REG - Castillo Copper Ltd - December 2022 Quarterly Activities Report
20/01/2023 07:00
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RNS Number : 3316N Castillo Copper Limited 20 January 2023
20 January 2023
CASTILLO COPPER LIMITED
("Castillo", or the "Company")
December 2022 Quarterly Activities Report
Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily
focused on copper across Australia and Zambia, is pleased to present
shareholders its latest quarterly report for the period 1 October to 31
December 2022
HIGHLIGHTS:
· EAST ZONE, BHA PROJECT, NEW SOUTH WALES
· Assays from seven drill-holes across the Fence Gossan (FG) and Tors
Tank (TT) Prospects, confirm a significant shallow clay-hosted Rare Earth
Elements (REE) discovery - up to 2,410ppm Total Rare Earth Oxides (TREO)(1) -
the best intercepts comprise:
o 20m @ 1,780ppm TREO (28.9% Magnet REO) from surface including 4m @
2,410ppm TREO from 16m (FG_003RC)(1)
o 7m @ 1,048ppm TREO (29.9% Magnet REO) from 12m (TT_002RC)(1)
o 19m @ 847ppm TREO (29.6% Magnet REO) from surface (TT_003RC)(1)
· LUANSHYA PROJECT ZAMBIA
· Incremental development work on known key targets - scheduled to
commence in 1H2023 - focusing on the highly prospective Luanshya Project(1)
· The Board remains committed to aligning with a development partner or
undertaking a trade sale for the Zambia Copper Projects - efforts will be
redoubled to deliver this outcome during 2023(1)
ACTIVITIES REPORT
During the period, most of the focus remained on developing the REE potential
at the East Zone, BHA Project in Broken Hill.
An overview of key events follows:
DEVELOPMENT WORK
Castillo has four properties comprising the NWQ Copper Project in Mt Isa's
copper-belt, the BHA Project near Broken Hill's world class silver-zinc-lead
deposit in NSW, the historic Cangai Copper Mine and four assets across
Zambia's copper-belt.
East Zone, BHA Project, NSW
On 3 October 2022, a four-week long, cobalt-focused drilling campaign at the
East Zone commenced, comprising one diamond core and 17 RC drill-holes for
2,100m across four prospects(1) (Figure 1 & 2).
FIGURE 1: PROPOSED DRILLING CAMPAIGN BHA PROJECT EAST ZONE
Prospects # Drillholes Target Commodity Depth range (m) Type Objective
Reefs Tank, Tors Tank, Fence Gossan 16 Co, Au, Ag, Cu 100-160 RC, DDH Target primary cobalt whilst assays to investigate PGE & REE potential
The Sisters 2 Co, Cu, REE 120-160 RC Test known EM interpretation; drill extensions north & south
Source: CCZ geology team
A key focus for the campaign is drilling two lower potentially cobalt-rich
zones at Fence Gossan (FG), Reefs Tanks (RT) & Tors Tank (TT), which are
interpreted to host higher-grade mineralisation than modelled to date(1).
Overall, the Board's strategic intent is to extend known mineralisation plus
enhance the confidence and grade of the current global Mineral Resource
Estimate (MRE) - 21,556t cobalt (64Mt @ 318 ppm Co) and 44,260t copper (63Mt @
0.07% Cu)(1).
FIGURE 2: DRILLING UNDERWAY AT BHA PROJECT'S EAST ZONE
Location: 6460000mN, 570000mE
Source: CCZ geology team
On 12 October 2022, Castillo announced four drill-holes for 488m were
completed at the Tors Tank Prospect which delivered encouraging initial
observations, including:
· All four drill-holes hit targeted cobalt mineralisation zones, evidenced
by intersecting sequences comprising clay, amphibolite, schist, and gneiss;
· Qualitative logging identified multiple disseminated sulphide layers
(mostly pyrite), up to 12m thick, associated with amphibolite layers that can
potentially host cobalt mineralisation;
· Field XRF observations, which are subject to final assay results,
indicated the presence of cobalt mineralisation within these amphibolite
zones; and
· The intersected geology was interpreted to be consistent with
observations by previous explorers, including Broken Hill North, across the
1970-80s(1).
