Regulatory Filings • Jul 9, 2021
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Download Source Filetitle: Microsoft Word - 2020.12.08 Chesterfield Resources Plc - Prospectus - Final Version
author: NFRYDA
date: 2021-07-06 16:21:00+00:00
as to what action you should take you are recommended to seek your own financial advice immediately from an independent financial adviser who specialises in advising on shares or other securities and who is authorised under the Financial Services and Markets Act 2000.
This Document comprises a Prospectus relating to Chesterfield Resources plc prepared in accordance with the Prospectus Regulation Rules. This Document has been approved by the FCA as the competent authority under Regulation (EU) 2017/1129 and has been filed with the FCA in accordance with Rule 3.2 of the Prospectus Regulation Rules. The FCA only approves this prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by the UK Prospectus Regulation and such approval should not be considered as an endorsement of the quality of the securities that are, or the Company which is the, subject of this prospectus. Investors should make their own assessment as to the suitability of investing in the securities. This Document has been drawn up as a simplified prospectus in accordance with Article 14 of the UK Prospectus Regulation.
This Document together with the documents incorporated into it by reference (as set out in Part IV) will be made available to the public in accordance with UK Prospectus Regulation Rule 3.2 by the same being made available free of charge at https://www.chesterfieldresourcesplc.com/ and at the Company’s registered office at 7-9 Swallow Street, London, England, W1B 4DE.
To the best of the knowledge of the Company and the Directors, the information contained in this Document is in accordance with the facts and this Document does not omit anything likely to affect the import of such information.
CHESTERFIELD RESOURCES PLC
(Incorporated and registered in England and Wales with number 10545738)
The Existing Ordinary Shares are listed on the Official List (by way of a Standard Listing) maintained by the FCA and traded on the London Stock Exchange’s Main Market for listed securities. Applications will be made to the FCA and the London Stock Exchange for the Placing Shares and the Labrador Consideration Shares to be admitted to the Official List and to trading on the Main Market for listed securities.
It is expected that Admission will become effective and that dealings for normal settlement in the Ordinary Shares will commence at 8.00 a.m. (London time) on 12 July 2021. No application is currently intended to be made for the Placing Shares and the Labrador Consideration Shares to be admitted to listing or dealing on any other exchange. The Company will comply with its obligation to publish a further supplementary prospectus containing further updated information required by law or any regulatory authority but assumes no further obligation to publish additional information.
This Document does not constitute an offer to sell or invitation to subscribe for, or solicitation of an offer or invitation to buy or subscribe for, Ordinary Shares in any jurisdiction where such offer or solicitation is unlawful or would impose any unfulfilled registration, publication or approval requirements on the Company. The Ordinary Shares have not been, nor will they be, registered under the US Securities Act or under the securities laws or with any securities regulatory authority of any state or other jurisdiction of the United States or of any province or territory of Canada, Australia, the Republic of South Africa or Japan. Subject to certain exceptions, the Ordinary Shares may not, directly or indirectly, be offered, sold, taken up or delivered in, into or from the United States, Canada, Australia, the Republic of South Africa or Japan or to or for the account or benefit of any national, resident or citizen of the United States, or any person resident in Canada, Australia, the Republic of South Africa or Japan. The distribution of this Document in other jurisdictions may be restricted by law and, therefore, persons into whose possession this Document comes should inform themselves of and observe any restrictions. The Ordinary Shares may not be taken up, offered, sold, resold, transferred or distributed, directly or indirectly, within, into or in the United States except pursuant to an exemption from, or in a transaction that is not subject to, the registration requirements of the US Securities Act. There will be no public offer in the United States. The Company has not been and will not be registered under the US Investment Company Act pursuant to the exemption provided by Section 3(c)(7) thereof and Shareholders will not be entitled to the benefits of that Act. The Ordinary Shares are being offered outside the United States in offshore transactions within the meaning of and in accordance with the safe harbour from the registration requirements provided by Regulation S under the US Securities Act. The Ordinary Shares have not been approved or disapproved by the SEC, any state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing commissions or authorities passed comment upon or endorsed the merit of the offer of the Ordinary Shares or the accuracy or the adequacy of this Document. Any representation to the contrary is a criminal offence in the United States. The distribution of this Document in or into other jurisdictions may be restricted by law and therefore persons into whose possession this Document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
Panmure Gordon, which is authorised and regulated in the United Kingdom by the FCA, is acting as broker exclusively for the Company and no-one else in connection with the proposed Placing and will not regard any other person as its client in relation to the proposed Placing and Admission (including any recipient of this Document) and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Panmure Gordon, nor for providing advice in connection with the proposed Placing or any other matter or arrangement referred to in this Document.
Neither Panmure Gordon nor any person acting on their behalf makes any representations or warranties, express or implied, with respect to the completeness, accuracy or verification of this Document nor does any such person authorise the contents of this Document. No such person accepts any responsibility or liability whatsoever for the contents of this Document or for any other statement made or purported to be made by it or on its behalf in connection with the Company, the Ordinary Shares, the Placing or Admission. Panmure Gordon accordingly disclaims all and any liability whether arising in tort or contract or otherwise which it might otherwise have in respect of this Document or any such statement. Panmure Gordon nor any person acting on their behalf accepts any responsibility or obligation to update, review or revise the information in this Document or to publish or distribute any information which comes to its or their attention after the date of this Document, and the distribution of this Document shall not constitute a representation by Panmure Gordon or any such person that this Document will be updated, reviewed or revised or that any such information will be published or distributed after the date hereof. However, nothing in this paragraph excludes or limits any responsibility which Panmure Gordon may have under FSMA or the regulatory regime established thereunder, or which, by law or regulation, cannot otherwise be limited or excluded.
SUMMARY
RISK FACTORS
Investment in the Company and the Ordinary Shares carries a significant degree of risk, including risks in relation to the Company’s business strategy and the fact it is at an early stage of development, risks relating to the natural resources sector, risks relating to COVID 19, risks relating to taxation and risks relating to the Ordinary Shares. The risks referred to below are the material risks relating to the Company. However, there may be additional risks that the Company and the Directors do not currently consider to be material or of which the Company and the Directors are not currently aware that may adversely affect the Company’s business, financial condition or results of operations.
Prospective Shareholders should review this Document carefully and in its entirety and consult with their professional advisers before acquiring any Ordinary Shares. If any of the risks referred to in this Document were to occur, the results of operations, financial condition and prospects of the Company could be materially adversely affected. If that were to be the case, the market price of the Ordinary Shares, the target rate of return, and/or the level of dividends or distributions (if any) received from the Ordinary Shares could decline significantly. Further, Shareholders could lose all or part of their investment.
PART A – RISK FACTORS SPECIFIC AND MATERIAL TO THE COMPANY
EARLY STAGE OF DEVELOPMENT AND NO CURRENT REVENUES
The Group’s primary objective in the short to medium term will be to continue exploring and developing the Portfolio for copper and gold mineralisation in order to establish a commercially mineable resource with a view to generating revenue by executing a trade sale, joint venture or strategic partnership in relation to the Portfolio. As at the date of this Document, the Group will have no properties producing positive cash flow. Unless the Company acquires a revenue generating company business or asset or is able to exploit a near term revenue generating opportunity from within the Portfolio, the Directors do not expect the Group to generate revenues during this exploration and development phase of its operations. Therefore, the Group will rely upon the Net Proceeds and existing capital reserves in order to fund its activities. However, the Directors are satisfied that the Net Proceeds will be sufficient for the Group to carry out its proposed activities (as set out at paragraph 6 of Part I) and the other requirements of the Group during the 12-18 months following Admission. Such requirements include meeting the Group’s minimum expenditure commitment of $250,000, which is spread across the first 18 months of the Adeline Copper Project, pursuant to the Share Purchase Agreement. The Company’s capacity to carry out further activities beyond those detailed at paragraph 6 of Part I will depend upon the Company’s ability to access capital from equity capital markets, strategic partnerships or other sources.
All of the Group’s activities will likely be directed to exploration and development of its existing licence areas and to the search for and development of new mineral deposits. Significant capital investment will be required to identify a commercially mineable mineral resource, which may cause the Group to be loss making in the short to medium term. There can also be no assurance that a commercially viable mining asset will be identified and therefore there can be no assurance that that the Group will be profitable in the future. The group has accrued losses of £812,153 as at 31 December 2020. However, this situation is to be expected of a Company engaged in early stage mining exploration activities and as such the Historical Financial Information of the Group provides a limited basis on which investors may evaluate potential future performance.
Consequently, the success of the Group will depend on its ability to preserve capital and to access capital from equity capital markets, strategic partnerships or other sources, until such point as it is able to realise returns from the successful identification and development of its mineral resource projects. The Directors cannot provide assurances that its exploration activities will be successful or that it will be able to generate sufficient returns from its projects or that it will continue to be successful long-term in raising capital to supports its projects. If such risk were to materialise, this will have adverse impact on the financial conditions of the Group and its prospects.
The Group will conduct its operations pursuant to exploration or mining rights and concessions, licences, permits and other authorisations, including the Granted Prospecting Permits and the Granted Map-Staked Mineral Licences. Any delay in obtaining or renewing a licence, permit or other authorisation may result in a delay in development of a resource, which may have a material adverse effect on the results of the Group’s operations, cash flows and financial condition. To date, the Group has been successful in maintaining and renewing the terms of the Granted Prospecting Permits and Granted Map-Staked Mineral Licences. The Directors are therefore not aware of any circumstances likely to lead to the termination and or non-renewal of the Granted Prospecting Permits and the Granted Map-Staked Mineral Licences. However, there can be no guarantee that the Group will be able to maintain all required approvals, licences and permits relating to its exploration and development activities.
In addition, any existing exploration or mining rights and concessions, licences, permits and other authorisations of the Group including the Granted Prospecting Permits and the Granted Map-Staked Mineral Licences may be suspended, terminated or revoked if the Group fails to comply with their terms. In this case, or if the Group otherwise operates in contravention of applicable law, government regulators may impose fines or terminate the relevant right, concession, licence, permit or other authorisation. In Cyprus, according to the provisions of Article 18 of the Mines Law, a Prospecting Permit may be cancelled in the case of non-compliance of the Company with the Mines Law or any regulations that have been issued subject to the Mines Law or any of the terms subject to which the Prospecting Permit has been issued. If this risk were to materialise and some or all of the Granted Prospecting Permits and/or Granted Map-Staked Mineral Licences were to be revoked or otherwise not renewed or maintained, the Group would be effectively prevented from carrying on its mineral resource operations on the affected licence areas, which could have a material adverse effect on the Portfolio’s exploration potential and its value, which would in turn impact the Group’s operational and financial performance. Related to the above, in Cyprus, the Company is presently engaged in a dispute with a surface rights owner regarding a demand to build a small retaining wall (the surface rights owner claims a cutting has destabilised some land). The Company expects this to be settled amicably, however if not resolved the dispute could lead to the revocation of the Company’s licence number AE4660.
In Cyprus, Exploration Permits (Category A) can be renewed for four consecutive periods lasting 1 year each, for the total duration of validity of up to 5 years and Exploration Permits (Category B) can be renewed for one period of 1 year, for the total duration of validity of up to 2 years. Reconnaissance Permits can be renewed for one period of 1 year, for the total duration of validity of up to 2 years. In accordance with Regulation 6(1) of the Mines Regulations, for the renewal of a Prospecting Permit, a company must submit between 20 to 30 days prior to its expiration the relevant written request to the Mines Inspector accompanied with the relevant fee and lease fee for the following period as provided subject to the Second Table of the Mines Regulations. The application for renewal should be accompanied by the relevant annual report as specified by the Mines’ Service form. According to Regulation 6(2) of the Mines Regulations, a renewal application for a Prospecting Permit may be rejected in the event that the Company does not act in accordance with Regulation 6(1) of the Mines Regulations. In the event the application is rejected, the lease fee is returned. Any cancellation of a Prospecting Permit would have a material adverse impact on the Group’s operation and financial condition.
In Newfoundland and Labrador, Map-Staked Mineral Licences are issued for terms of five years (which are renewable for three additional five-year terms and 10 additional one-year terms) and can be held for a maximum of thirty years provided that (i) the minimum annual assessment work is completed (ii) the annual work is reported and (iii) the Map-Staked Mineral Licence is renewed every five years. In order for a Map-Staked Mineral Licence to remain in good standing with the Government of Newfoundland and Labrador, the Map-Staked Mineral Licence has to be renewed every fifth year on the anniversary date. Renewal fees escalate at year 5, year 10 and year 15 of the Map-Staked Mineral Licence (CDN $25/claim, CDN$50/claim and CDN$100/claim respectively). A Map-Staked Mineral Licence may additionally be converted to a mining lease at any time if the owner deems there to be sufficient mineral resources to warrant conversion and further work. Any cancellation of a Map-Staked Mineral Licence would have a material adverse impact on the Group’s operation and financial condition.
In Newfoundland and Labrador, a company holding mineral lands and wishing to complete exploration work on those mineral lands must be registered with the Government of Newfoundland and Labrador’s Registry of Companies and maintain their registration while actively exploring and/or holding mineral titles. All proposed exploration work must be approved by the Department of Industry, Energy and Technology through a Mineral Exploration Approval Application that documents the proposed work. All work must meet with current environmental best practices and if so merited, could require a further level of permitting issued by the Department of Environment that could range from an environmental registration up to environmental assessment, resulting in delays which could have a material adverse impact on operations. All Mineral Exploration Approval Applications received will be referred to various government departments, as well as certain stakeholders in the area (e.g., Environment and Wildlife, Forestry, Fisheries, Protected Lands Committees, Municipal Government, Indigenous groups, etc.). The referral process and the agencies to be included in the referral process hinges on the location of the proposed work and scope of the work proposed. There can be no guarantee that the Group will be able to maintain all required approvals, licences and permits relating to its exploration and development activities.
In Cyprus, subject to Article 20 of the Mines Law, if an application is received with respect to the same area or for successive areas by two or more persons on the same day, the application received first and which is in accordance with the provisions of the Mines Law or any regulations issued under it shall be deemed to have priority over the others. Whilst the title to and rights and interests in permits or licences may be diligently investigated, permits or licences may still be subject to defects and, if a defect does exist, then it is possible that part or all of the interest in those permits or licences to which the defect relates may be lost or adversely affected, which could have a material adverse impact on the results of operations, financial condition and prospects of the Group.
In Labrador and Newfoundland, the Adeline Copper Project falls in an area that the Labrador Innu (a regional indigenous group with traditional ties to area) has asserted its traditional rights. The Labrador Innu are currently negotiating a Land Claims agreement with the Provincial and Federal governments. As part of the exploration permitting process any mineral exploration approval application submitted to the Provincial Government for work on the Adeline Copper Project will be sent to the Labrador Innu and any other stake-holder groups which might have an interest in the area.
There has never been a Treaty agreement signed between the Labrador Innu and the Crown with respect to areas of central Labrador, including the Adeline Copper Project area, claimed by the Labrador Innu to be their traditional territory. The Labrador Innu has been in negotiations for a land claims agreement with the federal (and indirectly provincial) government since 1978 and these negotiations are ongoing. No final designation of the Innu land claims area has been promulgated. The Labrador Innu have not explicitly expressed opposition to mineral exploration and mining and in fact signed an Impact Benefits Agreement with INCO and the governments of Canada and Newfoundland and Labrador which led to the establishment of the Voisey’s Bay Mine in northern Labrador. Many Innu people are actively employed at that mine. Nevertheless, there is a risk that members of the Labrador Innu could assert traditional rights over the Adeline Copper Project area and, as such, title to the Adeline Copper Project Area and the Granted Map-Staked Mineral Licences may be disputed. In a worst case scenario, were some or all of any disputed Granted Map-Staked Mineral Licences to be revoked, the Group would be effectively prevented from carrying on its mineral resource operations on the affected licence areas, which could have a material adverse effect on the Adeline Copper Project’s explorational potential and its value, which would in turn impact the Group’s operational and financial performance.
The Group’s exploration and development projects may have to be put on hold or operate at reduced capacity or be subject to restrictions due to COVID 19 and the associated measures put in place by national governments to control COVID 19, including social distancing measures and travel restrictions. This will cause delays to the Group’s projects and in turn further delay the date at which the Company can generate revenues and make progress towards profitability. In addition, it is also likely to cause the Company to incur additional costs as machinery and staff may be required to remain idle whilst projects are on hold due to the government restrictions implemented in response to COVID 19. Such delays and additional costs may have a material adverse impact on the Group’s financial condition and operations.
During 2020, local measures implemented by the Cyprus government meant the Group was required to defer its drilling activities on its Troodos West copper-gold exploration licences by approximately four months. The Group also experienced difficulty in obtaining the services of contractors from Spain and Bulgaria due to COVID 19 related travel restrictions which contributed to delays. The Group recommenced drilling activities in September 2020, as the situation had improved and the Group’s 2021 exploration campaign in Cyprus is running on schedule, However, given the spread of COVID 19 variants and notwithstanding ongoing vaccination programmes, it is conceivable that existing or new lock-down restrictions, including restrictions on the entry of personnel into Cyprus or Canada, could be maintained for longer than expected, introduced or re-introduced at any time in Cyprus, Canada and the United Kingdom (either on a semi-permanent or temporary basis).
In Labrador, there are currently no COVID 19 restrictions preventing the Company’s exploration field work, nor does the Company anticipate any such restrictions. However, it is conceivable that COVID 19 restrictions could be introduced which would serve to prevent exploration field work. Whilst the Company’s minimum expenditure obligation of $250,000 pursuant to the Share Purchase Agreement is spread over the first 18 months of the Adeline Copper Project, which would appear to be sufficient time for any such COVID 19 restrictions to be lifted, should this not occur, the Company would be required to extend the 18 month period by requesting an extension of the expenditure period applicable to the Granted Map-Staked Mineral Licences and triggering force majeure provisions under the Share Purchase Agreement. In a worst case scenario, the Group would be effectively prevented from carrying on its mineral resource operations on the affected licence areas and fulfilling its obligations under the Share Purchase Agreement, which could have a material adverse effect on the Adeline Copper Project’s explorational potential and its value and/or require return of the Granted Map-Staked Mineral Licences to Altius, which would in turn impact the Group’s operational and financial performance.
There is therefore a risk of potential disruption to the Group’s planned exploration activities. If the Group’s exploration and development projects are delayed, this would mean that the Group is likely to incur additional costs and the expected timeline for the conclusion of, and revenue generation from, particular projects would be delayed. If such risk were to materialise, this could have an adverse effect on the financial condition of the Group. However, the Group is able to mitigate the adverse impact of COVID 19 on the financial condition of the Group to an extent by deferring the deployment of capital resources on capital intensive activities until local lock-down or social distancing measures are lifted. As a result, COVID 19 could impact the timeline for the completion of certain projects and the Group could incur additional and unanticipated costs connected with the postponement or deferment of such projects.
The impact of COVID 19 has had a materially adverse effect on the global economy and overall business sentiment, which has the potential to negatively impact the demand and price for commodities and have an impact on the financial position and prospects of the Group. However, despite falls in the copper and gold price during the first wave of the COVID 19 pandemic in spring 2020, at present the demand for copper is emerging strongly from the pandemic particularly due to increased demand (particularly from China) (Source: Mining Journal, “Ballooning copper demand in China”, 19.01.21) and COVID 19. The price of copper has also seen a particular appreciation in recent years since it is an important commodity in the electrification of energy and transport (Source: Ernst & Young, “How advancing mobility will disrupt the mining and metals sector”, 02.12.20). Gold has benefitted from speculative buying due to lingering uncertainties and a general increase of liquidity in the hands of speculators (Source: Forbes, “What’s Driving Gold Prices So High, And What Might the Future Hold?”, 22.09.20). Prices for these commodities are now currently exceeding their prevailing market prices prior to the COVID 19 pandemic, which is a positive sign for the Group (Source: London Metal Exchange, www.lme.com/Metals, 01.07.21).
The exploration and development of mineral resource properties is speculative and subject to a number of uncertainties, which careful evaluation, experience and knowledge may not eliminate. Many mineral exploration projects do not result in the discovery of commercially mineable deposits and initial results from the Group’s Portfolio may be materially different from those anticipated. Failure to discover new resources or to enhance existing resources in sufficient amounts and in a timely manner would materially and adversely affect the Group’s results of operations, cash flows, financial condition and prospects. In addition, the Group may not be able to recover the funds used in any exploration programme to identify new opportunities.
The Group will initially focus on exploring the Portfolio in Cyprus and in Canada. There can be no assurance that the Portfolio has the levels of resources anticipated, that it holds any commercially mineable resources or that it will generate meaningful revenues or be profitable (whether realised through a trade sale, joint venture, strategic partnership or otherwise). The commercial viability of the mineral deposits located within the Portfolio is dependent upon a number of factors, including but not limited to, the market price of copper, gold or any other relevant metals, the quality, size, grade, metallurgy and other attributes of the deposits and proximity to and availability of infrastructure necessary to develop and exploit minerals on a commercial scale. If any of the above factors prove to be adverse for the Group on a consistent basis, then this could materially affect the Group’s financial condition and prospects.
Mineral resource exploration and development activities may be disrupted, damaged or delayed by a variety of problems outside of the Group’s control, such as:
variations in grade, deposit size, density, unusual or unexpected rock formations and other geological problems;
seismic activity, structural cave-ins or slides, flooding, drought, fires, explosions, storms, the physical effects of climate change or other natural disasters;
operational and technical difficulties encountered in trenching, drilling, development, production and treatment activities;
metallurgical and other processing problems;
failure to locate or identify mineral deposits;
delays to or failure to obtain regulatory or landowner consents or approvals;
unavailability or significant increases in the cost of drilling, mining, processing and other equipment or supplies, including water, fuel, power and transportation facilities;
industrial disputes and labour force disruptions or shortages of skilled workers and management;
delays in installing and commissioning plant and equipment;
difficulty in commissioning mechanical equipment or performance problems, break down or failures and other technical problems with mechanical equipment;
default or non-performance by third parties providing essential services;
interruptions due to adverse or hazardous weather conditions;
environmental and industrial hazards and accidents;
changes in government regulations relating to matters such as prices, taxes, equity participation, royalties, land use, importing and exporting of minerals and environmental protection; and
civil unrest, an outbreak of hostilities and other force majeure events.
If the Group’s operations were to be subject to any of the issues listed above, this could affect the costs, timelines and viability of the Group’s operations for indeterminate periods and its overall financial condition and prospects. Although the Group intends to maintain suitable insurance policies to cover certain of the above risks, the Group’s insurance may not cover every potential risk associated with its operations. Adequate coverage at reasonable rates is not always obtainable and may not cover any business interruptions such as equipment failure or labour dispute. The occurrence of a significant adverse event that is not covered by insurance could have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.
Climate change in Labrador could adversely affect mineral exploration
In relation to the Adeline Copper Project, climate change could affect exploration and mining operations in central Labrador. The past winter has been the warmest on record in Labrador with the amount of sea-ice at record levels. There has therefore been much concern in Labrador communities about the increasing warming effects of climate change. These concerns are mainly related to the decreasing sea-ice and winter snow covers and their effects on transportation and hunting. Conversely for mineral exploration and mining, these warming conditions might improve working conditions by decreasing the severity of winter weather. Warming conditions could however adversely affect mineral exploration by limiting the ability to conduct winter drilling through ice-covered bodies of water. This would serve to restrict the drilling programme of the Company to land as opposed to lakes and the Company would be required to explore alternative drilling methods, such as creating drilling platforms on the surrounding sloping terrain using platforms created by local timber or inclining drilling to drill under lakes from the shore. This, in turn, might lead to additional costs which would adversely affect the Company’s financial performance.
The Group currently aims to identify the most prospective areas within the Portfolio and prioritise field work. There are risks that the data used in this analysis may be flawed at the point of collection and/or may be misinterpreted when analysed. Confirmatory field studies which typically follow the identification process involve geological and structural mapping, rock chip and trench sampling and ground geophysics need to be carried out before conclusive assessments can be made about the prospectivity of the Portfolio. However, these are all subjective areas and, despite the experience of those undertaking the work, may be open to misinterpretation. The drilling which follows identification and field studies is intended to provide the data necessary for the definition of mineral resources but there is a risk that the results of drilling may prove insufficient, inaccurate or inappropriate for the purpose. Flawed analysis or misleading interpretations of data or samples may result in elements of the relevant phase needing to be repeated, which may delay the projects or result in additional costs being incurred by the Group.
Despite the Board being highly experienced in the natural resources sector, there can be no assurance that the Board and management will be able to implement effective operating strategies for the Group. The implementation of the Group’s business strategy will depend upon the ability of the Board and management to maintain, expand and upgrade effective operational, financial and management systems in line with the Group’s growth. Any failure to implement these strategies successfully and/or the failure of these strategies to deliver the anticipated benefits could have a material adverse effect on the Company’s results of operations and financial condition. The Group intends to appoint an experienced chief operating officer (COO) during Q3 2021 to ensure, as far as possible, that operating strategies are developed and implemented effectively for the Group. The group has engaged an experienced interim COO for 2021.
There are two villages located in proximity to the Group’s Troodos West licence area (at Kinousa between AE4659 and AE3661 and Lysos within AE4664) (“Local Villages”), but these have been specifically carved out of the licence area with a buffer space between the Local Villages and the beginning of the licence areas. Despite this, there is a risk that local communities, such as those at the Local Villages, or at new sites the Group may seek to explore may regard the Group’s exploration operations as detrimental to their environmental, economic or social circumstances and seek to object to the Group’s activities. Negative community reaction to such operations could cause impediment or delay to the Group’s operations which in turn may have an adverse impact on the cost, profitability, ability to finance or even the viability of an operation.
However, the Group has been operating in Cyprus for over two years and has a good relationship with the local communities and mayors of the Local Villages. There is sufficient distance between the Local Villages and the start of the licence areas such that it is unlikely for noise or dust to impact these communities and the Prospecting Permits were granted by the Mines Service having taken these factors into account. There are no current issues between the Group and any local communities which are likely to have an adverse impact on the Group. There are also no significant communities within the Group’s Troodos North and Discovery South licence areas. Despite these factors, there remains a risk that issues could arise in future, whether in relation to the Local Villages or in new areas which the Group may explore which may have an adverse impact on the Group’s operations.
In addition, drilling holes in new areas of the Group’s Portfolio (such as Discovery South) requires permission from land owners holding surface rights over the relevant land, in order to gain access for drilling (on top of the relevant Prospecting Permits). In relation to the Group’s Portfolio, the land is predominantly owned by the government which grants the requisite permission promptly and without raising any concerns or requiring any fees. In other instances the land is privately owned and the Group typically pays a small compensation for the right to drill on the land, which usually does not present an issue for the Group. However, there is a risk that surface rights holders could refuse to grant such permission or request unreasonable fees from the Group in connection with such permission.
In Labrador and Newfoundland, the Adeline Copper Project falls in an area that the Labrador Innu (a regional indigenous group with traditional ties to area) has asserted its traditional rights. The Labrador Innu are currently negotiating a Land Claims agreement with the Provincial and Federal governments. As part of the exploration permitting process any mineral exploration approval application submitted to the Provincial Government for work on the Adeline Copper Project will be sent to the Labrador Innu and any other stake-holder groups which might have an interest in the area.
There has never been a Treaty agreement signed between the Labrador Innu and the Crown with respect to areas of central Labrador, including the Adeline Copper Project area, claimed by the Labrador Innu to be their traditional territory. The Labrador Innu has been in negotiations for a land claims agreement with the federal (and indirectly provincial) government since 1978 and these negotiations are ongoing. No final designation of the Innu land claims area has been promulgated. The Labrador Innu have not explicitly expressed opposition to mineral exploration and mining and in fact signed an Impact Benefits Agreement with INCO and the governments of Canada and Newfoundland and Labrador which led to the establishment of the Voisey’s Bay Mine in northern Labrador. Many Innu people are actively employed at that mine. Nevertheless, there is a risk that members of the Labrador Innu could assert traditional rights over the Adeline Copper Project area and, as such, title to the Adeline Copper Project Area and the Granted Map-Staked Mineral Licences may be disputed.
However, in the vast majority of cases obtaining this permission does not present any issues for the Group. Furthermore, the extractives mining industry in Cyprus has been active for some time, producing for both local use and export, and the Group has already engaged with numerous stakeholders in Cyprus, in order to mitigate these risks.
The Group may engage experts to estimate the resources and reserves, which exist at its assets. Such estimates will be subject to a number of assumptions, including the price of relevant commodities, production costs and recovery rates. Fluctuations in the variables underlying the Group’s or third party expert’s estimates may result in material revisions to such reserve estimates and such changes may have a materially adverse impact on the financial condition and prospects of the Group.
The natural resources sector is a hazardous industry, which is highly regulated by health, safety and environmental laws, including general and specific regulations and restrictions governing drilling and production, land tenure and use, environmental requirements (including site specific environmental licences, permits and remediation requirements), workplace health and safety, social impacts and other laws.
Certain of the Group’s operations may create environmental risk in the form of dust, noise or leakage of polluting substances from site operations. It is likely that the environmental laws and standards that regulate the Group’s operations will become increasingly stringent in the future, particularly under air quality and water quality laws and regulations and standards related to climate change issues, such as the reporting of greenhouse gas emissions. Whilst the Group intends to operate in accordance with relevant safety, health and environmental regulations and requirements, the Group will remain susceptible to the risk that liabilities might arise as a result of accidents or other circumstances which may be beyond the control of the Group and/or be uninsurable.
Failure to provide a safe working environment or to manage environmental risks may result in harm to the Group’s employees, the communities near the Group’s operations and the local environment. Government authorities may also force closure of facilities or refuse future drilling applications in such circumstances. The Group could face fines and penalties, liability to employees and third parties for injury, statutory liability for environmental remediation and other financial consequences, which may be significant. The Group could also suffer impairment of its reputation, industrial action or difficulty in recruiting and retaining skilled employees. Any future changes in laws, regulations or community expectations governing the Group’s operations could result in increased compliance and remediation costs. Any of the foregoing developments could have a materially adverse effect on the Group’s results of operations, cash flows or financial condition.
Historically, the prices of certain commodities have been volatile for many reasons, including levels of global and regional supply and demand (particularly from the US and China) and in response to the actions of commodity traders. Other factors affecting commodity prices include but are not limited to geopolitical uncertainty; availability of processing equipment; availability of transportation; level and availability of government subsidies; price and availability of new technologies; political, economic and military developments; domestic and foreign governmental regulations and actions, including export restrictions, taxes, repatriations and nationalisations; global and regional economic conditions; and weather conditions and natural disasters. It is not possible to predict accurately future commodity price movements and commodity prices may not remain at their current levels. Any material decline in commodity prices in the medium to long term could have a material adverse impact on the results of operations, financial condition and prospects of the Group. However, despite falls in the copper and gold price during the peak of the COVID 19 pandemic, at present the demand for copper and other industrial metals is emerging strongly from the pandemic particularly due to increased demand from China as well as other industrialised nations (Source: Mining Journal, “Ballooning copper demand in China”, 19.01.21). The price of copper has seen a particular appreciation in recent years since it is an important commodity in the electrification of energy and transport (Source: Ernst & Young, “How advancing mobility will disrupt the mining and metals sector”, 02.12.20). Gold, which is a more speculative commodity, has also been robust due to lingering uncertainties about the economic ramifications of the COVID 19 pandemic, and increased liquidity in the hands of speculators (Source: Forbes, “What’s Driving Gold Prices So High, And What Might the Future Hold?”, 22.09.20). Prices for both copper and gold are now currently exceeding their prevailing market prices prior to the COVID 19 pandemic (Source: London Metal Exchange, www.lme.com/Metals, 01.07.21)
Adverse and volatile economic conditions can also limit the Group’s ability to anticipate revenues and costs and can affect the Group’s ability to implement planned projects. In addition, industry analysts are likely to take such conditions into account when assessing the prospective business and creditworthiness of the Group and any adverse determinations may make it more difficult for the Company to raise capital in the future to finance the Group’s business.
One of the main assets of the Company is the combined experience and expertise of its Board and geological/technical team. During the early phase of the Company’s development it shall rely on a small number of key individuals, in respect of its exploration activities and to develop and maintain important relationships with governmental and regulatory authorities in Cyprus. The Company’s success is dependent upon the continuing service of these key individuals and its business and performance could be negatively impacted by the loss of key individuals.
If the Group were to lose more than one of its key individuals or otherwise seek to expand its management, geological or technical team, the Group’s success would be dependent on its ability to retain and recruit suitably qualified and experienced personnel. Given the current high levels of activity in the global exploration and mining industry, there can be no assurance that the Group will be able to retain or recruit experienced, qualified individuals to deliver the Group’s business strategy, which could have a material adverse impact on the results of operations, financial condition or prospects of the Group.
Independent contractors are often used in operations in the natural resources sector. In periods of high commodity prices, demand for key contractors may exceed supply, resulting in increased costs or lack of availability and delays to projects. Furthermore, the Group will have less control over independent contractors than it does over its employees, which creates a risk that such contractors will not operate in accordance with the Group’s safety standards or other policies, potentially exposing the Group to liabilities. Any of the foregoing circumstances could have an adverse effect on the Group’s operating results and cash flows.
Since the Turkish invasion of Cyprus in 1974, approximately 40 per cent. of Cyprus has been occupied by Turkey. In 1983, the Turkish Republic of Northern Cyprus declared independence from Cyprus, although Turkey is the only country to recognise it and the international community considers the territory to be a Turkish occupied territory of Cyprus. There can be no certainty that relations between Turkey and the Republic of Cyprus will not deteriorate, which could lead to political instability or even military conflict. One example of ongoing tensions between Cyprus and Turkey is in relation to competing claims to offshore oil drilling rights off the coast of Cyprus in Mediterranean Sea. Turkish oil companies have started drilling in close proximity to the coast of northern Cyprus and in response the Greek Cypriot government and European Union have accused Turkey of violating Cyprus’ maritime economic zone. If disputes such as this or other tensions cannot be amicably resolved between the two countries and relations deteriorate, this would be likely to have a material adverse impact on the financial condition and prospects of the Group as it would cause a number of unforeseen disruptions which may affect the areas of northern Cyprus where the Group is operating. However, save for the tensions in relation to oil rights, the current atmosphere is relatively benign, with border gates open since 2003 and meetings between various stakeholders ongoing.
Although Cyprus is a modern country with generally good infrastructure such as roads, ports and mobile phone coverage, restrictions on the Group’s ability to access necessary infrastructure services, including transportation and utilities, may adversely affect the Group’s operations. Inadequate or restricted access to the critical infrastructure elements required for exploration and drilling activity could have a negative effect on the Group’s financial performance and significant additional funding may be required to develop such infrastructure.
Disruptions to or restrictions on access to essential utility services, such as water and electricity, could halt the Group’s operations for the duration of the disruption or restriction and, when unexpected, may cause loss of life or damage to drilling or mining equipment or facilities, which may in turn affect the Group’s ability to recommence operations in a timely manner. Adequate provision of transportation services is critical to distributing products and disruptions to or restrictions on such services may affect the Group’s operations. The Group may be dependent on third party providers of utility and transportation services which may be subject to failures, maintenance or other issues beyond the Group’s control.
In Labrador, the Adeline Copper Project is remote and must be accessed by helicopter and float plane air support from the community of Happy Valley – Goose Bay, which is located approximately 145km to the southeast of the Adeline Copper Project. Helicopter and small-boat supported ground traversing will be the most effective means for covering much of the Adeline Copper Project area and the Group may be dependent on third party providers of transportation services which may be subject to failures, maintenance or other issues beyond the Group’s control.
In connection with the Labrador Acquisition, the Company has conducted such due diligence as it deems practicable and appropriate in relation to NLCO. There can be no assurance that the due diligence undertaken with respect to NLCO will have revealed all relevant facts, that the information provided during due diligence was accurate or that subjective judgements made about NLCO in connection with the Labrador Acquisition are accurate. Whilst conducting due diligence, the Company has relied on publicly available data and information, discussions with third party specialists, and information provided by Altius and some of the documentation maintained may be incomplete or inconclusive. As part of the due diligence process, the Company has also made subjective judgements regarding the results of operations, financial condition and prospects on the Adeline Copper Project or the Labrador Acquisition and the assets the subject of the Adeline Copper Project or the Labrador Acquisition (as applicable). If the due diligence investigation has failed to identify correctly material issues and liabilities that may be present, or if the Company has concluded such material risks are commercially acceptable relative to the opportunity, the Company may subsequently incur substantial impairment charges or other losses. If issues are identified in relation to NLCO or another future corporate action undertaken by the Company, which were not identified in the due diligence, this may additionally cause the Company to incur losses remedying these issues, as well as potentially expose the Company to any undisclosed or partially disclosed liabilities of NLCO or any future acquisition target. This could have a material adverse effect on the Company’s financial condition and results of operations.
Risk that the desired benefits may not be achieved by the Company
The value of an investment in the Group is dependent on the Group achieving its strategic aims. The Group is
targeting significant benefits from the Labrador Acquisition and the Group’s financial planning and funding
strategies are based in part on realising these benefits. There is a risk that benefits from the Labrador
Acquisition may fail to materialise, may take longer than anticipated or may be lower than have been estimated. In
addition, the cost of funding these benefits may exceed expectations and such eventualities may have a material
adverse effect on the financial position of the Group.
There can be no assurances that the Company will be able to identify suitable further acquisition opportunities or make further acquisitions that will eventually become profitable. If the Company identifies a suitable target company, business or asset, there can be no guarantee that the Company will be able to acquire it at a price that is consistent with its objectives or at all. In addition, if the Company fails to complete an acquisition which it has been pursuing, it may be left with substantial unrecovered transaction costs, which could have a material adverse impact on the results of operations, cash flow and financial condition of the Group. Furthermore, there is likely to be competition from others interested in some or all of the further acquisition opportunities that the Company may explore, and as such there can be no assurance that it will be successful against such competition, which may have favourable financial, technical or management resources.
There can also be no assurances that the Company will be able to identify appropriate buyers, joint venture or strategic partners (as and when applicable) through which it can realise the investments it has made in its Portfolio and generate revenues, or that the Company will be able to conclude such arrangements on favourable commercial terms if identified. In such event, the Group would be unable or significantly hindered from generating revenues from its mineral resource assets, which could materially affect the Group’s prospects and financial condition.
The Group will pay for the Labrador Acquisition by issuing Ordinary Shares (and warrants to subscribe for Ordinary Shares) as consideration and could offer its Ordinary Shares as consideration for further acquisitions. The issuance of such new Ordinary Shares could materially reduce the percentage ownership of existing Shareholders in the Company. Where any further acquisition target has an existing large shareholder, an issue of new Ordinary Shares as consideration may result in such shareholder subsequently holding a large stake in the Company, which may, in turn, enable it to exert significant influence over the Company.
Although the Placing will raise proceeds denominated in sterling, the Portfolio is located in the Republic of Cyprus and in Canada which use the Euro and Canadian dollar respectively. In addition, the markets for the commodities produced within the resources sector are predominately priced in US dollars. The Group does not intend to hedge the Net Proceeds against risks for adverse exchange rate movements against the euro or the Canadian or US dollar immediately. As such, the Group may be adversely affected by currency exchange rate fluctuations from Admission if it does not hedge the currency exchange rate.
