Announcement PDF RNS Number : 8347W East Star Resources PLC 23 August 2022 THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. East Star Resources Plc ("East Star" or the "Company") Half Year Report for the Period Ended 31 May 2022 East Star Resources Plc (LSE:EST), the Kazakhstan-focused gold, rare earths and copper explorer, is pleased to present its interim results for the six-month period ended 31 May 2022. Highlights · Re-listed as a Kazakhstan-focused gold and copper explorer on 10 January 2022 following completion of the acquisition of Discovery Ventures Kazakhstan Limited ("DVK") and an oversubscribed fundraising of £3.1 million · Alex Walker, CEO of DVK, appointed Director and CEO of the Company (based full time in Kazakhstan) · Announced on 26 January and 16 May 2022 assay results from RC drilling in September 2021 on the Apmintas Licence in the Chu-Ili gold belt including a "discovery hole" returning 63m at 4.51 g/t Au from surface, including 19m @ 14.36 g/t from 44m and anomalous gold across all Eshkilitau occurrences, confirming a gold bearing system with a strike of more than 4km · Announced on 3 February 2022 historic data which added a new target on the Apmintas Licence - Southern Shabdar - to the 2022 drill campaign · Announced on 4 February 2022 the award of a diamond drilling contract for 5,000m of drilling in 2022 focused on the Chu-Ili Orogenic Gold Belt · Announced on 7 March 2022 the completion of processing of 481km2 of close spaced drone magnetics flown in September 2021 over the Dalny Licence resulting in 11 target areas prospective for gold mineralisation being identified · Announced on 8 March 2022 historical drill results acquired over the Eshkilitau II target on the Apmintas Licence resulting in the target being added to the 2022 drill programme · Announced on 13 April 2022 the completion of processing of 380km2 of closed spaced drone magnetics flown between July and October 2021 over the Apmintas Licence resulting in 22 target areas prospective for gold mineralisation being identified · Announced on 18 May 2022 a farm-in for up to 90% of the Talairyk Ionic Adsorption Clay (IAC) Heavy Rare Earth Element (HREE) project in the Kostanay region of Kazakhstan o Low-cost and zero cash payment entry to a geologically de-risked IAC hosted HREE deposit Post Period End · Announced on 30 June 2022 high grade assay results from rock chip samples taken during geological surveys conducted over the Alatagyl target on the Dalny Licence · Announced on 6 July 2022 the completion of 3,640.2-line km of helicopter electromagnetic survey conducted over the Rudny Altai volcanogenic massive sulphide ("VMS") belt licences o Included 153.5-line km of 100m spaced infill survey over three target areas with particularly strong electromagnetic conductors · Announced on 25 July 2022 the commencement of diamond drilling on the Apmintas Licence · Announced on 8 August 2022 the award of an additional 134.7km2 exploration licence at the Talairyk rare earths project, also prospective for Ionic Adsorption Clay (IAC) hosted heavy rare earth elements · Announced on 15 August 2022 the award of three new licences on the Rudny Altai VMS belt, incorporating two historic operating copper-lead-zinc mines, one known deposit, and many historical mineral occurrences · Announced on 18 August 2022 an interim drilling update on the Apmintas licence detailing the completion of four boreholes totalling 970 metres being drilled on the Novoe target. The boreholes showed wide intersections of quartz diorite containing interspersed quartz veining and sulphides with some more intense sections of alteration Sandy Barblett, Non-executive Chairman, commented: "Considering East Star re-listed just seven months ago, the pace and quality of progress in Kazakhstan has been exceptional and I would like to commend the executive team for their efforts. Being able to move this swiftly to secure new opportunities such as the rare earths project and additional VMS licences, or to oversee geophysical work such as the under-budget EM survey on the VMS licences, is precisely why the CEO is stationed in Kazakhstan giving the Company a genuine first-mover advantage and the ability to get things done. If you believe, as we do, in the extraordinary mineral exploration potential of Kazakhstan, there is no other pure-play listed explorer with boots on the ground through which to access this opportunity - this is an incredibly exciting period for the Company and our shareholders." For further information visit the Company's website at www.eaststarplc.com, or contact: East Star Resources