The Kazakhstan-focused explorer East Star Resources Plc has formalised a joint venture agreement with Hong Kong Xinhai Mining Services Limited that creates a pathway to bring the Verkhuba copper deposit into production. This arrangement follows the Heads of Agreement announced on 11 December 2026 and converts that intent into a contractual structure that will see Xinhai fund the project through commissioning in return for an earn-in of up to 70% of the newly formed joint venture company (JVCo).
The tie-up pairs East Star’s regional knowledge and exploration inventory with Xinhai’s global EPC capabilities and balance sheet. Xinhai is described as a specialist in process engineering, procurement and construction and has completed both >500 EPC contracts and more than 2,500 projects globally according to company disclosures. Under the agreement East Star will be carried to production at no further cost and will retain a 30% interest in a producing mine should the project reach that stage.
Table of Contents:
The commercial and corporate framework
The parties will incorporate the JVCo in Kazakhstan within 30 days under the Astana International Financial Centre, with the transfer of Licence 1795 into the JVCo. Xinhai will provide working capital and fund all costs required to progress Verkhuba from definition drilling through to commissioning and a handover of operations upon issuance of the Completion Certificate. Following commissioning the JVCo will take full responsibility for operational management and will distribute dividends pro rata to shareholders when the board determines it appropriate.
Farm-in mechanics and milestone funding
The farm-in is structured as a staged earn-in in which Xinhai increases its equity as it meets funding and technical milestones. Initial funding supports resource definition and metallurgical sampling, with subsequent tranches covering the feasibility study, detailed engineering and the transfer of major construction equipment. Xinhai’s total estimated investment to complete feasibility, development and plant construction is approximately US$65 million, which will be borne by Xinhai through to successful commissioning.
Milestone schedule and resulting ownership
The schedule sets incremental share allocations to Xinhai as key deliverables are achieved. At first, an initial A$1.5 million payment for resource infill work yields 15% (Xinhai) / 85% (East Star). Completion of a feasibility study sufficient for a Kazakh mining licence increases Xinhai to 20%. Further funding of detailed engineering moves Xinhai to 30%. Transfer of construction equipment (Bill of Lading) takes Xinhai to a controlling position at 51%, and successful commissioning of a 1 million tonne per annum processing plant culminates in a 70%/30% split in favour of Xinhai. Governance arrangements allow board appointment adjustments once Xinhai exceeds 50% ownership.
Technical plan and near-term work
The immediate activity window aims to begin resource definition drilling and metallurgical sampling by June 2026. Initial drilling focus will be the shallow open pit domain where previous holes returned encouraging intercepts, including: VU_23_DD_001: 2.9m @ 2.07% CuEq from 19.4m and 15.0m @ 1.56% CuEq from 27.4m (including 10m @ 2% CuEq from 30.4m); VU_23_DD_002: 11.8m @ 1.41% CuEq from 171.0m and 10.3m @ 1.77% CuEq from 186.8m; and VU_23_DD_003: 2.4m @ 2.45% CuEq from 74.0m and 5.0m @ 0.86% CuEq from 101.4m. These infill holes are intended to support the Stage 2 feasibility study and the mining licence application.
Resources and surrounding targets
East Star brings a currently quoted JORC inferred resource for Verkhuba of 20.3 Mt @ 1.16% copper, 1.54% zinc and 0.27% lead. The company also retains 100% ownership of adjacent prospects, including the Soviet-era Rulikha deposit, independently modelled to contain an upper-limit JORC exploration target of 23 Mt @ 2.4% copper equivalent. East Star has indicated it will continue to progress permitting for follow-up work on these targets while the JV advances Verkhuba.
Market context and strategic significance
Management highlights that the arrangement materially de-risks schedule and capital exposure for East Star: there is no direct capital call on East Star to reach production under the agreed farm-in. CEO Alex Walker noted the partnership with an experienced global EPC contractor reduces execution risk for a junior developer, citing Xinhai’s ongoing work on a separate Kazakh processing plant with a sub-12-month construction benchmark. The press release also referenced a copper price of around US$12,677 per tonne at the time of comment, underlining the commercial rationale for advancing the deposit. Separately, market reaction included a share price rise reported to be about 12.5% on the announcement.
Next administrative steps
East Star will incorporate the JVCo and arrange licence transfer within the prescribed 30-day window. Once established, the JV will execute the Stage 1 drilling programme and metallurgical testwork that feed into the formal feasibility study milestone. If milestones are met as planned, Xinhai will escalate its equity while carrying the project to commissioning and operational handover.