The Group will be exposed to currency risk in relation to its operations in Cyprus and in Canada. The Company’s functional and presentational currency is sterling, and this is the currency of the Company’s financial statements. However, a significant proportion of the Company’s business is conducted in the European geographic region (notably Cyprus at the date of this Document) in Euros and in Canada in Canadian dollars, and certain other expenses may be denominated in US dollars. Certain amounts will therefore need to be translated into sterling. Due to changes in exchange rates between sterling and the Euro, Canadian and US dollar this could lead to changes in the Company’s reported financial results from period to period. As a result, fluctuations in the exchange rates of these currencies may adversely affect the Group’s operating results, cash flows or financial condition to a material extent.
The acquisition and disposal of Ordinary Shares will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Ordinary Shares from a taxation point of view and generally.
The Company has one existing substantial (10% plus) shareholder, Polymetal, and will have a second significant shareholder, Altius, that will hold 8.41% of the Enlarged Ordinary Share Capital (and16.16% of the issued share capital assuming full exercise of the Labrador Consideration Warrants and no exercise of any other Warrants or Options and no issue of any other new Ordinary Shares) following completion of the Labrador Acquisition and Admission. The Company is party to a relationship agreement with Polymetal, and will be party to a relationship agreement with Altius on completion of the Labrador Acquisition and Admission, as described at paragraphs 14.6(b) and 14.1(b) respectively of Part VII of this document. However, there is no guarantee that either such counterparty will comply with its obligations, and restrictions placed upon it, under those agreements. As such, the Group may be adversely affected by any such non-compliance.
PART B – RISKS RELATING TO THE ORDINARY SHARES
Application has been made for the Placing Shares and the Labrador Consideration Shares to be admitted to the Standard Listed segment of the Official List. A Standard Listing will afford Shareholders a lower level of regulatory protection than that afforded to investors in a company with a Premium Listing, which is subject to additional obligations under the Listing Rules. A Standard Listing will not permit the Company to gain a FTSE indexation, which may have an adverse effect on the valuation of the Ordinary Shares.
The Company’s listing on the Official List should not be taken as implying that there will always be a liquid market in the Ordinary Shares. Investors should be aware that the value of the Ordinary Shares may be volatile and may go down as well as up and investors may therefore not recover the full value of their original investment. The price at which investors may dispose of their Ordinary Shares may be influenced by a number of factors, some of which may pertain to the Company and others of which are extraneous. On any disposal investors may realise less than the original amount invested. Investors could lose all or part of their invested capital by participating in the Placing.
An investment in Ordinary Shares may be relatively illiquid. There may be a limited number of Shareholders and this may contribute to infrequent trading in the Ordinary Shares on the London Stock Exchange and volatile movements in the market price of the Ordinary Share. The market price of the Ordinary Shares may fluctuate based on a number of factors, including inter alia, published details of the Company’s performance (in particular, the result of its exploration activities), changes in general economic conditions, the market’s reaction to press releases and public announcements made by the Company, as well as the arrival or departure of key personnel.
The Company has not declared or paid any dividends on the Ordinary Shares and it is unable to provide assurances to investors that it will pay dividends in the foreseeable future. The Company’s ability to declare dividends is contingent upon a number of factors, including, the general financial condition of the Company, the cash requirements of the business and the availability of sufficient distributable reserves.
Application will be made for all of the Ordinary Shares, issued and to be issued pursuant to the Placing and the Labrador Acquisition, to be admitted to listing on the Official List pursuant to Chapter 14 of the Listing Rules, which sets out the requirements for Standard Listings.
The Ordinary Shares will be listed under Chapter 14 of the Listing Rules (Standard Listing (Shares)) and, as a consequence, a significant number of the Listing Rules will not apply to the Company. Shareholders will therefore not receive the full protections of the Listing Rules associated with a Premium Listing.
Listing Rule 14.3 sets out the continuing obligations applicable to companies with a Standard Listing and requires that such companies’ listed equity shares must be admitted to trading on a regulated market at all times. Such companies must have at least 25 per cent. of the shares of any listed class in public hands in one or more Member States at all times and the FCA must be notified as soon as possible if these holdings fall below that level.
The continuing obligations under Chapter 14 also include requirements as to:
the forwarding of circulars and other documentation to the National Storage Mechanism and related notification to a RIS;
the provision of contact details of appropriate persons nominated to act as a first point of contact with the FCA in relation to compliance with the Listing Rules and the Disclosure Guidance and Transparency Rules;
the form and content of temporary and definitive documents of title;
the appointment of a registrar;
notifying an RIS in relation to changes to equity and debt capital; and
compliance with, in particular, Chapters 4, 5 and 6 of the Disclosure Guidance and Transparency Rules.
The Company is subject to the Market Abuse Regulation.
As a company with a Standard Listing, the Company will, following Admission, not be required to comply with, inter alia, the provisions of Chapters 6 to 13 of the Listing Rules (except for Listing Principles 1 and 2 as set out in Chapter 7 of the Listing Rules, as required by the UK Listing Authority), which set out more onerous requirements for issuers with a Premium Listing of equity securities. These include provisions relating to certain listing principles, the requirement to appoint a sponsor, various continuing obligations, significant transactions, related party transactions, dealings in own securities and treasury shares and contents of circulars.
The Company will comply with Chapter 5 of the Listing Rules (Suspending, cancelling and restoring listing).
The Company intends to comply with the Premium Listing Principles set out in Chapter 7 of the Listing Rules notwithstanding that they only apply to companies which obtain a Premium Listing on the Official List. The Company is not, however, formally subject to such Listing Principles and will not be required to comply with them by the UK Listing Authority.
In addition, while the Company has a Standard Listing, it is not required to comply with the provisions of, among other things:
Chapter 6 of the Listing Rules containing additional requirements for the listing of equity securities, which is only applicable to companies with a Premium Listing.
Chapter 8 of the Listing Rules regarding the appointment of a listing sponsor to guide the Company in understanding and meeting its responsibilities under the Listing Rules in connection with certain matters. The Company has not and does not intend to appoint such a sponsor in connection with the Placing, the Labrador Acquisition and Admission.
Chapter 9 of the Listing Rules regarding continuous obligations for a company with a Premium Listing.
Chapter 10 of the Listing Rules relating to significant transactions. It should be noted that the Company will only seek Shareholder consent for any further acquisition if required by the Companies Act or the Takeover Code.
Chapter 11 of the Listing Rules regarding related party transactions. It should be noted therefore that related party transactions will not require Shareholder consent.
Chapter 12 of the Listing Rules regarding purchases by the Company of its Ordinary Shares. However, Shareholder authority is required in order for a company to buy back its shares under the Companies Act.
Chapter 13 of the Listing Rules regarding the form and content of circulars to be sent to Shareholders.
In deciding whether or not to invest in Placing Shares or Labrador Consideration Shares, prospective investors should rely only on the information contained in this Document and the information incorporated by reference as set out at Part IV. No person has been authorised to give any information or make any representations other than as contained in this Document and, if given or made, such information or representations must not be relied on as having been authorised by the Company, the Directors or Panmure Gordon. Without prejudice to the Company’s obligations under FSMA, the Prospectus Regulation Rules, the Listing Rules and the Disclosure Guidance and Transparency Rules, neither the delivery of this Document nor any subscription made under this Document shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Document or that the information contained herein is correct as at any time after its date.
Prospective investors must not treat the contents of this Document or any subsequent communications from the Company, Panmure Gordon or any of their respective affiliates, officers, directors, employees or agents as advice relating to legal, financial, taxation, accounting, regulatory, investment or any other matter.
Neither Panmure Gordon nor any person acting on its behalf makes any representations or warranties, express or implied, with respect to the completeness, accuracy or verification of this Document nor does any such person authorise the contents of this Document. No such person accepts any responsibility or liability whatsoever for the contents of this Document or for any other statement made or purported to be made by it or on its behalf in connection with the Company, the Ordinary Shares, the Placing, the Labrador Acquisition or Admission. Panmure Gordon accordingly disclaims all and any liability whether arising in tort or contract or otherwise which it might otherwise have in respect of this Document or any such statement. Neither Panmure Gordon nor any person acting on its behalf accepts any responsibility or obligation to update, review or revise the information in this Document or to publish or distribute any information which comes to its or their attention after the date of this Document, and the distribution of this Document shall not constitute a representation by Panmure Gordon or any such person that this Document will be updated, reviewed or revised or that any such information will be published or distributed after the date hereof. However, nothing in this paragraph excludes or limits any responsibility which Panmure Gordon may have under FSMA or the regulatory regime established thereunder, or which, by law or regulation, cannot otherwise be limited or excluded.
Panmure Gordon and any affiliate thereof acting as an investor for its or their own account(s) may subscribe for, retain, purchase or sell Ordinary Shares for its or their own account(s) and may offer or sell such securities otherwise than in connection with the Placing. Panmure Gordon does not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any applicable legal or regulatory requirements.
This Document is being furnished by the Company in connection with an offering exempt from registration under the US Securities Act solely to enable a prospective investor to consider the subscription for Ordinary Shares. Any reproduction or distribution of this Document, in whole or in part, and any disclosure of its contents or use of any information herein for any purpose other than considering an investment in the Ordinary Shares offered hereby is prohibited. Each offeree of the Ordinary Shares, by accepting delivery of this Document, agrees to the foregoing.
This Document does not constitute, and may not be used for the purposes of, an offer to sell or an invitation or the solicitation of an offer to subscribe for or buy, any Ordinary Shares by any person in any jurisdiction: (i) in which such offer or invitation is not authorised, (ii) in which the person making such offer or invitation is not qualified to do so, or (iii) in which, or to any person to whom, it is unlawful to make such offer, solicitation or invitation. The distribution of this Document and the offering of the Ordinary Shares in certain jurisdictions may be restricted. Accordingly, persons outside the UK into whose possession this Document comes are required by the Company, and Panmure Gordon to inform themselves about and to observe any restrictions as to the offer or sale of Ordinary Shares and the distribution of this Document under the laws and regulations of any territory in connection with any applications for Placing Shares or Labrador Consideration Shares, including obtaining any requisite governmental or other consent and observing any other formality prescribed in such territory. No action has been taken or will be taken in any jurisdiction by the Company or Panmure Gordon that would permit a public offering of the Ordinary Shares in any jurisdiction where action for that purpose is required, nor has any such action been taken with respect to the possession or distribution of this Document other than in any jurisdiction where action for that purpose is required. Neither the Company nor Panmure Gordon accepts any responsibility for any violation of any of these restrictions by any other person.
The Ordinary Shares have not been nor will be registered under the US Securities Act, or under any relevant securities laws of any state or other jurisdiction in the US, or under the applicable securities laws of Australia, Canada, the Republic of South Africa or Japan. Subject to certain exceptions, the Ordinary Shares may not be taken up, offered, sold, resold, reoffered, pledged, transferred, distributed or delivered directly or indirectly, within, into or in the US, Australia, Canada, the Republic of South Africa or Japan or to any national, resident or citizen of the US, Australia, Canada, the Republic of South Africa or Japan.
The Ordinary Shares have not been approved or disapproved by the SEC, any federal or state securities commission in the Unites States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Ordinary Shares or confirmed the accuracy or determined the adequacy of the information contained in this Document. Any representation to the contrary is a criminal offence in the United States.
The following information is provided to prospective investors in accordance with Article 13 and Article 14 of the UK version of the General Data Protection Regulation (EU) 2016/679 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018 as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations (the “GDPR”). For the purposes of this section, an investor is deemed to include the legal or natural person making the investment in the Company and any beneficial owner.
The Company is the controller of any personal data that may be supplied by investors, and its contact details can be found on page 4 of this Document.
Investors will be asked to provide information to the Company, including personal data, as part of their applications for Placing Shares or Labrador Consideration Shares. If an investor does not provide all of the information requested, the Company will not be able to process the application and the investor will not receive any Placing Shares or Labrador Consideration Shares.
The personal data provided by investors will be processed for the following purposes:
processing the investor’s application for Placing Shares or Labrador Consideration Shares, collecting funds and communications regarding the Placing or Labrador Acquisition;
verifying the identity of the investor to comply with statutory and regulatory requirements including but not limited to in relation to anti-money laundering procedures;
meeting the legal, regulatory, reporting and/or financial obligations of the Company in the United Kingdom or elsewhere;
administering the Company’s shareholder records, including sending notices and information about the Company to its shareholders;
administering the payment of dividends and any tax liabilities that may arise from the same;
disclosing personal data to other functionaries of, or advisers to, the Company to operate and/or administer the Company.
The legal basis on which such personal data is provided is:
processing is necessary for the performance of a contract to which the investor is party or in order to take steps at the request of the investor prior to entering into a contract (in each case the contract concerned being the contract to subscribe for shares in the Company); and/or
processing is necessary for compliance with legal obligations to which the Company is subject, particularly those set out in paragraphs 3.2 and 3.3 above; and/or
the processing is necessary for the purposes of the legitimate interests pursued by the Company, namely the issue of shares and the effective administration of its shareholder records.
The Company may provide personal data regarding investors to third parties in the following circumstances:
it will be required to disclose information about investors to government and regulatory and tax authorities in order to comply with applicable law;
it may delegate certain administrative functions to third parties including its brokers, share registrars, solicitors and accountants and, to enable such parties to perform their functions, it may be necessary for the Company to disclose investor information for that purpose; and
it may also need to disclose information about its shareholders to potential lenders or potential purchasers of the share capital of the Company.
In some cases, the disclosure of information in accordance with paragraph 5 will necessitate the transfer of personal data about the investor outside of the EEA to countries or territories which do not offer the same level of protection for the rights or freedoms of prospective investors as the United Kingdom. The Company will take steps to ensure that any such transfer complies with Chapter V of the GDPR.
If the Company (or any third party, functionary or agent appointed by the Company) discloses personal data to a third party, agent or functionary and/or makes such a transfer of personal data it will, where required by law, ensure that any third party, agent or functionary to whom the relevant personal data is disclosed or transferred is obliged to provide an adequate level of protection in respect of such personal data.
The processing of the investor’s personal data will not be subject to automated decision-making by the Company, including profiling, which has any legal or significant effect on him or her.
Personal data provided by investors will be retained as follows:
if the investor’s application is wholly unsuccessful and it is not issued shares, any personal data regarding the investor will be deleted by the Company and its providers in accordance with any data retention policies; or
if the investor’s application is successful and shares are issued to them by the Company, the Company will retain the name and contact details of the investor for as long as it is obliged to maintain records of its shareholders under law, and any other details will be deleted in accordance with data retention policies, after the investor ceases to be a shareholder.
An investor has the right, in relation to his or her personal data held by the Company, to:
request access to such personal data;
require the Company to rectify any inaccurate personal data;
in some cases, to require the Company to:
restrict processing of the personal data;
erase the personal data; and/or
transfer the personal data to another controller; and/or
lodge a complaint with the supervisory authority, being the Information Commissioner’s Office.
Investors are responsible for informing any third party individual to whom the personal data relates (including but not limited to any beneficial owner) of the disclosure and use of such data in accordance with these provisions.
In making an investment decision, prospective investors must rely on their own examination of the Company, this Document and the terms of the Placing and the Labrador Acquisition, including the merits and risks involved. The contents of this Document are not to be construed as advice relating to legal, financial, taxation, accounting, regulatory, investment or any other matter. Prospective investors should inform themselves as to:
the legal requirements within their own countries for the subscription, purchase, holding, transfer or other disposal of the Ordinary Shares;
any foreign exchange restrictions applicable to the subscription, purchase, holding, transfer or other disposal of the Ordinary Shares which they might encounter; and
the income and other tax consequences which may apply in their own countries as a result of the subscription, purchase, holding, transfer or other disposal of the Ordinary Shares.
Prospective investors must rely upon their own representatives, including their own legal and financial advisers and accountants, as to legal, tax, financial, investment or any other related matters concerning the Company and an investment therein.
An investment in the Company should be regarded as a long-term investment. There can be no assurance that the Company’s objective will be achieved.
It should be remembered that the price of the Ordinary Shares, and any income from such Ordinary Shares, can go down as well as up.
This Document should be read in its entirety before making any investment in the Ordinary Shares. All Shareholders are entitled to the benefit of, are bound by, and are deemed to have notice of, the provisions of the Articles, which prospective investors should review.
This Document includes statements that are, or may be deemed to be, “forward-looking statements”. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “targets”, “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this Document and include statements regarding the intentions, beliefs or current expectations of the Company and the Directors concerning, among other things: (i) the Group’s objectives, acquisition and financing strategies, returns of capital, results of operations, financial condition, capital resources, prospects, capital appreciation of the Ordinary Shares and dividends, (ii) future deal flow and implementation of active management strategies, and (iii) trends in the sectors in which the Group may elect to operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Group’s actual performance, results of operations, internal rate of return, financial condition, distributions to Shareholders and the development of its financing strategies may differ materially from the impression created by the forward-looking statements contained in this Document. In addition, even if the Group’s actual performance, results of operations, internal rate of return, financial condition, distributions to Shareholders and the development of its financing strategies are consistent with the forward-looking statements contained in this Document, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that may cause these differences include, but are not limited to:
the Group’s success in exploring and developing the Portfolio for copper and gold;
the Group’s success in maintaining Granted Prospecting Permits and Granted Map-Staked Mineral Licences;
changes in commodity prices and in economic conditions generally (and specifically in the copper and gold markets and those relevant to any further acquisition made by the Group);
changes in interest rates and currency fluctuations, as well as the success of the Group’s hedging strategies in relation to such changes and fluctuations (if such strategies are in fact used);
legislative and/or regulatory changes, including changes in taxation regimes;
the Group’s ability to source and close any further acquisitions and to propose effective growth strategies for any company, business or assets the Group acquires; and
the availability and cost of equity or debt capital to finance or part finance the development of the Portfolio and any further acquisition.
Prospective investors should carefully review the “Risk Factors” section of this Document for a discussion of additional factors that could cause the Group’s actual results to differ materially, before making an investment decision.
Forward-looking statements contained in this Document apply only as at the date of this Document. Subject to any obligations under FSMA, the Listing Rules, the Disclosure Guidance and Transparency Rules, the Prospectus Regulation Rules and the Market Abuse Regulation, the Company undertakes no obligation publicly to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
The contents of these paragraphs relating to forward-looking statements are not intended to qualify any statement made in this Document as to the sufficiency of working capital and, in particular, the statement set out in paragraph 17 of Part VII of this Document.
Unless otherwise indicated, all references in this Document to “sterling”, “£”, “p” or “pence” are to the lawful currency of the UK; all references to “$”, “US$” or “US dollars” are to the lawful currency of the United States; and all references to “€” or “euro” are to the lawful currency of the Euro zone countries.
The contents of the Company’s website (or any other website) do not form part of this Document, save for any documents incorporated by reference from the website.
A list of defined terms used in this Document is set out in Part VIII of this Document.
Unless otherwise stated, statements made in this Document are based on the law and practice currently in force in England and Wales and are subject to changes therein.
DIRECTORS AND ADVISERS
Directors Martin Stephen French (Executive Chairman)
Ajay Kejriwal (Executive Director and Chief Financial Officer)
David Charles Cliff (Non-Executive Director) Peter Damouni (Non-Executive Director)
Evgeny Vrublevskiy (Non-Executive Director)
Paul Ensor (Non-Executive Director)
all c/o the Registered Office
Registered Office 7-9 Swallow Street
London England W1B 4DE
Company Secretary Heytesbury Corporate LLP 7-9 Swallow Street London
England W1B 4DE
Company Website www.chesterfieldresourcesplc.com
Broker to the Placing Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
Reporting Accountants and Auditor to the Company PKF Littlejohn LLP
15 Westferry Circus Canary Wharf London
United Kingdom E14 4HD
Solicitors to the Company
Watson Farley & Williams LLP
15 Appold St
London EC2A 2HB
Registrars Neville Registrars Limited
Neville House 18 Laurel Lane Halesowen B63 3DA
INFORMATION ON THE GROUP, PLACING AND LABRADOR ACQUISITION
Introduction and Background
The Company, together with its wholly owned subsidiary Chesterfield Resources (Cyprus) Limited, comprises a group engaged in early stage mineral resource exploration with a strategy to expand through further acquisitions and by acquiring further mineral exploration opportunities, including, initially, the Labrador Acquisition.
The Group’s principal activity is the exploration for and development of copper and gold mineral resource assets in Cyprus, with exploration for and development of copper mineral resource assets in Canada due to commence shortly following completion of the Labrador Acquisition. The Group intends to continue developing its existing operations to identify commercially mineable copper and gold resources in Cyprus, as well as copper resources in Canada. The Group is however unlikely to carry out mining activities on its own account, as it intends to generate its revenues through the eventual trade sale (or partial trade sale) or entry into a joint venture / strategic partnership in respect of its resource assets prior to commercial extraction.
The Group is continuing to expand its Portfolio of mineral Granted Prospecting Permits in Cyprus and, following completion of the Labrador Acquisition, the Group shall have a 100% interest in 10 Granted Map-Staked Mineral Licences (covering 297.25 square kilometres).
In parallel the Group will continue to seek acquisition and joint venture opportunities in the natural resources sector, maintaining a focus on companies, businesses or assets with operations in the Exchange Traded Non-Ferrous Metals mining segment with the European geographic region, although the Group will also consider opportunities focused on other commodities and/or in other locations, as evidenced by the Labrador Acquisition to acquire the Adeline Copper Project in central Labrador, Newfoundland and Labrador, Canada.
Chesterfield Resources Plc was incorporated on 4 January 2017 under the laws of England and Wales. On 29 August 2017, the Company’s Ordinary Shares were admitted to the Standard Listed segment of the Official List and to trading on the London Stock Exchange’s Main Market for listed securities.
On 3 July 2018, the Company completed a Reverse Takeover (as defined in Listing Rule 5.6.4) of the entire issued share capital of HKP Exploration Ltd, a mineral exploration company operating in Cyprus holding prospecting permits and prospecting permit applications in proximity to the Troodos Mountains in Cyprus. HKP was incorporated in the Republic of Cyprus under the Cyprus Companies Law Cap.113, as amended, on 1 July 2014 with company number HE 333726. The founder of HKP is Michael Green and its entire issued share capital is now owned by the Company. Following completion of the RTO, the name of HKP was changed to Chesterfield Resources (Cyprus) Limited (“CRCL”).
On 18 May 2021, the Company entered into the Share Purchase Agreement, pursuant to which it agreed to purchase the entire issued share capital of NLCO, a company owning a 100% interest in the Adeline Copper Project in central Labrador, Newfoundland and Labrador, Canada, from Altius. NLCO was incorporated under the laws of Newfoundland and Labrador on 13 May 2021 with company number 87986. Following completion of the Labrador Acquisition, the entire issued share capital of NLCO will be owned by the Company.
The consideration payable by the Company pursuant to the Labrador Acquisition comprises the Company issuing (i) 10,089,199 new Ordinary Shares and (ii) Warrants over 11,100,000 Ordinary Shares at an exercise price of 20p per share to Altius. Further details of the Labrador Acquisition are set out at paragraph 14.1 of Part VII of this Document.
The principal activity of the Group is currently the exploration for and development of copper and gold mineral resource assets in Cyprus. The exploration for and development of copper mineral resource assets in central Labrador, Newfoundland and Labrador, Canada is anticipated to commence shortly following completion of the Labrador Acquisition.
The Group has a 100 per cent. interest in the Granted Prospecting Permits. The Granted Prospecting Permits are split in Cyprus according to km2 as provided by the Mines Service Report in the following three areas:
Troodos West - a near contiguous block of fourteen Granted Prospecting Permits covering an area of approximately 52.875km2, on the western side of the Troodos Mountains, Cyprus (“Troodos West”);
Troodos North – two Granted Prospecting Permits covering an area of 7.740 km2 on the northern side of the Troodos Mountains, Cyprus (“Troodos North”); and
Discovery South – four Granted Prospecting Permits, covering an area of 34.767 km2 on the eastern end of the Troodos West area, Cyprus (“Discovery South”).
In total, the Group’s Granted Prospecting Permits cover an area of 95.382 km2. A full summary of the Granted Prospecting Permits to which the Group has title and their particulars is set out in the table at paragraph 15 of Part VII of this Document.
A Prospecting Permit may be one of three types, as listed below.
Reconnaissance Permit – Subject to Regulation 5(a) of the Mines Regulations, a Reconnaissance Permit is defined as a prospecting permit granted for the search of minerals, as referred to in paragraph 3.1(b) below, with any suitable method including the basic surface sampling but without performing any drilling or excavation. Reconnaissance Permits allow reconnaissance work only. In accordance with Regulation 6(3)(a) of the Mines Regulations, Reconnaissance Permits can be renewed for 1 (one) period of 1 (one) year for the total duration of validity of up to 2 (two) years. Subject to Regulation 3(a) of the Mines Regulations, Reconnaissance Permits can cover an area of up to 25km2. Subject to the conditions as these are identified in each of the issued Granted Prospecting Permits, by granting the respective permit, the Republic of Cyprus is not bound to issue any mining lease (or any other permit).
Exploration Permit (Category A) – Subject to Regulation 5(b) of the Mines Regulations, an Exploration Permit (Category A) is defined as a prospecting permit granted for the search and identification minerals consisting of copper, iron, manganese, nickel, cobalt, chromium, zinc, lead, sulphur, cadmium, gold, silver, platinum, selenium, tellurium, any other metals, energy or radioactive minerals, asbestos, or containing them, with any suitable method including conducting of drilling. According to Regulation 3(b) of the Mines Regulations, Exploration Permits (Category A) can cover an area of up to 5 km2. In accordance with Regulation 6(3)(b) of the Mines Regulations, Exploration Permits (Category A) can be renewed for four consecutive periods lasting 1 year each, for the total duration of validity of up to 5 years. Subject to the conditions as these are identified in each of the issued Granted Prospecting Permits, by granting the respective licence, the Republic of Cyprus is not bound to issue any mining lease (or other licence).
Exploration Permit (Category B) Subject to Regulation 5(c) of the Mines Regulations, an Exploration Permit (Category B) is defined as a prospecting permit granted for the search and identification of quarry materials such as soil, ocher, quartz, passage, granite, flint, magnesite, gypsum, salt, limestone, marble, chalk, clay, marl, slate, sandstone, sand, gravel, stone or other rocks or containing them, with any suitable method including drilling. According to Regulation 3(c) of the Mines Regulations, Exploration Permits (Category B) can cover an area of up to 2km2. In accordance with Regulation 6(3)(c) of the Mines Regulations, Exploration Permits (Category B) can be renewed for one period of one year, for the total duration of validity of up to 2 years. As at the date of this Document, the Company does not hold any Exploration Permits (Category B).
Following completion of the Labrador Acquisition, the Group shall have a 100 per cent interest in 10 Granted Map-Staked Mineral Licences in Canada. In total, with effect from completion of the Labrador Acquisition, the Group’s Granted Map-Staked Mineral Licences shall cover an area of 297.25km2. A full summary of the Granted Map-Staked Mineral Licences to which the Group shall have title and their particulars is set out in the table at paragraph 15 of Part VII of this Document.
Map-Staked Mineral Licences in Newfoundland and Labrador are defined and managed under the terms and conditions of the Mineral Act (RSNL1990) and associated Mineral Regulations as amended to date.
Map-Staked Mineral Licences are issued for terms of five years (which is renewable for three additional five-year terms and 10 additional one-year terms) and can be held for a maximum of thirty years provided that (i) the minimum annual assessment work is completed (ii) the annual work is reported and (iii) the Map-Staked Mineral Licence is renewed every five years.
The Directors believe that the Group’s Portfolio of Prospecting Permits in Cyprus present an attractive exploration opportunity because:
they are in an area of Cyprus that was previously very actively mined, but has been subject to limited exploration over the last 46 years due to the Turkish invasion of northern Cyprus in 1974;
the type of mineral deposits in the area covered by the Portfolio are volcanogenic massive sulphide deposits (“VMS Deposits”), which contain high proportions (over 50% mineral sulphides) and typically occur in clusters, meaning that where one VMS Deposit has been located, it is likely that there remain undiscovered deposits buried underground nearby; and
the Group has an experienced team of geologists, as well as the know-how to utilise modern exploration techniques and technologies, to search for these VMS Deposits in a way that was unavailable to previous miners of the area.
The Directors further believe that the Group’s Portfolio of Granted Map-Staked Mineral Licences in Canada present an attractive exploration opportunity because:
they are in an area of Canada which clearly demonstrates the potential for sediment-hosted copper (SSC) mineralisation as reduced grey beds of the Adeline Island Formation host significant copper concentrations; and
historical exploration campaigns at Seal Lake sought small, very high grade copper deposit models as shown by the programs of shallow drilling and short step outs and more recent programmes lacked sustained effort or focus.
Modern mining commenced in Cyprus in the 1920s with more than 74 million tonnes of ore extracted from about 30 deposits in the following 50 years, (mainly copper and pyrite ores). However, the industry was brought to an abrupt halt by the invasion of Turkey in 1974 and principal mining regions in Cyprus were located on the front-line of this attack. In the decades following the Turkish invasion of Cyprus the price of copper fell steadily, in part due to large new copper mines being discovered in Latin America. As a result, the mining industry in Cyprus was not economically viable and therefore remained largely dormant, but not because there were not valuable mineral deposits to be found there.
The first large scale commercial mine was opened at Tilt Cove in Newfoundland in 1864 and sparked a copper boom. During the 1880s Newfoundland became the fifth largest copper mining region in the world and in the 1890s Bell Island became one of the world’s leading sources of iron ore.
Newfoundland and Labrador is geologically diverse and is richly endowed with a wide spectrum of minerals. During the 20th century several other minerals were mined in the province, including silver, gold, lead, copper and zinc. A world-class nickel deposit was discovered at Voisey’s Bay with a mine opening there in 2005. Gold, fluoride, iron ore, dolomite and gypsum are also currently mined in the province. More recently, the province has attracted an increasing number of exploration companies. The influential Fraser Institute Survey of Mining Companies in 2020 ranked Labrador the 8th best destination for mining investment in the world.
The land surrounding the Troodos Mountains is considered to be rich in a particular type of geology, called volcanogenic massive sulphide deposits (“VMS Deposits”). VMS Deposits are a type of metal sulphide ore deposit which are created by volcanic-associated hydrothermal events and which are particularly rich in certain metals (including copper and gold), and are comprised of more than 50 per cent mineral sulphide. See figure 1 below for a diagram of a VMS Deposit. VMS Deposits are one of the richest sources of copper, and can also produce economic amounts of gold. VMS Deposits account for approximately 6 per cent of overall global copper production and 2.2 per cent of overall global gold production.
The Group’s initial drilling programme at its Troodos West licence area which commenced in 2018, encountered buried sulphide mineralisation (the type of rock that occurs in VMS Deposits) on several targets, verifying the Directors’ expectation that these deposits exist there. The Group has announced encountering this type of sulphide mineralisation on its targets at Evlim, Hillside and Embayment at Troodos West, which is an encouraging early sign for this licence area.
VMS Deposits generally occur in clusters or stacks typically a few hundred metres apart from each other, which means that where the Group has found one VMS Deposit, others are likely to be buried nearby. In Cyprus only those deposits that were visible on the surface of the land have been mined by other companies so far, because historically miners did not have the technology to explore for VMS Deposits that were buried underground. The Directors believe that approximately 80 per cent of the prospective area at its Troodos West licence area is beneath such shallow cover and therefore the Directors consider it likely that the Group will find additional deposits when exploring under the surface.
The Group now has access to and utilises more modern geophysical techniques such as AMT Surveys (discussed at paragraph 3.6 below), which allows the Group to form a clearer picture of the VMS Deposits underground. The Group is therefore able to use this modern geological know-how and technology to reliably explore for and locate VMS Deposits that remain undiscovered, buried at shallow depths of between 50-200 metres underground.
The Directors also believe the Group is well positioned to take advantage of the VMS Deposits it has identified in Cyprus and the opportunities presented in Labrador due to the expertise of its Board and technical/geological team (including David Cliff, Neil O’Brien and Michael Parker).
David Cliff, a senior geologist, is on the Group’s board and represents the technical team on the board. Mr Cliff was previously Head of Exploration Europe, for Rio Tinto, one of the world’s largest mining companies, where he played a leading role in the discovery of the Copler gold mine in eastern Turkey. The Group engages highly regarded expert in VMS Deposits, Dr Neil O’Brien, as a technical consultant to advise on the Group’s exploration programmes. Dr O’Brien was previously Head of Exploration for Lundin Mining, a $35bn mining company. Dr O’Brien is a specialist in VMS geology and also has considerable experience in the regional geological structure which the Group is exploring in Cyprus, known as the Tethyan Belt. Also advising the team is Michael Parker, as a technical consultant, who was previously an exploration geologist for 20 years with a major mining company, First Quantum Minerals. Therefore, the Directors believe that, for a comparatively early stage mineral exploration venture, the Group has a uniquely senior and experienced technical/geological team, which has the potential to give the Group a competitive advantage.
The Group uses a multi-faceted approach to its exploration programme using a variety of techniques such as satellite surveys, geological mapping, geochemistry and utilising information from the Cypriot government archives, in order to narrow the search area and then identify specific targets, for drill testing (using both percussion and Diamond Drilling techniques). All these techniques when taken together allow the Group to generate an in depth understanding of the geological landscape such that it can allocate capital resources most efficiently to only the most prospective areas for copper and gold VMS Deposits.
One particularly useful technique utilised by the Group for its mineral resource exploration is called AMT (audio- magnetotellurics). AMT is an advanced technology that measures the natural electromagnetic signals in the earth's crust, which are generated by lightning strikes, to create a high-resolution image of geological features underground. AMT measures natural high frequency signals in the audio range (greater than 1 hertz), which are generated by lightning strikes hitting the earth around the globe. These induce time-varying electric and magnetic fields into the earth's crust and oceans, which in turn produce signals that can then be measured over a range of frequencies using probes and magnetic field antennas. Ground resistivity values are then calculated from these AMT measurements, creating a relatively clear 3D image of the subsurface of the relevant land.
The Directors believe that its AMT surveys will be able to identify sulphide mineralisation and also provide a useful indication of the depth at which mineralised deposits may occur. This will contribute to enabling the Group to identify the most prospective areas for VMS Deposits and therefore to allocate its resources most efficiently, thereby significantly enhancing the Group’s exploration prospects.
In the 2021 exploration campaign the Group is also utilising Down Hole EM (electromagnetics) which involves lowering a probe down a drill hole to act as a receiver to an electrical current charged into a surface copper loop adjacent to the hole. This is used to measure the resistivity in sub-surface rock formations to help identify the possible location of mineral deposits. In addition, the Group is utilising a gravity surveys as a further geophysics tool. This measures minute changes in the Earth’s gravity which, when combined with accurate GPS attitude data, can provide an analysis of rock lithology. The Group believes that, in combination, these various geophysics techniques will significantly increase the Group’s chances of making a discovery.
Once the Group has identified targets which it believes to be prospective for gold and/or copper, the Group has a two phased drilling strategy which involves Percussion Drilling, followed by Diamond Drilling. Percussion Drilling is a less common exploration technique employed by the Group as a final testing tool prior to Diamond Drilling to investigate targets up to 200m underground. Percussion Drilling is regarded as more rudimentary than Diamond Drilling, in that it produces rock chips, and sometimes sludge, (rather than complete rock core samples), it can only drill vertically and rock chips can also fall down the hole and contaminate samples. However, it is a relatively quick and cost effective (typically costing around 15 per cent of the cost of Diamond Drilling) way to gain a good initial picture of the type of rocks that exist underground, including the presence of mineralisation, its extent, and potential thickness. Percussion Drilling has proved to be a very effective initial screening tool for the Group to this point. Once mineralisation has been located by a percussion drill, a diamond drill can be targeted to more accurately measure drill sites for grade and width. This two stage drilling approach reduces the potential for wasted drilling using the more expensive Diamond Drilling and make the Group’s drill programmes more efficient.
In Labrador, the Group intends to pursue core re-logging, detailed geological mapping, prospecting and soil sampling to identify drill targets within the target areas. Geochemical techniques such as soil and/or till sampling, in conjunction with detailed geological and structural mapping, will aid in the identification and evaluation of potentially mineralised areas.
While mining in Cyprus has traditionally been strongly associated with copper (with the word “copper” being derived from the Latin name for Cyprus), another commercial opportunity exists for the Group in exploration for gold.
Cyprus has not previously been considered as a location for gold mined in association with copper, because its mining boom of the 1960s and 1970s coincided with the period when gold prices were pegged at just $35 per ounce, and gold was then uneconomic to produce. The development of lower cost and more consistently accurate assay methods occurred during the period when the $35 gold peg was abandoned which was also at around the same time the mining industry halted in Cyprus in the early 1970s. This sparked a significant increase in gold prices which saw the value of gold increase more than fifty-fold in the last 40 years, to approximately $1,770 per ounce (Source: London Metal Exchange, www.lme.com/Metals, 01.07.21).
the mid-1970s onwards there was a gold exploration boom. At that time, Cyprus was considered geo-politically risky and a relatively small-scale opportunity. While a small number of junior mineral exploration companies did drill in Cyprus following the turn of the millennium, their exploration operations were relatively short-lived, typically for financial reasons. Consequently, Copper VMS Deposits in Cyprus have not yet been comprehensively evaluated for their gold potential in the modern era.
During the Group’s appraisals at Troodos West in April 2020, the Group identified significant enrichment of gold, in association with VMS type sulphide occurrences, at five locations over a 4km strike length on a major prospective geological structure. In addition, on the same geological structure approximately 7km south-east, another gold occurrence in association with VMS sulphide was also identified, which confirms the presence of multiple VMS Deposits containing gold occurring relatively near to one another at Troodos West.
Gold intercepts were also encountered during the Group’s Diamond Drilling campaign at Troodos West in late 2018. Rock core samples produced during this drill programme are being measured according to the length of underground intercept, and assayed for mineral grade. Among the most notable intercepts were 29.8 meters grading at an average of 1.1g/t (grams per ton) Au (gold), 27.9m at 0.97g/t Au and 10.5m at 3.8 g/t Au. The Directors believe that by industry standards, these would be considered noteworthy intersections in the context of exploring for commercially mineable gold deposits. Percussion Drilling in early 2020 at the Group’s Hillside target encountered further gold enrichment in association with buried VMS sulphides. Rock chip assays from this area revealed intersections of VMS sulphides containing above 1 g/t Au. The Group’s technical team is also of the opinion, having carried out various different types of testing, that Cypriot deposits are capable of producing clean, gold-rich copper mineral concentrates that are in increasingly high demand from smelters globally.
In the most recent assay results from the Group’s Diamond Drilling campaign of late 2020, two high grade intercepts of 3 g/t Au (gold) were encountered, providing further evidence of potentially commercial grades of gold in larger deposits.
These factors, along with an appreciation in the price of gold of approximately 40% over the last two years (Source: London Metal Exchange, https://www.lme.com/Metals/Precious-metals/LME-Gold#tabIndex=0 01.07.21) has emphasised to the Directors the importance of gold rich copper deposits to its operations and the Directors believe that gold will form an important component of the value of the Group’s mineral resource assets in Cyprus.
