Interim Results

RNS Number : 5087A

Chesterfield Resources PLC

30 September 2020

 

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

30 September 2020

CHESTERFIELD RESOURCES PLC

("Chesterfield" or the "Company")

Interim Results

Chesterfield Resources PLC, the LSE listed mineral exploration company with projects in Cyprus, is pleased to announce its interim results for the six months ended 30 June 2020.

Highlights

· Impact of Covid-19 on Chesterfield.

· Robust outlook for copper and gold.

· AMT geophysics programme commences.

Chairman's review of year to date

Impact of Covid-19

I imagine every Chairman's letter in company reports this year will be discussing the impact of the Covid-19 epidemic. We have been somewhat fortunate in that we had just completed our target development programme when the epidemic hit. This meant we thankfully went into lockdown with a relatively low-cost structure. However, the impact of the Europe-wide lockdown meant that our drill programme was delayed by approximately four months and has meant that we are now running-up against the end of the weather window, which is usually in November. Without this Covid-19 impact, we would have preferred to spend more time to spread out the various components of the integrated programme, so that we could gather assays and analyse data at each step.

Coming out of lockdown we then had the pleasant surprise of a bull market in mining stocks, the likes of which we haven't seen for a decade. The first commodity to start an upward trajectory was gold. We took the opportunity of the lockdown to conduct a desktop study of the gold potential of our exploration plays. The conclusion was that Cyprus VMS deposits are likely to have a larger than average gold content and are also relatively free of impurities. There is an opportunity for us because gold was never properly exploited when Cyprus was last active as a mining centre during the 1960s and 1970s. This was because the price of the metal was then pegged at just $35 an ounce (less than one-fiftieth of today's price) and so gold deposits were likely left behind. We have already encountered gold mineralisation near surface and we are hopeful that we will discover commercial gold credits.

However, our main exploration target remains copper. The price of copper has also taken off and is up more than 50% from its lows back in March 2020. The rise in part was due to the Covid-19 epidemic disrupting mining operations in Chile and Peru, as well as the supply chain of scrap metal. As the epidemic recedes the copper supply will bounce back. In normal circumstances, this would dampen the price of copper again. However, it appears that copper looks set to remain strong because of robust demand for the metal from China. At the time of writing LME inventories are at a 14-year low, while China's Caixin manufacturing purchasing managers' index has reached its highest reading since January 2011.

The medium-term outlook for copper is also encouraging. The Covid-19 crisis has led to vast multi-trillion-dollar stimulus programmes, much of which will go into infrastructure. China was the first major economy to start its recovery and therefore, will be the first to launch metal-hungry infrastructure programmes. China is currently stockpiling essential commodities, including copper, in anticipation of this.

The epidemic has been a wake-up call that the human race is vulnerable to global crises, and this has caused an even greater focus on environmental issues, notably climate change and clean air. Therefore, infrastructure spending is likely to be tilted towards to environmentally beneficial projects such as the electrification of energy and of transportation. "Clean and Green" in this context leads to copper demand, as anything electrical, from wiring to motors, consumes a great deal of copper. This includes wind-turbines, solar farms, electric railway projects (like HS2), electric cars and their charging infrastructure, among others. While recent demand for copper has come from China, we believe that other stimulus infrastructure and transportation programmes around the world will provide an increasing demand for copper. This means that larger mining companies will be looking to buy into copper discoveries found by exploration companies such as ourselves. The price of gold is more speculative and difficult to predict. However, it looks likely that in the near-term both copper and gold will remain strong.

We were also fortunate that Cyprus had one of the most effective Covid-19 response programmes in Europe. This is partly because it is an island, and also because the authorities moved decisively to a strict lockdown, including curfews. Cyprus has military conscription for adult males and so has a relatively disciplined culture. To date, the country has only suffered 22 deaths out of a population of 1.2m.

However, in getting our drilling and survey programme underway we have encountered some issues bringing in teams from Covid-19 hotspots in Bulgaria and Spain, and so have had to alter plans to bring crews in from Germany and Portugal. This has caused some minor delays.

