issue but not yet mandatorily
effective is not expected to be material.
2.19 New standards and interpretations adopted
Standard Overview
IFRS 17 Insurance Contracts
IFRS 17 will replace IFRS 4 Insurance Contracts, a
temporary standard which permits a variety of
accounting practices for insurance contracts.
Amendments to IFRS 17 – Initial Application of IFRS 17 &
IFRS 9
Comparative Information
Many insurance entities will now be applying both IFRS 17
and IFRS 9 for the first time in annual reporting periods
beginning on or after 1 January 2023.
Amendments to IAS 1 and IFRS Practice Statement 2 –
Making Materiality Judgements
Disclosure of Accounting Policies
The amendments to IAS 1 will require an entity to disclose
material accounting policies. Accounting policy
information is likely to be considered material if users
need the disclosure to understand other material
information in the accounts.
Amendments to IAS 8 – Accounting Policies, Changes in
Accounting Estimates and Errors
Definition of Accounting Estimates
The amendments introduce a definition for accounting
estimates which is ‘monetary amounts in financial
statements that are subject to measurement
uncertainty’. Measurement uncertainty will arise when
monetary amounts required to apply an accounting policy
cannot be observed directly. In such cases, accounting
estimates will need to be developed using judgements
and assumptions.
Amendments to IAS 12 – Income Taxes
Deferred Tax related to Assets and Liabilities arising from
a Single Transaction
This amendment to IAS 12 Income Taxes introduces an
exception to the “initial recognition exemption” when the
transaction gives rise to equal taxable and deductible
temporary differences.
Amendments to IAS 12 – Income Taxes
International Tax Reform – Pillar Two Model Rules
This amendment to IAS 12 Income Taxes introduces
disclosures to help investors better understand a
company’s exposure to income taxes arising from the
reform, particularly before legislation implementing the
rules is in effect.
The effect of these amended Standards and Interpretations which are in issue have not had a material effect
on the financial statements.
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
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 54
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 2023 (2022: £0).
United Kingdom
Kazakhstan
Total
£'000
£'000
£'000
Administrative expenses (449)
(261)
(710)
Share based payments (39)
-
(39)
Impairment charge -
(1,058)
(1,058)
Other income -
279
279
Operating loss from continued operations
per reportable segment
(488)
(1,040)
(1,528)
Reportable segment assets
557 2,372 2,929
Reportable segment liabilities
(83) (33) (116)
Total
474 2,339 2,813
Segment assets and liabilities are allocated based on geographical location.
4. Administrative expenses
Administrative expenses for the Group can further be broken down as per below:
Year ended
31 Dec 2023
Period ended
31 Dec 2022
£'000
£'000
Professional fees
(189)
(340)
Directors’ fees*
(161)
(335)
Salaries & wages
(55)
(89)
Geological consulting and exploration costs
(111)
-
Insurance
(7)
(25)
Consultants
(29)
-
Travel
-
(33)
Foreign Exchange
9
83
VAT write off
-
(279)
Other administrative expenses
(167)
(113)
Administrative expenses
(710)
(1,131)
*Please see Directors Remuneration report for breakdown
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 55
5. Employees
The average number of persons employed by the Group (including directors) during the period ended 31
December 2023 was:
2023 2022
Management 5 4
Non-management 7 7
12 11
The highest paid director received total remuneration of approx. £163,000 including share-based payments (2022:
approx. £308,000)
6. Auditor’s Remuneration
Year ended 31
December 2023
£'000
Period ended 31
December 2022
£'000
Fees payable for the audit of the Group’s financial statements 44 45
Fees payable for review of the Group’s interim financial
statements
- 3
44 48
7. Taxation
Year ended
31 December
2023
£’000
Period ended
31 December
2022
£’000
A reconciliation of the tax charge appearing
in the income statement to the tax that
would result from applying the standard
rate of tax to the results for the year is:
Loss per accounts (1,528) (3,105)
Tax credit at the weighted standard average
rate of corporation tax in the UK of 19% and
Kazakhstan of 20%
(298)
(606)
Adjustment for items disallowable for tax 7 375
Tax losses for which no deferred tax is
recognised
(291)
231
Tax expense recognised in accounts - -
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 56
The Group has estimated tax losses carried forward of approx. £2,768,000 (2022: approx. £1,279,000) The
taxed value of the unrecognised deferred tax asset is approx. £542,000 and these losses do not expire. No
deferred tax assets in respect of tax losses have been recognised in the accounts as there is currently
insufficient evidence of the timing of suitable future taxable profits against which they can be recovered.