3.10.1 Troodos West
Throughout 2019, the Group focused on its exploration resources on its Troodos West licence area, using the variety of inter-connected exploration techniques referenced at paragraph 3.6 of this Part I above, to identify over 30 specific targets which were considered for drilling and testing. As at the date of this Document, this list includes the following notable target sites: Evlim, Hillside, Kin Valley, Embayment, Prince, Orchard, Princess, Copse West, Copse East, Ridgecrest, Kinplane and Forest sites. As at the date of this Document, the Group’s highest priority drill targets on its Troodos West licence (which it considers to be most prospective for copper and gold) area are Evlim, KinValley and Hillside. This target list represents a principal asset of the Group and the locations of the targets are depicted at Figure 2 below.
The Directors consider the Group’s Troodos West licence area particularly prospective for copper and gold VMS mineralisation because:
it has already identified copper and gold mineralisation in this area following Percussion Drilling in 2018 and 2020 and is currently Diamond Drilling on this area;
there are four historic mines from previous operators located on Troodos West, each of which had strong historic production records for copper;
there is direct geological evidence of copper mineralisation such as outcrops of primary copper sulphide (chalcopyrite), secondary copper (such as malachite staining) and ancient slag piles;
prospective host rocks are currently only exposed over approximately 20 per cent of the Troodos West area but it has already yielded four mines and numerous prospects;
previous exploration work carried out by the Group identified new prospects with potential high-grade copper and gold mineralisation that have not yet been fully evaluated by the Group.
Assays from Diamond Drilling (below) two intercepts displayed revealed high grade polymetallic massive sulphide mineralisation.
Despite the above, although exploration and drilling results from the Troodos West licence area have been positive so far, further assays and testing are required of the core samples derived from Diamond Drilling to determine the prospectively of each target drilled and whether any of them would be viable to develop commercially. There can be no guarantees that any of the drill results from Troodos West identified so far will result in the establishment of a commercially mineable resource.
The Group undertook approximately 2,100m of Diamond Drilling on a number of targets from September to November 2020. The Diamond Drilling provided encouraging inter-sections on all three of the Group’s priority targets.
At target Evlim, high-grade, resource quality polymetallic massive sulphides were encountered from a depth of 148.50-151.15m, i.e. 2.65m with assayed grades of 2.8% copper, 3.8% zinc, 3.0g/t silver. The total mineralised width of the intersection was 11.6m.
At target Hillside, resource-grade polymetallic sulphides were encountered from a depth of 143.55-146.00m i.e. 2.45m with assayed grades of 1.4% copper, 4.4% zinc, 3.0g/t gold, 38 g/t silver. The total mineralised width of the intersection was 16.6m.
At target KinValley, traces of supergene native copper were encountered in three drill holes, indicative of a primary copper sulphide source undergoing weathering nearby.
The Group concurrently ran a series of AMT geophysics surveys at a number of locations at Troodos West, and the survey has also been expanded to a location at Troodos North. Diamond Drilling on AMT anomalies has verified that this survey technique can be an effective tool in identifying and locating sulphide mineralisation.
The Group intends to start focusing increased attention and resources on its four Discovery South Prospecting Permit areas and commence intensive desktop studies, while drilling programmes continue at Troodos West. Nine prospects have been identified at Discovery South, and while data is still being analysed, there is one especially interesting target called Perapedhi. This site has been drilled historically in the 1980’s and intersected 1 per cent copper over 15 - 20 metres, which the Directors consider noteworthy in the context of exploration for commercial prospects and accordingly this site is likely to be fast-tracked for drilling and testing by the Group. The Group identified targets and commenced drilling on its Discovery South Prospecting Permit areas at the start of July 2021.
The Troodos North Project comprises 3 Granted Prospecting Permits covering an area of 12.48 km2. The Directors believe the Troodos North area is an attractive proposition because it is the area where the largest copper deposits have been found historically, of all the Group’s licence areas, including the Mavrovouni mine, which produced nearly 750kt of copper until its closure in 1974 and the Skouriotissa mine, which has produced 294kt of copper and is still producing. The Group’s Granted Prospecting Permits at Troodos North include prospective ground bordering both the Skouriotissa and Mavrovouni mines, which the Directors believe is an encouraging sign for the Group’s activities at Troodos North.
The Group has recently run an AMT geophysics survey at a target area called Agrokipia at Troodos North with encouraging results. The area contains an historic mine with recoded high grades of copper, as well as zinc. There is also a signiciant amount of historic drilling at Agrokipia, including two historic non-compliant resources of 0.8 Mt of 1.5% Cu and 0.8% Zn and 4.5 Mt of 0.4% Cu and 0.6% Zn. The company is planning to review a considerable body of historic data at this target area, as it believes there is the potential, in combination with further drilling, to estimate a JORC compliant mineral resource in the future at this area.
In Labrador, a programme comprising 8-10 weeks of core re-logging or sampling, boat and helicopter supported detailed mapping, prospecting, rock sampling and geochemical surveys (soil sampling) is planned, with a crew of 6 persons working from the community of Happy Valley Goose Bay or from small, temporary campsites. The primary objective of the programme will be evaluating the four priority target areas to identify drill targets for future testing.
The primary objective of the Group is to generate value for shareholders by progressing its ongoing copper and gold exploration projects to identify a commercially mineable resource and to generate revenues by executing a trade sale (or partial trade sale), joint venture or strategic partnership in respect of its Portfolio.
After encouraging results from its late 2020 geophysics, percussion and Diamond Drilling campaign, the Group’s 2021 exploration campaign in Cyprus is running on schedule, with the Group’s first phase AMT and gravity geophysics surveys, together with its Percussion Drilling programme of 14 holes, now completed. The gravity geophysics survey conducted in the area to the west of target Hillside highlighted a large new high-priority target named “Olive”, which is a compelling North-South trending structure, manifesting as a residual gravity high. This anomaly extends 1km in length and up to 300m in width and may be indicative of a type of early-forming subsidiary basin that often host VMS deposits. The next phase of geophysics can now commence and a specialised team is due to conduct a down-hole EM programme shortly. Diamond Drilling is commenced at the start of July 2021, in an expanded works programme. As well as focusing on its primary target area of Troodos West, the Group anticipates exploratory work on its Troodos North and Discovery South licence areas.
Such discoveries will require infill drilling and further exploration to define or enlarge resources to create value for the Group’s shareholders. The Group considers it prudent to now raise necessary funding in advance of such work to provide investors with confidence that the Group is in a position to advance its project next year free of financing risk.
In addition, the Group also intends to continue exploring for new prospective locations for Exchange Traded Non-Ferrous Metals and to obtain further mineral exploration licences or permits, whether identified directly by the Group or through further acquisitions and whether in Cyprus, Canada or further afield, with a view to executing a similar exit event in the future. In parallel with developing its Portfolio in Cyprus, the Group will continue to seek acquisition and joint venture opportunities in the natural resources sector, maintaining a focus on companies, businesses or assets with operations in the Exchange Traded Non-Ferrous Metals mining segment with the European geographic region, although the Group will consider opportunities focused on other commodities and/or in other locations, as evidenced by the Labrador Acquisition to acquire the Adeline Copper Project in central Labrador, Newfoundland and Labrador, Canada.
Following completion of the Labrador Acquisition, the Group shall have a 100% interest in 10 Granted Map-Staked Mineral Licences (covering 297.25 square kilometres) in proximity to the Central Mineral Belt of Labrador, Newfoundland and Labrador, Canada, on which it intends to explore primarily for copper.
The market in which the Group operates is global with participants in the market ranging from large multi-nationals to small private exploration businesses. The Directors believe that the Group is well placed to compete against other market participants and generate revenues in the medium to long term for the following reasons:
the Portfolio is prospective for copper and gold, two of the most actively traded metals globally;
a number of the areas covered by the Granted Prospecting Permits and the Granted Map-Staked Mineral Licences have a history of gold and copper extraction;
the Group’s personnel are highly skilled and experienced in the mineral exploration and natural resources sector;
Cyprus has a rich heritage in mining (and particularly mining Copper, from which the name of the country is derived), dating back to the Bronze Age, and the style of mineralisation is relatively well understood;
Labrador clearly demonstrates the potential for sediment-hosted copper (SSC) mineralisation as reduced grey beds of the Adeline Island Formation host significant copper concentrations and historic exploration campaigns at Seal Lake sought small, very high grade copper deposit models as shown by the programmes of shallow drilling and short step outs, with more recent programmes lacking sustained effort or focus;
the Group has 100 per cent. interests in all the Granted Prospecting Permits and the Granted Map-Staked Mineral Licences in the Portfolio;
Cyprus is an EU member with close ties to the UK, whose legal system is based on English common law, and is well-ranked in terms of ease of doing business and corruption perception, representing relatively low country risk;
the climate in Cyprus allows for virtually year-round exploration and mining operations;
Cyprus has good infrastructure, such as road networks, mobile phone coverage, electricity and water supply, international airports and sea ports;
Canada is highly developed country with one of the world’s strongest economies which, like Cyprus, has close ties to the UK, and has a legal system which is based on English common law;
Canada is very well-ranked in terms of ease of doing business and corruption perception, representing low country risk;
the community of Happy Valley-Goose Bay, which is located approximately 145km to the southeast of the Adeline Copper Project is a major regional service centre and a full-service community with a government-serviced airport with air traffic control to facilitate exploration and mining operations via helicopter and small boat-supported ground traversing;
commodity prices have generally been robust since 2016, save for a short-term declines in copper prices during the peak of the COVID 19 pandemic and both copper and gold have recovered strongly from the COVID 19 related downturns and the prospects for both metals are generally considered by the Directors to be positive in the near and medium term (Source: London Metal Exchange,www.lme.com/Metals 01.07.21);
the Group has the largest portfolio of prospecting permits in Cyprus; and
Cyprus provides a comparatively attractive corporate environment for the Group’s natural resource projects. In particular, the current government royalties for mineral resources (calculated on the Free-On-Board price) are relatively low (being 1 per cent for metals and alloys) and the corporate tax rate in Cyprus is reasonable (12.5 per cent) (Source: PWC, “Corporate – Taxes on corporate income”, 21.12.20).
Canada additionally provides an appealing corporate environment for the Group’s natural resource projects. About half of the world’s publicly listed mining and exploration companies are listed on the Toronto Stock Exchange and TSX Venture Exchange (Source: Government of Canada, “Canadian Mining Assets Information Bulletin”, 08.02.21). Canada’s marginal effective tax rate (which takes into account local, as well as federal, taxes) averages 13.7% (2019), which is the lowest in G7 and below the average of OECD (Source: Government of Canada, "Invest in Canada FDI Report”, 18.07.2019). Mining taxes and royalties paid to a province or territory with respect to income from a mineral resource are fully deductible when computing income for federal income tax purposes (Source: Lexology, “At a glance: mining duties, royalties and taxes in Canada”, 27.05.21).
The Group is unlikely to carry out mining activities on its own account in the foreseeable future as it intends to generate revenues by eventually executing a joint venture, strategic partnership or trade sale (or partial trade sale) in relation to its mineral resource assets before they reach the stage of commercial extraction. The attractiveness of the Group’s mineral resource assets to potential acquirers or joint venture/strategic partners will be highly dependent on the medium to long term outlook and overarching trends associated with the revenue metals contained within them, notably copper and gold in the case of the Portfolio. Short term fluctuations and volatility in the price of these commodities will have a comparatively immaterial impact on the Group’s prospects from this perspective, although the Group’s share price can be influenced by sentiment in this regard.
Since 2016, commodity prices have generally been robust (with the exception of COVID 19 related downturns in the copper price) (Source: London Metal Exchange, www.lme.com/Metals 01.07.21), which the Directors believe has encouraged investment capital into the sector.
Copper price (US dollars per pound) Five years Source: tradingeconomics.com
Gold price (US dollars per ounce) Five years Source: tradingeconomics.com
The price of copper has reached an eight year high to peak in February 2021 at $8,279 per ton (Source: London Metal Exchange, www.lme.com/Metals/Non-ferrous/Copper#tabIndex=0, 01.07.21). The copper price has strengthened by over 70% per cent since the COVID 19 low in March 2020 of $4,617 per ton, primarily due to strong demand for metal from China and reduced output from Chile and Peru, where the mines have been significantly impacted by COVID 19 (Source: London Metal Exchange, www.lme.com/Metals/Non-ferrous/Copper#tabIndex=0, 01.07.21). Scrap copper supply chains have also been impacted by COVID 19, causing a further squeeze on supply. Copper prices have experienced a sharp ‘V shaped’ recovery from the COVID 19 pandemic, and have also increased considerably from their pre-epidemic levels With the relief of vaccines, supply constraints will likely unravel in 2021. However many commodity forecasters expect that copper prices will likely move higher, in the medium to long term as the “green economy” has a greater requirement for copper due to increased electrification of transport and energy. Demand for copper in China remains particularly strong as it experiences one of the faster economic recoveries following COVID 19 and therefore it is likely to be among the first to commence metal-intensive infrastructure programmes (Source: Mining Journal, “Ballooning copper demand in China”, 19.01.21). In addition, new stimulus programmes are being initiated in the US and Europe leading to further demand (Source: Goldman Sachs, “2021 Commodity Outlook – REVing up a structural bull market”, 18.11.20). The view of the Directors is that copper prices will continue to remain robust in the medium-term.
The price of gold has continued its steady rise since 2013, recording an all-time high in July 2020 of $2,072 per ounce, and increasing by approximately 74% per cent since a low in October 2018 (Source: London Metal Exchange, https://www.lme.com/Metals/Precious-metals/LME-Gold#tabIndex=0, 01.07.21). Demand for gold is primarily sentiment-driven, with speculators commonly buying through Exchange Traded Funds (ETFs). The metal has benefited from the “fear” element of the COVID 19 pandemic. Positive news about progress of COVID 19 vaccines has caused gold prices to soften recently, although concerns will persist of mounting global debt and the inflationary consequences of the printing of money. Physical demand for gold comes predominantly from use in jewellery, bullion and gold coinage as well as various industrial and electronic applications. The supply of gold to meet this demand comes largely from newly mined gold, but also from recycling. Production of newly mined gold production fell by approximately 1 per cent to 3,464t, during 2019, representing the first year on year decline in output since 2008 (Source: London Metal Exchange, https://www.lme.com/Metals/Precious-metals/LME-Gold#tabIndex=0 01.07.21). However, this fall was offset by a material increase in the supply of recycled gold which rose by 11 per cent to 1,304t resulting in an aggregate net increase of total gold supply of approximately 2 per cent in 2019 as compared with 2018 (Source: London Metal Exchange, https://www.lme.com/Metals/Precious-metals/LME-Gold#tabIndex=0 01.07.21). As such, the Directors do not expect any significant downturns over the coming years.
The Directors believe that the medium to long term outlook for the price of copper and gold will remain robust into the future. In light of this, the Directors believe that there will be interest from potential acquirers or joint venture/strategic partners in relation to its Portfolio (particularly considering the importance of copper to the electrification of transport and energy) and that it could enter into an agreement for a sale, joint venture or strategic partnership in relation to its Portfolio in Cyprus on favourable commercial terms in the medium to long term. However, the time frame for this is uncertain as the Portfolio requires further development to establish conclusive mineral resource estimates and these estimates will factor into placing an appropriate valuation on the Portfolio.
The most significant developments to the Group’s business since the date of RTO Admission has been the identification of further copper, gold, zinc and silver mineralisation on its Troodos West licence area and the completion of a 2,000 metre Diamond Drilling programme at this location. In addition, in 2020 the Group has also been granted three new Prospecting Permits at its Discovery South location and made three new prospecting permit applications at Troodos West (two in June 2020 and one in October 2020, which have now been granted).
A significant trend affecting the Group is its increased focus on gold exploration and extraction, which has stemmed from an approximately 40 per cent appreciation in the price of gold over the last 2 years (Source: London Metal Exchange, https://www.lme.com/Metals/Precious-metals/LME-Gold#tabIndex=0 01.07.21). More generally, the Group’s activities will be affected by medium to long term trends and fluctuations in the prices of copper, gold and other minerals, which may become relevant to the Group as discussed above, as this will be directly linked to the value of the Portfolio.
COVID 19 is an uncertainty which has had an impact on the Group in 2020 including the postponement and delay of percussion and Diamond Drilling programmes at Troodos West. The recent second spike in the number of cases in Cyprus and associated government restrictions could have a further impact on the Group’s operations. However, the situation in Cyprus is relatively controlled, with fewer than 400 COVID 19 related deaths to date, a comparatively low number in the context of the rest of Europe (Source: Reuters Covid-19 Tracker, 01.07.21). As such, the Directors remain confident that the impact of COVID 19 on its business will be relatively immaterial. The most significant impacts of COVID 19 on the Group’s activities, is expected to be the difficulty moving personnel in and out of the country to work carry out work in relation to the Portfolio and potential volatility and downward trends on the stock markets, which may affect the Company, the valuation of its share price and therefore its attractiveness to potential investors.
There have been no material changes in the regulatory environment in which the Group operates since the period covered by the latest published audited financial information.
The Placing and Use of Proceeds
The Group has raised gross proceeds of £800,000 through the Placing, conditional only on Admission. Further details of the Placing are set out in Part III of this Document. After deduction of the estimated expenses of the Placing and Admission, amounting to approximately £100,000, the Net Proceeds are estimated to be approximately £700,000.
In the 20 months following Admission, the Group currently intends to use the Net Proceeds to carry out further resource exploration work for general working capital and operational expenditure purposes, and in order to carry out potential future corporate activities (such as acquisitions or joint ventures).
The Group currently intends to use approximately sixty per cent of the Net Proceeds on operations and new business development work in Cyprus and Labrador. The Directors currently intend to allocate this portion of the Net Proceeds will be allocated approximately in accordance with the table set out below.
The Group currently intends to use the remaining forty per cent of the Net Proceeds for general working capital and operational expenditure, to assess new mineral prospecting opportunities and to potentially carry out further acquisitions or joint ventures. The Directors currently intend to allocate this portion of the Net Proceeds approximately in accordance with the table set out below.
The Directors are satisfied that the Net Proceeds are sufficient for the proposed purposes identified above.
After the initial 12 month period following Admission, the Group hopes to have discovered one or more commercially mineable mineral resource deposits and aims to move into phases of resource infill drilling, conceptual mine planning and scoping studies. The Group also intends to seek new projects to diversify its risk profile and expand its operations and potential revenues. The Group plans to seek strategic or joint venture partners or potential acquirers of the all or part of the Portfolio to help fund its growth and the Directors believe the Group can attract such partners. This is amongst other reasons, because of strong demand for copper projects, due to the commodity being regarded as essential for the global transition to clean energy and transport.
Since incorporation the Company has carried out four material fundraises (not including the Placing) as follows to raise, in aggregate, gross proceeds of approximately £6.43M.
In connection with the Company’s IPO Admission, it carried out the IPO Placing pursuant to which it issued 26,000,000 Ordinary Shares at a price of £0.05 per Ordinary Share to raise gross proceeds of £1,300,000.
In connection with the Acquisition and RTO, the Company carried out the RTO Fundraise pursuant to which it issued 26,666,667 Ordinary Shares at an issue price of £0.075 per Ordinary Share to raise gross proceeds of
£2,000,000.
On 26 July 2020, the Company completed a placing pursuant to which it allotted 12,000,000 new ordinary shares at a placing price of £0.0525 per Ordinary Share to raise gross proceeds of £630,000. The Company also issued warrants to its joint broker, Fox Davies, and Options to certain of its Directors and key management in each case as detailed at paragraph 10 and 11 of part VII of this Document.
On 11 December 2020, the Company completed a placing pursuant to which it allotted 27,777,778 new ordinary shares at a placing price of £0.009 per Ordinary Share to raise gross proceeds of £2,500,000.
On 5 January and 5 February 2021, the Company also issued Options to various persons as detailed at paragraph 10 of part VII of this Document.
THE BOARD AND KEY PERSONNEL AND CORPORATE GOVERNANCE
The Board and key personnel
The Directors
The Directors of the Company are:
Martin French has over 30 years of experience in capital markets, investment banking and mining. He graduated in International Finance from the City University Business School in London. He started his career at Merrill Lynch structuring OTC FX options. He became Editor of the financial newspaper Euroweek in London and then the founding Editor of Asiamoney in Hong Kong. He then joined Credit Lyonnais Securities Asia (CLSA) working as a Country Manager in various locations in Asia running institutional equity businesses and equity capital markets. He then moved to Sao Paulo as Managing Director Latin America to set CLSA’s business in the continent. Mr French was more recently Managing Director of North River Resources plc from December 2012 until January 2015, and took its Namibia-based brownfield underground lead-zinc project through a bankable feasibility study and project execution planning. He then successfully sourced a strategic funding partner.
Ajay Kejriwal Executive Director and Chief Financial Officer, aged 51 (date of birth 25/02/1970)
Ajay has over 30 years’ experience in capital markets and entrepreneurship. A graduate in Economics from City University, he started his career at PriceWaterhouse (now PwC) and whilst there qualified as a Chartered Accountant (England and Wales). Ajay subsequently joined Morgan Stanley where he was an equity research analyst covering European Utilities. From there he joined Cazenove & Co (now JP Morgan Cazenove) where he was an institutional broker for Asian equities. He also helped establish Cazenove & Co’s Indian office. He then joined Nomura International in London, subsequently transferring to Hong Kong. Whilst at Nomura International he was responsible for a variety of roles, including secondary market activities in Asia, and thereafter private equity and complex transactions from a proprietary perspective. After a period of entrepreneurship where he established various businesses, including property investment and development, and an award winning retail business, he again joined banking with Crosby Capital. At Crosby Capital, he was a member of the firm’s Executive Committee and led many transactions in natural resources and asset management. He subsequently joined several of his Crosby Capital colleagues in establishing Juniper Capital, a boutique consultancy business focusing on natural resources. He remains a consultant to Juniper Capital.
David is an experienced geologist who spent 26 years working in a management capacity for the Rio Tinto Exploration group until 2006, including the last five years as Exploration Manager Europe. During his time with Rio Tinto Exploration, he headed exploration teams in the wider European area, including the discovery and evaluation of the Çöpler gold mine in Turkey, now owned and operated by SSR-Alacer Gold Corporation. Over this period, he has worked in a variety of geological settings, commodities and jurisdictions, especially in exploration for copper and gold. David commenced his career in 1968 with the Union Corporation group, spending seven years in South Africa (including work on the discovery and evaluation of the Beatrix Gold Mine complex, as well as the development of the Unisel mine and production-related geology at St Helena Gold Mine). Prior to that he spent four years in the United Kingdom, mainly involved in development and production at two Cornish tin mines. More recently, he was a director and Chief Executive Officer of Columbus Copper Corporation (formerly Empire Mining Corp.), a Toronto Venture Exchange listed exploration company exploring copper and gold assets in western Turkey and chromite in Albania, until its merger with Energulf Resources Inc. in 2015. David holds a BSc honours degree in Geology from University College London and is a Chartered Engineer, Member of the Institute of Materials, Minerals and Mining.
Mr. Damouni is a graduate of McGill University and has over 18 years of experience in investment banking and capital markets, with particular expertise in natural resources. Throughout his career, Mr. Damouni has worked on and led equity and debt financings valued over $5 billion. He has comprehensive experience in equity financing, restructuring, corporate valuations and advisory assignments. Mr. Damouni is a Director of a number of companies listed on the TSX, TSX-V and London Stock Exchange and other public companies including Kerr Mines Inc, Empire Metals Ltd, Gatling Exploration Inc, Arena Minerals Inc and Mason Graphite Inc. Mr Damouni has also been on the board of other private companies including Silvergate Capital Partners Limited and formerly NorthCrest Capital Limited.
Evgeny Vrublevskiy, Non-Executive Director, aged 37 (date of birth 22/09/1983)
Evgeny is the nominated director of Polymetal. He graduated with a B.A. in Business Management from the Moscow State Mining University in 2007 before obtaining a B.A. in Economics from S.U. Witte University, Russia in 2014 and an M.A. in Accounting, also from S.U. Witte University, in 2017. He is an Associate Member of the Chartered Institute for Securities and Investment in the UK, a Certified Treasury Professional at the Association for Financial Professionals in the USA and has an Advanced CySec certificate in Cyprus. From 2005 to 2008 Evgeny was a Senior Operations Specialist with Bank Uralsib PAO in Moscow, before moving to Cyprus where he worked in financial management for Unicredit Securities from 2008-2012, Inteco Group from 2012-14 and UFG Asset Management from 2014-2015. In 2015 Evgeny was appointed as head of Polymetal’s office in Cyprus, which serves as the group headquarters, and is also Head of Treasury, with oversight of all finance and accounting matters at Polymetal.
Paul Ensor, Non-Executive Director, aged 65 (date of birth 19/09/1955)
Paul is a graduate of Brown University, where he obtained a B.A. in History, and Sussex University, where he obtained a M.Phil in Development Economics. Paul was the business and economics correspondent in Seoul, South Korea for the Far Eastern Economic Review, a weekly magazine, and subsequently worked for The Economist magazine in London as global Transport Correspondent. From 2003-2013 Paul was the London representative of RK Equity, the New York based financial advisory firm which focussed primarily on work with companies in the natural resources sector. Since leaving RK Equity he has formed a new company, London Specialist Capital, of which he is a director and through which he conducts his business of advisory work and investment research with companies in the mining, technology and commercial property sectors. Paul served as a non-executive chairman of SPDI, a commercial property company headquartered in Cyprus and listed in London with a focus in investment in southeastern Europe between 2007-2018 and during 2011-2016 he was a director of Brazil Tungsten Holdings Ltd, a private mining development company.
Other personnel
The Company intends to appoint a chief operating officer (COO) to provide overall operational management in Cyprus (and further afield as and when applicable). An interim COO has been appointed for the time being. The Directors expect to appoint a chief operating officer before the end of Q3 2021.
Independence
On Admission, David Cliff, Peter Damouni, Evgeny Vrublevskiy and Paul Ensor will be considered to be ‘independent’ members of the Board, as that term is defined in the Corporate Governance Code.
In order to implement its business strategy, the Company has adopted a corporate governance structure, the key features of which are:
a Board comprising four independent non-executive directors, one executive chairman and one executive chief financial officer;
the Company intends to comply, insofar as is appropriate having regard to the size and nature of the Company and the composition of the Board, with the Corporate Governance Code;
the Company has adopted a share dealing policy that complies with the requirements of the Market Abuse Regulation; and
the Company has adopted an anti-bribery and corruption policy.
Members and responsibility
The Board is responsible for the Company’s objectives and business strategy and its overall supervision, including acquisition, divestment and other strategic decisions. The Board provides leadership within a framework of prudent and effective controls. The Board sets the corporate governance values of the Group and has overall responsibility for setting the Group’s strategic aims, defining the business plan and strategy, managing the financial and operational resources of the Group and reviewing the performance of the officers and management of the Group’s business.
Frequency of meetings
While the Board will schedule monthly meetings, it will hold additional meetings as and when required.
Financial Management
The Company does not currently have a finance director and responsibility for financial management is undertaken by the Board as a whole. The Company has engaged an experienced bookkeeper to provide accounting services. Due to the limited number of expected financial transactions of the Group and the financial expertise of the Directors, the Directors believe these arrangements will continue to be appropriate for the period immediately following Admission.
Corporate Governance
As a company with a Standard Listing, the Company is not required to comply with the provisions of the Corporate Governance Code, which forms a key part of the corporate governance regime for England and Wales, the Company’s country of incorporation. In the interests of observing best practice on corporate governance, however, the Company will observe the requirements of the Corporate Governance Code, insofar as the Board considers appropriate, having regard to the size and nature of the Group and the composition of the Board. As at the date of this Document, the Company is in compliance with the Corporate Governance Code with the exception that the Company does not comply with the requirements of the Corporate Governance Code in relation to the requirement to have a senior independent director.
The Company has in place an audit and remuneration committee, the particulars of which are as follows:
The audit committee will comprise Peter Damouni (as chairman), David Cliff and Ajay Kejriwal and will meet normally not less than twice each year. The audit committee will be responsible for making recommendations to the Board on the appointment of auditors and the audit fee and for ensuring that the financial performance of the Company is properly monitored and reported. In addition, the audit committee will receive and review reports from management and the auditors relating to the interim report, the annual report and financial statements and the internal control systems of the Company.
The remuneration committee will comprise Peter Damouni (as chairman), David Cliff and Evgeny Vrublevskiy and will meet normally not less than twice each year. The remuneration committee will be responsible for the review of and making recommendations to the Board on the scale and structure of remuneration for the Board and key personnel, including any bonus arrangements and the award of Options, having due regard to the interests of Shareholders and other stakeholders.
The Company has adopted a share dealing policy that complies with the requirements of the Market Abuse Regulation. All persons discharging managerial responsibilities (comprising the Directors only as at the date of this Document) are required to comply with the share dealing policy and the Board will be responsible for taking reasonable steps to ensure such compliance.
The Company takes a zero-tolerance approach to bribery and corruption and has adopted an anti-bribery and corruption policy under which the Company is committed to conducting its business in a fair and ethical way without using bribes or corrupt practices to obtain unfair advantages in its business dealings and to implementing and enforcing effective systems to counter bribery and corruption.
A Standard Listing offers less protection to Shareholders than would otherwise be the case with a Premium Listing on the Official List. Further details on the consequences of a Standard Listing are set out in the section entitled “Consequences of a Standard Listing” of this Document.
Potential areas for conflicts of interest for the Directors in relation to the Group include:
the Directors have or may have interests (whether directorships, partnerships or otherwise) in other companies, partnerships, projects or ventures, in some cases of a similar nature to that of the Group. Therefore, the Directors may have a limited amount of time to dedicate to the business of the Group and, accordingly, they may have conflicts of interest in allocating management time to the Group and each aspects of the Group’s business. As such some aspects or the whole of the Group’s business may receive less of the Directors time and management attention than may be considered necessary or desirable;
in the course of their other business activities, the Directors may become aware of investment and business opportunities which may be appropriate for presentation to the Group as well as the other entities with which they are affiliated (that are of a similar nature to the Company) and the Directors may have conflicts of interest in determining to which entity a particular opportunity should be presented to; and
The Directors have, or may come to have, other fiduciary obligations, including to other companies on whose board of directors they presently sit or to other companies whose board of directors they may join in the future. To the extent that they identify business opportunities that may be suitable for the Group or other companies on whose board of directors they may sit, the Directors will honour any pre-existing fiduciary obligations ahead of their obligations to the Group. Accordingly, they may refrain from presenting certain opportunities to the Group that come to their attention in the performance of their duties as directors of such other entities unless the other companies have declined to accept such opportunities or clearly lack the resources to take advantage of such opportunities.
The Articles contain provisions whereby a director shall not vote on or be counted in the quorum of any Board meeting in respect of, any matter in which he has, directly or indirectly, any material interest.
In accordance with the terms of the letters of appointment or service agreements entered into by each of the Directors, further details of which are set out in paragraph 9 of this Part VII of this Document, the Directors may be required to seek the agreement of the Board before accepting commitments outside their role in the Group, in addition to those already disclosed to the Company, which might give rise to a conflict of interest with any of their duties to the Group.
Description of the Placing
Subject to and conditional upon Admission occurring by 8.00 a.m. on or before 12 April 2021 (or such later dates as might be agreed between relevant parties provided such date is not later than the Long Stop Date), the Company will raise gross proceeds of £800,000 as a result of the Placing. The terms of the Placing are briefly summarised below:
After commissions and other estimated fees and expenses in connection with the Placing and Admission of approximately £100,000 (exclusive of VAT), the Net Proceeds are estimated to be £700,000.
The Investors participating in the Placing can be categorised in the following terms:
In accordance with Listing Rule 14.3, on Admission at least 25 per cent. of the Ordinary Shares will be in public hands (as defined in the Listing Rules).
At the Placing Price, the Enlarged Ordinary Share Capital will have a market capitalisation of £12.0 million on Admission. The Placing Shares will be registered within ISIN GB00BF2F1X78 and SEDOL code BF2F1X7.
The Placing is conditional only on Admission occurring on or before 8.00 a.m. on or before 12 July 2021 (or such later date as the relevant parties may respectively agree with the Company but in any event not later than the Long Stop Date) (the “Admission Condition”). Please refer to paragraph 4 of this Part III in relation to the return of subscription funds to Investors in the event that the Admission Condition is not satisfied by the relevant date.
Admission is expected to take place and dealings in the Enlarged Ordinary Share Capital are expected to commence on the London Stock Exchange at 8.00 a.m. on 12 July 2021.
The CREST accounts designated by Investors that have requested delivery of Placing Shares in uncertificated form are expected to be credited with the relevant new Ordinary Shares on the date of Admission. Where applicable, definitive share certificates in respect of the Placing Shares of Investors that have requested delivery of Placing Shares in certificated form are expected to be despatched, by post at the risk of the recipients, to the relevant Investor not later than the week commencing 12 July 2021. No temporary documents of title will be issued. Prior to the despatch of definitive share certificates in respect of any new Ordinary Shares which are held in certificated form, transfers of those Ordinary Shares will be certified against the register of members of the Company.
The Ordinary Shares are in registered form and may be held in certificated or uncertificated form.
The terms of the Placing are governed by a Placing Agreement. Further details of the Placing Agreement are set out in paragraph 14.1 of Part VII. Pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. Panmure Gordon may terminate the Placing Agreement (and the arrangements provided for thereunder) at any time prior to Admission in certain circumstances (including for a material breach of warranty). If this right is exercised, the Placing and these arrangements will lapse and any monies received in respect of the Placing will be returned to applicants without interest by Panmure Gordon.
All Ordinary Shares issued pursuant to the Placing will be issued at the Placing Price, which has been determined by the Directors after consultation with Panmure Gordon.
In respect of the Placing, allocations have been determined by agreement between the Directors and Panmure Gordon after indications of interest from prospective Placees were received. A number of factors were considered in deciding the basis of allocations under the Placing, including the level and nature of the demand for the Ordinary Shares, investor profile and the firm through which the application was to be made, if any.
Allocations have been managed by the Directors and Panmure Gordon so that the Company shall have sufficient shares in public hands, in accordance with Listing Rule 14.2.2.
The rights attaching to the Placing Shares will be uniform in all respects and all of the Ordinary Shares will form a single class for all purposes.
Subject to the Admission Condition, each Investor has agreed to subscribe for Placing Shares at the Placing Price. To the fullest extent permitted by law, Investors will not be entitled to rescind their agreement at any time.
Each Placee has irrevocably undertaken to pay the Placing Price for the Placing Shares allocated to them as set out in the terms and conditions of the Placing.
In the event that Admission does not occur by the relevant date, in accordance with the Placing Agreement, Panmure Gordon will arrange for monies to be returned to applicants for Placing Shares, without interest, and at their own risk.
No expenses will be charged by the Company to Investors in connection with the Placing. Details regarding liability for stamp duty and stamp duty reserve tax is as set out in Part VI of this Document.
CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by written instrument. The Articles permit the holding of Ordinary Shares under the CREST system. The Ordinary Shares were admitted to CREST with effect from IPO Admission on 29 August 2017. Accordingly, settlement of transactions in the Ordinary Shares may take place within the CREST system if any Shareholder so wishes.CREST is a voluntary system and Shareholders who wish to receive and retain certificates for their securities will be able to do so. The Investors may elect to receive such new Ordinary Shares in uncertificated form if such person is a system-member (as defined in the CREST Regulations) in relation to CREST.
The Ordinary Shares will not be registered under the US Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be taken up, offered, sold, resold, transferred, delivered or distributed, directly or indirectly, within into or in the United States. The Placing is being made by means of offering the Placing Shares to certain institutional and other investors in the UK and elsewhere outside the United States in accordance with Regulation S. The Company has not been and will not be registered under the US Investment Company Act and Shareholders will not be entitled to the benefits of that Act.
HISTORICAL FINANCIAL INFORMATION OF THE COMPANY
On 30 April 2021 the Company published its 2020 Annual Report, which contains the Company’s audited financial statements for the year ended 31 December 2020.
The audited historical financial information referred to above was audited by PKF Littlejohn LLP. The reports were without qualification and contained no statements under section 498(2) or (3) of CA 2006 and were prepared in accordance with International Financial Reporting Standards and are being incorporated by reference into this prospectus in accordance with Prospectus rule 2.4.1 as detailed below.
This Document should be read and construed in conjunction with the annual report and accounts of the Group for the financial year ended 31 December 2020 together with the audit reports on them. The following list is intended to enable investors to identify easily specific items of information which have been incorporated by reference into this prospectus. The parts of this Document which are not incorporated by reference are either not relevant for investors or are covered elsewhere in this prospectus. To the extent that any part of any information referred to below itself contains information which is incorporated by reference, such information will not form part of this Document.
The page numbers below refer to the relevant pages of the annual report and accounts of the Company for the year ended 31 December 2020:
Chairman’s statement – page 2;
Group strategic report – page 4;
Independent auditor’s report – page 17;
Group statement of comprehensive income – page 22;
Statement of financial position – page 23;
Group statement of changes in equity – page 24;
Company statement of changes in equity – page 25;
Statement of cash flows – page 26;
Notes to the financial statements (including a summary of significant accounting policies) – page 27 – 44.
Copies of the Company’s audited financial statements for the year ended 31 December 2020 are available for inspection as provided for in paragraph 21 of Part VII of this Document.
In relation to the audited financial information incorporated by reference above, no audit reports have been refused by the auditors of the Company and no audit reports contain qualifications or disclaimers.
The following table shows the Group’s capitalisation and indebtedness as at 31 December 2020.
(£)
Guaranteed -
Secured -
Unguaranteed/Unsecured 200,619
Guaranteed -
Secured -
Unguaranteed/Unsecured 127,450
Shareholder Equity
(£)
Share Capital 199,711
Share premium 6,482,931
Other Reserves 201,776
Retained losses (2,198,550)
As at the Last Practicable Date, there has been no material change in the capitalisation of the Group since 31 December 2020.
The following table sets out the unaudited net funds of the Group as at 31 December 2020.
(£)
A. Cash 2,438,856
Cash equivalent -
Trading securities -
D. Liquidity (A) + (B) + (C) 2,438,856
Current financial receivable 128,498
Current bank debt -
Current portion of non-current debt -
Other current financial debt (200,619)
Current Financial Debt (F) + (G) + (H) (200,619)
Net Current Financial Indebtedness (I) - (E) - (D) 2,366,735
Non-current Bank loans -
Bonds Issued -
Other non-current loans -
Non-current Financial Indebtedness (K) + (L) + (M) (127,450)
Net Financial Indebtedness (J) + (N) 2,239,285
As at 31 December 2020, the Group had no indirect or contingent indebtedness. As at the Last Practicable Date, there has been no material change in the indebtedness of the Company since 31 December 2020.
The comments set out below are based on current UK tax law and what is understood to be current HMRC published practice which are subject to change at any time (potentially with retrospective effect) and which, in the case of HMRC’s published practice, may not be binding. They are intended as a general guide only and apply only to Shareholders who are resident and domiciled (in the case of individuals) and resident (in the case of companies) in (and only in) the UK (except to the extent that specific reference is made to Shareholders resident outside the UK), who hold their Ordinary Shares as investments (other than under an individual savings account (ISA) only and not as securities to be realised in the course of a trade, and who are the absolute beneficial owners of those Ordinary Shares and any dividends paid thereon.
It is not intended to be, nor should it be construed as, legal or tax advice.