AMT geophysics survey commences

As I write this letter, the Company has commenced a programme of exploration test work on our Troodos West licence area. We spent 2019 developing an extensive list of targets and had started testing these with a percussion drill at the start of the year. Covid-19 then struck and this programme had to be postponed, with percussion drilling re-commencing in June. We commenced our diamond drill programme in mid-September. This programme is to be integrated with percussion drilling and an interesting type of geophysics survey called AMT.

AMT is an advanced technology that measures the natural electromagnetic signals in the earth's crust, and as such is often referred to as a "natural source" survey. It is a branch of geophysics called magnetotellurics (MT). AMT stands for audio magnetotellurics, because it measures natural high frequency signals in the audio range.  These are natural electrical charges in the ground that are generated by the lightning strikes that continually hit the earth around the globe. These induce electric and magnetic fields into the earth's crust and oceans. These currents produce signals which can then be measured over a range of frequencies using probes placed in the ground. Rock resistivity values are then calculated from these AMT measurements, which are the basis creating a 3D image of the subsurface.

This type of survey has proven successful in detecting similar VMS (Volcanogenic Massive Sulphide) to those we are exploring for in, for example, the Iberian Pyrite Belt of southern Spain and Portugal. AMT should be able to distinguish between responses from sulphides and sedimentary rocks and also give an indication of the depth of the deposit. This is why the method was selected by the technical team.

The survey by itself is not fool proof as it can give out false positives but, taken in conjunction with other geological data, helps provide a good target selection tool for our percussion drill. The percussion drill will then test these targets to verify that an anomaly indicated by the AMT survey is indeed sulphide mineralisation. If so, that in turn will be tested by the diamond drill to assay it for mineral grade. In this way we are using the three tools (AMT survey, percussion drill and diamond drill) in a sequenced programme to help maximise our chances of making a discovery.

In July we raised £630,000 in new equity in a top-up financing for the programme, via our new brokers Fox-Davies Capital. The placing brought in a good array of new investors to our company.

We are looking forward to our test programmes and keeping shareholders updated.

Financials

As is to be expected with an exploration company, for the six-month period ended 30 June 2020 the Group is reporting a pre-tax loss of £257,465 (six months ended 30 June 2019: £303,704). The Group's net cash balance as at 30 June 2020 was £316,478 (six months ended 30 June 2019: £1,282,523).

Responsibility Statement

We confirm that to the best of our knowledge: 

· the interim financial statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the EU;

· give a true and fair view of the assets, liabilities, financial position and loss of the Company;

· the Interim report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

· The Interim report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.

The interim report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:

Martin French

Executive Chairman

30 September 2020

Market Abuse Regulation (MAR) Disclosure

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

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

Chesterfield Resources plc	Martin French, Executive Chairman	Tel: [phone]
Fox-Davies Capital Limited	Daniel Fox-Davies	Tel:   [phone]

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Notes	6 months to 30 June 2020 Unaudited £	6 months to 30 June 2019 Unaudited £
Continuing operations
Revenue		-	-
Administration expenses		(257,465)	(303,704)
Operating loss		(257,465)	(303,704)
Income tax		-	-
Loss for the period		(257,465)	(303,704)
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translation differences		78,387	(1,285)
Total comprehensive income for the period		(179,078)	(304,989)
Total comprehensive income for the period attributable to equity holders		(179,078)	(304,989)
Earnings per share from continuing operations attributable to the equity owners of the parent
Basic and diluted (pence per share)	5	(0.416)p	(0.492)p

