Annual Report (ESEF) • Nov 16, 2023
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Company Information 1
Chairman’s Review 2
Group Strategic Report 4
Directors’ Report 7
Directors’ Responsibilities Statement 10
Corporate Governance Report 11
Directors’ Remuneration Report 13
Independent Auditor’s Report 17
Group Statement of Comprehensive Income 22
Group and Company Statement of Financial Position 23
Group Statement of Changes in Equity 24
Company Statement of Changes in Equity 25
Group and Company Statement of Cash Flows 26
Notes to the Financial Statements 27
Directors
Ajay Kejriwal
David Cliff
Paul Ensor
Evgeny Vrublevskiy
Martin French (resigned 4 August 2022)
Peter Damouni (resigned 7 February 2022)
Company Secretary
Westend Corporate LLP
Registered Office
6 Heddon Street, London, W1B 4BT
Auditors
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
Brokers
First Equity Limited
Salisbury House
London Wall
London EC2M 5QQ
Solicitors
Watson Farley & Williams LLP
15 Appold Street
London EC2A 2HB
Bankers
Barclays Bank plc
1 Churchill Place
Canary Wharf
London E14 5HP
Registrars and Transfer Office
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen B62 8HD
Website
www.chesterfieldresourcesplc.com
Dear Shareholders,
During 2022, Chesterfield underwent a radical restructuring of our extensive exploration licence portfolios in Canada and Cyprus. These changes were made with the goal of reducing expenditure and hence shareholder dilution, while at the same time remaining committed and keeping exposure to our most promising assets in both locations. In parallel with these changes to our asset base, during the second half of 2022 we cut running costs back significantly. As a result of these changes the Company is in a stable financial condition with much to look forward to in both Cyprus and Canada during 2023 and beyond.
In Cyprus, Chesterfield remains committed to building upon the successes that it has enjoyed on its retained licence group of three areas that are close together (two are adjoining) on the Westline Trend, a highly prospective mineral trend containing the Westline and Orchard areas in the West Troodos area, with a history of positive drill results announced most recently in late 2021 and early 2022. At Westline, this recent work produced some long polymetallic intersections with consistently elevated gold shows, indicating potential for a for a larger nearby gold-copper-zinc massive sulphide deposit with the target open in all directions. At Orchard, which has a history small scale trial mining in the 1950s, drilling in 2018 and 2021 encountered semi-massive sulphides.
Chesterfield has rationalised its previously large exploration licence portfolio in Cyprus while continuing to advance its most highly prospective retained Westline and Orchard assets. In line with this approach, in November the Company informed the relevant authorities in Cyprus of its plan to surrender a number of licences as they expire in the early months of 2023. As a result, as the affected licences expire in the course of the first half of 2023, Chesterfield's portfolio of licences have been substantially reduced from a total of 26 licences covering 110.42 km², to 3 licences (licence numbers: AE4664, AE4672 and AE4673) covering 13.39 km². This will allow the Company to focus future work on the most prospective licences and also mitigate the need for substantial costs that would be payable for the renewal of licences of lesser interest.
For much of 2022, the Company grappled with the question as to how best to raise the considerable funds it would need to fund a full-scale drill campaign on its large, highly prospective Adeline property in Labrador, Canada. The Adeline licence area is large (300 km², 44 km long) and lacks road access. Activity there is also constrained by challenging weather conditions for much of the year. For these reasons in addition to the large amounts of funding and expertise available for this sort of investment in Canada, the Board had always believed that a large element of the funding for its exploration would need to come from Canada, possibly through a local Canadian listing, or farm-in, or joint venture, or something similar.
In September, the Company ran a process to seek outside funding and some sort of partnership with a number of Canadian groups that included some large established mining names and junior explorers and developers. The Board’s criteria in selecting a candidate to partner on Adeline included the following:
1) the ability to promptly fund the next stage of work in Labrador
2) technical competence to carry out and successfully complete all necessary work to yield the quickest and best possible results from our Adeline licences and
3) a track record of past success in previous similar endeavours.
The Board were pleased with the response to this process which elicited a number of clearly defined offers from smaller companies. Despite some real initial interest in Adeline, larger firms were unable to move as quickly as the Board required. Chesterfield was able conclude matters with regard to Adeline with the deal that it announced in early March 2023, under which the Adeline project was optioned to listed Canadian explorer Sterling Metals (SAG.V) in exchange for cash and shares. According to the agreement Sterling Metals agreed to purchase an option to acquire full ownership and rights over the project in exchange for a series of payments of cash and shares. As a result, Chesterfield will become a significant shareholder in Sterling, giving Chesterfield shareholders a stake both in the upside of the Adeline property and Sterling's 100% owned high grade, district scale, Sail Pond silver-polymetallic property located approximately 500km from Adeline.
Sterling Metals is a listed exploration company that prior to the announcement of the deal and issue of shares to Chesterfield had a market capitalization of CAD$17.35m (£10,65m). It is the holder of the Sail Pond project, a 135km² set of licences in Newfoundland, eastern Canada. At the time of the announcement and prior to payments it committed to through its agreement (see below) to Chesterfield, Sterling had a cash position of CAD$3.5m (£2,075,000).
According to the terms of the deal, Sterling will pay a total of CAD$800,000 (£490,000) in three separate payments in the course of 2023 and 2024. These payments commence with CAD$100,000 (£62,250) on signing the agreement, and CAD$300,000 (£183,750) following receipt of permission from the TSX-V authorities to complete the deal, and a final CAD$400,000 (£230,000) to be paid on or before 30 November 2024. In addition, Sterling also agreed to issue a total of 9m shares to Chesterfield in two equal tranches of 4.5m, the first following, and subject to, receipt of permission from the TSX-V authorities to complete the deal, and the second tranche to be issued on or before 30 November 2024.
Chesterfield's ability to sell its shares in Sterling will be restricted according to certain terms detailed in the agreement. The final CAD$400,000 and the second tranche of 4.5m shares are payable should Sterling decide to exercise its option to acquire the Adeline licences at any time prior to 30 November 2024.
As a result of the Sterling deal, Chesterfield’s cash reserves have been replenished from the levels recorded at the end of the period in this report, and in addition Chesterfield will have a stake in what in effect becomes a regional play for potentially two highly prospective licence areas in eastern Canada, in both cases originally sourced from the same renowned group, Altius Minerals. The amount it is receiving in cash and shares for Adeline is comparable to what it spent in acquiring and exploring the property largely during 2021, a decent result considering the poor state of capital markets in 2022.
As a result of our efforts in Canada and Cyprus, the Company has kept a significant stake in both without the need to anticipate large dilutive funding requirements to progress them. Chesterfield is stabilised and ready to meet the challenges and considerable opportunities it has in front of it in 2023.
The loss of the Group for the year ended 31 December 2022 amounted to £3,659,387 (year ended 31 December 2021: loss of £900,636). The Group’s cash position at 31 December 2022 was £304,022 (2021: £762,971).
I would like to thank our shareholders for their support; we are lucky to have a strong and supportive base of investors and we hope that the coming months and years will continue to be value accretive for all our stakeholders.
Paul Ensor
Executive Chairman
27 April 2023
The Directors of the Company and its subsidiary undertakings (which together comprise the “Group”) present their Strategic Report on the Group for the year ended 31 December 2022.
The Group’s aim is to create value for shareholders through the discovery and development of economic mineral deposits. The Group’s strategy is to progress the development of its projects in Cyprus and to evaluate its existing and new mineral resource opportunities.
The Group’s business is directed by the Board and is managed on a day-to-day basis by the two Executive directors being Ajay Kejriwal and Paul Ensor. The Board monitors compliance with objectives and policies of the Group through monthly performance reporting, budget updates and periodic operational reviews. The Corporate Head Office of the Group is located in London, UK, and provides corporate support services to the overseas operations.# CHESTERFIELD RESOURCES PLC GROUP STRATEGIC REPORT
Overseas operations are managed in Cyprus and Canada. As at 31 December 2022, the Board comprised of two Executive Directors and two Non-Executive Directors as detailed below:
Ajay Kejriwal – Executive Director
Mr Kejriwal has over 30 years of experience in finance and commerce, having worked for Morgan Stanley, Cazenove and Nomura, in London and Hong Kong. Mr Kejriwal is a Chartered Accountant, having qualified with PriceWaterhouseCoopers in 1994. He has considerable experience in the junior resource sector and is a specialist in structuring transactions.
Paul Ensor - Executive Director
Mr Ensor has 30 years’ experience in institutional equity markets having worked for Baring Securities, CLSA and UBS in Hong Kong and South-East Asia. Since his return to London, Mr Ensor has advised on growth strategies for a number of junior companies, principally in the natural resources sector. He has notable experience in new business development and financing.
David Cliff - Non-Executive Director
Mr Cliff has over 50 years in exploration and mine geology. Previously he had over 26 years at Rio Tinto including five as Exploration Manager Europe. He has a BSc Hons in Geology and is a Chartered Engineer and Member of the Institute of Materials, Minerals and Mining.
Evgeny Vrublevskiy - Non-Executive Director
Evgeny (Eugene) is the Nominated Director of our strategic partner, Polymetal International, where he runs its headquarters Cyprus office. Eugene is also Head of Treasury, with oversight of all finance and accounting matters. He has a 15 year career in banking and financial services.
During the year the Group had the following gender composition of employees and directors:
| Gender | Male | Female |
|---|---|---|
| Directors (1) | 6 | 0 |
| Employees | 2 | 1 |
(1) Martin French and Peter Damouni resigned during the year.
The Group has undertaken a review of its exploration portfolio. To that end the company granted an option to acquire its Adeline Project to Sterling Metals (SAG.V) and has reduced the size of the licence holding in Cyprus in order to better focus on the most prospective licences. In Cyprus there has been an extensive reassessment of the portfolio which has resulted in a substantial relinquishment of licences. The three remaining licences are AE4664, AE4672 and AE4673.
The loss of the Group for the year ended 31 December 2022 amounts to £3,659,387 (year ended 31 December 2021: loss of £900,636). The Board monitors the activities and performance of the Group on a regular basis. The Board uses financial indicators based on budget versus actual to assess the performance of the Group. The indicators set out below will continue to be used by the Board to assess performance over the year to 31 December 2023.
The Group is committed to best practice in energy consumption, social, community and human rights issues however given the Groups size it does not separately disclose these matters in this report.