The comments set out below are a summary only of certain aspects of tax in the UK and do not deal with the position of certain classes of Shareholders, such as dealers in securities, broker dealers, insurance companies, collective investment schemes or Shareholders who have or are deemed to have acquired their Ordinary Shares by virtue of an office or employment. Shareholders who are in doubt as to their position or who are subject to tax in any jurisdiction other than the UK should consult their own professional advisers immediately.
Taxation of dividends
The Company will not be required to withhold tax at source on any dividends it pays to its Shareholders.
Dividends paid on the Ordinary Shares to individual Shareholders resident in the UK for taxation purposes may be liable to income tax. Each individual has a tax-free dividend allowance which, in the 2020-21 and 2021-22 tax years exempts the first £2,000 (Nil Rate Amount) of dividend income. Dividend income in excess of the tax-free allowance will be liable to income tax in the hands of individuals at the rate of 7.5% to the extent that it is within the basic rate band, 32.5% to the extent that it is within the higher rate band and 38.1% to the extent it is within the additional rate band.
Dividend income that is within the Nil Rate Amount counts towards an individual’s basic or higher rate limits - and will therefore impact on the level of savings allowance to which they are entitled, and the rate of tax that is due on any dividend income in excess of the Nil Rate Amount. In calculating into which tax band any dividend income over the Nil Rate Amount falls, savings and dividend income are treated as the highest part of an individual’s income. Where an individual has both savings and dividend income, the dividend income is treated as the top slice.
Dividends paid on the Ordinary Shares to UK resident corporate Shareholders will generally (subject to anti- avoidance rules) fall within one or more of the classes of dividend qualifying for exemption from corporation tax. If a dividend paid on the Ordinary Shares to a UK resident corporate Shareholder does not fall within one of the exempt classes, or such a Shareholder elects for an otherwise exempt dividend to be taxable, the Shareholder will be subject to corporation tax on the gross amount of the dividend at a rate of 19%. Shareholders within the charge to corporation tax are advised to consult their independent professional tax advisers in relation to the implications of the legislation.
Non-UK resident Shareholders may also be subject to tax on dividend income under any law to which they are subject outside the UK. Such Shareholders should consult their own tax advisers concerning their tax liabilities.
A disposal of Ordinary Shares by a Shareholder (other than those holding shares as dealing stock, who are subject to separate rules) who is resident in the UK for tax purposes may give rise to a chargeable gain or an allowable loss for the purposes of UK taxation, depending on the Shareholder’s circumstances and subject to any available exemption or relief.
Such an individual Shareholder who is subject to UK income tax at the higher or additional rate will be liable to UK capital gains tax on the amount of any chargeable gain realised by a disposal of Ordinary Shares at the rate of 20%.
Such an individual Shareholder who is subject to income tax at the basic rate only should only be liable to capital gains tax on the chargeable gain up to the unused amount of the Shareholder’s basic rate band at the rate of 10% and at a rate of 20% on the gains above the basic rate band. Individuals may benefit from certain reliefs and allowances (including a personal annual exemption allowance, which presently exempts the first £12,300 of gains from tax for the tax year 2020-21).
For such Shareholders that are bodies corporate they will generally be subject to corporation tax (rather than capital gains tax) at a rate of 19% on any chargeable gain realised on a disposal of Ordinary Shares.
The Ordinary Shares will be assets situated in the UK for the purposes of UK inheritance tax. A gift of such assets following the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to UK inheritance tax, even if the holder is neither domiciled in the UK nor deemed to be domiciled there (under certain rules relating to long residence or previous domicile). Generally, UK inheritance tax is not chargeable on gifts to individuals if the transfer is made more than seven complete years prior to death of the donor. For inheritance tax purposes, a transfer of assets at less than full market value may be treated as a gift and particular rules apply to gifts where the donor reserves or retains some benefit. Special rules also apply to close companies and to trustees of settlements who hold shares in the Company bringing them within the charge to inheritance tax. Holders of shares in the Company should consult an appropriate professional adviser if they make a gift of any kind or intend to hold any shares in the Company through such a company or trust arrangement. They should also seek professional advice in a situation where there is potential for a double charge to UK inheritance tax and an equivalent tax in another country or if they are in any doubt about their UK inheritance tax position.
The statements in this section relating to Stamp Duty and SDRT apply to any Shareholders irrespective of their residence, summarise the current position and are intended as a general guide only to Stamp Duty and SDRT. They do not apply to certain categories of person are not liable to Stamp Duty or SDRT, or to persons connected with depository arrangements or clearance services, who may be liable at a higher rate. Special rules apply to agreements made by, amongst others, intermediaries, broker dealers and market makers in the ordinary course of their business.
Issue of Ordinary Shares
No UK Stamp Duty or SDRT will be payable on the issue of Ordinary Shares, other than as explained below.
Transfer of certificated Ordinary Shares
The transfer on sale of Ordinary Shares will generally be liable to ad valorem Stamp Duty at the rate of 0.5% (rounded up to the nearest multiple of £5) of the amount or value of the consideration paid. An exemption from Stamp Duty will be available on an instrument transferring Ordinary Shares where the amount or value of the consideration is £1,000 or less, and it is certified on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions for which the aggregate consideration exceeds
£1,000. The purchaser normally pays the Stamp Duty. An unconditional agreement to transfer such shares will be generally liable to SDRT, at the rate of 0.5% of the consideration paid, but such liability will be cancelled or a right to a repayment in respect of the SDRT liability will arise if the agreement is completed by a duly stamped transfer within six years of the agreement having become unconditional. SDRT is the liability of the purchaser.
Ordinary Shares transferred through paperless means including CREST
Paperless transfers of shares within the CREST system are generally liable to SDRT (at a rate of 0.5% of the amount or value of the consideration payable) rather than Stamp Duty, and SDRT on relevant transactions settled within the system or reported through it for regulatory purposes will be collected by CREST. Deposits of shares into CREST will not generally be subject to SDRT unless the transfer into CREST is itself for consideration.
Responsibility
The Company and each of the Directors, whose names appear on page 27 of this Document, accept responsibility for this Document and its contents. The Company and each of the Directors confirm that to the best of their knowledge, the information contained in this Document is in accordance with the facts and this Document makes no omission likely to affect its import.
The Competent Person is responsible for the Competent Person’s Report which appears as part of this Document at Annex I. The Competent Person is responsible for all scientific and technical information in relation to the Adeline Copper Project contained within this Document as well as references to the Competent Person’s Report and statements of information attributed to the Competent Person or extracted from the Competent Person’s Report and included in this Document. The Competent Person declares that to the best of his knowledge, the information contained in this Document is in accordance with the facts and this document makes no omission likely to affect its import. The Company affirms that, as at the date of this Document, no material changes have occurred since the date of the Competent Person’s Report, the omission of which would make the Competent Person’s Report misleading.
The Company was incorporated and registered in England and Wales on 4 January 2017 with registered number 10545738 as a private limited company under the Companies Act with the name Chesterfield Resources Limited.
On 8 May 2017, the Company was re-registered as a public limited company under the Companies Act and accordingly changed its name to Chesterfield Resources plc.
The legal and commercial name of the issuer is Chesterfield Resources plc.
The principal legislation under which the Company operates and under which the Ordinary Shares have been created is the Companies Act.
The Company has, since the date of its incorporation, operated in conformity with its constitution.
The Company is domiciled in the United Kingdom. Its wholly owned subsidiary CRCL is registered and has its principal operations in Cyprus. NLCO, which shall be a further wholly owned subsidiary of the Company with effect from completion of the Labrador Acquisition, is registered and has its principal operations in Canada.
The registered office address of the Company is at 7-9 Swallow Street, London, England, W1B 4DE, and its telephone number is +44(0)203 004 0693.
The Company was founded by Derek Crowhurst, Peter Damouni and David Cliff. Derek Crowhurst is no longer a director of the Company.
The registrars of the Company are Neville Registrars Limited. They are responsible for maintaining the register of members of the Company.
The ISIN of the Ordinary Shares is GB00BF2F1X78.
The Legal Entity Identifier (LEI) of the Company is 213800EF8I2TT767IU35 and its SEDOL is BF2F1X7.
The Company’s TIDM in respect of the Ordinary Shares is CHF.
The website of the Company is https://www.chesterfieldresourcesplc.com/ and such website, and its contents does not form part of this Document, save for any documents incorporated by reference from the website.
The Company’s issued share capital, as at the date of this Document and following Admission is as follows:
A summary of the changes to the issued share capital of the Company from its incorporation to the date of this Document is as follows:
On incorporation, the Company had an issued share capital of £600 divided into 600,000 Ordinary Shares with a nominal value of 0.1p, which were subscribed for at their nominal value by the Founders.
On 16 March 2017, 1,200,000 Series A Warrants were issued to the Founders.
On 24 April 2017, 2,000,000 ‘A’ ordinary shares of 5p each were issued and allotted to the Seed Investors at a price of 5p per share, such shares being fully paid. This allotment brought the Company’s total number of shares in issue to 2,600,000.
On 24 April 2017, 4,000,000 Series A Warrants were issued to the Seed Investors bringing the total number of Series A Warrants outstanding to 5,200,000, of which 200,000 have been exercised as described at paragraph 3.5 below. Such Series A Warrants remain outstanding as at the date of this Document and remain valid until 29 August 2022.
On 28 April 2017, pursuant to a capital reorganisation, the 2,000,000 ‘A’ ordinary shares of 5p each were sub-divided and re-designated into 2,000,000 Ordinary Shares with nominal value of 0.1p and 2,000,000 Deferred Shares with a nominal value of 4.9p.
On 29 August 2017, 26,000,000 Ordinary Shares were issued and allotted to the IPO Placees at a price of 5p per share, such Ordinary Shares being fully paid. This allotment brought the Company’s total number of shares in issue to 28,600,000 Ordinary Shares and 2,000,000 Deferred Shares.
On 29 August 2017, 13,000,000 Series B Warrants were issued to the IPO Placees. The Series B Warrants were exercisable until the third anniversary of IPO Admission, being 29 August 2020, as such all rights granted pursuant to the Series B Warrant Deeds are now extinguished.
On 29 August 2017, 494,300 Shard Warrants were issued to the nominees of Shard. The Shard Warrants were exercisable until the second anniversary of IPO Admission, being 29 August 2019 and as such all rights granted pursuant to the Shard Warrant Deed are now extinguished;
On 28 June 2018, 13,333,332 Series C Warrants were issued. The Series C Warrants were exercisable until the second anniversary of RTO Admission, being 3 July 2020, and as such all rights granted pursuant to the Series C Warrant Deed are now extinguished.
On 3 July 2018, 33,333,334 Ordinary Shares were issued and allotted, of which 26,666,667 were allotted to the RTO Investors and 6,666,667 being the Consideration Shares, which were allotted to the HKP Sellers pursuant to the Acquisition, such Ordinary Shares being fully paid. This allotment brought the Company’s total number of shares in issue to 61,933,334 Ordinary Shares and 2,000,000 Deferred Shares.
On 31 July 2020, pursuant to a placing carried out by the Company:
12,000,000 Ordinary Shares of 0.1p each were allotted at a price of 5.25p per Ordinary Share, such Ordinary Shares being fully paid, bringing the total number of Ordinary Shares in issue to 73,933,334 Ordinary Shares and 2,000,000 Deferred Shares;
Broker Warrants over 1,009,333 Ordinary Shares were granted to Fox Davies;
Options over a total of 1,935,000 Ordinary Shares were granted to certain Directors and key personnel; and
certain existing Options in the Company were repriced.
Further details on the grant of warrants and Options and the repricing of Options are set out in paragraphs 11 and 10 of this Part VII respectively.
On 11 December 2020 pursuant to the December 2020 Fundraise carried out by the Company and at the December 2020 Fundraise Price:
23,333,334 new Ordinary Shares were allotted to Polymetal;
Mr Martin French was granted an Option to subscribe for 1,000,000 Ordinary Shares;
3,333,333 new Ordinary Shares were allotted to certain Subscribers; and
55,556 Warrants over Ordinary Shares were granted to Fox Davies
The Company raised gross proceeds of £2,500,000 from the December 2020 Fundraise from the following sources:
£2,100,000 from the issue and allotment of 23,333,334 Ordinary Shares to Polymetal;
£100,000 from the issue and allotment of 1,111,111 to certain placees; and
£300,000 from the issue and allotment of 3,333,333 to certain subscribers.
On 5 January 2021, the Company announced that it had resolved to issue Options over 1,400,000 Ordinary Shares exercisable at the price of 14p to Neil O’Brien, George Clegg, Ryan Fells and Paul Ensor, further details of which are set out at Paragraph 10 of this Part VII.
On 14 January 2021, the Company announced that it had received notifications from holders of Series A Warrants to exercise Series A Warrants over 200,000 new Ordinary Shares in the Company and accordingly the Company issued the new Ordinary Shares to the holders of the Series A Warrants for an aggregate cash value of £10,000, further details of which are set out at Paragraph 11 of this Part VII.
On 5 February 2021, the Company announced that it had agreed to issue Ajay Kejriwal with Options over 250,000 Ordinary Shares exercisable at a price of 12.5p, further details of which are set out at Paragraph 10 of this Part VII.
On 19 May 2021, the Company announced that, conditional on various matters including upon Admission occurring on or before 31 July 2021, it had agreed to issue a total of 10,089,199 Labrador Consideration Shares and 11,100,000 Labrador Consideration Warrants to Altius pursuant to the Labrador Acquisition.
On 2 July 2021, the Company announced that, conditional on various matters including upon Admission occurring on or before 31 July 2021, it had agreed to issue a total of 8,000,000 Placing Shares pursuant to the Placing.
On 2 July 2021, the Company also announced the issue of 2,400,000 Options to certain Directors and key personnel, exercisable at the price of 12p, further details of which are set out at Paragraph 10 of this Part VII.
Each Placing Share and Labrador Consideration Share will rank in full for all dividends and distributions declared made or paid after their issue and otherwise pari passu in all respects with each existing Ordinary Share and will have the same rights (including voting and dividend rights and rights on a return of capital).
The Labrador Consideration Shares and 11,100,000 Labrador Consideration Warrants to be issued pursuant to the Labrador Acquisition are to be allotted and issued pursuant to the authorities granted to the Directors at the Company’s annual general meeting held on 29 June 2020. The Placing Shares are being issued under the authorities approved and mentioned in paragraph 3.12 immediately below.
At the Company’s annual general meeting held on 29 June 2020, Shareholders resolved:
That in accordance with section 551 of the Companies Act, the Board be generally and unconditionally authorised to allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the Company (Rights) up to an aggregate nominal amount of £99,000 (representing a total of 99,000,000 Ordinary Shares) provided that this authority shall unless renewed, varied or revoked by the Company, expire on the conclusion of the next annual general meeting of the Company or 30 June 2022, whichever is earlier to occur, save that the Company may, before such expiry, make offer(s) or enter agreement(s) which would or might require shares to be allotted or Rights to be granted after such expiry and the Board may allot shares or grant Rights in pursuance of such offers or agreements notwithstanding that the authority conferred by this resolution has expired; and all unexercised authorities previously granted to the Board to allot shares and grant Rights be and are hereby revoked;
That, in accordance with section 570 of the Companies Act, the Board be generally empowered to allot equity securities (as defined in section 560 of the Companies Act) for cash pursuant to the authority conferred by the resolution set out at 3.11.1 above or by way of a sale of treasury shares, as if section 561(1) of the Companies Act did not apply to any such allotment, provided that this power shall be limited to:
the allotment of equity securities in connection with an offer of equity securities to the holders of ordinary shares in proportion (as nearly as practicable) to their respective holdings; and to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or arrangements as the Directors may deem necessary or expedient in relation to any treasury shares, fractional entitlements or record dates, arising out of any legal or practical problems under the laws of any overseas territory or the requirements of any regulatory body or stock exchange; and
the allotment of equity securities (otherwise than pursuant to paragraph 3.11.1 above) up to an aggregate nominal amount of £99,000,
and provided that this power shall expire on the conclusion of the next annual general meeting of the Company or 30 June 2022, whichever is earlier to occur (unless renewed, varied or revoked by the Company prior to or on that date) save that the Company may, before such expiry, make offer(s) or agreement(s) which would or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of any such offers or agreements notwithstanding that the power conferred by this resolution has expired.
The provisions of section 561(1) of the Companies Act (to the extent not dis-applied pursuant to sections 570- 571 of the Companies Act) confer on shareholders certain rights of pre-emption in respect of the allotment of equity securities (as defined in section 560 of the Companies Act) which are, or are to be, paid up in cash and, upon Admission, will apply to any shares to be allotted by the Board, except to the extent dis-applied by the resolution referred to in paragraph 3.11 of this Part VII.
Otherwise than pursuant to the Options and the Warrants set out in paragraphs 10 and 11 of this Part VII of this Document, no share or loan capital of the Company is under option or agreed conditionally or unconditionally to be put under option.
The Company’s objects and purposes are not limited by its Memorandum or Articles. The Articles contain provisions, inter alia, to the following effect:
Voting rights
Subject to any special terms as to voting on which any shares may have been issued, on a show of hands every member has one vote, and on a poll every member has one vote for every share of which he is the holder.
A member of the Company is not entitled in respect of any shares held by him to vote at any general meeting of the Company if any amounts payable by him in respect of those shares have not been paid (unless the Board otherwise determines), or if the member has failed to comply with a notice under section 793 of the Companies Act.
A holder of Deferred Shares is not entitled to receive notice of any general meeting of the Company or to attend, speak or vote in such a general meeting.
General meetings
Subject to the Companies Act, an annual general meeting must be called by at least 21 clear days’ notice and all other general meetings must be called by at least 14 clear days’ notice.
Notices must be given in the manner stated in the Articles to the members, other than those who under the provisions of the Articles or under the rights attached to the shares held by them are not entitled to receive the notice, and to the auditors.
No business may be transacted at any general meeting unless a quorum is present which will be constituted by two persons entitled to vote at the meeting each being a member or a proxy for a member or a representative of a corporation which is a member. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened on the requisition of, or by, members, will be dissolved. In any other case, it will stand adjourned to the same day in the next week at the same time and place, or to such other day and at such other time and place as the Board may determine.
At a general meeting a resolution put to the vote will be decided on a show of hands unless, before or on the declaration of the show of hands, a poll is demanded by the chairman or by at least five members present in person or by proxy and entitled to vote or by a member or members entitled to vote and holding or representing by proxy at least one tenth of the total voting rights of all the members having the right to vote on the resolution.
The appointment of a proxy must be in writing (this includes electronic form) and in any usual form, or such other form as may be approved by the Board, and must be signed by the appointor or by his agent duly authorised in writing or if the appointor is a corporation, must be either under its common seal or signed by an officer or agent so authorised. The Board may, but will not be bound to, require evidence of authority of such officer or agent. An instrument of proxy need not be witnessed.
The proxy will be deemed to include the right to demand or join in demanding a poll and generally to act at the meeting for the member giving the proxy.
The directors of the Company may direct that members or proxies wishing to attend any general meeting must submit to such searches or other security arrangements or restrictions as the directors of the Company consider appropriate in the circumstances and may, in their absolute discretion, refuse entry to or eject from, such general meeting any member or proxy who fails to submit to such searches or otherwise to comply with such security arrangements or restrictions.
Dividends
Subject to the provisions of the Companies Act and to any special rights attaching to any shares, the Shareholders are to distribute amongst themselves the profits of the Company according to their respective rights and priorities, provided that no dividend will be declared in excess of the amount recommended by the directors of the Company.
A member will not be entitled to receive any dividend (interim, final or otherwise):
on any shares carrying deferred or non-preferred rights, including the Deferred Shares, if any preferential dividend is in arrears; or
if he has a holding of at least 0.25% of any class of shares of the Company and has failed to comply with a notice under section 793 of the Companies Act.
Interim dividends may be paid if profits are available for distribution and if the Board so resolves.
Any dividend unclaimed after a period of 12 years from the date of its declaration will be forfeited and will revert to the Company.
The Deferred Shares have no right to participate in the profits of the Company.
Return of Capital
On a winding-up of the Company, the balance of the assets available for distribution will, subject to any sanction required by the Companies Act, be divided amongst the members.
On a winding-up or a return of capital, the paying of the nominal amount of capital paid up on the Deferred Shares from assets available for distribution will only occur after paying the holders of the Ordinary Shares the nominal capital paid-up together with the sum of £1,000,000 on each Ordinary Share. The holders of Deferred Shares are not entitled to any further right of participation in the assets of the Company.
Redeemable shares
The Company may issue shares which are to be redeemed or are liable to be redeemed at the option of the Company and/or the holders of those shares.
The Ordinary Shares and the Deferred Shares are not redeemable.
Transfer of shares
Subject to the provisions of the Articles relating to CREST, all transfers of shares will be effected in any usual form or in such other form as the Board approves and must be signed by or on behalf of the transferor and, in the case of a partly paid share, by or on behalf of the transferee.
The Directors may, in their absolute discretion and without assigning any reason, refuse to register the transfer of a share in certificated form if it is not fully paid or if the Company has a lien on it, or if it is not duly stamped, or if it is by a member who has a holding of at least 0.25% of any class of shares of the Company and has failed to comply with a notice under section 793 of the Companies Act. In exceptional circumstances approved by the London Stock Exchange, the directors of the Company may refuse to register a share transfer, provided that such refusal does not disturb the market in the Company’s shares.
The Articles contain no restrictions on the free transferability of fully paid Ordinary Shares provided that the transfers are in favour of not more than four transferees, the transfers are in respect of only one class of share and the provisions in the Articles, if any, relating to registration of transfers have been complied with.
The Deferred Shares are not transferable except in the following circumstances where the Company has the irrevocable authority at any time to do all or any of the following without consent of the holders of the Deferred Shares:
appoint a person to execute on behalf of any holder of the Deferred Shares an agreement to transfer to such a person (who is willing to accept such shares) as the directors of the Company may determine;
purchase all or any of the Deferred Shares in accordance with the Companies Act in consideration of payment of £0.01 in respect of all the Deferred Shares being purchased by the Company, and appoint any person to execute such a contract of sale for such Deferred Shares being purchased by the Company; and
to cancel all or any of the Deferred Shares purchased by the Company in accordance with sub-paragraph 4.6.4(b) above.
The directors of the Company may implement such arrangements as they think fit in order for any class of shares to be held in uncertificated form and for title to those shares to be transferred by means of a system such as CREST in accordance with the Uncertificated Securities Regulations 2001 and the Company will not be required to issue a certificate to any person holding such shares in uncertificated form.
Variation of Rights
Subject to applicable law (including the Companies Act), shares in the Company may be allotted with such preferred, deferred, or other rights, or restrictions, as the Company may from time to time by ordinary resolution, or the Board, determines.
If at any time the capital of the Company is divided into different classes of shares, the rights attached to any class may be varied or abrogated with the consent in writing of the holders of at least three fourths in nominal value of that class or with the sanction of a Special Resolution passed at a separate meeting of the holders of that class but not otherwise.
Share Capital and Changes in Capital
Subject to applicable law (including the Companies Act), the Company may by ordinary resolution:
consolidate and divide all or any of its share capital into shares of a larger nominal value than its existing shares; and
subdivide its shares, or any of them, into shares of smaller nominal value and the resolution may determine that one or more of the shares arising from the subdivision may have such preferred or other special rights or may have such deferred or be subject to any such restriction as the Company has the power to attach to shares.
Allotment of Shares
The Board has unconditional authority (subject to the Companies Act and authority of the Company in general meeting) to allot, grant options over, issue warrants or otherwise deal or dispose of any shares to such persons, at such times and such terms as they determine.
The Company can create, allot and issue further shares, ranking pari passu with or in priority to the Deferred Shares or conduct a reduction of capital paid-up on the Deferred Shares and cancel such shares (in accordance with the Companies Act) and such actions will be treated as not involving a variation of such rights of the Deferred Shares for any purpose and will not require the consent of the holders of the Deferred Shares.
Disclosure of Interests in Shares
The Company may by notice in writing in accordance with section 793 of the Companies Act, require a person whom the Company knows or has reasonable cause to believe to be or, at any time during the three years immediately preceding the date on which the notice is issued, to have been interested in the Company’s shares:
to confirm that fact or (as the case may be) to indicate whether or not it is the case; and
where he holds or has during that time held an interest in such shares, to give such further information as may be required in the notice.
Overseas Members
Any member or other person who has a registered address which is not within the United Kingdom is not entitled to receive any notice or other document or information from the Company unless they have given to the Company an address within the United Kingdom to which notices or other documents or information may be sent to them or an electronic address to which notices or other documents or information may be sent using electronic communication.
Borrowing Powers
Subject to the provisions of the Companies Act, the Board may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital, and to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party, except that the Board must restrict the borrowings of the Company so as to secure that, except with the previous sanction of an ordinary resolution of the Company, no money may be borrowed if the aggregate principal amount outstanding of all money borrowed by the Company and its subsidiaries exceeds or would exceed an amount equal to two times the aggregate of the nominal amount paid-up on the issued share capital of the Company and the consolidated reserves of the Company and its subsidiaries.
Directors
No shareholding qualification is required by a director of the Company.
The directors of the Company are entitled to fees, in addition to salaries, at the rate decided by them, subject to an aggregate limit of £200,000 per annum or such additional sums as the Company may by ordinary resolution determine. The Company may by ordinary resolution also vote extra fees to the directors of the Company which, unless otherwise directed by the resolution by which it is voted, will be divided amongst the directors of the Company as they agree, or failing agreement, equally. The directors of the Company are also entitled to be repaid all travelling, hotel and other expenses incurred by them in connection with the business of the Company.
At the third (or next subsequent) annual general meeting after an annual general meeting or general meeting at which a director of the Company was appointed or last re-appointed, such director of the Company will retire from office. A retiring director of the Company is eligible for reappointment.
The directors of the Company may from time to time appoint one or more of their body to be the holder of an executive office on such terms as they think fit.
Except as provided in sub-paragraphs 4.14.6 and 4.14.7 below, a director of the Company may not vote or be counted in the quorum present on any motion in regard to any contract, transaction, arrangement or any other proposal in which he has any material interest, which includes the interest of any person connected with him, otherwise than by virtue of his interests in shares or debentures or other securities of or otherwise in or through the Company.
Subject to the Companies Act, the Company may by ordinary resolution suspend or relax the provision described in sub-paragraph 4.14.5 above to any extent or ratify any transaction not duly authorised by reason of a contravention of it.
A director of the Company is entitled to vote and be counted in the quorum in respect of any resolution concerning any of the following matters:
the giving of any security, guarantee or indemnity to him in respect of money lent or obligations incurred by him or by any other person at the request of or for the benefit of the Company or any of its subsidiaries;
the giving of any security, guarantee or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security;
any proposal concerning an offer of shares or debentures or other securities of or by the Company or any of its subsidiaries for subscription or purchase in which offer he is or is to be interested as a participant in its underwriting or sub-underwriting;
any contract, arrangement, transaction or other proposal concerning any other company in which he is interested provided that he is not the holder of or beneficially interested in 1% or more of any class of the equity share capital of such company, or of a third company through which his interest is derived, or of the voting rights available to members of the relevant company, any such interest being deemed to be a material interest, in all circumstances;
any contract, arrangement, transaction or other proposal concerning the adoption, modification or operation of a superannuation fund or retirement, death or disability benefits scheme under which he may benefit and which has been approved by or is subject to and conditional upon approval by HM Revenue & Customs;
any contract, arrangement, transaction or other proposal concerning the adoption, modification or operation of an employee share scheme which includes full time executive directors of the Company and/or any subsidiary or any arrangement for the benefit of employees of the Company or any of its subsidiaries and which does not award to any director of the Company any privilege or advantage not generally accorded to the employees to whom such a scheme relates; and
any contract, arrangement, transaction or proposal concerning insurance which the Company proposed to maintain or purchase for the benefit of directors of the Company or for the benefit or persons including the directors of the Company.
If any question arises at any meeting as to the materiality of a director of the Company’s interest or as to the entitlement of any director of the Company to vote and such question is not resolved by his voluntarily agreeing to abstain from voting, such question must be referred to the chairman of the meeting and his ruling in relation to any other director of the Company will be final and conclusive, except in a case where the nature or extent of the interest of such director of the Company has not been fully disclosed.
The directors of the Company may provide or pay pensions, annuities, gratuities and superannuation or other allowances or benefits to any director, ex-director, employee or ex- employee of the Company or any of its subsidiaries or to the spouse, civil partner, children and dependants of any such director, ex-director, employee or ex-employee of the Company.
Mandatory Bid Rules
The Takeover Code applies to the Company. Under Rule 9 of the Takeover Code, if:
a person acquires an interest in shares in the Company which, when taken together with shares already held by him or persons acting in concert with him, carry 30 per cent. or more of the voting rights in the Company; or
a person who, together with persons acting in concert with him, is interested in not less than 30 per cent. and not more than 50 per cent. of the voting rights in the Company, acquires additional interests in shares which increase the percentage of shares carrying voting rights in which that person is interested, the acquiror and, depending on the circumstances, its concert parties, would be required (except with the consent of the Panel on Takeovers and Mergers) to make a cash offer for the outstanding shares in the Company at a price not less than the highest price paid for any interests in the Ordinary Shares by the acquiror or its concert parties during the previous 12 months.
Compulsory Acquisition Rules
Under sections 974 to 991 of the Companies Act, if an offeror acquires or contracts to acquire (pursuant to a takeover offer) not less than 90 per cent. of the shares (in value and by voting rights) to which such offer relates it may then compulsorily acquire the outstanding shares from the relevant holders who have not assented to the offer. It would do so by sending a notice to outstanding holders of shares telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the outstanding shares in its favour and pay the consideration to the Company, which would hold the consideration on trust for the outstanding holders of shares. The consideration offered to the holders whose shares are compulsorily acquired under the Companies Act must, in general, be the same as the consideration that was available under the takeover offer.
In addition, pursuant to section 983 of the Companies Act, if an offeror acquires or agrees to acquire not less than 90 per cent. of the shares (in value and by voting rights) to which the offer relates, any holder of shares to which the offer relates who has not accepted the offer may require the offeror to acquire his shares on the same terms as the takeover offer.
The offeror would be required to give any holder of shares notice of his right to be bought out within one month of that right arising. Sell-out rights cannot be exercised after the end of the period of three months from the last date on which the offer can be accepted or, if later, three months from the date on which the notice is served on the holder of shares notifying them of their sell-out rights. If a holder of shares exercises his rights, the offeror is bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.
Save in respect of the Options described in paragraph 10 of this Part VII, as at the date of this Document and as at Admission, the Directors’ (and their respective Connected Persons) are directly and/or indirectly interested in the Ordinary Shares of the Company as set out below
None of the Directors intend to acquire Placing Shares pursuant to the Placing.
Save as described in paragraphs 6.1, 10 and 11 of this Part VII, the Directors and their respective Connected Persons do not hold any options or warrants or other rights over any unissued Ordinary Shares of the Company.
Save for the Directors and their Connected Persons, the following are the interests that represent or will represent directly, 3 per cent, or more of the issued share capital of the Company immediately following Admission.
Save as disclosed in paragraphs 7.1 and 6.1 of this Part VII, the Company is not aware of any person who will, immediately following Admission, hold three per cent. or more of the voting rights in the Company as a Shareholder or through a direct or indirect holding of financial instruments (in each case for the purposes of Chapter 5 of the Disclosure Guidance and Transparency Rules).
None of the substantial shareholders notified at paragraph 7.2 above intend to acquire Placing Shares pursuant to the Placing.
The voting rights of all Shareholders are the same in respect of each Ordinary Share held.
The Company is not, so far as it is aware, directly or indirectly owned or controlled by any single Shareholder or group of Shareholders who are connected.
So far as the Company is aware, there are no arrangements in place, the operation of which may at a subsequent date result in a change of control of the Company.
Details of the names of companies and partnerships (excluding directorships of the Company) of which the Directors are or have been members of the administrative, management or supervisory bodies or partners at any time in the five years preceding the date of this Document are set out in the below table.
Past directorships and partnerships
David Cliff None Columbus Copper Corporation DC Minerals Consultants Dinaric International Energy Corporation
Moonlake Natural Resources Limited
Peter Damouni Georgian Mining Corporation NorthCrest Capital Limited Kerr Mines Inc.
Silvergate Capital Partners Limited
Empire Metals Ltd, Gatlin Exploration Inc, Arena Minerals Inc, Mason Graphite
Martin French Exchange Juhu Ltd Enfren Ltd
Specialist Trading London Limited North River Resources Plc
NRR Energy Minerals Limited NRR Mozambique Limited
Paul Ensor London Specialist Capital Secure Property Development
& Investment
Brazil Tungsten Holdings Ltd
Enfren
Evgeny Vrubleveskyi PMTL Holding Ltd Polar Silver Resources Ltd UVGK
Holdings Limited
PMTL Netherlands B.V.
PMTL Mining Ltd
Polymetal International PLC
Ajay Kerjriwal Enim Vero Ltd
Dormers Wells Learning Trust
Apollo Minerals Limited
None of the Directors:
has any convictions in relation to fraudulent offences; or
has been declared bankrupt or been a director or member of the administrative, management or supervisory body of a company or a senior manager of a company at the time of any receivership or liquidation; or
has been subject to any official public incrimination and/or sanctions by any statutory or regulatory authority (including designated professional bodies) or has ever been disqualified by a court from acting as a director of a company or from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company.
Executive Service Agreements of Martin French and Ajay Kejriwal
On 26 July 2018, Martin French entered into a service agreement with the Company, pursuant to which he agreed to serve as the Executive Chairman of the Company. Pursuant to the service agreement, Martin French agrees to devote such hours as are necessary for the proper performance of his duties and a minimum of five working days per month. Pursuant to the service agreement, the Company agrees to pay Martin French an annual salary of £27,000 per year payable in equal monthly instalments in arears (however this amount was increased on 1 July 2019 to £90,000) and he is entitled to 20 days annual leave per year (including public holidays). The service agreement continues in force until terminated by either party giving not less than three months’ notice in writing or on the happening of certain other standard form termination events (such as material breach). Under the service agreement, Martin French is obliged to keep Company information confidential, comply with the Company’s data protection, share dealing and other policies, disclose all intellectual property developed in the course of his employment and comply with certain post termination competition restrictions for a period of six months.
On 1 February 2021, Ajay Kejriwal entered into a service agreement with the Company, pursuant to which he agreed to serve as an Executive Director and the Chief Financial Officer of the Company. Pursuant to the service agreement, Ajay Kejriwal agrees to allocate sufficient time to meet the expectations of his role, anticipated to be a time commitment of one day per week on average. Pursuant to the service agreement, the Company agrees to pay Ajay Kejriwal director and executive fees of £4,000 per month (with a review after a three-month probationary period). The service agreement continues in force unless terminated by Ajay Kejriwal giving not less than one month’s notice in writing or by the Company on the happening of certain other standard termination events (such as material breach). Under the service agreement, Ajay Kejriwal is obliged to keep Company information confidential during his employment and for a period of two years post termination.
Appointment Letters of Peter Damouni, David Cliff, Evgeny Vrublevskiy and Paul Ensor
On 16 March 2017, Peter Damouni and David Cliff, entered into letters of appointment with the Company on substantially identical terms. The letters of appointment were effective from IPO Admission and each of Peter Damouni and David Cliff are entitled to receive a gross annual fee of £12,000, payable in equal monthly instalments in arrears, and to be reimbursed for reasonable and properly documented expenses incurred in performing their duties as a Non-Executive Director. On 12 January 2021, Evgeny Vrublevskiy, the nominated director of Polymetal, entered into a letter of appointment with the Company. His remuneration for his duties as a Non-Executive Director is to be discharged and satisfied in full by Polymetal pursuant to a relationship agreement entered into between the Company and Polymetal dated 25 November 2020. On 1 February 2021, Paul Ensor entered into a letter of appointment with the Company. Paul Ensor is entitled to receive a monthly fee of £2,000 and to be reimbursed for properly incurred expenses incurred in performing his duties as a Non-Executive Director. Each Non-Executive Director is expected to devote such time as is necessary for the proper performance of their duties. It is anticipated that Peter Damouni, David Cliff and Paul Ensor will spend a minimum of four days per month on work for the Company, whilst Evgeny Vrublevskiy will spend a minimum of three days per month on work for the Company. The appointment is a contract for services and not a contract of employment. Under their service agreements, Evgeny Vrublevskiy and Paul Ensor will be required to keep information about the Company confidential during their employment and for a period of two years post termination. Peter Damouni and David Cliff will be required to keep information about the Company confidential, return any of the Company’s property upon termination of his appointment, comply with the Company’s share dealing policy and comply with certain post-termination competition restrictions for a period of six months.
On 3 July 2018, Peter Damouni’s and David Cliff’s appointment letters were varied to increase their gross annual salary to £24,000 per year and to incorporate certain data protection provisions.
Agreement with Heytesbury Corporate LLP (“Heytesbury”)
On 10 July 2018 the Company entered into an engagement letter with Heytesbury Corporate LLP, pursuant to which Heytesbury agreed to provide company secretarial services to the Company including assistance with board and annual general meetings, ongoing compliance services (including maintenance of statutory records and Companies House filings), financial control, accounting and finance support, including tax assistance and management accounting. The fee payable by the Company for these services is £4,950 per month plus VAT. The engagement is for an initial term of 6 months after which the agreement may be terminated by three months written notice from either party.
Options representing approximately 9.54 per cent. of the Enlarged Ordinary Share Capital (and 8.25% of the Enlarged Ordinary Share Capital on a fully diluted basis) have been granted, as at Admission, in accordance with the below table.
The below table shows each of the warrants over Ordinary Shares in the Company currently outstanding, including the number of shares subject to warrant, the exercise period and the exercise price of such warrants.
On 11 December 2020, the Company issued 55,556 warrants (constituting 5% of the funds raised by them pursuant to the December 2020 Fundraise) to Fox Davies, pursuant to the terms of the December 2020 Placing Agreement and their engagement letter, in connection with the December 2020 Fundraise. Such warrants have the particulars set out in the above table, and are made subject to substantially identical terms as the Broker Warrant Instrument, as summarised at paragraph14.5 of Part VII below.
On completion of the Labrador Acquisition, the Company shall issue 11,100,000 warrants to Altius, pursuant to the terms of the Share Purchase Agreement and in connection with the Labrador Acquisition. Such warrants have the particulars set out in the above table and are made subject to the terms of the Altius Warrant Instrument, as further summarised at paragraph 14.1 of Part VII below.
The Directors’ current intention is to retain any earnings for use in the Group’s operations and the Directors do not anticipate declaring any dividends in the foreseeable future. The Company will only pay dividends at such times (if any) and in such amounts (if any) as the Board determines appropriate and to the extent that to do so is in accordance with all applicable laws.
Summaries of the announcements made by the Company pursuant to its obligations under the Market Abuse Regulations in the twelve months preceding the date of this Document are set out below:
The following are the only contracts (not being contracts entered into in the ordinary course of business) which have been entered into by the Company in the two years immediately preceding publication of the Document and which are or may be material to the Company or which contain any provision under which the Company has any obligation or entitlement which is or may be material to the Company.
Share Purchase Agreement
On 18 May 2021 the Company entered into a Share Purchase Agreement with Altius pursuant to which Altius agreed to sell the entire issued share capital of NLCO, which owns a 100% interest in the Adeline Copper Project, to the Company. The consideration for the share purchase is to be satisfied by the Company’s issue to Altius of (i) 10,089,199 Labrador Consideration Shares and (ii) 11,100,000 Labrador Consideration Warrants.