Plc Alex Walker, Chief Executive Officer Tel: +44 (0)20 7390 0234 (via Vigo Consulting) Peterhouse Capital Limited (Corporate Broker and Placing Agent) Duncan Vasey / Lucy Williams Tel: +44 (0) 20 7469 0930 Vigo Consulting (Investor Relations) Ben Simons / Tara Benniman / Peter Jacob Tel: +44 (0)20 7390 0234 About East Star Resources Plc East Star Resources is focused on the discovery and development of gold, rare earth, and copper deposits in Kazakhstan. With an initial nine licences covering 1,687 sq km in three mineral rich districts, East Star is undertaking an intensive exploration programme, applying modern geophysics to discover minerals in levels that were not previously explored. The Company also intends to further expand its licence portfolio in Kazakhstan. East Star's management are based permanently on the ground, supported by local expertise, and joint ventures with the state mining company. Follow us on social media: LinkedIn: www.linkedin.com/company/east-star-resources/ Twitter: www.twitter.com/EastStar_PLC Subscribe to our email alert service to be notified whenever East Star releases news: www.eaststarplc.com/newsalerts The person who arranged for the release of this announcement was Alex Walker, CEO of the Company. Chairman's Statement On 10 January 2022, East Star announced it had raised gross proceeds of £3.1 million by way of an oversubscribed placing and subscription and had been readmitted to the Official List of the London Stock Exchange by way of a Standard Listing following its acquisition of 100% of the share capital of Discovery Ventures Kazakhstan Limited ("DVK") (the "Acquisition"). As a result of the Acquisition, East Star owns 100% of DVK which was formed for the purpose of identifying and developing gold and base metals projects in prospective regions of Kazakhstan. Kazakhstan has a rich mining history for gold and base metals but is relatively underexplored and has lacked modern exploration since independence from the Soviet Union in 1991. The Board believes the exploration and development opportunities offered by the Company's projects has the potential to generate significant value for shareholders. The Company's strategy is built on three main pillars: · Identify highly prospective exploration ground and brownfields projects in known mineral districts with demonstrated historical exploration success and limited application of modern exploration techniques · Develop proven and out-of-the-box concepts for potential mineral targets and efficiently conduct exploration by application of state-of-the-art methods and equipment · Partner with existing companies via joint venture or farm-in Management have worked well with our partners and stakeholders in Kazakhstan. Indeed, on 20 April 2022 the Company announced that all four exploration licences under the joint venture with Kazakhstan national mining company Tau-Ken Samruk were transferred to newly established joint venture companies within the Astana International Financial Centre (AIFC) owned 80% by DVK and 20% by Tau-Ken Samruk. Chu-Ili Orogenic Gold Belt Licences - Apmintas and Dalny On 26 January 2022, the Company announced the first batch of assay results from reconnaissance Reverse Circulation (RC) drilling undertaken in September 2021 on the Apmintas Licence. The results showed outstanding high-grade intersections including a "discovery hole" at the first drill target at Novoe returning 63m at 4.51 g/t Au from surface including 19m at 14.36 g/t from 44m. On 16 May 2022, the Company announced further assay results from RC drilling in September 2021 on the Apmintas Licence. Highlights included 14m at 2.54 g/t Au from 40m on the Eshkilitau II target. Anomalous gold was recorded across all Eshkilitau occurrences, confirming a gold bearing system with a strike of more than 4km. This and other data were processed to determine strike extent and direction and are being used in planning the diamond drilling exploration which commenced on 25 July 2022 ("2022 Drill Campaign"). On 3 February 2022, the Company announced the acquisition of additional historic data which added a new target - Southern Shabdar - to the 2022 Drill Campaign. Historical results included: · 24.9m @ 2.86 g/t Au · 8.2m @ 13.0 g/t Au · 5m @ 4.89 g/t Au from 53m · 1m @ 24.8 g/t Au from 15m and 2m @ 39.3 g/t Au from 28m; and · 2m @ 39 g/t Au from 275m downhole On 7 March 2022, the Company announced the completion of processing of 481 square kilometres of close spaced drone magnetics flown in September 2021 over the Dalny Licence. This has resulted in 11 target areas prospective for gold