CHESTERFIELD RESOURCES PLC GROUP STRATEGIC REPORT 5
The three main KPIs for the Group are as follows. These allow the Group to monitor costs and plan future exploration and development activities:
| KPI | 2022 | 2021 |
|---|---|---|
| Cash and cash equivalents (£) | 304,022 | 762,971 |
| Administrative expenses as a percentage of total assets | 30% | 15% |
| Exploration costs capitalised during the period (£) | 462,587 | 1,426,898 |
Cash has been used to fund the Group’s operations and facilitate its investment activities (refer to the Statement of Cash Flows on page 25). Administrative expenses are the expenses related to the Group’s ability to run the corporate functions to ensure they can perform their operational commitments. Exploration costs capitalised during the year consist of exploration expenditure on the Group’s exploration licences, net of foreign exchange rate movements and excludes the fair value uplift of acquisitions.
The management of the business and the execution of the Group’s strategy are subject to a number of risks. The key business risks affecting the Group are set out below. Risks are formally reviewed by the Board, and appropriate processes are put in place to monitor and mitigate them. If more than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the Group.
The exploration and mining business are controlled by a number of global factors, principally supply and demand which in turn is a key driver of global mineral prices; these factors are beyond the control of the Group. Exploration is a high-risk business and there can be no guarantee that any mineralisation discovered will result in proven and probable reserves or go on to be an operating mine. At every stage of the exploration process the projects are rigorously reviewed to determine if the results justify the next stage of exploration expenditure ensuring that funds are only applied to high priority targets. The principal asset of the Group, comprising the mineral exploration licences, are subject to certain financial and legal commitments. If these commitments are not fulfilled the licences could be revoked. They are also subject to legislation defined by the Cypriot and Canadian Governments; if this legislation is changed it could adversely affect the value of the Group’s assets.
The Group and Company is dependent upon its executive management team and various technical consultants. Whilst it has entered into contractual agreements at market rates with the aim of securing the services of these personnel, the retention of their services cannot be guaranteed. The development and success of the Group depends on its ability to recruit and retain high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group grows could have an adverse effect on future business and financial conditions.
The Group, as a participant in exploration and development programmes, may become subject to liability for hazards that cannot be insured against or third-party claims that exceed the insurance cover. The Group may also be disrupted by a variety of risks and hazards that are beyond its control, including geological, geotechnical and seismic factors, environmental hazards, industrial accidents, occupation and health hazards and weather conditions or other acts of God.
The only sources of funding currently available to the Group are through the issue of additional equity capital in the parent company in discrete tranches or through bringing in partners to fund exploration and development costs. The Company’s ability to raise further funds will depend on the success of the Group’s exploration activities and its investment strategy. Th e Company may not be successful in procuring funds on terms which are attractive and, if such funding is unavailable, the Group may be required to reduce the scope of its exploration activities or relinquish some of the exploration licences held for which it may incur fines or penalties.
CHESTERFIELD RESOURCES PLC GROUP STRATEGIC REPORT 6
All of the Group’s operations are located in a foreign jurisdiction. As a result, the Group is subject to political, economic and other uncertainties, including but not limited to, changes in policies or the personnel administering them, terrorism, appropriation of property without fair compensation, cancellation or modification of contractual rights, foreign exchange restrictions and currency fluctuations.
The Group’s operations expose it to a variety of financial risks that can include market risk (including foreign currency, price and interest rate risk), credit risk, and liquidity risk. The Group has a risk management programme in place that seeks to limit the adverse effects on the financial performance of the Group by monitoring levels of debt finance and the related finance costs. The Group does not use derivative financial instruments to manage interest rate costs and, as such, no hedge accounting is applied. Details of the Group’s financial risk management policies are set out in Note 3 to the Financial Statements.
The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006. The requirements of s172 are for the Directors to:
The Company operates as a base metals exploration business, which is inherently speculative in nature and, without regular income, is dependent upon fund-raising for its continued operation. The pre-revenue nature of the business is important to the understanding of the Company by its members, employees and suppliers, and the Directors are as transparent about the cash position and funding requirements as is allowed under LSE regulations.# CHESTERFIELD RESOURCES PLC
The Directors present their annual report on the affairs of Chesterfield Resources plc together with the audited Financial Statements for the year ended 31 December 2022.
The Directors do not recommend the payment of a dividend for the year (2021: nil).
The Directors who served during the year ended 31 December 2022 are shown below and had, at that time, the following beneficial interests in the shares of the Company:
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Ordinary Shares Options & Warrants | Ordinary Shares Options & Warrants | |
| Martin French (1) | - | - |
| Ajay Kejriwal | 150,000 | 1,100,000 |
| Peter Damouni (2) | - | - |
| David Cliff | 450,000 | 1,950,000 |
| Paul Ensor | 172,841 | 750,000 |
| Evgeny Vrublevskiy | - | - |
(1) Martin French resigned 4 August 2022
(2) Peter Damouni resigned 7 February 2022
Further details on options can be found in Note 20 to the Financial Statements.
The substantial shareholders with more than a 3% shareholding at 27 April 2023 are shown below:
| Holding | Percentage | |
|---|---|---|
| Polymetal International plc | 23,333,334 | 17.9% |
| Altius Minerals | 10,089,199 | 7.7% |
| Claudio Ciavarella | 4,400,000 | 3.4% |
| Leo Berezan | 4,201,334 | 3.2% |
Chesterfield undertakes its exploration activities in a manner that minimises or eliminates negative environmental impacts and maximises positive impacts of an environmental nature. Chesterfield is a mineral explorer, not a mining company. Hence, the environmental impact associated with its activities is minimal. To ensure proper environmental stewardship on its projects, Chesterfield conducts certified baseline studies prior to all drill programmes and ensures that areas explored are properly maintained and conserved.
As an exploration stage business, the Group’s operations are at a relatively small scale. As such, the Group’s environmental impact is relatively small when compared with larger businesses in the sector. Nevertheless, the Board recognises its responsibility to protect the environment (particularly as the business scales up) and is fully committed to conserving natural resources and striving for environmental sustainability, by ensuring that its facilities are operated to optimise energy usage; minimise waste production; and protect nature and people.
The Group is currently deemed to be a low energy user meaning it has consumed less that 40MWh of energy during the reporting period. This includes the combustion of gas, consumption of fuel for transport and the purchase of electricity for its own use. As such, it is exempt from disclosing actual kWh of energy emitted during the period from its operations and activities.
As the Group’s operations scale up, it will continue to monitor its energy use and its status as a low energy user. The Group will seek to collect, structure, and effectively disclose related performance data for the material, climate-related risks and opportunities identified where relevant.
Chesterfield operates a comprehensive health and safety programme to ensure the wellness and security of its employees. The control and eventual elimination of all work-related hazards requires a dedicated team effort involving the active participation of all employees. A comprehensive health and safety programme is the primary means for delivering best practices in health and safety management. This programme is regularly updated to incorporate employee suggestions, lessons learned from past incidents and new guidelines related to new projects with the aim of identifying areas for further improvement of health and safety management. This results in continuous improvement of the health and safety programme. Employee involvement is regarded as fundamental in recognising and reporting unsafe conditions and avoiding events that may result in injuries and accidents.
The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control environment and any related shortfalls during the period. Since the Group was established, the Directors are satisfied that, given the current size and activities of the Group, adequate internal controls have been implemented. Whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in light of the current activity and proposed future development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective.
The statement on corporate governance can be found in the Corporate Governance Report on page 11 of these Financial Statements. The Corporate Governance Report forms part of this directors’ report and is incorporated into it by cross reference. The Group is committed to diversity of age, gender, educational and professional backgrounds however given the Groups size it does not have a specific policy in place.
The Group's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU). The Group's current policy concerning the payment of trade creditors is to:
* settle the terms of payment with suppliers when agreeing the terms of each transaction;
* ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
* pay in accordance with the Group's contractual and other legal obligations.
The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future and, therefore, continue to adopt the going concern basis in preparing the Annual Report and Financial Statements. Further details on their assumptions and their conclusion thereon are included in the statement on going concern included in Note 2.3 to the Financial Statements.
The Group has made qualifying third-party indemnity provisions for the benefit of its Directors and Officers. These were made during the period and remain in force at the date of this report.
Events after the reporting date are detailed in Note 24.
Management are evaluating plans to continue exploration work in the Company’s remaining licences in Cyprus while at the same seeking partners to assist in this work for the coming summer drilling season. The Board will update the market as these plans take shape.
Details of the Group’s financial instruments are disclosed in note 18 to these Financial Statements.
So far as each of the Directors is aware at the time this report is approved:
* there is no relevant audit information of which the Company's auditor is unaware; and
* the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.
PKF Littlejohn LLP has signified its willingness to continue in office as auditor. A resolution to reappoint PKF Littlejohn LLP as auditor will be proposed at the Annual General Meeting.
This report was approved by the Board on 27 April 2023 and signed on its behalf.
Paul Ensor
Executive Chairman
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Group and Company Financial Statements in accordance with UK-adopted international accounting standards.# CHESTERFIELD RESOURCES PLC CORPORATE GOVERNANCE REPORT
Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and of the profit or loss of the Group and Company for that period. In preparing these Financial Statements, the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgments and accounting estimates that are reasonable and prudent;
* state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; and
* prepare the Financial Statements on a going concern basis unless it is inappropriate to presume the Group and Company will continue in business
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company, and enable them to ensure that the Financial Statements and the Directors Remuneration Report comply with the Companies Act 2006 and, as regards the group Financial Statements, international financial reporting standards. They are also responsible for safeguarding the assets of the Group and Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. They are also responsible to make a statement that they consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced, and understandable and provides the information necessary for the shareholders to assess the Group and Company’s position and performance, business model and strategy. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions.
Each of the Directors whose names and functions are listed on page 4 confirm that, to the best of their knowledge and belief:
* The Financial Statements prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and loss of the Group and Company; and
* the Annual Report and Financial Statements, including the Business review, includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face.
On behalf of the Board
Paul Ensor
Executive Chairman
27 April 2023
The Group is not required to comply with the UK Code of Corporate Governance and has not voluntarily adopted it. However, the Directors recognise the importance of sound corporate governance and the Board intends, to the extent it considers appropriate in light of the Group’s size, stage of development and resources, to implement certain corporate governance recommendations. The Directors have responsibility for the overall corporate governance of the Group and recognise the need for the highest standards of behaviour and accountability. The Board has a wide range of experience directly related to the Group and its activities and its structure ensures that no one individual or group dominates the decision-making process.
As at 31 December 2022, the Board comprised two executive and two non-executive Directors. Their details appear on page 1. Martin French resigned on 4 August 2022 and Peter Damouni resigned on 7 February 2022. On 4 August 2022, Paul Ensor became Executive Chairman, replacing Martin French.
The Board is responsible to shareholders for the proper management of the Group. The Directors’ responsibilities statement in respect of the Financial Statements is set out on page 10. The non- executive Directors have a particular responsibility to ensure that the strategies proposed by the executive Directors are fully considered. To enable the Board to discharge its duties, all directors have full and timely access to all relevant information and there is a procedure for all Directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group. The Board is responsible for overall Group strategy, approval of major capital expenditure projects and consideration of significant financing matters.
