East Star Resources (LSE:EST) — VMS Exploration Update

0:00 Good morning, and welcome to the ESTAR RESOURCES PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab 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 receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to CEO, Alex Walker. Good morning, sir.

0:31 Good morning. Thank you very much for, for having us today, and and thank you all for dialing in. The purpose of this presentation is is is twofold. One is to give everyone a bit of an update on the exploration work we've been conducting this year on other targets within the Rudney Altai VMS Belt, on our licenses there. And it's also to make an introduction to doctor Tremaine Woods who has been our exploration manager here at EST STAR since March of this year, and he can take you a little bit through, his his resume and the work that he's been conducting in the East Region. So to that end, I'll, I'll use that as an opportunity to hand over to Tremaine, to introduce himself and and to take you through, the targeting work that we've done this year and and some of the targets, that we're undertaking with our IP

1:21 as we speak. Over to you, Tremaine. Thanks, Alex. Morning, everyone. My name is Tremaine Woods. I'm a geologist. I have a PhD from the University of the Advance France in in Johannesburg, South Africa. I've been based for the last two years out in Kazakhstan, previously with a consultancy where I did a large number of projects throughout Kazakhstan. And I've recently, this year, moved to ESTAR RESOURCES, where my main focus has been on the VMS targets in the East Region. The East Region is quite interesting for us. There's a bunch of known deposits and mines in the area, and we feel it's quite underexplored.

2:11 There's a lot of information in the area that we've been using. You can see that there's quite a large strike length along a known shear zone that hosts deposits and it hosts a number of key infrastructure that we plan to integrate into our work. In the area, the deposit model that we're exploring for is quite a classical VMS system with a volcanic pipe feeding up through the seabeds, bringing in numerous hydrothermal metals. And this is the deposit model that's been known in the area and known to work.

2:57 There are some key differences to this, but the main thing is that these produce an alteration signature and some other geological features that we can track down in order to find deposits.

3:13 What this has meant is that over this year, we've really been able to refine an approach that started three years ago, really, with our Heli TEM survey of these over the license area. And since then, we've just been refining and refining our targets further and further until the current point where we've got to deposit scale targeting. And today I'm going to present some of the targets that really have us excited in this area. These targets are obviously different from our Vancouver deposits, which is seeing work currently. And these targets we've been working on throughout this year following up on previous work that's been done and really expanding on the geology and information that we have of these targets.

4:06 In a previous news announcement, we announced some of the areas that we've been working on and mapping on. You can see the image on the right shows a number of those targets and known mineralization points in the area. And this goes with EM anomalies that we found with our own HeliTem survey, and the number of historical anomalies that we've been sifting through and following up on. Of these, you can see that there's a number of targets that I was really excited, and those are targets that we've designed some IP ground survey lines over. And those have just commenced this week.

4:53 One of these targets that we're quite excited about is Talofskoye. It's a known deposit with historically reasonable grades, fairly small. However, in this region we also see that there's a lot of potential that wasn't tested. So under this target there's quite a large historical anomaly. Our own mapping and sampling found really high grade samples at surface. And our IP survey is designed to test the lower portions of this area for additional mineralization. Part of what has us so excited about this is that historical reports called this a barren gossam. And as you can see from some of those samples that we took at surface, it clearly isn't barren. There's quite a bit of mineralization showing at surface.

5:53 And the IP survey here is designed to help us find any mineralization at depth. Further to the east of the previous Tel Avskaya target is the Nikolayevskaya East area. And you can see that it's not too far away from the Nikolaevskoye Mine that's held by CAS Minerals. The target there is a pretty good EM target. And when we went and did some follow-up mapping and sampling of this area, we found some historical trenches as well as some historical pits in the area, but no drilling. So we've decided that the area has a pretty strong signature and that it's worth following up with IP lines. So we've planned a couple of IP lines over one of the strongest EM anomalies. And you can see that coincides the

7:00 with the strong magnetic signature in the area. We've got two IP lines here to test for any mineralization a little bit deeper down. The next target this target is probably one of our most exciting targets. We really, really do think highly of this. It's the Ruleka target, Ruleka North. It's north of the known deposits. The Ruleka deposits has historically been defined as 14,000,000 tons at about 1% copper and 3.5% zinc. All of that drilling is done to the south and there's about eight meters of rock unit that hasn't been drill tested before.

7:52 But where there has been drill testing right at the peripheries of this unit, we've seen lenses of sulfide mineralization as well as some fairly good copper equivalent grades as you can see from the two profiles on this map here. Profiles on the right are from drill holes that were drilled in the very south of this unit and the very north of this unit. So these are really strong indications that there is mineralization within this unit. And to go with that, there's really strong IP signature over the area and EM signatures. And then finally, over a little bit further to the south, we have a new target. This target didn't present as an EM anomaly.