mineralisation being identified along structurally prospective sections of the first-order, deep-crustal faults totalling more than 50km of strike. On 8 March 2022, the Company announced historical drill results acquired over the Eshkilitau II target on the Apmintas Licence. Based on the Company's analysis, Eshkilitau II was added as a target for the 2022 Drill Campaign. Historical results included: · 1m @ 7.86 g/t Au from 27m · 1m @ 7.00 g/t Au from 5m · 2.8m @ 4.67 g/t Au from 19m · 1m @ 4.62 g/t Au from 25m · 4m @ 2.04 g/t Au from 47m and 1.3m @ 8.2 g/t from 122.7m · 6m @ 1.6 g/t from 61m · 2m @ 28.8 g/t Au from 196m; and · 7m @ 1.34 g/t Au from 37m and 1m @ 13.61 g/t Au from 53m On 13 April 2022, the Company announced the completion of processing of 380km2 of close spaced drone magnetics flown between July and October 2021 over the Apmintas Licence. Highlights included: · 22 targets highlighted for follow up work - most of which are under 10-30m of cover · Majority of targets represent structural settings for classic orogenic gold mineralisation including duplex structures, flexures and step-over zones along second and third order structures · 9 targets with historical gold occurrences including Novoe, Southern Shabdar and Eshkilitau II with previously announced high grade gold intersections from drilling · Another 9 targets have existing historical geochemical anomalies of known gold pathfinder elements including arsenic, antimony, bismuth and copper On 30 June 2022, after the period end, the Company announced high grade assay results from rock chip samples taken during geological surveys over the Alatagyl target on the Dalny Licence. The 2022 Drill Campaign got underway on 25 July 2022 and aims to extend past intersections and grades along strike and at depth, with the potential to discover economic deposits from exploration of only a small part of the Apmintas Licence. By using diamond core, work can also be undertaken on the minerology and metallurgy including conducting 'gravity recovered gold' testing to begin establishing a processing route for eventual production. On 18 August 2022, the Company announced an interim drilling update on the Apmintas licence detailing the completion of four boreholes totalling 970 metres being drilled on the Novoe target. The boreholes showed wide intersections of quartz diorite containing interspersed quartz veining and sulphides with some more intense sections of alteration. Rudny Altai VMS Licences On 25 May 2022, the Company announced the commencement of a helicopter electromagnetic ("HEM") survey on the Company's Rudny Altai volcanogenic massive sulphide ("VMS") licences in Eastern Kazakhstan. The survey was completed on 6 July 2022, with data processing and technical review and targeting currently underway. The execution of the survey was excellent, with the survey completing faster, and at a significantly lower cost, than originally budgeted. The results from the survey are expected to provide East Star with some immediately drill-ready targets and targets requiring further field and geophysical work prior to drilling. It is expected that these targets will be identified by the end of 2022 with initial drilling to be conducted during the field season of 2023. On 15 August 2022, after the period end, the Company announced the award of three new licences on the Rudny Altai VMS belt, incorporating two historic operating copper-lead-zinc mines, one known deposit, and many historical mineral occurrences. We're extremely excited by these licences as the grades of mines in the region could be considered world class and the infrastructure for development including labour, rail, road, power, water, processing facilities and smelters are all within the very near vicinity. Talairyk Ionic Adsorption Clay (IAC) Heavy Rare Earth Elements (HREE) Project On 18 May 2022, the Company announced a farm-in to the Talairyk Licence - an IAC Heavy Rare Earth Element project in the Kostanay region of Kazakhstan. The Talairyk Licence is 10km2 and represents a low-cost entry to a geologically de-risked IAC hosted HREE deposit, with 19,962 tonnes of contained Total Rare Earth Oxides (TREO) including 4,300 tonnes of yttrium oxide at an average of 7.5m from surface (1994 resource model). The deposit bears the same geochemical signature as the IACs of South China from where most of the world's HREEs are currently supplied. There is a database which includes 128 core holes and 61 auger holes for 3,755 samples. The Company's JV partner is Phoenix Mining whose team includes a senior mining executive and a leading lawyer in