The following Board committees, which have written terms of reference, deal with specific aspects of the Group’s affairs:
In light of the size of the Board, the Directors do not consider it necessary to establish a Nomination Committee. However, this will be kept under regular review.
Following the resignation of Peter Damouni during the year, Paul Ensor joined the Audit Committee. The Audit Committee, comprising David Cliff, Ajay Kejriwal and Paul Ensor, reviews the Group's annual and interim Financial Statements before submission to the Board for approval. The Committee also reviews regular reports from management and the external auditor on accounting and internal control matters. Where appropriate, the Committee monitors the progress of action taken in relation to such matters. The Committee also recommends the appointment, and reviews the fees, of the external auditor. The Committee keeps under review the cost effectiveness and the independence and objectivity of the external auditor. A formal statement of independence is received from the external auditor each year.
During the year, following the resignation of Peter Damouni, Paul Ensor joined the Remuneration Committee. The Remuneration Committee, comprising Paul Ensor, David Cliff and Evgeny Vrublevskiy, is responsible for reviewing the performance of the Board and for setting the scale and structure of remuneration, determining the payment of bonuses, considering the grant of options under any share option scheme and, in particular, the price per share and the application of performance standards which may apply to any such grant, paying due regard to the interests of shareholders as a whole and the performance of the Group.
The Board meets on an informal basis regularly throughout the year. The Board is responsible for formulating, reviewing and approving the Group's strategy, financial activities and operating performance. The formal board meetings held during the year are detailed below, however this excludes any informal board calls and meetings held during the same period.
| Date | Type | Present |
|---|---|---|
| 4 August 2022 | Board Meeting | Paul Ensor, David Cliff, Evgeny Vrublevskiy, Ajay Kejriwal |
| 19 August 2022 | Board Meeting | Paul Ensor, David Cliff, Evgeny Vrublevskiy, Ajay Kejriwal |
| 22 August 2022 | Board Meeting | Paul Ensor, David Cliff, Evgeny Vrublevskiy, Ajay Kejriwal |
The Directors acknowledge their responsibility for the Group’s systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Group and to ensure the reliability of financial information for both internal use and external publication. Whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in light of the increased activity and further development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. The key elements of the control system in operation are:
* the Board meets regularly with a formal schedule of matters reserved to it for decision;
* there are established procedures for planning, approval and monitoring of capital expenditure and information systems for monitoring the Group’s financial performance against approved budgets and forecasts;
* UK financial operations are closely monitored by members of the Board to enable them to assess risk and address the adequacy of measures in place for its monitoring and control. The Cyprus and Canadian operations are closely supervised by the UK based executives through daily, weekly and monthly reports from the directors’ key management in Cyprus and Canadian.
The Board considers risk assessment to be important in achieving its strategic objectives. Project milestones and timelines are regularly reviewed.
The Board is committed to acting ethically, fairly and with integrity in all its endeavours and compliance of the code is closely monitored.
The Group has adopted a share dealing code for dealings in shares by Directors and senior employees which is appropriate for a quoted company. The Directors will take all reasonable steps to ensure compliance by the Group’s applicable employees.
The Board is committed to providing effective communication with the Shareholders of the Group. Significant developments are disseminated through stock exchange announcements and regular updates of the Group’s website. The Board views the AGM as a forum for communication between the Group and its shareholders and encourages their participation in its agenda.
On behalf of the Board
Paul Ensor
Executive Chairman
27 April 2023
The Company has an established Remuneration Committee. The Committee reviews the scale and structure of the Directors’ fees, taking into account the interests of shareholders and the performance of the Group and Directors.# DIRECTORS’ REMUNERATION REPORT
The Company’s auditors, PKF Littlejohn LLP are required by law to audit certain disclosures and where disclosures have been audited, they are indicated as such.
Statement of Chesterfield Resources Plc’s policy on Directors’ remuneration by the Chairman of the Remuneration Committee
As Chairman of the Remuneration Committee I am pleased to introduce our Directors’ Remuneration Report. One of the Remuneration Committee’s aims is to provide clear, transparent remuneration reporting for our shareholders which adheres to the best practice corporate governance principles that are required for listed organisations. The Directors’ Remuneration Policy, is set out on page 13 of this report. A key focus of the Directors’ Remuneration Policy is to align the interests of the Directors to the long-term interests of the shareholders and aims to support a high-performance culture with appropriate reward for superior performance, without creating incentives that will encourage excessive risk taking or unsustainable company performance. This is underpinned through the implementation and operation of incentive plans.
Key Activities of the Remuneration Committee
The key activities of the Remuneration Committee are:
• to determine and agree with the Board the framework or broad policy for the remuneration of the Company's chairman, chief executive, the executive directors, the company secretary and such other members of the executive management as it is designated to consider;
• in determining such policy, take into account all factors which it deems necessary including relevant legal and regulatory requirements. The objective of such policy shall be to ensure that members of the executive management of the Company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Company;
• recommend and monitor the level and structure of remuneration for senior management;
• when setting remuneration policy for directors, review and have regard to the remuneration trends across the Company, and review the on-going appropriateness and relevance of the remuneration policy;
• obtain reliable, up-to-date information about remuneration in other companies. To help it fulfil its obligations the Committee shall have full authority to appoint remuneration consultants and to commission or purchase any reports, surveys or information which it deems necessary, within any budgetary restraints imposed by the Board;
• be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Committee;
• approve the design of, and determine targets for, any performance related pay schemes operated by the Company and approve the total annual payments made under such schemes;
• review the design of all share incentive plans for approval by the Board and shareholders. For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to executive directors, company secretary and other designated senior executives and the performance targets to be used;
• ensure that contractual terms on termination, and any payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised; and
• oversee any major changes in employee benefits structures throughout the Company.
Members
The Remuneration Committee comprises the following independent Non-Executive Directors and Executive Director:
| Name | Position | Date of appointment |
|---|---|---|
| Paul Ensor | Chairman | 22 February 2022 |
| David Cliff | Member | 3 July 2018 |
| Evgeny Vrublevskiy | Member | 12 January 2021 |
CHESTERFIELD RESOURCES PLC DIRECTORS’ REMUNERATION REPORT 14
Remuneration Components
The Company remunerates directors in line with best market practice in the industry in which it operates. The components of Director remuneration that are considered by the Board for the remuneration of directors in future years are likely to consist of:
• Base salaries
• Pension and other benefits
• Annual bonus
• Share Incentive arrangements
Given the early stage of development of the Company, the Remuneration Committee also do not consider it necessary to have maximum amounts of each remuneration component. The Executive Directors have entered into service agreements with the Company and the Non-Executive Directors have entered into letters of appointment with the Company. All such contracts impose certain restrictions as regards the use of confidential information and intellectual property and the Executive Director’s service contracts impose restrictive covenants which apply following the termination of the agreement.
Other matters
The Company has established a workplace pension scheme and pays the statutory required pension amounts in relation to Directors’ remuneration where applicable. The Company has not paid out any excess retirement benefits to any Directors or past Directors. The Company has not paid any compensation to past Directors. The Company has also issued options to Directors as part of a long-term incentive scheme.
Recruitment Policy
Base salary levels will take into account market data for the relevant role, internal relativities, their individual experience and their current base salary. For external and internal appointments, the Board may agree that the Company will meet certain relocation and/or incidental expenses as appropriate.
Payment for loss of Office
The Committee will honour the Executive Directors’ contractual entitlements. Service contracts do not contain liquidated damages clauses. If a contract is to be terminated, the Committee will determine such mitigation as it considers fair and reasonable in each case. There is no agreement between the Company and its Executive Directors or employees, providing for compensation for loss of office or employment that occurs because of a takeover bid. The Committee reserves the right to make additional payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or by way of settlement or compromise of any claim arising in connection with the termination of an Executive Director’s office or employment.
Service Agreements and letters of appointment
The Executive Director’s service agreement are not for a fixed term and may be terminated by the Company or the Executive Director by giving 6 months’ notice.
| Name | Date of service agreement | Notice period by Company (months) | Notice period by Director (months) |
|---|---|---|---|
| Martin French (1) | 27 July 2018 | 6 months | 6 months |
| Ajay Kejriwal | 4 February 2021 | 6 months | 6 months |
| Paul Ensor (2) | 4 February 2021 | 6 months | 6 months |
(1) Martin French resigned 4 August 2022
(2) Paul Ensor was appointed as an Executive Director on 4 August 2022
CHESTERFIELD RESOURCES PLC DIRECTORS’ REMUNERATION REPORT 15
The terms of all Directors’ appointments are subject to their re-election by the Company’s shareholders at any Annual General Meeting at which all the Directors stand for re-election. The Non-Executive Directors of the Company do not have service contracts but are appointed by letters of appointment. Each Non-Executive Director’s term of office runs for an initial period of three years unless terminated earlier upon written notice or upon their resignation. The details of each Non-Executive Director’s current term are set out below:
| Name | Date of service agreement | Current term (years) | Notice period by Company (months) | Notice period by Director (months) |
|---|---|---|---|---|
| David Cliff | 16 March 2017 | 6 years | 3 months | 3 months |
| Peter Damouni (1) | 16 March 2017 | 5 years | 3 months | 3 months |
| Evgeny Vrublevskiy | 12 January 2021 | 2 year 1 month | 1 month | 1 month |
(1) Peter Damouni resigned 7 February 2022
Executive Directors’ remuneration - Audited
The table below sets out the remuneration received by the Executive Directors for the year ended 31 December 2022 and 31 December 2021:
| Short term benefits 2022 £ | Notice period fees 2022 £ | Accruals 2022 £ | Total 2022 £ | Short term benefits 2021 £ | Total 2021 £ | |
|---|---|---|---|---|---|---|
| Martin French (1) | 70,870 | 65,538 | - | 136,408 | 120,000 | 120,000 |
| Ajay Kejriwal | 62,000 | - | 25,000 | 87,000 | 55,400 | 55,400 |
| Paul Ensor (2) | 36,000 | - | - | 36,000 | 21,700 | 21,700 |
| Total | 132,870 | 65,538 | 25,000 | 223,408 | 175,400 | 175,400 |
(1) Martin French resigned 4 August 2022.
(2) Paul Ensor was appointed as an Executive Director on 4 August 2022
Ajay Kejriwal’s remuneration of £87,000 for the year ended 31 December 2022 includes a £25,000 accrual (Note 7).
