TIDMCHF
RNS Number : 0579Z
Chesterfield Resources PLC
19 May 2021
Chesterfield Resources Plc / EPIC: CHF / Market: LSE / Sector:
Mining
19 May 2021
Chesterfield to acquire substantial copper project in Canada
Chesterfield Resources is pleased to announce that it is to
acquire a belt scale copper exploration project, called Adeline, in
the highly-rated Labrador region of eastern Canada. The project is
close to the regional service hub of Goose Bay, and in range of
major road and rail infrastructure to the coast. The vendor, Altius
Minerals Corporation (together with its affiliates "Altius") TSX:
ALS, will become a strategic partner and help manage the
project.
-- Chesterfield to acquire 100% of a globally significant copper
exploration project, covering an entire geological basin nearly
40km long, that hosts over 200 known copper occurrences.
-- Previous prospecting and drilling on the site has encountered
high-grade copper-silver mineralisation. Potential for world class
discoveries.
-- Labrador ranked as one of the top ten mining destinations in
the world by the Fraser Institute, and is host to several major
mines.
-- Acquisition is via an all-share deal. The vendor, Altius,
will be issued 10% of Chesterfield's stock as payment for the
project, with an option to purchase a further 10% via a three-year
warrant exercisable at 20p. Altius is also entitled to a 1.6% gross
sales royalty. Low project expenditure obligations for
Chesterfield.
-- Altius will become a strategic shareholder and will help
design and manage initial exploration operations in Labrador on
behalf of Chesterfield.
-- Chesterfield will be hosting a Webinar to present the project
to investors, to be held at 4.30 pm on 20 May. All are welcome,
details below.
Said Martin French, Executive Chairman, "The Adeline project is
an outstanding acquisition for Chesterfield. It is highly unusual
to secure and be able to explore an entire copper belt in a
top-tier jurisdiction. The project has the potential for a
world-class discovery.
We have taken a strategic decision to greatly increase our
global footprint of high quality copper exploration assets. Our
objective is to be positioned as a leading copper exploration and
resource development company to help supply the surging global
demand for electrification.
Expansion into Canada is a natural fit for Chesterfield. The
company was co-founded by a Canadian and retains a core group of
Canadian shareholders. Our Director of Exploration, Dr Neil
O'Brien, is a Canadian and is based near Toronto. The acquisition
complements well our copper exploration project in Cyprus. Flight
time between London and St John's, Newfoundland is similar to
Cyprus, and like Cyprus, Labrador is an excellent mining location,
with good regulation, legal codes and infrastructure."
In recent months we have significantly bolstered the team at
Chesterfield in anticipation of expansion. Initial expenditure
obligations at Adeline are easily manageable within our current
cash reserves. We are also very pleased to welcome Altius as a
strategic partner. Altius is a highly regarded and successful
mining group in Canada and expert in Labrador, being head quartered
in St John's. Altius is helping us design and manage the initial
phase of exploration, of which there will be more news soon."
Said Neil O'Brien, Director of Exploration "Adeline is an
excellent entry point to a mid-stage exploration project covering
an entire sediment-hosted copper belt. Previous work has clearly
demonstrated its potential for important new copper discoveries
with significant silver credits. There are distinct similarities to
many of the world's great sediment-hosted copper deposits and belts
including very rich copper ore mineralogy, efficient metal traps
needed to form economic copper-silver deposits, and km-scale strike
extents of prospective geology with 100's of copper showings that
allow for multiple camp-scale discoveries.
A rich exploration and research database exists that, coupled
with heads-up field investigations, can be leveraged towards rapid,
smart drill target development in a very cost-effective manner.
Consequent important new copper-silver resources can be confidently
developed within a top tier mining jurisdiction. Labrador has a
track record for supporting new mine and resource sector
development projects in partnership with a local indigenous First
Nation that is already actively supporting, as well as
participating in, other exploration and mining ventures in
Labrador.
Investor Webinar invitation
Chesterfield will be hosting a Webinar, open to all, to present
and explain the project. Executive Chairman Martin French will
provide background to the deal, while senior geologists Dr Neil
O'Brien and Dave Cliff will present the project itself, with time
for questions afterwards.
