Highlights

  • Xinhai to invest in staged farm-in of the Verkhuba copper project.
  • Planned funding includes feasibility and construction costs totaling about USD 65 million.
  • East Star retains full ownership of its remaining exploration licences in Kazakhstan.

East Star Resources Plc (LSE:EST) has entered binding Heads of Agreement with Hong Kong Xinhai Mining Services Limited to establish a joint venture company for the Verkhuba Copper Deposit located in Kazakhstan. The agreement outlines a multi-stage farm-in structure through which Xinhai may earn up to a 70% stake in the JVCo by funding all required project costs from additional drilling through to commissioning.

The arrangement provides Xinhai exclusivity over Licence 1795, which hosts the Verkhuba asset, for up to 180 days while the parties finalise a full Joint Venture Agreement. Once the agreement is executed, East Star will set up the JVCo within 90 days, registered at the Astana International Finance Centre. Both parties will initially appoint one director each, with Xinhai gaining the right to appoint an additional director once it holds more than 50% of the JVCo.

Staged Farm-In Linked to Defined Milestones
Under the structure, Xinhai will fund approximately 5,000 metres of resource definition drilling through an initial AUD 1.5 million investment, earning a 15% interest. A completed feasibility study sufficient for a Kazakhstan mining licence application would lift Xinhai’s stake to 20%.

Further stages include detailed engineering and design work, progressing Xinhai’s interest to 30%. Transfer of construction equipment to the JVCo would increase its share to 51%. Upon successful commissioning of a mining and processing operation with one million tonnes per annum capacity, Xinhai would attain a 70% interest. The estimated total investment covering feasibility and construction activities is about USD 65 million.

Operational Roles and Funding Responsibilities
Xinhai will cover all working capital and costs incurred during the commissioning phase. After commissioning, the JVCo will assume responsibility for operating the project. If the JVCo later requires additional funding that cannot be sourced through debt or equity, both shareholders must contribute pro rata based on their ownership at that time. Dividend distribution will follow a similar proportional structure.

East Star’s Broader Exploration Position
The agreement does not affect East Star’s ownership of its other assets. The company retains 100% of the Rulikha and Talovskoye prospects, including the Rulikha deposit, which has an independently modelled upper-limit JORC Exploration Target of 23 Mt at 2.4% copper equivalent. East Star also continues to hold the Snowy, Piket, and Judzha licences in Karaganda, which are prospective for porphyry and epithermal mineralisation.

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EST was trading 20.34% higher at GBX 3.55 per share as of 11 December 2025.