East Star Resources (LSE:EST) — Exploration Update

0:01 Good morning and welcome to the ESTAR RESOURCES PLC Exploration Update. Throughout this recorded update, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time just by using the Q and A tab that's situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to turn the following poll.

0:28 I'd now like to hand over to CEO, Alex Walker. Good morning to you, sir. Good morning. Thank you very much for having me today. So today, the intention is just to give a short update on the exploration works for ESTAR from last quarter of twenty twenty four and a little bit of insights into our future work programs into the first quarter and second quarter of twenty twenty five. First of all, we'll start with a bit of a reminder of of ESTAR and and what we're doing. ESTAR is a is a principally copper focused explorer based in Kazakhstan. We've been operating on the ground here for more than three, three and a half years, and we've had some fantastic success with our exploration strategies to date. Our three primary strategies are: number one is volcanogenic massive sulfide exploration or VMS exploration in the East Region Of Kazakhstan, where in April last year we released our first Jaw compliant resource of 20,300,000 tonnes at around 1.2% copper.

1:26 This is infrastructure led exploration where we've spent the bulk of our time and resources over the last twelve to eighteen months, serious amount of processing and infrastructure in the region, and so any success that we have here has a very low threshold in terms of being able to put those deposits into development. What I like to say is very achievable, certainly for a small company. The next two strategies, the first is for copper porphyry lead exploration principally focused around the Balkash Eli Magmatic Arc in blue, principally dark blue. Initially this was funded by a grant from BHP Explore, which is a program which BHP put together. They've accepted around 1% of the applications into the Explore program. It was a $500,000 grant for us and the team, and we completed the majority of that work, or we completed all of that work last year and are now continuing with that exploration strategy based on the work that we did with BHP.

2:24 The third part of the strategy is for sediment hosted exploration. Chris Van Wykow, our technical director, gave a more detailed presentation on this exploration or this deposit style earlier on last year. Sediment hosted deposits can be significant, largely or typically they're higher grade than porphyry targets, and Jessica's Ghan is a primary example of that. It's a 22,000,000 tonnes of contained copper deposit in the center of Kazakhstan, you can see on the slide there. So they're the three deposit styles we've been working on and continue to progress all three strategies. Firstly, I'll draw attention to the drilling of Vekuba, which is, I guess, our principal asset in terms of our most advanced asset to date. Again, the Vekuba deposit is around 20,300,000 tonnes at around 1.2% copper, plus about 1.5% zinc and about 0.3% lead.

3:19 Now at the end of last year, we explained that we were going to continue drilling this deposit and advancing it ourselves. One of the fantastic things about this deposit is the amount of information we we have on it. More than 46,000 meters of historic drilling has been digitized and and converted into a resource model. So we have a very good handle on where we understand the mineralized lenses to be and where we understand that the mineralized lenses aren't and why they may or may not be there. And so the intention of this program is to get more confidence in the resource, but also to provide some infill drilling for this deposit. We were able to complete just under a thousand meters of drilling last year. As we stated, it was 990 meters of drilling. Three of those holes were broken down and submitted for assays.

4:07 Around 270 samples were submitted for assay, and we're expecting those results back in the very, very near future. Really encouragingly, all three of those results all three of those holes intersected mineralization. Two of them in particular were drilling a gap in between two known ore bodies, which you can see in this area. Now we had no geological reason to believe that these ore bodies don't connect. It's simply often a matter in this case and for much of the deposit, that they're not connecting because of a lack of data rather than data proving that they don't connect. And so we believe that the drilling that we've just conducted will prove that thesis, and the assay results will come back and demonstrate that we're able to connect some of these ore bodies and thereby increase the size of the resource and also low importantly, lower the strip ratio.

5:01 So what I mean by that is if this is all within the modeled open pit that we have to date, an optimized open pit which came from AMC Consulting back when they did the exploration target in April 2023, then we can basically convert areas that would otherwise we we have to take out because it's waste, but that now becomes ore. So this sort of thing drastically improves the economics of mining a deposit like this or any open pit deposit. If you can convert waste to ore, if it's something you're going to dig up anyway, then it's basically something that you dig up and you get paid for instead of not being paid for. So this is a really fantastic result for us showing mineralization in between these lenses, and we really hope to demonstrate that we can continue to do that with other parts of the deposit.