8. Other comprehensive income
Items credited to the other comprehensive income line in the statement of comprehensive income relate
to the impact of foreign exchange movements when translating the statement of financial position from
functional to presentational currencies on consolidation. The corresponding movement is offset against the
foreign exchange reserve in the statement of financial position:
Year ended 31
December 2023
£'000
Period ended 31
December 2022
£'000
Foreign currency movements (35) 70
(35) 70
9. Earnings per share
The calculation of the basic and diluted earnings per share is calculated by dividing the profit or loss for the
year by the weighted average number of ordinary shares in issue during the year.
Year ended
31 December
2023
Period ended
31 December
2022
Loss attributable to shareholders of East Star Resources PLC - £’000 (1,528)
(3,105)
Weighted number of ordinary shares in issue 189,850,164 180,843,292
Basic & dilutive earnings per share from continuing operations –
pence
(0.81)
(1.72)
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.
In the current year no adjustment is required to account for the reverse takeover transaction. In the previous
period the weighted average number of shares was 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.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 57
10. Exploration assets
Group
Exploration assets
£’000
Cost and carrying value – 1 January 2022 -
Additions 2,268
Impairment charge -
At 31 December 2022 2,268
Additions 888
Foreign exchange (75)
932
Impairment on licenses (932)
At 31 December 2023 2,149
Exploration and evaluation assets relate specifically to expenditure to support the exploitation of exploration
licenses held in the Kazakhstan based subsidiaries. The Group holds a total of 8 licenses across 3 mineral
districts being specifically the Chu-Ili belt, East Kostanay region and Rudny Altai belt.
In accordance with IFRS 6, the Directors undertook an assessment of the following areas and circumstances
which could indicate the existence of impairment
• The Group’s right to explore in an area has expired, or will expire in the near future without
renewal;
• No further exploration or evaluation is planned by the Company or in conjunction with potential
joint venture partners;
• The Board may consider to discontinue exploration and evaluation in an area due to the absence
of a commercial level of reserves;
• Existing joint venture agreements have been terminated;
• Sufficient data exists to indicate that the book value may not be fully recovered from future
development and production.
The Directors concluded that an impairment charge need be processed in the period in relation to the
licenses as detailed below:
i) License 670 – Dalny: The exploration asset relating to license 670 was fully impaired in the
period. No further exploration is planned by the Group.
ii) License 774 – Apmintas: The exploration asset relating to license 774 has been partially impaired
in the period. The Company is in the process of relinquishing 40% of the tenement package
considered to be less prospective for a commercial gold discovery.
A 10% movement either way in the KZT/GBP exchange rate would change the fair value by approximately
£215,000.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 58
11. Earn in advance (financial asset)
Group
Earn in advance
£’000
Cost and carrying value – 1 January 2022 -
Additions 57
Impairment charge -
At 31 December 2022 57
Additions 57
Foreign exchange 12
Impairment on licenses (126)
At 31 December 2023 -
The licenses held jointly with Phoenix Mining Ltd in relation to rare earths are referred to above as a financial
asset as they do not currently satisfy all the requirements of IFRS 6 to be capitalised as an exploration asset.
In the period an impairment charge was processed in relation to the licences as the joint venture agreement
with Phoenix Mining Ltd was terminated. An impairment charge of £126,174 has been included in the
accounts to write down the value of the assets to their fair value less cost to sell.