In addition, proximal to the amphibolite layers, there are significant
magnetite-rich zones - associated with pegmatite up to 14m thick - that
potentially hosts REEs. Notably, this interpretation is based on recently
re-assayed diamond core from drill-hole DD90_IB3 at the Iron Blow Prospect
which returned up to 1,270ppm TREO(1).
On 24 October 2022, Castillo provided an update on drilling at the Fence
Gossan Prospect, where four drill-holes for a total of 516m were completed,
with positive initial observations comparable to the Tors Tank Prospect:
· Targeted cobalt mineralisation zones were hit across the four
drill-holes, as sequences intersected comprised clay, amphibolite, schist and
gneiss;
· Numerous disseminated sulphide layers (mostly pyrite linked to
amphibolite), up to 17m thick, were logged which could potentially host cobalt
mineralisation; and
· Interpreting the intersected geology suggests it is consistent with
observations noted by North Broken Hill in the 1970-80s, while XRF field
observations (subject to final assays) indicated cobalt mineralisation is
apparent(1).
Similar to the Iron Blow Prospect, there are significant magnetite-rich zones
- associated with pegmatite up to 19m thick - which potentially hosts REEs.
These are based on field XRF observations and are subject to final assays(1).
On 31 October 2022, after reconciling geochemical and geophysical data for the
Iron Blow Prospect, Castillo announced several viable targets for
drill-testing with significant exploration potential. These findings were
based on a re-interpretation of geophysical campaigns from 2000, 2001 and 2017
which identified several significant bedrock conductors that could host
mineralisation(1).
The primary focus will be REEs since diamond core assays from drill-hole
DD90_1B3 (sourced from the core library) returned positive readings - on a
cumulative basis - over 35m, with the best intersections(1):
· 8m @ 1,460ppm TREO from 150m(1)
· 12m @ 297ppm TREO from 199m(1)
· 6.4m @ 290ppm TREO from 189m(1)
· 4.8m @ 311ppm TREO from 232m(1)
Since there is still untested diamond core from DD90_1B3 at the core library,
the geology team are planning for this to be fully re-assayed for REEs.
Contingent on the outcome of the current drilling campaign, the Board has
earmarked the Iron Blow Prospect as the next priority target to drill-test
with nine holes planned.
On 15 November 2022, assays from seven drill-holes across the Fence Gossan and
Tors Tank Prospects, confirmed a significant shallow clay-hosted REE discovery
- up to 2,410ppm TREO, with high-value Magnet REOs representing up to 29.9% of
the grade - the best intercepts are highlighted in Figure 3 below(1):
FIGURE 3: BEST ASSAYED INTERCEPTS - FENCE GOSSAN / TORS TANK PROSPECTS(1)
v 20m @ 1,780ppm TREO (28.9% Magnet REO) from surface including 4m @ 2,410ppm
TREO from 16m (FG_003RC)
v 7m @ 1,048ppm TREO (29.9% Magnet REO) from 12m (TT_002RC)
v 19m @ 847ppm TREO (29.6% Magnet REO) from surface (TT_003RC)
v 8m @ 773ppm TREO (24.0% Magnet REO) from 48m (FG_004RC)
v 4m @ 732ppm TREO (27.1% Magnet REO) from 24m (TT_001RC)
v 19m @ 661ppm TREO (28.0% Magnet REO) from surface (FG_002RC)
v 32m @ 636ppm TREO (25.7% Magnet REO) from 52m (FG_003RC)
v 28m @ 614ppm TREO (27.8% Magnet REO) from 4m (FG_004RC)
Source: CCZ geology team
Of significance, the assays for FG_002-4RC delineated an initial 800m strike
event starting near Fence Gossan's eastern boundary. Moreover, with REE
mineralisation open in all directions, and Fence Gossan circa 4km long by 1km
wide (W-E), the Board has ordered follow up geological mapping, sampling and
auger drilling to target extending the known strike event to the west(1).
While cobalt assays were consistent with previous observations, the new REE
discovery has pivoted the Board's strategic focus for the current drilling
campaign and beyond to fully understanding the extent of REE mineralisation
across the BHA Project's East Zone(1).