Kazakhstan. This farm in represents why East Star is exploring in Kazakhstan. There are very few places in the world where a company can find a project of this quality and potential and with this amount of data that has not undergone any work since 1994. After period end, on 8 August 2022, the Company announced the award of a new exploration licence comprising 59 blocks ("Talairyk 1") which now forms part of the Talairyk HREE Project. Talairyk 1 covers 134.7km2 and is contiguous with the 10km2 Talairyk Licence. Talairyk 1 will be included in the farm-in agreement with Phoenix Mining, with East Star expenditure on Talairyk 1 also contributing towards the agreed earn-in milestones. Key East Star Financial Indicators - Cash and cash equivalents at period end: £3.2 million Loss before taxation for the period: £2.1 million (includes £1.6 million share based payments (non-cash) on acquisition of DVK) Net cash flow for the period of £1.9 million Net assets of £4.5 million Summary I would like to finish by thanking Alex Walker and his senior management team based in Almaty for their excellent progress, as well as my fellow Board members and our shareholders for their support as we travel this exciting journey of building this unique opportunity into a profitable company. Responsibility Statement We confirm that to the best of our knowledge that the Interim Report: · has been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting; · gives a true and fair view of the assets, liabilities, financial position and profit/loss of the Company; · includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and · includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions. The Interim Report was approved by the Board of Directors and the above responsibility statement was signed on 22 August 2022. ……………………………….. Sandy Barblett - Chairman EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME FOR THE 6 MONTH PERIOD ENDING 31 MAY 2022 Unaudited Unaudited Unaudited Period ending 31 May 2022 Period ending 31 May 2021 Year ended 31 December 2021 £'000 £'000 £'000 Administrative expenses (399) (74) (80) Operating loss (399) (74) (80) Finance Income (93) - - Note Continuing Operations Reverse acquisition expense 7 (1,626) - - Loss before taxation 4 (2,118) (74) (80) 91 2 (4) Total comprehensive loss for the year attributable to shareholders from continuing operations (2,027) (72) (84) Basic & dilutive earnings per share - (£ pence) (1.435) (168.412) (133.194) Other comprehensive income The notes form an integral part of the Condensed Consolidated Interim Financial Statements EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2022 Unaudited Unaudited Unaudited As At 31 May 2022 As At 31 May 2021 As At 31 December 2021 Note £'000 £'000 £'000 26 22 25 6 1,039 - - 1,065 22 25 Cash and cash equivalents 3,205 154 16 Trade and other receivables 327 89 941 - 95 72 TOTAL CURRENT ASSETS 3,532 338 1,029 TOTAL ASSETS 4,597 360 1,054 NON-CURRENT ASSETS Fixed assets Intangibles TOTAL NON-CURRENT ASSETS CURRENT ASSETS Other current assets EQUITY Share capital 9 1,823 51 51 Share premium 9 5,905 132 132 Share based payment reserve 10 106 - - Share capital to be issued 7 3,750 - - 93 (2) 2 (4,932) - - Retained earnings (2,198) (75) (80) Non controlling interest (0.03) - - TOTAL EQUITY 4,547 106 105 Borrowings - 235 863 TOTAL NON-CURRENT LIABILITIES - 235 863 CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES 50 50 50 19 19 254 86 86 949 TOTAL EQUITY AND LIABILITIES 4,597 360 1,054 Foreign exchange reserve Reverse acquisition reserve 7 NON-CURRENT LIABILITIES The notes form an integral part of the Condensed Consolidated Interim Financial Statements. The Condensed Consolidated Financial Statements were approved and authorized by the Board of Directors on 22 August 2022: ……………………………. Sandy Barblett - Non Executive Chairman EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTH PERIOD ENDING 31 MAY 2022 Share Capital Share Premium Share based payment reserve 0.07 - - - - (2) - - (74) - - (74) (2) - - (2) - - (74) - (76) 51 132 - - - - - 183 51 132 - - - - - 183 51 132 (2) - - (75) - 106 Loss for period - - - - - (5) - (5) Other comprehensive income Total comprehensive income for year Balance at 31 December 2021 - - - 4 - - - - 4 - - - 4 - - (5) - (1) 51 132 2 - - (80) - 105 Loss for period - - - - - - (2,118) - (2,118) Other comprehensive income Total comprehensive income for year - - - 91 - - - - 91 - - - 91 - - (2,118) - (2,027) 1,373 4,210 - - - - - 5,583 - - - - - - - 58 £'000 Balance at 1 December 2020 Loss for period Other comprehensive income Total comprehensive