Under the Share Purchase Agreement, the Company further agrees that it will spend, or procure that NLCO spends, subject to standard force majeure provisions, (i) $250,000 in expenditures (defined therein) on the Adeline Copper Project within 18 months following the date of the Share Purchase Agreement or such shorter period that is required to keep the relevant licences and applications in good standing and (ii) within 12 months following the end of the period set out at (i), an additional $750,000 in expenditures on the Adeline Copper Project (failing which NLCO may be required to retransfer the Granted Map-Staked Licences to Altius) .
In the event that Altius or an affiliate of Altius stakes additional mineral claims adjacent to the Adeline Copper Project at any time prior to termination of the Share Purchase Agreement, the additional claims must be offered in writing to the Company for an amount equal to the cost to stake or acquire such additional claims incurred by Altius or its affiliate. If the Company does not elect by written notice to Altius to acquire such additional claims within fourteen days of receipt of the offer, then Altius will have no further obligation to the Company in this respect. If elected, the 1.6% gross sales royalty which is payable to Altius Royalty Corporation in accordance with the provisions of the Royalty Agreement shall apply to the additional claims.
The Share Purchase Agreement includes customary warranties and representations in relation to NLCO and the Adeline Copper Project. The Share Purchase Agreement may be terminated by the mutual agreement of the parties or upon notice by one party to the other parties in the event of material breach or default or upon a failure to satisfy a condition of closing.
The Share Purchase Agreement is governed by the laws of the Province of Newfoundland and Labrador and the parties submit to the non-exclusive jurisdiction of the courts of the Province of Newfoundland and Labrador.
Relationship Agreement
Subject to Admission, the Company and Altius have agreed to enter into a relationship agreement providing for the terms on which their relationship will be governed so as to ensure that the Company’s business is capable of being conducted independently.
Altius has agreed to certain restrictions under the terms of the agreement, including inter alia:
Altius is required to exercise its voting rights so as to ensure the independence of the Company’s board;
Altius is required not to control or influence the running of the Company at an operational level;
Altius is required not to exercise its voting rights in respect of any resolution relating to (a) any transaction with Altius; (b) the cancellation of the Company’s Admission to trading on the Main Market; or (c) any amendments to the Company’s article of association which would be inconsistent with the agreement; and
Altius has the right to participate in any issue of shares or other equity securities by the Company by subscribing for such number of shares as will ensure that the total proportion of all voting rights held by Altius is not reduced following such issue.
These restrictions shall apply for so long as Altius individually or together with members of its group maintains an interest in more than 5% of the Company’s voting rights.
The agreement is governed by the laws of England and Wales and disputes will be settled by LCIA arbitration.
Altius Warrant Agreement
Subject to Admission, the Company has agreed to enter into a warrant instrument, pursuant to which it agrees to grant 11,100,000 warrants to subscribe for Ordinary Shares of 0.1p in the Company to Altius. These warrants may be exercised from the date of Admission until the third anniversary of Admission and are exercisable at an exercise price of £0.20 per new Ordinary Share.
Aside from the particulars of the warrants set out above, the terms and conditions of the Altius Warrant Instrument, including the adjustment provisions and the provisions giving the warrant holder rights in the event that an offer is made to all shareholders of the Company to acquire the whole or any part of the issued share capital of the Company, are as contained in the Fox Davies warrant instrument set out at paragraph 14.5(a) below.
Technical Services Agreement
Subject to Admission, NLCO has agreed to enter into a Technical Services Agreement with Altius Resources Inc., pursuant to which, subject to certain conditions, Altius agrees to act as technical manager to NLCO and to manage NLCO’s exploration activities and business affairs in Newfoundland and Labrador, Canada and other jurisdictions from time to time as mutually agreed upon between the parties.
As part of its scope of work, Altius shall engage such personnel, contractors and purchase such equipment as are required to efficiently undertake the exploration programmes submitted by NLCO and prepare quarterly (or such other longer period as is determined by NLCO) exploration budgets and programmes for approval by NLCO.
In consideration for Altius’s services under the Technical Services Agreement, NLCO shall pay it certain fees and charges, with rates totalling $4,475 per day for personnel, with consulting, tenement, travel and accommodation and fuel fees at cost. NLCO shall also be liable to pay a management and administration fee of 7% (which shall be reduced to 5% for contracts which are less than $100,000).
The Technical Services Agreement is governed by, and arbitration shall be conducted in accordance with, the laws of the Province of Newfoundland and Labrador.
Royalty Agreement
On 13 May 2021, Altius Royalty Corporation and NLCO entered into a royalty agreement pursuant to which NLCO has agreed to pay Altius a gross sales royalty of 1.6% from all commercial production of the minerals from the Adeline Copper Project, which is to be calculated and paid in accordance with the provisions of the agreement.
The Technical Services Agreement is governed by, and arbitration shall be conducted in accordance with, the laws of the Province of Ontario,
On 1 July 2021, the Company entered into a Placing Agreement with Panmure Gordon, pursuant to which, subject to certain conditions, Panmure Gordon agreed to use reasonable endeavours to procure subscribers for Ordinary Shares to be issued pursuant to the Placing.
In consideration for its services under the Placing Agreement, Panmure Gordon will, conditional on Admission, receive a cash commission.
In the Placing Agreement, the Company gives customary warranties, undertakings and indemnities to Panmure Gordon.
The Placing Agreement is conditional on Admission and certain other customary conditions and also has certain termination rights in favour of Panmure Gordon.
The Placing Agreement is governed by English Law and the parties submit to the non-exclusive jurisdiction of the Courts of England.
On 7 December 2020, the Company entered into a Placing Agreement with Fox Davies, pursuant to which, subject to certain conditions, Fox Davies agreed to use reasonable endeavours to procure purchasers for Ordinary Shares to be issued pursuant to the December 2020 Fundraise.
In consideration for its services under the Placing Agreement Fox Davies received from the Company (i) a cash commission of 5% of the aggregate value of the Placing Price multiplied by the number of placing shares issued (being a total of £5,000); and (ii) 55,556 warrants granted pursuant to a Broker Warrant as set out at paragraph 14.4 of this Part VII. The Company also agreed to pay to Fox Davies certain commissions, and issue certain Warrants to Fox Davies, in connection with future fundraisings for a period of 24 months from completion of the December 2020 Placing.
In the Placing Agreement, the Company gives customary warranties, undertakings and indemnities to Fox Davies. The Placing Agreement is governed by English Law and the parties submit to the non-exclusive jurisdiction of the Courts of England.
On 30 July 2020, the Company entered into a Placing Agreement with Fox Davies, pursuant to which, subject to certain conditions, Fox Davies agreed to use reasonable endeavours to procure purchasers for Ordinary Share to be issued pursuant to the July 2020 Fundraise.
In consideration for its services under the July 2020 Placing Agreement Fox Davies received from the Company (i) a cash commission of 5% of the aggregate value of the July 2020 Placing Price multiplied by the number of placing shares issued (being a total of £20,450); and (ii) the Broker Warrants as granted pursuant to the Broker Warrant Deeds set out at paragraph 14.4 of this Part VII below.
Under the July 2020 Placing Agreement, the Company also agreed for a period of 24 months from the date of completion to pay a commission of 5% of any further amounts raised in the 24 month period from completion of the July 2020 Fundraise and grant warrants on the same commercial terms as set out in their engagement letter.
In the July 2020 Placing Agreement, the Company gives customary warranties, undertakings and indemnities to Fox Davies. The July 2020 Placing Agreement is governed by English Law and the parties submit to the non-exclusive jurisdiction of the Courts of England.
Fox Davies - August 2020 Warrants
On 13 August 2020, the Company entered into a warrant instrument, pursuant to which it agreed to grant 390,000 warrants to subscribe for Ordinary Shares of 0.1p in the Company to Fox Davies. These warrants may be exercised from 31 July 2020 until 31 July 2025 and are exercisable at an exercise price of 5.25p per new Ordinary Share.
On 14 August 2020, the Company entered into a warrant instrument on substantially identical terms to the warrant instrument referenced above (save for the exercise period and exercise price), pursuant to which it agreed to grant 619,333 warrants to subscribe for new Ordinary Shares of 0.1p in the Company to Fox Davies. These warrants may be exercised from 31 July 2020 to 16 July 2025 and are exercisable at an exercise price of 10 pence per new Ordinary Share.
On 11 December 2020, the Company entered into a warrant instrument on substantially identical terms to the warrant instrument referenced above (save for the exercise period and exercise price), pursuant to which it agreed to grant 55,556 warrants to subscribe for new Ordinary Shares to Fox Davies on substantially the same terms as the warrant instrument referred to above (save for the exercise period and exercise price). These warrants may be exercised from 11 December 2020 to the fifth anniversary of 11 December 2020 and are exercisable at an exercise price of £0.09 per new Ordinary Share.
In each case, the warrant instruments contain adjustment provisions which provide for the adjustment to the amount of warrants in the event that any of the certain specified adjustment events occur (such as a capitalisation of profits or reduction of capital) so that after such adjustment, Fox Davies is entitled to receive the same percentage of the issued share capital, carrying the same rights as nearly as practicable as would have been the case had no adjustment event occurred, as certified by the professional advisors or auditors of the Company. The warrant instrument also includes provisions giving the warrant holder rights in the event that an offer is made to all shareholders of the Company to acquire the whole or any part of the issued share capital of the Company, to exercise its warrants so as to take effect immediately prior to the record date of the offer.
The warrant instruments are governed by and construed in accordance with the laws of England and Wales
Investment Agreement
On 24 November 2020, the Company entered into an Investment Agreement with Polymetal. Pursuant to the Investment Agreement Polymetal irrevocably agreed to subscribe for a total of 23,333,334 new Ordinary Shares at the December 2020 Fundraise Price.
On 24 November 2020, the Company and Polymetal entered into a relationship agreement providing for the terms on which their relationship will be governed so as to ensure that the Company’s business is capable of being conducted independently.
Polymetal has agreed to certain restrictions under the terms of the agreement, including inter alia:
Polymetal is required to exercise their voting rights so as to ensure the independence of the Company’s board;
Polymetal is required not to control or influence the running of the Company at an operational level;
Polymetal is required not to exercise their voting rights in respect of any resolution relating to (a) any transaction with Polymetal; (b) the cancellation of the Company’s Admission to trading on the Main Market; or (c) any amendments to the Company’s article of association which would be inconsistent with the agreement;
Polymetal will not at any time prior to the third anniversary of Admission, sell any interest in its shares or acquire any inerest in the Company’s shares if such acquisition would increase the aggregate shareholding of Polymetal by more than 1% of the total voting rights in the Company from the percentage existing at Admission (subject to certain exceptions as set out in the Investment Agreement);
Polymetal has the right to participate in any issue of shares or other equity securities by the Company by subscribing for such number of shares as will ensure that the total proportion of all voting rights held by Polymetal is not reduced following such issue; and
Polymetal has given certain undertakings to the Company that it shall not have interests in other businesses which would compete with the Group and to not solicit any employees of the Group.
These restrictions shall apply for so long as Polymetal maintains an interest in more than 15% of the Company’s voting rights. Polymetal shall also have the right to nominate one director for appointment to the Board of the Company, provided such interest is maintained.
The agreement is governed by the laws of England and Wales and disputes will be settled by LCIA arbitration.
On 16 July 2020, the Company entered into an engagement letter with Fox Davies pursuant to which Fox Davies agreed to act as the Company’s capital markets adviser, which shall include amongst other things (i) acting as a point of contact between the investment community and the Company; (ii) preparing brokers’ notes on the Company; (iii) organising and advising on roadshows and reviewing corporate presentations; and (v) procuring investors for equity fundraising (when applicable).
In consideration for the services provided by Fox Davies, the Company will pay a corporate finance and marketing fee of £40,000 per year, of which £10,000 will be payable in equity at a mutually agreed price. In the case of a placing the Company shall pay (i) a cash commission of 5 per cent of the gross funding introduced by Fox Davies plus an additional 1.5 per cent cash commission in the case of investments sourced pursuant to fee splitting agreements (“Syndicated Amounts”); (ii) warrants to subscribe for 5 per cent of the total number of shares introduced by Fox Davies, plus warrants to subscribe for an additional 1.5 per cent of the total shares issued for Syndicated Amounts, and (iii) where placing proceeds exceed £1,000,000 an administrative fee of 1 per cent of the gross amount of all investments received by the Company and warrants to subscribe for 1 percent of the total number of shares issued pursuant to the placing. In addition, Fox Davies shall be granted warrants to subscribe for such number of shares as is equal to 1% of the Company’s issued share capital on the date of the engagement letter (being 619,333 and granted pursuant to the Broker Warrant Instrument dated 14 August 2020 referenced above). In connection with the December 2020 Fundraise, on 11 December 2020 Fox Davies was granted a further 55,556 warrants to subscribe for Ordinary Shares issued pursuant to the December 2020 Placing at the December 2020 Fundraise Price.
The engagement letter continues in force until terminated by either party at any time after the initial six months by giving not less than one month’s notice in writing or in certain other standard termination events (such as material breach).
On 25 November 2020, the Company entered into an engagement letter with Panmure Gordon pursuant to which Panmure Gordon agreed to act as the Company’s introductory agent in relation to Polymetal’s direct subscription in the Company, subject to the terms and conditions set out in the engagement letter. Notwithstanding the completion of Polymetal’s direct investment in the Company, the engagement letter has continuing application in respect of any financial advice or corporate broking services Panmure Gordon provides to the Company. The engagement letter continues in force until terminated by either party by giving not less than one month’s notice in writing or certain other standard termination events (such as material breach).
On 13 December 2020, the Company entered into a further engagement letter with Panmure Gordon pursuant to which Panmure Gordon agreed to act, subject to the terms and conditions set out in the engagement letter, as the Company’s joint capital markets adviser, which shall include amongst other things (i) acting as a point of contact between the investment community and the Company; (ii) preparing brokers’ notes on the Company; (iii) organising and advising on roadshows and reviewing corporate presentations; and (v) procuring investors for equity fundraising (when applicable). The engagement letter is automatically renewed annually until terminated by either party by giving not less than three months’ notice in writing or certain other standard termination events (such as material breach).
A summary of the Granted Prospecting Permits in which the Group has a 100% interest and their particulars are set out in the table below.
A summary of the Granted Map-Staked Mineral Licences in which the Group has a 100% interest and their particulars are set out in the table below.
Save for the issue of share capital and Options to the Directors disclosed in paragraphs 6.1 and 10 of this Part VII of this Document, the Company has not been a party to any related party transactions.
As at the date of this Document, the Company is of the opinion that the working capital available to the Group, taking into account the Net Proceeds of the Placing is sufficient for the Group’s present requirements (that is, for at least the next twelve months from the date of this Document).
Since 31 December 2020 (being the end of the last financial period of the Company for which financial information has been published) to the date of this Document, there has been no significant change in the financial position or financial performance of the Company or the Group.
On 12 July 2021, the Company intends to issue of 10,089,199 Labrador Consideration Shares and 11,100,000 Labrador Consideration Warrants pursuant to the Labrador Acquisition. Further information regarding the issue of the Labrador Consideration Shares and Labrador Consideration Warrants is set out in paragraph 14.1 of this Part VII of this Document.
On 12 July 2021, subject to Admission, the Company intends to issue 8,000,000 Placing Shares to raise approximately £800,000 (before expenses). Further information regarding the issue of the Placing Shares is set out in Part III of this Document.
Save for the dispute with the surface rights owner detailed at Part A of the Risk Factors, there are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) during the last 12 months which may have, or have had in the recent past, significant effects on the financial position or profitability of the Group.
The total costs (including fees and commissions) (exclusive of VAT) payable by the Company in connection with the Placing, the Labrador Acquisition and Admission are estimated to be approximately £150,000.
The estimated Net Proceeds accruing to the Company from the Placing are approximately £700,000.
The nominal value of the Ordinary Shares is denominated in sterling and the Placing Price is payable in sterling.
The issue of the Placing Shares and the Labrador Consideration Shares will result in the Existing Ordinary Shares being diluted so as to constitute approximately 15.07 per cent. of the Enlarged Ordinary Share Capital.
PKF Littlejohn LLP of 15 Westferry Circus, Canary Wharf, London, United Kingdom, E14 4HD is the auditor of the Company. PKF Littlejohn LLP is a member firm of the Institute of Chartered Accountants in England and Wales and registered under the Statutory Audit Directive, Register of Statutory Auditors number C002139029.
PKF Littlejohn LLP, acting in its capacity as the auditor to the Company, has no material interest in the Company and has given and not withdrawn its written consent to the issue of this Document with the inclusion of its name in it and has authorised the contents of Part IV of this Document for the purpose of the Prospectus.
The Historical Financial Information of the Group included in this Document has been incorporated by reference from the Company’s annual accounts as set out in Part IV of this Document. In relation to such financial information, no audit reports have been refused by the auditors of the Company and no audit reports contain qualifications or disclaimers, to the extent that they have been audited.
The Company’s previous auditors Saffery Champness LLP resigned as auditors for the Company on 10 September 2018. Saffery Champness LLP confirmed in their letter of resignation they do not consider their resignation a matter to bring to the attention of creditors or members of the Company.
Panmure Gordon, acting in the capacity as the Company’s broker, has given and has not withdrawn its written consent to the issue of this Document with the inclusion of its name in it.
The Competent Person, acting in his capacity as the Company’s competent person, has given and has not withdrawn his written consent to the issue of this Document with the inclusion in it of the Competent Person’s Report in Annex I and the references to his report and to his name in it and has authorised the contents of Annex I of this Document for the purpose of the Prospectus.
Copies of the following Documents will be available for inspection during normal business hours on any weekday (excluding public holidays) at the offices of the registered office of the Company, for the period of 14 days following the date of this Document:
the Articles;
the audited annual accounts of the Company incorporated into this document by reference at Part IV of this Document;
the letters of consent referred to in paragraphs 20.6, 20.9 and 20.10 of Part VII of this Document; and
the Share Purchase Agreement referred to in paragraph 14.1 of Part VII of this Document.
Certain of the above documents may also be inspected at the Company’s website: https://www.chesterfieldresourcesplc.com/. The contents of the website do not form part of this Document, save for any documents incorporated by reference from the website.
Where information has been sourced from a third party, the information has been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.
Dated: 7 July 2021
The distribution of this Document may be restricted by law in certain jurisdictions and therefore persons into whose possession this Document comes should inform themselves about and observe any restrictions, including those set out below. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
No action has been or will be taken in any jurisdiction that would permit a public offering of the Ordinary Shares, or possession or distribution of this Document or any other offering material in any country or jurisdiction where action for that purpose is required. Accordingly, the Ordinary Shares may not be offered or sold, directly or indirectly, and neither this Document nor any other offering material or advertisement in connection with the Ordinary Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Document does not constitute an offer to subscribe for any of the Ordinary Shares offered hereby to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.
This Document has been approved by the FCA as a prospectus for the purposes of the UK Prospectus Regulation and the Prospectus Regulation Rules. This Document has not been approved as a prospectus by the competent authority in any EEA State and no arrangement has been made with the competent authority in any other jurisdiction for the use of this Document as an approved prospectus in such jurisdiction. Accordingly no public offer is to be made in any EEA state (or in any other jurisdiction). Issue or circulation of this Document may be prohibited in countries other than those in relation to which notices are given below.
In relation to each member state of the European Economic Area (each, a “Relevant Member State”), an offer to the public of the Ordinary Shares may only be made at any time in a Relevant Remember State (i) where a prospectus has been approved in such Relevant Member State in accordance with EU Prospectus Regulation or, where appropriate, in another Relevant Member State and notified to the competent authority in that Relevant Member State: or (ii) under the following exemptions under the EU Prospectus Regulation:
where the offer is solely addressed to any legal entities which are qualified investors as defined under the EU
Prospectus Regulation;
where the offer is addressed to fewer than 150 natural or legal persons (other than qualified investors as defined in the EU Prospectus Regulation) in such Relevant Member State; or
in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation,
provided that no such offer of Ordinary Shares shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the EU Prospectus Regulation.
For the purposes of this provision, the expression an “offer to the public” in relation to any offer of Ordinary Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an Investor to decide to purchase or subscribe for the Ordinary Shares.
The distribution of this Document in other jurisdictions may be restricted by law and therefore persons into whose possession this Document comes should inform themselves about and observe any such restrictions.
This Document comprises a prospectus relating to the Company prepared in accordance with the UK Prospectus Regulation and approved by the FCA under section 87A of FSMA. This Document has been filed with the FCA and made available to the public in accordance with Rule 3.2 of the UK Prospectus Regulation.
In the United Kingdom this Document is for distribution to, and is directed only at, legal entities which are qualified investors as defined under the UK Prospectus Regulation and are (i) persons having professional experience in matters relating to investments who fall within the definition of investment professionals in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (ii) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Order; or (iii) persons to whom it may otherwise be lawfully distributed under the Order, (all such persons together being “Relevant Persons”). In the United Kingdom, any investment or investment activity to which this Document relates is only available to and will only be engaged in with Relevant Persons. Persons who are not Relevant Persons should not act or rely on this Document or any of its contents.
DEFINITIONS
The following definitions apply throughout this Document, unless the context requires otherwise:
“EU Prospectus Regulation” Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017;
“Euroclear” "Euroclear" Euroclear UK & Ireland Limited;
“Exchange Traded Non- Ferrous Metals” non-ferrous metals traded on the markets of either the London Metal Exchange or the London Bullion Market Association;
“Existing Ordinary Shares” the 101,911,112 Ordinary Shares in issue as at the date of this Document;
“Exploration Permit” a Prospecting Permit which permits invasive exploration activities such as drilling in the licensed area (as opposed to a Reconnaissance Permit which does not);
“FCA” "FCA" the Financial Conduct Authority;
“Founders” "Founders" Derek Crowhurst, Peter Damouni and David Cliff;
“Fox Davies” Fox-Davies Capital Limited, joint broker to the Company, a private limited company with company number 10165213;
“FSMA” the Financial Services and Markets Act 2000, as amended;
“GDPR” EU Regulation 2106/679, the General Data Protection Regulation;
“Granted Prospecting Permits” the Prospecting Permits granted to and held by CRCL as detailed in the first section of the table at paragraph 15 of Part VII, or any of them, as the case may be;
“Group” the Company and its subsidiaries from time to time;
“Historical Financial Information of the Group” the historical financial information of the Group as incorporated by reference into this Document at Part IV, being the audited annual accounts of the Company for the year ended 31 December 2020;
“HKP” HKP Exploration Ltd, a company incorporated in Cyprus with company number HE 333726 (now CRCL);
“HKP Sellers” the holders of the entire issued share capital of HKP immediately prior to completion of the Acquisition;
“HMRC” Her Majesty’s Revenue and Custom, the ministerial department of the UK government responsible for taxation;
“IFRS” International Financial Reporting Standards, as endorsed by the European Union;
“Investment Agreement” the investment agreement between Polymetal and the Company in relation to the Investment Commitment;
“Investment Commitment” the commitment by Polymetal, to invest £2,100,000 in the Company through the subscription for 23,333,334 new Ordinary Shares;
“Investment Commitment Shares” the 23,333,334 new Ordinary shares subscribed for by Polymetal;
“Investor” means a person who has agreed to subscribe for new Ordinary Shares as part of the Placing;
“IPO Admission” the admission of the Existing Ordinary Shares to the Standard Listed segment of the Official List and to trading on the London Stock Exchange’s Main Market for listed securities, which became effective on 29 August 2017;
“IPO Placee” a person who subscribed for IPO Placing Shares under the IPO Placing (together the IPO Placees);
“IPO Placing” the placing of the IPO Placing Shares by Fox Davies at 5p per IPO Placing Share pursuant to the IPO Placing Agreement;
“IPO Placing Agreement” the placing agreement dated 22 August 2017 between the Company, the Directors and Fox Davies;
“IPO Placing Shares” the 26,000,000 new Ordinary Shares allotted and issued pursuant to the IPO Placing;
“July 2020 Fundraise” a fundraise of £630,000 carried out by the Company which completed on 31 July 2020;
“July 2020 Placing Agreement” the placing agreement dated 30 July 2020, between the Company and Fox Davies in respect of the July 2020 Fundraise;
“Kingfisher” Kingfisher Distribution Company Limited;
“Last Practicable Date” the last practicable date prior to publication of this Document, being 6 July 2021;
“Labrador Acquisition” the acquisition by the Company of a 100% interest in the Adeline Copper Project in Newfoundland and Labrador;
“Listing Rules” the Listing Rules made by the FCA under Part VI of the FSMA;
“Labrador Consideration Shares” the 10,089,199 new Ordinary Shares to be issued pursuant to the Labrador Acquisition;
“Labrador Consideration Warrants” the 11,100,000 Warrants to be issued pursuant to the Labrador Acquisition;
“London Stock Exchange” London Stock Exchange plc;
“Long Stop Date” means 31 July 2021;
“Market Abuse Regulation” Regulation EU 596/2014 of the European Parliament and the Council of the European Union on market abuse;
“Member State” a member state of the European Union and the European Economic Area;
“Mines Regulations” the Mines and Quarries Regulations of the Republic of Cyprus, as amended;
“Mines Service” the Mines Service of the Ministry of Agriculture, Rural Development and Environment of the Republic of Cyprus;
“NLCO” 87986 Newfoundland and Labrador Inc., incorporated in Newfoundland and Labrador with company number 87986 whose registered office is P.O. Box 5939, 5th Floor, 10 Fort William Place, St. John's, NL A1C5X4;
“Net Proceeds” the proceeds of the Placing receivable by the Company, after deduction of any expenses paid or payable in connection with the Placing and Admission;
“Official List” the Official List of the UK Listing Authority;
“Ordinary Shares” ordinary shares of 0.1p (£0.001) each in the capital of the Company;
"Option" an option to subscribe for Ordinary Shares in the capital of the Company as granted to the Directors and certain key management and consultants and set out in paragraph 10 of part VII;
“Percussion Drilling” a fast and cost effective drilling method for investigating mining targets at depths of up to 200 metres, which yields rock chips for geological logging. Percussion Drilling is the final step of test work in the Company’s mineral exploration process prior to diamond drilling and is generally considered less precise and accurate than diamond drilling;
“Panmure Gordon” Panmore Gordon (UK Limited), joint broker to the Company but acting exclusively as broker in relation to the Placing, a private limited company with company number 04915201;
“Placee” a person who confirms his agreement to Panmure Gordon to subscribe for Placing Shares under the Placing in accordance with the terms of a Placing Letter;
“Placing” the conditional placing of the Placing Shares by Panmure Gordon at the Placing Price pursuant to the Placing Agreement;
“Placing Agreement” the conditional placing agreement between the Company and Panmure Gordon, details of which are set out in paragraph 14.1 of Part VII of this Document;
“Placing Price” 0.10p per Placing Share;
“Placing Shares” the 8,000,000 new Ordinary Shares to be allotted and issued to the Placees pursuant to the Placing;
“Polymetal” Polymetal International Plc, incorporated and registered in Jersey with company number 106196 whose registered office is at 44 Esplanade, St Helier, Jersey, JE4 9WG;
“Portfolio” the Granted Prospecting Permits, as well as, following completion of the Labrador Acquisition, the Granted Map-Staked Mineral Licences, or the land covered by them, in each case as the context requires;
“Premium Listing” a Premium listing under Rule 6 of the listing Rules;
“Principal HKP Sellers” Michael Green, David Hall and Jeremy Martin, together being holders of an aggregate of 51.10 per cent. of the issued share capital of HKP at the time of the Acquisition;
“Prospectus” a prospectus required under the Prospectus Directive and prepared in accordance with the EU Prospectus Regulation, the UK Prospectus Regulation and Prospectus Regulation Rules;
“Prospectus Regulation Rules” the prospectus regulation rules made by the FCA under Part VI of FSMA, as amended from time to time;
“Reconnaissance Permit” a Prospecting Permit which does not permit invasive activities such as drilling in the licensed area (as opposed to an Exploration Permit which does);
“Regulation S” Regulation S under the US Securities Act;
“Reverse Takeover” a transaction defined as a reverse takeover in Listing Rule 5.6.4;
“Royalty Agreement” the royalty agreement between the Company and Altius relating to the Labrador Acquisition, details of which are set out in paragraph 14.1 of Part VII of this Document;
“RTO Admission” the admission of the Company’s share capital to trading on the Main Market following the completion of the Company’s Reverse Takeover, which took place on 3 July 2018;
“RTO" the Reverse Takeover carried out by the Company in connection with the" which completed on 3 July 2018;
“RTO Fundraise” a fundraise of £2,000,000 carried out by the Company pursuant to the RTO, through a placing of 10,766,667 new Ordinary Shares and subscription for 15,900,000 new Ordinary Shares, which completed on 3 July 2018;
“RTO Investors” those placees and subscribers who participated in the RTO Fundraise;
“SEC” the United States Securities and Exchange Commission;
“Seed Investors” Derek Crowhurst, Peter Damouni, David Cliff, Christopher Hall, Mark Stephenson, Glenn Olnick, John Kutzschan and Michael Johnson;
“Series A Warrants” the 5,00,000 warrants to subscribe for new Ordinary Shares at a subscription price of 5p per share from the date of IPO Admission, being 29 August 2017, until the fifth anniversary of IPO Admission, being 29 August 2022, created and issued pursuant to the warrant deeds setting out the terms of the Series A Warrants;
“Series B Warrants” the 13,000,000 warrants to subscribe for new Ordinary Shares at a subscription price of 10p per share from the date of IPO Admission, being 29 August 2017, until the third anniversary of IPO Admission, being 29 August 2020, created and issued pursuant to the Series B Warrant Deed;
“Series B Warrant Deed” the warrant deed dated 22 August 2017 setting out the terms of the Series B Warrants;
“Series C Warrants” the 13,333,322 warrants to subscribe for new Ordinary Shares at a subscription price of 15p per share from the date of Admission until the second anniversary of Admission, created and to be issued pursuant to the Series C Warrant Deed;
“Series C Warrant Deed” the warrant deed dated 28 June 2018 setting out the terms of the Series C Warrants;
“Shard Warrants” the 494,300 warrants to subscribe for new Ordinary Shares at a subscription price of 5p per share from the date of IPO Admission, being 29 August 2017, until the second anniversary of IPO Admission, being 29 August 2019, created and issued pursuant to the Shard Warrant Deed;
“Shard Warrant Deed” the warrant deed dated 22 August 2017, setting out the terms of the Shard Warrants;
“Shareholders” holders of Ordinary Shares;
“Special Resolution” a special resolution within the meaning of section 283 of the Companies Act;
“Standard Listing” a standard listing under Chapter 14 of the Listing Rules;
“Subscriber” a person who confirms his agreement to subscribe for Subscription Shares in accordance with the terms of a subscription letter with the Company and being referred to collectively as the “Subscribers”;
“Subscription” the subscription by the Subscribers for a total of 3,333,333 new Ordinary Shares at the December 2020 Fundraise Price;
“Subscription Shares” means new Ordinary Shares subscribed for by the Subscribers in connection with the Subscription;
“Sulphides” or “Sulphide Mineralisation” metal sulphide ore deposits;
“Takeover Code” the City Code on Takeovers and Mergers as published by the Takeover Panel from time to time;
“Takeover Panel” the Panel on Takeovers and Mergers;
“Troodos North” the project area covered by three Granted Prospecting Permits (AE4706, AE4708 and AE 4709) on the northern side of the Troodos Mountains;
“Troodos West” the project area covered by certain of the Granted Prospecting Permits (namely AE4659, AE4660, AE4661, AE4664, AE4665, AE4672, AE4673, AE4722, AE4724, AE4728, AE4739, AE4777, AE4773, AE4788) on the western side of the Troodos Mountains;
“UK” or “United Kingdom” the United Kingdom of Great Britain and Northern Ireland;
“UK Listing Authority” the FCA acting in its capacity as the competent authority for the purposes of Part VI of the FSMA and in the exercise of its functions in respect of admission to the Official List;
“UK Prospectus Regulation” the UK version of Regulation (EU) 2017/1129 which is part of UK law by virtue of the European (Withdrawal) Act 2018/EUWA;
“US” or “United States” the United States of America, its territories and possessions;
“US Investment Company Act” the United States Investment Company Act of 1940, as amended, and related rules;
“US Securities Act” the United States Securities Act of 1933, as amended; “VAT” UK value added tax;
“VMS Deposits” volcanogenic massive sulphide deposits a type of metal sulphide ore deposits which are created by volcanic-associated hydrothermal events, are composed of more than 50% metal sulphides and are often rich in metals such as copper, lead, zinc and gold; and
“Warrants” means a warrant to subscribe for Ordinary Shares in the capital of the Company
COMPETENT PERSON’S REPORT
COMPETENT PERSON’S REPORT
ADELINE COPPER PROJECT
NEWFOUNDLAND AND LABRADOR, CANADA
Prepared for
Chesterfield Resources PLC
7-9 Swallow Street
London, W1B 4DE
Prepared by
Derek H.C. Wilton, Ph.D., P.Geo.
A Competent Person of Terra Rosetta Inc.
7 Yellowknife Street
St. John’s, Newfoundland Labrador
Canada A1A 2Z7
Effective Date: July 02, 2021
TABLE OF CONTENTS
EXECUTIVE SUMMARY
INTRODUCTION
Terms of Reference AND QUALIFICATIONS OF COMPETENT PERSON
Terms, Definitions and Units
Sources of Information
Involvement of Competent Person
PROJECT DESCRIPTION
Location, Access and Infrastructure
Climate, Physiography & VEGETATION
Project Ownership, Land Tenure and Work requirements
OVERVIEW OF THE GOVRNMENT OF NeWFOUNDLaND AND LABRADOR’S MINERAL LAND TENURE SYSTEM
Permitting, EnVIRONMENTAL, community considerations AND POTENTIAL RISK FACTORS
HISTORY
GOVERNMENT SURVEYS AND ACADEMIC RESEARCHRY SURVEYS
GEOLOGICAL SETTING AND MINERALIZATION
REGIONAL GEOLOGY
LOCAL GEOLOGY
MINERALIZATION AND DEPOSIT TYPE
MINERAL RESOURCES AND MINERAL RESERVES
EXPLORATION TARGETS
TARGET 1: ADELINE ISLAND EAST EXTENSION
TARGET 2: ADELINE TO ELLIS
TARGET 3: ELLIS
TARGET 4: DUCK LAKE EAST
DISCUSSION AND CONCLUSIONS
RECOMMENDATIONS
8.1 BUDGET
REFERENCES
LIST OF FIGURES
LIST OF TABLES
Appendix 1: Certificate of Qualifications, Consent, Date and Signature
EXECUTIVE SUMMARY
On April 12, 2021, Derek H. C. Wilton, PhD., P.Geo., (CP), a competent person (the “Competent Person” or “CP”), of Terra Rosetta Inc., of St. John’s, Newfoundland and Labrador, Canada, was commissioned by Chesterfield Resources PLC (“Chesterfield”) of London, UK, to prepare a Competent Person’s Report on the Adeline Copper Project (the “Property”) located in central Labrador, Newfoundland and Labrador, Canada currently held by Altius Resources Inc. (“Altius”).
On Monday April 19, 2021, Altius and Chesterfield executed a Letter of Intent (“LOI”) for the 100% sale of the Property to Chesterfield. The terms include a one-time payment of 10,089,199 common shares of Chesterfield (equal to a 9.9% stake) and 11,100,000 common share purchase warrants of Chesterfield priced at 20p with an exercise option duration of 36 months. Chesterfield will be required to spend an aggregate of $1,000,000 (CAD) on the Property within twenty-four months of the date of the Definitive Agreement, including a minimum expenditure commitment for year 1 of $250,000. The Definitive Agreement is anticipated to conclude on or about July 12, 2021.
This report has been prepared to the standards of the United Kingdom Listing Authority (“UKLA”). It has been produced by the Competent Person. The Competent Person is responsible for this report which appears as part of the prospectus (“Prospectus”) prepared by Chesterfield at Annex I. The Competent Person is responsible for all scientific and technical information in relation to the Property contained in the Prospectus as well as references to this report and statements of information attributed to the Competent Person or extracted from this report and included in the Prospectus. The Competent Person declares that to the best of his knowledge, the information contained in the Prospectus, including this report, is in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus.
The Competent Person, acting in his capacity as Chesterfield’s competent person, has given and has not withdrawn his written consent to the issue of the Prospectus with the inclusion in it of this report in Annex I and the references to his report and to his name in it and has authorised the contents of this report for the purpose of the Prospectus. This declaration is included in the Prospectus.
Terra Rosetta has herein completed a technical compilation and evaluation of all available exploration-related and geoscientific data pertaining to the Property, with the objective of reporting on the copper exploration potential of the project.
The Property is in central Labrador, Newfoundland Labrador, Canada and consists of 10 contiguous map-staked mineral licenses containing a total of 1189 claims covering 29725 Ha (297.25 km2).
The Property is remote and must accessed by helicopter and float plane air support from the community of Happy Valley - Goose Bay) located approximately 145 km to the southeast of the project. Happy Valley - Goose Bay is the major regional service centre and is a full-service community with a government-serviced airport with air traffic control. Helicopter and small boat-supported ground traversing will be the most effective means for covering much of the project area.
All issued licenses comprising the Property are in their first year of tenure and require expenditures of CDN$200/claim to be incurred on or before December 27, 2021, totaling CDN$103,400 for all claims. A mineral exploration licence is issued for terms of five years (which is renewable for three additional five-year terms and 10 additional one-year terms) and can be held for a maximum of thirty years. The minimum annual assessment work required to be completed on each claim held in a licence increases annually from CDN$200/claim in the first year to CDN $2,500/claim/year for years twenty six to thirty inclusive.
Copper was first discovered on the Property area in 1946, but significant exploration, including geological mapping, geochemical and geophysical surveying and diamond drilling was not undertaken until 1951-57. The next cycle of exploration lasted from 1968-1972 and included a variety of exploration techniques up to diamond drilling. From 1991-1992, Noranda, explored the region and in 2011 a junior exploration company, Playfair, drilled 24 holes with a cumulative depth of 4354.7 m. Altius conducted reconnaissance work in 2015. None of these exploration programs defined economically exploitable mineralization.
The Property covers the ca. 1224-1250 million-year-old (Ma) Seal Lake Group. This unit is a 5.2-14 km thick sequence of relatively unmetamorphosed shallow-marine to continentally-derived sedimentary units and flood basalts along with voluminous diabase sills, that were slightly deformed during the ca. 1000 Ma Grenville Orogeny.
The Seal Lake Group hosts at least 250 copper occurrences and the mineralization has been dated at 1084 and 1064-1069.6 Ma, respectively at two different occurrences. The mineralization appears to be epigenetic with respect to the immediate host rocks and has many striking parallels with other sediment-hosted stratiform copper (SSC) deposits including the Kupferschiefer the Katangan Copperbelt.
The Property clearly demonstrates potential to host significant sediment-hosted copper (SSC) mineralization, particularly within reduced grey beds of the Adeline Island Formation of the Seal Lake Group. Previous exploration campaigns sought small, very high-grade copper deposits and as such only involved shallow drilling programs and short step outs and lacked sustained effort or focus.
The program proposed herein for the Property targets four stratigraphic horizons in the Seal Like Group with first phase programs of core re-logging, detailed geological mapping, prospecting, and soil sampling to identify drill targets within the target areas.