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Notes	As at 30 June 2020 Unaudited £	As at 31 December 2019 Audited £	As at 30 June 2019 Unaudited £
Non-Current Assets
Property, plant and equipment		15,056	20,778	21,263
Intangible assets	6	1,913,612	1,675,562	1,473,940
		1,928,668	1,696,340	1,495,203
Current Assets
Trade and other receivables		83,148	89,498	69,129
Cash and cash equivalents		316,478	748,596	1,282,523
		399,626	838,094	1,351,652
Total Assets		2,328,294	2,534,434	2,846,855
Non-Current Liabilities
Deferred tax liabilities		(127,450)	(127,450)	(119,747)
Current Liabilities
Trade and other payables		(41,895)	(68,957)	(115,572)
Total Liabilities		(169,345)	(196,407)	(235,319)
Net Assets		2,158,949	2,338,027	2,611,536
Capital and Reserves Attributable to Equity Holders of the Company
Share capital		159,933	159,933	159,933
Share premium		3,534,597	3,534,597	3,534,597
Other reserves		54,026	(20,003)	21,089
Retained losses		(1,589,607)	(1,336,500)	(1,104,083)
Total Equity		2,158,949	2,338,027	2,611,536

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

				Attributable to owners of the Parent
	Note	Share capital £	Share premium £		Other reserves £	Retained losses £	Total equity £
Balance as at 1 January 2019		159,933	3,534,597		22,374	(800,379)	2,916,525
Loss for the period		-	-		-	(303,704)	(303,704)
Other comprehensive income for the year
Items that may be subsequently reclassified to profit or loss
Currency translation differences		-	-		(1,285)	-	(1,285)
Total comprehensive income for the year		-	-		(1,285)	(303,704)	(304,989)
Total transactions with owners, recognised in equity		-	-		-	-	-
Balance as at 30 June 2019		159,933	3,534,597		21,089	(1,104,083)	2,611,536
Balance as at 1 January 2020		159,933	3,534,597		(20,003)	(1,336,500)	2,338,027
Loss for the period		-	-		-	(257,465)	(257,465)
Other comprehensive income for the year
Items that may be subsequently reclassified to profit or loss
Currency translation differences		-	-		78,387	-	78,387
Total comprehensive income for the year		-	-		78,387	(257,465)	(179,078)
Expiry of options		-	-		(4,358)	4,358	-
Total transactions with owners, recognised in equity		-	-		(4,358)	4,358	-
Balance as at 30 June 2020		159,933	3,534,597		54,026	(1,589,607)	2,158,949

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

		Notes	6 months to 30 June 2020 Unaudited £	6 months to 30 June 2019 Unaudited £
Cash flows from operating activities
Loss before taxation			(257,465)	(303,704)
Adjustments for:
Depreciation			6,703	4,657
Increase/(decrease) in trade and other receivables			6,348	7,940
Increase in trade and other payables			(27,061)	18,729
Foreign exchange			6,185	178
Net cash used in operations			(265,290)	(272,200)
Cash flows from investing activities
Purchase of property, plant & equipment			-	(12,061)
Exploration and evaluation activities		6	(166,828)	(318,942)
Net cash used in investing activities			(166,828)	(331,003)
Net cash generated from financing activities			-	-
Net decrease in cash and cash equivalents			(432,118)	(603,203)
Cash and cash equivalents at beginning of period			748,596	1,885,726
Cash and cash equivalents at end of period			316,478	1,282,523

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1. General Information

Chesterfield Resources plc is a minerals company exploring primarily for copper and gold in Cyprus and listed on the Standard segment of the Main Market of the London Stock Exchange.

The Company is domiciled in the United Kingdom and incorporated and registered in England and Wales, with registration number 10545738. The Company's registered office is 7-9 Swallow Street, London, England, W1B 4DE.

2. Basis of Preparation

The condensed interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Statements" as adopted by the European Union and the Disclosure and Transparency Rules of the UK Financial Conduct Authority. The condensed interim financial statements should be read in conjunction with the annual financial statements for the period ended 31 December 2019, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The interim financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union.

Statutory financial statements for the period ended 31 December 2019 were approved by the Board of Directors on 5 May 2020 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified with an emphasis of matter paragraph in respect of the impact of COVID-19. The condensed interim financial statements are unaudited and have not been reviewed by the Company's auditor. 

