Acquisition: Substantial Copper Project in Canada

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 -12°C in January, to an average of 20°C 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 £0.20 per new Ordinary Share.

 

Under the Share Purchase Agreement, Chesterfield agrees that it will spend C$250,000 (£146,185) on the Adeline copper project within 18 months following the date of the Share Purchase Agreement and an additional C$750,000 (£438,554) 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 (Joint Broker): John Prior & Hugh Rich	Tel: +44 (0)207 886 2500
Fox-Davies Capital Limited (Broker): Daniel Fox-Davies	Tel: +44 (0)20 3884 8450