8:50 However, there is really, really strong historical evidence and a number of pits and mineralization features at surface.

9:01 On the left you can see some of the mapping that we've been busy with this year. We've also taken a number of samples that we're going to be sending to test the geochemical signature of this deposit. We've also noted a number of mineralized pits, mineralized features within this deposit. And there is a historical drill hole that intersected good grades of copper, albeit right in the periphery of the outcropping deposits. So in order to define if there's mineralization at depth, we've planned a number of IP lines over this target. And that will be to define any mineralization a little bit deeper down than what has historically been tested in this deposit.

9:52 And that's our most exciting targets in a nutshell. It's not all of the targets. If we went through all of our targets, we'd be here for quite some time. But these are the ones that have us most interested and we're following up on these targets in the coming year.

10:13 Thanks very much, Tremaine. So that was a really good summary of of essentially, the work program that we're undertaking at the moment is the four targets which we are currently conducting IP over. We we conducted IP over a couple of other targets last year, which gave us a really strong indication, and some of those we, have been conducting soil sampling over as well. So we expect these targets to be added to the ones that we have currently in the portfolio, and then we'll be able to rank those for for drill testing, hopefully, fairly early on in the new year. The other really important point to note is just the geological understanding that's gone into this breakdown. So it's not just these deposits that are on our our license that we've been trying to refine, but we've been actually doing a lot of effort to understand the entire, you know, the entire belt.

11:06 I've said in the past, we've we've sampled 17 current and past producing mines in the region, so that's sampling the ore, the hanging wall, the football to get a really good handle on the alteration footprint and the rock packages that host these deposits. And now we can use those 17 examples as analogies, a, for what we're looking for, but, b, also as a targeting, mechanism to say that we wanna be in the right units that were done at the right time. And if we're in this unit, it's the same unit that produced Nikoloskoye, for example, then we know that's that's the the correct horizon to be in. So if we have an anomaly there, it's a it's a it's an anomaly very well worth chasing. So we're really excited by these, and and statistically, there are gonna be a, you know, quite a large number of of of other deposits in the region. And, fingers crossed, these these will be some of them.

11:56 So to that end, I think we'll pause for a moment. There's a few questions that have started to come in, and and I'll, give you all just a moment to ask anymore before I I start on those. Alex Tremaine, thank you very much for your presentation. And if I may just bring back up your cameras. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. As you can see, we have received a number of questions throughout today's presentation. I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.

12:39 Well, I might just kick off then, and I'll read out the questions and then answer them if it's appropriate for me. I'll do so, and, otherwise, I'll I'll hand over to Tremaine. First question is given the scale of the IP survey and subsequent drilling, what's the anticipated budget for this phase of exploration? Do you anticipate needing additional funding if the IP survey uncovers additional high priority targets? The answer to the first part, what's the additional what is the budget for the IP survey? This survey is expected to cost in the realm of, 40,000 US dollars to provide hopefully four additional targets. We have budgeted as per the prospectus for to drill additional targets at least three of those. So two to three drill holes over three targets of around 200 a 150 to 200 meter per drill hole.

13:27 That's diamond drilling. So if there's a chance that we can do

13:31 RC drilling, if that is if it's amenable for that and it makes more sense, then arguably we could do more meters. However, we would hope that that two to three holes per target will be enough to get a good handle on whether or not the IP is from charcoal pyrite or sphalerite or or other mineralized mineralization or if it's from another signature such as such as pyrite. But it's well budgeted to test these with with our current funds. Could you please clarify what additional steps or verifications are needed to commence drilling? Are there any foreseeable regulatory logistical barriers to initiate, initiating drilling once ready?

14:11 No is the answer. So with some of these targets, we already have all of the approvals in place to commence drilling already. With some of them, we are commencing that process at the moment, which is called servitude. So we have all permissions to do drilling other than land access on some of them, but everything that we've sought to do to date in the region, we've had approval for very, very quickly. We've got exceptional support from the local acumat. Again, said in the past that this is a region that's been mining for nearly two hundred and fifty years since 1749 Nicoloskoye was discovered. It's one of the major employers of the region, and it has a number of mines that are expected to be shutting in the next couple of years. And so what we see is a huge amount of support locally for our operations here and for the potential for us to make discoveries and continue that employment in the region and the economic benefits to the region.

