REG - Castillo Copper Ltd - Final Results and Publication of Annual Report
03/10/2022 07:00
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RNS Number : 4526B Castillo Copper Limited 03 October 2022
03 October 2022
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VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
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CASTILLO COPPER LIMITED
("Castillo" or the "Company")
Final Results
Publication of Annual Report
Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily
focused on copper across Australia and Zambia, announces its financial results
for the year ended 30 June 2022.
Chairman's Address
Dear Shareholders,
Since becoming Chairman earlier in the year, the Board has undertaken a
comprehensive strategic review on how to create optimal value for shareholders
from our existing copper-cobalt assets. The Board is cognizant of the
importance to factor in external factors given these can significantly
influence global commodity markets, particularly the conflict in Europe and
prospect of tighter monetary policy to reign in inflationary pressures.
As such, the Board determined the necessity, where practical, to align with
partners that could either aid project advancement or facilitate a path to
market. Pleasingly, UK-based Hyperion Copper's offer to acquire and develop
the Zambia assets, subject to due diligence, is an excellent outcome for both
parties.
Post a planned listing on the Alternative Investment Market by Hyperion, a
sub-set of the London Stock Exchange, Castillo Copper will retain a least a
25% stake in Hyperion Copper and directly benefit from exploration successes.
Our three assets in Australia - Cangai Copper Mine, BHA and NWQ Copper
Projects - have either cobalt or copper inferred mineral resource estimates
which delivers a significant point of difference over peers. The Board's
objective is to increase the confidence in the current MREs and, if
achievable, extend known mineralisation as this is a direct conduit to
creating incremental value.
Whilst we have decided to progress developing the BHA Project on our own, the
Board is in discussions with a number of parties that could aid delivering
paths to market for Cangai Copper Mine and NWQ Copper Project.
Overall, the Board believes it has the strategy in place to maximise the
valuation potential for shareholders in fiscal 2023 and beyond.
Ged Hall
Chairman
Managing Director's Address
Dear Shareholders,
As outlined by the Chairman, Castillo Copper has re-set its high-level
strategic intent, which the Board is now determined to effectively implement.
The focus of this address is a deeper assessment of operational issues and
nuances involved for the four core projects.
ZAMBIAN PROJECTS
Over the past two years, our geology team in Zambia has undertaken soil
sampling campaigns across the prime Luanshya and Mkushi Projects which
delineated significant surface anomalies. Follow up Induced Polarisation (IP)
campaigns, which were interpreted by a geophysicist, generated a plethora of
viable targets to test drill.
Consequently, the Board was delighted to have entered into an option agreement
with Hyperion Copper (UK) to sell these high-quality copper assets for circa
A$4m plus milestones. If the option is exercised and Hyperion Copper lists on
AIM in late 2022 or early 2023, then Castillo Copper has the right to appoint
one Board director.
Further, this transaction should ensure the Zambia assets exploration
potential is fully developed, with any benefits accruing to Castillo Copper
through retaining its shareholding in Hyperion Copper.
AUSTRALIA
BHA Project - East Zone, New South Wales
Having defined an inferred cobalt resource - 64Mt @ 318 ppm Co for 21,556t
contained metal - leveraging historical drilling data, the Board has approved
a drilling campaign to focus on enhancing the confidence and grade across a
larger footprint.
The campaign will comprise one diamond core and 17 RC drill-holes for 2,100m
across four prospects including The Sisters, Fence Gossan, Reefs Tank &
Tors Tank. A key area of interest will be drill-testing two lower cobalt-rich
zones (excluding The Sisters Prospect) the geology team interpret to host
higher grading cobalt mineralisation than has been modelled to date.
Although the primary target is cobalt-copper, the Board hopes to gain further
insights on the potential for rare earth elements and gold mineralisation once
the assay results are returned. Further, the Board believes improving the
confidence and grade of the current MRE, coupled with recent favourable
metallurgical results, should aid securing support from prospective off-take
partners.
NWQ Copper Project, Queensland
Within the NWQ Copper Project are circa 20 prospects which all have potential
to host copper mineralisation based on analysing historical geological
reports. As part of the new strategic intent, the Board has now formulated
plans to systematically visit these prospects, once development work at the
Big One Deposit has concluded, to ascertain if there are viable targets for
drill-testing. The Board's optimal goal is to discover several satellite
copper deposits across the tenure which could ultimately feed into a central
processing mill.
To date, development work at Big One Deposit has produced an inferred copper
resource - 2.1Mt @ 1.1% Cu for 21,886t contained metal - with positive
metallurgical test-work. More significantly, with a sizeable target north of
the line of lode, the Board is optimistic incremental drilling can extend
known mineralisation and enhance the confidence in the current resource.
Reconciling the exploration potential the NWQ Copper Project delivers, coupled
with ongoing demand across the Mt Isa region to identify future copper
concentrate suppliers, the Board is targeting to align with a processing
partner to expedite development work.