income for year Transactions with owners in own capacity Ordinary shares issued Transactions with owners in own capacity Balance at 31 May 2021 Transactions with owners in own capacity Ordinary shares issued Broker warrants 58 Foreign exchange reserve Reverse acquisition reserve Share Capital to be issued Retained Earnings - - - (0.6) - (0.5) Total Equity NCI issued Employee options issued Share issue costs Recognition of PLC equity at acquisition date Remove share capital of DVK Issue of shares for acquisition of subsidiary Reverse acquisition of DVK Account for NCI on incorporation of new entities Transactions with owners in own capacity Balance at 31 May 2022 - - 48 - - - - - 48 - (105) - - - (473) - - - (105) (473) (51) (132) - - 183 - - - - 450 1,800 - - (6,268) 3,750 - - (268) - - - - 1,626 - - - 1,358 - - - - - - - (0.03) (0.03) 1,772 5,772 106 - (4,932) 3,750 - (0.03) 6,562 1,823 5,905 106 93 (4,932) 3,750 (2,198) (0.03) 4,547 EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS STATEMENT OF CASHFLOWS FOR THE 6 MONTH PERIOD ENDING 31 MAY 2022 Unaudited Unaudited 6 month period ended 31 May 2022 6 month period ended 31 May 2021 £'000 £'000 (2,118) (74) 1,626 82 126 18 2 - 346 (158) (78) (189) 19 (242) Cash flows from investing activities Investment in fixed assets Spend on exploration assets Net cash flow from investing activities (0.8) (1,039) (1,040) (22) (22) Cash flows from financing activities Proceeds from Issue of Shares 3,100 178 Cash flow from operating activities Loss for the financial year Adjustments for: Share based payment on reverse acquisition Share based payment reserves Foreign exchange Listing expenses settled in shares Changes in working capital: Decrease / (increase) in trade and other receivables Increase / (decrease) in trade and other payables Net cash outflow from operating activities Share Issue Costs Borrowings Net cash flow from financing activities (105) 2,995 222 400 Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Foreign exchange impact on cash Cash and cash equivalents at end of the period 1,877 1,353 (25) 3,205 136 1 17 154 EAST STAR RESOURCES PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTH PERIOD ENDING 31 MAY 2022 1 General information East Star Resources Plc was incorporated under the Companies Act 2006 on 17 November 2020 in England and Wales under the name Cawmed Resources Limited and remains domiciled there with Registered Number 13025608. The Company subsequently changed its name to East Star Resources Limited on 27 January 2021 and on 3rd March 2021 re-registered as a plc. The following condensed consolidated interim financial statements are consolidated to include the Company and all its subsidiaries ("Group"). The address of its registered office is Eccleston Yards, 25 Eccleston Place, London SW1W 9NF, United Kingdom. The principal activity of the Group is to explore opportunities in the natural resources sector specifically in relation to gold and copper extraction. The Group has taken significant steps in the period with the acquisition of Discovery Ventures Kazakhstan ("DVK"), a Kazakhstan based subsidiary which jointly holds multiple exploration licenses. The Company was suspended from trading on 19th July 2021 whilst managing a reverse takeover transaction and was then re-admitted to trading on 10th January 2022. 2 Accounting policies IAS 8 requires that management shall use its judgement in developing and applying accounting policies that result in information which is relevant to the economic decisionmaking needs of users, that are reliable, free from bias, prudent, complete and represent faithfully the financial position, financial performance and cash flows of the entity. 2.1 Basis of preparation The condensed consolidated interim financial statements ("interim financial statements") have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" (IAS 34). The interim financial statements have been prepared on the historical cost basis, except for assets and liabilities measured at fair value through profit and loss, and are presented in pounds sterling, which is the currency of the primary economic environment in which the Company operates. All amounts have been rounded to the nearest pound, unless otherwise stated. The interim financial statements have not been audited but the Company has engaged the Company's auditors to perform a limited scope review in accordance with the International Standard on Review Engagements 2410 issued by the Auditing Practices Board. The interim financial statements do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The figures have