Going concern

The Group is managing the impact of the COVID-19 pandemic on its business and the uncertainty it creates. The Company has taken swift pre-emptive action to ensure the safety of its employees, contractors and supply chain. This includes a full financial and strategic review designed to safeguard and ensure the stability and longevity of Chesterfield's activities for the benefit for all its stakeholders.

The Directors, having made appropriate enquiries, consider that adequate resources exist for the Company to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed interim financial statements for the period ended 30 June 2020. Further to this, the Directors believe the Group is in a strong position to endure ongoing uncertainty from COVID-19 however the risk remains for short term market volatility and uncertain long-term impacts which may affect the Groups ability to raise further funding in the future.

Risks and uncertainties

  The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Company's medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Company's 2019 Annual Report and Financial Statements, a copy of which is available on the Company's website: www.chesterfieldresourcesplc.com . The key financial risks are liquidity risk, credit risk, interest rate risk and fair value estimation.

Critical accounting estimates

The preparation of condensed interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in Note 2 of the Company's 2019 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period.

3.  Accounting Policies

Except as described below, the same accounting policies, presentation and methods of computation have been followed in these condensed interim financial statements as were applied in the preparation of the Company's annual financial statements for the period ended 31 December 2019.

3.1 Changes in accounting policy and disclosures

(a) New and amended standards mandatory for the first time for the financial year beginning 1 January 2020

The following new IFRS standards and/or amendments to IFRS standards are mandatory for the first time for the Company: 

Standard		Effective date
IFRS 3 (Amendments)	Business Combinations	1 January 2020*
IAS 1 (Amendments)	Presentation of Financial Statements	1 January 2020*
IAS 8 (Amendments)	Accounting policies, Changes in Accounting Estimates	1 January 2020*

The Directors believe that the adoption of these standards has not had a material impact on the financial statements other than changes to disclosures.

(b) New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early adopted

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the condensed interim financial statements are listed below. The Company intends to adopt these standards, if applicable when they become effective.

Standard		Effective date
IAS 1 (Amendments)	Classification of Liabilities as Current or Non-Current.	1 January 2023*
Various	Annual improvements to IFRS Standards 2018-2020	1 January 2022*

*Not yet endorsed by the EU.

The Company is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Company's results or shareholders' funds.

4.  Dividends

No dividend has been declared or paid by the Company during the six months ended 30 June 2020 (six months ended 30 June 2019: £nil).

5.  Loss per Share

The calculation of loss per share is based on a retained loss of £ 257,465 for the six months ended 30 June 2020 ( six months ended 30 June 2019: £ 303,704 ) and the weighted average number of shares in issue in the period ended 30 June 2020 of 61,933,334 ( six months ended 30 June 2019: 61,933,334 ).

No diluted earnings per share is presented for the six months ended 30 June 2020 or six months ended 30 June 2019 as the effect on the exercise of share options would be to decrease the loss per share.

6. Intangible fixed assets

The movement in capitalised exploration and evaluation costs during the period was as follows:

Exploration & Evaluation at Cost and Net Book Value	£
Balance as at 1 January 2020	1,675,562
Additions	166,828
Exchange rate variances	71,222
As at 30 June 2020	1,913,612

7. Events after the balance sheet date

On 26 July 2020, the Company issued 390,000 warrants at an exercise price of 5.25p with a vesting date of 27 July 2020 and expiry date of 27 July 2025.

On 26 July 2020, the Company issued 619,333 warrants at an exercise price of 10p with a vesting date of 27 July 2020 and expiry date of 27 July 2025.

On 26 July 2020, the Company issued 2,035,000 options at an exercise price of 10p with a vesting date of 27 July 2020 and expiry date of 27 July 2025.

On 26 July 2020, the Company repriced 2,565,000 existing options to an exercise price of 5.25p and changed the expiry date to 3 July 2023.

On 26 July 2020, the Company raised £630,000 via the issue and allotment of 12,000,000 new Ordinary Shares of 0.01p each for a price of 5.25p per share.

8. Approval of interim financial statements

The Condensed interim financial statements were approved by the Board of Directors on 30 September 2020.

**ENDS**

 

END

 

 

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