The registration link is on the home page of our website:
https://www.chesterfieldresourcesplc.com
The Adeline exploration project
The Adeline copper-silver project is located within the western
half of the Central Mineral Belt, a 260 km long, metal-rich
geological terrane located in Central Labrador, eastern Canada. The
property is comprised of five contiguous mineral licenses totalling
129.3 km2, covering the full extent of the Seal Lake basin, a
nearly 40 km long by 10 km wide geological structure which contains
some 250 copper prospects. The project is similar in scale to the
renowned Chambisi basin on the Zambian Copperbelt and shares key
geological attributes with the giant sediment-hosted copper-silver
deposits at Udokan, Russia (1.4Bt @ 1.05%Cu, 10 g/t Ag) and the
Keweenawan Copperbelt, Michigan (historic production of 7.3Mt
copper) as well as copper deposits across the Zambian Copperbelt.
The Adeline property is close to the regional service hub of Goose
Bay, and within range of major road and rail infrastructure to the
coast, some of which was built specifically for mining projects
including the large iron ore mines of Labrador.
The successful track record of sediment-hosted copper belts
At the Adeline project, the numerous copper showings located
across the entire extent of the regional Seal Lake basin belong to
one very large sediment-hosted copper mineral system, and is one of
a number of similar belts globally. These include the world class
copper deposits of the Central African Copperbelt in the Democratic
Republic of Congo and Zambia, the Kupferscheifer of central Europe,
the Keweenawan Copperbelt of Michigan, US and the Udokan
copper-silver deposit in eastern Russia. These sediment-hosted
copper belts have been successfully developed into significant,
very long-life mining camps that have each seen mine production of
several millions of tonnes of contained copper and other valuable
metals including cobalt and silver. It is important to recognize
that whilst sediment-hosted copper deposits commonly form as fairly
narrow beds of typically a few meters they can have kilometres of
regional extent both along strike and down-dip. However, these
copper beds can become locally much thicker and so these zones
become the target for exploration.
Geologically, the Adeline copper prospects have particular
similarities with those of the Keweenawan Copperbelt, as they
contain high copper tenor sulphide mineralization comprised of
chalcocite-bornite with substantial silver content hosted by grey
bed type shales and native copper within underlying basalts. They
also share a similar Late Proterozoic ("Grenvillian") age of copper
mineralization, again the same as the copper deposits at Keweenawan
as well as those hosted in the older host rocks of the Zambian
Copperbelt. It is thought that these particular, large
sediment-hosted copper belts may have all formed at the same time,
around a billion years ago, in response to the formation of a
former supercontinent.
Plenty of evidence of high-grade copper at Adeline, yet there
has been drilling on the belt
There have been a number of field exploration programmes and
government mapping surveys across the Adeline project area covering
the Seal Lake basin over previous decades, resulting in a robust
knowledge base and many defined targets to work from. Trenching and
channel sampling, for example, has established the presence of
high-grade copper beds, such as 7.11% Cu, 90.8 g/t Ag across 1.5m
and 2.5% Cu, 94.3 g/t Ag over 4.5m, but also laterally continuous
copper beds with resource grades and thicknesses, such as 1.35% Cu,
49.8 g/t Ag across an average 4.2m thickness over an exposed strike
length of 60m. However, where sulphide mineralization becomes
massive the grades are extremely high, commonly 10-30% Cu due to
the high copper tenor of chalcocite-bornite, the principal copper
sulphides.
Yet despite the encouraging field work there has been relatively
little drill testing, largely due to the lack of road access. Only
7,317m has been drilled since 1951 with much of this as shallow
prospect drilling. However, this shallow historic drilling has
returned some good resource grades and thicknesses, including 7.9m
@ 1.76% Cu, 56.2ppm Ag, that need following up.
While many of these copper-silver intercepts are open along
strike and down-dip, the vast majority of the over 200 copper
prospects at Adeline have still only been explored by local mapping
and rock sampling and their extents remain unknown. There is
clearly considerable opportunity for further exploration work, and
especially carefully targeted drilling. The regional exploration
database includes results of extensive, high-quality geological,
geochemical and geophysical surveys. Using advanced techniques,
these databases can now be quickly combined and analysed to
generate high priority target areas for field follow up prior to
drill target definition.
An initial field season is already being planned to investigate
prospects and more specific field-based targeting methods based
upon a re-evaluation and re-modeling of the regional exploration
datasets with the latest visualization software tools and with
expert consultants who have decades of experience in this belt.
This is expected to generate a significant pipeline of quality
drill targets to test for significant extents of high-grade
copper-silver mineralized grey beds. Drilling can be done
throughout much of the year including during the winter if needed
when rigs can set up on frozen lakes.