Cangai Copper Mine
Previous work in 2017 delineated an inferred resource at 3.3Mt @ 3.35% Cu for
107,589t contained metal at Cangai Copper Mine, which is one of Australia's
highest grading historic copper mines. More recently, Castillo Copper's
geology team have reaffirmed there are several priority massive sulphide
targets that could potentially extend known copper mineralisation and enhance
confidence in the current inferred resource.
As a starting point to resuming development work at Cangai Copper Mine, the
Board has asked the geology team to update the inferred resource and factor
the historic stockpiles into the mix. Concurrently, the Board are seeking
guidance from an environmental consultant on how to ensure any potential
resumption of active exploration work fully complies with protocols
established by the NSW Resources Regulator. This is particularly pertinent as
the NSW has listed Cangai Copper Mine on its critical minerals list.
Overall, with the Board having set clear targets on how to maximise
shareholder value moving forward, we are now highly focused on ensuring these
are delivered in a timely manner.
Dr Dennis Jensen
Managing Director
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
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."
Annual Report and Accounts
The Company's Annual Report and Accounts is available on the Company's website
at: https://castillocopper.com/investors/
(https://castillocopper.com/investors/)
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was $1,653,183 (2021:
$1,624,984) and the net assets of the Group at 30 June 2022 were $19,012,138
(2021: $19,025,358).
DIVIDENDS
No dividend was paid or declared by the Group during the year and up to the
date of this report.
CORPORATE STRUCTURE
Castillo Copper Limited is a company limited by shares that is incorporated
and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
During the financial year, the principal activity of the Group was mineral
exploration and examination of new resource opportunities. The Group currently
holds copper projects in Queensland and New South Wales in Australia as well
as copper projects in Zambia.
EMPLOYEES
Other than the Directors, the Group had no employees at 30 June 2022 (2021:
Nil).
REVIEW OF OPERATIONS
During the financial year, the principal activity of the group was mineral
exploration primarily focused on copper and cobalt projects in Australia and
Zambia. However, in the second half of the financial year, the group's
strategic intent pivoted towards developing the core BHA and NWQ Copper
Projects, whilst aligning with partners to advance Cangai Copper Mine and
Zambia assets.
EAST & WEST ZONES, BHA PROJECT, NEW SOUTH WALES
On 14 January 2022, a geological review on BHA's East Zone (Figure 1),
acquired from Wyloo Metals in 2020, discovered numerous anomalous areas for
cobalt-copper mineralisation delineated from surface and down-hole assays. As
such, with assayed values ranging from >300ppm Co up to 3,890ppm Co across
>20 drill-holes (proximal to Himalaya Formation outcrop and sub-crop)
preliminary work on modelling a JORC 2012 cobalt Mineral Resource Estimate
(MRE) commenced. A key driver is that the Broken Hill region is well-known
for its cobalt potential, as Cobalt Blue (ASX: COB) has JORC Ore Reserves of
118Mt @ 687ppm Co for 81,100t contained metal.
In addition, the Board was highly encouraged by the NSW government's new
strategy, which targets building a viable downstream industry for processing
critical minerals (including cobalt-copper-REEs) and establishing a global
supply hub in the state's central west region. More importantly, the BHA
Project is on the NSW government's critical minerals list which is a
significant positive as development work advances.
FIGURE 1: BHA PROJECT FOOTPRINT
Source: CCZ geology team
On 9 February 2022, further forensic work uncovered up to 6,182 drill-holes
across the East Zone (BHA Project) - undertaken by North Broken Hill Group in
the 1980s. Consequently, the Board prioritised codifying the data then
modelling up a JORC 2012 cobalt MRE, with potential for base metal credits:
v Incrementally, up to seven reverse circulation and diamond drill-core
samples (in the Geological Survey of New South Wales core library) were tested
for cobalt mineralisation; and
v As all previous drilling and assays completed by North Broken Hill Group
meet current QAQC requirements, there should be a high degree of confidence in
the final modelled result.
Given encouraging results from an initial 108 drill-holes, all delivering
assays from >200ppm Co up to 9,500ppm Co, spinning-off the BHA Group (via
an IPO) was shelved indefinitely. As a result, this enabled the Board to focus
on expediting the development of the East Zone.
On 15 February 2022, preliminary interpretations, based on analysing assayed
drill-hole data, suggested cobalt mineralisation, with coincident base metal
occurrences, is within four zones down to a relatively shallow 70m.
Moreover, a key advantage for the group is the ability to leverage legacy data
to model a JORC 2012 MRE, as it facilitates fast-track developing the BHA
Project at a negligible cost.
On 9 March 2022, surface sampling undertaken in and around the Iron Blow
Prospect (Figure 2) confirmed the potential for shallow platinoid
mineralisation within ultrabasic dykes & metamorphic rocks:
v The best samples comprised: G3 - 3.7 g/t Pt; 25 - 1.45 g/t Pt; G1 - 2.2 g/t
Pt (6.1 g/t Au); and MS2 - 2.9 g/t Pt.
