Chesterfield Resources PLC
Annual Report 2021

Plain-text annual report

Registered number: 10545738 CHESTERFIELD RESOURCES PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 CHESTERFIELD RESOURCES PLC CONTENTS Company Information Chairman’s Review Group Strategic Report Directors’ Report Directors’ Responsibilities Statement Corporate Governance Report Page 1 2 4 8 11 12 Directors’ Remuneration Report 14 Independent Auditor’s Report Group Statement of Comprehensive Income Group and Company Statement of Financial Position Group Statement of Changes in Equity Company Statement of Changes in Equity Group and Company Statement of Cash Flows Notes to the Financial Statements 18 23 24 25 26 27 28 CHESTERFIELD RESOURCES PLC COMPANY INFORMATION Directors Company Secretary Registered Office Auditors Brokers Solicitors Bankers Registrars 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 1 CHESTERFIELD RESOURCES PLC CHAIRMAN’S REVIEW 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. 2 CHESTERFIELD RESOURCES PLC CHAIRMAN’S REVIEW 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 3 CHESTERFIELD RESOURCES PLC GROUP STRATEGIC REPORT The Directors of the Company and its subsidiary undertakings (which together comprise the “Group”) present their Strategic Report on the Group for the year ended 31 December 2021. Strategic Approach The Group’s aim is to create value for shareholders through the discovery and development of economic mineral deposits. The Group’s strategy is to progress the development of its projects in Cyprus and Canada and to evaluate its existing and new mineral resource opportunities. Organisation Overview The Group’s business is directed by the Board and is managed on a day-to-day basis by the Executives being Martin French and Ajay Kejriwal. The Board monitors compliance with objectives and policies of the Group through monthly performance reporting, budget updates and periodic operational reviews. The Corporate Head Office of the Group is located in London, UK, and provides corporate support services to the overseas operations. Overseas operations are managed out of the Group’s offices in Cyprus and Canada. During the year the Board comprised of two Executive Directors and four Non-Executive Directors as detailed below: Martin French - Executive Chairman Mr French has over 30 years of experience in capital markets, investment banking and mining. He began his career at Merrill Lynch, and was country manager for Credit Lyonnais Securities Asia (CLSA) in various locations in Asia, before setting up its business in Latin America. Mr French was also Managing Director of North River Resources plc from December 2012 until January 2015 and took its Namibia-based brownfield lead-zinc project through to bankable feasibility study and sourced a strategic funding partner. The project is now under construction. Ajay Kejriwal – Executive Director Mr Kejriwal has over 30 years of experience in finance and commerce, having worked for Morgan Stanley, Cazanove and Nomura, in London and Hong Kong. Mr Kejriwal is a Chartered Accountant, having qualified with PriceWaterhouseCoopers in 1994. He has considerable experience in the junior resource sector and is a specialist in structuring transactions. David Cliff - Non-Executive Director Mr Cliff has over 50 years in exploration and mine geology. Previously he had over 26 years at Rio Tinto including five as Exploration Manager Europe. He has a BSc Hons in Geology and is a Chartered Engineer and Member of the Institute of Materials, Minerals and Mining. Peter Damouni - Non-Executive Director Mr. Damouni has over 17 years of experience in investment banking and capital markets, with expertise in mining and oil and gas. 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. Paul Ensor - Non-Executive Director Mr Ensor has 30 years’ experience in institutional equity markets having worked for Baring Securities, CLSA and UBS in Hong Kong and South-East Asia. Since his return to London, Mr Ensor has advised on growth strategies for a number of junior companies, principally in the natural resources sector. He has notable experience in new business development and financing. Evgeny Vrublevskiy - Non-Executive Director Evgeny (Eugene) is the Nominated Director of our strategic partner, Polymetal International, where he runs its headquarters Cyprus office. Eugene is also Head of Treasury, with oversight of all finance and accounting matters for the FTSE 100 listed mining company. He has a 15 year career in banking and financial services. During the year the Group had the following gender composition of employees and directors: Gender Composition Directors Employees Male 6 2 Female 0 1 4 CHESTERFIELD RESOURCES PLC GROUP STRATEGIC REPORT Review of Business The Cyprus 2021 work programme built on previous exploration efforts and involved an extensive drilling program and geophysics surveys. Further financing was raised during the year to expand the exploration program into 2022. During the year the Group acquired licenses in the Labrador region of Canada to further expand on its strategic aims. Upon acquisition of the Canadian licences, a field program of sampling and mapping was undertaken. This work was completed and has allowed for the 2022 drilling program to be designed. All licenses remain in good standing and have either recently been granted or in the process of being renewed. Financial Performance Review The loss of the Group for the year ended 31 December 2021 before taxation amounts to £900,636 (year ended 31 December 2020: loss of £871,261). The Board monitors the activities and performance of the Group on a regular basis. The Board uses financial indicators based on budget versus actual to assess the performance of the Group. The indicators set out below will continue to be used by the Board to assess performance over the year to 31 December 2021. The Group is committed to best practice in energy consumption, social, community and human rights issues however given the Groups size it does not separately disclose these matters in this report. The three main KPIs for the Group are as follows. These allow the Group to monitor costs and plan future exploration and development activities: KPI Cash and cash equivalents (£) Administrative expenses as a percentage of total assets Exploration costs capitalised during the period (£) 2021 2020 762,971 2,438,856 15% 17% 1,426,898 701,714 Cash has been used to fund the Group’s operations and facilitate its investment activities (refer to the Statement of Cash Flows on page 27). Administrative expenses are the expenses related to the Group’s ability to run the corporate functions to ensure they can perform their operational commitments. Exploration costs capitalised during the year consist of exploration expenditure on the Group’s exploration licences, net of foreign exchange rate movements and excludes fair value uplift of acquisitions. Principal Risks and Uncertainties The management of the business and the execution of the Group’s strategy are subject to a number of risks. The key business risks affecting the Group are set out below. Risks are formally reviewed by the Board, and appropriate processes are put in place to monitor and mitigate them. If more than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the Group. Exploration risks The exploration and mining business are controlled by a number of global factors, principally supply and demand which in turn is a key driver of global mineral prices; these factors are beyond the control of the Group. Exploration is a high-risk business and there can be no guarantee that any mineralisation discovered will result in proven and probable reserves or go on to be an operating mine. At every stage of the exploration process the projects are rigorously reviewed to determine if the results justify the next stage of exploration expenditure ensuring that funds are only applied to high priority targets. The principal asset of the Group, comprising the mineral exploration licences, are subject to certain financial and legal commitments. If these commitments are not fulfilled the licences could be revoked. They are also subject to legislation defined by the Cypriot and Canadian Governments; if this legislation is changed it could adversely affect the value of the Group’s assets. 5 CHESTERFIELD RESOURCES PLC GROUP STRATEGIC REPORT Dependence on key personnel The Group and Company is dependent upon its executive management team and various technical consultants. Whilst it has entered into contractual agreements at market rates with the aim of securing the services of these personnel, the retention of their services cannot be guaranteed. The development and success of the Group depends on its ability to recruit and retain high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group grows could have an adverse effect on future business and financial conditions. Uninsured risk The Group, as a participant in exploration and development programmes, may become subject to liability for hazards that cannot be insured against or third-party claims that exceed the insurance cover. The Group may also be disrupted by a variety of risks and hazards that are beyond its control, including geological, geotechnical and seismic factors, environmental hazards, industrial accidents, occupation and health hazards and weather conditions or other acts of God. Funding risk The only sources of funding currently available to the Group are through the issue of additional equity capital in the parent company in discrete tranches or through bringing in partners to fund exploration and development costs. The Company’s ability to raise further funds will depend on the success of the Group’s exploration activities and its investment strategy. The Company may not be successful in procuring funds on terms which are attractive and, if such funding is unavailable, the Group may be required to reduce the scope of its exploration activities or relinquish some of the exploration licences held for which it may incur fines or penalties. Political risk All of the Group’s operations are located in a foreign jurisdiction. As a result, the Group is subject to political, economic and other uncertainties, including but not limited to, changes in policies or the personnel administering them, terrorism, appropriation of property without fair compensation, cancellation or modification of contractual rights, foreign exchange restrictions and currency fluctuations. COVID-19 The outbreak of the recent global COVID-19 virus has resulted in business disruption and stock market volatility. The extent of the effect of the virus, including its long-term impact, remains uncertain. The Group has implemented extensive business continuity procedures and contingency arrangements to ensure that they are able to continue to operate. Financial Risks The Group’s operations expose it to a variety of financial risks that can include market risk (including foreign currency, price and interest rate risk), credit risk, and liquidity risk. The Group has a risk management programme in place that seeks to limit the adverse effects on the financial performance of the Group by monitoring levels of debt finance and the related finance costs. The Group does not use derivative financial instruments to manage interest rate costs and, as such, no hedge accounting is applied. Details of the Group’s financial risk management policies are set out in Note 3 to the Financial Statements. Section 172(1) Statement - Promotion of the Company for the benefit of the members as a whole The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006. The requirements of s172 are for the Directors to: • Consider the likely consequences of any decision in the long term, • Act fairly between the members of the Company, • Maintain a reputation for high standards of business conduct, • Consider the interests of the Company’s employees, • • Consider the impact of the Company’s operations on the community and the environment. Foster the Company’s relationships with suppliers, customers and others, and The Company operates as a base metals exploration business, which is inherently speculative in nature and, without regular income, is dependent upon fund-raising for its continued operation. The pre-revenue nature of the business is important to the understanding of the Company by its members, employees and suppliers, and the Directors are as transparent about the cash position and funding requirements as is allowed under LSE regulations. 