The Definitive Agreement is anticipated to conclude on or about July, 12, 2021.
2.0 INTRODUCTION
2.1 Terms of Reference AND QUALIFICATIONS OF COMPETENT PERSON
Terms of reference for this report were established through discussions between Chesterfield and the author in April, 2021, and on April 12th, 2021, Chesterfield retained the author to prepare this Competent Person’s Report. This report has been prepared to the standards of the United Kingdom Listing Authority (“UKLA”). The report was prepared in St. John’s, in June-July, 2021.
The author of this report, Dr. Derek H.C. Wilton, P.Geo., is an independent Qualified Person who carried out the work associated with report preparation on a fee for service basis. The author was a long-time professor of Economic Geology at Memorial University and presently is an Honourary Research Professor there. The author is registered with the Professional Engineers and Geoscientists Newfoundland & Labrador (PEGNL). The author followed Canadian National Instrument 43-101 (“NI 43-101”), Form 43-101F1, Technical Report standards and ESMA CESR recommendations in writing this report.
Wilton has past consulting and academic experience on the geology and mineral occurrences of the Adeline project area. In detail, Wilton has worked on copper occurrences in the region from 1985 to the present and has published a number of reports thereon, including Ivany and Wilton (1989), Perrelló et al. (2017), Romer et al. (1995), Wardle and Wilton (1995), Wilton (1989a, 1989b, 1996), and Wilton and Selby (2017). Wilton wrote a report on the petrography of copper mineralization and host rocks from area for Altius in 2015 (Wilton, 2015). He has visited almost copper occurrences in the region, sampling many.
The author of this report consulted with Altius concerning its previous activity on the Property. The author also made use of the Altius cartography staff to produce some of the map images, but under his direction.
The author of this report (including family members or associates) does not have a business relationship, other than acting as an independent consultant, with Chesterfield or Altius or their affiliates, nor with any other company mentioned in the report, which is likely to materially influence their impartiality or create the perception that the report could be compromised or biased in any way. The views expressed herein are genuinely held and deemed independent of Chesterfield and Altius.
Moreover, the author of the report (nor his family members or associates) does not have any financial interest in the outcome of any transaction involving the properties considered in this report, other than the payment of normal professional fees for the work undertaken in their preparation (which are based upon hourly charge-out rates and reimbursement of expenses). The payment of such fees is not dependent upon the content or the conclusions of either this report, or any consequences of any proposed transaction.
Chesterfield has accepted that the qualifications, expertise, experience, competence, and professional reputation of the author are appropriate and relevant for the preparation of this report.
Terms, Definitions and Units
This Report uses both the Imperial and Metric Systems (System International or “SI”) as systems of length and measure. Many of the geological publications and the more recent work assessment files use the SI system, but older geological work, including assessment files, almost exclusively refers to the Imperial System.
All costs contained in this report are in Canadian dollars (CDN$). Distances are reported in centimetres (cm), metres (m) and km (kilometres). Area is reported in hectares (Ha or ha), kilometres squared (Km2, km2).
Table 1. List of Abbreviations used in Text
2.3 Sources of Information
The author has relied on information provided by independent legal counsel commissioned by Chesterfield on the legal status of the mineral licenses that constitute the Adeline Copper Project. The author has further reviewed the claim status information as posted on the Newfoundland
Labrador Department of Industry, Energy and Technology (“DIET”) website (https://www.gov.nl.ca/iet/); however, the author shall not be held liable for any errors or omissions relating to the legal status of claims and mineral licenses described in this report.
The author has relied on information provided by independent legal counsel commissioned by Chesterfield on the legal status of the mineral licenses that constitute the Adeline Copper Project. The author has further reviewed the claim status information as posted on the Newfoundland Labrador Department of Industry, Energy and Technology (“DIET”) website (https://www.gov.nl.ca/iet/); however, the author shall not be held liable for any errors or omissions relating to the legal status of claims and mineral licenses described in this report.
In addition, all historic exploration information and data reported herein which forms the basis of this report was sourced from the Newfoundland and Labrador Department of Industry, Energy and Technology Geoscience Atlas (https://gis.geosurv.gov.nl.ca).
The author has also relied on the description of exploration targets as defined by Seymour et al. (2016). It should be noted that the author was a co-author on that earlier report. Mr. Roderick Smith of Altius provided some of the information on previous work as well as Altius’s experience with permitting.
2.4 Involvement of Competent Person
The author has not specifically visited the Property due to weather limiting access (snow cover) and Covid-19 restrictions during the time of writing, but he has visited the site on numerous occasions in the past and is satisfied that this should be sufficient for the purposes of this report. The author has reviewed and verified historical data on regional and local geology, topography, and access. The author is responsible for all sections of this report. The maps and some tables in this report were prepared by Altius personnel under the direction of the author.
3.0 PROJECT DESCRIPTION
3.1 Location, Access, and infrastructure
The Property is in central Labrador, within the Province of Newfoundland Labrador, Canada (Figure 1). The project is included within NTS map sheets 13K/05 and 13L/08 and approximately centered on 578,000mE and 6,017,500mN (UTM NAD27, Zone 20 projection) (Figure 2).
The project can be best accessed by a combination of helicopter and float plane air support from the community of Happy Valley - Goose Bay (population of 8,109 - 2016 Census, Stat-Can) located approximately 145 km to the southeast of the project. Happy Valley - Goose Bay is the major regional service centre for most of Labrador and is a full-service community with available skilled and unskilled labour workforce, grocery and fuel services, a hospital, a government-serviced airport with air traffic control, motel accommodations, drilling contractors, geophysical contractors, expediting, helicopter and fixed wing support, and heavy equipment services.
The Trans-Labrador Highway is located approximately 110 km to the south of the project and the 5,428-megawatt Churchill Falls hydroelectric facility is located approximately 180 km to the southwest. A hydro access road is located ~60 km of the west end of the project.
A combination of helicopter and small boat-supported ground traversing would be the most effective means for covering much of the project area. There are number of large lakes (e.g., Seal Lake, Adeline Lake) that allow for good float plane and boat access throughout the project area.
3.2 Climate, physiography and vegetation
The climate at lower elevations is subarctic with normal average temperatures at Goose Bay ranging between -12oC in January, to an average of 20oC in July. Annual precipitation is in the order of 940 mm, distributed between the short, wet, warmer summers and cold, snowy winters. Exploration work can be carried out year-round with slightly more planning and preparation needed during the winter months. The general prospecting and geological mapping season runs from mid-June through mid-October with thaw of late ice occurring around mid-June.
The physiography of the area is dominated by the east-west trending Seal Lake, which is approximately 35 km long and up to 1.5 km wide. Seal Lake is surrounded by rugged, densely forested hills and ridges to the north and east, and steep-sided, north facing escarpments and ridges to the south. Elevations range from 212 m above sea level (ASL) at Seal Lake to over 520 m ASL in the area just south of Adeline Lake. The generally narrow, east-trending valleys which separate the higher ridges contain thick spruce, alder, and spruce forests, small lakes and intermittent swamps. Bedrock exposure ranges up to 20-25% and is best along ridge tops, steep-sided escarpments, and shorelines.
Figure 1: Location of the Adeline Copper Project within the Central Mineral Belt of Labrador, Newfoundland and Labrador, Canada.
Figure 2: Mineral Licenses comprising the Adeline Copper Project, central Labrador, Newfoundland and Labrador, Canada.
Table 2: Annual Climate Data for Happy Valley-Goose Bay, NL
.
3.3 Project Ownership, Land Tenure and work requirements
The Property comprises 10 contiguous map-staked mineral licenses containing a total of 1189 claims covering 29,725 Ha (297.25 km2). The claims were map-staked by Altius on November 27, 2020 and the licences issued by the mineral claims recorder on December 27, 2020. Altius staked 672 additional claims surrounding the 2020 claims on April 21, 2021 and the licences issued by the mineral claims recorder on May, 21, 2021.
Table 3 below, provides details of each of the 2020 and 2021 map-staked licenses, while Figure 2 shows a mineral claims map. The license number is also hyperlinked to the Mineral Rights Inquiry page at the Department of Industry, Energy and Technology, Mineral Rights Division, which provides additional information on each of the licenses.
Currently, all 2020 licenses comprising the Property are in their first year of tenure and require expenditures of CDN$200 / claim to be incurred on or before December 27, 2021, totaling CDN$103,400 for all claims and all 2021 licenses require expenditures of CDN$200 / claim to be incurred on or before May 21, 2022 totalling $237,800 for all claims.
Table 3. Listing of Mineral License Details
3.4 OVERVIEW OF THE GOVERNMENT OF NEWFOUNDLAND AND LABRADOR’S MINERAL LANDS TENURE SYSTEM
Mineral exploration titles in Newfoundland and Labrador are defined and managed under the terms and conditions of the Mineral Act (RSNL1990), and associated Mineral Regulations as amended to date. The description of the system presented below is summarized from information made available by the Geological Survey of Newfoundland and Labrador (DIET), particularly the Staking and Exploration Guidebook.
The basic unit of map staking in Newfoundland and Labrador is the claim, which is a 25 ha2 (500 m x 500 m), being one quarter of a UTM grid square (1 km x 1 km) and bounded on one corner by such a UTM grid square. The UTM grid square referred to is the one thousand metre grid used on the 1:50,000 National Topographic Map Series (NAD 27). An application for a map staked licence is made on-line through the Mineral Rights Administration System (MIRIAD). A licence can contain a maximum of 256 claims, all of which must be coterminous (“coterminous” is defined as having at least one side in common). There are no restrictions on the shape of mineral licences. Licences extended past year twenty have a maximum size of 100 claims. A mineral licence may be converted to a mining lease at any time if the owner deems there to be sufficient mineral resources to warrant conversion and further work.
Each claim staked in a licence requires payment of a CDN $65 fee. This total includes a non-fundable CDN $15 recording fee and a CDN $50 security deposit that will be refunded upon submission and acceptance of a report covering first year work requirements for the licence (so-called “assessment report”). If a map staked licence has been partially surrendered in the first year and the assessment work required has not been completed, a portion of the deposit in proportion to the partial surrender is forfeited. Also, if a map staked licence is cancelled or surrendered in the first year, the security deposit is forfeited.
The Mineral Act and Regulations in Newfoundland and Labrador state that there is a 30-day wait period for a staking application to be reviewed before a mineral license is issued. After the license is issued ("Issuance Date"), the license holder has 365 days until the anniversary date during which time they must complete the required first year work. Sixty days after the work due date, a report documenting the work performed and a statement of expenditures must be submitted to the Mineral Lands Division.
A mineral exploration licence is issued for terms of five years (which is renewable for three additional five-year terms and 10 additional one-year terms) and can be held for a maximum of thirty years provided that:
the minimum annual assessment work is completed;
the annual work is reported; and
the mineral exploration licence is renewed every five years.
The minimum annual assessment work required to be completed on each claim held in a licence are:
CDN$200 / claim in the first year;
CDN$250 / claim in the second year;
CDN$300 / claim in the third year;
CDN$350 / claim in the fourth year;
CDN$400 / claim in the fifth year;
CDN$600 / claim / year for years six to ten, inclusive;
CDN$900 / claim / year for years eleven to fifteen, inclusive;
CDN$1,200 / claim / year for years sixteen to twenty, inclusive;
CDN $2,000 / claim/ year for years twenty one to twenty five, inclusive; and
CDN $2,500 / claim/ year for years twenty six to thirty inclusive.
The minimum annual assessment work must be completed on or before the anniversary date. The assessment report must then be submitted within 60 days after the anniversary date.
Excess work performed in a given year can be carried forward for up to 10 years, meaning should no other work be performed on the license, and adequate excess expenditures exist, the annual assessment work requirement will be allocated from the excess until such time the excess runs out, or the ten-year time period is reached, whatever comes first. Although no work may have been done by the license holder in the subsequent year or years, provided excess assessment expenditures exist sufficient to cover the requirement, there is no requirement to do work annually.
Should a license holder find themselves deficient in the required expenditures for a license, the license holder can post a security for the amount of the deficiency, but this still requires that the deficient work be completed in the next year in addition to the minimum assessment work required during that subsequent year. This is referred to as a Condition 2 ("CON2") extension and the security is refundable upon acceptance of report documenting that the required expenditures were incurred.
In order for a license to remain in good standing with the Government of Newfoundland and Labrador, the license has to be renewed every fifth year on the anniversary date. The renewal fees escalate for Term 1, Term 2 and Term 3 and are listed as follows:
Term 1 Renewal (year 5 of license) is CDN$25 / claim;
Term 2 Renewal (year 10 of license) is CDN$50 / claim; and
Term 3 Renewal (year 15 of license) is CDN$100 / claim.
Starting in year 20, any excess expenditures from previous work are deleted and annual work is required as per the assessment work listing given above. Excess expenditures for work incurred in year 20 and beyond can only be carried for 5 years. In addition, there is an annual renewal fee of CDN$200 / claim.
3.5Permitting, environmental, community considerations, AND POSSIBLE RISK FACTORS
In Newfoundland and Labrador, a company holding mineral lands and wishing to complete exploration work on those mineral lands must be registered with the Government of Newfoundland and Labrador’s Registry of Companies and maintain their registration while actively exploring and/or holding mineral titles.
All proposed exploration work must be approved by the Department of Industry, Energy and Technology through a Mineral Exploration Approval Application that documents the proposed work. All work must meet with current environmental best practices and if so merited, could require a further level of permitting issued by the Department of Environment that could range from an environmental registration up to environmental assessment.
All Mineral Exploration Approval Applications received will be referred to various government departments, as well as certain stakeholders in the area (e.g., Environment and Wildlife, Forestry, Fisheries, Protected Lands Committees, Municipal Government, Indigenous groups, etc.). The referral process and the agencies to be included in the referral process hinges on the location of the proposed work and scope of the work proposed.
The Property falls in an area that the Labrador Innu (a regional indigenous group with traditional ties to area) have asserted their traditional rights. The Labrador Innu are currently negotiating a Land Claims agreement with the Provincial and Federal governments. As part of the exploration permitting process any mineral exploration approval application submitted to the Provincial Government for work on the Property will be sent to the Labrador Innu and any other stake-holder groups who might have an interest in the area.
The author recommends early dialogue with the Innu and any other stakeholders as well as best attempts at utilizing local service providers and labour to assist in the execution of the proposed work program.
The author can only foresee two potential risks to exploration and potential mining of the Property; these being 1) Indigenous land rights and potential inclusion of the Property with a land claim agreement between the Innu Nation and Governments of Canada and Newfoundland and Labrador and 2) climate change/environmental factors. These risks have not occurred in the past and are solely potential ricks.
There has never been a Treaty agreement signed between the Innu Nation and the Crown with respect to areas of central Labrador, including the Project area, claimed by the Innu Nation to be their traditional territory. The Innu Nation has been in negotiations for a land claims agreement with the federal (and indirectly provincial) government since 1978 and these negotiations are ongoing. No final designation of the Innu land claims area has been promulgated. The Innu Nation has not explicitly expressed opposition to mineral exploration and mining and in fact signed an Impact Benefits Agreement with INCO and the governments of Canada and Newfoundland and Labrador which lead to the establishment of the Voisey’s Bay Mine in northern Labrador. Many Innu people are actively employed at that mine.
Climate change could conceivably affect exploration and mining operations in central Labrador. This past Winter has been the warmest on record in Labrador with the amount of sea-ice at record levels. Thus, there has been much concern in Labrador communities about the increasing warming effects of climate change. These concerns are mainly related to the decreasing sea-ice and winter snow covers and their effects on transportation and hunting. Conversely for mineral exploration and mining, these warming conditions might improve working conditions by decreasing the severity of winter weather. Warming, however, could adversely affect mineral exploration by limiting the ability to conduct winter drilling through ice-covered bodies of water.
4.0 HISTORY
4.1 GOVERNMENT SURVEYS AND ACADEMIC RESEARCH
The first published work describing copper occurrences in the Property area was by Evans (1952). Brummer and Mann (1961) published a map of the Seal Lake Group and subdivided the group into six formations, viz.: 1) the Bessie Lake Formation clastic sedimentary rocks and basalts; 2) the Wuchusk Lake Formation shale, chert, limestone and gabbro sills; 3) the Whisky (aka Whiskey) Lake Formation red and grey slate, and phyllite; 4) the Salmon Lake Formation shale, basalt, and diabase sills; 5) the Adeline Island Formation clastic sedimentary rocks and chert; and 6) the Upper Red Quartzite Formation. They described the Seal Lake Group as occupying a broad syncline. These authors also documented many of the copper showings in the area.
The Geological Survey of Canada produced 1:250 000-scale geological maps of portions of the project area including Roscoe and Emslie (1973) and Fahrig (1959). Baragar (1968; 1981) mapped a cross- section through the Seal Lake Group and defined the geochemical nature of basalts and sills in the group.
Gandhi and Brown (1975) described five showings in detail, viz.: the Ellis, Brian, Duck Lake South, Duck Lake North and Brandy Lake prospects. These were the main BRINEX exploration targets. According to Gandhi and Brown, all of these showings are hosted by Adeline Island Formation shale and quartzite. They modelled this formation as an analogue to the Nonesuch Shale and associated mineralization at White Pine, Michigan.
Wilton (1989a) mapped many copper occurrences in the area and provided a metallogenic model. Wilton (1989b) provided detailed geochemical data mainly of sills within the Seal Lake Group.
The definitive government mapping of the Seal Lake group in the area of the project was reported in a number of reports from 2009-2013 by Tim van Nostrand; including, van Nostrand (2009), van Nostrand and Lowe (2010), van Nostrand and MacFarland (2011), and van Nostrand and Corcoran (2013).
4.2 INDUSTRY SURVEYS
Norancon Exploration Ltd. discovered a native copper showing near Adeline Lake in 1946 (Evans, 1950). In 1950, a Frobisher Ltd. prospecting party discovered further copper occurrences in the region and conducted more detailed evaluation of the region in 1951 (Evans, 1951). During this work they discovered the Seal Lake and Eastern showings and thirteen other occurrences. They also produced the first regional geological map of the Seal Lake Group. Based on this success, Frobisher explored a 9,400 km2 concession area covering most of the Adeline Copper Project from 1952 -1955 (Robinson, 1953; 1954; 1956). During this work they discovered the Salmon Lake, Adeline Island, South Adeline Mountain, Ellis, and Whisky Lake showings. Minor drilling was also completed on some of the showings.
In 1956, Kennco Exploration (Canada) Ltd. conducted the most extensive evaluation of the copper occurrences to date that included diamond drilling and mapping (Brummer, 1957). The company also conducted pioneering geochemical surveys (Brummer, 1960). Kennco subsequently dropped their concession rights.
From 1968 to 1972, British Newfoundland Exploration Ltd. (“BRINEX”) conducted detailed mapping, soil geochemistry, and various geophysical surveys (IP) over a large portion of the Adeline Island Formation (Gandhi, 1970; 1972a; 1972b; and Gandhi and Murthy, 1972). BRINEX completed one phase of diamond drilling which targeted soil geochemical and chargeability anomalies but had disappointing results.
Noranda Exploration Company Ltd. (‘Noranda”) conducted geological, geochemical (biogeochemical and lake sediments), and ground geophysical surveys over some of the more significant copper occurrences (Graves, 1992; Huard and Ascough, 1992). Detailed prospecting over soil geochemical anomalies was conducted as follow-up (Huard and Ascough, 1992). An airborne DighemV, EM and magnetometer survey was also conducted (McConnell, 1993).
In 2005, Silver Spruce Resources Inc. (‘Silver Spruce”) staked a considerable portion of the project area and conducted reconnaissance examination of some copper occurrences, but switched exploration interest to uranium (Dimmell, 2007). Subsequently, Silver Spruce contracted Fugro Airborne Surveys in 2006 to provide a helicopter-borne radiometric and magnetic survey over the region.
Playfair Mining Ltd. (“Playfair") staked 673 claims covering 16,825 hectares of the Property area in 2011, based on a report by Christopher (2011). During 2012, Playfair digitally compiled data from previous exploration programs, commissioned a satellite image study of the region and drilled 24 drill holes with a cumulative depth of 4354.7 m along strike extensions of the Adeline Island Formation through the Seal Lake Group (Moore, 2012).
The most recent work on the Property was conducted in 2015 by Altius (Seymour et al., 2016) on their land package of 1021 claims comprising 25,525 hectares. The Altius work program included a technical compilation, prospecting, rock and soil sampling, field documentation of historical mineral occurrences, a review of historical geophysical surveys, and the re-examination and sampling of drill core from previous exploration programs.
5.0 GEOLOGICAL SETTING AND MINERALIZATION
5.1 REGIONAL GEOLOGY
Most of Labrador constitutes the northeastern edge of the Precambrian Canadian Shield and consists predominantly of intrusive and high-grade metamorphic rocks which record the geological evolution of the region from about 3.85 Ga to 0.6 Ga (Wardle and Wilton, 1995). The region contains five main components (Figures 3a and 3b); 1) the Archean Nain Province to the northeast, 2) the Archean Superior Province to the west, 3) the ca. 2.1-2.8 Ga Churchill Province, sandwiched between the Nain and Superior province in north-central to central Labrador, 4) the Makkovik Province (ca. 2.0-1.8 Ga) along the southern margin of the Nain Province, and 5) the Grenville Province (ca. 1.7-1.0 Ga) all along the southern margin of Labrador (Wardle and Wilton, 1995).
Rocks of the Grenville Province are separated from the other structural provinces by the Grenville Front, an east-west-trending allocthonous zone that truncated and tectonically reworked rocks located in the pre-Grenvillian Provinces during the Grenville Orogeny between 1.3 Ga and 1.0 Ga. The Grenville Front has strong regional magnetic and gravity geophysical expressions and marks the break between typically higher-grade metamorphism on the Grenville Province side of the Front.
The Seal Lake Group represents a Mesoproterozoic supracrustal successor sequence that formed on the southern edges of the Nain-Makkovik craton. Rocks within the Seal Lake Group constitute shallow-marine to continentally-derived sedimentary units and flood basalts along with voluminous diabase sills, which were subsequently deformed during the ca. 1000-Ma Grenville Orogeny. The age of the Seal Lake Group has been constrained by zircon and baddeleyite age dates from sills at between 1224-1250 Ma (Romer et al., 1995). Perrelló et al. (2017) dated molybdenite from the Seal Main Showing at 1084+5.1 Ma. Wilton and Selby (2017) likewise Re-Os dated molybdenite from the Whisky Lake Showing at 1069.6 + 4.7 Ma and 1064.6 + 5.1 Ma.
5.2 LOCAL GEOLOGY
This section satisfies requirements under paragraph (i)(2) Appendix of the European Securities and Markets Authority Mining outline for Competent Persons Reports as relates to details of the property to which the rights of exploration and extraction apply.
The author has not included more details as to the nature and extent of the rights of exploration and extraction and the permits/planning permissions as in sections 3.1 to 3.4 paragraphs (i)1 and (i)(2) Appendix of the European Securities and Markets Authority Mining outline for Competent Persons Reports because the licenses in some of the areas of the Property are in an an early stage.
The Property is entirely underlain by the Seal Lake Group (Robinson, 1953; Brummer and Mann, 1961; Baragar, 1981) which comprises a Mesoproterozoic volcano-sedimentary sequence covering an area of approximately 10,000 km2 in central Labrador (Figure 3a). The Seal Lake Group is the youngest of six Proterozoic supracrustal sequences that are collectively known as the Central Mineral Belt ("CMB") (Wilton, 1996). The Seal Lake Group lies near the junction between the Churchill, Nain and Grenville geological provinces. The Seal Lake Group unconformably overlies several older terranes, complexes, suites and undifferentiated basement rocks ranging from the Archean to the Mesoproterozoic (Wardle et al., 1997).
The Seal Lake Group has been subdivided into six formations (Evans, 1952; Brummer and Mann, 1961) as listed on Table 4. The formations, from youngest to oldest, are the: 1) Upper Red Quartzite Formation, 2) Adeline Island Formation, 3) Salmon Lake Formation, 4) Whisky Lake
Figure 3a: Geological map of Labrador (after Wardle et al. 1997) and location of Adeline Copper Project.
Figure 3b. Legend for the Geological Map of Labrador (after Wardle et al. 1997).
Formation, 5) Wuschusk Lake Formation and 5) Bessie Lake - Majoqua Lake Formation. The Majoqua Lake Formation and the Bessie Lake Formation are considered stratigraphic equivalents. However, the Majoqua Lake Formation, exposed along the northern limb of the regional syncline, is weakly deformed whereas the southern, basal Bessie Lake Formation is strongly deformed (Brummer and Mann, 1961).
Table 4. Formations of the Seal Lake Group (from Seymour et al., 2016)
The overall thickness of the Seal Lake Group is postulated to range from 5,280 m (Knight, 1972) to 14,000 m (Baragar, 1981). The effects of folding and thrusting render the estimation of thickness difficult.
The Seal Lake Group forms a major east–west trending, doubly plunging synclinal structure, approximately 120 km long and 45 km wide (Figure 4). The southern limb of the fold is overturned and has been structurally buried beneath older granitoids that have been transported northward over the Seal Lake Group along Grenvillian thrusts (Brummer and Mann, 1961; Baragar, 1981). From west to east, the trend of the synclinal axis varies from southeast through to northeast and the folds exhibit a progression from tight to open (van Nostrand, 2009). From north to south, sedimentary rocks of the group exhibit a general transition from subaerial to shallow marine and from coarser to finer grained (van Nostrand, 2009).
Metamorphic phases, attributed to Grenvillian deformation, decrease gradationally from lower greenschist-facies to zeolite-facies assemblages south to north across the syncline (Baragar, 1981; van Nostrand and Corcoran, 2013). Rocks on the extreme northern limb of the regional syncline exhibit only minimal deformation and metamorphism (van Nostrand and Corcoran, 2013).
5.3 MINERALIZATION AND DEPOSIT TYPE
The middle and upper units of the Seal Lake Group are hosts to more than 250 native copper and copper-sulphide occurrences (Brummer and Mann, 1961). Most of these are documented in the NL DIET Mineral Occurrence Data System (MODS) (Figure 4). Host rocks to the Cu occurrences include slate and phyllite of the Whisky Lake Formation; red and green slate, shale, amygdaloidal basalt and diabase of the Salmon Lake Formation; mixed slate, shale, phyllite and argillite units of the Adeline Island Formation; and coarse- to mediumgrained diabase sills and black-grey shale of the Wuchusk Formation (Wilton 1996).
Most of these copper occurrences are hosted within local shear zones, along foliation, and/or within quartz +/- carbonate veins. The veins are generally developed between units with competency contrasts wherein dilatant zones formed during deformation, or between rocks with a contrast in oxidation state (reduced versus oxidized) (van Nostrand, 2009; Wilton 1989a).
Syngenetic pyrite (+chalcopyrite) is present in diabase and black to green phyllitic slate units. The extensive gabbro and diabase sills contain primary ilmenite and in some cases the ilmenite content is of sufficient grade and grain size to constitute a potential titanium i resource (Wilton, 1996).
Brummer and Mann (1961) suggested that copper mineralization was restricted to the upper parts of the Seal Lake Group because only the uppermost lava flows and sills contained sufficient copper to be concentrated into shears and veins during later folding. Baragar (1981), however, reported lower copper contents within the stratigraphically higher Salmon Lake Formation compared to lower volcanic units.
Figure 4. Geology map of the Seal Lake Group (after Brummer and Mann, 1961) with locations of copper occurrences (from MODS files) and Adeline Copper Project mineral claims licenses.
Gandhi and Brown (1975) suggested that there are two styles of copper mineralization in the Seal Lake Group. One in the Salmon Lake Formation (mainly native copper in red slate and volcanic rocks), and the second in the Adeline Island Formation. They suggested that the copper in the Adeline Island Formation was derived from underlying volcanic rocks and transported to pyrite-bearing shale of the formation along "red bed aquifers". The copper-bearing fluids subsequently reacted with, and replaced, the pyrite, and precipitated copper sulphides in the shale syn- to slightly post-diagenetically. This model stresses the singular-ore-bed comparison with the Nonesuch Shale, Michigan.
Wilton (1989a) suggested that ore-fluid flow was related to deformation as mineralization occurs in sheared rock along rock-unit contacts. There are no significant contrasts between copper mineralization in the Salmon Lake and Adeline Island formations, excepting the presence of native copper in the Salmon Lake rocks, which is apparently dependent on the oxidation state of the host rock, and not on stratigraphic position. Both units host chalcocite, bornite and chalcopyrite in diabase and sedimentary rocks (Wilton, 1996).
Huard and Ascough (1992) pointed out, as had Wilton (1989a), that there was an absence of immature, permeable sedimentary units in the Seal Lake Basin able to release copper to mobile fluids during diagenesis. Such permeable units are an essential feature of syngenetic sediment-hosted stratiform copper (SSC) deposits. Based on “cursory” examination of the copper occurrences in the Property area, van Nostrand (2009) and van Nostrand and MacFarlane (2009) agreed with the supposition by Wilton (1989a) that the copper mineralization was epigenetic with respect to the host rocks.
Sills in the Seal lake Group have been dated at 1224-1250 Ma (Romer et al., 1995). Grenvillian Re-Os age dates of 1084+5.1 Ma, and 1069.6 + 4.7 to 1064.6 + 5.1 Ma for molybdenite from the Seal Main (Perrelló et al., 2017) and the Whisky Lake (Wilton and Selby, 2017) showings, respectively, suggest an epigenetic origin for the copper mineralization.
The copper mineralization in the Adeline Copper thus seems to most likely be epigenetic, likely attributed to deformation associated with the Grenville Orogeny. The mineralization occurs in quartz-carbonate vein systems, contact zones, and zones of structural weakening associated with folding and shearing. Copper mineralization occurs in two settings (Wilton, 1996): 1) Native copper-bearing quartz-carbonate veins within red slate and/or strongly hematized basalt units (Salmon Lake, Whiskey Lake and Wuschusk Lake formations), 2) Chalcocite ± bornite ± chalcopyrite stringers and quartz-carbonate veins in diabase, basalt, or grey, green to black shales, arenite and phyllite (reduced “grey beds”). The grey bed hosted copper mineralization constitutes our primary target.
That said, Gandhi and Brown (1975) noted broad-scale zonation’s in the copper mineralization throughout the project area that are typical of SSC systems (e.g., Hitzman et al, 2005). The documented mineral zoning at Seal Lake has chalcocite and bornite-dominated mineralization grading upwards and outwards to chalcopyrite, pyrite and locally sphalerite. This sequence is observed at scales from drill sections and outcrops to thin sections (Wilton, 2015). Regardless of contradictions with their syngenetic model, Gandhi and Brown (1975) noted that the mineral zoning, with copper-rich sulphides in lower volcanic rocks and chalcopyrite and pyrite stratigraphically higher is typical of other SSC deposits such as White Pine, Kupferschiefer, and the Katangan Copperbelt despite the stratigraphy being repeated and disrupted by folding and faulting.
Wilton (1996) noted that the distribution of copper minerals throughout the Seal Lake Group is also affected by the difference in oxidation state of the various rock types (i.e., oxidized vs. reduced). In volcanic rocks and sedimentary red beds of the Salmon Lake Formation copper form is predominantly as native copper, in contrast to the copper sulfide mineralization that characterizes overlying grayish sediments of the Adeline Island Formation. The oxidation state of host rocks is also reflected in the iron-bearing phases present: iron oxides in the redbeds and oxidized volcanics versus iron sulphides in black and green shales (Wilton, 1996). Thus, the oxidation state of host rocks is assumed to play an important role in dictating which copper minerals precipitate.
5.4 MINERAL RESOURCES AND MINERAL RESERVES
With respect to paragraph 1113(i)(c) Appendix I of the European Securities and Markets Authority Mining Competent Persons Report, there are no mineral resources and reserves for the Property. This is because the Adeline Copper Project is in early stages and no mineral resource and mineral reserve estimates have been produced to date by any previous workers on the Adeline Copper Project and no historic estimates of metallic minerals are known to the author.
6.0 EXPLORATION TARGETS
Seymour et al.’s (2016) compilation of historic work, coupled with preliminary field work and petrography, suggest that there are several specific target areas in the Adeline Cooper Project, specifically along strike of the Adeline Island Formation that have the potential to host a significant copper resources, but have not been adequately tested by previous exploration programs. Four priority targets are described below and outlined in Figure 5. Other areas with host significant mineralization require more extensive geological, geophysical and geochemical ground survey work.
6.1 TARGET 1: ADELINE ISLAND EAST EXTENSION
This Adeline Formation target extends from the shallowly east-dipping fold nose of the overturned Seal Lake under Adeline Lake through a number of copper occurrences along a strike length of approximately 10 km to the east along the northern shoreline of Adeline Lake and ultimately for 15 km along the thrusted margin of Grenville gneiss unto the Seal Lake Group. The thrust plane seems to cut off the Adeline Formation, but the exact relationships of the thrust and location of Adeline Island Formation have yet to be resolved. The copper occurrences in this target comprise pyrite, chalcopyrite and lesser chalcocite + bornite located in the upper portions of the Adeline Island Formation stratigraphy. As such, these occurrences would seem to be above the main mineralized horizon and thus could represent distal mineral zonation from the main mineralized zone.
Approximately 4 km east of Adeline Island on the north shore of Adeline Lake, both BRINEX and Playfair attempted to drill a BRINEX soil anomaly (up to 560 ppm copper), but neither drill program apparently fully penetrated the Adeline Formation or explained the soil anomaly.
Ten km east of Adeline Island, Playfair drill hole SL-11-22 intersected ca. 140 m of near continuous grey, green and black shale with pyrite and minor chalcopyrite yielding weakly anomalous copper values averaging 108 ppm over the 146 m composited interval. This drill hole suggests that thicknesses of the Adeline Island Formation on the southern edge of the synclinorium might be quite substantial.
The presence of pyrite and chalcopyrite in outcrops and drill holes from this target area along with anomalous Zn in lake sediments along the eastern end of the target area may represent the potential outer ‘fringes’ of a copper-mineralized system. Detailed mapping and re-logging of the drill core from this area is recommended to understand the structure and define drill targets. This target area covers a strike length of 10-15 km of favorable stratigraphy that has not been thoroughly tested, there are discrepancies in mapping with respect to the extent of the Adeline Island Formation, and the relationship with thrust faulting remains unresolved.
6.2 TARGET 2: ADELINE TO ELLIS
The Adeline Island Formation between the Adeline Island and Ellis occurrences, two of the most significant occurrences in the Project area, has not been thoroughly examined. This is in spite of fact that it occupies portions the western fold nose of the Seal Lake syncline, an ideal potential structural trap for copper deposition. BRINEX drilled five holes along the target area, but none were deep enough to intersect the middle to lower units of the Adeline Island Formation. Three holes drilled by Playfair in the target area were not deep enough to intersect the favorable middle and lower units of the Adeline Island Formation
Figure 5. Geology map of the Seal Lake Group (after Brummer and Mann, 1961) with locations of Adeline Copper Project mineral claim licenses, copper occurrences and Main Exploration Target areas. Target 1 – Adeline Island East Extension Target, Target 2 – Adeline to Ellis Target, Target 3 – Ellis Target and Target 4 – Duck lake East Target.
6.3 TARGET 3: ELLIS
Playfair drilling at the Ellis occurrence intersected up to 1.76% Cu and 56.2 g/t Ag over 7.9 m (SL-11-10; Moore, 2011) indicating a considerable thicknesses of significant grade mineralization within the Adeline Island Formation. This mineralized zone was successfully tested in four other holes to a vertical depth of 125 m and 100 m along strike. Attempts to step out further along strike from the main occurrence, however, were unsuccessful but drill logs indicate that they intersected either the underlying Salmon Lake Formation or upper units of the Adeline Island Formation. It should be noted that the stratigraphy in area is complicated by folding and faulting. To be fully evaluated, the target requires detailed re-logging of core and detailed geological mapping.
6.4 TARGET 4: DUCK LAKE EAST
This target constitutes chalcocite-bearing Adeline Island Formation grey shales and quartzite beds. that appear to be structurally repeated, producing a thicker sequence of potentially mineralized shale. Despite the number of copper occurrences discovered along this stratigraphic horizon of the Adeline Island Formation, there are no detailed geological maps, diamond drilling or even soil surveys. This target horizon constitutes a ca. 12 km strike length of Adeline Island Formation with known, undrilled copper occurrences.
7.0 DISCUSSION AND CONCLUSIONS
The Adeline Copper Project clearly demonstrates the potential for sediment-hosted copper (SSC) mineralization as reduced grey beds of the Adeline Island Formation host significant copper concentrations. Historic exploration campaigns at Seal Lake sought small, very high grade copper deposit models as shown by the programs of shallow drilling and short step outs, more recent programs lacked sustained effort or focus.
For all four target areas it is recommended that a program of core re-logging, detailed geological mapping, prospecting and soil sampling be carried out as the first phase of a work program to identify drill targets within the target areas. Much of the Adeline Island Formation underlies low valleys and/or lakes, in contrast with the steep ridges and cliff faces the more resistant Upper Red Quartzite Formation and Salmon Lake Formation basalts, that dominate the topography of the area. The recessive characteristic of the Adeline Island Formation means that the unit is typically not exposed, and thus full continuity and prospectivity may be under-represented on existing geological maps. Geochemical techniques such as soil and/or till sampling, in conjunction with detailed geological and structural mapping, will aid in the identification and evaluation such potentially mineralized areas.
RECOMMENDATIONS
A proposed program comprising 8-10 weeks of core re-logging/sampling, boat- and helicopter -supported detailed mapping, prospecting, rock sampling and geochemical surveys (soil sampling) with a crew of 6 persons working from the community of Happy Valley Goose Bay and/or from small, temporary campsites is recommended. The primary objective of the program will be evaluating the four priority target areas to identify drill targets for future testing.
8.1 BUDGET
REFERENCES
Baragar, W.R.A., 1969. Volcanic Studies in the Seal Lake Area, Labrador (13 K, L). Geological Survey of Canada, Paper 69-1A, pp. 142-146.
Baragar, W.R.A., 1981. Tectonic and Regional Relationships of the Seal Lake and Bruce River Magmatic Provinces. Geological Survey of Canada, Bulletin 314, 72p.
Brummer, J.J., 1957. Report on operations including geology maps diamond drilling, geophysical, and geochemical plans in the Frobisher Seal Lake Concession, central Labrador. Newfoundland and Labrador Geological Survey, Assessment File 13K/0011, 162p.
Brummer, J.J., 1960. A reconnaissance geochemical survey in the Seal Lake area, Labrador. CIM Bulletin, v.63, pp. 260-267.
Brummer, J.J. and Mann, E.L., 1961. Geology of the Seal Lake area, Labrador. Geol. Soc. Am. Bull., v. 72, pp. 1361-1382.
Christopher, P., 2010. Technical Report Seal Lake Project, Labrador Canada. A NI 43-101 report for Playfair Mining Corp., 42p.
Dimmell, P.M., 2007. Report on 2006 Exploration on the Central Mineral Belt Properties-3094 claims; Seal Lake Properties–2469 claims, Snegamook Rroperties-86 claims of Silver Spruce Resources Inc., Central Labrador (NTS 13J, K, L). Newfoundland and Labrador Geological Survey, Assessment File LAB/1431, 187p.