Further, there is demonstrable base metal and cobalt potential, with assayed
surface samples (including rock-chips, bulked & grab) returning up to 12%
Cu, 2,500 Zn, 9,400 Pb and 350ppm Co.
Meanwhile, historical diamond core drilling has confirmed cobalt is apparent
at The Sisters Prospect (Figure 2), with the best results: 1.8m @ 820ppm Co
from 124.7m (BH1) and 1.5m @ 320ppm Co from 138.4m (BH2).
On 21 March 2022, following a visit to NSW's core library, the geology team
re-tested diamond core - from drill-holes BH1 & BH2 at The Sisters
Prospect, with encouraging results:
v Utilising a PXRF analyser - to identify samples for follow up assays -
readings up to 1,705ppm Co and 9.63% Zn were recorded; and
v More significantly, several PXRF intervals (7-9m wide) were delineated with
high-grade cobalt-zinc readings (Figure 2).
FIGURE 2: PRXF INTERVALS BH1 & BH2 - THE SISTERS PROSPECT
Drill-hole From To Apparent Thickness (m) Co (ppm) Zn (%)
BH1 11.84 20.89 9.05 859 0.26
106.62 114.36 7.26 946 1.53
116.24 124.66 8.42 897 3.26
124.66 129.54 4.88 370 0.89
BH2 89.35 90.44 1.09 245 1.89
92.66 93.57 0.91 350 1.94
137.29 140.58 3.29 525 2.21
Source: CCZ geology team
In addition, there is a primary 1,200m synclinal structure at The Sisters
Prospect - which BH1 intersected - that appears to host high-grade cobalt-zinc
mineralisation: this is now a key target for further drill-testing.
On 13 April 2022, compelling new assays uncovered at the Fence Gossan and
Ziggy's Hill Prospect (Figure 3) provide incremental evidence there is
potentially an extensive cobalt system apparent within the BHA Project's East
Zone.
FIGURE 3: PROSPECTS WITHIN EAST ZONE, BHA PROJECT
Source: CCZ geology team
The new cobalt assays, especially from Fence Gossan, are relatively shallow
(from surface to circa 100m) and include several standout intercepts which
align with earlier results at the Tors & Reef Tank (Figure 4).
FIGURE 4: BEST ASSAYED INTERCEPTS
Prospect Best Intercepts
New - Fence Gossan Prospect: 23m @ 660ppm Co from 28m including
3m @ 1,300ppm Co from 37m (3E49N)
4m @ 925ppm Co from 53m including
2m @ 1,300ppm Co from 55m (3E45N)
4m @ 647ppm Co from 46m including
1m @ 1,700ppm Co from 48m (TT05W10N)
3m @ 620ppm Co from 52m including
1m @ 1,100ppm Co from 54m (TT05W14N)
2m @ 500ppm Co from 7m (TT4W035S)
New - Ziggy's Hill Prospect: 14m @ 262ppm Co from 84m including
1m @ 600ppm Co from 93m (ZIG01)
6m @ 336ppm Co from 39m (RABZIG097)
7m @ 250ppm Co from 5m (ZH0210W)
Reported - Tors & Reef Tank Prospects: 15m @ 760ppm Co from 67m including
3m @ 1,500ppm Co from 70m (3E51N)
5m @ 1,200ppm Co from 15m (AGSO2740)
10m @ 510ppm Co from 5m including
5m @ 690ppm Co from 10m (AGSO2716)
7m @ 1,600ppm Co from 30m (1800E1180N)
10m @ 520ppm Co from surface (2925E1240S)
5m @ 520ppm Co from 45m (TT05W10N)
Source: CCZ geology team
On 5 May 2022, diamond core assay results for drill-hole BH1 at The Sisters
Prospect confirmed significant cobalt mineralisation, with the best intercept:
24m @ 424ppm Co from 103m including 2m @ 1,120ppm Co from 107m; 1m @ 873ppm Co
from 120m; and 2m @ 486ppm Co from 125m (BH1)
On 1 June 2022, the geology team produced the maiden MRE to the JORC (2012)
Code for the East Zone - it totaled 64Mt @ 318 ppm Co for 21,556t contained
cobalt metal (Figure 5) at relatively shallow depths (0-80m). Furthermore, the
global MRE comprised 44,260t (64Mt @ 0.07% Cu) of contained copper metal that
enhances the overall result.
FIGURE 5: JORC RESOURCE TONNAGES BHA EAST ZONE PROSPECTS
Deposit Prospect Area Mask Model Surface Area Cut-off Inferred Co Cu Contained Cobalt Contained Copper
Ha Ha Co ppm Mt ppm % t t
Fence Gossan 2,335 218 125 22.1 315 0.08 6,962 17,680
Reefs Tank 5,363 2362 180 42.3 345 0.06 14,594 26,580
64.4 318 0.07 21,556 44,260
Notes: (1) Contained content reported is insitu at 100%, no mining assumptions
or dilution yet applied.