6 CHESTERFIELD RESOURCES PLC GROUP STRATEGIC REPORT The application of the s172 requirements can be demonstrated in relation to the some of the key decisions made during 2021: • Continuing evaluation of existing license areas and assessment of targets; • Acquisition of the Adeline project in Canada; • • Continued assessment of corporate overheads, expenditure levels and wider market conditions. Identification of drill targets and preparation for the diamond drill programs in Canada and Cyprus; As a mining exploration Company operating in Cyprus and Canada, the Board takes seriously its ethical responsibilities to the communities and environment in which it works. We abide by the local and relevant UK laws on anti-corruption & bribery. Wherever possible, local communities are engaged in the geological operations and support functions required for field operations, providing much needed employment and wider economic benefits to the local communities. In addition, we follow international best practise on environmental aspects of our work. Our goal is to meet or exceed standards, in order to ensure we obtain and maintain our social licence to operate from the communities with which we interact. The interests of our employees are a primary consideration for the Board. An inclusive share-option programme allows them to share in the future success of the Company, personal development opportunities are supported and a health and security support network is in place to assist with any issues that may arise on field expeditions. The Group Strategic Report was approved by the Board on 27 April 2022. Martin French Executive Chairman 7 CHESTERFIELD RESOURCES PLC DIRECTORS’ REPORT The Directors present their annual report on the affairs of Chesterfield Resources plc together with the audited Financial Statements for the year ended 31 December 2021. Dividends The Directors do not recommend the payment of a dividend for the year (2020: nil). Directors & Directors’ Interests The Directors who served during the year ended 31 December 2021 are shown below and had, at that time, the following beneficial interests in the shares of the Company: Martin French Ajay Kejriwal Peter Damouni David Cliff Paul Ensor Evgeny Vrublevskiy 31 December 2021 Ordinary Shares 3,175,000 150,000 1,583,000 450,000 154,853 - Options & Warrants 4,650,000 1,100,000 2,500,000 1,950,000 750,000 - 31 December 2020 Ordinary Shares 3,000,000 - 1,533,333 450,000 - - Options & Warrants 3,900,000 - 2,250,000 1,450,000 - - Further details on options can be found in Note 19 to the Financial Statements. Substantial Shareholders The substantial shareholders with more than a 3% shareholding at 27 April 2022 are shown below Polymetal International plc Robert Labrum Claudio Ciavarella Leo Berezan Corporate Responsibility Holding 23,333,334 6,500,000 4,400,000 4,201,334 Percentage 17.9% 5.0% 3.4% 3.2% Environmental Chesterfield undertakes its exploration activities in a manner that minimises or eliminates negative environmental impacts and maximises positive impacts of an environmental nature. Chesterfield is a mineral explorer, not a mining company. Hence, the environmental impact associated with its activities is minimal. To ensure proper environmental stewardship on its projects, Chesterfield conducts certified baseline studies prior to all drill programmes and ensures that areas explored are properly maintained and conserved. As an exploration stage business, the Group’s operations are at a relatively small scale. As such, the Group’s environmental impact is relatively small when compared with larger businesses in the sector. Nevertheless, the Board recognises its responsibility to protect the environment (particularly as the business scales up) and is fully committed to conserving natural resources and striving for environmental sustainability, by ensuring that its facilities are operated to optimise energy usage; minimise waste production; and protect nature and people. The Group is currently deemed to be a low energy user meaning it has consumed less that 40MWh of energy during the reporting period. This includes the combustion of gas, consumption of fuel for transport and the purchase of electricity for its own use. As such, it is exempt from disclosing actual kWh of energy emitted during the period from its operations and activities. As the Group’s operations scale up, it will continue to monitor its energy use and its status as a low energy user. The Group will seek to collect, structure, and effectively disclose related performance data for the material, climate-related risks and opportunities identified where relevant. 8 CHESTERFIELD RESOURCES PLC DIRECTORS’ REPORT Health and safety Chesterfield operates a comprehensive health and safety programme to ensure the wellness and security of its employees. The control and eventual elimination of all work-related hazards requires a dedicated team effort involving the active participation of all employees. A comprehensive health and safety programme is the primary means for delivering best practices in health and safety management. This programme is regularly updated to incorporate employee suggestions, lessons learned from past incidents and new guidelines related to new projects with the aim of identifying areas for further improvement of health and safety management. This results in continuous improvement of the health and safety programme. Employee involvement is regarded as fundamental in recognising and reporting unsafe conditions and avoiding events that may result in injuries and accidents. Internal Controls The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control environment and any related shortfalls during the period. Since the Group was established, the Directors are satisfied that, given the current size and activities of the Group, adequate internal controls have been implemented. Whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in light of the current activity and proposed future development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. Corporate Governance The statement on corporate governance can be found in the Corporate Governance Report on page 12 of these Financial Statements. The Corporate Governance Report forms part of this directors’ report and is incorporated into it by cross reference. The Group is committed to diversity of age, gender, educational and professional backgrounds however given the Groups size it does not have a specific policy in place. Supplier payment policy The Group's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU). The Group's current policy concerning the payment of trade creditors is to: • • • settle the terms of payment with suppliers when agreeing the terms of each transaction; ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and pay in accordance with the Group's contractual and other legal obligations. Going Concern The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future and, therefore, continue to adopt the going concern basis in preparing the Annual Report and Financial Statements. Further details on their assumptions and their conclusion thereon are included in the statement on going concern included in Note 2.3 to the Financial Statements. Directors’ and Officers’ Indemnity Insurance The Group has made qualifying third-party indemnity provisions for the benefit of its Directors and Officers. These were made during the period and remain in force at the date of this report. Events after the reporting period Events after the reporting date are detailed in Note 23. Future Developments The workplan for 2022 involves extensive field mapping and sampling covering all licences, followed by targeted diamond drilling programs. Prospective areas near existing licences are to be accessed with a view to applying for additional exploration permits. COVID-19 Since March 2020, the Group has made preparations to mitigate the impact of COVID-19 on the business through several action plans and mitigation strategies. The Group has continued to operate throughout the COVID-19 pandemic, notwithstanding it will continue to be monitored and the Group’s plans will be updated as required. Financial instruments Details of the Group’s financial instruments are disclosed in note 17 to these Financial Statements. 9 CHESTERFIELD RESOURCES PLC DIRECTORS’ REPORT Provision of Information to Auditor So far as each of the Directors is aware at the time this report is approved: • • there is no relevant audit information of which the Company's auditor is unaware; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. Auditor PKF Littlejohn LLP has signified its willingness to continue in office as auditor. A resolution to reappoint PKF Littlejohn LLP as auditor will be proposed at the Annual General Meeting. This report was approved by the Board on 27 April 2022 and signed on its behalf. Martin French Executive Chairman 10 CHESTERFIELD RESOURCES PLC DIRECTORS RESPONSIBILITIES STATEMENT The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Group and Company Financial Statements in accordance with UK-adopted international accounting standards. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and of the profit or loss of the Group and Company for that period. In preparing these Financial Statements, the Directors are required to: select suitable accounting policies and then apply them consistently; • • make judgments and accounting estimates that are reasonable and prudent; • state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; and prepare the Financial Statements on a going concern basis unless it is inappropriate to presume the Group and Company will continue in business • The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group Company, and enable them to ensure that the Financial Statements and the Directors Remuneration Report comply with the Companies Act 2006 and, as regards the group Financial Statements, international financial reporting standards. They are also responsible for safeguarding the assets of the Group and Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. They are also responsible to make a statement that they consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced, and understandable and provides the information necessary for the shareholders to assess the Group and Company’s position and performance, business model and strategy. