Chesterfield Resources : Annual Report And Financial Statements For The Year Ended 31 December 2021

Registered number: 10545738

CHESTERFIELD RESOURCES PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED

31 DECEMBER 2021

CHESTERFIELD RESOURCES PLC

CONTENTS

Page
Company Information	1
Chairman's Review	2
Group Strategic Report	4
Directors' Report	8
Directors' Responsibilities Statement	11
Corporate Governance Report	12
Directors' Remuneration Report	14
Independent Auditor's Report	18
Group Statement of Comprehensive Income	23
Group and Company Statement of Financial Position	24
Group Statement of Changes in Equity	25
Company Statement of Changes in Equity	26
Group and Company Statement of Cash Flows	27
Notes to the Financial Statements	28

COMPANY INFORMATION

Directors

Company Secretary

Registered Office

Auditors

BrokersSolicitorsBankersRegistrars and Transfer Office

Martin French

Ajay Kejriwal (appointed 4 February 2021) David Cliff

Peter Damouni (resigned 7 February 2022)

Paul Ensor (appointed 4 February 2021)

Evgeny Vrublevskiy (appointed 12 January 2021)Westend Corporate LLP

Suite 1, 15 Ingestre Place, London, W1F 0DU

PKF Littlejohn LLP

Statutory Auditor 15 Westferry Circus Canary Wharf London

E14 4HD

Panmure Gordon (UK) Limited One New Change

London EC4M 9AF

First Equity Limited Salisbury House London Wall London EC2M 5QQ

Watson Farley & Williams LLP 15 Appold Street

London

EC2A 2HB

Barclays Bank plc 1 Churchill Place Canary Wharf London

E14 5HP

Neville Registrars Limited Neville House

Steelpark Road Halesowen B62 8HD

Website

www.chesterfieldresourcesplc.com

Dear Shareholders,

The period in review, from January 2021 to date has been very positive for our company, both in Cyprus and in North America.

The decision to make a major acquisition in the copper exploration space.

The mineral exploration business has traditionally been focussed on trying to look several years ahead, assess technological changes and how those will impact the demand for various metals. Part of being a successful junior is to position the company in the right metals and type of project where you believe it will benefit from strong demand for its assets going forward.

With this in mind, last spring our team assessed the significant increase in the copper price that had occurred in late 2020 and was still surging in the early months of 2021. Copper is particularly attractive to miners because it is one of the most homogenous and commonly traded of the industrial metals. It was becoming clear to us that the run up in copper prices this was no fleeting price spike, but a fundamental structural change in outlook for the commodity and therefore we should take advantage of it.

An important impact of the global Covid emergency was that the world was starting to take to take another potential ecological crises much more seriously. The result was to notably accelerate the drive towards decarbonisation and electrification. Copper is the most cost-efficient conductor of electricity and therefore a basic building block of almost all clean and green technology. With copper already forecast to be in deficit, further significant demand would likely trigger a global race to discover more copper. The consensus forecast is now for heightened copper demand to stretch out over many years, perhaps more than a decade.

We took the view that were we able to acquire a large and significant copper exploration asset, it would attract the attention of major mining companies to earn-in at a suitable stage. However, we would have to move swiftly as we would surely face stiff competition for any prime copper exploration assets still available. So, in the second quarter of 2021, we formed an initiative to locate and acquire the best new copper exploration play that we could.

Our senior corporate and technical team devised a rather utopian wish list for a project that was large, was held in a contiguous licence block, was already proven to be prospective (rather than simply being near to another discovery), was not so far from our base that it would be difficult to manage and that likewise we could also find a good local partner. We also hoped that we could find that asset in a jurisdiction that was not too risky (although that can be a tough ask in exploration these days)

Somewhat to our surprise, we quickly found a project that ticked all the boxes. Altius Minerals, a well-regarded project generator and royalty company in Canada, had recently secured a large copper exploration play in Labrador which comprised an entire sediment-hosted basin. Sedimentary plays are popular with explorers as they can yield deposits of a similar scale to porphyries, but with much higher grades.