12. Property, plant & equipment
Group
Plant and
equipment
£’000
Furniture
and
fittings
£’000
Computer
equipment
£’000
Total
£’000
Cost
Opening balance – 1 January 2023 29 2 7 38
Additions 2 - - 2
At 31 December 2023 31 2 7 40
Depreciation
Opening balance – 1 January 2023 (12) - (1) (13)
Charge for the period (7) (1) (2) (10)
At 31 December 2023 (19) (1) (3) (23)
Net book value 31 December 2022 17 2 6 25
Net book value 31 December 2023 12 1 4 17
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 59
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
13. Investment in subsidiaries
Company
£’000
Cost and carrying value – 1 December 2021 -
Additions:
Share acquisition on RTO 2,250
Convertible loan note 268
Consideration shares 3,750
At 31 December 2022 6,268
Additions -
Impairment -
At 31 December 2023 6,268
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 60
List of Subsidiaries
Name Business Activity
Country of
Incorporation Registered Address
Percentage
Holding
Discovery Ventures
Kazakhstan Limited
Mineral
exploration
Kazakhstan
VP 32, building 12/1, Dinmuhamed
Konaev street, Yesil district, Astana,
Z05H9B0, Kazakhstan
100%
Chu Ili Resources
ltd*
Mineral
exploration
Kazakhstan
bld. 12/1, VP 32, 3rd floor, IHUB
coworking, D. Konayev Street, Yessil
district, Astana city, Z05H9B0,
Kazakhstan
80%
Rudny Resources
ltd*
Mineral
exploration
Kazakhstan
bld. 12/1, VP 32, 3rd floor, IHUB
coworking, D. Konayev Street, Yessil
district, Astana city, Z05H9B0,
Kazakhstan
80%
*Subsidiaries held indirectly through Discovery Ventures Kazakhstan
14. Cash and cash equivalents
Group Company
As at
31 December
2023
£’000
As at
31 December
2022
£’000
As at
31 December
2023
£’000
As at
31 December
2022
£’000
Cash at bank 635 1,456 509 1,407
15. Inter-company receivable
Company
As at 31
December 2023
£'000
As at 31
December 2022
£'000
Inter-company loan – DVK 3,674 2,734
3,674 2,734
16. Trade and other receivables
Group Company
As at
31 December
2023
£’000
As at
31 December
2022
£’000
As at
31 December
2023
£’000
As at
31 December
2022
£’000
VAT receivable 17 15 17 6
Prepayments 39 24 20 -
Other debtors 71 94 10 10
127 133 47 16
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 61
17. Trade and other payables
Group Company
As at
31 December
2023
£’000
As at
31 December
2022
£’000
As at
31 December
2023
£’000
As at
31 December
2022
£’000
Trade payables 71 54 38 32
Accruals 44 54 44 45
Other payables - 19 - 8
115 127 82 85
18. Share capital and share premium
Group
Ordinary
Shares
Share
Capital
Share
Premium Total
# £’000 £’000 £’000
At 31 December 2021 70,590 53 132 185
Transfer of capital to reverse acquisition
reserve
(70,590) (53) (132) (185)
Share capital of the Company at
acquisition
69,540,164 695 1,501 2,196
Issue of shares for acquisition of subsidiary 50,350,000 504 2,014 2,518
Issue of ordinary shares 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
Issue of ordinary shares
1
36,400,000 364 182 546
Share issue costs - - (21) (21)
At 31 December 2023 218,650,164 2,187 6,052 8,239
1
On 16 October 2023, the Company issued 36,400,000 ordinary shares at £0.015 as part of a share
placement.
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.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 62
19. Share based payments reserve
Group
£’000
Company
£’000
Opening balance – 1 December 2021
- 24
Acquired equity as part of acquisition 24 -
Advisor warrants issued 132 132
Employee options issued 112 112
As at 31 December 2022 268 268
Employee options issued
1
32 32
LTIP options issued
2
7 7
As at 31 December 2023 307 307
1
On 13 December 2021, 11,250,000 employee options were granted. These options have an exercise price
of £0.05 and expire 5 years from the grant date. Value attributed to the share based payments reserve in
the current period represents the pro-rata portion of the expense brought to account over the vesting
period.
2
On 1 March 2023 the remuneration committee approved the adoption of a long-term incentive plan
("LTIP"). On the recommendation of the Remuneration Committee, the Company has granted an aggregate
of 4,432,326 options over new ordinary shares in the Company to employees and non-executive directors of
the Company to be approved by shareholders at the next Annual General Meeting. Value attributed to the
share based payments reserve in the current period represents the pro-rata portion of the expense brought
to account over the vesting period
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:
Options
Grant date Number
Share price Exercise price
Volatility % RF Rate % Technique
01/03/2023 4,251,167 0.035 0.043 77 3.5 Black Scholes
Warrants
As at 31 December 2023
Weighted average
exercise price
Number of
warrants
Brought forward at 1 January 2023
14,813,505
Lapsed in period 5p (6,000,000)
Granted in period 3p 36,400,000
Vested in period 3p 36,400,000
Outstanding at 31 December 2023 4p 45,213,505
Exercisable at 31 December 2023 4p 45,213,505
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 63
The weighted average time to expiry of the warrants as at 31 December 2023 is 1.06 years.
Options
As at 31 December 2023
Weighted average
exercise price Number of options
Brought forward at 1 January 2023 5p 11,250,000
Granted in period 4.3p 4,794,644
Cancelled in period 4.3p (1,110,144)
Vested in period
-
Outstanding at 31 December 2023 5p 14,934,500
Exercisable at 31 December 2023
3,750,000
The weighted average time to expiry of the options as at 31 December 2023 is 4.67 years.
The option vesting conditions of the LTIP options are as below:
- 50% of the Shares under Option (rounded down to the nearest whole number) shall Vest on the first
anniversary of the Date of Grant;
- 25% of the Shares under Option (rounded down to the nearest whole number) shall Vest on the
second anniversary of the Date of Grant;
- 25% the remaining number of the Shares under Option shall Vest on the third anniversary of the
Date of Grant.