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions. Directors Responsibility pursuant to DTR4 Each of the Directors whose names and functions are listed on page 5 confirm that, to the best of their knowledge and belief: • • The Financial Statements prepared in accordance with UK-adopted IFRS, give a true and fair view of the assets, liabilities, financial position and loss of the Group and Company; and the Annual Report and Financial Statements, including the Business review, includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face. On behalf of the Board Martin French Executive Chairman 27 April 2022 11 CHESTERFIELD RESOURCES PLC CORPORATE GOVERNANCE REPORT Principles of corporate governance The Group is not required to comply with the UK Code of Corporate Governance and has not voluntarily adopted it. However, the Directors recognise the importance of sound corporate governance and the Board intends, to the extent it considers appropriate in light of the Group’s size, stage of development and resources, to implement certain corporate governance recommendations. The Directors have responsibility for the overall corporate governance of the Group and recognise the need for the highest standards of behaviour and accountability. The Board has a wide range of experience directly related to the Group and its activities and its structure ensures that no one individual or group dominates the decision-making process. Board structure During the year the Board comprised two executives and four non-executive Directors. Their details appear on page 1. The Board is responsible to shareholders for the proper management of the Group. The Directors’ responsibilities statement in respect of the Financial Statements is set out on page 11. The non-executive Directors have a particular responsibility to ensure that the strategies proposed by the executive Directors are fully considered. To enable the Board to discharge its duties, all directors have full and timely access to all relevant information and there is a procedure for all Directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group. The Board is responsible for overall Group strategy, approval of major capital expenditure projects and consideration of significant financing matters. The following Board committees, which have written terms of reference, deal with specific aspects of the Group’s affairs: Nomination Committee In light of the size of the Board, the Directors do not consider it necessary to establish a Nomination Committee. However, this will be kept under regular review. Audit Committee The Audit Committee, comprising David Cliff, Ajay Kejriwal and Paul Ensor, reviews the Group's annual and interim Financial Statements before submission to the Board for approval. The Committee also reviews regular reports from management and the external auditor on accounting and internal control matters. Where appropriate, the Committee monitors the progress of action taken in relation to such matters. The Committee also recommends the appointment, and reviews the fees, of the external auditor. The Committee keeps under review the cost effectiveness and the independence and objectivity of the external auditor. A formal statement of independence is received from the external auditor each year. Remuneration Committee The Remuneration Committee, comprising David Cliff, Paul Ensor and Evgeny Vrublevskiy is responsible for reviewing the performance of the Board and for setting the scale and structure of remuneration, determining the payment of bonuses, considering the grant of options under any share option scheme and, in particular, the price per share and the application of performance standards which may apply to any such grant, paying due regard to the interests of shareholders as a whole and the performance of the Group. Board Meetings The Board meets on an informal basis regularly throughout the year. The Board is responsible for formulating, reviewing and approving the Group's strategy, financial activities and operating performance. The formal board meetings held during the year are detailed below, however this excludes any informal board calls and meetings held during the same period. Date Type Present 18 February 2021 Board Meeting 18 May 2021 Board Meeting 8 October 2021 Board Meeting Martin French, Ajay Kejriwal, David Cliff, Peter Damouni, Paul Ensor, Evgeny Vrublevskiy Martin French, Ajay Kejriwal, David Cliff, Peter Damouni, Paul Ensor, Evgeny Vrublevskiy Martin French, Ajay Kejriwal, David Cliff, Peter Damouni, Paul Ensor, Evgeny Vrublevskiy 12 CHESTERFIELD RESOURCES PLC CORPORATE GOVERNANCE REPORT Internal Controls The Directors acknowledge their responsibility for the Group’s systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Group and to ensure the reliability of financial information for both internal use and external publication. Whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in light of the increased activity and further development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. The key elements of the control system in operation are: • • the Board meets regularly with a formal schedule of matters reserved to it for decision; there are established procedures for planning, approval and monitoring of capital expenditure and information systems for monitoring the Group’s financial performance against approved budgets and forecasts; • UK financial operations are closely monitored by members of the Board to enable them to assess risk and address the adequacy of measures in place for its monitoring and control. The Cyprus and Canadian operations are closely supervised by the UK based executives through daily, weekly and monthly reports from the directors’ key management in Cyprus and Canadian. Risk Management The Board considers risk assessment to be important in achieving its strategic objectives. Project milestones and timelines are regularly reviewed. The Bribery Act 2010 The Board is committed to acting ethically, fairly and with integrity in all its endeavours and compliance of the code is closely monitored. Securities Trading The Group has adopted a share dealing code for dealings in shares by Directors and senior employees which is appropriate for a quoted company. The Directors will take all reasonable steps to ensure compliance by the Group’s applicable employees. Relations with Shareholders The Board is committed to providing effective communication with the Shareholders of the Group. Significant developments are disseminated through stock exchange announcements and regular updates of the Group’s website. The Board views the AGM as a forum for communication between the Group and its shareholders and encourages their participation in its agenda. On behalf of the Board Martin French Executive Chairman 27 April 2022 13 CHESTERFIELD RESOURCES PLC DIRECTORS’ REMUNERATION REPORT The Company has an established Remuneration Committee. The Committee reviews the scale and structure of the Directors’ fees, taking into account the interests of shareholders and the performance of the Group and Directors. The Company’s auditors, PKF Littlejohn LLP are required by law to audit certain disclosures and where disclosures have been audited, they are indicated as such. Statement of Chesterfield Resources Plc’s policy on Directors’ remuneration by the Chairman of the Remuneration Committee As Chairman of the Remuneration Committee I am pleased to introduce our Directors’ Remuneration Report. One of the Remuneration Committee’s aims is to provide clear, transparent remuneration reporting for our shareholders which adheres to the best practice corporate governance principles that are required for listed organisations. The Directors’ Remuneration Policy, is set out on page 15 of this report. A key focus of the Directors’ Remuneration Policy is to align the interests of the Directors to the long-term interests of the shareholders and aims to support a high-performance culture with appropriate reward for superior performance, without creating incentives that will encourage excessive risk taking or unsustainable company performance. This is underpinned through the implementation and operation of incentive plans. Key Activities of the Remuneration Committee The key activities of the Remuneration Committee are: • • to determine and agree with the Board the framework or broad policy for the remuneration of the Company's chairman, chief executive, the executive directors, the company secretary and such other members of the executive management as it is designated to consider; in determining such policy, take into account all factors which it deems necessary including relevant legal and regulatory requirements. The objective of such policy shall be to ensure that members of the executive management of the Company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Company; recommend and monitor the level and structure of remuneration for senior management; • • when setting remuneration policy for directors, review and have regard to the remuneration trends across the Company, and review the on-going appropriateness and relevance of the remuneration policy; obtain reliable, up-to-date information about remuneration in other companies. To help it fulfil its obligations the Committee shall have full authority to appoint remuneration consultants and to commission or purchase any reports, surveys or information which it deems necessary, within any budgetary restraints imposed by the Board; be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Committee; approve the design of, and determine targets for, any performance related pay schemes operated by the Company and approve the total annual payments made under such schemes; review the design of all share incentive plans for approval by the Board and shareholders. For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to executive directors, company secretary and other designated senior executives and the performance targets to be used; ensure that contractual terms on termination, and any payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised; and oversee any major changes in employee benefits structures throughout the Company. • • • • • • Members The Remuneration Committee comprises the following independent Non-Executive Directors: Name Paul Ensor David Cliff Evgeny Vrublevskiy Position Chairman Member Member Date of appointment 22 February 2022 3 July 2018 12 January 2021 14 CHESTERFIELD RESOURCES PLC DIRECTORS’ REMUNERATION REPORT Remuneration Components The Company remunerates directors in line with best market practice in the industry in which it operates. The components of Director remuneration that are considered by the Board for the remuneration of directors in future years are likely to consist of: • Base salaries • Pension and other benefits • Annual bonus • Share Incentive arrangements Given the early stage of development of the Company, the Remuneration Committee also do not consider it necessary to have maximum amounts of each remuneration component. The Executive Directors have entered into service agreements with the Company and the Non-Executive Directors have entered into letters of appointment with the Company. All such contracts impose certain restrictions as regards the use of confidential information and intellectual property and the Executive Director’s service contracts impose restrictive covenants which apply following the termination of the agreement. Other matters The Company has established a workplace pension scheme and pays the statutory required pension amounts in relation to Directors’ remuneration where applicable. The Company has not paid out any excess retirement benefits to any Directors or past Directors. The Company has not paid any compensation to past Directors. The Company has also issued options to Directors as part of a long-term incentive scheme. Recruitment Policy Base salary levels will take into account market data for the relevant role, internal relativities, their individual experience and their current base salary. For external and internal appointments, the Board may agree that the Company will meet certain relocation and/or incidental expenses as appropriate. Payment for loss of Office The Committee will honour the Executive Directors’ contractual entitlements. Service contracts do not contain liquidated damages clauses. If a contract is to be terminated, the Committee will determine such mitigation as it considers fair and reasonable in each case. There is no agreement between the Company and its Executive Directors or employees, providing for compensation for loss of office or employment that occurs because of a takeover bid. The Committee reserves the right to make additional payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or by way of settlement or compromise of any claim arising in connection with the termination of an Executive Directors’ office or employment. Service Agreements and letters of appointment The Executive Director’s service agreement are not for a fixed term and may be terminated by the Company or the Executive Director by giving 6 months’ notice. Name Martin French Ajay Kejriwal Date of service agreement 27 July 2018 4 February 2021 Notice period by Company (months) 6 months 1 month Notice period by Director (months) 6 months 1 month The terms of all Directors’ appointments are subject to their re-election by the Company’s shareholders at any Annual General Meeting at which the all Directors stand for re-election. 