Chesterfield Resources (LSE:CHF) recently came to market to provide investors with an opportunity to access the vibrant copper market through the formerly-thriving mining jurisdiction of Cyprus. Fresh from the firm expanding its land package considerably on the back of strong gold prospectivity, executive chairman Martin French talks us through what investors can expect over coming months in this exclusive Q&A session…

Can you tell me about the formation of Chesterfield Resources?

We started as a group of investors looking for exploration opportunities in copper. We believe the current supply/demand dynamics within the market for the metal present an excellent opportunity for investors.

Cyprus has always looked like a fantastic opportunity to me. The word “copper” even comes from the Latin word for Cyprus – Cyprium. Historically, the island has always been significant for the metal. Not many people know, it was a big producer in the 1960s and early 1970s. However, following the Turkish invasion of 1974, the industry was stopped in its tracks.

This was also around the time that the Vietnam War was drawing to a close, meaning that copper demand has begun to decline. Alongside this, explorers and producers began to discover large porphyry systems in Latin America. All this has meant that the industry’s needs were met elsewhere. Essentially, we felt this indicated that an area that was once a very vibrant producer of copper had been mothballed for 45 years. It looked like a great area to approach.

Chesterfield’s particular opportunity arose because we discovered that third parties did not hold many of the licences covering previously-copper producing areas. The government still owned them. This gave us an opportunity to go out and acquire an expansive licence area with relative ease.

So, against this backdrop, has your interest in revitalising Cyprus’s copper industry been reciprocated by the island’s government?

For some time, there have been two main industries in Cyprus. One is the tourism sector, which caters in particular to the British. The other is financial services. However, over recent years, the latter has come under an increased compliance restrictions from EU regulators. This is creating some pressure on the Cypriot financial services industry.

I think Cyprus now wants to diversify from its traditional, hallmark economic drivers. The fact that companies like Chesterfield are coming in to revive the island’s mining industry ought to be attractive from the government’s point of view.

Handily, the strong links between the UK and Cyprus – which have arisen mainly thanks to the area’s booming tourism industry – are working in our favour. Indeed, Cyprus’s legal system is based on English Common Law, two RAF bases are actually British Overseas Territories, and – for what it’s worth – they even drive on the ‘wrong’ side of the road (like us Brits do). All of these connections have made it a great country in which to operate – perhaps even more so than jurisdictions like Spain and France, where some of our peers are targeting. As it stands, from a mining perspective, Cyprus is a relatively benign place. We have found the mining regulatory authority very helpful.

Although there were a few miners that attempted to enter the territory during the last resources boom, no one has really come into the area as we have. We have acquired quite a large land package, and – speaking globally - this is very unusual given the area’s previous prospectivity. So we have a significant first mover advantage. Going forward, however, we hope and expect other resource firms to join us in the area.

Can you tell me about the assets, and what made you pursue them?

At the moment, the ground we have in the Troodos area is brownfield exploration. We are exploring for mineral deposits as well as studying historical dumps for other revenue opportunities. We did around 3,000m of preliminary drilling before Christmas within the areas in which we had been permitted to work. Fortunately, much of this is based in the vicinity of significant, historical mines.

Cyprus is well known for hosting volcanogenic massive sulphide (VMS) ore deposits. So much so, that geology students often go out to the island to study its rock structures. With this in mind, the real surprise for us was that we hit surprisingly high levels of gold, as well as copper. We have also discovered more recent epithermal systems, which we did not expect. This, therefore, means that mineralisation is hosted in at least two types of systems, which is very exciting.

Our work so far has mainly taken place at our Troodos West licences, and we are starting to generate a large number of targets here. We have also begun to receive permits at the grants we applied for in Troodos North, which we announced last month. We will now be working to generate targets here before drilling them and exploring what they can offer.

As it stands, there is one target in particular that could represent a near-term revenue project for us. This is a pit called Limni. It was refilled with about 10MMts of waste material, and we are fairly sure that it contains a large amount of copper in water solution. When it rains heavily, the pit even starts to overflow with this bright blue liquid – as sure a sign of mineralisation.  We are looking to drill into Limni and see if we can extract this and should be talking more about that soon. It is an exciting possibility for us.

A map of Chesterfield’s holdings in the belt surrounding Cyprus’s Troodos Mountains

You also recently announced a substantial expansion of your exploration programme; can you talk me through this?

Of course, this was launched mainly off the back of the strong results we received from our early drilling – the gold levels really marked a step-change in the pace of our activities. Initially, we applied for permits over around 60km2 of land, principally covering Troodos West and North, but as our drilling results started to look so strong, we decided to up the ante.

We have applied for licences that will essentially more-than-triple our mineralisation exploration land package in the highly prospective belt surrounding the Troodos mountain range. Once you submit a licence in Cyprus, no-one else can apply for it. Provided these are granted, we will become the dominant player on the island in terms of exploration acreage – we are very much gunning the engines. We will take this land package and start to explore it straight away. There really is a lot you can do very quickly with remote sensing and archival data to begin generating target lists.

Obviously, we cannot drill until we have the permits, so the immediate plan is to focus on the licences that we already have permited. We hope to start drilling again mid year, but this could come even sooner because our contracted drill is held in our facility, meaning it is easily accessible.

Alongside this, we will be exploring our additional land and, as can be seen in our recent newsflow, we have been hiring new staff to support our larger operations. Notably, this includes First Quantum veteran Michael Parker, who has joined us as chief operating officer. Mike was instrumental in two huge discoveries for First Quantum and was the organisation’s country manager for the DRC and then Peru. He is an extremely experienced and senior individual, and a company of our size would not normally expect to be able to hire a person of that calibre.

This sounds like a large amount of work; can you talk me through Chesterfield’s cash situation?

Of course, as it stands, we have around £1.6m in the bank, meaning we are pretty well funded. Of course, the degree to which this can stretch is dependent on the amount of drilling we decide to do. Regardless, I feel quite confident in saying that we have sufficient funds for our activity in 2019.

So, what is the long-term plan?

We are in Cyprus to make commercial discoveries, and we are very confident that we can do that. We have exploration techniques that were not available to companies operating in the region back in the heady days of the 60s and 70s, and we also have a vastly improved knowledge of the area’s geology.

Alongside this, drilling was very slow and expensive back in the days when Cyprus’s mining industry was booming. Miners tended to rely on finding mineral expressions at the surface and following them down. They were not really exploring and  drilling in the way we think of it these days.

Furthermore, there are quite a few areas where we can see mineralised structures going under cover. In volcanic regions, these formations tend to go under basalt and old lava flows. In the past, these would have gone entirely un-noticed by operators due to technological restrictions.

This combination of greatly-improved geological understanding and massively-improved exploration techniques means that, in our eyes, we are approaching the asset as if it were new with the knowledge that it is already prospective.

Author: Daniel Flynn

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