20. Reverse acquisition
On 10 January 2022, the Company acquired the share capital of Discovery Ventures Kazakhstan Limited
(“DVK”), through an issue of 45,000,000 consideration shares the entire share capital of DVK, whose principal
activity is to undertake exploration activities relating to gold and copper mineral resources in Kazakhstan.
Although the transaction resulted in DVK becoming a wholly owned subsidiary of the Company, the
transaction constitutes a reverse acquisition as in substance, it has resulted in a fundamental change in the
business of the Company with the sole director of DVK becoming the Chief Executive Officer of the Company.
Thus, the executive management of DVK now exerts significant influence over the executive management of
the Company.
The shareholders of DVK acquired a 27.63% interest in the Company and the transaction has therefore been
accounted for as a reverse acquisition. As the Company’s activities prior to the acquisition were purely the
maintenance of the Main Market LSE Listing, acquiring DVK and raising equity finance to provide the required
funding for the operations of the acquisition the directors did not consider this to meet the definition of a
business in accordance with IFRS 3.
Accordingly, this reverse acquisition does not constitute a business combination. Although, the reverse
acquisition is not a business combination, the Company has become a legal parent and is required to apply
IFRS 10 and prepare consolidated financial statements. The Directors have prepared these financial
statements using the reverse acquisition methodology, but rather than recognising goodwill, the difference
between the equity value given up by the DVK shareholders and the share of the fair value of net assets
gained by the DVK shareholders is charged to the statement of comprehensive income as a share-based
payment on reverse acquisition, and represents in substance the cost of acquiring a Main Market LSE listing.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 64
In accordance with reverse acquisition accounting principles, these consolidated financial statements
represent a continuation of the consolidated statements of DVK and its subsidiaries and include:
- The assets and liabilities of DVK and its subsidiaries at their pre-acquisition carrying value amounts
and the results for both periods; and
- The assets and liabilities of the Company as at 10 January 2022 and its results from the date of the
reverse acquisition on 10 January 2022 to 31 May 2022.
On 10 January 2022, the Company issued 45,000,000 ordinary shares to acquire the entire share capital of
DVK. As part of the acquisition the Company also agreed to settle a separate convertible loan note held by
DVK through the issue of 5,350,000 shares. On the same date, the Company was readmitted to the Main
Market of the LSE, after completing its second placing round with a placing share price of £0.05 and therefore
the Company has valued the investment in DVK at £6,267,500. (This figure includes both the initial
consideration mentioned above as well as the contingent consideration on completion milestones)
Because the legal subsidiary, DVK, was treated on consolidation as the accounting acquirer and the legal
Parent Company, East Star, was treated as the accounting subsidiary, the fair value of the shares deemed to
have been issued by DVK was calculated at £3,477,008 based on an assessment of the purchase consideration
for a 100% holding of East Star of 69,540,164 shares at a weighted average placing price of £0.05 per share
(being the share price of East Star at acquisition).
The fair value of the net assets of East Star at acquisition was as follows:
£’000
Cash and cash equivalents 1,835
Convertible loan notes 609
Other receivables 151
Trade and other payables (848)
Net assets 1,747
The difference between the deemed cost (£3,477,008) 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)
1. Recognition of pre-acquisition equity of East Star as at 10 January 2022.
2. DVK had equity at the date of acquisition of £216,050. As these financial statements present the capital
structure of the legal parent entity, the equity of DVK is eliminated.
3. The value of the shares issued by the Company in exchange for the entire share capital of DVK as at the
share price used in the placing that occurred simultaneously (£0.05). The above entry is required to
eliminate the balance sheet impact of this transaction.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 65
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)
4. The reverse acquisition expense represents the difference between the value of the equity issued by the
Company, and the deemed consideration given by DVK to acquire the Company.
21. 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.
Page | 66
The Group has a limited level of exposure to foreign exchange risk through its foreign currency denominated
cash balances, trade receivables and payables:
31 Dec 2023
£’000
£GBP
Cash and cash equivalents 126
Trade and other receivables 80
Trade and other payables (33)
173
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group
. The Group has adopted a policy of only dealing with creditworthy counterparties. The
Group’s exposure and the credit ratings of its counterparties are monitored by the Board of Directors to
ensure that the aggregate value of transactions is spread amongst approved counterparties.
The Group applies IFRS 9 to measure expected credit losses for receivables, these are regularly monitored
and assessed. Receivables are subject to an expected credit loss provision when it is probable that amounts
outstanding are not recoverable as set out in the accounting policy.
