CHESTERFIELD RESOURCES PLC

Earnings Release • May 5, 2020

National Storage Mechanism | Additional information

RNS Number : 8867L

Chesterfield Resources PLC

05 May 2020

Chesterfield Resources / EPIC: CHF / Market: LSE / Sector: Mining

5 May 2020

Chesterfield Resources Plc (the 'Company', 'Chesterfield')

Final Results, Notice of AGM

Chesterfield Resources plc is pleased to announce its final results for the year ended 31 December 2019. The Company also gives notice that its Annual General Meeting ('AGM') will be held on June 29th at 11am. at 7-9 Swallow Street, London W1B 4DE.

Copies of the Notice of AGM, together with the Form of Proxy and the Annual Report will be posted to shareholders and will be available to view on the Company's website shortly at www.chesterfieldresourcesplc.com

The cash balance for the Company at year end was £748,596.

FINAL RESULTS

Chairmans Statement

Dear Shareholders,

2019 was a year dominated by our target development programme in Cyprus. For a mineral exploration company, the quality of its targets is its principal asset. Our objective was to develop a list of high-value targets prior to the expensive process of diamond drilling. Advancing these targets involved a great deal of laborious and painstaking work, running various different types of exploration programmes concurrently. However, it is this diligent preparation that maximises our chances of discovery and success.

In order to undertake this complicated task, 2019 also saw the company build a truly world class geological team. Dave Cliff (non-Executive Director), who was formally Head of Exploration Europe for Rio Tinto, one of the world's biggest mining companies, joined us in 2017. Joining us in January as Chief Operating Officer was Mike Parker, who had just completed a 20-year career at First Quantum Minerals, where he was key in two major copper discoveries and led large teams of exploration personnel. Also joining us as Technical Consultant was Neil O'Brien, who previously was VP of new business development at Lundin Mining. Neil is a recognised authority on the VMS (volcanogenic massive sulphide) geological occurrences that the company is exploring in Cyprus. We believe it is this experience and brain-power behind our target development that will help distinguish us as a junior explorer.

Chesterfield's exploration strategy in Cyprus is to locate Volcanogenic Massive Sulphides (VMS) buried under cover, around 50-200 metres underground. Historically, miners in Cyprus only worked deposits they could locate visibly from surface. After the Turkish invasion of 1974 most mining work halted and there was very little exploration using new methods and technology to look further underground. There was some limited exploration in the noughties, but these programmes were short-lived due to various specific financial constraints. In November 2019, Chesterfield completed a comprehensive multi-disciplined target development programme for buried deposits.

We focussed the majority of our exploration on the Troodos West suite of licences, which are permitted for drilling. The programme involved layering numerous different types of exploration techniques. During the year, these included remote sensing satellite survey, using data from the Sentinel-2 satellite, owned by the European Space Agency. The data, both from the visible and non-visible spectrum, was sent to a specialist analytical company in the US to identify faulted structures around our areas of focus in Cyprus. This was completed in April and saved many months of trying to complete the same task purely through fieldwork. However, we still also put great store by geologists "kicking stones" and getting on the ground to conduct detailed mapping as we narrowed our search areas to those of the most interest. In line with this, we also have a strong emphasis on geochemistry, and ran out several sizable soil sampling surveys on our licence areas. The interpretation of this sampling is also very important to understand properly. Often the soil signatures are adjacent, not directly above, mineralised targets due to underlying stratigraphy. The company also commissioned some costly geophysics surveys.

Another important aspect of our work is archival research. There is much historical mining and exploration data in Cyprus that has not been digitised, and has to be sifted through from sometimes dusty folders found in the bottom of drawers and boxes. There have also been several useful surveys conducted over the years by entities such as the United Nations and BRGM that have yielded useful information. Likewise, we have made use of the considerable expertise and knowledge of Cypriot geologists on the island. The results of these various exploration work tracks are then brought together and analysed in reference to each other to identify targets. The ones which have the most co-incident layers of evidence are usually the strongest.

The process of developing targets involves ranking them, and this ranking changes on an on-going basis as new evidence comes to light and the technical team debates the merit of each target relative to its peers. We had initially expected to commence a new diamond drill programme in the late summer of 2019, but as that time approached, the target list was evolving beyond our expectation. Our initial list of ten targets had grown to more than 20, and the ranking of the top ten targets could change significantly from week to week. We therefore took the decision to delay the drilling until the team felt confident it had optimised the target list and therefore our prospects of making discoveries. This proved to be the correct decision, as the list eventually grew to 30 targets in the fourth quarter, with 15 ranked on a priority list. While we will still need some help from Mother Nature, we believe this ranked-list will now provide us with the best chance of making discoveries.

The list of targets was completed by November but it was not then practicable to import a drill rig and team from overseas as the rainy season had started in Cyprus. This season, which lasts until around May, is characterised by lightning storms, during which a rig must stand down. However, the local team came up with an innovative solution to allow us to advance our programme during the down-season, which was to test the targets with a percussion drill.

