Chesterfield Resources : Annual Report and Financial Statement

Registered number: 10545738

CHESTERFIELD RESOURCES PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED

31 DECEMBER 2020

CHESTERFIELD RESOURCES PLC

CONTENTS

	Page
Company Information	1
Chairman's Statement	2
Group Strategic Report	4
Directors' Report	8
Directors' Responsibilities Statement	10
Corporate Governance Report	11
Directors' Remuneration Report	13
Independent Auditor's Report	17
Group Statement of Comprehensive Income	22
Group and Company Statement of Financial Position	23
Group Statement of Changes in Equity	24
Company Statement of Changes in Equity	25
Group and Company Statement of Cash Flows	26
Notes to the Financial Statements	27

CHESTERFIELD RESOURCES PLC

COMPANY INFORMATION

Directors	Martin French
	David Cliff
	Peter Damouni
	Ajay Kejriwal (appointed 4 February 2021)
	Paul Ensor (appointed 4 February 2021)
	Evgeny Vrublevskiy (appointed 12 January 2021)
Company Secretary	Westend Corporate LLP
Registered Office	7-9 Swallow Street
	London
	England
	W1B 4DE
Auditors	PKF Littlejohn LLP
	Statutory Auditor
	15 Westferry Circus
	Canary Wharf
	London
	E14 4HD
Brokers	Panmure Gordon (UK) Limited
	One New Change
	London EC4M 9AF
	Fox Davies Capital Limited
	12 Hay Hill
	London
	W1J 6DQ
Solicitors	Hill Dickinson LLP
	The Broadgate Tower
	20 Primrose Street
	London
	EC2A 2EW
Bankers	Barclays Bank plc
	1 Churchill Place
	Canary Wharf
	London
	E14 5HP
Registrars and Transfer Office	Neville Registrars Limited
	Neville House
	Steelpark Road
	Halesowen
	B62 8HD
Website	www.chesterfieldresourcesplc.com

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CHESTERFIELD RESOURCES PLC

CHAIRMAN'S STATEMENT

Dear Shareholders,

A review of 2020

The chairman's statements for almost all companies this year will be dominated by the impact of the Covid pandemic. I am pleased to report that Chesterfield has emerged stronger for the experience.

We entered 2020 with high hopes, having completed a lengthy process of target development at our Troodos West exploration licence area in Cyprus, which lasted throughout 2019. The principal objective was to discover copper deposits with gold credits. Our geological team had identified 30 individual drill targets clustered into several main areas where we wished to concentrate our drilling for core samples,

During January and February, we used a combination of geophysics surveys and percussion drilling to further narrow our search areas and finalise specific locations for our diamond-tipped core sample drilling, due to commence in the Spring. Then the pandemic struck and all operations had to be abruptly halted.

Weathering Covid

We had been careful to organise our company without burdensome on-going overheads. Most of our operational personal were able to be quickly wound-down, while the majority of our services, both technical and corporate are out-sourced. We also took a decision early on in the lock-down to cancel our office lease in central London. Our general overhead in Cyprus was also quite modest and we were able to mothball operations there at low cost. In this way we were able to quickly reduce our overhead to conserve shareholders' cash during the very uncertain times of twelve months ago. Like many, we have discovered that it is often more efficient to work from home and we have no immediate plans to re-open costly offices.

As with most listed companies, our share price suffered in the early months of the lockdown. However, as uncertainty rose around the world, so did the price of gold. We therefore decided to conduct an extensive desktop study into the gold potential of our exploration programme. Our technical team determined that not only were our deposits likely to be unusually gold-rich, but also that the metal could be extracted as a relatively clean product. The release of this report in April last year resulted in a welcome rebound in our share price, which proved to be the start of a truly exceptional performance for our investors over the rest of the year.

The markets then witnessed an unexpected and welcome surge in most major metal prices, including that of copper. The junior mining sector had been in the doldrums since 2011 and I don't think many would have entered 2020 anticipating our sector would come roaring back in a manner reminiscent of the "super-cycle" of a decade ago.

Further, Cyprus was exemplary in its response to the Covid crisis. As an island, it was able to quickly close off its borders. Most men serve a period of conscription to army duty and so there is a culture of discipline on the island. Curfews were strictly observed resulting in infection and mortality rates far lower than the rest of the EU.