On 23 November 2022, Castillo announced new assays for RT_001RC and FG_001RC
were positive for TREO, confirming REEs are more widely apparent across the
East Zone than initially envisaged - the best intercepts comprise:
· 11m @ 1,078 TREO from 8m (RT_001RC)(1)
· 20m @ 609ppm TREO from surface incl. 4m @ 1,709ppm REO from 8m
(FG_001RC)(1)
· 11m @ 862ppm TREO from 58m (FG_001RC)(1)
More significantly, all the assays returned to date from Fence Gossan, Tors
Tank and Reefs Tank highlight the REE mineralisation discovered is extensive
and shallow(1).
On 20 December 2022, following the receipt of drill assays for the Fence
Gossan, Tors Tank and partly Reefs Tank Prospects, Castillo's Board confirmed
that shallow REE mineralisation is more widely apparent across the BHA
Project's East Zone than initially envisaged. As an immediate next step, the
Board commissioned an extensive auger sampling campaign(1).
Encouragingly, the auger sampling campaign, which covered a 6.5km(2) area
proximal to the Fence Gossan Prospect, was designed to identify the full
extent of REE mineralisation and new targets to test-drill. As an immediate
follow up, all samples were sent to the laboratory for further analysis, with
subsequent interpretation charting the next phase of REE-focused exploration
across the BHA Project's East Zone(1).
Zambia Copper Projects
On 7 December 2022, Castillo's Board approved incremental development work on
known key targets - scheduled to commence in 1H2023 - focusing on the highly
prospective Luanshya Project which is in the heart of Zambia's copper belt(1).
Specifically, the geology team plan to roll out an Induced Polarisation (IP)
geophysics campaign to build on earlier work undertaken in 2021 which focused
on a 6km zone of copper surface anomalism that delineated up to 14 chargeable
zones. A key focus of the upcoming IP campaign will be to refine targets for
test drilling and enhance the confidence of finding structurally controlled
copper mineralisation(1).
The plans for development work follow London-based, Metallea Group's
(previously Hyperion Copper) decision to cancel plans to list on the
Alternative Investment Market (AIM) of the London Stock Exchange (LSE), due to
extremely difficult equity market conditions. As this was a key requirement to
secure funds to progress development work, Metallea has further advised it
will not be exercising the option - which delivered a US$100,000
non-refundable deposit to Castillo - to acquire the Zambia Copper Projects(1).
Moving forward, as Castillo's Board remains committed to aligning with a
development partner or undertaking a trade sale for the Zambia Copper
Projects, efforts will be redoubled to deliver this outcome during 2023(1).
NWQ Copper Project, Queensland
No work was undertaken at the NWQ Copper Project during the review period.
However, on 20 December 2022, Castillo announced that the geology team planned
to visit several prospects at the NWQ Copper Project during 1Q 2023 to
determine the potential to host copper mineralisation(1).
Cangai Copper Mine
No work was undertaken at Cangai Copper Mine during the review period.
CORPORATE
· Result of AGM: On 29 November 2022, Castillo advised that all fives
resolutions put to shareholders at the Annual General Meeting (AGM) were
passed on a poll. The resolutions included: 1) Adopting the remuneration
report; 2) Re-electing Dr Dennis Jensen as a director: 3) Re-electing Mr Geoff
Reed as a director: 4) Approving the 7.1A mandate; and, 5) Replacing the
constitution.
PAYMENTS TO, OR TO AN ASSOCIATE OF, A RELATED PARTY OF THE ENTITY DURING QUARTER DURING THE QUARTER
$97,000 was paid to related parties of Castillo relating to executive director
and non-executive director fees.
SUMMARY OF THE EXPLORATION EXPENDITURE INCURRED DURING THE QUARTER
Consulting fees Rates and mines departments fees
Cangai $14,000 $10,000
Broken Hill Alliance $710,000 $14,000
Mt Isa $67,000 $17,000
Zambia $26,000 $5,000
Total $817,000 $46,000
For further information, please contact:
Castillo Copper Limited +61 8 6558 0886
Dr Dennis Jensen (Australia), Managing Director
Gerrard Hall (UK), Chairman
SI Capital Limited (Financial Adviser and Corporate Broker) +44 (0)1483 413500
Nick Emerson
Gracechurch Group (Financial PR) +44 (0)20 4582 3500
Harry Chathli, Alexis Gore, Henry Gamble
About Castillo Copper
Castillo Copper Limited is an Australian-based explorer primarily focused on
copper across Australia and Zambia. The group is embarking on a strategic
transformation to morph into a mid-tier copper group underpinned by its core
projects:
· A large footprint in the Mt Isa copper-belt district, north-west
Queensland, which delivers significant exploration upside through having
several high-grade targets and a sizeable untested anomaly within its
boundaries in a copper-rich region.