Unlike a diamond drill, a percussion drill does not produce core samples, but rather rock chips. While not as capable of producing as representative a sample as an RC (reverse circulation) drill, it is cheaper and is available in country. Given the relatively low-cost of percussion drilling (approximately 15% of the cost of a comparable diamond drilling per meter), it is an excellent cost-effective method of testing for target stratigraphy and presence of sulphides up to a limited depth, in this case, of 200m, below surface. In this campaign, the samples were split and dried and assayed by a portable XRF. Drilling is quick; a hole typically takes only one day to complete. Because the percussion drill is located in Cyprus, there are no mobilisation costs.

Despite unusually heavy rain and wet ground, we were able to access two targets, drilling four holes on each. Sulphide mineralisation was encountered on both targets. This means that the company's diamond drill campaigns can now be designed more accurately with a higher level of confidence of intersecting VMS-type sulphides.

Importantly, the success of these early percussion holes indicates "proof of concept" of the team's exploration methodology, and so adds to confidence in the company's extensive target list at Troodos West. Many of the other targets are close to Hillside and Embayment and so will share similar geological characteristics. Verification of the local stratigraphy and presence of sulphides in the formations predicted, now provides significant support to the whole programme of exploration target modelling. At the Hillside target concentrated sulphide mineralisation was reported in two holes collared approximately 50 metres apart at the expected stratigraphic target horizon and with the presence of gold, zinc, and copper which is the typical revenue metal signature for Cyprus VMS deposits. These results are strongly indicative of VMS type mineralisation and prioritize the Hillside target for follow-up diamond (core) drilling.

Just as we were expecting to recommence our percussion drilling in March, the Covid-19 epidemic swept through Europe and all work had to be halted. One consequence of the crisis was the continued surge in the gold price. Gold had been ticking up through 2019 and gained further momentum as the epidemic tightened its grip. Since Chesterfield first drilled notable gold intersections in Cyprus in late 2018, the gold price had risen by 40%, which emphasized the importance of finding and developing new gold-rich copper deposits.

We decided to put the lock-down period to good effect and in April this year the company's technical team completed a desktop evaluation of its Cypriot exploration licences in terms of their potential for gold. During its appraisal, the team identified significant enrichment of gold, in association with VMS type sulphide occurrences, at five locations over a 4km strike length on a major prospective structure. On the same structure, 7km south-east of this zone, another gold occurrence in association with VMS sulphide has also been identified.

Based these gold encounters in the area, the team concluded that that the company's Troodos West licences cover an unusually gold-enriched VMS belt, capable of producing a clean gold-rich copper concentrate. As such, gold is likely to be a significant revenue metal contained within copper-zinc sulphide resources.

During the year, the company was also active in managing its land position. As we reduced our search area to focus on high value targets, we were able to release some licence packages that we no longer deemed necessary. On the other hand, we submitted applications for new licence areas adjacent promising targets. We expect to continue this active land management through 2020.

The company has also worked improving its messaging and investor interface. We launched a greatly improved company website with quite a number of pages to help educate those interested in aspects of Cypriot geology and mining history, as well as various aspects of our work programmes. We have produced video clips on many of these topics for people who prefer to watch rather than read. We have a detailed company presentation on the site which we keep updated regularly, and have been active in attending interviews for podcasts and TV.

In April, this year we conducted our first Zoom "Webinar" with a corporate presentation to a sizable group of interested shareholders locked-down due to the epidemic. We have posted a recording of this on our company website and expect to make further use of this technology to provide more real-time interaction with our current and potential shareholders. We feel our investor relations efforts are bearing fruit. On April 21st 2020, Chesterfield was the top performing stock on the London Exchange, by some considerable margin, turning over 18m shares, equivalent to about 30% of our register. We are encouraged that the stock has gained the attention of the market and are hopeful that any positive news going forward will get noticed. Shareholders are always comforted by stocks which are capable of displaying good trading volume.

As I write this letter there are signs that Covid-19 restrictions will be eased and we are looking forward to resuming our percussion drilling programme in Cyprus. While 2019 was the year of target development, we hope that 2020 will be a year of discovery.

Financial Review

The loss before taxation of the Group for the year ended 31 December 2019 amounted to £536,121 (period ended 31 December 2018: £689,367). 

The Group's cash position at 31 December 2019 was £748,596 (2018: £1,885,726). 

Outlook

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.