5:52 One of our other updates was on the Telazovkoye IP anomaly. Now Telazovkoye is a target which has been quite exciting for us for some time. It's taken longer to progress largely due to the fact that we've gone back to a regional understanding of of what we actually wanna be targeting. So, Telesofka is a it was an exciting target from everything that you see at surface, but we wanted to know what it was exactly that we're chasing. Is it sort of thin, high grade, massive sulfide pipes, is there something a little bit more significant there? So we've been working through that geological model, understanding the rock package that it sits in. Is it the same rock package which has produced these much more or much significant mines of Nikoloskoye, Artemievskiy, the big ones that are in production in the belt currently today?

6:43 And or or is it something slightly different? So the IP work that we've done is is to help us try and understand that, and, actually, it started to demonstrate that it that it could well be both. So, importantly, there are two narrow two narrow shallow zones at the northern line of the deposit, which could well be a couple of these thinner but very, very high grade massive sulfide pipes. But what we also really like to see is larger anomaly that's sitting to the south of the deposit that's been picked up on on every line that was done on Telesofka. And so what we need to do to vector in on that and understand exactly how deep it is and and what angle it's sitting at is we need to pick it up on additional IP lines. So we need to run some additional IP lines at 50 meter spacing in between the southern line, and that will give us our vectoring target for drilling next year.

7:37 So we're really excited by that. Know, Telzovkir is a is a very, very high grade or to date, it's been very, very high grade pipes. Last year, we sampled some massive sulfide areas of the of of the deposit over different areas, and we got results like 6.3% copper, 5% lead, point eight grams gold, more than a 100 grams silver, more than 8% copper, more than 20% lead, 1.1 grams gold, and more than a 100 grams silver. And so, you know, any success here would be hopefully resemble those sorts of grades, which is really exciting for us. The last update that we gave on our announcement last week was for our porphyry, which we're now calling porphyry epithermal gold exploration.

8:29 A quick explanation for that is is simply that epithermal gold is very often associated with porphyry copper exploration. So we don't actually have to change our exploration strategy to incorporate epithermal gold. However, if we happen to stumble upon an epithermal gold target whilst we're looking for copper porphyries, then we can use a lot of the existing work that we do to help us understand these high sulfidation epithermal gold targets. I won't delve into that in a lot more detail, but what I will say is that some of these targets are they tend to be quite high grade. I believe the average grade globally is around five grams per tonne. The size of them can vary from a few 100,000 ounces to multimillion ounces.

9:15 And the examples that we put in our

9:18 presentation included Yanacocha, which is 36,000,000 ounces, and Pueblo Verho, which is 19,000,000 ounces. And a little bit more indicator for that, Pueblo Verho is around 1,500 meters surface expression, the main ore body for that is around 1,500 meters by 500 meters surface expression, and our anomaly here is over four kilometers by one kilometer surface expression. So you start to see the potential scale of the deposit that's possible for a high sulfonation epithermal target of this type. We now need to go and prove how much holds it actually contains. So we've already demonstrated at zoriferous. We've got rock chip results up to 0.28 grams per tonne and silver results over seven grams per tonne, both of which are multiples of what you would consider to be an anomaly.

10:11 In fact, the gold is at least 10 times what you'd consider to be anomalous on a high sulfidation epithermal target, and of course the size is significant. We've done a little bit more work in terms of hyperspectral processing. So the original work that we've done as part of our targeting for the whole belt as part of the BHP explore program included ASTER imagery, which is, in essence, it's satellite imaging, which gets reflective bands and can give you concept of the mineralization, mineral species, or alteration that's that's around some of these targets. There's some new processing data, EMIT and PRISMA is one of them, that gives a significant more amount of detail over these targets. So instead of around 14 bands, which ASTER has, these have around 230 to 240 bands. And so you can be a lot more precise on your imaging. An image on the far right is an example of that where we've highlighted the perophyllite, what is almost certainly perophyllite, as part of that that ASTER imaging. That's super important for us because it demonstrates that you're in the very, very hot part of the system.