· Four high-quality prospective assets across Zambia's copper-belt which
is the second largest copper producer in Africa.
· A large tenure footprint proximal to Broken Hill's world-class deposit
that is prospective for zinc-silver-lead-copper-gold and platinoids.
· Cangai Copper Mine in northern New South Wales, which is one of
Australia's highest grading historic copper mines.
The group is listed on the LSE and ASX under the ticker "CCZ."
References
1) Note - All information referenced is from CCZ ASX Releases,
as dated in text, from 1 October 2022 to 31 December 2022 inclusive
APPENDIX A: KEY PROJECTS
FIGURE A1: WEST AND EAST ZONE - BHA PROJECT, BROKEN HILL REGION
Source: CCZ geology team
FIGURE A2: ZAMBIA COPPER-BELT PROJECTS
Source: CCZ geology team
FIGURE A3: NWQ COPPER PROJECT, MT ISA REGION
Source: CCZ geology team
APPENDIX 1: INTEREST IN MINING TENEMENTS HELD
JACKADERRY (CANGAI)
New England Orogen in NSW
Tenement ID Ownership at start of Quarter Ownership at end of Quarter Change during the Quarter
EL8635 100% 100% -
EL8625 100% 100% -
EL8601 100% 100% -
BROKEN HILL
located within a 20km radius of Broken Hill, NSW
Tenement ID Ownership at start of Quarter Ownership at end of Quarter Change during the Quarter
EL8599 100% 100% -
EL8572 100% 100% -
EL 8434 100% 100% -
EL 8435 100% 100% -
MT OXIDE
Mt Isa region, northwest Queensland
Tenement ID Ownership at start of Quarter Ownership at end of Quarter Change during the Quarter
EPM 26513 100% 100% -
EPM 26525 100% 100% -
EPM 26574 100% 100% -
EPM 26462 100% 100% -
EPM 27440 100% 100% -
ZAMBIA
Project Tenement ID Ownership at start of Quarter Ownership at end of Quarter Change during the Quarter
Lumwana North 23914-HQ-SEL 100% 100% -
Lumwana North 23913-HQ-SEL 100% 100% -
Mkushi 24659-HQ-LEL 100% 100% -
Luanshya * 22448-HQ-LEL - - -
Luanshya 25195-HQ-LEL 55% 55% -
Luanshya 25273-HQ-LEL 55% 55% -
Mwansa 25261-HQ-LEL 100% 100% -
* CCZ can earn up to 80% by meeting previously disclosed milestones
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
Castillo Copper Ltd
ABN Quarter ended ("current quarter")
52 137 606 476 31 December 2022
Consolidated statement of cash flows Current quarter Year to date (6 months)
$A'000
$A'000
1. Cash flows from operating activities
1.1 Receipts from customers
1.2 Payments for
(a) exploration & evaluation
(b) development
(c) production
(d) staff costs
(e) administration and corporate costs (474) (725)
1.3 Dividends received (see note 3)
1.4 Interest received 3 3
1.5 Interest and other costs of finance paid
1.6 Income taxes paid
1.7 Government grants and tax incentives
1.8 Other (provide details if material)
1.9 Net cash from / (used in) operating activities (471) (722)
2. Cash flows from investing activities
2.1 Payments to acquire or for:
(a) entities
(b) tenements
(c) property, plant and equipment
(d) exploration & evaluation (863) (1,123)
(e) investments
(f) other non-current assets 10 (82)
2.2 Proceeds from the disposal of:
(a) entities
(b) tenements
(c) property, plant and equipment
(d) investments
(e) other non-current assets
2.3 Cash flows from loans to other entities
2.4 Dividends received (see note 3)
2.5 Other (provide details if material)
2.6 Net cash from / (used in) investing activities (853) (1,205)
3. Cash flows from financing activities
3.1 Proceeds from issues of equity securities (excluding convertible debt
securities)
3.2 Proceeds from issue of convertible debt securities
3.3 Proceeds from exercise of options
3.4 Transaction costs related to issues of equity securities or convertible debt
securities
3.5 Proceeds from borrowings
3.6 Repayment of borrowings
3.7 Transaction costs related to loans and borrowings
3.8 Dividends paid
3.9 Other (provide details if material)
3.10 Net cash from / (used in) financing activities - -
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 5,090 5,754
4.2 Net cash from / (used in) operating activities (item 1.9 above) (471) (722)
4.3 Net cash from / (used in) investing activities (item 2.6 above) (853) (1,205)
4.4 Net cash from / (used in) financing activities (item 3.10 above) - -
4.5 Effect of movement in exchange rates on cash held 82 21
4.6 Cash and cash equivalents at end of period 3,848 3,848
5. Reconciliation of cash and cash equivalents Current quarter Previous quarter
at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts
$A'000
$A'000
5.1 Bank balances 3,756 4,998
5.2 Call deposits 92 92
5.3 Bank overdrafts
5.4 Other (provide details)
5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 3,848 5,090