Source: CCZ geology team
NWQ COPPER PROJECT
Big One Deposit
On 15 July 2021, a key insight was the intersection of significant visible
copper mineralisation in drill-hole BO_318RC in two distinct zones - 11m from
89-100m and 34m from 153-187m (apparent thickness).
Reconciling these new data points with the geological modelling completed at
the time, clearly verified material extensions to known mineralisation and
potentially a larger underlying system than initially envisaged.
A key feature behind the success of the 2021 campaign (Figure 6) was
significantly improved targeting, resulting from the effective utilisation of
geophysical insights to refine and reshape the drilling program to boost the
collective exploration potential.
FIGURE 6: DRILL RIG AT BIG ONE DEPOSIT
Location: 7,880,306E, 335,422N
Source: CCZ geology team
On 5 October 2021, CCZ announced that assays for the first four drill-holes of
the second drilling campaign extended known mineralisation at the Big One
Deposit, as they were proximal to the dacite dyke, with the best intercepts
comprising:
Ø 9m @ 1.42% Cu from 88m including 4m @ 3.06% Cu from 92m & 1m @ 9.19% Cu
from 92m (BO_317RC)
Ø 5m @ 1.06% Cu from 141m (BO_316RC)
Ø 16m @ 0.59% Cu from 166m including 3m @ 1.76% Cu from 176m (BO_318RC)
Ø 3m @ 1.22% Cu from 65m (BO_315RC)
On 30 November 2021, based on fresh insights, post the chief geological
consultant visiting the Big One Deposit, the Board has prioritised
geologically modelling an inaugural JORC compliant resource.
There are several reasons including:
1) Recent and historical drilling campaigns have intersected relatively
shallow copper mineralisation; and
2) The significant bedrock conductor, north of the line of lode, which
is larger and of different character than the Induced Polarisation anomaly
drilled in 2020, is yet to be drill-tested.
On 28 February 2022, modelling the 2020-21 reverse circulation and diamond
core drilling campaigns at the Big One Deposit produced a maiden JORC 2012 MRE
of 2.1Mt @ 1.1% Cu for 21,886t contained metal (Figure 7). The underlying
orebody - which commences from surface - is not fully defined, as it remains
open to the east, north and down dip.
FIGURE 7: RESOURCE TONNAGES BIG ONE DEPOSIT
Tenure Name Ore Type Inferred (Mt) Indicated (Mt) Measured (Mt) Copper Grade (%) Silver Grade (g/t) Contained Copper (t) Contained Silver (kg)
Mine Dumps Oxidised 0 0.007 - 1.2 4.0 86 29
Mine Insitu Oxidised 1.7 0 - 1.0 1.1 17,000 1,870
Mine Insitu Fresh 0.4 0 0 1.2 1.4 4,800 560
Sub-Totals 2.1 0.007 0 21,886 2,459
Note: Cut-off grade 0.45% Cu.
Source: CCZ geology team
Moving forward, CCZ's geology team have mapped out the next drilling campaign
(slated to start once ground conditions improve), which will target extending
the known orebody. Notably, the campaign comprises infill drilling around the
known orebody (drill-holes 301RC, 303RC & 318R; Figure 8); and
drill-testing a significant bedrock conductor, north of the line of lode,
which is larger than the known orebody along strike.
FIGURE 8: BIG ONE DEPOSIT - LINE OF LODE & 2022 DRILL TARGETS
Source: CCZ geology team
Arya Prospect
On 10 August 2021, logistics were in place to test drill the Arya Prospect.
A re-interpretation of legacy data by CCZ's geophysicist consultant - which
enabled better targeting at the Big One Deposit - provided new insights and
re-emphasised the Arya Prospect's merits as a major exploration target in Mt
Isa's copper-belt.
Notably, re-processing data from AusAEM Survey, commissioned by Geoscience
Australia, shows the EG01 anomaly - interpreted to be 130m thick, 1,500m long
& 450m wide - is only around 100-200m deep (Figure 9).
FIGURE 9: RE-PROCESSED AUSAEM SURVEY DATA
Source: CCZ geology team
This is a significant finding, as it highlighted EG01 is much shallower than
the initial ~430m depth estimate based on analysing data from BHP, which
discovered the Arya Prospect in the mid-1990s and recommended it be
drill-tested.
On 18 October 2021, the inaugural drilling campaign at the Arya Prospect
commenced, after a massive logistical effort to prepare the drill-pads then
heli-lift the rig and all supporting equipment to site. After reconciling the
geochemical and geophysical data, the Board decided to orchestrate a strategic
"proof of concept" campaign, comprising five initial RC drill-holes.
On 17 November 2021, CCZ announced that three drill-holes had been completed
from two drill pads, with standout, AR_002RC, reaching a depth of 238m.