Non-Executive Directors’ remuneration - Audited
The table below sets out the remuneration received by each Non-Executive Director during the years ended 31 December 2022 and 31 December 2021:
| Short term benefits 2022 £ | Total 2022 £ | Short term benefits 2021 £ | Total 2021 £ | |
|---|---|---|---|---|
| David Cliff | 24,000 | 24,000 | 24,000 | 24,000 |
| Peter Damouni (1) | 2,500 | 2,500 | 24,000 | 24,000 |
| Evgeny Vrublevskiy | - | - | - | - |
| Total | 62,500 | 62,500 | 69,700 | 69,700 |
(1) Peter Damouni resigned 7 February 2022
CHESTERFIELD RESOURCES PLC DIRECTORS’ REMUNERATION REPORT 16
Relative importance of spend on pay
The table below illustrates the year-on-year change in total remuneration compared to distributions to shareholders and loss before tax for the financial periods ended 31 December 2022 and 2021:
| Distributions to shareholders £ | Total directors and employee pay £ | Operational cash outflow £ | |
|---|---|---|---|
| Year ended 31 December 2022 | nil | 399,431 | 681,739 |
| Year ended 31 December 2021 | nil | 338,359 | 1,011,673 |
Total employee pay includes wages and salaries, social security costs and pension cost for employees in continuing operations. Further details on Employee remuneration are provided in note 6 and 7.Operational cash outflow has been shown in the table above as cash flow monitoring and forecasting is an important consideration for the Remuneration Committee and Board of Directors when determining cash-based remuneration for directors and employees.
The table below compares the share price performance (based on a notional investment of £100) of Chesterfield Resources plc against the FTSE SmallCap for the period August 2017 to December 2022 calculated on a month end spot basis. The FTSE SmallCap has been chosen to provide a wider market comparator constituting companies of an appropriate size:
| FTSE Small Cap £ | Chesterfield Resources plc £ |
|---|---|
| 31 December 2022 | 143.20 |
| 31 December 2021 | 126.60 |
| 31 December 2020 | 109.53 |
| 31 December 2019 | 104.87 |
| 31 December 2018 | 90.97 |
| 11 August 2017 | 100.00 |
Chesterfield Resources plc was listed in August 2017 and therefore no historical share price data exists prior to this period, there was also no data between 2 November 2017 and 3 July 2018 pending completion of a transaction.
The Board considers shareholder feedback received and guidance from shareholder bodies. This feedback, plus any additional feedback received from time to time, is considered as part of the Company’s annual policy on remuneration.
Approved on behalf of the Board of Directors.
Paul Ensor
Director & Remuneration Committee Chairman
27 April 2023
17
We have audited the financial statements of Chesterfield Resources plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2022 which comprise the Group Statement of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Changes in Equity, the Group and Parent Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK- adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
* the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2022 and of the group’s loss for the year then ended;
* the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
* the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
* the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included a review of the directors’ statement in note 2.3 to the financial statements and review of the group and parent company’s budgets and cash flow forecasts for the period of at least twelve months from the date of approval of the financial statements, being 31 December 2024, including checking the mathematical accuracy of the budgets and discussion of significant assumptions used by the management. We have also reviewed the latest available post year end management accounts, bank statements, regulatory announcements and board minutes and assessed subsequent events impacting going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s or parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied to the group financial statements was £122,000 (2021: £110,000), based on 2% of gross assets (2021: 2% of gross assets). We believe assets to be the main driver of the business as the group is in the exploration stage and no revenues are currently being generated. The group performance materiality at 70% of overall materiality was determined to be £85,400 (2021: £77,000) based upon our assessment of risk, the control environment and the level of misstatements identified in previous periods.
The materiality applied to the parent company financial statements was £33,000 (2021: £37,000), based on 0.5% of the net assets (2021: 5% of the loss before tax). The performance materiality was £23,100 (2021: £25,900) in order to obtain appropriate coverage of the parent company expenditure during the audit.
Component materiality applied to the subsidiary undertakings in Cyprus and Canada was £65,000 (2021: £55,000) and £14,000 (2021: £9,000), respectively, based on 2% of gross assets (2021: 2% of gross assets). The performance materiality for the components was set at 60%.
CHESTERFIELD RESOURCES PLC INDEPENDENT AUDITOR’S REPORT
18
We agreed with the audit committee that we would report to the committee all audit differences identified during the course of our audit in excess of £6,100 (2021: £5,500) for the group and £1,650 (2021: £1,850) for the parent company together with any other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
In designing our audit approach, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors, including the carrying value of intangible assets, investments and intercompany receivables, and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Whilst Chesterfield Resources plc is a company listed on the Standard segment of the London Stock Exchange Main Market, the group’s operations principally comprise exploration projects located in Cyprus and Canada. We assessed the significant components of the group to be the exploration projects in Cyprus and Canada and the corporate accounting function. We performed a full scope audit on the corporate accounting function and components. The full scope audit of the subsidiary in Canada was performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of auditing exploration entities. The Cyprus component was audited by a component auditor, under our direction and supervision as group auditor in accordance with ISA (UK) 600. We issued detailed instructions and performed a review of the component auditor’s working papers. The Senior Statutory Auditor interacted regularly with the component audit team during all stages of the audit and was responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed at the consolidation level, gave us sufficient and appropriate evidence to support our opinion on the group and parent company financial statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
| Key Audit Matter | How our scope addressed this matter |
|---|---|
| Carrying value and assessment of impairment of intangible exploration and evaluation assets (refer to Notes 2.6, 2.9, 4 and 11) | As at 31 December 2022, the total intangible assets reported in the Group Statement of Financial Position was £880,837, which comprised exploration and evaluation assets. |
We tested the group’s exploration licences to confirm good title and standing, including the likelihood of renewal on future expiry. We reviewed and evaluated the impairment assessment prepared by management in relation to the Cyprus and Canada projects. Our procedures included an assessment of the early stage exploration and evaluation project with reference to the criteria listed within IFRS 6, to include whether:
We have performed additions testing in relation to the Canada project and ensured they meet the capitalisation criteria under IFRS 6. We reviewed the working papers prepared by the component auditor in respect of the capitalised additions in the Cypriot subsidiary in the year for eligibility in accordance with IFRS 6. We also reviewed the work performed by the component auditor in respect of assessing compliance with the terms and conditions CHESTERFIELD RESOURCES PLC INDEPENDENT AUDITOR’S REPORT 19 contained in the exploration licenses. The Mines Service within the Republic of Cyprus provided confirmation of good title to the Prospecting Permits held by the subsidiary undertaking, including the deposit held as financial guarantee against potential future liabilities.
We are satisfied that the carrying value of the intangible assets are reasonable. We did not identify any indicators of impairment to the year-end carrying values in addition to the impairments recognised by management.
As at 31 December 2022, the total investments in subsidiaries and intercompany receivables reported in the Group Statement of Financial Position was £2,453,764. The carrying value is ultimately dependent on the value of the underlying assets. Many of the underlying assets are exploration projects which are at an early stage of exploration making it difficult to definitively determine their value. There is the risk that these amounts are impaired. Given that the estimated recoverable amount is subjective due to the inherent uncertainty involved in the assessment of early-stage exploration projects in the subsidiaries, we considered the carrying value of the investments and intercompany receivables to be a key audit matter.
We reviewed the value of investment and intercompany receivables balances against the value of the underlying assets, including reference to work performed in respect of the carrying value of exploration expenditure in accordance with IFRS 6. We obtained evidence of ownership for all investments held within the group. We reviewed management’s impairment paper in respect of the recoverability of investment and intercompany receivables balances and providing appropriate challenge, corroborating any key assumptions used.
We are satisfied that the carrying value of the investment in subsidiaries and intercompany receivables is reasonable. We did not identify any indicators of impairment to the year-end carrying values in addition to the impairments recognised by management.
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
CHESTERFIELD RESOURCES PLC INDEPENDENT AUDITOR’S REPORT 20
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
CHESTERFIELD RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
21
• We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates, judgements and assumptions for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business or where the business rationale is not clear.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
We were appointed by the Board of Directors on 22 November 2018 to audit the financial statements for the year ending 31 December 2018 and subsequent financial periods. Our total uninterrupted period of engagement is 5 years, covering the periods ending 31 December 2018 to December 2022. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in conducting our audit. Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
27 April 2023
CHESTERFIELD RESOURCES PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
The Notes on pages 27 to 47 form part of these Financial Statements.
22
Group
Continuing operations
Note
31 December 2022
£
31 December 2021
£
Administrative expenses
6
(855,899)
(900,573)
Operating Loss
(855,899)
(900,573)
Impairment
11
(3,195,730)
-
Finance Income
(35)
(63)
Other income
45,132
-
Loss before taxation
(4,006,532)
(900,636)
Deferred tax credit
16
347,145
-
Loss for the Period attributable to owners of the parent
(3,659,387)
(900,636)
Basic and Diluted Earnings Per Share attributable to owners of the parent (expressed in pence per share)
9
(2.831)
(0.811)
31 December 2022
£
31 December 2021
£
Loss for the period
(3,659,387)
(900,636)
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Currency translation differences
97,040
(130,657)
Other comprehensive income for the period, net of tax
(3,562,347)
(1,031,293)
Total Comprehensive Income attributable to owners of the parent
(3,562,347)
(1,031,293)
CHESTERFIELD RESOURCES PLC
STATEMENTS OF FINANCIAL POSITION
As at 31 December 2022
Company number: 10545738
The Notes on pages 27 to 47 form part of these Financial Statements.
23
Group
Company
Note
31 December 2022
£
31 December 2021
£
31 December 2022
£
31 December 2021
£
Non-Current Assets
Property, plant and equipment
10
8,941
23,208
-
-
Intangible assets
11
880,837
5,008,562
-
-
Investments in subsidiaries
12
-
-
2,453,764
5,330,459
889,778
5,031,770
2,453,764
5,330,459
Current Assets
Trade and other receivables
14
162,435
322,003
579,007
130,534
Cash and cash equivalents
15
304,022
762,971
275,813
759,978
466,457
1,084,974
854,820
890,512
Asset held for sale
13
1,478,287
-
-
-
Total Assets
2,834,522
6,116,744
3,308,584
6,220,971
Non-Current Liabilities
Deferred tax liabilities
16
(33,138)
(380,283)
-
-
(33,138)
(380,283)
-
-
Current Liabilities
Trade and other payables
17
(103,533)
(154,383)
(109,403)
(130,932)
(103,533)
(154,383)
(109,403)
(130,932)
Total Liabilities
(136,671)
(534,666)
(109,403)
(130,932)
Net Assets
2,697,851
5,582,078
3,199,181
6,090,039
Equity attributable to owners of the Parent
Share capital
19
228,328
218,328
228,328
218,328
Share premium
19
8,919,654
8,253,634
8,919,654
8,253,634
Other reserves
257,838
160,798
268,921
268,921
Retained losses
(6,707,969)
(3,050,682)
(6,217,722)
(2,650,844)
Total Equity
2,697,851
5,582,078
3,199,181
6,090,039
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent Company Statement of Comprehensive Income. The loss for the Parent Company for the year was £3,568,978 (2021: loss of £804,151).