15 CHESTERFIELD RESOURCES PLC DIRECTORS’ REMUNERATION REPORT The Non-Executive Directors of the Company do not have service contracts but are appointed by letters of appointment. Each Non-Executive Director’s term of office runs for an initial period of three years unless terminated earlier upon written notice or upon their resignation. The details of each Non-Executive Director’s current term are set out below: Name David Cliff Peter Damouni Paul Ensor Evgeny Vrublevskiy Date of service agreement 16 March 2017 16 March 2017 4 February 2021 12 January 2021 Current term (years) 5 years 5 years 1 year 1 year Notice period by Company (months) 3 months 3 months 1 month 1 month Notice period by Director (months) 3 months 3 months 1 month 1 month Executive Directors’ remuneration - Audited The table below sets out the remuneration received by the Executive Directors for the year ended 31 December 2021 and 31 December 2020: Short term benefits 2021 £ 120,000 55,400 175,400 Total 2021 £ Consultancy fees and additional work fees 2021 £ 120,000 - - 55,400 - 175,400 Short term benefits 2020 £ 91,788 - 91,788 Total 2020 £ Consultancy fees and additional work fees 2020 £ 25,000 116,788 - 25,000 116,788 - Martin French Ajay Kejriwal Total Non-Executive Directors’ remuneration - Audited The table below sets out the remuneration received by each Non-Executive Director during the years ended 31 December 2021 and 31 December 2020. Short term benefits 2021 £ David Cliff Peter Damouni Paul Ensor Evgeny Vrublevskiy Total 24,000 24,000 21,700 - 69,700 Consultancy fees and additional work fees 2021 £ - - - - - Total 2021 £ 24,000 24,000 21,700 - 69,700 Short term benefits 2020 £ 24,000 24,000 - - 48,000 Consultancy fees and additional work fees 2020 £ - 25,000 - - 25,000 Total 2020 £ 24,000 49,000 - - 73,000 16 CHESTERFIELD RESOURCES PLC DIRECTORS’ REMUNERATION REPORT Relative importance of spend on pay The table below illustrates the year-on-year change in total remuneration compared to distributions to shareholders and loss before tax for the financial periods ended 31 December 2021 and 2020: Year ended 31 December 2021 Year ended 31 December 2020 Distributions to shareholders £ nil nil Total directors and employee pay £ 338,359 250,080 Operational cash outflow £ 1,011,673 595,374 Total employee pay includes wages and salaries, social security costs and pension cost for employees in continuing operations. Further details on Employee remuneration are provided in note 6 and 7. Operational cash outflow has been shown in the table above as cash flow monitoring and forecasting is an important consideration for the Remuneration Committee and Board of Directors when determining cash-based remuneration for directors and employees. Historical Share Price Performance Comparison The table below compares the share price performance (based on a notional investment of £100) of Chesterfield Resources plc against the FTSE SmallCap for the period August 2017 to December 2021 calculated on a month end spot basis. The FTSE SmallCap has been chosen to provide a wider market comparator constituting companies of an appropriate size: 31 December 2021 31 December 2020 31 December 2019 31 December 2018 11 August 2017 FTSE Small Cap £ Chesterfield Resources plc £ 126.60 109.53 104.87 90.97 100.00 162.72 254.45 56.36 84.09 100.00 Chesterfield Resources plc was listed in August 2017 and therefore no historical share price data exists prior to this period, there was also no data between 2 November 2017 and 3 July 2018 pending completion of a transaction. Consideration of shareholder views The Board considers shareholder feedback received and guidance from shareholder bodies. This feedback, plus any additional feedback received from time to time, is considered as part of the Company’s annual policy on remuneration. Approved on behalf of the Board of Directors. Paul Ensor Director & Remuneration Committee Chairman 27 April 2022 17 CHESTERFIELD RESOURCES PLC INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CHESTERFIELD RESOURCES PLC Opinion We have audited the financial statements of Chesterfield Resources plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2021 which comprise the Group Statement of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Changes in Equity, the Group and Parent Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK- adopted international accounting standards and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion: • • • • the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2021 and of the group’s loss for the year then ended; the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards; the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to note 2.3 in the financial statements, which indicates that the group will need to raise additional funds during the going concern period to fund exploration expenditure and working capital requirements. As stated in note 2.3, these events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the group’s and parent company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included a review of the directors’ statement in note 2.3 to the financial statements and review of the group and parent company’s budgets and cash flow forecasts for the period of at least twelve months from the date of approval of the financial statements, including checking the mathematical accuracy of the budgets and discussion of significant assumptions used by the management. We have also reviewed the latest available post year end management accounts, bank statements, regulatory announcements and board minutes and assessed subsequent events impacting going concern. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Our application of materiality The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied to the group financial statements was £110,000 (2020: £53,000), based on 2% of gross assets. We believe assets to be the main driver of the business as the group is in the exploration stage and no revenues are currently being generated. The group performance materiality was determined to be £77,000 (2020: £37,100). The materiality applied to the parent company financial statements was £37,000 (2020: £14,000), based on 5% of the loss before tax. The performance materiality was £25,900 (2020: £9,800). Component materiality applied to the subsidiary undertakings in Cyprus and Canada was £55,000 (2020: £30,000) and £9,000, respectively, based on 2% of gross assets. The Canadian subsidiary was acquired during the year. The performance materiality for the components was set at 70%. We agreed with the audit committee that we would report to the committee all audit differences identified during the course of our audit in excess of £5,500 (2020: £2,650). There were no misstatements identified during the course of our audit that were individually, or in aggregate, considered to be material. 18 CHESTERFIELD RESOURCES PLC INDEPENDENT AUDITOR’S REPORT Our approach to the audit In designing our audit approach, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors, including the carrying value of intangible assets, and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Whilst Chesterfield Resources plc is a company listed on the Standard segment of the London Stock Exchange, the group’s operations principally comprise exploration projects located in Cyprus and Canada. We assessed the significant components of the group to be the exploration projects in Cyprus and Canada and the corporate accounting function. We performed a full scope audit on the corporate accounting function and components. The full scope audit of the subsidiary in Canada was performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of auditing exploration entities. The Cyprus component was audited by a component auditor, under our direction and supervision as group auditor in accordance with ISA 600. We issued detailed instructions and performed a review of the component auditor’s working papers. The Senior Statutory Auditor interacted regularly with the component audit team during all stages of the audit and was responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed at the consolidation level, gave us sufficient and appropriate evidence to support our opinion on the group and parent company financial statements. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report. Key Audit Matter How our scope addressed this matter Carrying value and assessment of impairment of intangible exploration and evaluation assets (refer to Note 4 and 11) As at 31 December 2021, the total intangible assets reported in the group Statement of Financial Position was £4,755,730, which comprise of exploration and evaluation assets. The value and recoverability of these intangible assets are tested annually for impairment. There is the risk that these amounts are impaired, and the capitalised amounts do not meet the recognition criteria of IFRS 6. carrying The estimated recoverable amount is subjective due to the inherent uncertainty involved in the assessment of early-stage exploration projects. We tested the Group’s exploration licences to confirm good title and standing, including the likelihood of renewal on future expiry. the reviewed and evaluated impairment We assessment prepared by management in relation to the Cyprus and Canada projects. Our procedures included an assessment of the early stage exploration and evaluation project with reference to the criteria listed within IFRS 6, to include whether: • exploration and evaluation work to date indicates that the carrying amount is unlikely to be recovered from further development or sale; and substantive expenditure on further exploration and evaluation is not budgeted or planned. • We have performed additions testing in relation to the Canada project and ensured the capitalisation criteria under IFRS 6. We have also reviewed the recently announced NI 43-101 Technical Report prepared by Mercator Geological Services Limited regarding the planning and completion of an exploration program for the Adeline Copper Project. they meet 19 CHESTERFIELD RESOURCES PLC INDEPENDENT AUDITOR’S REPORT We reviewed the working papers prepared by the component auditor in respect of the capitalised additions in the Cypriot subsidiary in the year for eligibility in accordance with IFRS 6. We also reviewed the work performed by the component auditor in respect of assessing compliance with the terms and conditions contained in the exploration licenses. The Mines Service within the Republic of Cyprus provided confirmation of good title to the Prospecting Permits held by the subsidiary undertaking, including the deposit held as financial guarantee against potential future liabilities. We are satisfied that the carrying value of the intangible assets are not materially misstated. We did not identify any indicators of impairment to the year- end carrying value. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: • • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. 