Evans, E.L., 1950. Exploration in the Seal Lake area, Labrador, Frobisher Limited. Newfoundland and Labrador Geological Survey, Assessment File 13K/0001, 30p.
Evans, E.L., 1951. Copper deposits in the Seal Bay area, Labrador, Frobisher Limited. Newfoundland and Labrador Geological Survey, Assessment File 13K/0003, 23p.
Evans, E.L., 1952. Native copper discoveries in the Seal Lake area, Labrador. Geological Association of Canada, Proceedings, v. 5, pp.111-116.
Fahrig, W.F., 1959. Snegamook Lake, coast of Labrador, Newfoundland. Geological Survey of Canada, Map 1079A.
Gandhi, S.S., 1970. Report on Seal Lake copper area, Labrador. British Newfoundland Exploration Limited. Newfoundland and Labrador Geological Survey, Assessment File LAB/0364, 25p.
Gandhi, S.S., 1972a. Geology of the Adeline Island Formation in the central part of the Seal Lake synclinorium, Labrador. British Newfoundland Exploration Limited. Newfoundland and Labrador Geological Survey, Assessment File 13K/05/0095, 20p.
Gandhi, S.S., 1972b. Summary report on exploration during 1972 in the Seal Lake joint venture area, Labrador. British Newfoundland Exploration Limited. Newfoundland and Labrador Geological Survey, Assessment File 13K/05/0099, 19p.
Gandhi, S.S. and Murthy, T.N.N., 1972. Geological report on the Adeline Island Formation in the eastern part of the Seal Lake Basin, Labrador part 1-geology and copper occurrence, part 2-structural features. British Newfoundland Exploration Limited. Newfoundland and Labrador Geological Survey, Assessment File 13K/0104, 34p.
Gandhi, S.S. and Brown, C., 1975. Cupiferous shales of the Adeline Island Formation, Seal Lake Group, Labrador. Economic Geology, v. 70, pp. 145-163.
Graves, G., 1992. First year assessment report on prospecting and geological mapping at Seal Lake, Licence 400m, 404m and 408m NTS 13K/5. Noranda Exploration Company Limited. Newfoundland and Labrador Geological Survey, Assessment File LAB/0966, 101p.
Hitzman, M., Kirkham, R., Broughton, D., Thorson, J., and Selley, D., 2005. The Sediment-Hosted Stratiform Copper Ore System. Economic Geology, 100th Anniversary Volume, pp. 609-642.
Huard, A. and Ascough, G., 1992. First year assessment report (supplementary) Geology, Geochemistry and Geophysics conducted from March to October, 1992, on Licences 400m, 404m, 406m, 408m and 445m, Seal Lake Property, NTS 13K/5 & 13L/8. Noranda Exploration Company Limited. Newfoundland and Labrador Geological Survey, Assessment File LAB/0967, 233p.
Ivany, P.A., and Wilton, D.H.C., 1989. Geochemistry and mineralization of the Adeline Island Prospect, Seal Lake, Labrador. Atlantic Geology, v. 25, p. 213.
Knight, I., 1972. The geology of the Arkose Lake area, north of Seal Lake, Labrador, Canada. MSc, Memorial University of Newfoundland, St John's, Newfoundland, 232p.
McConnell, D.L., 1993. DighemV Survey for Noranda Exploration Company Limited, Labrador, NTS 13L/1, 5, 8, 12, 13K/4, 5, 9, 10. Noranda Exploration Company Limited. Newfoundland and Labrador Geological Survey, Assessment File 13K/0196, 164p.
Moore, M., 2011. 2011 Exploration Summary Report, Seal Lake Project Labrador, Canada -
Work Completed on Mineral Licenses: 017252M,017253M,017279M,017341M Playfair Mining Limited. Newfoundland and Labrador Geological Survey, Assessment File LAB/1649, 230p.
Perelló, J., Cornejo, P, Wilton, D.H.C., Creaser, R.A., Winter, L. and Smith, R., 2017. Grenvillian
age for the sediment-hosted Cu-Ag mineralization at Seal Lake, Labrador, Canada. Extended
Abstract SGA, SGA Québec 2017 v.3, pp. 1035-1039.
Robinson, W.G., 1953. Exploration during 1952 in the Seal Lake Concession, Labrador, Frobisher Limited. Newfoundland and Labrador Geological Survey, Assessment File 13K/0005, 29p.
Robinson, W.G., 1954. Exploration report for 1954 in the Seal Lake area, Labrador. Newfoundland and Labrador Geological Survey, Assessment File 13K/0008, 21p.
Robinson, W.G., 1956. Exploration during 1955 on the block D concession, Labrador. Frobisher Limited. Newfoundland and Labrador Geological Survey, Assessment File 13K/0009, 12p.
Romer, R.L., Scharer, U., Wardle, R.J. and Wilton, D.H.C. 1995. U-Pb age of the Seal Lake Group, Labrador. relationship to Mesoproterozoic extension-related magmatism of Laurasia. Canadian Journal of Earth Sciences, v. 32, pp.1401-1410.
Roscoe, S.M. and Emslie, R.F., 1973. Kasheshibaw Lake (East Half), Newfoundland –Quebec. Geological Survey of Canada, Map 1342A, 1:250 000 scale.
Seymour, C., Morgan, J., Winter, L., Smith, R., Lachance, N., and Wilton, D., 2016. First year assessment report on compilation, prospecting, petrography, geochemical exploration and re-logging of diamond drill core for licenses 23331M-23337M on claims in the Seal Lake area, central Labrador. Newfoundland and Labrador Geological Survey, Assessment File LAB/1754, 226p.
van Nostrand, T.S., 2009. Geology of the Seal Lake Group, central Labrador (parts of NTS map areas 13K/5 and 6). In Current research, Compiled and Edited by C. P. G. Pereira and D. G. Walsh, Government of Newfoundland and Labrador, Department of Natural Resources, Mines Branch, Report 9-1, p.249-270.
van Nostrand, T.S. and Lowe, D., 2010. Geology of the Seal Lake area, central Labrador (parts of NTS map areas 13K/3, 4, 5 and 6). In Current research, Compiled and Edited by C. P. G. Pereira and D. G. Walsh, Government of Newfoundland and Labrador, Department of Natural Resources, Mines Branch, Report 10-1, p.351-371.
van Nostrand, T. and MacFarlane A., 2011. Geology of the west-central Seal Lake Group, central Labrador (including parts of NTS map areas 13K/4, 5 and 12, and 13L/1, 8 and 9). In Current research, Compiled and Edited by C. P. G. Pereira and D. G. Walsh, Government of Newfoundland and Labrador, Department of Natural Resources, Mines Branch, Report 11-1, p.313-335.
van Nostrand, T. and Corcoran, C., 2013: Geology of the western Mesoproterozoic Seal Lake Group, central Labrador (including all of NTS map areas 13L/2 and 7 and parts of 13L/1, 3, 6, 8, 9, 10, 11, 14, 15 and 16 and 13E/14 and 15). In Current research, Compiled and Edited by C. P. G. Pereira and D. G. Walsh, Government of Newfoundland and Labrador, Department of Natural Resources, Geological Survey, Report 13-1, p.301-326.
Wardle, R.J., Gower, C.F., Ryan, B., Nunn, G.A.G., James, D.T. and Kerr, A., 1997. Geological map of Labrador. Government of Newfoundland and Labrador, Department of Mines and Energy, Open File LAB/1265, Map 97-007.
Wardle, R.J. and Wilton, D.H.C. 1995. A field workshop on the geology and mineral deposits of Labrador. Newfoundland and Labrador Geological Survey, Memorial University of Newfoundland Report, 241p., Geofile LAB/1131.
Wilton, D.H.C., 1989a. Studies in the Seal Lake Group, Central Labrador, Part I. Description of Copper Occurrences. Current Research (1989) Newfoundland Department of Mines, Geological Survey of Newfoundland, Report 89-1, pp. 23-33.
Wilton, D.H.C., 1989b. Studies in the Seal Lake Group, central Labrador, part II. Geochemistry of diabase sills. In Current Research, Nfld. Dept. of Mines, Rept. 89-1, pp. 35-46.
Wilton, D.H.C., 1996. Metallogeny of the Central Mineral Belt and adjacent Archean basement, Labrador. Government of Newfoundland and Labrador, Department of Mines and Energy, Geological Survey, Mineral Resources Report 8, 198p.
Wilton, D.H.C., 2015. Report of the petrographic examination of seven polished thin
sections from the Seal Lake region, Labrador. Unpublished report for Altius Resources Inc., 20p.
Wilton, D.H.C., and Selby, D., 2017. The beginning and end of metallogeny in the Labrador Central Mineral Belt; 1868 to 1064 Ma Re-Os molybdenite dates bracket the widespread polymetallic mineralization. Kingston 2017 GAC/MAC program with abstracts.
v.40 p.421.
CERTIFICATE AND CONSENT OF THE INDEPENDENT QUALIFIED PERSON
Dr. Derek H. C. Wilton, PGeo., FGC
Terra Rosetta Inc.
7 Yellowknife St.
St. John’s NL
A1A 2Z7
Tel: 709-730-6624
I, Derek Harold Clement Wilton, do hereby certify the following:
I am currently a part-time Faculty Researcher at the College of the North Atlantic, St. John’s NL, and am a recently retired (Dec. 31, 2019) Professor – Department of Earth Sciences, Memorial University of Newfoundland (MUN), St. John’s, NL, A1B 3X5 where I had been employed as a fulltime employee since September 1983.
I also operate under the business name of Terra Rosetta Inc., a geological consulting business (active since November 2007) independent of both Chesterfield Resources PLC and Altius Minerals Corp.
I graduated with the degree of BSc. (Geology) from Memorial University of Newfoundland in 1976, MSc. (Geological Sciences) from the University of British Columbia in 1978, and a PhD. from Memorial University of Newfoundland in 1984 and have worked continuously in the industry since that time.
I am duly registered with, and a member in good standing of, the Professional Engineers and Geoscientists of Newfoundland and Labrador (PEG-NL Reg. No. 02840).
I am a Fellow Geosciences Canada, Fellow Geological Association of Canada, and Fellow Royal Canadian Geographical Society.
I have worked as a geologist for a total of 45 years since my BSc. graduation. My relevant experience for the purpose of the Technical Report is that I have conducted geological research in Newfoundland and Labrador since 1976. I have completed extensive work on Labrador geology and mineral deposits, particularly the copper occurrences in the Seal Lake Group. I have undertaken collaborative work with government geologists and consulting work on mineral deposits throughout Newfoundland and Labrador.
I visited the exact site of the mineral occurrences in the report in 1987 and periodically since up to ca. 2010.
I certify, that by reason of my education, affiliation with professional associations, and past relevant work experience I fulfill the requirements to be a “competent person” for the purposes of this report.
I am responsible for the preparation of all sections of this technical document titled “Competent Person’s Report - Adeline Copper Project, Newfoundland and Labrador, Canada
NTS 13K/05 and 13L/08” (the "report"), with an effective date of July 02, 2021.
As of July 02, 2021 and to the best of my knowledge, information and belief, the report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.
I am not aware of any material fact or material change with respect to the subject matter of the report that is not reflected in the report, the omission to disclose which make the report misleading.
I am independent of the issuer and I do not hold, nor expect to hold, securities of either Chesterfield Resources PLC or Altius Resources Corp.
Signed Sealed
Derek Wilton
July 02, 2021
|
CONTENTS
| |
| --- | --- |
|
SUMMARY | Page
4 – 10 |
| RISK FACTORS | 11 - 20 |
| CONSEQUENCES OF A STANDARD LISTING | 21 - 22 |
| IMPORTANT INFORMATION | 23 - 27 |
| EXPECTED TIMETABLE OF PRINCIPAL EVENTS | 28 |
| PLACING STATISTICS | 27 |
| DIRECTORS AND ADVISERS | 29 |
| PART I THE COMPANY AND THE GROUP | 30 - 41 |
| PART II THE BOARD AND KEY PERSONNEL AND CORPORATE GOVERNANCE | 42 – 45 |
| PART III THE PLACING | 46 - 47 |
| PART IV HISTORICAL FINANCIAL INFORMATION OF THE COMPANY | 48 |
| PART V CAPITLISATION AND INDEBTEDNESS STATEMENT | 49 - 50 |
| PART VI TAXATION | 51 - 52 |
| PART VII ADDITIONAL INFORMATION | 53 –77 |
| NOTICES TO INVESTORS | 78-79 |
| PART VIII DEFINITIONS | 80 – 86
|
| ANNEX I COMPETENT PERSON’S REPORT | 87 |
| Introduction and warnings | Introduction and warnings |
|---|---|
| Introduction | The legal and commercial name of the issuer is Chesterfield Resources Plc, a public limited company with its registered office address at 7-9 Swallow Street, London, England, W1B 4DE and telephone number +44(0)203 004 0693. In respect of the Company’s Ordinary Shares, the Company’s International Securities Identification Number (ISIN) is GB00BF2F1X78 and its legal entity identifier (LEI) is 213800EF8I2TT767IU35. This Document was approved on 7 July 2021 by the Financial Conduct Authority (whose address is at 12 Endeavour Square, London, E20 1JN, United Kingdom and telephone number is 020 7066 1000), as competent authority in the United Kingdom under Regulation (EU) 2017/1129. |
| Warnings | This summary should be read as an introduction to this Document. Any decision to invest in the Ordinary Shares should be based on consideration of this Document as a whole. Civil liability attaches only to those persons who have tabled this summary, including any translation thereof, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of this Document, or if this summary does not provide, when read together with the other parts of this Document, key information in order to aid investors when considering whether to invest in the Ordinary Shares. Investors could lose all or part of their invested capital by participating in the Placing. |
| Key Information on the Issuer | Key Information on the Issuer |
| Who is the issuer of the securities? | Who is the issuer of the securities? |
| Legal and commercial name | The legal and commercial name of the issuer is Chesterfield Resources plc. |
| Domicile, legal form, legislation and country of incorporation | The Company was incorporated and registered in England and Wales on 4 January 2017 with registered number 10545738 as a private limited company under the Companies Act with the name Chesterfield Resources Limited. On 8 May 2017, the Company was re-registered as a public limited company under the Companies Act and accordingly changed its name to Chesterfield Resources Plc. The principal legislation under which the Company operates and under which the Ordinary Shares have been created is the Companies Act and the Company is subject to the provisions of the Takeover Code. The Company is domiciled in the United Kingdom and also has a wholly owned subsidiary, Chesterfield Resources (Cyprus) Limited, which is registered and operates in Cyprus. Following completion of the Labrador Acquisition, the Company shall have a further wholly owned subsidiary, 87986 Newfoundland and Labrador Inc., which is registered and operates in Newfoundland and Labrador, Canada. |
| Principal Activities / Current operations and markets | The Group’s principal activity is currently the exploration for and development of copper and gold mineral resource assets in Cyprus and, following completion of the Labrador Acquisition, shall shortly include the exploration for and development of copper mineral resource assets in Canada. The Group intends to continue developing its existing operations to identify commercially mineable copper and gold resources in Cyprus and copper resources in Canada. The Group is unlikely to carry out mining activities on its own account, as it intends to generate its revenues through the eventual trade sale (or partial trade sale) or entry into a joint venture or strategic partnership in respect of its mineral resource assets before they reach the stage of commercial extraction. |
In addition, the Group also intends to continue exploring new prospective locations for Exchange Traded Non-Ferrous Metals, whether identified directly by the Group or obtained through further acquisitions or joint ventures, which the Group is actively seeking. |
| | Stage of Operations
The Group is continuing to expand its Portfolio of mineral Prospecting Permits, in Cyprus, Canada and further afield, with a view to building a substantial group within the Exchange Traded Non- Ferrous Metals sector.
The Group has a 100% interest in 20 Granted Prospecting Permits (covering 95.382 square kilometres) in proximity to the Troodos mountains in Cyprus, on which it is currently exploring primarily for gold and copper.
Following completion of the Labrador Acquisition, the Group shall have a 100% interest in 10 Granted Map-Staked Mineral Licences (covering 297.25 square kilometres) in proximity to the Central Mineral Belt of Labrador, Newfoundland and Labrador, Canada, on which it intends to explore primarily for copper. |
| | In Cyprus, the Group has identified over 30 targets at Troodos West which are considered to be prospective for Gold and Copper, which it is currently assessing for drilling. The Group’s top drill targets on the Troodos West licence area are called Evlim, KinValley and Hillside.
In Q4 2020, the Group carried out an AMT geophysics survey at its Troodos North licence area, with encouraging results. The Group carried out Diamond Drilling on this licence area in November 2020. An historic mine was located on this target area which was closed before the orebody was exhausted. The Directors therefore believe that there is the potential to estimate a mineral resource in this area in the future. The Group has received assay results from its Diamond Drilling carried out from September to November 2020. The drilling provided encouraging intersections on all three of the Group’s priority targets. At target Evlim, high-grade, resource quality polymetallic massive sulphides were encountered from a depth of 148.50-151.15m, i.e. 2.65m with assayed grades of 2.8% copper, 3.8% zinc, 3.0 g/t gold, 30 g/t silver. The total mineralised width of the intersection was 11.6m. At target Hillside, resource-grade polymetallic sulphides were encountered from a depth of 143.55-146.00m, i.e. 2.45m with assayed grades of 1.4% copper, 4.4% zinc, 3.0 g/t gold, 38 g/t silver. The total mineralised width of the intersection was 16.6m. At target KinValley, traces of supergene native copper encountered in three drill holes are indicative of a primary copper sulphide source undergoing weathering nearby. The Group’s 2021 exploration campaign in Cyprus is running on schedule, with the Group’s first phase AMT and gravity geophysics surveys, together with its Percussion Drilling programme of 14 holes, now completed. The gravity geophysics survey conducted in the area to the west of target Hillside highlighted a large new high-priority target named “Olive”, which is a compelling North-South trending structure, manifesting as a residual gravity high. This anomaly extends 1km in length and up to 300m in width and may be indicative of a type of early-forming subsidiary basin that often host VMS deposits. The next phase of geophysics has now commenced and a specialised team has conducted a down-hole EM programme. Diamond Drilling commenced at the start of July 2021, in an expanded works programme. As well as focusing on its primary target area of Troodos West, the Group anticipates exploratory work on its Troodos North and Discovery South licence areas.
In Canada, the Adeline Copper Project demonstrates the potential for sediment-hosted copper mineralisation as reduced grey beds of the Adeline Island Formation host significant copper concentrations. The Group intends to undertake a programme of core re-logging, detailed geological mapping, prospecting and soil sampling as the first phase of a work programme to identify drill targets within the target areas. Geochemical techniques such as soil and/or till sampling, together with detailed geological and structural mapping, will aid in the identification and evaluation of mineralised areas, including those which are typically not exposed. |
| Major shareholders | As at the Last Practicable Date, the Company is aware of the following persons who are interested and who, immediately following Admission, are expected to be interested, directly or indirectly, in three per cent. or more of the Company’s capital or voting rights:
The Company and the Directors are not aware of any persons, who, as at the Last Practicable Date, directly or indirectly, jointly or severally, exercise or could exercise control over the Company nor are they aware of any arrangements the operation of which may at a subsequent date result in a change in control over the Company. |
| Key Managing Directors | The directors of the Company are Martin Stephen French (Executive Chairman), Ajay Kejriwal (Executive Director and Chief Financial Officer), David Charles Cliff (Non-Executive Director), Peter Damouni (Non-Executive Director), Evgeny Vrublevskiy (Non-Executive Director) and Paul Ensor (Non-Executive Director). |
| Statutory Auditors | The Company’s statutory auditors are PKF Littlejohn LLP, having its registered office at 15 Westferry Circus, Canary Wharf, London, United Kingdom, E14 4HD and being registered under the Statutory Audit Directive, Register of Statutory Auditors number C002139029. |
| What is the key financial information regarding the issuer? | What is the key financial information regarding the issuer? |
| Selected key historical financial
information | Selected key historical financial information relating to the Group is set out in the tables below. The information has been presented in accordance with Annex I of the UK version of the European Commission Delegated Regulation (EU) 2019/979 which is part of UK law by virtue of the European (Withdrawal) Act 2018. |
| | Table 1: Income statement for the Group
|
| |
*The Group was formed on 3 July 2018 and therefore the financial information for the period ended 31 December 2017 is that of the Company.
** Expressed in pence per share
Table 2: Balance sheet for the Group
|
| |
*The Group was formed on 3 July 2018 and therefore the financial information for 31 December 2017 is that of the Company.
|
| | Table 3: Cash flow statement for the Group
|
| Pro forma
financial information | Not applicable. No pro forma financial information is included in this prospectus. |
| Audit
Qualifications | There are no qualifications in the audit opinions on the historical financial information for the year ended on 31 December 2020, which are incorporated by reference. |
| What are the key risks that are specific to the issuer? | What are the key risks that are specific to the issuer? |
| Key risks specific to the Company or the mining industry | 1. The Group had accrued losses of £812,153 as at 31 December 2020 and, to date, has not generated any revenues. The Group will deploy capital primarily towards the exploration and development of copper and gold mineral resource deposits on its Portfolio in Cyprus. There can be no assurance that the Group will identify a commercially viable mining asset and, therefore, no assurance can be provided that the Group will become revenue generating and or profitable in future. The Group also has no current trading record which can be analysed. The current Historical Financial Information of the Group therefore provides a very limited basis on which investors may evaluate potential future performance.
The Group’s ability to undertake exploration and drilling work at its licence areas in Cyprus and Canada depends upon the maintenance and renewal of licences, which, to date, the Group has been successful in maintaining. The Directors are not aware of any circumstances likely to lead to the termination and or non-renewal of licences, save for the dispute with the surface rights owner detailed at Part A of the Risk Factors. However, there can be no guarantee that the Group will be able to maintain all required approvals, licences and permits relating to its exploration and development activities. If some or all of the licences were to be revoked or otherwise not renewed or maintained, the Group would be effectively prevented from carrying on its mineral resource operations on the affected licence areas, which could have a material adverse effect on the Portfolio’s exploration potential and its value, impacting the Group’s operational and financial performance.
Mineral exploration and development is a speculative and high-risk undertaking that may be impacted by circumstances and factors beyond the control of the Group. Many exploration projects do not result in the discovery of commercially mineable deposits. Failure to discover new resources or to enhance existing resources in sufficient amounts and in a timely manner would materially and adversely affect the Group’s results of operations, cash flows, financial condition and prospects.
Given the spread of COVID 19 variants and notwithstanding ongoing vaccination programmes, it is conceivable that existing or new lock-down restrictions, including restrictions on the entry of personnel into Cyprus or Canada, could be maintained for longer than expected, introduced or re-introduced at any time in Cyprus, Canada and the United Kingdom (either on a semi-permanent or temporary basis). There is therefore a risk of potential disruption to the Group’s planned exploration activities which could delay the time by which the Group can generate revenues from the Portfolio and cause the Group to incur additional costs. However, the Group is able to mitigate the adverse impact of COVID 19 on the financial condition of the Group to an extent by deferring the deployment of capital resources on capital intensive activities until local lock- down or social distancing measures are lifted.
A key asset of the Group is the collective expertise and experience of its directors and technical/geological team. The Group will depend heavily upon a small number of key individuals during its early-stage development. The loss or diminution in the services of more than one of the Directors or members of the technical/geological team or an inability to recruit, train and/or retain necessary personnel could have a material and adverse effect on the Group’s business, results of operations, financial condition and prospects.
The future exploration and extraction activities of the Group may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, insufficient or unreliable infrastructure (such as power, water and transport), unanticipated metallurgical problems which may affect extraction costs, industrial and environmental accidents, changing government regulations and many other factors beyond the control of the Group.
In relation to the Adeline Copper Project, climate change could affect exploration operations in central Labrador. The past winter has been the warmest on record in Labrador with the amount of sea-ice at record levels. For mineral exploration and mining, these warming conditions might improve working conditions by decreasing the severity of winter weather. Warming conditions could limit the ability to conduct winter drilling through ice-covered bodies of water.
In Labrador and Newfoundland, the Adeline Copper Project falls in an area where the Labrador Innu (a regional indigenous group) has asserted its traditional rights. As part of the exploration permitting process any mineral exploration approval application submitted to the provincial government for work on the Adeline Copper Project will be sent to the Labrador Innu and any other stake-holder groups which might have an interest in the area. There is a risk that members of the Labrador Innu or other groups could assert traditional rights over the Adeline Copper Project area and, as such, title to the Adeline Copper Project area may be disputed.
Changes in global supply and demand for commodities such as gold and copper will have an impact on their price, which may adversely affect the business, results of operations, cash flows and financial condition of the Group. However, despite falls in the copper and gold price during the peak of the COVID 19 pandemic, at present the demand for copper in particular is emerging very strongly from the pandemic with prices currently exceeding their prevailing market prices prior to the start of the COVID 19 pandemic. However, this situation may change in the future.
|
|
| 1. The Group had accrued losses of £812,153 as at 31 December 2020 and, to date, has not generated any revenues. The Group will deploy capital primarily towards the exploration and development of copper and gold mineral resource deposits on its Portfolio in Cyprus. There can be no assurance that the Group will identify a commercially viable mining asset and, therefore, no assurance can be provided that the Group will become revenue generating and or profitable in future. The Group also has no current trading record which can be analysed. The current Historical Financial Information of the Group therefore provides a very limited basis on which investors may evaluate potential future performance.
The Group’s ability to undertake exploration and drilling work at its licence areas in Cyprus and Canada depends upon the maintenance and renewal of licences, which, to date, the Group has been successful in maintaining. The Directors are not aware of any circumstances likely to lead to the termination and or non-renewal of licences, save for the dispute with the surface rights owner detailed at Part A of the Risk Factors. However, there can be no guarantee that the Group will be able to maintain all required approvals, licences and permits relating to its exploration and development activities. If some or all of the licences were to be revoked or otherwise not renewed or maintained, the Group would be effectively prevented from carrying on its mineral resource operations on the affected licence areas, which could have a material adverse effect on the Portfolio’s exploration potential and its value, impacting the Group’s operational and financial performance.
Mineral exploration and development is a speculative and high-risk undertaking that may be impacted by circumstances and factors beyond the control of the Group. Many exploration projects do not result in the discovery of commercially mineable deposits. Failure to discover new resources or to enhance existing resources in sufficient amounts and in a timely manner would materially and adversely affect the Group’s results of operations, cash flows, financial condition and prospects.
Given the spread of COVID 19 variants and notwithstanding ongoing vaccination programmes, it is conceivable that existing or new lock-down restrictions, including restrictions on the entry of personnel into Cyprus or Canada, could be maintained for longer than expected, introduced or re-introduced at any time in Cyprus, Canada and the United Kingdom (either on a semi-permanent or temporary basis). There is therefore a risk of potential disruption to the Group’s planned exploration activities which could delay the time by which the Group can generate revenues from the Portfolio and cause the Group to incur additional costs. However, the Group is able to mitigate the adverse impact of COVID 19 on the financial condition of the Group to an extent by deferring the deployment of capital resources on capital intensive activities until local lock- down or social distancing measures are lifted.
A key asset of the Group is the collective expertise and experience of its directors and technical/geological team. The Group will depend heavily upon a small number of key individuals during its early-stage development. The loss or diminution in the services of more than one of the Directors or members of the technical/geological team or an inability to recruit, train and/or retain necessary personnel could have a material and adverse effect on the Group’s business, results of operations, financial condition and prospects.
The future exploration and extraction activities of the Group may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, insufficient or unreliable infrastructure (such as power, water and transport), unanticipated metallurgical problems which may affect extraction costs, industrial and environmental accidents, changing government regulations and many other factors beyond the control of the Group.
In relation to the Adeline Copper Project, climate change could affect exploration operations in central Labrador. The past winter has been the warmest on record in Labrador with the amount of sea-ice at record levels. For mineral exploration and mining, these warming conditions might improve working conditions by decreasing the severity of winter weather. Warming conditions could limit the ability to conduct winter drilling through ice-covered bodies of water.
In Labrador and Newfoundland, the Adeline Copper Project falls in an area where the Labrador Innu (a regional indigenous group) has asserted its traditional rights. As part of the exploration permitting process any mineral exploration approval application submitted to the provincial government for work on the Adeline Copper Project will be sent to the Labrador Innu and any other stake-holder groups which might have an interest in the area. There is a risk that members of the Labrador Innu or other groups could assert traditional rights over the Adeline Copper Project area and, as such, title to the Adeline Copper Project area may be disputed.
Changes in global supply and demand for commodities such as gold and copper will have an impact on their price, which may adversely affect the business, results of operations, cash flows and financial condition of the Group. However, despite falls in the copper and gold price during the peak of the COVID 19 pandemic, at present the demand for copper in particular is emerging very strongly from the pandemic with prices currently exceeding their prevailing market prices prior to the start of the COVID 19 pandemic. However, this situation may change in the future.
|
| KEY INFORMATION ON THE SECURITIES | KEY INFORMATION ON THE SECURITIES |
| What are the main features of the securities? | What are the main features of the securities? |
| Type, Class and ISIN of the securities | The Company has two classes of share, being Ordinary Shares and Deferred Shares. Applications will be made for the Ordinary Shares issued pursuant to the Placing and the Labrador Acquisition to be admitted to the Official List of the FCA with a Standard Listing and to trading on the Main Market of the London Stock Exchange. The Ordinary Shares are registered within ISIN GB00BF2F1X78, SEDOL code BF2F1X7 and TIDM CHF. |
| Currency denomination, par value number and term of the securities. | The Ordinary Shares are denominated into UK pounds sterling and the Placing Price of the Placing Shares is payable in sterling. The nominal value of the Ordinary Shares is £0.001.
As at the date of this Document, the aggregate nominal share capital of the Company is £199,911.11 divided into 101,911,112 Ordinary Shares of £0.001 and 2,000,000 Deferred Shares of £0.049, such shares being fully paid up. The term of the securities is perpetual. |
| Rights attaching to the securities | Subject to any special terms as to voting on which any shares may have been issued, on a show of hands every member who being an individual is present in person or by proxy or, being a corporation is present by a duly authorised representative, has one vote, and on a poll every member has one vote for every share of which he is the holder. Subject to the provisions of the Companies Act and to any special rights attaching to any shares, the Shareholders are to distribute amongst themselves the profits of the Company according to their respective rights and priorities, provided that no dividend will be declared in excess of the amount recommended by the Directors. Interim dividends may be paid if profits are available for distribution and if the Board so resolves. Any dividend unclaimed after a period of 12 years from the date of its declaration will be forfeited and will revert to the Company. On a winding- up of the Company, the balance of the assets available for distribution will, subject to any sanction required by the Companies Act, be divided amongst the members. The Ordinary Shares are not redeemable.
The provisions of section 561(1) of the Companies Act (to the extent not dis-applied pursuant to sections 570-571 of the Companies Act) confer on shareholders certain rights of pre- emption in respect of the allotment of equity securities (as defined in section 560 of the Companies Act) which are, or are to be, paid up in cash.
The Company also has 2,000,000 Deferred Shares in issue (but no application has been made or will be made for these to be admitted to the Official List of the FCA or to trading on the Main Market). The Deferred Shares have no voting rights and no rights to participate in the profits
of the Company and do no confer any rights of redemption. |
| The relative seniority of the
securities. | The Ordinary Shares have seniority over the Deferred Shares in the event of an insolvency or winding up of the Company. |
| Restrictions on free transferability | Subject to the provisions of the Articles below, the Ordinary Shares are freely transferrable and there are no restrictions on transfers. Each shareholder may transfer all or any of their Ordinary Shares held in certificated form by means of an instrument of transfer (in such a form approved by the Directors).The Directors may refuse to register a transfer of Ordinary Shares which is in certificated form, unless the instrument of transfer (i) is in respect of only one class of share; (ii) is in favour of not more than four joint transferees; (iii) is duly stamped (if required); and (iv) is lodged at the Company’s registered office or such other place as the board may decide accompanied by the certificate for the shares to which it relates (except in the case of a transfer by a recognised person to whom no certificate was issued) and such evidence to prove the title of the transferor to the shares and the due execution by them of the transfer.
Shareholders may transfer all or any of their Ordinary Shares which are in uncertificated form by means of a ‘relevant system’ (i.e. the CREST System) in such manner provided for, and subject as provided in the CREST Regulations. The Board may refuse to register a transfer of an uncertificated share in any circumstances permitted by the London Stock Exchange or the CREST Regulations if the exercise of such power does not disturb the market in the shares. |
| Dividend Policy | The Directors’ current intention is to retain any earnings for use in the Group’s operations and the Directors do not anticipate declaring any dividends in the foreseeable future. The Company will only pay dividends at such times (if any) and in such amounts (if any) as the Board determines appropriate and to the extent that to do so is in accordance with all applicable laws. |
| Guarantee | Not Applicable. There is no guarantee attached to the securities. |
| Where will the securities be traded? | Where will the securities be traded? |
| Where will the securities be traded | Application will be made for the Ordinary Shares issued pursuant to the Placing and the Labrador Acquisition to be admitted to trading on the Main Market of the London Stock exchange. |
| What are the key risks that are specific to the securities? | What are the key risks that are specific to the securities? |
| What are the key risks that are specific to the securities | The Group’s operations remain at an early stage and such early stage exploration activities are inherently high-risk. Consequently, shareholders may not be able to realise a return on their investment (at all) or within a timeframe they would consider to be reasonable.