Notably, around 200m of dark grey and black carbonaceous siltstone / schist
was intersected (Figure 10), with scattered base-metal sulphides, fine-grained
graphite mineralisation occurrences and remaining open at depth.
FIGURE 10: COMPLETE CHIP TRAY COLLECTION (AR_002RC)
Source: CCZ geology team
On 6 December 2021, CCZ announced the drilling campaign at the Arya Prospect
had concluded, with five drill-holes completed.
CANGAI COPPER MINE
A pleasing new developing is that Cangai Copper Mine features on the NSW
government's critical minerals list. As such, the Board intends to determine
the degree of government support that can be secured to aid further advancing
Cangai Copper Mine, considering it has an MRE at 107,589t contained copper
metal (3.2Mt @ 3.35%) and is one of Australia's highest grading historic
copper mines (Figure 11).
FIGURE 11: RESOURCE TONNAGES - CANGAI COPPER MINE
Mass (t) Cu (%) Co (%) Zn (%) Au (g/t) Ag (g/t) Cu Co Zn Au Ag
(t) (t) (t) (Oz) (Oz)
Oxide 814,267 4.1 0.010 0.63 0.06 27.34 33,391 78 5,165 14,550 715,667
Fresh 2,397,342 3.1 0.003 0.28 0.89 17.74 74,198 75 6,762 68,349 1,367,456
Total 3,211,609 3.35 0.005 0.37 0.8 20.17 107,589 153 11,927 82,899 2,083,123
Note: Totals may not sum exactly due to rounding. Cut-off grade used: 1.0% Cu
with top-cut applied: 10.0% Cu
Source: CCZ geology team
In addition, Cangai Copper Mine still delivers significant exploration
potential as there are several untested bedrock conductors that are
interpreted to be open at depth (Figure 12).
FIGURE 12: CANGAI COPPER MINE - UNTESTED BEDROCK CONDUCTORS
Source: CCZ geology team
ZAMBIA PROJECTS
On 1 July 2021, a comprehensive geophysical campaign across the key Zambian
projects commenced. The campaign was estimated to take 6-8 weeks to complete
and additional time to fully analyse the results, reconciling these with known
anomalous areas at surface to identify priority targets to drill.
On 25 October 2021, up to 14 drill targets were identified at the Luanshya
Project. Notably, the 14 chargeable zones were identified post an Induced
Polarisation (IP) survey - within a 6km zone of copper surface anomalism
(Figure 13).
Modelling was undertaken by CCZ's consultant geophysicist, who interpreted the
IP survey results that covered the 6km long soil anomaly, which was defined
after extensive soil sampling campaigns.
FIGURE 13: LUANSHYA PROJECT - IP SURVEY VS COPPER SURFACE ANOMALISM
Source: CCZ geology team
On 5 April 2022, an IP survey campaign undertaken at the Mkushi Project
highlighted multiple zones of high chargeability coincident with known copper
soil anomalies. More significantly, according to the geophysicist's
interpretation, these are potential bodies of disseminated copper sulphide
mineralisation and prime targets to test drill.
On 22 June 2022, in a landmark deal, London-based Hyperion Copper was granted
a 12-month option to acquire 100%-owned subsidiary, Zed Copper Pty Ltd, which
owns the four projects in Zambia's copper-belt - including the prime Luanshya
and Mkushi Projects - for total consideration of £3.75m (A$6.7m), subject to
due diligence, in a value creating transaction.
The Board believes this is an excellent outcome for all stakeholders since it
secures a strategic partner that is committed to fully develop the exploration
potential of the Zambia projects (Figure 14). Moreover, with Hyperion Copper
planning to list on the LSE's AIM market in 2H 2022, CCZ is set to accrue
benefits via retaining its shareholding in Hyperion post listing.
FIGURE 14: ZAMBIA PROJECTS
Source: CCZ geology team
Hyperion is positioning itself as an Africa-focused, copper-gold explorer as
it owns 100% of the Yansse Gold Project in Burkina Faso.
CORPORATE
New Director Appointed
On 16 August 2021, Mr Geoff Reed was appointed Non-Executive Director. Mr
Reed, who is an experienced geologist and has worked with MIM/Xstrata in the
Mt Isa region, will provide invaluable oversight of CCZ's exploration programs
in NSW and north-west Queensland.
Board changes
On 28 January 202, Dr Dennis Jensen was promoted to Chief Executive Officer
and Mr Geoff Reed to Executive Director with effect 1 February 2022. They
assume responsibility for executing the Board's revised strategic intent to
prove up JORC 2012 mineral resources. They take over from Mr Simon Paull who
retired after building up an excellent platform during his tenure with the
group.
On 1 April 2022, Mr Ged Hall (non-executive director based in London) was
promoted to Chairman and Dr Dennis Jensen to Managing Director (from CEO) with
effect from 1 April 2022. These promotions follow on post the retirement of
long-standing Chairman, Mr Rob Scott, with effect from 31 March 2022.