A very strong performance for investors in 2020

By June, the company was able to re-commence its percussion drilling programme in Cyprus as well as conducting an AMT geophysics survey. We also dipped into markets to top up our cash reserves with a £630,000 placement at 5.25p. We were pleased to see continued strong performance in our shares. Those that invested in the placement were rewarded by a doubling of our share price over the next three months. By September we were able to commence our fully-funded diamond drill programme.

Then in November we sprang a major surprise on the market by announcing that Polymetal International, a FTSE 100 constituent mining group with a market capitalisation of £7.4bn, had taken a 23% strategic stake in our company by investing £2.1m. We raised an additional £400,000 on the back of this deal, taking the total placement size up to £2.5m at a price of 9p. As with the previous placement, investors were handsomely rewarded. Within a week, the share price almost doubled. Chesterfield gained a lively following among retail investors during 2020 and was one of the best performers on the market, rising from a low of just 1.2p, during the darkest moments of the spring lockdown, to a high 19.5p in late December, a multiple gain of over 16x. Trading volume was also very good for a company of our size.

Chesterfield positioned at the epicentre of a megatrend

Polymetal is one of the ten largest gold producing miners globally, and the world's fifth largest producer of silver. Chesterfield was its first ever investment in a public company. Polymetal was attracted to us because of our exposure to copper and ambition to grow. The Covid crisis has propelled copper to become the most sought-after major metal in the world. Prior to the pandemic, environmental issues and concern over climate change had emerged from the fringes to become a mainstream topic. The Covid pandemic has all too clearly demonstrated the vulnerability of the human race to global disasters. It has now dramatically propelled clean technology, and particularly electrification of power and transport, into a mega-trend.

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CHESTERFIELD RESOURCES PLC

CHAIRMAN'S STATEMENT

The crisis has also resulted in eye-watering stimulus programmes in China, the US and Europe to fund economic recovery. A large proportion of these programmes will be to fund projects to reduce carbon emissions and improve air quality. Decarbonisation and electrification are the new mantras of this decade, and likely beyond. Only silver is a better conductor of electricity than copper, yet is vastly more expensive. In short, anything "clean and green" is likely to increase the demand for copper.

At the emergence of the last great energy transformation, the age of oil, it was the explorers that were best placed to profit, with the discovery oil gushers in the US in the late nineteenth century, to the giant oil finds in the middle east in the 1950. The metals trader, Trafigura estimates that the world will need to discover a whopping 10 million tons of copper by 2030. Chesterfield boasts one of the most qualified copper exploration teams among any junior copper explorer in the world. As such we find ourselves at the epi-centre of this megatrend, and we are determined to take advantage of it.

The path ahead: growth through exploration and acquisition

In February we reported strong results from our recent diamond drilling, hitting two massive sulphide deposits with intersections of 11.6m and 16.6m. In both strikes we encountered both very high grades, in the top 10% of such deposits globally. This included surprisingly high grades of zinc and silver, as well as our target metals of copper and gold. Both intersections were cut off by faults, presenting the tantalising prospect that the faults had carried larger sections of this ore grade material to other locations nearby.

The search is now on for these deposits. The company has just commenced a new, enlarged, exploration programme for 2021, this time starting with multiple geophysics programmes, utilising AMT, gravity and electromagnetics techniques. We expect to start our diamond drilling in May.

Given the enormous potential for growth in the copper market in coming years, we have recently taken a strategic decision to grow the company through acquisition to take full advantage. We are well positioned to do this. In addition to the new financial backing of Polymetal, the company has appointed the powerful institutional equity house Panmure Gordon as its broker. To complement its team of tier-one geologists, the company also appointed two new directors with strong skills and experience in corporate transactions. Ajay Kejriwal has joined as Chief Financial Officer, and Paul Ensor as a non-executive director. Both bring a wealth of contacts and advisory talent. The company is now armed with an excellent technical team, experienced corporate financiers and financial fire power.

The company has set itself an ambitious target to add a second major copper project to our business by the end of the summer, and a third by the end of the year. There are only a handful of dedicated copper companies listed on the London Stock Exchange and we anticipate copper exposure to be in much demand among investors over coming years. Chesterfield aims to be well positioned as a high growth stock on the LSE to reward all of you who have placed your faith in us. Exciting times lie ahead.

Financial Review

The loss before taxation of the Group for the year ended 31 December 2020 amounted to £871,261 (period ended 31 December 2019: £536,121).

The Group's cash position at 31 December 2020 was £2,438,856 (2019: £748,596).

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

29 April 2021

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