The market price of the Ordinary Shares, including the Placing Shares and the Labrador Consideration Shares, could be subject to significant fluctuations. |
| Key information on the offer of securities to the public and the admission to trading. | Key information on the offer of securities to the public and the admission to trading. |
| Under which conditions and timetable can I invest in this security? | Under which conditions and timetable can I invest in this security? |
| Terms and Conditions of the Offer | This Prospectus does not constitute an offer or an invitation to any person to subscribe for or purchase any shares in the Company. The new Ordinary Shares are not being offered to the public. Subject to and conditional upon Admission occurring by 8.00 a.m. on or before 12 July 2021(or such later date agreed between the Company and the relevant parties provided that such date is not later than the Long Stop Date) (the “Admission Condition”), the Company will raise gross proceeds of £800,000 from the issue and allotment of 8,000,000 new Ordinary Shares at the Placing Price. The Company will also issue 10,089,199 Labrador Consideration Shares, together with 11,100,000 Labrador Consideration Warrants, pursuant to the Labrador Acquisition. The terms of the Placing and Labrador Acquisition are briefly summarised below:
The Investors have irrevocably agreed to subscribe for the Placing Shares subject to and conditional upon the Admission Condition. In the event that these conditions are not satisfied or waived (where capable of waiver), the Placing will be revoked and will not proceed. In such circumstances, application monies will be returned without payment of interest, as soon as practicable thereafter, to investors participating in the Placing. The Placing Shares issued pursuant to the Placing and the Labrador Consideration Shares issued pursuant to the Labrador Acquisition shall rank pari passu with all Existing Ordinary Shares. |
| Expected Timetable | Expected Timetable
Publication of this Document 7 July 2021
Completion of Labrador Acquisition 12 July 2021
Admission and commencement of dealings in 8.00 a.m. on 12 July 2021 Ordinary Shares
Crediting of Ordinary Shares to CREST Accounts 12 July 2021
Ordinary Share Certificates dispatched Week commencing 12 July 2021 |
| Costs and Expenses | The total costs (including fees and commissions) (exclusive of VAT) payable by the Company in connection with the Placing, the Labrador Acquisition and Admission are estimated to amount to approximately £150,000. No expenses will be charged by the Company to Placees in connection with the Placing. |
| Dilution | The issue of the Placing Shares and new Ordinary Shares in connection with the Labrador Acquisition will result in the Existing Ordinary Shares being diluted so as to constitute approximately 15.07 per cent. of the Enlarged Ordinary Share Capital and 22.26 per cent. of the issued enlarged ordinary share capital assuming full exercise of the Labrador Consideration Warrants but no exercise of any other Warrants or Options. |
| Why is this prospectus being produced? | Why is this prospectus being produced? |
| Reasons for Placing and estimated proceeds | The Company expects to raise Net Proceeds of approximately £800,000 from the Placing. In the 12 months following Admission, the Group intends to use the Net Proceeds, amongst other things, to carry out further resource exploration work, for general working capital and operational expenditure purposes and in order to carry out potential future corporate activities (such as acquisitions or joint ventures). The Directors currently intend to allocate the Net Proceeds amongst those proposed uses in approximately the following proportions, as further detailed at paragraph 6 of Part I of this Document: |
| | Proposed Use Estimated Expenditure |
| | Canada exploration and project expansion £650,000 |
| | |
| Underwriting | The Placing is not underwritten but each investor participating in the Placing has provided a legally binding commitment to irrevocably subscribe for Placing Shares subject to and conditional upon Admission occurring by 12 July 2021 (or such later date as agreed in writing between the parties, provided such date is not later than 31 July 2021). |
| Material Interests | Save as disclosed herein, there are no interests, including any conflicting interests, known to the Company that are material to the Company or the Placing. The Directors have interests in other companies, which are in some cases of a similar nature to the Company. This may lead to conflicts of interest as a result of fiduciary obligations owed to both Companies, or simply lead to conflicts in allocating sufficient management time to the Company. The Directors may become aware of business opportunities and experience conflicts when deciding which of the companies they are interested in to present the opportunity to, which may be to the detriment of the Company. |
| Event | Time and/or Date |
|---|---|
| Publication of this Document | 7July 2021 |
| Completion of Labrador Acquisition |
Admission and commencement of unconditional dealings in Placing Shares and Labrador Consideration Shares
| 12 July 2021
8.00 a.m. on 12 July 2021 |
| CREST members' accounts credited in respect of the Placing Shares and Labrador Consideration Shares in uncertified form
| 12 July 2021 |
| Despatch of definitive share certificates in respect of the Placing Shares and Labrador Consideration Shares in certified form | Week commencing 12 July 2021 |
| Number of Existing Ordinary Shares | 101,911,112 |
|---|---|
| Number of Deferred Shares | 2,000,000 |
| Number of Placing Shares | 8,000,000 |
| Number of Labrador Consideration Shares | 10,089,199 |
| Number of Labrador Consideration Warrants | 11,100,000 |
| Number of Ordinary Shares in issue on Admission | 120,000,311 |
| Number of Deferred Shares in issue on Admission | 2,000,000 |
| Percentage of Enlarged Ordinary Share Capital represented by the Placing Shares and Labrador Consideration Shares | 15.07% |
| Percentage of issued ordinary share capital of the Company represented by the Placing Shares, Labrador Consideration Shares and Labrador Consideration Warrants (assuming full exercise of Labrador Consideration Warrants and no exercise of any other Warrants or Options) | |
| Placing Price |
22.26%
£0.10p |
| Gross proceeds of the Placing | £800,000 |
| Estimated Net Proceeds receivable by the Company | £700,000 |
| Estimated expenses of Placing, Labrador Acquisition and Admission (excluding VAT) | £150,000 |
| Total Warrants in issue on Admission, including the Labrador Consideration Warrants | 17,164,889 |
| Total Options in issue on Admission | 13,755,000 |
| Proposed Use | Estimated Expenditure | Estimated Expenditure |
|---|---|---|
| Exploration and project expansion | ||
| Canada – Initial Programme | ||
| Airfares/charter | £163,000 | £163,000 |
| Accommodation | £33,000 | £33,000 |
| Wages | £26,000 | £26,000 |
| Consultants and costs | £101,500 | £101,500 |
| Equipment | £7,000 | £7,000 |
| Analytical | £24,000 | £24,000 |
| Contingency | £15,065 | £15,065 |
| HST 15% | £55,435 | £55,435 |
| Canada total | £425,000 | £425,000 |
| Other Expenditures | ||
| Other Expenditures | ||
|
|
| Exploration - Canada | Exploration - Canada | £225,000 | £225,000 |
| Adviser, commission and other fees | Adviser, commission and other fees | | |
| Brokerage fees | Brokerage fees | £50,000 | £50,000 |
| Legal fees | Legal fees | £60,000 | £60,000 |
| Other advisers/fees | Other advisers/fees | £40,000 | £40,000 |
| Sub total | Sub total | £375,000 | £375,000 |
| TOTAL | TOTAL | £800,000 | £800,000 |
| | Ordinary Shares Issued on Admission | Issue Price | Gross Proceeds Raised
(£) |
| --- | --- | --- | --- |
| Placing | 8,000,000 | Placing Price (£0.10p) | £800,000 |
| Total | 8,000,000 | Placing Price (£0.10p)
| £800,000 |
| Placing | The Placees are investment professionals and high net worth, sophisticated and institutional investors in the UK. Placees have been introduced by Panmure Gordon, as broker to the Company. |
|---|---|
| As at the date of this Document | As at the date of this Document | On Admission | On Admission |
|---|---|---|---|
| Ordinary Shares | Nominal Value | Ordinary Shares | Nominal Value |
| 101,911,112 | £101,911.112 | 120,000,311 | £120,000.311 |
| Deferred Shares | Nominal Value | Deferred Shares | Nominal Value |
| 2,000,000 | £98,000 | 2,000,000 | £98,000 |
| As at the date of this Document | As at the date of this Document | Immediately following Admission | Immediately following Admission | |
|---|---|---|---|---|
| Name of Director | Number of Ordinary Shares | Percentage of issued Ordinary share capital | Number of Ordinary Shares | Percentage of issued Ordinary share capital |
| Martin French | 3,175,000 | 3.12 | 3,175, 000 | 2.65 |
| Peter Damouni | 1,583,000 | 1.55 | 1,583,000 | 1.32 |
| David Cliff | 450,000 | 0.44 | 450,000 | 0.37 |
| Ajay Kejriwal | 150,000 | 0.15 | 150,000 | 0.12 |
| Paul Ensor | 172,841 | 0.17 | 172,841 | 0.14 |
| Name | Number of Ordinary Shares as at date of this Document | % of Existing Ordinary Share Capital | Number of Ordinary Shares as at Admission (pre/post exercise of Labrador Consideration Warrants)* | % of the Enlarged Ordinary Share Capital/issued ordinary share capital post exercise of Labrador Consideration Warrants* | % of Dilution (pre/post exercise of Labrador Consideration Warrants)*. |
|---|---|---|---|---|---|
| Polymetal | |||||
| 23,333,334 | |||||
| 22.90 | |||||
| 23,333,334/23,333,334 | |||||
| 19.44/17.80 | |||||
| 15.07/22.26 | |||||
| Claudio Ciaverella | |||||
| 4,440,000 | |||||
| 4.36 | |||||
| 4,440,000/4,440,000 | |||||
| 3.70/3.39 | |||||
| 15.07/22.26 | |||||
| Leo Berezan | 4,201,334 | 4.12 | 4,201,334/4,201,334 | 3.50/3.20 | 15.07/22.26 |
| Kingfisher | 3,350,000 | 3.29 | 3,350,000/3,350,000 | 2.79/2.56 | 15.07/22.26 |
| Martin French | 3,175,000 | 3.12 | 3,175,000/3,175,000 | 2.65/2.42 | 15.07/22.26 |
| Robert McFadden | 2,232,937 | 2.19 | 2,232,937/2,232,937 | 1.86/1.70 | 15.07/22.26 |
| Altius | 0 | 0 | 10,089,199/21,189,199 | 8.41/16.16 | N/A |
| Date of Issue | Name of Option Holder | Number of
Options | | Exercise
Price | Vesting
Date | Expiry
Date |
| --- | --- | --- | --- | --- | --- | --- |
| 7.5p Options issued in connection with IPO Admission | 7.5p Options issued in connection with IPO Admission | 7.5p Options issued in connection with IPO Admission | 7.5p Options issued in connection with IPO Admission | 7.5p Options issued in connection with IPO Admission | 7.5p Options issued in connection with IPO Admission | 7.5p Options issued in connection with IPO Admission |
| 28/06/2018 | Christopher Raymon John Hall | 175,000 | | 7.5p | 3/01/19 | 3/07/23 |
| 28/06/2018 | Derek Crowhurst | 700,000 | | 7.5p | 3/01/19 | 3/07/23 |
| 28/06/2018 | Michael Godfrey Green | 700,000 | | 7.5p | 3/01/19 | 3/07/23 |
| 28/06/2018 | David John Hall | 115,000 | | 7.5p | 3/01/19 | 3/07/23 |
| 28/06/2018 | Jeremy John Martin | 115,000 | | 7.5p | 3/01/19 | 3/07/23 |
| 5p Options issued in December 2019 | 5p Options issued in December 2019 | 5p Options issued in December 2019 | 5p Options issued in December 2019 | 5p Options issued in December 2019 | 5p Options issued in December 2019 | 5p Options issued in December 2019 |
| 17/12/2019 | Martin French | 1,000,000 | | 5p | 1/01/20 | 1/01/25 |
| 17/12/2019 | Michael Parker | 500,000 | | 5p | 1/01/20 | 1/01/25 |
| 17/12/2019 | Peter Damouni | 250,000 | | 5p | 1/01/20 | 1/01/25 |
| 17/12/2019 | Neil O'Brien | 250,000 | | 5p | 1/01/20 | 1/01/25 |
| 17/12/2019 | David Cliff | 100,000 | | 5p | 1/01/20 | 1/01/25 |
| 17/12/2019 | Ryan Fells | 100,000 | | 5p | 1/01/20 | 1/01/25 |
| 17/12/2019 | George Clegg | 100,000 | | 5p | 1/01/20 | 1/01/25 |
| Repricing of existing Options to 5.25p in connection with the July 2020 Placing | Repricing of existing Options to 5.25p in connection with the July 2020 Placing | Repricing of existing Options to 5.25p in connection with the July 2020 Placing | Repricing of existing Options to 5.25p in connection with the July 2020 Placing | Repricing of existing Options to 5.25p in connection with the July 2020 Placing | Repricing of existing Options to 5.25p in connection with the July 2020 Placing | Repricing of existing Options to 5.25p* in connection with the July 2020 Placing |
| 27/07/2020 | David Charles Cliff | 465,000 | | 5.25p | 27/07/20 | 3/07/23 |
| 27/07/2020 | Peter Damouni | 700,000 | | 5.25p | 27/07/20 | 3/07/23 |
| 27/07/2020 | Martin French | 1,400,000 | | 5.25p | 27/07/20 | 3/07/23 |
| 5.25p Option Issue in connection with the July 2020 Placing | 5.25p Option Issue in connection with the July 2020 Placing | 5.25p Option Issue in connection with the July 2020 Placing | 5.25p Option Issue in connection with the July 2020 Placing | 5.25p Option Issue in connection with the July 2020 Placing | 5.25p Option Issue in connection with the July 2020 Placing | 5.25p Option Issue in connection with the July 2020 Placing |
| 27/07/2020 | Martin French | 500,000 | | 5.25p | 27/07/20 | 27/07/25 |
| 27/07/2020 | Peter Damouni | 500,000 | | 5.25p | 27/07/20 | 27/07/25 |
| 27/07/2020 | Michael Parker | 250,000 | | 5.25p | 27/07/20 | 27/07/25 |
| 27/07/2020 | Neil O'Brien | 500,000 | | 5.25p | 27/07/20 | 27/07/25 |
| 27/07/2020 | David Charles Cliff | 185,000 | | 5.25p | 27/07/20 | 27/07/25 |
| 27/07/2020 | Rod Whyte | 100,000 | | 5.25p | 27/07/20 | 27/07/25 |
| 9p Option Issue in connection with December 2020 Fundraise | 9p Option Issue in connection with December 2020 Fundraise | 9p Option Issue in connection with December 2020 Fundraise | 9p Option Issue in connection with December 2020 Fundraise | 9p Option Issue in connection with December 2020 Fundraise | 9p Option Issue in connection with December 2020 Fundraise | 9p Option Issue in connection with December 2020 Fundraise |
| 26/11/2020 | Martin French | 1,000,000 | | December 2020 Fundraise Price | 26/11/2020 | 25/11/25 |
| 14p Options issued in January 2021 | 14p Options issued in January 2021 | 14p Options issued in January 2021 | 14p Options issued in January 2021 | 14p Options issued in January 2021 | 14p Options issued in January 2021 | 14p Options issued in January 2021 |
| 05/01/2021 | Neil O’Brien | 750,000 | | 14p | 05/01/21 | 05/01/26 |
| 05/01/2021 | George Clegg | 200,000 | | 14p | 05/01/21 | 05/01/26 |
| 05/01/2021 | Ryan Fells | 200,000 | | 14p | 05/01/21 | 05/01/26 |
| 05/01/2021 | Paul Ensor | 250,000 | | 14p | 05/01/21 | 05/01/26 |
| 12.5p Options issued in February 2021 | 12.5p Options issued in February 2021 | 12.5p Options issued in February 2021 | 12.5p Options issued in February 2021 | 12.5p Options issued in February 2021 | 12.5p Options issued in February 2021 | 12.5p Options issued in February 2021 |
| 04/02/2021 | Ajay Kejriwal | 250,000 | | 12.5p | 04/02/21 | 04/02/26 |
| 12p Options issued in July 2021 | 12p Options issued in July 2021 | 12p Options issued in July 2021 | 12p Options issued in July 2021 | 12p Options issued in July 2021 | 12p Options issued in July 2021 | 12p Options issued in July 2021 |
| 02/07/2021 | Neil O’Brien | 1,000,000 | | 12p | 02/07/21 | 02/07/26 |
| 02/07/2021 | Ajay Kerjiwal | 500,000 | | 12p | 02/07/21 | 02/07/26 |
| 02/07/2021 | Paul Ensor | 250,000 | | 12p | 02/07/21 | 02/07/26 |
| 02/07/2021 | Dave Cliff | 250,000 | | 12p | 02/07/21 | 02/07/26 |
| 02/07/2021 | Ryan Fells | 200,000 | | 12p | 02/07/21 | 02/07/26 |
| 02/07/2021 | George Clegg | 200,000 | | 12p | 02/07/21 | 02/07/26 |
| | TOTAL | 13,755,000 | | | | |
| Warrant Holder | Warrant Instrument | Warrant Instrument | Date Issue | of | Number Shares subject Warrant | of to | Exercise Period | Exercise Period | Exercise share | Price | per |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Seed | Series | A | 1,200,000 | 1,200,000 | 5,000,000 | 5,000,000 | Until 29 August | Until 29 August | £0.05 | £0.05 | £0.05 |
| Investors | Warrant Deed | Warrant Deed | on | 16 | 2025 | 2025 | |||||
| March | March | ||||||||||
| 2017 | 2017 | ||||||||||
| 4,000,000 | 4,000,000 | ||||||||||
| on | 24 | ||||||||||
| April 2017 | April 2017 | ||||||||||
| Fox Davies | Broker Warrant Instrument | Broker Warrant Instrument | 13 August | ||||||||
| 2020 | 13 August | ||||||||||
| 2020 | 390,000 | 390,000 | Until 31 | ||||||||
| 2025 | July | £0.0525 | £0.0525 | £0.0525 | |||||||
| Fox Davies | Broker Warrant Instrument | Broker Warrant Instrument | 14 August | ||||||||
| 2020 | 14 August | ||||||||||
| 2020 | 619,333 | 619,333 | until 16 July 2025 | until 16 July 2025 | £0.10 | £0.10 | £0.10 | ||||
| Fox Davies | Broker Warrant Instrument | Broker Warrant Instrument | 11 December 2020 | 11 December 2020 | 55,556 | 55,556 | 5 years 11 December 2020 | from | December 2020 Fundraise Price | December 2020 Fundraise Price | December 2020 Fundraise Price |
| Altius | Altius Warrant Instrument | Altius Warrant Instrument | To be entered into on completion of the Labrador Acquisition | To be entered into on completion of the Labrador Acquisition | 11,100,000 | 11,100,000 | 3 years from Admission | £0.20 | £0.20 | £0.20 | |
| TOTAL | TOTAL | 17,164,889 | 17,164,889 |
| Date | Key aspects of regulatory disclosure |
|---|---|
| 02.07.21 | Details of the management incentive options over a total of 2,400,000 Ordinary Shares with an exercise price of 12p issued to certain Directors and key personnel, details of which are set out at paragraph 10 of Part VII above. |
| 02.07.21 | The successful completion of the placing announced on 1 July 2021, which raised £800,000, upsized from the original £750,000 previously announced. |
| A total of 8,000,000 Placing Shares have been placed with new and existing investors at a placing price of 10 pence per Placing Share. | |
| 01.07.21 | The announcement of a proposed placing of up to £750,000 at a price of 10p per ordinary share, with Panmure Gordon acting as sole bookrunner in relation to the Placing. |
| 30.06.21 | The announcement that, following the Company’s Annual General Meeting held on 30 June 2021, all resolutions were duly passed. |
| 28.06.21 | The commencement of the diamond drilling programme in Cyprus, exploring for copper, together with good credits in gold, silver and zinc. |
| The programme is expected to cover approximately 2,000m of drilling. | |
| 16.06.21 | The exercise of the right to acquire a considerable number of new mineral licences to more than double the size of the Adeline Copper Project. The licences will be acquired when the Company completes the Labrador Acquisition. |
| The total licence area of the Adeline Copper Project to be extended to nearly 300 KM2 , in one continuous block. | |
| Details of the commencement of exploration programmes on the Adeline Copper Project. | |
| 08.06.21 | The posting of a new presentation on the Company’s website to introduce the Labrador Acquisition. |
| Further operational updates of the copper exploration programmes in Cyprus and Labrador to be provided soon. | |
| 04.06.21 | Notice that the Company’s annual general meeting will be held on 30 June 2021 at 11am at the Company’s registered office. |
| Copies of the notice of annual general meeting, together with the form of proxy and the annual report to be posted to shareholders and available to view on the Company’s website. | |
| 19.05.21 | The acquisition of the Adeline Copper Project in the Labrador region of eastern Canada. |
| Altius to become a strategic partner to the Company and help manage the Adeline Copper Project. | |
| 06.05.21 | The report of good progress on percussion drilling and geophysics campaigns. |
| The discovery of a compelling large new anomaly, which is now confirmed as a high-priority drill target. | |
| Details of a down hole EM (electro-magnetic) campaign to commence imminently. | |
| Details of an additional new geophysics campaign commissioned and Diamond Drilling to start within weeks. | |
| 30.04.21 | The publication of the final results for the year ended 31 December 2020 and the annual report. The annual report is to be posted to shareholders and notice provided of the annual general meeting. |
| 20.04.21 | The hosting of a webinar on Thursday, April 22 at 1pm to talk investors through the new presentation “Growth through Exploration and Acquisition” posted on the company website and answer questions. |
| 15.04.21 | The commencement of the programme of percussion drilling as part of the 2021 exploration programme in Cyprus and the exploration for further copper, gold, zinc and silver, after a successful diamond drill programme of late 2020. |
| Details of 15 percussion drill holes planned during April and May to test target zones for presence of blind sulphide mineralisation and to provide boreholes for downhole EM (electro-magnetic) survey. | |
| 12.04.21 | The commencement of the 2021 mineral exploration campaign in Cyprus to search for additional tonnage of copper, gold, silver and zinc after high grade intercepts were assayed in February. |
| Details of gravity survey commencement on five main target areas, with approximately 800 survey points planned over 5km² | |
| Details of AMT survey commencement on three main target areas, with approximately 250 survey points planned over 2.25km² | |
| 05.03.21 | Peter Damouni purchased 50,000 Ordinary Shares at an aggregate price of 9.23 pence per Ordinary Share. Following this transaction, Mr Damouni’s total interest in the Company is now 1,583,000 Ordinary Shares, representing 1.5% of the total voting rights of the Company. |
| Martin French purchased 175,000 Ordinary Shares at an aggregate price of 9.17 pence per Ordinary Share. Following this transaction, Mr French’s total interest in the Company is now 3,175,000 Ordinary Shares, representing 3.1% of the total voting rights of the Company. | |
| Ajay Kejriwal purchased 150,000 Ordinary Shares at an aggregate price of 150,000 Ordinary Shares at an aggregate price of 9.3 pence per Ordinary Share. Following this transaction, Mr Kejriwal’s total interest in the Company is now 150,000 Ordinary Shares representing 0.1% of the total voting rights of the Company. | |
| 05.03.21 | Paul Ensor purchased 154,853 Ordinary Shares at an aggregate price of 8.7 pence per Ordinary Share. Following this transaction, Mr Ensor’s total interest in the Company is now 172,841 Ordinary Shares, representing 0.001% of the total voting rights of the Company. |
| 24.02.21 | Details of results for the Company’s recent Diamond Drilling programme on its copper, gold, zinc and silver exploration project in Cyprus. |
| Details of the Company’s integrated exploration programme for the 2021 season. | |
| 05.02.21 | The appointment of Ajay Kejriwal as executive director and Chief Financial Officer of the Company and Paul Ensor as non-executive director of the Company. |
| Operational update details of assay results from the Diamond Drilling programme of late 2020 and plans for the Company’s 2021 exploration programme. | |
| Details of the Options over a total of 250,000 Ordinary Shares in the Company issued to Ajay Kejriwal which will vest immediately and expire five years from the date of issue with an exercise price of 12.5p, details of which are set out at paragraph 10 of Part VII above. | |
| 14.01.21 | Details of the notifications from holders of the Warrants to exercise Warrants over 200,000 new Ordinary Shares in the Company at a price of 5p per Ordinary Share and the issuance of the 200,000 new Ordinary Shares for an aggregate cash value of £10,000. |
| 13.01.2021 | The appointment of Evgeny Vrublevskiy as a director of the Company. Evgeny is the nominated director of Polymetal. |
| 05.01.2021 | The appointment of Neil O’Brien as Director of Exploration and of George Clegg and Ryan Fells as Exploration Geologists. |
| Details of the management incentive Options over a total of 1,400,000 Ordinary Shares with an exercise price of 14p issued to Neil O’Brien, George Clegg, Ryan Fells and Paul Ensor. | |
| 22.12.2020 | TR1 notifying that Polymetal holds 23,333,334 Ordinary Shares in the Company which represents 22.94% of the Ordinary Share Capital |
| 14.12.2020 | The appointment of Panmure Gordon as joint broker. |
| 08.12.2020 | Details of gross proceeds of £2,500,000 from the conditional issue and allotment of 27,777,778 Ordinary Shares at the December 2020 Fundraise Price and the publication of a prospectus in connection with the December 2020 Fundraise. |
| 26.11.2020 | Polymetal’s agreement to invest £2,100,000 in the Company, by subscribing for 23,333,334 Ordinary Shares at the December 2020 Fundraise Price and the proposed entry into a relationship agreement between the Company and Polymetal. The Company is planning geophysics surveys over the winter, with a renewed campaign of Diamond Drilling in the second quarter of 2021. The Company also announced the grant of 1,000,000 Options to Martin French, details of which are set out in paragraph 10 of this Part VII. |
| 17.11.2020 | TR1 notifying that Robert McFadden holds 2,232,937 Ordinary Shares in the Company which represents 3.02% of the Ordinary Share capital. |
| 13.11.2020 | Details in relation to the preliminary results from the Company’s AMT Geophysics survey at Troodos West. The AMT survey correctly identified known deposits and current Diamond Drilling has successfully encountered fresh mineralisation in several holes vectored by the AMT survey. The strong results led the AMT survey being extended to Troodos North. The AMT survey has provided strong indications of potential extensions to a high-grade historic mine at Agrokipia. |
| 13.10.2020 | The expansion of the Portfolio at Troodos West through the application for two new Prospecting Permits and the concession of land at Troodos East and Troodos North. The Company also announced that Michael Parker is transitioning to be a part time consultant for the Company rather than managing director. |
| 30.09.2020 | The Chairman’s review of 2020 to date including updates regarding the impact of COVID19 on the Group (including the four month delay to and subsequent recommencement of its drill programme at Troodos West), a positive assessment of the copper and gold prices and an update on the Audio Magnetotellurics (AMT) Geophysics Survey |
| 15/09/2020 | The commencement of a 2,000 metre diamond drill programme on the Company’s Troodos West copper and gold exploration licences in Cyprus, alongside which the Company will carry out Percussion Drilling and an AMT geophysics survey. |
| 01/09/2020 | The commissioning of an AMT geophysics survey for the Group’s Troodos West licence area in Cyprus, which will assist in the exploration for copper and gold mineralisation. |
| 20/08/2020 | The Company’s intention to carry out a 2,000 metre Diamond Drilling programme in September 2020 at Troodos West. The Company announced that the first six drill holes comprising approximately 1,000, have been identified and are drill ready with access infrastructure already established. |
That 7 percussion holes had recently been drilled on three targets, namely Sliver, Copse West and Reef Cover. The sediments in Sliver and Reef Cover proved much thicker than expected and presented challenging conditions and as such these targets remain untested and the holes have been abandoned. The hole at Copse West has not yet encountered minerals, however it is approximately 1km long and two third of it is yet to be tested. |
| 29/07/2020 | The issuance of 12,000,000 new Ordinary Shares in the Company, which were admitted to trading on the Main Market on 31 July 2020. |
| 27/07/2020 | The completion by the Company of a fundraise of £630,000 by way of conditional placing and subscription for 12,000,000 new Ordinary Shares at a price of 5.25 pence per share.
The appointment of Fox Davies as the Company’s broker.
The issuance of 1,093,333 warrants to Fox Davies, details of which are set out at paragraph 11 of Part VII.
The issuance of Options over 1,935,000 Ordinary Shares, details of which are set out in paragraph 10 of Part VII.
The repricing of 2,565,000 Options previously granted to the Directors, to have an exercise price of 5.25 pence details of which are set out at paragraph 10 of Part VII. |
| 16/07/2020 | The Company’s Percussion Drilling would recommence after technical review with several new target areas being made ready for drilling and that planning is underway for at least 2,000 metres of Diamond Drilling at Evlim and additional targets. The Company had halted drilling as it had encountered intersections of sulphide mineralisation.
New areas are being prepared for Percussion Drilling including targets at Zakhira and others in the vicinity of Kinousa and further holes are being appraised at targets Embayment, Pournaji and the Hillside complex. The Company states that it believes that there is strong evidence of VMS Deposits and that the next step is to test with 1,000 metres of Diamond Drilling. |
| 10/07/2020 | The Company has encountered significant intersections of sulphide mineralisation at its Evlim target during step-out drilling. |
| Licence number | Community Name | Project | Area Granted (sq km) | Type | Status | Date granted | Duration |
|---|---|---|---|---|---|---|---|
| Granted Prospecting Permits | Granted Prospecting Permits | Granted Prospecting Permits | Granted Prospecting Permits | Granted Prospecting Permits | Granted Prospecting Permits | Granted Prospecting Permits | Granted Prospecting Permits |
| AE4727 | Asproyia, Pano Panayia | Discovery | |||||
| South | 2.48 | Exploration | GRANTED | 14l12l2019 | 14/12/2020-13/12/2021 | ||
| AE4740 | Ayios Ioannis, Ayios Nikolaos, Bretsia, Mulikouri, Pano Panayia | Discovery | |||||
| South | 11.403 | Reconnaissance | GRANTED | 09l03l2020 | 09/03/2021-08/03/2022 | ||
| AE4741 | Ayios Nikolaos, Kato Platres, Mandria, Omodos | Discovery | |||||
| South | 16.474 | Reconnaissance | GRANTED | 04l02l2020 | 04/02/2021-03/02/2022 | ||
| AE4765 | Asproyia- | ||||||
| Panayia | Discovery | ||||||
| South | 4.41 | Exploration | GRANTED | 14l05l2020 | 14/05/2020-13/05/2022 | ||
| AE4708 | Ayios Epifanios, Agrokipia, Kalo Chorio, Klirou, Mitsero | Troodos | |||||
| North | 4.89 | Exploration | GRANTED | 05l02l2019 | 05/02/2021-04/02/2022 | ||
| AE4709 | Agrokipia, Mitsero | Troodos | |||||
| North | 2.85 | Exploration | GRANTED | 05l02l2019 | 05/02/2021-04/02/2022 | ||
| AE4659 | Kynousa, Makounta | Troodos | |||||
| West | 3.73 | Exploration | GRANTED | 10l01l2018 | 10/01/2021-09/01/2022 | ||
| AE4660 | Kynousa, Lysos, Pelathousa | Troodos | |||||
| West | 5.00 | Exploration | GRANTED | 10l01l2018 | 10/01/2021-09/01/2022 | ||
| AE4661 | Kynousa, Lysos | Troodos | |||||
| West | 4.99 | Exploration | GRANTED | 10l01l2018 | 10/01/2021-09/01/2022 | ||
| AE4664 | Kynousa, Lysos, Peristerona, Melandra, Filousa | Troodos | |||||
| West | 3.90 | Exploration | GRANTED | 10l01l2018 | 10/01/2021-09/01/2022 | ||
| AE4665 | Lysos, Melandra, Zacharia | Troodos | |||||
| West | 5.00 | Exploration | GRANTED | 10l01l2018 | 10/01/2021-09/01/2022 | ||
| AE4672 | Anadiou, Kios, Filousa | Troodos | |||||
| West | 4.67 | Exploration | GRANTED | 07l03l2018 | 07/03/2021-06/03/2022 | ||
| AE4673 | Anadiou, Saramas | Troodos | |||||
| West | 4.82 | Exploration | GRANTED | 07l03l2018 | 07/03/2021-06/03/2022 | ||
| AE4722 | Ayios Isidoros, Lysos, Pelathousa, Peristerona | Troodos | |||||
| West | 3.00 | Exploration | GRANTED | 14l12l2019 | 14/12/2020-13/12/2021 | ||
| AE4724 | Lysos, Meladra, Zacharia | Troodos | |||||
| West | 2.45 | Exploration | GRANTED | 29l03l2019 | 29/032021-28/03/2022 | ||
| AE4728 | Anadiou, Kannaviou, Kritou | ||||||
| Marottou | Troodos | ||||||
| West | 4.675 | Exploration | GRANTED | 14l12l2019 | 14/12/2020-13/12/2021 | ||
| AE4739 | Anadiou, Kios, Saramas | Troodos | |||||
| West | 4.15 | Exploration | GRANTED | 09l03l2020 | 09/03/2021-08/03/2022 | ||
| AE4777 | |||||||
| Lysos, Pelathousa | Troodos West | ||||||
| 0.37 | |||||||
| Exploration | |||||||
| GRANTED | 30l11l2020 | 30/11/2020-29/11/2021 | |||||
| AE4778 | |||||||
| Melandra, Peristerona, Filousa | Troodos West | ||||||
| 2.87 | |||||||
| Exploration | |||||||
| GRANTED | 30l11l2020 | 30/11/2020-29/11/2021 | |||||
| AE4788 | |||||||
| Makounta, Pelathousa, | |||||||
| Polis | Troodos West | ||||||
| 3.25 | |||||||
| Exploration | |||||||
| GRANTED | |||||||
| 01/03/2021 | 01/03/2021-28/02/2022 | ||||||
| Total | |||||||
| Area | 95.382 |
| Licence
Number | License Status | No. of Claims | No. of
Hectares | Application
Date | Issuance
Date | Renewal
Date | Tenure
Year | Work Due
Date | Work
Required
(CDN$) | Report
Due Date | Refundable Deposits
(CDN$) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 031789M | Issued | 256 | 6,400 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 51,200 | 2022-Feb-25 | 12,800 |
| 031790M | Issued | 229 | 5,725 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 45,800 | 2022-Feb-25 | 11,450 |
| 031791M | Issued | 4 | 100 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 800 | 2022-Feb-25 | 200 |
| 031792M | Issued | 12 | 300 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 2,400 | 2022-Feb-25 | 600 |
| 031793M | Issued | 16 | 400 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 3,200 | 2022-Feb-25 | 800 |
| 032466M | Issued | 69 | 1,725 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 13,800 | 2022-Jul-21 | 3,450 |
| 032467M | Issued | 161 | 4,025 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 32,200 | 2022-Jul-21 | 8,050 |
| 032468M | Issued | 151 | 3,775 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 30,200 | 2022-Jul-21 | 7,550 |
| 032469M | Issued | 150 | 3,750 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 30,000 | 2022-Jul-21 | 7,500 |
| 032470M | Issued | 141 | 3,525 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 28,200 | 2022-Jul-21 | 7,050 |
| TOTALS | | 1,189 | 29,725 | | | | | | 237,800 | | 59,450 |
| “Acquisition” | the acquisition by the Company of the entire issued share capital of CRCL (formerly HKP) pursuant to the Acquisition Agreement; |
|---|---|
| “Acquisition Agreement” | the acquisition agreement dated 28 June 2018 between the Company and the Principal HKP Sellers relating to the Acquisition; |
| “Adeline Copper Project” | the project area covered by certain of the Granted Prospecting Permits (namely 031789M, 031790M, 031791M, 031792M and 031793M) in central Labrador, within the Province of Newfoundland Labrador, Canada; |
| “Admission” | admission of the Placing Shares and the Labrador Consideration Shares to the Standard Listed segment of the Official List and to trading on the London Stock Exchange’s Main Market for listed securities; |
| “Altius” | Altius Minerals Corporation, incorporated and registered in the Province of Alberta, Canada whose registered office is at 2nd Floor, 38 Duffy Place, St John’s, NL, A1B 4M5, Canada, including, where relevant, its affiliates Altius Resources Inc. and Altius Royalty Corporation; |
| “Altius Warrant Instrument” | the warrant instrument to be entered into by the Company in favour of Altius relating to the Labrador Acquisition, details of which are set out in paragraph 14.1 of Part VII of this Document; |
| “AMT” or “Audio-Magnetotellurics” | an advanced technology that measures the natural electromagnetic signals in the earth’s crust, which is generated by lightning strikes, to create a high resolution image of geological features underground; |
| “Articles” | the articles of association of the Company; |
| “Board” | the board of directors of the Company from time to time; |
| “Broker Warrant Instruments” | the warrant deeds dated 13 August 2020 and 14 August 2020 setting out the terms of the Broker Warrants, details of which are set out in paragraph 14.4 of VII of this Document; |
| “Broker Warrants” | Together the warrants granted to Fox Davies as set out in paragraph 14.4 of Part VII; |
| “Company” or “Chesterfield Resources” | Chesterfield Resources plc, a company incorporated in England and Wales with company number 10545738; |
| “Companies Act” | the Companies Act 2006, as amended; |
| “Competent Person” | Derek H.C. Wilton, Ph.D., P.Geo. of Terra Rosetta Inc.; |
| “Competent Person’s Report” | the report of the Competent Person attached to this Document at Annex I; |
| “Consideration Shares” | the 6,666,667 new Ordinary Shares allotted and issued to the HKP Sellers pursuant to the Acquisition; |
| “Corporate Governance Code” | the code of best practice including the principles of good governance known as the “UK Corporate Governance Code” (the latest edition of which was published in July 2018) published by the Financial Reporting Council as amended from time to time; |
| “COVID 19” | a coronavirus identified as the cause of an outbreak of respiratory illness that was first detected in Wuhan city, Hubei province in China in Q4 2019; |
| “CRCL” | Chesterfield Resources (Cyprus) Limited, a company incorporated in Cyprus with company number HE 333726 (formerly HKP); |
| “CREST” | the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the operator (as defined in the CREST Regulations); |
| “CREST Regulations” | the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended; “Deferred Shares” deferred shares of 4.9p each in the capital of the Company; |
| “December 2020 Fundraise” | a fundraise of £2,500,000 carried out by the Company which completed on 11 December 2020 and which included the December 2020 Placing, the Subscription and the Investment Commitment; |
| “December 2020 Fundraise Price” | the price at which the December 2020 Placing Shares were issued pursuant to the December 2020 Fundraise, being £0.09 per December 2020 Fundraise Share; |
| “December 2020 Fundraise Shares” | together, the Investment Commitment Shares, the December 2020 Placing Shares and the Subscription Shares; |
| “December 2020 Placing” | the placing of the December 2020 Placing Shares by Fox Davies at the December 2020 Fundraise Price pursuant to the December 2020 Placing Agreement; |
| “December 2020 Placing Agreement” | the placing agreement dated 7 December 2020, between the Company and Fox Davies; |
| “December 2020 Placing Shares” | the 1,111,111 new Ordinary Shares allotted and issued to the placees pursuant to the December 2020 Placing; |
| “Diamond Drilling” | a mineral resource drilling technique which yields rock core samples suitable for accurate assays (which are compliant with the Joint Ore Reserves Committee’s (JORC) standards) and geological inspections, and produces more precise information than Percussion Drilling; |
| “Directors” | the directors of the Company as at the date of this Document whose names are set out on page 27 of this Document; |
| “Disclosure Guidance and Transparency Rules” | the Disclosure Guidance and Transparency Rules of the UK Listing Authority made in accordance with section 73A of FSMA; |
| “Document” | means this document; |
| “Enlarged Ordinary Share Capital” | the entire issued ordinary share capital of the Company upon Admission, comprising the Existing Ordinary Shares, the Placing Shares and the Labrador Consideration Shares; |
| “Granted Map-Staked Mineral Licences” | the Map-Stakes Mineral Licences granted to and held by NLCO as detailed in the first section of the table at paragraph 15 of Part VII, or any of them, as the case may be; |
|---|---|
| “Map-Staked Mineral Licences“ | a map staked-mineral licence granted by the Government of Newfoundland and Labrador; |
|---|---|
| “Prospecting Permit Map Staked Mineral Licence Application” | the application for a Map-Staked Mineral Licence made by the Group, which has not been granted as at the date of this Document (namely 032466M, 032467M, 032468M, 032469M and 032470M at the Adeline Copper Project); |
| “Share Purchase
Agreement” | the share purchase agreement dated 18 May 2021 between the Company and Altius relating to the Labrador Acquisition, details of which are set out in paragraph 14.1 of Part VII of this Document; |
| --- | --- |
| Source | Abbreviation | Source | Abbreviation | |
|---|---|---|---|---|
| Competent Person | CP | Qualified Person | QP | |
| Professional Geoscientist | PGeo. | Fellow, Geoscientists Canada | FGC | |
| United Kingdom Listing Authority | UKLA | Letter of Intent | LOI | |
| Syngenetic Sediment-hosted Stratiform Copper | SSC | Above Sea Level | ASL, asl | |
| Department of Industry, Energy and Technology, Government of Newfoundland and Labrador | DIET | Province of Newfoundland and Labrador | NL | |
| Mineral Rights Administration System, DIET | MIRAID | Mineral Occurrence Database System, DIET | MODS | |
| Universal Transverse Mercator co-ordinate system | UTM | National Topographic System, Canada | NTS | |
| Million years | Ma | Billion years | Ga | |
| Temperatures, celsius | oC | Altius Resources Inc. | Altius |
| Licence
Number | License Status | No. of Claims | No. of
Hectares | Application
Date | Issuance
Date | Renewal
Date | Tenure
Year | Work Due
Date | Work
Required
(CDN$) | Report
Due Date | Refundable Deposits
(CDN$) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 031789M | Issued | 256 | 6,400 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 51,200 | 2022-Feb-25 | 12,800 |
| 031790M | Issued | 229 | 5,725 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 45,800 | 2022-Feb-25 | 11,450 |
| 031791M | Issued | 4 | 100 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 800 | 2022-Feb-25 | 200 |
| 031792M | Issued | 12 | 300 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 2,400 | 2022-Feb-25 | 600 |
| 031793M | Issued | 16 | 400 | 2020-Nov-27 | 2020-Dec-27 | 2025-Dec-27 | 1 | 2021-Dec-27 | 3,200 | 2022-Feb-25 | 800 |
| 032466M | Issued | 69 | 1,725 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 13,800 | 2022-Jul-21 | 3,450 |
| 032467M | Issued | 161 | 4,025 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 32,200 | 2022-Jul-21 | 8,050 |
| 032468M | Issued | 151 | 3,775 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 30,200 | 2022-Jul-21 | 7,550 |
| 032469M | Issued | 150 | 3,750 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 30,000 | 2022-Jul-21 | 7,500 |
| 032470M | Issued | 141 | 3,525 | 2021-Apr-21 | 2021-May-21 | 2026-May-21 | 1 | 2022-May-21 | 28,200 | 2022-Jul-21 | 7,050 |
| TOTALS | | 1,189 | 29,725 | | | | | | 237,800 | | 59,450 |
| Formation | Description | Main Mineral Occurrences
(see Figure 4 for locations) | Mineralization |
| --- | --- | --- | --- |
| Upper Red Quartzite | Red-, to pink-weathering, fine- to medium grained, bedded to massive quartzite and minor feldspathic quartzite. Subordinate maroon slate horizons are present. | No known copper occurrences | N/A |
| Adeline Island Formation (AdI Fm)
| Interbedded slate, phyllite and quartzite having subordinate calcareous rocks, basalt flows and thin gabbro sills. | Adeline Island
Adeline Island West
Adeline River
Adeline Lake North Shore
Ellis
Duck Lake East
Brian Prospect
Brandy Lake | Chalcocite
Bornite
Chalcopyrite
Pyrite
Molybdenite
Sphalerite?
|
| Salmon Lake Formation
(SL Fm) | Weakly to strongly deformed and altered basalt flows and maroon-weathering slate. Subordinate quartzite, siltstone, sandstone, shale and calcareous rocks are also present. Gabbro is a relatively minor rock type consisting of tabular shaped sills ranging from 5 to 75 m thick, and small, irregular-shaped intrusions. | Ellis 75
Seal Lake Main
East Seal Lake
Salmon Lake Main
Seal Lake #1
Whiskey Lake
Adeline Lake North Shore | Native Copper
Chalcocite
Bornite
Chalcopyrite
Pyrite
Molybdenite
|
| Whiskey Lake Formation | Interlaminated to thinly interbedded slate, siltstone, sandstone and quartzite that rarely exceeds cm-scale bedding thicknesses | | Native Copper
Chalcopyrite |
| Wuschusk Lake Formation | Ophitic-textured gabbro and leucogabbro sills, quartzite, feldspathic quartzite, siltstone and minor shale, slate and subordinate calcareous layers and volcaniclastic rocks. | South Adeline Mountain | Chalcocite
Bornite
|
| Bessie Lake – Majoqua Lake Formation | Extensive basalt flows and subordinate volcaniclastic rocks and intercalated sedimentary rocks, including: quartzite and feldspathic quartzite, quartz-sericite schist, conglomerate and siltstone. | | |
| Budget for Phase 1 | |
|---|---|
| Item | Totals |
| Airfares/charter | £163,000 |
| Accommodation | £33,000 |
| Wages | £26,000 |
| Consultants and costs | £101,500 |
| Equipment | £7,000 |
| Analytical | £24,000 |
| Contingency | £15,065 |
| HST 15% | £55,435 |
| TOTAL | £425,000 |
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