11:20 Now ESTAR intend on further using this processing technology or this exploration technique around the rest of the Balkash Hilli magnetic arc. So we've already got our 20 priority targets, and we'll, re rank them by using, the the Prisma data, and it will also intend on saving us time and money when we go out into the field because we can go, straight up to the hottest parts of the system, sample those directly. So it'll be less samples and faster visits per per target to help help prioritize and limit those targets for mining license applications excuse me, for exploration license applications this year. So it's been a really fantastic end of twenty twenty four for us, a really exciting start of 2025, and we look forward to to bringing you more updates as things progress on all of these targets.

12:13 That's it for us. I will happily take questions. Perfect, Alex. Thanks very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that is situated on the top right hand corner of your screen. But just while Alex takes a few moments for you, some of the questions have been submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Alex, as you can see, we have received questions. And if I could ask you just to read out those questions and give responses where it is appropriate to do so, I'll pick up from you at the end. Thanks very much. First question is from Peter M. Thanks, Peter. Given that assay results are expected soon, what would be the next steps if they confirm additional mineralization?

12:59 The next steps is to continue with our exploration of for Cuba. So we had originally planned around four and a half thousand meters of drilling. We've done the first for within that, we've done the first around 800 meters of drilling, and so we'll look to continue with that program. The there are timing restrictions on that. We intend on going out to site probably in the next few weeks just to inspect the conditions, but what I'm expecting to see is is several meters of snow. And so we need to have a look more specifically at where the color locations are and when we think that we can actually get safe access to those locations again. So I can't tell you definitively when we're gonna start drilling. I wouldn't expect it to be any later than than late April, early May.

13:48 But, you until we go out and inspect the site, I can't expect it to be any any earlier than that. But we look to continue with that program, and we're really, really happy to be drilling the rest of the rest of this. One of the comments I made in the announcement was that this is not the highest grade portion of the deposit. Winter had started, and we had pad preparation to get underway, and we wanted to get the drill rigs turning quickly, so we went for the most accessible parts of our already defined drill program. And so, you know, these are the areas that was that were infill rather than the highest priority in terms of thickness and grade. So we'd be more excited to drill the next phase of drilling than in fact we were for this phase of drilling, despite the fact that we're obviously happy with this phase.

14:35 Paul, what scale are we looking at on that snowy image slide again? Yeah. Apologies, Paul. It was probably a little bit small on on that summarized image, but the anomaly on the right hand side or the let's say the northeast corner of the license area is the gold anomaly. That's around four kilometers by one kilometer. And I should note again, there's two artisanal pits, which we believe is mined for gold, artisanal pits on either side of that anomaly just off the license. So we know there's gold on it because we found it in soils, and we're fairly certain there's gold on it because people have been digging it up in the past. So very, very large anomaly and very, very exciting if you know, when we get a chance to drill that.

15:25 Do we anticipate any permitting or logistical challenges in advancing Telazov going to a drill ready stage? No. We've got our permits in place to get that to drill ready, so we just need to run the IP lines and then schedule the drilling. How do you plan to fund further exploration? Well, at the moment, our current planned exploration program is fully funded. Thanks, John. But we're an exploration company, so if we increase the size of our exploration, then we'll need to find ways ways to to fund that. You know, we are looking at potential partnerships perpetually, looking at potential partnerships in particular for the large scale exploration, so sediment hosted copper and copper porphyry exploration.