20 CHESTERFIELD RESOURCES PLC INDEPENDENT AUDITOR’S REPORT Responsibilities of directors As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research, application of cumulative audit knowledge and experience of the resource exploration and evaluation sector. • We determined the principal laws and regulations relevant to the group and parent company in this regard to be those arising from the Companies Act 2006, the Listing rules and local laws and regulations in Cyprus and Canada including terms within the exploration licenses. • We designed our audit procedures to ensure that the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. This is evidenced by our discussion of laws and regulations with management, reviewing minutes of meetings of those charged with governance and review of regulatory news. Corresponding instructions were issued to the component auditor in Cyprus to assess compliance by the component with applicable laws and regulations. • We also identified the risks of material misstatement of the financial statements due to fraud. Aside from the non- rebuttable presumption of a risk of fraud arising from management override of controls, we did not identify any significant fraud risks. • We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates, judgements and assumptions for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business or where the business rationale is not clear. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 21 CHESTERFIELD RESOURCES PLC INDEPENDENT AUDITOR’S REPORT Other matters which we are required to address We were appointed by the Board of Directors on 22 November 2018 to audit the financial statements for the year ended 31 December 2018 and subsequent financial years. Our total uninterrupted period of engagement is 4 years, covering the periods ending 31 December 2018 to December 2021. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent of the group and parent company in conducting our audit. Our audit opinion is consistent with the additional report to the audit committee. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. David Thompson (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD 27 April 2022 22 CHESTERFIELD RESOURCES PLC GROUP STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2021 Continuing operations Administrative expenses Operating Loss Finance Income Loss before taxation Loss for the Period attributable to owners of the parent Basic and Diluted Earnings Per Share attributable to owners of the parent (expressed in pence per share) 9 Loss for the period Other Comprehensive Income: Items that may be subsequently reclassified to profit or loss Currency translation differences Other comprehensive income for the period, net of tax Group 31 December 2021 31 December 2020 £ £ (900,573) (871,261) Note 6 (900,573) (871,261) (63) - (900,636) (871,261) (900,636) (871,261) (0.811) (1.264) 31 December 2021 31 December 2020 £ £ (900,636) (871,261) (130,657) 59,108 (1,031,293) (812,153) Total Comprehensive Income attributable to owners of the parent (1,031,293) (812,153) The Notes on pages 28 to 44 form part of these Financial Statements. 23 CHESTERFIELD RESOURCES PLC STATEMENTS OF FINANCIAL POSITION As at 31 December 2021 Company number: 10545738 Group Company 31 December 2021 31 December 2020 31 December 2021 31 December 2020 Note £ £ Non-Current Assets Property, plant and equipment Intangible assets Investments in subsidiaries Current Assets Trade and other receivables Cash and cash equivalents 10 11 12 13 14 £ - - £ 1,147 - 23,208 5,008,562 12,707 2,433,876 - - 5,330,459 2,451,046 5,031,770 2,446,583 5,330,459 2,452,193 322,003 762,971 128,498 2,438,856 130,534 759,978 211,917 2,402,138 1,084,974 2,567,354 890,512 2,614,055 Total Assets 6,116,744 5,013,937 6,220,971 5,066,248 Non-Current Liabilities Deferred tax liabilities Current Liabilities 15 (380,283) (127,450) (380,283) (127,450) - - - - Trade and other payables 16 (154,383) (200,619) (130,932) (99,561) (154,383) (200,619) (130,932) (99,561) Total Liabilities (534,666) (328,069) (130,932) (99,561) Net Assets 5,582,078 4,685,868 6,090,039 4,966,687 Equity attributable to owners of the Parent Share capital Share premium Other reserves Retained losses Total Equity 18 18 218,328 8,253,634 160,798 199,711 6,482,931 201,776 218,328 8,253,634 268,921 199,711 6,482,931 179,242 (3,050,682) (2,198,550) (2,650,844) (1,895,197) 5,582,078 4,685,868 6,090,039 4,966,687 The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent Company Statement of Comprehensive Income. The loss for the Parent Company for the year was £804,151 (2020: loss of £644,741). The Financial Statements were approved and authorised for issue by the Board on 27 April 2022 and were signed on its behalf by: Martin French Executive Chairman The Notes on pages 28 to 48 form part of these Financial Statements. 24 CHESTERFIELD RESOURCES PLC GROUP STATEMENT OF CHANGES IN EQUITY As at 31 December 2021 Company number: 10545738 Attributable to owners of the Parent Share capital £ Share premium £ Other reserves £ Retained losses £ Total £ Note Balance as at 1 January 2020 159,933 3,534,597 (20,003) (1,336,500) 2,338,027 Loss for the year Other comprehensive income for the year Items that may be subsequently reclassified to profit or loss Currency translation differences Total comprehensive income for the year Shares issued Cost of capital Options expired during year Options granted during year Total transactions with owners, recognised directly in equity 18 18 19 19 - - - - - - 39,778 3,090,222 (141,888) - - - - (871,261) (871,261) 59,108 - 59,108 59,108 (871,261) (812,153) - - - - (9,211) 171,882 - - 3,130,000 (141,888) 9,211 - - 171,882 39,778 2,948,334 162,671 9,211 3,159,994 Balance as at 31 December 2020 199,711 6,482,931 201,776 (2,198,550) 4,685,868 Balance as at 1 January 2021 199,711 6,482,931 201,776 (2,198,550) 4,685,868 Loss for the year Other comprehensive income for the year Items that may be subsequently reclassified to profit or loss Currency translation differences Total comprehensive income for the year Shares issued Cost of capital Options expired during year Options cancelled during year Options granted during year Total transactions with owners, recognised directly in equity - - - - - - - (900,636) (900,636) (130,657) - (130,657) (130,657) (900,636) (1,031,293) 18 18 19 19 19 18,617 1,816,703 - - - - (46,000) - - - - - (41,327) (7,177) 138,183 - - 1,835,320 (46,000) 41,327 7,177 - - - 138,183 18,617 1,770,703 89,679 48,504 1,927,503 Balance as at 31 December 2021 218,328 8,253,634 160,798 (3,050,682) 5,582,078 Share capital represents the nominal value of ordinary and deferred shares issued. Share premium represents the amounts subscribed for share capital in excess of the nominal value of the shares issued, net of cost of issue. Other reserves represent the share option reserve and the foreign currency translation reserve. The share option reserve represents the fair value of the share options outstanding and the foreign currency translation reserve represents the accumulated foreign currency translation differences upon converting the Group’s results into the presentational currency. Retained losses comprise the Group’s accumulative losses recognised in the statement of comprehensive income. The Notes on pages 28 to 48 form part of these Financial Statements. 25 CHESTERFIELD RESOURCES PLC COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2021 Attributable to equity shareholders Share capital £ Share premium Other reserves Retained losses Total equity £ £ £ £ Note Balance as at 1 January 2020 159,933 3,534,597 16,571 (1,259,667) 2,451,434 Loss for the year Total comprehensive income for the year Shares issued Cost of capital Options expired during year Options granted during year Total transactions with owners, recognised directly in equity 18 18 19 19 - - - - 39,778 3,090,222 - - - (141,888) - - - - - - (644,741) (644,741) (644,741) (644,741) - - 3,130,000 (141,888) (9,211) 9,211 - 171,882 - 171,882 39,778 2,948,334 162,671 9,211 3,159,994 Balance as at 31 December 2020 199,711 6,482,931 179,242 (1,895,197) 4,966,687 Balance as at 1 January 2021 199,711 6,482,931 179,242 (1,895,197) 4,966,687 Loss for the year Total comprehensive income for the year Shares issued Cost of capital Options expired during year Options cancelled during year Options granted during year Total transactions with owners, recognised directly in equity 18 18 19 19 19 - - - - 18,617 1,816,703 - - - - (46,000) - - - - - - - (804,151) (804,151) (804,151) (804,151) - - 1,835,320 (46,000) (41,327) 41,327 (7,177) 7,177 - - 138,183 - 138,183 18,617 1,770,703 89,679 48,504 1,927,503 Balance as at 31 December 2021 218,328 8,253,634 268,921 (2,650,844) 6,090,039 The Notes on pages 28 to 48 form part of these Financial Statements. 26 CHESTERFIELD RESOURCES PLC STATEMENTS OF CASH FLOWS For the year ended 31 December 2021 Group Company Year ended Year ended 31 December 2021 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 Note £ £ £ £ (900,636) (871,261) (804,151) (644,741) 10 19 6,453 135,771 - (13,523) (193,507) (46,231) 9,615 171,882 - 5,038 (51,551) 140,903 1,147 135,771 - (159,016) 81,379 31,375 5,834 171,882 (78,061) (68,985) (16,357) 40,774 Cash flows from operating activities Loss before income tax Adjustments for: Depreciation Share options expense Intercompany charges Foreign exchange (Increase)/Decrease in trade and receivables (Decrease)/Increase in trade and payables Net cash used in operating activities (1,011,673) (595,374) (713,495) (589,654) Cash flows from investing activities Interest received Purchase of property plant and equipment Loans granted to subsidiary undertakings Exploration and evaluation activities Net cash used in investing activities Cash flows from financing activities Proceeds from issue of share capital Transaction costs of share issue Proceeds from option exercise 10 11 18 18 18 - (17,714) - (1,426,898) - (764) - (701,714) (60,686) - (1,648,379) - (28,110) - (705,044) - (1,444,612) (702,478) (1,709,065) (733,154) 800,000 (46,000) 26,400 3,130,000 (141,888) - 800,000 (46,000) 26,400 3,130,000 (141,888) - Net cash generated from financing activities 780,400 2,988,112 780,400 2,988,112 Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of period (1,675,885) 1,690,260 (1,642,160) 1,665,304 2,438,856 748,596 2,402,138 736,834 Cash and cash equivalents at end of period 14 762,971 2,438,856 759,978 2,402,138 The Notes on pages 28 to 48 form part of these Financial Statements. 27 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 1. General information The principal activity of Chesterfield Resources plc (the ‘Company’) and its subsidiaries (together the ‘Group’) is the exploration and development of precious and base metals. The Company is a public limited Company whose shares were admitted to the Standard listing segment of the Main market of the London Stock Exchange on 29 August 2017. The Company is incorporated and domiciled in England. The address of its registered office is Suite 1, 15 Ingestre Place, London, W1F 0DU. The Company acquired the entire share capital of 87986 Newfoundland and Labrador Inc on 2 July 2021 which the Directors have treated as an asset acquisition as explained in note 22 to these financial statements. The Directors are required to and have prepared Group financial statements which include the results of the acquired subsidiary from the date that the acquisition took place. As the acquisition was not considered to meet the definition of a business combination under IFRS 3, the Group Financial Statements are prepared as though the Company has acquired an asset and as such, the comparative financial information for the Group financial statements is that of the Company. 