been prepared using applicable accounting policies and practices consistent with those adopted in the audited annual financial statements for the year ended 30 November 2021. The interim financial statements are for the six months to 31 May 2022, being six months from the financial year end for the Company being 30 November 2021. The interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual audited financial statements for the period ended 30 November 2021. The Company has prepared the interim financial statements using reverse acquisition methodology and therefore has presented the comparatives for the accounting acquirer (legal subsidiary - DVK). As per IAS 34 the comparative data for the comparable year-to-date period has been presented as well as the year-todate figures for the immediately preceding financial year being 31 December 2021. 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 parent company, East Star Resources is Pounds Sterling (£) as this is the currency that finance is raised in. All subsidiaries are based in Kazakhstan and the functional currencies of these subsidiaries is Kazakhstan Tenge. All subsidiaries are required to report in United States Dollars ($) and this is the presentational currency of all subsidiaries. The presentational currency of the Group is Pounds Sterling (£). The business is not considered to be seasonal in nature. New standards, amendments and interpretations adopted by the Group During the current period the Group adopted all the new and revised standards, amendments and interpretations that are relevant to its operations and are effective for accounting periods beginning on 1 December 2021. This adoption did not have a material effect on the accounting policies of the Group. New standards, amendments and interpretations not yet adopted by the Group. The standards and interpretations that are relevant to the Group, issued, but not yet effective, up to the date of these interim Financial Statements have been evaluated by the Directors and they do not consider that there will be a material impact of transition on the financial statements. 2.2 Principal risks and uncertainties During the period the Company successfully completed the acquisition of DVK and the incorporation of two new subsidiaries all of which are based in Kazakhstan. Due to these new operating jurisdictions the principal risks pertaining to the Company and its business operations have changed materially. An outline of the new risks attributable to the Group are listed below: i) Jurisdictional & Political Risk The Company is now operating in Kazakhstan and while the country has been stable for a sustained period it did experience some political unrest in early 2022. This has since been resolved and political stability has returned to the nation with the operations of the Company being unaffected. The level of risk is constantly monitored by the CEO who is based in country allowing for an appropriate and timely response to any chance in the risk exposure. ii) Operational Risk The Company is now actively pursuing exploration activities in Kazakhstan. As well as the general risks involved with exploration activities the Company holds exploration licenses jointly with Tau Ken Samruk which is the holding company for the Kazakh government's stakes in mining operations. Dealing with multiple governments across multiple jurisdictions is a new risk for the Company however the Company is comfortable that the team of advisors in place has the requisite skills to deal with any issues that may arise. iii) Currency Risk Post acquisition of DVK a significant proportion of the Group's operational costs will be denominated in Kazakhstan's tenge however market prices for commodities that will hopefully be extracted will be determined is US Dollars. Consequently changes in the exchange rates of these currencies could positively or negatively impact cash flows. As the Company has not begun to extract and sell commodities any potential impact is limited currently to expenditure and the Directors believe that this level of risk is acceptable to the Company at this time. 2.3 Leases As Per IFRS 16 leases are required to be recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use unless the Group chooses to utilize an exemption. The Group entered into two leases on 1 March 2022 and will be treating the leases on a straight line basis as an expense in the profit or loss as per the short-term lease exemption for leases with terms of 12 months or less. 2.4 Going concern The directors have assessed the Company's ability to adopt the going concern b