16:10 They're two strategies which, if you really wanna conduct them well, often requires a large balance sheet. So, you know, we're continuing to assess that and and and have conversations with with relevant parties. Would ESTAR consider accelerating exploration through strategic partnerships, or is it planned to continue independently? I think I've just addressed that. You know, we're not against partnerships by any stretch of the imagination, but we also feel that we can't be beholden to them. You know, that's actually bit us in the past waiting for for certain answers from people with regards to progressing. And so, you know, we don't wanna find ourselves in a position where things are delayed because of a party who don't have skin in the game like we do. So, you know, as we spend money on just about every project we have, when we've spent money on it, we've increased the value of it, or we've dropped it like I o like I ogaz last year and to to make sure our our every dollar is spent in its most efficient manner.

17:11 You know, we've added a lot of significant value to to our exploration portfolio because of that, to have more than 230,000 tonnes of contained copper, and so we intend to keep progressing those targets. The closer you get things to production, like for Cuba, the higher in value they should increase too, the closer to their net present value they should get. And so we expect to continue to progress those without being beholden other parties despite the fact that we're open to it. Next question was what about the sediment hosted copper? So no significant process on that in terms of the update. What we continue to do with the said hosted copper is assess the data. We've got the full GE Tech report, and we're very happy with that. What we do now is we've got more refined areas in what is otherwise quite a significant basin, much like the copper porphyry. You start with more than 200,000 square kilometers. The said hosted copper is is not too dissimilar in size.

18:09 So the work that we did with GETEP might refine that down to, for example, six or seven key areas of 2,000 square kilometers each. And now with those areas, we can do things like download the one to 50,000 scale maps, review those, any historical drilling that might be strong indicators, and other things like geophysics, seismic or IP work that will help us further refine the targeting of of those areas. So we're doing that at the moment through winter. We can't get on the ground too easily anyway and and view view the areas. So we'll continue to do that through winter, and we expect that as soon as things clear up in in summer, we'll be able to get boots on the ground for all of these targets and be applying for licenses. How much work needs to be done before drilling Snowy? That's a good question, Philip. We we don't expect too much.

19:01 You know, first pass is, again, boots on the ground. So with any luck, that will be around April. Once we've confirmed visually the mineralization that we've seen by satellite and and obviously with our soil sampling, and that it is indeed perophyllite that we're we're viewing in that area, for example, then it's likely that we would do some geophysics that would give us our drilling targets. It would either be geophysics such as IP or maybe offensive drilling if we can do RC drilling, for example. So probably one of those two, although I don't wanna speak for my technical team. They might wanna do some MAG as well, but there's every reason to believe that it would be draw ready this year. K. Richard, why do you think the market is not seeing the positivity of this latest RNS with an uplift in the share price?

19:53 Richard, that's a good question. You know, I often find it difficult to second guess the market. I expect mineralization isn't results. You know, the reality is is that mineralization is positive, but, you you know, we don't know if it's point 2% copper or or one and a half percent copper. You know, obviously, the latter being potentially commercial with with the lower grade being less commercial. So, you know, potentially, it's it's the aspect of that uncertainty. And once we can

20:24 get that information to the market, maybe it will react. I'm always perplexed by the lack of reaction to Fukuba in general. You know, if we were drilling an exploration project, we'd have a similar valuation. Only an exploration project will cost three times as much to get to the level of data that we already have, so we're not drilling as many dud holes looking for the edges of the deposit or holes too deep while we try and figure out the lithology because we already have all of that information. So, you know, we're valued like an exploration company whilst having 230,000 tons of contained copper and knowing that we can advance, you know, through scoping study as long as we continue to get the results that we've had in the past, we can advance through feasibility scoping and into mining license applications very, quickly by spending a significant amount less money than than if this was a new discovery.

21:18 So I'd love to see the market react. Hopefully, they will sometime soon. You know, we'll we'll keep doing good work in the meantime and keep spending money wisely. How do you view the timeline for shareholders benefiting from all your hard work and progression? Thanks, Mark. Yeah. I agree. You know, I've put money into every capital raise myself. Probably, I I think more money than I've had in disposable income the last three years. So I I would like to think that that's any day now, quite frankly. You know, like I said, we'll continue to put out good work. The market has has, for various reasons, been quite quite hesitant across the board. It's not just EAST STAR. You know? But gold is rallying well. Copper's been performing. It's been stable, but, you know, we're obviously expecting a copper bull market.