The Financial Statements were approved and authorised for issue by the Board on 27 April 2023 and were signed on its behalf by:
Paul Ensor
Executive Chairman
CHESTERFIELD RESOURCES PLC
GROUP STATEMENT OF CHANGES IN EQUITY
As at 31 December 2022
Company number: 10545738
The Notes on pages 27 to 47 form part of these Financial Statements.
24
Attributable to owners of the Parent
Note
Share capital
£
Share premium
£
Other reserves
£
Retained losses
£
Total
£
Balance as at 1 January 2021
199,711
6,482,931
201,776
(2,198,550)
4,685,868
Loss for the year
-
-
-
(900,636)
(900,636)
Other comprehensive income for the year
Items that may be subsequently reclassified to profit or loss
Currency translation differences
-
-
(130,657)
-
(130,657)
Total comprehensive income for the year
-
-
(130,657)
(900,636)
(1,031,293)
Shares issued
19
18,617
1,816,703
-
-
1,835,320
Cost of capital
19
-
(46,000)
-
-
(46,000)
Options expired during year
20
-
-
(41,327)
41,327
-
Options cancelled during year
20
-
-
(7,177)
7,177
-
Options granted during year
20
-
-
138,183
-
138,183
Total transactions with owners, recognised directly in equity
18,617
1,770,703
89,679
48,504
1,927,503
Balance as at 31 December 2021
218,328
8,253,634
160,798
(3,050,682)
5,582,078
Balance as at 1 January 2022
218,328
8,253,634
160,798
(3,050,682)
5,582,078
Loss for the year
-
-
-
(3,659,387)
(3,659,387)
Other comprehensive income for the year
Items that may be subsequently reclassified to profit or loss
Currency translation differences
-
-
97,040
-
97,040
Total comprehensive income for the year
-
-
97,040
(3,659,387)
(3,562,347)
Shares issued
19
10,000
690,000
-
-
700,000
Cost of capital
19
-
(23,980)
-
-
(23,980)
Options expired during year
20
-
-
(2,100)
2,100
-
Options granted during year
20
-
-
2,100
-
2,100
Total transactions with owners, recognised directly in equity
10,000
666,020
-
2,100
678,120
Balance as at 31 December 2022
228,328
8,919,654
257,838
(6,707,969)
2,697,851
Share capital represents the nominal value of ordinary and deferred shares issued. Share premium represents the amounts subscribed for share capital in excess of the nominal value of the shares issued, net of cost of issue. Other reserves represent the share option reserve and the foreign currency translation reserve. The share option reserve represents the fair value of the share options outstanding, and the foreign currency translation reserve represents the accumulated foreign currency translation differences upon converting the Group’s results into the presentational currency. Retained losses comprise the Group’s accumulative losses recognised in the statement of comprehensive income.
CHESTERFIELD RESOURCES PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
The Notes on pages 27 to 47 form part of these Financial Statements.
25
Attributable to equity shareholders
Note
Share capital
£
Share premium
£
Other reserves
£
Retained losses
£
Total equity
£
Balance as at 1 January 2021
199,711
6,482,931
179,242
(1,895,197)
4,966,687
Loss for the year
-
-
-
(804,151)
(804,151)
Total comprehensive income for the year
-
-
-
(804,151)
(804,151)
Shares issued
19
18,617
1,816,703
-
-
1,835,320
Cost of capital
19
-
(46,000)
-
-
(46,000)
Options expired during year
20
-
-
(41,327)
41,327
-
Options cancelled during year
20
-
-
(7,177)
7,177
-
Options granted during year
20
-
-
138,183
-
138,183
Total transactions with owners, recognised directly in equity
18,617
1,770,703
89,679
48,504
1,927,503
Balance as at 31 December 2021
218,328
8,253,634
268,921
(2,650,844)
6,090,039
Balance as at 1 January 2022
218,328
8,253,634
268,921
(2,650,844)
6,090,039
Loss for the year
-
-
-
(3,568,978)
(3,568,978)
Total comprehensive income for the year
-
-
-
(3,568,978)
(3,568,978)
Shares issued
19
10,000
690,000
-
-
700,000
Cost of capital
19
-
(23,980)
-
-
(23,980)
Options expired during year
20
-
-
(2,100)
2,100
-
Options granted during year
20
-
-
2,100
-
2,100
Total transactions with owners, recognised directly in equity
10,000
666,020
-
2,100
678,120
Balance as at 31 December 2022
228,328
8,919,654
268,921# CHESTERFIELD RESOURCES PLC STATEMENTS OF CASH FLOWS
The Notes on pages 27 to 47 form part of these Financial Statements.
| Group | Company |
|---|---|
| Year ended 31 December 2022 £ | Year ended 31 December 2021 £ |
| Year ended 31 December 2022 £ | Year ended 31 December 2021 £ |
| Note | |
| Cash flows from operating activities | |
| Loss before income tax | (3,659,387) |
| Adjustments for: | |
| Depreciation | 4,132 |
| Gain/(loss) on sale of property plant and equipment | 2,056 |
| Impairment of Exploration & Evaluation assets | 3,195,730 |
| Share options expense | 2,100 |
| Deferred tax credit | (347,145) |
| Foreign exchange | 12,057 |
| Decrease/(Increase) in trade and receivables | 159,568 |
| (Decrease)/Increase in trade and payables | (50,850) |
| Net cash used in operating activities | (681,739) |
| Cash flows from investing activities | |
| Interest received | - |
| (Purchase)/Sale of property plant and equipment | 9,357 |
| Loans granted to subsidiary undertakings | - |
| Exploration and evaluation activities | (462,587) |
| Net cash used in investing activities | (453,230) |
| Cash flows from financing activities | |
| Proceeds from issue of share capital | 700,000 |
| Transaction costs of share issue | (23,980) |
| Proceeds from option exercise | - |
| Net cash generated from financing activities | 676,020 |
| Net (decrease)/increase in cash and cash equivalents | (458,949) |
| Cash and cash equivalents at beginning of period | 762,971 |
| Cash and cash equivalents at end of period | 304,022 |
| Year ended 31 December 2021 £ | |
|---|---|
| Cash flows from operating activities | |
| Loss before income tax | (900,636) |
| Adjustments for: | |
| Depreciation | 6,453 |
| Gain/(loss) on sale of property plant and equipment | - |
| Impairment of Exploration & Evaluation assets | - |
| Share options expense | 135,771 |
| Deferred tax credit | - |
| Foreign exchange | (13,523) |
| Decrease/(Increase) in trade and receivables | (193,507) |
| (Decrease)/Increase in trade and payables | (46,231) |
| Net cash used in operating activities | (1,011,673) |
| Cash flows from investing activities | |
| Interest received | (55,017) |
| (Purchase)/Sale of property plant and equipment | (17,714) |
| Loans granted to subsidiary undertakings | (242,352) |
| Exploration and evaluation activities | (1,426,898) |
| Net cash used in investing activities | (1,444,612) |
| Cash flows from financing activities | |
| Proceeds from issue of share capital | 800,000 |
| Transaction costs of share issue | (46,000) |
| Proceeds from option exercise | 26,400 |
| Net cash generated from financing activities | 780,400 |
| Net (decrease)/increase in cash and cash equivalents | (1,675,885) |
| Cash and cash equivalents at beginning of period | 2,438,856 |
| Cash and cash equivalents at end of period | 762,971 |
| Year ended 31 December 2022 £ | |
|---|---|
| Cash flows from operating activities | |
| Loss before income tax | (3,568,978) |
| Adjustments for: | |
| Depreciation | - |
| Gain/(loss) on sale of property plant and equipment | - |
| Impairment of Exploration & Evaluation assets | 3,387,286 |
| Share options expense | 2,100 |
| Deferred tax credit | - |
| Foreign exchange | (213,221) |
| Decrease/(Increase) in trade and receivables | (448,471) |
| (Decrease)/Increase in trade and payables | (21,532) |
| Net cash used in operating activities | (862,816) |
| Cash flows from investing activities | |
| Interest received | (55,017) |
| (Purchase)/Sale of property plant and equipment | - |
| Loans granted to subsidiary undertakings | (242,352) |
| Exploration and evaluation activities | - |
| Net cash used in investing activities | (297,369) |
| Cash flows from financing activities | |
| Proceeds from issue of share capital | 700,000 |
| Transaction costs of share issue | (23,980) |
| Proceeds from option exercise | - |
| Net cash generated from financing activities | 676,020 |
| Net (decrease)/increase in cash and cash equivalents | (484,165) |
| Cash and cash equivalents at beginning of period | 759,978 |
| Cash and cash equivalents at end of period | 275,813 |
| Year ended 31 December 2021 £ | |
|---|---|
| Cash flows from operating activities | |
| Loss before income tax | (804,151) |
| Adjustments for: | |
| Depreciation | 1,147 |
| Gain/(loss) on sale of property plant and equipment | - |
| Impairment of Exploration & Evaluation assets | - |
| Share options expense | 135,771 |
| Deferred tax credit | - |
| Foreign exchange | (159,016) |
| Decrease/(Increase) in trade and receivables | 81,379 |
| (Decrease)/Increase in trade and payables | 31,375 |
| Net cash used in operating activities | (713,495) |
| Cash flows from investing activities | |
| Interest received | (60,686) |
| (Purchase)/Sale of property plant and equipment | - |
| Loans granted to subsidiary undertakings | (1,648,379) |
| Exploration and evaluation activities | - |
| Net cash used in investing activities | (1,709,065) |
| Cash flows from financing activities | |
| Proceeds from issue of share capital | 800,000 |
| Transaction costs of share issue | (46,000) |
| Proceeds from option exercise | 26,400 |
| Net cash generated from financing activities | 780,400 |
| Net (decrease)/increase in cash and cash equivalents | (1,642,160) |
| Cash and cash equivalents at beginning of period | 2,402,138 |
| Cash and cash equivalents at end of period | 759,978 |
The principal activity of Chesterfield Resources plc (the ‘Company’) and its subsidiaries (together the ‘Group’) is the exploration and development of precious and base metals. The Company is a public limited Company whose shares were admitted to the Standard listing segment of the Main market of the London Stock Exchange on 29 August 2017. The Company is incorporated and domiciled in England. The address of its registered office is 6 Heddon Street, London, W1B 4BT.
The principal accounting policies applied in the preparation of these Financial Information are set out below (‘Accounting Policies’ or ‘Policies’). These Policies have been consistently applied to all the periods presented, unless otherwise stated.
The Group and Company Financial Statements have been prepared in accordance with UK-adopted international accounting standards, IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the United Kingdom applicable to companies under IFRS, and the Companies Act 2006. The Group and Company Financial Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on an asset acquisition. The Financial Statements are presented in Pound Sterling rounded to the nearest pound.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group and Company Financial Statements are disclosed in Note 4.