Option agreement unwound
On 14 January 2022, the Board and companies, which hold the Litchfield and
Picasso Lithium Projects, mutually agreed to unwind the option agreement
enabling CCZ to acquire these assets. As part of the break agreement terms,
the $50,000 deposit has been returned to CCZ.
CAPITAL RAISING
On 4 August 2021 and 6 August 2021, the Company issued 41,240,648 new ordinary
shares and 159,439,781 listed options to complete the capital raising on the
Australian Securities Exchange and London Stock Exchange. Total proceeds
raised were $1,368,966 (AUD) and £177,245 (GBP) ($1,742,314 AUD total).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during
the year, other than as outlined elsewhere in this report.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Other than as set out in the Review of Operations, there were no known
material significant events from the end of the financial year to the date of
this report that have significantly affected, or may significantly affect the
operations of the Group, the results of those operations, or the state of
affairs of the Group in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Castillo Copper remains focused on progressing its three (3) pillared strategy
which includes continued exploration efforts at NWQ Copper Project in
Queensland, Cangai Copper Mine in New South Wales and its four Zambian
properties.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The operations of the Group are presently subject to environmental regulation
under the laws of the Commonwealth of Australia and the States of Queensland
and New South Wales and the Republic of Zambia. The Group is, to the best of
its knowledge, at all times in full environmental compliance with the
conditions of its licenses.
SHARE OPTIONS
As at the date of this report, there were 354,362,757 unissued ordinary shares
under unlisted options. The details of the unlisted options at the date of
this report are as follows:
Number Exercise Price $ Expiry Date
5,000,000 0.05 31 December 2023
17,000,000 0.10 31 December 2023
57,716,574 0.05 1 August 2022
52,491,667 0.05 2 December 2022
9,000,000 0.05 31 December 2022
102,454,545 0.05 30 June 2023
1,582,353 £0.017 1 September 2023
79,117,618 £0.028 1 September 2023
19,000,000 0.05 30 September 2023
3,000,000 0.08 31 July 2024
8,000,000 0.08 31 January 2025
In addition to the unlisted options, there are 224,939,782 listed options
(ASX:CCZO, CCZA, CCZB). The details of the listed options at the date of this
report are as follows:
Number Exercise Price $ Expiry Date
61,500,000 0.05 27 March 2023
127,418,042 0.08 31 July 2024
32,021,739 £0.044 1 August 2024
4,000,000 0.08 31 July 2024
No option holder has any right under the options to participate in any other
share issue of the Group or any other entity.
PERFORMANCE SHARES
As part of the Zed Copper acquisition in the 2021 financial year, the Group
issued 2 classes of performance shares to the vendors on 20 February 2021:
46,875,000 Class A performance shares
Conditions precedent - converting to an equal number of CCZ shares on
delineation of a JORC resource of 200,000 tonnes of contained copper at a
minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement.
46,875,000 Class B performance shares
Conditions precedent - converting to an equal number CCZ shares on completion
of a preliminary feasibility study demonstrating an internal rate of return
greater than 25% within 5 years of execution of the Share Sale Agreement.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has made an agreement indemnifying all the Directors and Officers of
the Group against all losses or liabilities incurred by each Director or
Officer in their capacity as Directors or Officers of the Group to the extent
permitted by the Corporation Act 2001. The indemnification specifically
excludes wilful acts of negligence. The Group paid insurance premiums in
respect of Directors' and Officers' Liability Insurance contracts for current
officers of the Group. The liabilities insured are damages and legal costs
that may be incurred in defending civil or criminal proceedings that may be
brought against the Officers in their capacity as Officers of entities in the
Group. The total amount of insurance premiums paid has not been disclosed due
to confidentiality reasons.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of the court to bring proceedings on behalf of
the Group or intervene in any proceedings to which the Group is a party for
the purpose of taking responsibility on behalf of the Group for all or any
part of those proceedings. The Group was not a party to any such proceedings
during the year.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year,
indemnified or agreed to indemnify the auditor of the company or any related
entity against a liability incurred by the auditor.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and
accountability, the Directors of Castillo Copper Limited support and have
adhered to the principles of sound corporate governance. The Board
recognises the recommendations of the Australian Securities Exchange Corporate
Governance Council and considers that Castillo Copper is in compliance with
those guidelines to the extent possible, which are of importance to the
commercial operation of a junior listed resources company. During the
financial year, shareholders continued to receive the benefit of an efficient
and cost effective corporate governance policy for the Group. The Group's
Corporate Governance Statement and disclosures can be found at
https://castillocopper.com/investors/governance/
(https://castillocopper.com/investors/governance/) .
