The Kazakhstan-focused explorer has struck a deal with a Chinese mining contractor to fund and build its Verkhuba copper deposit at no cost to the company
Shares in East Star Resources, the LSE-listed Kazakhstan-focused gold and copper explorer, rose 12.5% to 3.6p on Thursday after the company formalised a joint venture agreement with Hong Kong Xinhai Mining Services, a global mining engineering and construction contractor, to develop its Verkhuba copper deposit.
Under the deal, Xinhai will fund an estimated $65 million of costs covering resource drilling, a feasibility study, engineering design and plant construction, earning a 70% stake in the joint venture company upon commissioning.
East Star will be carried through to production at no cost, retaining a 30% interest in a mine with a current inferred resource of 20.3 million tonnes grading 1.16% copper, 1.54% zinc and 0.27% lead.
The joint venture company is to be incorporated in Kazakhstan within 30 days, with resource definition drilling targeted to begin by June 2026.
Chief executive Alex Walker said Xinhai's track record of more than 2,500 completed projects globally, including a processing plant currently under construction in Kazakhstan with a development timeline of less than 12 months, significantly reduced the execution risk typically faced by junior miners transitioning to production.
"At no further cost to East Star, upon commencement of production, our company will hold a 30% interest in a producing mine with an anticipated production profile of more than 10,000 tonnes per annum of copper equivalent metal," Walker said.
Copper was trading at around $12,677 per tonne.