Labrador as a mining region
Newfoundland & Labrador was ranked the eighth most
attractive mining investment destination in the world by the
influential Fraser Institute Survey of Mining Companies (2020),
which ranked jurisdictions on criteria such as regulation, legal
and tax environments, environmental protection issues, community
issues, infrastructure, trade barriers, political stability,
security, labour and the quality of geological databases.
The area is host to world class mines including Vale's famous
Voisey's Bay nickel-copper mine and Rio Tinto's Carol Lake iron ore
operation, as well as other natural resource sector projects
including large hydroelectric power generating projects, all under
current permitting processes and legislation. The legislative
environment is transparent, and government mineral claims
management inexpensive and efficient.
Newfoundland and Labrador is thus arguably one of the most
mining supportive jurisdictions in the world. Within legislative
and regulatory practice there are numerous examples of mining (and
exploration) activities that co-exist with natural water courses
and have been fully permitted for construction but that are also in
full compliance with operating environmental permits (including
those impacting water) and other related regulations.
Project location
The property is located in south-central Labrador, 20 minutes
away by helicopter from Goose Bay, which is a major settlement with
services and an airport, plus access to deep water. Goose Bay is
the service hub to most of Labrador and is the base of operations
for a number of exploration-related service providers including
helicopter and fixed wing support and diamond drilling companies. A
number of large lakes allow for good boat access throughout the
project area.
The paved, all-weather Trans-Labrador Highway is located
approximately 110 km to the south of the project and the 5,428 MW
Churchill Falls hydroelectric facility (the tenth largest in the
world) is located approximately 180 km to the southwest. A hydro
access road is located within approximately 60 km of the western
end of the project.
The climate at lower elevations is subarctic with normal average
temperatures at Goose Bay ranging between -12degC in January, to an
average of 20degC in July. Annual precipitation is in the order of
950 mm, distributed between the short, wet, warmer summers and
cold, snowy winters. Exploration work can be carried out for most
of each year with slightly more planning and preparation needed
during the winter months. The general prospecting and geological
mapping season is mid-June through mid-October with thaw of late
ice historically occurring around mid-June, although earlier in
recent years.
ESG considerations
All exploration work must be approved by the Department of
Industry, Energy and Technology, which adheres to world class best
practices in environmental and social considerations. All Mineral
Exploration Approval Applications are referred to various
government departments and stakeholders in the vicinity for
approval, such as Environment and Wildlife, Forestry, Fisheries,
Protected Lands Committees, Municipal Government, Indigenous
groups, before any permits are granted.
The Property falls in an area that the Labrador Innu, an
indigenous First Nations group, have asserted their traditional
rights. The Innu Nation has been in negotiations for a land claims
agreement with the federal (and indirectly provincial) government
since 1978 and these negotiations are ongoing. No final designation
of the Innu land claims area has been promulgated. The Innu Nation
has not explicitly expressed opposition to mineral exploration and
mining and in fact signed an Impact Benefits Agreement with INCO
(now Vale) and the governments of Canada and Newfoundland and
Labrador which led to the successful development of the Voisey's
Bay Mine in northeast Labrador. Many Innu people are actively
employed at that mine.
Transaction details
Chesterfield has entered into a share purchase agreement with
Altius in which Altius has agreed to sell the entire issued share
capital of a special purpose vehicle ("SPV"), which in turn owns a
100% interest in the Adeline copper project, to Chesterfield (the
"Share Purchase Agreement"). The consideration for the share
purchase will be satisfied by Chesterfield's issue to Altius of (i)
10,089,199 ordinary shares in the capital of Chesterfield (the
"Ordinary Shares") and (ii) warrants over 11,100,000 Ordinary
Shares, exercisable for three years from completion at an exercise
price of GBP0.20 per new Ordinary Share.
Under the Share Purchase Agreement, Chesterfield agrees that it
will spend C$250,000 (GBP146,185) on the Adeline copper project
within 18 months following the date of the Share Purchase Agreement
and an additional C$750,000 (GBP438,554) within a further 12
months. Altius has also applied for some additional claims on the
project periphery which it will transfer to the SPV at
Chesterfield's request at cost if granted.