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2022
Notes 2022 2021
$ $
Interest received 619 591
Other income 4 144,509 10,734
145,128 11,325
Listing and public company expenses (332,476) (302,671)
Accounting and audit expenses (126,586) (119,396)
Consulting and Directors' fees (647,641) (524,552)
Exploration expenditure expensed as incurred (25,108) -
Share-based payments 21 (85,680) (318,830)
Other expenses 4 (580,820) (370,860)
LOSS BEFORE INCOME TAX (1,653,183) (1,624,984)
- -
Income tax expense 5
(1,653,183) (1,624,984)
LOSS AFTER INCOME TAX
OTHER COMPREHENSIVE INCOME
Item that may be reclassified subsequently to profit or loss
1,594 (335)
Foreign currency translation
TOTAL OTHER COMPREHENSIVE INCOME 1,594 (335)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (1,651,589) (1,625,319)
(0.13) (0.16)
Basic and diluted loss per share (cents per share) 13
The accompanying notes form part of these financial statements.
Consolidated Statement of Financial Position
As at 30 June 2022
Notes 2022 2021
$ $
CURRENT ASSETS
Cash and cash equivalents 6 5,754,049 10,854,829
Other assets 7 78,994 221,444
TOTAL CURRENT ASSETS 5,833,043 11,076,273
NON-CURRENT ASSETS
Other assets 7 404,961 349,100
Deferred exploration and evaluation expenditure 8 12,899,486 8,171,821
TOTAL NON-CURRENT ASSETS 13,304,447 8,520,921
TOTAL ASSETS 19,137,490 19,597,194
CURRENT LIABILITIES
Trade and other payables 9 125,352 571,836
TOTAL CURRENT LIABILITIES 125,352 571,836
TOTAL LIABILITIES 125,352 571,836
NET ASSETS 19,012,138 19,025,358
EQUITY
Issued capital 11 35,964,396 34,464,159
Reserves 12 4,080,376 3,940,650
Accumulated losses (21,032,634) (19,379,451)
19,012,138 19,025,358
TOTAL EQUITY
The accompanying notes form part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Issued capital Share based payment reserve Foreign currency translation reserve Accumulated losses Total
$ $ $ $ $
Balance at 1 July 2021 34,464,159 4,092,830 (152,180) (19,379,451) 19,025,358
Loss for the year - - - (1,653,183) (1,653,183)
Other Comprehensive Income - - 1,594 - 1,594
Total Comprehensive Loss - - 1,594 (1,653,183) (1,651,589)
Transactions with owners in their capacity as owners
Shares issued to sophisticated investors 1,742,319 - - - 1,742,319
Shares issued to advisors and consultants 59,346 - - - 59,346
Share issue costs (301,428) 52,452 - - (248,976)
Share based payments - 85,680 - - 85,680
Balance as at 30 June 2022 35,964,396 4,230,962 (150,586) (21,032,634) 19,012,138
Balance at 1 July 2020 23,034,322 3,366,315 (151,845) (17,754,467) 8,494,325
Loss for the year - - - (1,624,984) (1,624,984)
Other comprehensive loss - - (335) - (335)
Total comprehensive loss - - (335) (1,624,984) (1,625,319)
Transactions with owners in their capacity as owners
Shares issued in London Stock Exchange IPO 2,454,515 - - - 2,454,515
Shares issued to sophisticated investors 9,965,973 - - - 9,965,973
Shares issued to advisors 276,139 - - - 276,139
Share issue costs (1,576,790) 407,685 - - (1,169,105)
Shares issued from exercise of options 310,000 - - - 310,000
Share based payments - 318,830 - - 318,830
Balance as at 30 June 2021 34,464,159 4,092,830 (152,180) (19,379,451) 19,025,358
The accompanying notes form part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
Notes 2022 2021
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 619 591
Payments to suppliers and employees (1,406,386) (1,208,781)
NET CASH USED IN OPERATING ACTIVITIES 6 (1,405,767) (1,208,190)
CASH FLOWS FROM INVESTING ACTIVITIES
Tenement expenditure guarantees - (232,000)
Payments for tenements bonds (55,861) -
Payment for acquisition of tenements - (217,285)
Option fee received 144,509 -
Exploration and evaluation expenditure 6 (5,112,153) (2,236,420)
NET CASH USED IN INVESTING ACTIVITIES (5,023,505) (2,685,705)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issues 11 1,742,319 12,420,488
Proceeds from exercise of options 11 - 310,000
Share issue costs 11 (248,976) (1,132,902)
NET CASH FROM FINANCING ACTIVITIES 1,493,343 11,597,586
Net (decrease)/increase in cash and cash equivalents (4,935,929) 7,703,691
Cash and cash equivalents at beginning of year 10,854,829 3,129,958
Foreign exchanges variances on cash (164,851) 21,180
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR 6 5,754,049 10,854,829
The accompanying notes form part of these financial statements.
Notes to the consolidated financial statements at and for the year ended 30 June 2022
1. Corporate Information
The financial report of Castillo Copper Limited and its subsidiaries
("Castillo Copper" or "the Group") for the year ended 30 June 2022 was
authorised for issue in accordance with a resolution of the Directors on 23
September 2022.
