East Star Signs Heads of Agreement for Rulikha Copper in Kazakhstan, Drilling at Verkhuba Continues

• East Star Resources has signed a binding Heads of Agreement for a new, fully free-carried joint venture over its Rulikha copper project, adding a second non-dilutive path to production alongside Verkhuba..
• The Rulikha partners, a locally connected legal figure and an experienced Kazakh mine-building group with a prior exit worth roughly $125 million, will fund all development costs while East Star's 25-35% economic interest remains protected until construction begins.
• Drilling at the flagship Verkhuba copper deposit is progressing with a second rig on site, with the first assay batch due at the lab within one to two weeks.
• Kazakhstan's deep-rooted mining culture and an accelerated environmental approval at Rulikha suggest permitting risk is lower than the market may assume for a foreign-owned explorer.
• The company's $25 million Endeavour Mining gold exploration joint venture remains unchanged, giving shareholders a third free-carried catalyst alongside the two copper projects.

Kazakhstan's copper and gold endowment has drawn increasing attention from investors seeking exposure to new supply outside the traditional mining jurisdictions of Australia, Canada and West Africa. East Star Resources (LSE:EST), a London-listed explorer operating exclusively in the country, has spent five years building a proprietary database of historical Soviet-era exploration data across the region. That work is now converting into deal flow. CEO Alex Walker, in a recent interview, talked about East Star's newest joint venture, at the Rulikha copper project, and provided an update on drilling progress at the company's flagship Verkhuba deposit.

Free-Carried Copper Project: The Rulikha Joint Venture

East Star has signed a binding Heads of Agreement for a joint venture over its Rulikha copper project, its second free-carried development structure after Verkhuba. Unlike Verkhuba, where East Star's own market valuation made a joint venture the economically sensible route, Rulikha's location closer to a village introduced permitting and environmental complexity that Walker judged was better handled by an experienced local partner than by East Star's own team.

The company ran a process among interested parties before settling on a group that has previously built two copper mines in Kazakhstan. Walker described his confidence in the partner's capability plainly:

"Incredibly impressed by their team and their expertise and their track record, and the simple fact that they've assisted us in getting a drilling approval already, much quicker than we expected, is demonstrating that expertise."

The partner group includes two counterparties: Nova, a financing vehicle set up specifically to fund the project, and Orion, the operating team behind two previous Kazakh copper mines. That operating team exited its most recent mine to a Chinese buyer for approximately $125 million within the past four years, indicating both a track record of successful development and financial capacity to fund Rulikha through to production.

Protecting Shareholders

East Star bears no funding obligation under the deal. The partners' initial earn-in percentage crystallises only on completion of the first of either 3,000 metres of drilling or $1.5 million of spend, whichever comes first. The final economic split for East Star sits between 25-35%. If funded with equity, East Star's interest is fixed at 25% from day one. If funded with debt, East Star holds an effective 12.25% interest (25% subject to a 65%-of-cash-flow debt repayment waterfall) until the debt is repaid, at which point its interest rises to 35%.

On the geology, Rulikha carries around 190 historic drill holes across the wider prospect area, though only three fall within the primary target zone which is described by Walker as "exceptional" intersections. East Star's exploration target is built conservatively, using a 0.5% copper cut-off grade pit-shell model rather than extrapolating along strike or at depth.

A planned drilling programme of roughly 3,000 metres, plus a ground electromagnetic survey, will test the two main deposit areas along with two satellite targets: Talovskoye, around one kilometre north, and Rulikha North, roughly 500-600 metres north, where drilling last year returned 120 metres of disseminated sulphide mineralisation. Drilling approval is already in place and East Star expects to begin drilling at Rulikha in the third or fourth quarter of 2026.

Interview with Alex Walker, CEO of East Star Resources

Verkhuba: Drilling Advances Toward a Development Decision

At Verkhuba, East Star's most advanced project, a second drill rig has been added to site and the company is hiring additional staff to keep pace with logging and sampling. The initial phase of a planned 5,000-metre programme is nearing completion at around 3,000 metres, with drill collar planning underway for infill, down-dip and additional target drilling. The first batch of samples is expected to be sent to the lab within one to two weeks.

East Star has hired an in-country mine development specialist to oversee selection of contractors for environmental test work, detailed engineering and metallurgical studies, working alongside the Xinhai Mining team. Xinhai will fund Verkhuba through to production under the existing joint venture in exchange for a 70% interest, with East Star retaining a free-carried 30% and no capital cost exposure - terms consistent with East Star's prior disclosures. Walker noted that Xinhai's own processing plant builds elsewhere in Kazakhstan have historically taken just over 12 months from the start of construction to being ready to operate, a benchmark he hopes to see repeated at Verkhuba.