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these Financial Information are set out below (‘Accounting Policies’ or ‘Policies’). These Policies have been consistently applied to all the periods presented, unless otherwise stated. 2.1. Basis of preparation of Financial Statements The Group and Company Financial Statements have been prepared in accordance with UK-adopted international accounting standards. The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the United Kingdom applicable to companies under IFRS. The Group and Company Financial Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on an asset acquisition. The Financial Statements are presented in Pound Sterling rounded to the nearest pound. The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group and Company Financial Statements are disclosed in Note 4. a) Changes in accounting policies and disclosures i) New and amended standards adopted by the Group and Company The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 31 December 2021 but did not result in any material changes to the financial statements of the Group or Company. Of the other IFRS and IFRIC amendments, none are expected to have a material effect on future Group or Company Financial Statements. ii) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows: Standard   IFRS 16 (Amendments) IAS 1 (Amendments) Annual improvements IAS 37 (Amendments) IAS 8 (Amendments) Effective date Impact on initial application Property, plant, and equipment *1 January 2022 Classification of Liabilities as Current or Non-Current. 1 January 2022 2018-2020 Cycle 1 January 2022 Provisions, contingent liabilities and contingent assets *1 January 2022 1 January 2023 Accounting estimates None are expected to have a material effect on the Group or Company Financial Statements. 28 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 2.2. Basis of consolidation The Group Financial Statements consolidate the Financial Statements of the Company and its subsidiaries made up to 31 December 2021. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: The contractual arrangement with the other vote holders of the investee; • • Rights arising from other contractual arrangements; and The Group's voting rights and potential voting rights • The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the Group Financial Statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Investments in subsidiaries are accounted for at cost less impairment within the Company Financial Statements. Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation. 2.3. Going concern The Group’s business activities together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Report on pages 2 to 3. In addition, Note 3 to the Group Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to market, credit and liquidity risk. The Group and Company Financial Statements have been prepared on a going concern basis. Although the Group’s assets are not generating revenues and an operating loss has been reported, the Directors are of the view that the Group will have sufficient funds to undertake its operating activities over the next 12 months from the date these Financial Statements are approved including any additional payments required in relation to its current exploration projects. The Group will need to raise additional funds during the going concern period, but is confident of doing so given the Group’s ability to raise additional funds when required. Therefore, the Directors consider that there will be sufficient resources to fund the Group’s committed expenditure and to maintain good title to the exploration licences. The Group has adequately planned and, where relevant, put in place mitigation strategies for the impacts of COVID-19. The ongoing uncertainty around the pandemic may lead to short term market volatility and uncertain long-term impacts which may affect the Group’s operations or future funding requirements. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Group and Company Financial Statements. 2.4. Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision- maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 2.5. Foreign currencies (a) Functional and presentation currency Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The functional currency of the UK parent 29 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 entity is Pound Sterling. The functional currency of the Cyprian subsidiary is Euros and Canadian subsidiary is Canadian Dollars. The Financial Statements are presented in Pounds Sterling which is the Group’s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income. (c) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities for each period end date presented are translated at the period-end closing rate; • income and expenses for each Income Statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and • all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the Statement of Comprehensive Income as part of the gain or loss on sale. 2.6. Intangible assets Exploration and evaluation assets The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production. Exploration and evaluation assets are recorded and held at cost Exploration and evaluation assets are not subject to amortisation but are assessed annually for impairment. The assessment is carried out by allocating exploration and evaluation assets to cash generating units (“CGU’s”), which are based on specific projects or geographical areas. The CGU’s are then assessed for impairment using a variety of methods including those specified in IFRS 6. Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the Statement of Comprehensive Income. Exploration and evaluation assets recorded at fair-value on acquisition Exploration assets which are acquired are recognised at fair value. When an acquisition of an entity whose only significant assets are its exploration asset and/or rights to explore, the Directors consider that the fair value of the exploration assets is equal to the consideration. Any excess of the consideration over the capitalised exploration asset is attributed to the fair value of the exploration asset. 2.7. Investment in subsidiaries Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision. 2.8. Property, plant and equipment Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates: Office Equipment – 10% straight line 30 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Vehicles – 20% straight line Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within ‘Other (losses)/gains’ in the Statement of Comprehensive Income. 2.9. Impairment of non-financial assets Assets that have an indefinite useful life, for example, intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 2.10. Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through OCI, or fair value through profit or loss. The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • • • • Financial assets at amortised cost (debt instruments) Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) Financial assets at fair value through profit or loss Financial assets at amortised cost (debt instruments) This category is the most relevant to the Group and Company. The Group and Company measures financial assets at amortised cost if both of the following conditions are met: • • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. 31 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets at amortised cost include trade receivables (not subject to provisional pricing) and other receivables. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when: • • The rights to receive cash flows from the asset have expired; or The Group and Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group and Company has transferred substantially all the risks and rewards of the asset, or (b) the Group and Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Impairment of financial assets The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. The Group recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity. At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. 2.11. Financial liabilities Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables and loans. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. IFRS 9.4.2.1(a) Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as 32 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income. Loans and borrowings and trade and other payables After initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income. This category generally applies to trade and other payables. Derecognition A financial liability is derecognised when the associated obligation is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income. Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities, as appropriate. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost. 2.12. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand. 2.13. Share capital, share premium and deferred shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available. Deferred shares are classified as equity. Deferred shares have no rights to receive dividends, or to attend or vote at general meetings of the Company and are only entitled to a return of capital after payment to holders of new ordinary shares of £100,000 per each share held. 2.14. Share based payments The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from employees or third-party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third-party suppliers’ services received in exchange for the grant of the options is recognised as an expense in the Statement of Comprehensive Income or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Statement of Comprehensive Income and its value is determined by reference to the fair value of the options granted: • • • including any market performance conditions; excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and including the impact of any non-vesting conditions (for example, the requirement for employees to save). The fair value of the share options and warrants are determined using the Black Scholes valuation model. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if 33 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 any, in the Statement of Comprehensive Income or equity as appropriate, with a corresponding adjustment to a separate reserve in equity. When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised. 2.15. Taxation No current tax is yet payable in view of the losses to date. Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the Group Financial Statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets and liabilities are not discounted. 3. Financial risk management 3.1. Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. None of these risks are hedged. Risk management is carried out by the London based management team under policies approved by the Board of Directors. 3.2. Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to enable the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts. At 31 December 2021 the Group had borrowings of nil (2020: £nil) and defines capital based on the total equity of the Group. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time. Given the Group’s level of debt versus its cash at bank and cash equivalents, the gearing ratio is immaterial. 4. Critical accounting estimates and judgements The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amount of expenses during the period. Actual results may vary from the estimates used to produce these Financial Statements. 34 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to: Impairment of intangible assets – exploration and evaluation costs Exploration and evaluation costs have a carrying value at 31 December 2021 of £5,008,562 (2020: £2,433,876). Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of the resource commences. Management tests for impairment annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.6. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the period warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision will be made to discontinue exploration; an impairment charge will then be recognised in the Statement of Comprehensive Income. Share based payment transactions The Group has made awards of options and warrants over its unissued share capital to certain Directors as part of their remuneration package. The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in Note 19. 5. Segment Information Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. During the period the Group had interests in three geographical segments; the United Kingdom, Canada (acquired during 2021) and Cyprus. Activities in the UK are mainly administrative in nature whilst the activities in Canada and Cyprus relate to exploration and evaluation work. 2020 Revenue Administrative expenses Loss before tax per reportable segment Additions to PP&E Additions to intangible asset Reportable segment assets Reportable segment liabilities 2021 Revenue Administrative expenses Loss before tax per reportable segment Additions to PP&E Additions to intangible asset Reportable assets Reportable liabilities segment segment Canada £ - (6,531) (6,531) - Cyprus £ - (147,856) (147,856) 764 701,714 2,573,952 (228,508) Cyprus £ - UK £ - (723,405) (723,405) - - 2,439,985 (99,561) UK £ - Total £ - (871,261) (871,261) 764 701,714 5,013,937 (328,069) Total £ - (114,072) (779,970) (900,573) (114,072) 17,714 (779,970) - - (900,573) 17,714 1,426,898 494,020 932,878 1,918,826 3,408,531 789,387 6,116,744 (281,747) (121,988) (130,931) (534,666) 35 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 6. Expenses by nature Directors’ fees Employee salaries & related expenses Stock exchange related costs Office related expenses including printing, postage and telephone Accountancy fees Auditor remuneration Travel & subsistence Professional & consultancy fees Insurance Depreciation Share Option expense Other expenses Total administrative expenses Group 31 December 2021 £ 31 December 2020 £ 162,253 701 146,042 45,307 4,800 30,480 37,441 224,175 13,429 6,453 135,771 93,721 164,633 32,842 118,885 65,980 10,097 29,829 11,640 173,216 6,328 9,574 171,882 76,355 900,573 871,261 Directors Fees of £85,187 (2020: £25,155) and Employee salaries of £93,259 (2020: £36,263) have been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible additions in the period. An additional £2,340 of the Director fees relate to the Subsidiary. Services provided by the Company’s auditor and its associates During the period, the Group (including overseas subsidiaries) obtained the following services from the Company’s auditors and its associates: Group 31 December 31 December 2021 £ 2020 £ Fees payable to the Company’s auditor and its associates for the audit of the Company and Group Financial Statements 30,180 29,829 36 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 7. Directors' remuneration Executive Director Ajay Kejriwal Martin French Non-executive Directors David Cliff Evengy Vrublevskiy Paul Ensor Peter Damouni 31 December 2021 Short-term benefits Additional work fees £ 55,400 120,000 24,000 - 21,700 24,000 245,100 £ - - - - - - - Total £ 55,400 120,000 24,000 - 21,700 24,000 245,100 Share options with a fair value of £33,524 were awarded to Directors during the year (2020: £123,740). Of the above Group Directors Remuneration, £85,187 (2020: £25,155) has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the period. Executive Director Martin French Non-executive Directors David Cliff Peter Damouni 31 December 2020 Short-term benefits Additional work fees £ £ Total £ 91,788 25,000 116,788 24,000 24,000 139,788 - 25,000 50,000 24,000 49,000 189,788 37 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 8. Income tax No charge to taxation arises due to the losses incurred. The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the losses of the consolidated entities as follows: Loss before tax Tax at the applicable rate of 18.1% (2020: 17.31%) Effects of: Expenditure not deductible for tax purposes Depreciation in excess of/(less than) capital allowances Losses carried forward on which no deferred tax asset is recognised Tax Group 31 December 2021 31 December 2020 £ £ (900,636) (871,261) (163,014) (150,815) 10,444 218 152,352 - 57,626 1,053 92,136 - The weighted average applicable tax rate of 18.3% (2020: 17.31%) used is a combination of the 19% standard rate of corporation tax in the UK, 12.5% Cypriot corporation tax and 28% Canadian tax rate. The Group has a potential deferred income tax asset of approximately £596,000 (2020: £325,000) due to tax losses available to carry forward against future taxable profits. The Company has tax losses of approximately £1,992,684 (2020: £1,330,662) available to carry forward against future taxable profits. No deferred tax asset has been recognised on accumulated tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset. A deferred tax liability arises on the acquisition of 87986 Newfoundland and Labrador Inc. Refer to Note 15. 9. Earnings per share The calculation of the total basic earnings per share of (0.811) pence (2020: (1.264)) pence is based on the loss attributable to equity holders of the Company of £900,636 (2020: £871,261) and on the weighted average number of ordinary shares of 110,984,045 (2020: 68,935,156) in issue during the period. In accordance with IAS 33, basic and diluted earnings per share are identical for the Group as the effect of the exercise of share options would be to decrease the earnings per share. Details of share options that could potentially dilute earnings per share in future periods are set out in Note 19 38 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 10. Property, plant and equipment Group Cost As at 1 January 2020 Additions Foreign exchange As at 31 December 2020 As at 1 January 2021 Additions Foreign exchange As at 31 December 2021 Depreciation As at 1 January 2020 Charge for the year Foreign exchange As at 31 December 2020 As at 1 January 2021 Charge for the year Foreign exchange As at 31 December 2021 Vehicles Office equipment £ £ Software £ Total £ 10,208 9,857 11,631 31,696 - 575 764 555 - - 764 1,130 10,783 11,176 11,631 33,590 10,783 - (707) 11,176 17,714 (734) 11,631 - - 33,590 17,714 (1,441) 10,076 28,156 11,631 49,863 4,083 2,157 230 2,185 1,624 120 4,650 5,834 - 10,918 9,615 350 6,470 3,929 10,484 20,883 6,470 2,015 (424) 3,929 3,291 (258) 10,484 20,883 1,147 - 6,453 (682) 8,061 6,962 11,631 26,654 Net book value as at 31 December 2020 4,313 7,247 1,147 12,707 Net book value as at 31 December 2021 2,015 21,194 - 23,209 Company Cost As at 1 January 2020 Additions As at 31 December 2020 As at 1 January 2021 Additions As at 31 December 2021 Software £ Total £ 11,631 11,631 - - 11,631 11,631 11,631 11,631 - - 11,631 11,631 39 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Depreciation As at 1 January 2020 Charge for the period As at 31 December 2020 As at 1 January 2021 Charge for the period As at 31 December 2021 Net book value as at 31 December 2020 Net book value as at 31 December 2021 11. Intangible Assets 4,650 5,834 4,650 5,834 10,484 10,484 10,484 1,147 10,484 1,147 11,631 11,631 1,147 1,147 - - Intangible assets comprise exploration and evaluation costs. Exploration and evaluation assets are all internally generated except for those acquired at fair value. Exploration & Evaluation Assets - Cost and Net Book Value Opening balance Additions Fair value uplift of Chesterfield (Canada) Inc. acquisition Foreign exchange As at end of period Group 2021 £ 2,433,876 1,426,898 1,264,164 (116,376) 5,008,562 2020 £ 1,675,562 701,714 - 56,600 2,433,876 Exploration projects in Cyprus and Canada are at an early stage of development and there are no JORC (Joint Ore Reserves Committee) or non-JORC compliant resource estimates available to enable value in use calculations to be prepared. The Directors therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment: • The Group’s right to explore in an area has expired, or will expire in the near future without renewal; • No further exploration or evaluation is planned or budgeted for; • A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; or • Sufficient data exists to indicate that the book value will not be fully recovered from future development and production. Following their assessment, the Directors concluded that no impairment charge was necessary for the year ended 31 December 2021. 40 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 12. Investments in Subsidiary Undertakings Shares in Group Undertakings At beginning of period Investment in Chesterfield (Canada) Inc. At end of period Loans to Group undertakings At beginning of period Loans granted Foreign Exchange Interest receivable At end of period Total Company 2021 £ 500,000 1,011,332 1,511,332 1,951,046 1,648,379 159,016 60,686 2020 £ 500,000 - 500,000 1,148,907 705,044 68,985 28,110 3,819,127 1,951,046 5,330,459 2,451,046 Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision. Subsidiaries Name of subsidiary Registered office address CRC Chesterfield Resources (Cyprus) Limited Illoupoleos 1, Germasogela, 4046 Limassol, Cyprus Chesterfield (Canada) Inc PO Box 5038. St John’s, Canada Country of incorporation and place of business Proportion of ordinary shares held by parent (%) Proportion of ordinary shares held by the Group (%) Nature of business Cyprus 100% 100% Exploration Canada 100% 100% Exploration 13. Trade and other receivables Current Prepayments Other receivables Group Company 31 December 2021 31 December 2020 31 December 2021 31 December 2020 £ 136,869 31,804 £ 17,237 32,160 £ £ 18,342 16,518 - 31 Amounts due from group undertakings - - 101,127 175,217 VAT receivable Total 153,330 79,101 11,065 20,151 322,003 128,498 130,534 211,917 Trade and other receivables are all due within one year. The fair value of all receivables is the same as their carrying values stated above. 41 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 14. Cash and cash equivalents Group Company 31 December 2021 31 December 2020 31 December 2021 31 December 2020 £ £ £ £ Cash at bank and in hand 762,971 2,438,856 759,978 2,402,138 Cash at bank comprises balances held by the Company in current bank accounts. The carrying value of these approximates to their fair value. 15. Deferred Tax The movement in the deferred tax liabilities account is as follows: Deferred tax liabilities Acquisition of subsidiary Group 2021 £ 2020 £ 380,283 127,450 During the year a deferred tax liability arose upon the acquisition of 87986 Newfoundland and Labrador Inc for £252,833. Refer to Note 22. 16. Trade and other payables Trade payables Accruals Other payables Group Company 31 December 2021 31 December 2020 31 December 2021 31 December 2020 £ £ 115,925 31,403 7,055 154,454 34,964 11,201 £ 98,179 25,697 7,056 154,383 200,619 130,932 £ 62,167 26,195 11,199 99,561 Trade payables and accruals principally comprise amounts outstanding for trade purchases and continuing costs. The Directors consider that the carrying value amount of trade and other payables approximates to their fair value. 