Chesterfield and Altius have also entered into a relationship
agreement. The principal terms are that 1) Altius is required to
exercise its voting rights so as to ensure the independence of
Chesterfield's board; 2) Altius is required not to control or
influence the running of Chesterfield at an operational level; 3)
Altius is required not to exercise its voting rights in respect of
any resolution relating to (a) any transaction with Altius; (b) the
cancellation of Chesterfield's admission to trading on the Main
Market; or (c) any amendments to Chesterfield's articles of
association which would be inconsistent with the agreement and 4)
Altius has the right to participate in any issue of shares or other
equity securities by Chesterfield by subscribing for such number of
shares as will ensure that the total proportion of all voting
rights held by Altius is not reduced following such issue. These
rights and restrictions shall apply for so long as Altius maintains
an interest in more than 5% of Chesterfield's voting rights.
Following completion, Altius will be entitled to a 1.6% gross
sales royalty on the Adeline project pursuant to a royalty
agreement between the SPV and an Altius affiliate. Altius will also
assist with the design of, and manage initial exploration
operations in Labrador of behalf of, and under the direction of
Chesterfield by virtue of a technical services agreement between
the SPV and an Altius affiliate.
The transaction is conditional upon, among other things,
approval of a Chesterfield prospectus expected in coming weeks.
Further details of the transaction will be published in the
prospectus.
About Altius
Altius Minerals Corporation is a well-regarded and successful
exploration project generator and royalty company listed on the TSX
(ALS.TO) with a market capitalisation of approximately C$710
million.
The Altius group holds royalty interests in 13 producing assets
throughout the Americas. In Canada these assets include a 4% net
sales royalty on Hudbay's 777 copper-zinc mine in Manitoba, 6
potash mines and two other mines located in western Canada, and a
royalty on the Voisey's Bay nickel-copper-cobalt mine in Labrador.
In 2020 it generated revenue of C$67 million.
Altius is headquartered in St John's, Newfoundland and so is
highly familiar with Labrador, and well connected with exploration
service providers there, as well as the local Innu First Nation
group.
About Chesterfield Resources
Chesterfield Resources is a copper-focussed exploration company
with a project in Cyprus and the proposed new Adeline copper
project in Labrador Canada, contingent, among other things, upon
the publication of a prospectus. In December 2020, Polymetal
International, the FTSE100 mining group, took a 23% strategic
investment in Chesterfield via a placing of new shares. Upon
completion of the acquisition of the project in Labrador, Altius
will similarly become a strategic partner, with a 10% holding in
the Chesterfield, and a 20p warrant over a further 10% of the
company.
The exploration team is led by two veteran industry geologists
Neil O'Brien, formally SVP Exploration & New Business
Development, Lundin Mining, and Dave Cliff, previously Head of
Exploration Europe, Rio Tinto.
In Cyprus the company holds the largest mineral exploration
licence area of any operator on the island.
Cyprus is regarded as a high-quality exploration location. It is
a member of the EU, and its legal system is based on English common
law. An opportunity exists because there has been minimal
exploration activity on the island in the last 46 years since the
invasion by Turkey in 1974 put a halt to what had been a very
active mining industry.
The current focus of exploration is in the Troodos West group of
licences belonging to the company, with around 30 defined targets
in an area measuring 10km by 10km. The objective is to discover
several VMS deposits in close proximity to each other to create a
mining project with a centralised processing unit.
While copper is the main exploration target, it is noteworthy
that gold was not historically exploited in Cyprus . Gold has been
encountered in several locations in the exploration target area and
is an important part of the exploration objective.
The company announced high grade results from its late season
2020 drilling campaign and is now engaged in an enlarged integrated
2021 geophysics, percussion and diamond drilling exploration
campaign. The company will commence its diamond drill programme in
one month.
Chesterfield Resources is committed to world-class environmental
standards in all of its operations to mine copper, which is
essential to developing clean technology projects worldwide. The
company hopes to develop
industry and opportunities for the benefit of the Republic of Cyprus and Canada.
Chesterfield has embarked on a strategy of acquisition to take
advantage of mega-trend of electrification and copper demand.
Further acquisitions are expected to significantly enlarge its
exploration footprint.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
**ENDS**
For further information, please visit
www.chesterfieldresourcesplc.com or contact:
Chesterfield Resources plc:
Martin French, Executive Chairman Tel: +44(0) 7901 552277
Panmure Gordon (UK) Limited Tel: +44 (0)207 886 2500
(Joint Broker):
John Prior & Hugh Rich
Fox-Davies Capital Limited
(Broker): Tel: +44 ( 0)20 3884 8450
Daniel Fox-Davies
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