Group Statement Of Comprehensive Income

For the year ended 31 December 2019

		Group
Continuing operations	Note	31 December 2019 £	31 December 2018 £
Administrative expenses	6	(536,121)	(689,367)
Operating Loss		(536,121)	(689,367)
Loss before taxation		(536,121)	(689,367)
Income tax	8	-	-
Loss for the Period attributable to owners of the parent		(536,121)	(689,367)
Basic and Diluted Earnings Per Share attributable to owners of the parent (expressed in pence per share)	9	(0.866)	(1.524)

		31 December 2019 £	31 December 2018 £
Loss for the period		(536,121)	(689,367)
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Currency translation differences		(42,755)	6,181
Other comprehensive income for the period, net of tax		(42,755)	(6,181)
Total Comprehensive Income attributable to owners of the parent		(578,876)	(683,186)

Statement of Financial Position

For the year ended 31 December 2019

		Group
	Note	31 December 2019 £	31 December 2018 £
Non-Current Assets
Property, plant and equipment	10	20,778	13,891
Intangible assets	11	1,675,562	1,156,429
Investments in subsidiaries	12	-	-
		1,696,340	1,170,320
Current Assets
Trade and other receivables	13	89,498	77,067
Cash and cash equivalents	14	748,596	1,885,726
		838,094	1,962,793
Total Assets		2,534,434	3,133,113
Non-Current Liabilities
Deferred tax liabilities	15	(127,450)	(127,450)
		(127,450)	(127,450)
Current Liabilities
Trade and other payables	16	(68,957)	(89,138)
		(68,957)	(89,138)
Total Liabilities		(196,407)	(216,588)
Net Assets		2,338,027	2,916,525
Equity attributable to owners of the Parent
Share capital	18	159,933	159,933
Share premium	18	3,534,597	3,534,597
Other reserves		(20,003)	22,374
Retained losses		(1,336,500)	(800,379)
Total Equity		2,338,027	2,916,525

Group Statement of Changes in Equity

For the year ended 31 December 2019

		Attributable to owners of the Parent
	Note	Share capital £	Share premium £	Other reserves £	Retained losses £	Total £
Balance as at 1 January 2018		126,600	1,157,873	4,360	(111,012)	1,177,821
Loss for the year		-	-	-	(689,367)	(689,367)
Other comprehensive income for the year
Items that may be subsequently reclassified to profit or loss
Currency translation differences		-	-	6,181	-	6,181
Total comprehensive income for the year		-	-	6,181	(689,367)	(683,186)
Proceeds from share issues	18	26,666	1,973,334	-	-	2,000,000
Issue costs	18	-	(89,943)	-	-	(89,943)
Share based payment	19	-	-	11,833	-	11,833
Shares issued on business combination	18	6,667	493,333	-	-	500,000
Total transactions with owners, recognised directly in equity		33,333	2,376,724	11,833	-	2,421,890
Balance as at 31 December 2018		159,933	3,534,597	22,374	(800,379)	2,916,525
Balance as at 1 January 2019		159,933	3,534,597	22,374	(800,379)	2,916,525
Loss for the year		-	-	-	(536,121)	(536,121)
Other comprehensive income for the year
Items that may be subsequently reclassified to profit or loss
Currency translation differences		-	-	(42,755)	-	(42,755)
Total comprehensive income for the year		-	-	(42,755)	(536,121)	(578,876)
Options granted during year	19	-	-	378	-	378
Total transactions with owners, recognised directly in equity		-	-	378	-	378
Balance as at 31 December 2019		159,933	3,534,597	(20,003)	(1,336,500)	2,338,027

Group Statement of Cash Flows

For the year ended 31 December 2019

		Group
	Note	Year ended 31 December 2019 £	Year ended 31 December 2018 £
Cash flows from operating activities
Loss before income tax		(536,121)	(689,367)
Adjustments for:
Depreciation	10	8,201	2,864
Share options expense	19	378	11,833
Intercompany charges		-	-
Foreign exchange		(17,299)	6,158
(Increase)/Decrease in trade and receivables		(13,586)	17,350
(Decrease)/Increase in trade and payables		(17,752)	(56,946)
Net cash used in operating activities		(576,179)	(708,108)
Cash flows from investing activities
Cash acquired upon acquisition		-	1,744
Interest received		-	-
Purchase of property plant and equipment	10	(15,837)	(16,755)
Loans granted to subsidiary undertakings		-	-
Exploration and evaluation activities	11	(545,114)	(485,636)
Net cash used in investing activities		(560,951)	(500,647)
Cash flows from financing activities
Proceeds from issue of share capital	18	-	2,000,000
Transaction costs of share issue	18	-	(89,943)
Net cash generated from financing activities		-	1,910,057
Net increase/(decrease) in cash and cash equivalents		(1,137,130)	701,302
Cash and cash equivalents at beginning of period		1,885,726	1,184,424
Exchange gain on cash and cash equivalents		-	-
Cash and cash equivalents at end of period	14	748,596	1,885,726

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About Chesterfield Resources Plc

Chesterfield Resources is a copper-gold exploration and development Company active in Cyprus. The Company strategy is to generate value for shareholders by discovering and developing multiple deposits to production. Chesterfield is in the advanced stage exploration in on its Troodos West licence area, and has a large bank of licence areas elsewhere in Cyprus, either granted or under application.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

**ENDS**

For further information, please visit www.chesterfieldresourcesplc.com or contact:

Chesterfield Resources plc:

Martin French, Executive Chairman         Tel: +44(0)7901 552277

Brandon Hill (Broker):

Jonathan Evans/Oliver Stanstead             Tel: +44(0)20 3463 5000

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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