The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions applicable for the period ended 31 December 2022 did not result in any material changes to the financial statements of the Group or Company. Of the other IFRS and IFRIC amendments, none are expected to have a material effect on future Group or Company Financial Statements.
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
| Standard | Impact on initial application | Effective date |
|---|---|---|
| IFRS 17 (Amendments) Insurance contracts | 1 January 2023 | |
| IAS 1 (Amendments) and IFRS Practice Statement 2 Disclosure of Accounting Policies | 1 January 2023 | |
| IAS 8 (Amendments) Definition of Accounting Estimate | 1 January 2023 | |
| IAS 12 Income Taxes (Amendments) Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction | 1 January 2023 | |
| IAS 1 (Amendments) Classification of liabilities as current or non-current | 1 January 2024 | |
| IFRS 16 (Amendments) Lease Liability in a Sale and Leaseback | 1 January 2024 |
None are expected to have a material effect on the Group or Company Financial Statements.
The Group Financial Statements consolidate the Financial Statements of the Company and its subsidiaries made up to 31 December 2022. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
* The contractual arrangement with the other vote holders of the investee;
* Rights arising from other contractual arrangements; and
* The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the Group Financial Statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within the Company Financial Statements. Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation.
The Group’s business activities together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Report on pages 2 to 3. In addition, Note 3 to the Group Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to market, credit and liquidity risk.
The Group and Company Financial Statements have been prepared on a going concern basis. Although the Group’s assets are not generating revenues and an operating loss has been reported, the Directors are of the view that the Group will have sufficient funds, taking into consideration the consideration from the disposal of the Canadian project, to undertake its operating activities over the next 12 months from the date these Financial Statements are approved including any additional payments required in relation to its current exploration projects. The Group may need to raise additional funds during the going concern period but is confident of doing so given the Group’s ability to raise additional funds when required. Therefore, the Directors consider that there will be sufficient resources to fund the Group’s committed expenditure and to maintain good title to the exploration licences. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Group and Company Financial Statements.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision- maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
(a) Functional and presentation currency
Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The functional currency of the UK parent entity is Pound Sterling. The functional currency of the Cyprian subsidiary is Euros and Canadian subsidiary is Canadian Dollars.# CHESTERFIELD RESOURCES PLC
The Financial Statements are presented in Pounds Sterling which is the Group’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the Statement of Comprehensive Income as part of the gain or loss on sale.
The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost
Exploration and evaluation assets are not subject to amortisation but are assessed annually for impairment. The assessment is carried out by allocating exploration and evaluation assets to cash generating units (“CGU’s”), which are based on specific projects or geographical areas. The CGU’s are then assessed for impairment using a variety of methods including those specified in IFRS 6. Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the Statement of Comprehensive Income.
Exploration assets which are acquired are recognised at fair value. When an acquisition of an entity whose only significant assets are its exploration asset and/or rights to explore, the Directors consider that the fair value of the exploration assets is equal to the consideration. Any excess of the consideration over the capitalised exploration asset is attributed to the fair value of the exploration asset.
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.
Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
30
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within ‘Other (losses)/gains’ in the Statement of Comprehensive Income.
Assets that have an indefinite useful life, for example, intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through OCI, or fair value through profit or loss. The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
For purposes of subsequent measurement, financial assets are classified in four categories:
This category is the most relevant to the Group and Company. The Group and Company measures financial assets at amortised cost if both of the following conditions are met:
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets at amortised cost include trade receivables (not subject to provisional pricing) and other receivables.
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
31
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. The Group recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity. At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables and loans.
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. IFRS 9.4.2.1(a) Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
32
After initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income. This category generally applies to trade and other payables.
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income. Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities, as appropriate. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost.
Cash and cash equivalents comprise cash at bank and in hand.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available. Deferred shares are classified as equity. Deferred shares have no rights to receive dividends, or to attend or vote at general meetings of the Company and are only entitled to a return of capital after payment to holders of new ordinary shares of £100,000 per each share held.
The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from employees or third-party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third-party suppliers’ services received in exchange for the grant of the options is recognised as an expense in the Statement of Comprehensive Income or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Statement of Comprehensive Income and its value is determined by reference to the fair value of the options granted:
• including any market performance conditions;
• excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and
• including the impact of any non-vesting conditions (for example, the requirement for employees to save).
The fair value of the share options and warrants are determined using the Black Scholes valuation model. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Statement of Comprehensive Income or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
33
When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.
No current tax is yet payable in view of the losses to date. Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the Group Financial Statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.# CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2022
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets and liabilities are not discounted.
Asset are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.
The Group’s activities expose it to a variety of financial risks: market risk (foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. None of these risks are hedged. Risk management is carried out by the London based management team under policies approved by the Board of Directors.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to enable the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts. At 31 December 2022 the Group had borrowings of nil (2021: £nil) and defines capital based on the total equity of the Group. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time. Given the Group’s level of debt versus its cash at bank and cash equivalents, the gearing ratio is immaterial.
The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amount of expenses during the period. Actual results may vary from the estimates used to produce these Financial Statements. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to:
Exploration and evaluation costs have a carrying value at 31 December 2022 of £880,837 (2021: £5,008,562). Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of the resource commences. Management tests for impairment annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.6. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the period warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision will be made to discontinue exploration; an impairment charge will then be recognised in the Statement of Comprehensive Income.
The Group has made awards of options and warrants over its unissued share capital to certain Directors as part of their remuneration package. The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in Note 20.
Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. During the period the Group had interests in three geographical segments; the United Kingdom, Canada and Cyprus. Activities in the UK are mainly administrative in nature whilst the activities in Canada and Cyprus relate to exploration and evaluation work.
| Canada £ | Cyprus £ | UK £ | Total £ | |
|---|---|---|---|---|
| Administrative expenses | (287,458) | (168,855) | (399,586) | (855,899) |
| Impairments | (488,286) | (2,707,444) | - | (3,195,730) |
| Other income | - | - | 45,132 | 45,132 |
| Finance Income | - | - | (35) | (35) |
| Loss before tax per reportable segment | (775,744) | (2,876,299) | (354,489) | (4,006,532) |
| Additions/(disposal) to PP&E | - | (23,816) | - | (23,816) |
| Additions/(disposal) to intangible asset | 279,898 | 182,689 | - | 462,587 |
| Reportable segment assets | 1,483,253 | 1,061,681 | 289,588 | 2,834,522 |
| Reportable segment liabilities | (12,693) | (14,574) | (109,404) | (136,671) |
| 31 December 2022 £ | 31 December 2021 £ | |
|---|---|---|
| Directors’ fees | 211,835 | 162,253 |
| Employee salaries & related expenses | 12,568 | 701 |
| Stock exchange related costs | 93,300 | 146,042 |
| Cost related to Project disposals | 155,681 | - |
| Office related expenses including printing, postage and telephone | 33,824 | 45,307 |
| Accountancy fees | 257 | 4,800 |
| Auditor remuneration | 37,214 | 30,480 |
| Travel & subsistence | 44,761 | 37,441 |
| Professional & consultancy fees | 172,944 | 224,175 |
| Insurance | 20,460 | 13,429 |
| Depreciation | 4,132 | 6,453 |
| Share Option expense | 2,100 | 135,771 |
| Other expenses | 66,823 | 93,721 |
| Total administrative expenses | 855,899 | 900,573 |
Directors Fees of £85,118 (2021: £85,187) and Employee salaries of £101,199 (2021: £93,259) have been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible additions in the period. As at 31 December 2021, an additional £11,046 of the Director fees related to the Subsidiary.
During the period, the Group (including overseas subsidiaries) obtained the following services from the Company’s auditors and its associates:
| 31 December 2022 £ | 31 December 2021 £ | |
|---|---|---|
| Fees payable to the Company’s auditor and its associates for the audit of the Company and Group Financial Statements | 30,000 | 30,180 |
| Canada £ | Cyprus £ | UK £ | Total £ | |
|---|---|---|---|---|
| Revenue | - | - | - | - |
| Administrative expenses | (6,531) | (114,072) | (779,970) | (900,573) |
| Finance Income | - | - | (63) | (63) |
| Loss before tax per reportable segment | (6,531) | (114,072) | (780,033) | (900,636) |
| Additions to PP&E | - | 17,714 | - | 17,714 |
| Additions to intangible asset | 494,020 | 932,878 | - | 1,426,898 |
| Reportable segment assets | 1,918,826 | 3,408,531 | 789,387 | 6,116,744 |
| Reportable segment liabilities | (281,747) | (121,988) | (130,931) | (534,666) |
| Short-term benefits £ | Notice period fees £ | Accruals £ | Total £ | |
|---|---|---|---|---|
| Executive Director | ||||
| Ajay Kejriwal | 62,000 | - | 25,000 | 87,000 |
| Martin French (1) | 70,870 | 65,538 | - | 136,408 |
| Paul Ensor (2) | 36,000 | - | - | 36,000 |
| Non-executive Directors | ||||
| David Cliff | 24,000 | - | - | 24,000 |
| Evengy Vrublevskiy | - | - | - | - |
| Peter Damouni (3) | 2,500 | - | - | 2,500 |
| 195,370 | 65,538 | 25,000 | 285,908 |
(1) Martin French resigned 4 August 2022
(2) Paul Ensor was appointed as an Executive Director on 4 August 2022
(3) Peter Damouni resigned 7 February 2022
Share options with a fair value of £nil were awarded to Directors during the year (2021: £33,524). Of the above Group Directors Remuneration, £85,118 (2021: £85,187) has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the period.
| Short-term benefits £ | Notice period fees £ | Total £ | |
|---|---|---|---|
| Executive Director | |||
| Ajay Kejriwal | 55,400 | - | 55,400 |
| Martin French | 120,000 | - | 120,000 |
| Non-executive Directors | |||
| David Cliff | 24,000 | - | 24,000 |
| Evengy Vrublevskiy | - | - | - |
| Paul Ensor | 21,700 | - | 21,700 |
| Peter Damouni | 24,000 | - | 24,000 |
| 245,100 | - | 245,100 |
No charge to taxation arises due to the losses incurred.# CHESTERFIELD RESOURCES PLC
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the losses of the consolidated entities as follows:
| Group | 31 December 2022 £ | 31 December 2021 £ |
|---|---|---|
| Loss before tax | (4,006,532) | (900,636) |
| Tax at the applicable rate of 16.8% (2021: 18.1%) | (672,996) | (163,014) |
| Effects of: | ||
| Expenditure not deductible for tax purposes | 265,565 | 10,444 |
| Depreciation in excess of/(less than) capital allowances | - | 218 |
| Losses carried forward on which no deferred tax asset is recognised | 407,431 | 152,352 |
| Tax | - | - |
The weighted average applicable tax rate of 16.8% (2021: 18.1%) used is a combination of the 19% standard rate of corporation tax in the UK, 12.5% Cypriot corporation tax and 28% Canadian tax rate. The Group has a potential deferred income tax asset of approximately £960,000 (2021: £596,000) due to tax losses available to carry forward against future taxable profits. The Company has tax losses of approximately £2,042,000 (2021: £1,993,000) available to carry forward against future taxable profits. No deferred tax asset has been recognised on accumulated tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset. A deferred tax liability arises on the acquisition of 87986 Newfoundland and Labrador Inc. Refer to Note 16.