15:07 Given the independence on weather for completing the IP survey, how are you planning to mitigate potential delays or interruptions caused by bad conditions? Good question. You're right. We are coming into that part of the year as we speak. In fact, the since mobilization, there's been a couple of days where the team have only been open to operate for half days so far. At the moment, the forecast for the next couple of weeks is fairly positive. I think two weeks forecast is only one potential rainy day, so we hope to get a significant portion for work done. However, the contract includes the situation that should the weather window close for us continuously for a ten day period, then, we'll simply move the second part of it into into next year. So what we hope is that we'll get at least two to three targets done this year and then, all of them. But, if that does close, well, then the survey will be finished hopefully by May, June next year.

16:05 Okay. It depends on weather. Alex, why on two separate occasions have you raised money at less than 50% of the highs of the share price being three to four p on both occasions? Is this because circumstances or other reason reasons? As this dilution has badly affected long term shareholders. The intention is never to raise money at a 50% discount to the high of the share price. Unfortunately, you never know what the high of the share price is gonna be and when that's gonna be and and should that continue. You know, the highs of our share price at five pay, I think, are drastically undervalued, and it's as a major shareholder, very upsetting for me raising money at lower levels. Unfortunately, being part of The UK system, you can't do things like in Australia, like trading halt as you undergo a raising process.

16:53 And so what we've seen is our share price drift as we've commenced those capital raising processes. It's a very bitter pill to swallow. It's certainly not our intention, as well as our intention is to find deposits and prove that value to shareholders and have our share price go up. We've done that, but our share price doesn't always reflect accordingly. We've discovered more than 230,000 tons of contained copper, which is in our portfolio, which wasn't when we listed, has a market value of over $2,000,000,000 today in the ground. And we obviously don't know the net present value of extracting that, but I'd love to see that reflected in the share price properly just as I would hope that more discoveries will equally be reflected in the share price properly. So part of that's up to us to get that success and and market that, and part of that's up to the market to reflect that success.

17:42 You know, in many instances, we strongly feel that we're upholding our end of the bargain on that. And so, it's up for us to to promote that accordingly, and and hopefully, the market will eventually realize that value. If not, someone else will. Which of the four targets is showing the most promising indicators so far?

18:02 I don't know if, Tremaine, if you wanna answer that. I I I would suggest maybe we probably can't go into that in more detail. What I would say is all four of them are showing copper at surface, which is huge. In terms of the size of the target, the Rulika one is the largest one that we have so far, but also with these deposits, often they can be steeply plunging, and and you might end up having a much larger ore body with a with a smaller surface signature. Jermaine, do you wanna add any color to that comment to those comments? Yeah. I think all of them have, you know, various amounts of information on them that we've we've uncovered through our work this year. They're all quite exciting, and definitely, as you said, the the Ruleco one seems to have the the largest in signatures, but each of them seem quite exciting in their own right, and we'll need some more information before we, you know, before we can move to the next stage of exploration.

19:02 Thanks. Are you going to sell Vekuba, as you said earlier, in 2024? As we know in 2024, we undertook a process on Vocuba, which I've explained previously and in our last our last report that the the process commenced after we were approached to sell, and so we decided it was the right thing to do in terms of our fiduciary obligation to undertake a process. We weren't happy with any of the proposals that were made today. We continue to have potential for partnerships on Vocobra, and we're still very much open to that. In fact, we've probably got I think today, we've got four parties in the data room that weren't in the data room in the last four, five months. So we've had new entrants come in.

19:51 But as I've stated in the past, again, you know, our feeling is we can't wait on third parties to provide, what they feel is the right value for this project. You know, AMC, our independent expert, put a a a pre CapEx NPV before our Jawkinferred resource of $240,000,000 on this. So we're not gonna be in a position where we're gonna give this away just because some, you know, investors are some investors are eager for an incredibly quick twenty, fifty, 40, or a 100% turn on the share price. If you've got a deposit worth hundreds of millions of dollars, you need to do your best to to try and achieve that value, obviously, at the right discount to that, but at the right time based on the risk of of achieving that value yourself.

20:37 So we can continue to do the work and and try and, close that valuation gap in the not too distant future. But we continue to be open to partnerships, so if the write off comes along, then, you know, we'd we'd look to accept that. What's the potential contained copper tonnage in Vancouver? How deep will the deposit go? The current contained copper tonnage is over 250,000 tons of of copper, and that's before we add zinc and lead, which make up, you know, a reasonable percentage of the economics. How big could it be? That's a very tough question to ask. Again, we we probably wouldn't like to wildly speculate on that. What I would say is at Fukuba, we think the potential for the deposit to grow is there for a couple of reasons. One, a number of the mineralized lenses don't connect in the current resource model, and that's because the drilling is too far apart to to have them connect.