Kazakhstan's Permitting Environment and Community Support

Walker pushed back on the idea that Rulikha's permitting complexity reflects Kazakhstan more broadly. Land access (servitude) for the Rulikha drill programme was already secured through the local township before the joint venture was even discussed; only the environmental approval process remained outstanding, and Nova's team has already helped accelerate that step. Walker pointed to the long mining history of the surrounding district, where a nearby historic mine has operated since the 1700s, as evidence of deep local familiarity with the industry, from individual households through to regional government.

On timing, Walker was reluctant to commit to firm dates for permitting given the added complexity of a resettlement framework near Rulikha, but said Kazakhstan's mining licence approvals have moved as quickly as six months in comparable cases, and that multi-year delays typical of Australian or Canadian permitting are not the norm.

Endeavour Mining and the Wider Portfolio Strategy

East Star's third free-carried structure, an exploration joint venture with FTSE 100 gold producer Endeavour Mining across two large land packages in northern and central Kazakhstan, remains unchanged since Crux last covered the company. Endeavour has committed up to $25 million in phased exploration funding, with East Star free-carried through to prefeasibility at a 20% interest.

Walker was explicit that East Star intends to remain an active project generator rather than a pure royalty holder, citing the strength of the company's five-year database of historical exploration data as a durable competitive advantage. He indicated the company has no immediate plans to self-fund new project acquisitions while its share price trades at a significant discount to what management believes the two flagship projects are worth, preferring to structure further joint ventures on similar free-carried terms if new opportunities arise.

The Investment Thesis for East Star Resources

• Second non-dilutive copper option: The Rulikha joint venture mirrors Verkhuba's free-carried structure, giving shareholders exposure to a second potential copper mine with no further capital commitment required from East Star.
• Downside protection built into the earn-in: The partners' majority stake at Rulikha only transfers once they have committed substantially more capital and reached construction - not on the initial spend threshold.
• Verkhuba progressing toward a resource and development decision: A second rig on site and assays due within weeks are near-term catalysts investors can track directly.
• Partner quality reduces execution risk: Both the Rulikha operating partner (two prior Kazakh copper mine builds, one exited for ~$125 million) and Xinhai Mining at Verkhuba bring proven development track records.
• Permitting risk may be overstated by the market: Land access at Rulikha predates the joint venture, and Kazakhstan's fastest comparable mining licence approvals have taken as little as six months.
• Third free-carried catalyst via Endeavour Mining: The $25 million gold exploration programme across two Kazakh belts remains a call option requiring no East Star capital.
• Watch items: confirmation of the definitive Rulikha JV agreement (currently a binding Heads of Agreement only), Verkhuba assay results, and the start of Rulikha drilling in Q3/Q4 2026.

Macro Thematic Analysis

East Star's newest deal illustrates a broader dynamic playing out across Kazakhstan's resources sector: experienced local operators with proven mine-building track records are increasingly willing to fund foreign-listed juniors' projects through to production in exchange for a minority interest, rather than requiring outright asset sales. That structure lets companies like East Star retain meaningful upside from Tier 1-scale discoveries while avoiding the dilution that typically accompanies self-funded development in small-cap mining.

The broader jurisdiction remains one of the least-explored major mineral provinces globally relative to its endowment, having seen comparatively little systematic exploration since the 1980s despite a mining history stretching back centuries and infrastructure - roads, rail, smelters, low-cost power - that materially de-risks development compared with genuine greenfield jurisdictions. That combination of historical data depth, existing infrastructure, and a government broadly supportive of new industrial development is what continues to draw major partners such as Xinhai Mining and Endeavour Mining into the country. For a company sitting on multiple free-carried projects, that partner interest itself functions as a form of third-party validation of asset quality, distinct from and reinforcing the exploration data East Star has independently compiled.

TL;DR

East Star Resources has signed a binding Heads of Agreement for a new, fully free-carried joint venture over its Rulikha copper project in Kazakhstan, adding a second non-dilutive development path alongside the existing Xinhai-funded Verkhuba deposit. Partners Nova (financing) and Orion (operations), a group with a prior $125 million mine exit, will fund Rulikha through to production, with East Star's eventual 25-35% interest protected until construction begins. Verkhuba drilling continues with a second rig on site and assays due within weeks. A separate $25 million Endeavour Mining gold exploration joint venture remains unchanged, giving East Star three simultaneous, partner-funded catalysts with no further capital required from shareholders.

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