22:06 I don't want to need a copper bull market to have a very commercial deposit. I wanna be very, very comfortable with the current copper price and have plenty of fat to be able to build something like Vekuba or or for someone to want to build something like Vekuba. So, you know, the reality is is that we can progress these things based on the amount of data we have well, cheaply, comparatively, very cheaply. And, you know, it it it can't be long before the market really picks up on that. And, you know, being an investor myself and having done this a lot, really, over the last twenty years, but in particular, I guess, the last five to seven years, there's any number of examples I can give you that have small companies which made the discovery and did nothing for, you know, a year or two before the market really picked up on that. So, you know, that that really has to be us because we've made we've we've done the work. So it can only be a matter of time.

23:02 Oh, here we go. Sorry. One more. Christopher l, how long until Vercubra is irresistible? Well, it's a good word. To potential partners or acquirers. The process last year must have given a reasonable insight into this. It did, Chris. Oh, yeah. Thank you. How long until it's irresistible? I mean, irresistible is a very, very strong word. You know? I I think it it's still dependent on on drill results. You know, we we have 46,000 meters of historic drilling, but you can't validate that without new drilling. So, it's it's a derisk it's derisked strongly from an exploration perspective, but it's not derisked particularly from a development perspective. So we still need to do that work. Another example of that is we've got results talking about recoveries. So simple flotation gave copper recoveries, you know, around the 87 to to 93% mark, I think it was.

23:55 So we're confident that we should get quite good recoveries from flotation. But until we have samples and run it through our own set of tests and analysis, it's still something we need to do to validate those results. So, you know, AMC put up a pre CapEx, which is a bit spurious, but a pre CapEx NPV of 240,000,000 on just the open pit nearly two years ago. You know, if we can put more tonnes in that pit, if we can have a higher copper price, if we can get better recoveries, then obviously subject to the capital costs, then, you know, there's no reason to think that we can't sort of meet those expectations at some point in the future. So that's what we intend to do. But irresistible is is is a is a strong word.

24:44 What I'll say is that I think the option value is is very much there. All the other mines in the region are depleting fast. I think some of them are gonna be shutting down in the next couple of years, And so, you know, there's gonna be a lot of latent infrastructure absolutely desperate for all, and that's usually the sort of time that you can the negotiating angle tips in favor of the person who holds the deposit. So touch wood that sooner rather than later. Paul has just asked about added Vekuba drilling and the met test work. None of none of that's new new information, Paul, based on the prospectus which we put out in October last year in the capital raising. So both the met test work and this drilling were budgeted for in that prospectus.

25:33 Perfect, Alex. Let me just jump in there. Thank you very much for answering those questions from investors. Of course, the company can review all the questions submitted today, and we will publish responses out on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which is particularly important to the company, Alex, could I just ask you for a few closing comments? Yeah. Thank you very much. Look. I really appreciate all of you joining us today. Patience, obviously, over December, January as we do things like wait for results, and we also enjoy a bit of a break over the winter Christmas. That's for for some of us as well despite my team mostly being on-site for the bulk of that time. We continue to spend the money that you've given us very wisely. We are very, very cautious about what that capital gets spent on, and we're very aware that that every dollar needs to provide value to shareholders.

26:24 We believe that the latest set of results of the Cuba will continue to achieve that that task. And, on top of that, you know, we continue to to do relatively low cost work in developing our portfolio for these tier one targets, the sort of targets which major, major companies get really interested in. So thank you for your continued support. You know, I I really hope that our share price will react accordingly to the to the positive news, and I certainly think Kazakhstan's a fantastic place to continue to operate as we see more and more interest grow in this in for this jurisdiction. So watch this space for 2025, but it's gonna be a good ride. Thank you. Alex, thank you once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

27:15 This will then take a few minutes to complete, which I'm sure will be greatly valued by the company. On behalf of the management team for ESTAR RESOURCES PLC, we'd like to thank you for attending today's presentation, and good morning to you all. Thank you.