The calculation of the total basic loss per share of (2.831) pence (2021: (0.811)) pence is based on the loss attributable to equity holders of the Company of £3,659,387 (2021: £900,636) and on the weighted average number of ordinary shares of 129,259,818 (2021: 110,984,045) in issue during the period. In accordance with IAS 33, basic and diluted earnings per share are identical for the Group as the effect of the exercise of share options would be to decrease the earnings per share. Details of share options that could potentially dilute earnings per share in future periods are set out in Note 20.
| Vehicles £ | Office equipment £ | Software £ | Total £ |
|---|---|---|---|
| Cost | |||
| As at 1 Jan 2021 | 10,783 | 11,176 | 11,631 |
| Additions | - | 17,714 | - |
| Foreign exchange | (707) | (734) | - |
| As at 31 Dec 2021 | 10,076 | 28,156 | 11,631 |
| As at 1 Jan 2022 | 10,076 | 28,156 | 11,631 |
| Additions | - | 5,225 | - |
| Disposal | (10,630) | (18,411) | - |
| Foreign exchange | 554 | 1,548 | - |
| As at 31 Dec 2022 | - | 16,518 | 11,631 |
| Depreciation | |||
| As at 1 Jan 2021 | 6,470 | 3,929 | 10,484 |
| Charge for the year | 2,015 | 3,291 | 1,147 |
| Foreign exchange | (424) | (258) | - |
| As at 31 Dec 2021 | 8,061 | 6,962 | 11,631 |
| As at 1 Jan 2022 | 8,061 | 6,962 | 11,631 |
| Disposal | (9,567) | (2,837) | - |
| Charge for the year | 1,063 | 3,069 | - |
| Foreign exchange | 443 | 383 | - |
| As at 31 Dec 2022 | - | 7,577 | 11,631 |
| Net book value as at 31 December 2021 | 2,015 | 21,194 | - |
| Net book value as at 31 December 2022 | - | 8,941 | - |
| Software £ | Total £ |
|---|---|
| Cost | |
| As at 1 Jan 2021 | 11,631 |
| Additions | - |
| As at 31 Dec 2021 | 11,631 |
| As at 1 Jan 2022 | 11,631 |
| Additions | - |
| As at 31 Dec 2022 | 11,631 |
| Depreciation | |
| As at 1 Jan 2021 | 10,484 |
| Charge for the period | 1,147 |
| As at 31 Dec 2021 | 11,631 |
| As at 1 Jan 2022 | 11,631 |
| Charge for the period | - |
| As at 31 Dec 2022 | 11,631 |
| Net book value as at 31 December 2021 | - |
| Net book value as at 31 December 2022 | - |
Intangible assets comprise exploration and evaluation costs. Exploration and evaluation assets are all internally generated except for those acquired at fair value.
| 2022 £ | 2021 £ | |
|---|---|---|
| Opening balance | 5,008,562 | 2,433,876 |
| Additions | 462,587 | 1,426,898 |
| Fair value uplift of Chesterfield (Canada) Inc. acquisition | - | 1,264,164 |
| Impairment of Chesterfield (Canada) Inc asset | (488,286) | - |
| Impairment of Chesterfield Resources (Cyprus) Ltd asset | (2,707,444) | - |
| Reclassify to Asset Held for Sale (note 13) | (1,478,287) | - |
| Foreign exchange | 83,705 | (116,376) |
| As at end of period | 880,837 | 5,008,562 |
Exploration projects in Cyprus and Canada are at an early stage of development and there are no JORC (Joint Ore Reserves Committee) or non-JORC compliant resource estimates available to enable value in use calculations to be prepared. The Directors therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment:
Following their assessment, the Directors concluded that an impairment charge of £3,195,730 was necessary for the year ended 31 December 2022 due to the relinquishment of licenses and the expected recoverability prior to reclassification to asset held for sale.
| 2022 £ | 2021 £ | |
|---|---|---|
| Shares in Group Undertakings | ||
| At beginning of period | 1,511,332 | 500,000 |
| Investment in Chesterfield (Canada) Inc. | - | 1,011,332 |
| Impairment of Investment in Chesterfield (Canada) Inc. | (241,060) | - |
| Investment in Chesterfield Resources (Cyprus) Ltd | - | - |
| At end of period | 1,270,272 | 1,511,332 |
| Loans to Group undertakings | ||
| At beginning of period | 3,819,127 | 1,951,046 |
| Loans granted | 242,352 | 1,648,379 |
| Foreign Exchange | 213,221 | 159,016 |
| Interest receivable | 55,017 | 60,686 |
| Impairment of Loan to Chesterfield Resources (Cyprus) Ltd | (3,146,225) | - |
| At end of period | 1,183,492 | 3,819,127 |
| Total | 2,453,764 | 5,330,459 |
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.
| Name of subsidiary | Registered office address | Country of incorporation and place of business | Proportion of ordinary shares held by parent (%) | Proportion of ordinary shares held by the Group (%) | Nature of business |
|---|---|---|---|---|---|
| CRC Chesterfield Resources (Cyprus) Limited | Illoupoleos 1, Germasogela, 4046 Limassol | Cyprus | 100% | 100% | Exploration |
| Chesterfield (Canada) Inc | PO Box 5038. St John’s, Canada | Canada | 100% | 100% | Exploration |
On 6th March 2023, the Company announced that they had signed an agreement with Sterling Metals, a TSX-V and OTCQB listed exploration company, with regard to Chesterfield's Adeline project in Labrador. Under the agreement Sterling Metals will purchase an option to acquire full ownership and rights over the project in exchange for a series of payments of cash and shares for a total consideration of CAD$800,000 and 9,000,000 shares in Sterling Metals. Refer to note 24. Therefore, the Directors determine that the Adeline licences be classified as an asset held for sale as at 31 December 2022. Sterling will pay the total cash consideration in three separate tranches: CAD$100,000 (£62,250) upon signing of the agreement, CAD$300,000 (£183,750) following TSX approval of the deal, and a final CAD$400,000 (£230,000) to be paid on or before 30 November 2024. The Directors undertook an impairment assessment of the disposal group's assets in accordance with IFS 5 and concluded that the asset's carrying value was in excess of their fair value less costs to sell. As such, an impairment of £241,060 has been recognised.
| Group | 31 December 2022 £ | 31 December 2021 £ | Company | 31 December 2022 £ | 31 December 2021 £ |
|---|---|---|---|---|---|
| Prepayments | 13,231 | 136,869 | Prepayments | 9,406 | 18,342 |
| Other receivables | 32,601 | 31,804 | Other receivables | 565,227 | - |
| Amounts due from group undertakings | - | - | Amounts due from group undertakings | - | 101,127 |
| VAT receivable | 116,603 | 153,330 | VAT receivable | 4,374 | 11,065 |
| Total | 162,435 | 322,003 | Total | 579,007 | 130,534 |
Trade and other receivables are all due within one year. The fair value of all receivables is the same as their carrying values stated above.
| Group | 31 December 2022 £ | 31 December 2021 £ | Company | 31 December 2022 £ | 31 December 2021 £ |
|---|---|---|---|---|---|
| Cash at bank and in hand | 304,022 | 762,971 | Cash at bank and in hand | 275,813 | 759,978 |
Cash at bank comprises balances held by the Company in current bank accounts. The carrying value of these approximates to their fair value.
The movement in the deferred tax liabilities account is as follows:
| Group | 2022 £ | 2021 £ |
|---|---|---|
| Deferred tax liabilities | ||
| Acquisition of subsidiary | 380,283 | 380,283 |
| Derecognised on impairment of Intangible Asset in Canada | (252,832) | - |
| Derecognised on impairment of Intangible Asset in Cyprus | (94,313) | - |
| 33,138 | - |
During the year ended 31 December 2021, a deferred tax liability arose upon the acquisition of 87986 Newfoundland and Labrador Inc for £252,833 and £127,450 relates to Cyprus. Refer to Note 23. During the year ended 31 December 2022, the deferred tax liability was reduced upon the impairment of the intangible asset in both the Cyprus and Canadian entities.
| Group | 31 December 2022 £ | 31 December 2021 £ | Company | 31 December 2022 £ | 31 December 2021 £ |
|---|---|---|---|---|---|
| Trade payables | 9,493 | 115,925 | Trade payables | 21,963 | 98,179 |
| Accruals | 61,600 | 31,403 | Accruals | 55,000 | 25,697 |
| Other payables | 32,440 | 7,055 | Other payables | 32,440 | 7,056 |
| 103,533 | 154,383 | 109,403 | 130,932 |
Trade payables and accruals principally comprise amounts outstanding for trade purchases and continuing costs.The Directors consider that the carrying value amount of trade and other payables approximates to their fair value.
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Loans & receivables | Total | |
| Assets per Statement of Financial Performance (Amortised cost) | £ | £ |
| Trade and other receivables (excluding prepayments and VAT) | 32,601 | 32,601 |
| Cash and cash equivalents | 304,022 | 304,022 |
| Total | 336,623 | 336,623 |
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| At amortised cost | Total | |
| Liabilities per Statement of Financial Performance (Amortised cost) | £ | £ |
| Trade and other payables (excluding non-financial liabilities) | 41,933 | 41,933 |
| Total | 41,933 | 41,933 |
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Loans & receivables | Total | |
| Assets per Statement of Financial Performance (Amortised cost) | £ | £ |
| Trade and other receivables (excluding prepayments and VAT) | 565,227 | 565,227 |
| Cash and cash equivalents | 275,813 | 275,813 |
| Total | 841,040 | 841,040 |
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| At amortised cost | Total | |
| Liabilities per Statement of Financial Performance (Amortised cost) | £ | £ |
| Trade and other payables (excluding non-financial liabilities) | 54,403 | 54,403 |
| Total | 54,403 | 54,403 |
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
43
| Number of shares | Share Capital £ | Share premium £ | Total £ | |
|---|---|---|---|---|
| As at 1 January 2021 | 101,711,112 | 199,711 | 6,482,931 | 6,682,642 |
| As at 31 December 2021 | 120,328,311 | 218,328 | 8,253,634 | 8,471,962 |
| As at 1 January 2022 | 120,328,311 | 218,328 | 8,253,634 | 8,471,962 |
| 2 February 2022 – shares issued (1) | 10,000,000 | 10,000 | 666,020 | 676,020 |
| As at 31 December 2022 | 130,328,311 | 228,328 | 8,919,654 | 9,147,982 |
(1) Includes cost of capital of £23,980
On 2 February 2022, the Company issued 10,000,000 Ordinary Shares for a price of £0.07 per share raising a total of £700,000 excluding the cost of capital of £23,980. Each ordinary share has a par value of 0.1p and carries the right to one vote, to receive dividends and to participate on a return of capital.