6. Payments to related parties of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to related parties and their associates included 60(1)
in item 1
6.2 Aggregate amount of payments to related parties and their associates included 37(2)
in item 2
(1)Comprises director's fees for the quarter.
(2)Comprises consulting fees paid to the Managing Director.
7. Financing facilities Total facility amount at quarter end Amount drawn at quarter end
Note: the term "facility' includes all forms of financing arrangements available to the entity.
$A'000
$A'000
Add notes as necessary for an understanding of the sources of finance available to the entity.
7.1 Loan facilities
7.2 Credit standby arrangements
7.3 Other (please specify)
7.4 Total financing facilities
7.5 Unused financing facilities available at quarter end
7.6 Include in the box below a description of each facility above, including the
lender, interest rate, maturity date and whether it is secured or unsecured.
If any additional financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing details of
those facilities as well.
8. Estimated cash available for future operating activities $A'000
8.1 Net cash from / (used in) operating activities (item 1.9) (471)
8.2 (Payments for exploration & evaluation classified as investing activities) (863)
(item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item 8.2) (1,334)
8.4 Cash and cash equivalents at quarter end (item 4.6) 3,848
8.5 Unused finance facilities available at quarter end (item 7.5)
8.6 Total available funding (item 8.4 + item 8.5) 3,848
8.7 Estimated quarters of funding available (item 8.6 divided by item 8.3) 2.9
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7.
8.8 If item 8.7 is less than 2 quarters, please provide answers to the following
questions:
8.8.1 Does the entity expect that it will continue to have the
current level of net operating cash flows for the time being and, if not, why
not?
Answer: N/A
8.8.2 Has the entity taken any steps, or does it propose to take
any steps, to raise further cash to fund its operations and, if so, what are
those steps and how likely does it believe that they will be successful?
Answer: N/A
8.8.3 Does the entity expect to be able to continue its operations
and to meet its business objectives and, if so, on what basis?
Answer: N/A
Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2
and 8.8.3 above must be answered.
Compliance statement
1 This statement has been prepared in accordance with
accounting standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters
disclosed.
Date: 20 January 2023
Authorised by: The Board of Directors
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the accompanying
activity report provide a basis for informing the market about the entity's
activities for the past quarter, how they have been financed and the effect
this has had on its cash position. An entity that wishes to disclose
additional information over and above the minimum required under the Listing
Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in
accordance with Australian Accounting Standards, the definitions in, and
provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and
AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash
flow report has been prepared in accordance with other accounting standards
agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent
standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities, depending
on the accounting policy of the entity.
4. If this report has been authorised for release to the
market by your board of directors, you can insert here: "By the board". If it
has been authorised for release to the market by a committee of your board of
directors, you can insert here: "By the [name of board committee - eg Audit
and Risk Committee]". If it has been authorised for release to the market by a
disclosure committee, you can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the
market by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations, the board should have
received a declaration from its CEO and CFO that, in their opinion, the
financial records of the entity have been properly maintained, that this
report complies with the appropriate accounting standards and gives a true and
fair view of the cash flows of the entity, and that their opinion has been
formed on the basis of a sound system of risk management and internal control
which is operating effectively.
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