We purchased 100% of the Adeline project, located in the centre of Labrador, from Altius in July last year in an all share deal. Altius retained a 1.6% royalty, took a 10% stake in the company (with a further 10% under option) and also agreed to help us project manage the property. We quickly acquired all meaningful licences around the property to expand the total area under licence to nearly 300 Km2. The property has a rich exploration history of sampling and geophysics.

The project area is completely uninhabited, and the nearest road is 38 miles away. As a result, all equipment has to be brought in by air and consequently there has been very little targeted drilling at Adeline. While air transport adds to the cost of drilling it is by no means prohibitive, and this has also provided us with a compelling exploration opportunity. The service centre of Goose Bay is only a 40-minute flight away.

Immediately upon acquisition, we commenced a wide-ranging three-month field programme. This involved taking extensive rock chip and grab samples. Assay results revealed strong grades over a wide range of targets. We are now ranking a number of compelling targets in preparation for drilling.

One key element of the decision to acquire the project in Labrador was manageability. Altius Minerals, which is based in the same province, has been helping us roll out our exploration strategy on the ground. This includes access to the right contractors and to personnel. Altius has also helped us build a relationship with the Innu First Nation group, an important element of mining-related projects in Canada.

Another advantage is that Adeline is that it has strong ESG credentials, important when attracting a major partner in the future. There is abundant green power supply from two nearby hydro-electric power stations, and no obvious human or environmental impediments. For those interested to learn more, we have recently published a NI 43-101 technical report, and also created on our website.

Success in Cyprus drilling

The expansion into Labrador has not deflected us from our ambitions in Cyprus. Our diamond drill programme there had been delayed by the Covid pandemic. However, we were able to complete a number of geophysics programs in the summer of last year before commencing drilling in the second half of the year, with the circa 2,000m programme being finalised in November. Due to Covid bottlenecks, it was slow getting our assay processed at the lab. However, the results proved worth the wait.

The team had been gathering historic drill information around a target area call Westline which displayed good characteristics of a gold and silver mineralised system, potentially open on all sides. We drilled two holes to test the system, one of which returned a very good 21.4m intersection which included 3.3m grading 6.55 g/t of gold and 90.35 g/t of silver (or the equivalent of 8.05 g/t of gold overall, from 100m downhole). The Westline system is so far around 300m by 220m in surface area and is looking very promising. Westline will clearly be a focus of drilling planned for later this year.

We have been asked by a number of shareholders why, if we were drilling primarily for copper, we have predominantly encountered gold on a number of our holes. The VMS-style deposits we are targeting are poly-metallic. In Cyprus such deposits are unusually gold-rich. In addition, the copper tends to be more highly concentrated, whereas the gold has a much wider foot-print, meaning that it is common to encounter gold before finding the copper.

Another target of particular interest was Orchard, which also returned strong intersections from our programme including a 5.7m interval, which this time was composed of gold, silver, copper and zinc, together equivalent to 4.05 g/t of copper. We are hopeful that some of the gold systems we have encountered will lead to similar polymetallic deposits as demonstrated at Orchard. Additionally, both the Westline and Orchard targets are on the same geological trend, which we have christened the Westline Trend, which has now become a focus for further exploration.

The company raised an additional £700,000 at 7p in February this year, shortly before the invasion of Ukraine, which improves the Company's financial position. Our exploration unit is now back on the ground in Cyprus and has been planning for a busy campaign season ahead. It is working on designing drill programs at Westline, Orchard and around the Westline trend. The team is also planning an extensive mapping and sampling programme across a range of our licence areas that have yet to be explored. We expect this to throw up a number of new opportunities and we are looking forward to an exciting year ahead.

Financial Review

The loss before taxation of the Group for the year ended 31 December 2021 amounted to £900,636 (year ended 31 December 2020: loss of £871,261).

The Group's cash position at 31 December 2021 was £762,971 (2020: £2,438,856).

Outlook

I would like to thank our shareholders for their support; we are lucky to have a strong and supportive base of investors and we hope that the coming months and years will continue to be value accretive for all our stakeholders.

Martin French

Executive Chairman 27 April 2022