21:31 So we've planned infill drill holes, and if we can get those ore bodies to connect, then that will increase the tonnage quite significantly in those areas. The second reason is is that we believe that the lenses tend to be thicker than what they were historically, and that was largely due due to core recovery Back when these were drilled, fifty to seventy years ago, core recovery was very poor. It was as low as 50% and and really peaked around 70% in, in the ore body. And so now we get core recoveries above 95%, usually closer to a 100%, and so our mineralized lenses tend to be thicker. So that's the second reason why it might increase. And the third reason is that, you know, there's still potential for discovery there.

22:18 You know, we have, for example, a small EM anomaly in the northern part of the project, so we'll be conducting downhole EM as part of this. And if that gives us a, you know, a strong conductor, then we'll look to drill that conductor as part of this program as well. And so there is a potential it can increase. You know, we need to do this drilling at least to give us a better handle on that before we start converting the resource more significantly into indicated and measured. Okay. Can you provide an update on the work that Geotech have been conducting during the summer? So that isn't the purpose of this presentation. We haven't been working with Geotech on the VMS deposit. The work that we've done with them on the set hosted copper has completed.

23:07 So we have our targeted areas. We're not gonna go into that in too much detail, but in until we apply for licenses in the said hosted copper basins, we probably won't be giving away our our targeting approach publicly. So once we've once we've confirmed and applied for those licenses, then we'll be updating the market on on that strategy. Will there be holes drilled reported before the next fundraise? Yes. Next question, considering winter. Yes. That's in considering winter as well. Have the rare earth gold, etcetera, been dropped from the portfolio? The rare earth, yes, and that's been reported. Gold, not completely dropped from the portfolio, but certainly put to the back based on our prospectivity in the East Region.

24:00 What's the plan to get the share price up? Well, as it seems the market deals are required, not forward looking statements. As it seems in this market, deals are required, not forward looking statements. Thank you for that. Oops. Sorry. This is flicking around a lot, I think. Could you put those questions back up? I think I might have missed one. Right. Deals are required. Well, that's, know, that's a fair comment. But, you know, we don't control the market. We don't control what's under the ground. We make sensible decisions on investing for a return on invested capital. I've put more money in at every Capital Rise. In fact, I've put more money in than I've made in disposable income since I started this company. And, you know, I'm very, very happy with the risk reward. I can't control us being offered deals at a significant premium to to our share price, but that's what we're seeking. So if we don't get off of that, then we're not accepting stupid deals.

24:59 So, you know, we will drill, progress the assets, progress the value. We believe in doing that. The odds of closing a commercial transaction are higher. But in the meantime, we're an exploration company. Our intention is to explore and discover deposits, and that's why, you know, on success, these companies get considerable outsized returns. That's what we're here to do and to deliver, and and that's what we'll continue to do. I thought there was one more, but it seems to have closed out from the screen. That's can you hear me, Alex? Yeah. Yeah. There there was one more question. It was have have the rare earth gold, etcetera, been dropped from the portfolio? I don't know if you touched on that, though. No. I did I did answer that. So I thought there was one further one. That was the one. Yeah. Well, to that end, then I hope I've answered all your questions. You Alex, thank you very much indeed. You have indeed answered all the questions. If any further questions do make themselves available, Alex, we'll we'll send to you post today's call.

25:55 Alex, I know investor feedback will be particularly important to you and to the company. We'll shortly redirect those on the call to give you their thoughts and their expectations. But before doing so, I wonder if I may just ask you for a couple of closing comments. Certainly. Well, thanks very much, Mark. Thanks, all the investors for your questions and your time today. You know, we're not I can't say we're particularly happy with the share price, what what company is when their share price trades lower and they have to raise capital lower. However, you know, I continue to invest. Our major shareholders continue to invest. We picked up a new institutional shareholder in the last capital raise. It was a very tight capital raise that that only went out to high net worths, several institutions, and and two or three brokers in The UK who have been supporters of the company and continue to be supporters.

26:41 And so we're well capitalized to execute these programs on IP, testing new targets, and, again, drilling out for CUBA further to to put that through a scoping study. So we really think in the next six to twelve months, we'll be delivering a hell of a lot of value both on for CUBA and Touchwood, making some discoveries along the way, which is which is what we're also, making some additional discoveries along the way, I should say, which is what we're also here to do. So thank you again for your continued support. We'll continue to invest in the ground diligently and, and hope we can deliver those results for all of us, myself included. Great, Alex. Germaine, thank you very much indeed for updating investors this morning. If I could please ask investors not to close this session as we now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of ESTAR RESOURCES, we'd like to thank you for attending today's presentation, and enjoy the rest of your day.