The Group’s principal financial assets are cash and cash equivalents. Cash equivalents include amounts held
on deposit with financial institutions.
The credit risk on liquid funds held in current accounts and available on demand is limited because the
Group’s counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The Group has zero trade receivables and therefore there is no risk relating to a 3
rd
party being unable to
service its obligations.
The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recorded
in the financial statements.
Interest rate risk
The Group currently has no borrowings. The Group’s principal financial assets are cash and cash equivalents.
Cash equivalents include amounts held on deposit with financial institutions. The effect of variable interest
rates is not significant.
Liquidity risk
During the period ended 31 December 2023, the Group was primarily financed by cash raised through equity
funding and supplemented by funds provided through the BHP Xplor program. Funds raised surplus to
immediate requirements are held as cash deposits in Sterling except for minor working capital requirements
held in subsidiary bank accounts.
In managing liquidity risk, the main objective of the Group is to ensure that it has the ability to pay all of its
liabilities as they fall due. The Group monitors its levels of working capital to ensure that it can meet its
liabilities as they fall due.
The table below shows the undiscounted cash flows on the Group’s financial liabilities as at 31 December
2023 on the basis of their earliest possible contractual maturity.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 67
Total
£’000
Within 2
months
£’000
Within 2-6
months
£’000
At 31 Dec 2023
Trade payables 71 71 -
22. Financial assets and liabilities
Financial assets/liabilities at amortised cost
Group – Year ended 31 Dec 2023 2022
£'000 £'000
Trade and other receivables
1
88 109
Cash and cash equivalents
635 1,456
Trade and other payables
2
(71) (73)
652 1,492
Financial assets/liabilities at amortised cost
Company – Period ended 31 Dec 2023 2022
£'000 £'000
Trade and other receivables
1
27 15
Cash and cash equivalents
509 1,407
Trade and other payables
2
(38) (40)
498 1,382
1
Trade and other receivables excludes prepayments
2
Trade and other payables excludes accruals
23. Related Party Transactions
Orana Corporate LLP - Service Agreement
During the year, £58,300 was paid to Orana Corporate LLP of which Anthony Eastman is a director of East
Star Resources PLC and Orana during the period for the provision of corporate accounting services. £1,000
was deferred to be settled at a later date.
Other than these there were no other related party transactions.
Directors remuneration
See Directors report for details on Directors remuneration in the period.
24. Ultimate Controlling Party
As at 31 December 2023, there was no ultimate controlling party of the Group.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 68
25. Capital Commitments
The Group is committed to the following minimum expenditure across various licenses within 12 months
from 31 December 2023:
License area License Owner
Annual minimal
expenditures on exploration
£
Apmintas 774-EL Chu-Ili Resources Limited 157,168
Novo 2 847-EL Rudny Resources Limited 118,252
Novo 1 914-EL Rudny Resources Limited 179,733
RA 1 1799-EL Discovery Ventures Kazakhstan Limited 32,032
RA 3 1795-EL Discovery Ventures Kazakhstan Limited 20,867
RA 4 2546-EL Discovery Ventures Kazakhstan Limited 6,620
Snowy 2506-EL Copperland 41,237
Ayogoz 2483-EL Copperland 30,746
Total 586,655
26. Contingent assets
VAT recoverable
The subsidiaries of East Star Resources had accrued an amount of £293,078 relating to VAT incurred on
expenditure on the various mining licenses to 31 December 2023. 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.
27. Contingent liabilities
There were no contingent liabilities over the Group as at 31 December 2023.
28. Events Subsequent to period end
BHP Xplor Program
On 22 January 2024 the Company announced that it had been selected to receive a grant of up to US$500,000
from BHP under the 2024 BHP Xplor Programme to initiate a copper porphyry exploration strategy in
Kazakhstan.
Appointment of director
On 22 January 2024 the Company appointed Chris van Wijk as a Non-Executive Director and subsequently
on 29 February 2024 he was appointed as Technical Director.
EAST STAR RESOURCES PLC – COMPANY NUMBER 13025608
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page | 69
Sediment-Hosted Copper Exploration JV with Getech
In February 2024, the Company announced it had entered into a joint venture agreement with Getech Group
PLC (AIM: GTC) ("Getech"), a world-leading locator of subsurface resources, to explore for sediment-hosted
copper deposits in Kazakhstan.
Verkhuba Copper Deposit Update
In March 2024, the Company announced it had instructed independent experts AMC Consultants to produce
a maiden JORC Inferred Resource for the Verkhuba Copper Deposit.
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