17. Financial Instruments by Category Group 31 December 2021 31 December 2020 Assets per Statement of Financial Performance other Trade and prepayments and VAT) Cash and cash equivalents receivables (excluding Loans & receivables £ Total £ 31,804 762,971 794,755 31,804 762,971 794,755 Loans & receivables £ 32,160 2,438,856 2,471,016 Total £ 32,160 2,438,856 2,471,016 42 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Liabilities per Statement of Financial Performance Trade and other payables (excluding non-financial liabilities) 31 December 2021 31 December 2020 At amortised cost Total At amortised cost £ £ £ 122,980 122,980 122,980 122,980 165,655 165,655 Total £ 165,655 165,655 Company 31 December 2021 31 December 2020 Assets per Statement of Financial Performance Trade and other receivables (excluding prepayments and VAT) Cash and cash equivalents Liabilities per Statement of Financial Performance Trade and other payables (excluding non-financial liabilities) 18. Share capital Group and Company As at 1 January 2020 As at 31 December 2020 As at 1 January 2021 15 January 2021 – options exercised 1 July 2021 – shares issued 7 July 2021 – shares issued (1) 6 September 2021 – options exercised 27 September 2021 – options exercised Loans & receivables Total Loans & receivables £ £ £ 101,127 759,978 861,105 At amortised cost £ 105,235 105,235 101,127 759,978 861,105 Total £ 105,235 105,235 175,248 2,402,138 2,577,386 At amortised cost £ 73,336 73,336 Total £ 175,248 2,402,138 2,577,386 Total £ 73,336 73,336 Total £ Number of shares authorised, issued and fully paid 61,933,334 101,711,112 101,711,112 200,000 10,089,199 8,000,000 120,000 208,000 Share Capital Share premium £ £ 159,933 199,711 199,711 200 10,089 8,000 120 208 3,534,597 3,694,530 6,482,931 6,682,642 6,482,931 6,682,642 9,800 10,000 998,831 1,008,920 746,000 754,000 5,880 6,000 10,192 10,400 As at 31 December 2021 120,328,311 218,328 8,253,634 8,471,962 (1) Includes cost of capital of £46,000 On 15 January 2021, the Company issued 200,000 Ordinary Shares for a price of £0.05 per share raising a total of £10,000 as part of an option exercise. On 1 July 2021, the Company issued 10,089,199 Ordinary Shares for a price of £0.1 per share for a total of £1,008,920 as consideration for the acquisition of 87986 Newfoundland and Labrador Inc. On 7 July 2021, the Company issued 8,000,000 Ordinary Shares for a price of £0.1 per share raising a total of £754,000 excluding the cost of capital of £46,000. 43 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 On 6 September 2021, the Company issued 120,000 Ordinary Shares for a price of £0.05 per share raising a total of £6,000 as part of an option exercise. On 27 September 2021, the Company issued 208,000 Ordinary Shares for a price of £0.05 per share raising a total of £10,400 as part of an option exercise. Of the total number of shares, there are 120,328,311 ordinary shares and 2,000,000 deferred shares. Share capital value is £218,328 of which £120,328 is ordinary shares and the balance of £98,000 is deferred shares. Each ordinary share has a par value of 0.1p and carries the right to one vote, to receive dividends and to participate on a return of capital. Each deferred share has a par value of 4.9p and has no voting rights, no rights to receive dividends and, on a winding up or return of capital, the holders of deferred shares shall receive the nominal capital paid up on deferred shares only after the payment of £1.000,000 per share to the holders of ordinary shares. 19. Share based payments Share options Share options and warrants outstanding and exercisable at the end of the period have the following expiry dates and exercise prices: Options & Warrants Grant Date 16 March 2017 28 June 2018 17 December 2019 27 July 2020 27 July 2020 27 July 2020 26 November 2020 11 December 2020 5 January 2021 5 February 2021 2 July 2021 2 July 2021 Expiry Date 29 August 2022 2 July 2023 1 January 2025 3 July 2023 27 July 2025 16 July 2025 26 November 2025 11 December 2025 5 January 2026 5 February 2026 2 July 2026 2 July 2024 30 September 2021 30 September 2026 Exercise price in £ per share 31 December 2021 31 December 2020 0.05 0.75 0.05 0.0525 0.0525 0.10 0.09 0.09 0.14 0.125 0.12 0.20 0.11 5,000,000 1,805,000 1,800,000 2,565,000 2,175,000 619,333 1,000,000 55,556 1,400,000 250,000 2,400,000 11,100,000 2,200,000 5,200,000 1,805,000 2,300,000 2,565,000 2,425,000 619,333 1,000,000 55,556 - - - - - 32,369,889 15,969,889 The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash. The fair value of the share options and warrants was determined using the Black Scholes valuation model. The parameters used are detailed below: 44 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Granted on: Life (years) Exercise price (pence per share) Risk free rate Expected volatility Expected dividend yield Marketability discount Total fair value (£000) Granted on: Life (years) Exercise price (pence per share) Risk free rate Expected volatility Expected dividend yield Marketability discount Total fair value (£000) Granted on: Life (years) Exercise price (pence per share) Risk free rate Expected volatility Expected dividend yield Marketability discount Total fair value (£000) Granted on: Life (years) Exercise price (pence per share) Risk free rate Expected volatility Expected dividend yield Marketability discount Total fair value (£000) 2020 Options 2020 Options 2019 Options 2018 Options 27/07/2020 27/07/2020 17/12/2019 28/06/2018 5 years 5.25p 0.08% 43.70% - 20% 69 3 years 5.25p 0.08% 43.70% - 20% 63 5 years 5p 0.4% 12.96% - 20% 0.378 4.5 years 7.5p 0.5% 14.33% - 20% 11 2021 Options 2020 Options 2020 Options 2020 Options 05/01/2021 11/12/2020 26/11/2020 27/07/2020 5 years 14p 0.08% 35.43% - 20% 50 5 years 9p 0.08% 27.23% - 20% 3 5 years 9p 0.08% 27.23% - 20% 27 5 years 10p 0.08% 43.70% - 20% 10 2021 Options 2021 Options 2021 Options 2021 Options 02/07/2021 02/07/2021 02/07/2021 05/02/2021 1 years 5p 1.02% 13.79% - 20% 41 5 years 12p 1.10% 13.79% - 20% 32.5 5 years 12.5p 0.08% 35.43% - 20% 8 3 years 20p 1.10% 13.79% - 20% 2.5 2021 Options 30/09/2021 5 years 11p 1.10% 12.29% - 20% 3.5 The expected volatility of the 2021, 2020, 2019 and 2018 options has been calculated based on volatility for the six months of trading after admission. The expected volatility of the 2017 options is based on historical volatility of similar companies. The risk-free rate of return is based on zero yield government bonds for a term consistent with the option life. A reconciliation of options and warrants granted over the year to 31 December 2021 is shown below: 45 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Outstanding at beginning of period Granted Exercised Expired/cancelled Outstanding as at period end Exercisable at period end 2021 2020 Weighted average exercise price (£) 0.058 0.17 0.058 0.058 0.11 0.11 Number 15,969,889 18,100,000 (528,000) (1,172,000) 32,369,889 32,369,889 Weighted average exercise price (£) 0.10 0.06 - 0.10 0.058 0.058 Number 38,697,622 6,664,889 - (29,392,622) 15,969,889 15,969,889 2021 2020 of Range exercise prices (£) 0 – 0.05 0.05 – 0.15 0.15 – 0.30 Weighted average exercise price (£) 0.05 0.07 Number of shares 6,800,000 8,219,889 0.17 17,350,000 Weighted average remaining life expected (years) Weighted average remaining life contracted (years) 1.16 2.51 3.20 1.16 2.51 3.20 Weighted average exercise price (£) 0.05 0.07 - Number of shares 7,500,000 8,469,889 - Weighted average remaining life expected (years) Weighted average remaining life contracted (years) 2.27 3.54 - 2.27 3.54 - During the period there was a charge of £135,771 (2020: £171,882) in respect of share options to the profit and loss and a further charge of £2,412 was incurred as part of the acquisition of 87986 Newfoundland and Labrador Inc. 20. Related party transactions Loans to Group undertakings Amounts receivable as a result of loans granted to subsidiary undertakings are as follows: CRC Chesterfield Resources (Cyprus Limited) Chesterfield (Canada) Inc. At 31 December Company 31 December 2021 £ 31 December 2020 £ 3,168,951 650,176 1,951,046 - 3,819,127 1,951,046 These amounts are unsecured, incur interest, and repayable in Euros and Canadian Dollars when sufficient cash resources are available in the subsidiaries. All intra Group transactions are eliminated on consolidation. Other related party transactions There were no members of key personnel management other than Directors, whose remuneration is disclosed in note 7. 46 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 21. Commitments License commitments Chesterfield now owns 20 mineral exploration licenses in Cyprus and 10 mineral exploration licenses in Canada. These licences include commitments to pay annual licence fees and minimum spend requirements. As at 31 December 2021 these are as follows: Group Not later than one year Group Minimum spend requirement £ Total £ 1,115,050 1,186,860 License fees £ 71,810 Later than one year and no later than five years 356,650 4,958,545 5,315,195 Total 428,460 6,073,595 6,502,055 22. Acquisition of Exploration and Evaluation asset On 1 July 2021 the Company acquired 87986 Newfoundland and Labrador Inc (“the Acquisition”) which was subsequently renamed to Chesterfield (Canada) Inc. 87986 Newfoundland and Labrador Inc is a company incorporated in Canada whose principal activity is the exploration for natural resources in Canada. The consideration for the Acquisition was satisfied by the issue 10,089,199 ordinary shares at a price of 10 pence per share and warrants over 11,100,000 Ordinary Shares, exercisable for three years from completion at an exercise price of £0.20 per new Ordinary Shares. The acquisition date was deemed as being 7 July 2021. The price of 10p per share was based on an agreed price between the Company and vendor. The following table summarises the fair value of assets acquired and liabilities assumed as the acquisition date: Consideration at 7 July 2021 Equity instruments in issue (10,089,199 ordinary shares £0.10 each) Warrant instruments (11,100,000 ordinary shares £0.10 each) Total consideration Recognise amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents Trade and other receivables Trade and other payables Total identified net assets Deferred tax liability Fair value uplift £ 1,008,920 2,412 1,011,332 - - - - (252,832) 1,264,164 Under IFRS 3, a business must have three elements: inputs, processes and outputs. 87986 Newfoundland and Labrador Inc was a newly incorporated exploration company and had no mineral reserves and no plan to develop a mine. 87986 Newfoundland and Labrador Inc did have title to mineral properties but these could not be considered inputs because of their early stage of development. 87986 Newfoundland and Labrador Inc had no processes to produce outputs and had not completed a feasibility study or a preliminary economic assessment on any of its properties and had no infrastructure or assets that could produce outputs. Therefore, the Directors conclusion was that the transaction was an asset acquisition and not a business combination. The fair value adjustment to intangible assets of £1,264,164 represents the excess of the purchase consideration of £1,011,332 over the excess of the net assets acquired of nil and a deferred tax liability of £252,833. The amount of loss of 87986 Newfoundland and Labrador Inc since the acquisition date included in the Group Statement of Comprehensive Income is £6,531. If the acquisition of 87986 Newfoundland and Labrador Inc had occurred on 1 January 2021 the revenue and loss of the Group would have been nil. 47 CHESTERFIELD RESOURCES PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 23. Events after the balance sheet date On 13 January 2022, the Company issued 10,000,000 Ordinary Shares of 0.1p each at a price of 7p per share for an aggregate cash value of £700,000. In addition, the Company issued 1 warrant for every 2 shares with an exercise price of 12p for a total of 5,000,000 warrants, each vesting on 16 February 2022 and expiring 16 February 2024. On 29 March 2022 the Company announced the sign-off and publication of its NI 43-101 technical report on its Adeline project in Labrador, Canada. The report is a key component of the company's application for a secondary listing on the TSX-V exchange in Canada. 24. Ultimate controlling party The Directors believe there is no ultimate controlling party. 48 

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