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
44
Share options and warrants outstanding and exercisable at the end of the period have the following expiry dates and exercise prices:
| Options & Warrants | Grant Date | Expiry Date | Exercise price in £ per share | 31 December 2022 | 31 December 2021 |
|---|---|---|---|---|---|
| 0.05 | - | 5,000,000 | |||
| 16 March 2017 | 29 August 2022 | ||||
| 28 June 2018 | 2 July 2023 | 0.75 | 1,805,000 | 1,805,000 | |
| 17 December 2019 | 1 January 2025 | 0.05 | 1,800,000 | 1,800,000 | |
| 27 July 2020 | 3 July 2023 | 0.0525 | 2,565,000 | 2,565,000 | |
| 27 July 2020 | 27 July 2025 | 0.0525 | 2,175,000 | 2,175,000 | |
| 27 July 2020 | 16 July 2025 | 0.10 | 619,333 | 619,333 | |
| 26 November 2020 | 26 November 2025 | 0.09 | 1,000,000 | 1,000,000 | |
| 11 December 2020 | 11 December 2025 | 0.09 | 55,556 | 55,556 | |
| 5 January 2021 | 5 January 2026 | 0.14 | 1,400,000 | 1,400,000 | |
| 5 February 2021 | 5 February 2026 | 0.125 | 250,000 | 250,000 | |
| 2 July 2021 | 2 July 2026 | 0.12 | 2,400,000 | 2,400,000 | |
| 2 July 2021 | 2 July 2024 | 0.20 | 11,100,000 | 11,100,000 | |
| 30 September 2021 | 30 September 2026 | 0.11 | 2,200,000 | 2,200,000 | |
| 16 February 2022 | 16 February 2024 | 0.12 | 5,029,000 | - | |
| Total | 32,398,889 | 32,369,889 |
During the period, £2,100 of options were issued to an employee, but these expired in the same period. The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash. The fair value of the share options and warrants was determined using the Black Scholes valuation model. The parameters used are detailed below:
| 2020 Options | 2020 Options | 2019 Options | 2018 Options | |
|---|---|---|---|---|
| Granted on: | 27/07/2020 | 27/07/2020 | 17/12/2019 | 28/06/2018 |
| Life (years) | 5 years | 3 years | 5 years | 4.5 years |
| Exercise price (pence per share) | 5.25p | 5.25p | 5p | 7.5p |
| Risk free rate | 0.08% | 0.08% | 0.4% | 0.5% |
| Expected volatility | 43.70% | 43.70% | 12.96% | 14.33% |
| Expected dividend yield | - | - | - | - |
| Marketability discount | 20% | 20% | 20% | 20% |
| Total fair value (£000) | 69 | 63 | 0.378 | 11 |
| 2021 Options | 2020 Options | 2020 Options | 2020 Options | |
|---|---|---|---|---|
| Granted on: | 05/01/2021 | 11/12/2020 | 26/11/2020 | 27/07/2020 |
| Life (years) | 5 years | 5 years | 5 years | 5 years |
| Exercise price (pence per share) | 14p | 9p | 9p | 10p |
| Risk free rate | 0.08% | 0.08% | 0.08% | 0.08% |
| Expected volatility | 35.43% | 27.23% | 27.23% | 43.70% |
| Expected dividend yield | - | - | - | - |
| Marketability discount | 20% | 20% | 20% | 20% |
| Total fair value (£000) | 50 | 3 | 27 | 10 |
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
45
| 2021 Options | 2021 Options | 2021 Options | 2021 Options | |
|---|---|---|---|---|
| Granted on: | 02/07/2021 | 02/07/2021 | 02/07/2021 | 05/02/2021 |
| Life (years) | 3 years | 1 years | 5 years | 5 years |
| Exercise price (pence per share) | 20p | 5p | 12p | 12.5p |
| Risk free rate | 1.10% | 1.02% | 1.10% | 0.08% |
| Expected volatility | 13.79% | 13.79% | 13.79% | 35.43% |
| Expected dividend yield | - | - | - | - |
| Marketability discount | 20% | 20% | 20% | 20% |
| Total fair value (£000) | 2.5 | 41 | 32.5 | 8 |
| 2021 Options | 2022 Options | 2022 Options | |
|---|---|---|---|
| Granted on: | 30/09/2021 | 03/01/2022 | 16/02/2022 |
| Life (years) | 5 years | 4 years | 2 years |
| Exercise price (pence per share) | 11p | 7p | 12p |
| Risk free rate | 1.10% | 1.95% | 2.12% |
| Expected volatility | 12.29% | 14.63% | 12.92% |
| Expected dividend yield | - | - | - |
| Marketability discount | 20% | 20% | 20% |
| Total fair value (£000) | 3.5 | 2.0 | - |
The expected volatility of the 2022, 2021, 2020, 2019 and 2018 options has been calculated based on volatility for the six months of trading after admission. The risk-free rate of return is based on zero yield government bonds for a term consistent with the option life. A reconciliation of options and warrants granted over the year to 31 December 2022 is shown below:
| 2022 | 2021 | |
|---|---|---|
| Number | Weighted average exercise price (£) | |
| Outstanding at beginning of period | 32,369,889 | 0.11 |
| Granted | 5,129,000 | 0.12 |
| Exercised | - | - |
| Expired/cancelled | (5,100,000) | 0.11 |
| Outstanding as at period end | 32,398,889 | 0.13 |
| Exercisable at period end | 32,398,889 | 0.13 |
| 2022 | 2021 | |
|---|---|---|
| Weighted average exercise price (£) | Number of shares | |
| Range of exercise prices (£) | ||
| 0 – 0.05 | 0.05 | 1,800,000 |
| 0.06 – 0.15 | 0.09 | 13,248,889 |
| 0.16 – 0.30 | 0.17 | 17,350,000 |
During the period there was a net charge of £2,100 (2021: £135,771) in respect of share options to the profit and loss. In 2021 a further charge of £2,412 was incurred as part of the acquisition of 87986 Newfoundland and Labrador Inc.
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
46
Amounts receivable as a result of loans granted to subsidiary undertakings are as follows:
| Company | 31 December 2022 £ | 31 December 2021 £ |
|---|---|---|
| CRC Chesterfield Resources (Cyprus Limited) | 475,476 | 3,168,951 |
| Chesterfield (Canada) Inc. | 708,016 | 650,176 |
| At 31 December | 1,183,492 | 3,819,127 |
These amounts are unsecured, incur interest, and repayable in Euros and Canadian Dollars when sufficient cash resources are available in the subsidiaries. All intra Group transactions are eliminated on consolidation.
During the year ended 31 December 2022, the Company raised an invoice for £45,132 to Polymetal International Plc. of whom Eugene Vrublevskiy is Head of Treasury and director of its’ wholly owned subsidiary PMTL Holding Ltd. There were no members of key personnel management other than Directors, whose remuneration is disclosed in note 7.
As at 31 December 2022, Chesterfield owned 3 mineral exploration licenses in Cyprus and 10 mineral exploration licenses in Canada. Subsequent to the year end, the Canadian Adeline project was sold to Sterling Metals. Therefore, in Canada, there are no further minimum spend requirements or annual licence fee commitments payable. In Cyprus, these licences include commitments to pay annual licence fees and minimum spend requirements.
| License fees £ | Minimum spend requirement £ | Total £ | |
|---|---|---|---|
| Not later than one year | 17,469 | 97,442 | 114,911 |
| Later than one year and no later than five years | 69,875 | 487,212 | 557,087 |
| Total | 87,344 | 584,654 | 671,998 |
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
47
On 1 July 2021 the Company acquired 87986 Newfoundland and Labrador Inc (“the Acquisition”) which was subsequently renamed to Chesterfield (Canada) Inc. 87986 Newfoundland and Labrador Inc is a company incorporated in Canada whose principal activity is the exploration for natural resources in Canada. The consideration for the Acquisition was satisfied by the issue 10,089,199 ordinary shares at a price of 10 pence per share and warrants over 11,100,000 Ordinary Shares, exercisable for three years from completion at an exercise price of £0.20 per new Ordinary Shares. The acquisition date was deemed as being 7 July 2021. The price of 10p per share was based on an agreed price between the Company and vendor.The following table summarises the fair value of assets acquired and liabilities assumed as the acquisition date:
| Consideration at 7 July 2021 | |
|---|---|
| Equity instruments in issue (10,089,199 ordinary shares £0.10 each) | 1,008,920 |
| Warrant instruments (11,100,000 ordinary shares £0.10 each) | 2,412 |
| Total consideration | 1,011,332 |
| Recognise amounts of identifiable assets acquired and liabilities assumed | |
|---|---|
| Cash and cash equivalents | - |
| Trade and other receivables | - |
| Trade and other payables | - |
| Total identified net assets | - |
| Deferred tax liability | (252,832) |
| Fair value uplift | 1,264,164 |
Under IFRS 3, a business must have three elements: inputs, processes and outputs. 87986 Newfoundland and Labrador Inc was a newly incorporated exploration company and had no mineral reserves and no plan to develop a mine. 87986 Newfoundland and Labrador Inc did have title to mineral properties but these could not be considered inputs because of their early stage of development. 87986 Newfoundland and Labrador Inc had no processes to produce outputs and had not completed a feasibility study or a preliminary economic assessment on any of its properties and had no infrastructure or assets that could produce outputs. Therefore, the Directors conclusion was that the transaction was an asset acquisition and not a business combination. The fair value adjustment to intangible assets of £1,264,164 represents the excess of the purchase consideration of £1,011,332 over the excess of the net assets acquired of nil and a deferred tax liability of £252,833. The amount of loss of 87986 Newfoundland and Labrador Inc since the acquisition date included in the Group Statement of Comprehensive Income is £6,531. If the acquisition of 87986 Newfoundland and Labrador Inc had occurred on 1 January 2021 the revenue and loss of the Group would have been nil.
On 6 March 2023, Sterling Metals (“Sterling”) purchased an option to acquire full ownership and rights over Chesterfield's Adeline project in Labrador in exchange for a series of payments of cash and share. As per the agreement, Sterling will pay Chesterfield a total of CAD$800,000 and issue 9,000,000 shares in Sterling Metals.
The Directors believe there is no ultimate controlling party.
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