Castillo Copper Limited is a company limited by shares incorporated in
Australia whose shares are publicly traded on the Australian Securities
Exchange and London Stock Exchange. The nature of the operations and the
principal activities of the Group are described in the Directors' Report.
2. Summary of Significant Accounting Policies
(a) Basis of Preparation
The financial report is a general-purpose financial report, which has been
prepared in accordance with Australian Accounting Standards, Australian
Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board and the Corporations Act 2001. The Group
is a for profit entity for financial reporting purposes under Australian
Accounting Standards.
The financial report has been prepared on an accrual basis and is based on
historical costs. Material accounting policies adopted in preparation of this
financial report are presented below and have been consistently applied unless
otherwise stated.
The presentation currency is Australian dollars.
(b) Statement of Compliance
The financial report complies with Australian Accounting Standards, which
include Australian equivalents to International Financial Reporting Standards
(AIFRS). Compliance with AIFRS ensures that the financial report, comprising
the financial statements and notes thereto, complies with International
Financial Reporting Standards (IFRS).
(c) Adoption of new and revised standards
Standards and Interpretations applicable 30 June 2022
In the year ended 30 June 2022, the Directors have reviewed all of the new and
revised Standards and Interpretations issued by the AASB that are relevant to
the Company and effective for the current annual reporting period. As a result
of this review, the Directors have determined that there is no material impact
of the new and revised Standards and Interpretations on the Group and
therefore, no material change is necessary to Group accounting policies.
Standards and interpretations issued, but not yet effective
The Directors have also reviewed all Standards and Interpretations issued, but
not yet effective for the period 30 June 2022. As a result of this review the
Directors have determined that there is no material impact of the Standards
and Interpretations issued but not yet effective on the Company.
(d) Going Concern
This report has been prepared on the going concern basis, which contemplates
the continuity of normal business activity and the realisation of assets and
settlement of liabilities in the normal course of business.
The Group incurred a net loss for the year ended 30 June 2022 of $1,653,183
and net cash outflows from operating activities of $1,405,767, net cash
outflows from investing activities of $5,023,505 and net cash inflows from
financing activities of $1,493,343. At 30 June 2022, the Group had a net asset
position of $19,012,138. The cash and cash equivalents balance at 30 June 2022
was $5,754,049.
The directors have reviewed the Group's financial position and are of the
opinion that the use of thegoing concern basis of accounting is appropriate.
(e) Basis of Consolidation
The consolidated financial statements comprise the financial statements of
Castillo Copper Limited and its subsidiaries as at 30 June each year ('the
Company').
Subsidiaries are all those entities (including special purpose entities) over
which the Company has control. The Company controls an entity when the company
is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power to
direct the activities of the Group.
The financial statements of the subsidiaries are prepared for the same
reporting period as the parent Company, using consistent accounting
policies.
In preparing the consolidated financial statements, all intercompany balances
and transactions, income and expenses and profit and losses resulting from
intra-company transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained
by the Company and cease to be consolidated from the date on which control is
transferred out of the Company.
A change in the ownership interest of a subsidiary that does not result in a
loss of control, is accounted for as an equity transaction.
(f) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company's entities
are measured using the currency of the primary economic environment in which
the entity operates ('the functional currency'). The functional and
presentation currency of Castillo Copper Limited is Australian dollars. The
functional currency of the Chilean subsidiary is Chilean Peso. The functional
currency of the Zambian subsidiaries is United States Dollars.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year‑end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the
statement of comprehensive income.
(iii) Group entities
The results and financial position of all the Company 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 statement of financial
position presented are translated at the closing rate at the date of that
statement of financial position;
· income and expenses for each statement of comprehensive
income are translated at average exchange rates (unless this is not a
reasonable approximation 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 as a
separate component of equity.
On consolidation, exchange differences arising from the translation of any net
investment in foreign entities are taken to foreign currency translation
reserve.
When a foreign operation is sold or any borrowings forming part of the net
investment are repaid, a proportionate share of such exchange differences are
recognised in the statement of comprehensive income, as part of the gain or
loss on sale where applicable.
(g) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. If any such indication exists, or when annual
impairment testing for an asset is required, the Group makes an estimate of
the asset's recoverable amount. An asset's recoverable amount is the higher of
its fair value less costs to sell and its value in use and is determined for
an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets of the Group. In such cases the
asset is tested for impairment as part of the cash generating unit to which it
belongs. When the carrying amount of an asset or cash-generating unit exceeds
its recoverable amount, the asset or cash-generating unit is considered
impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset unless
the asset is carried at revalued amount (in which case the impairment loss is
treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset's recoverable
amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in profit or loss unless
the asset is carried at revalued amount, in which case the reversal is treated
as a revaluation increase.
After such a reversal the depreciation charge is adjusted in future periods to
allocate the asset's revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
(h) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf of the Group
is accumulated separately for each area of interest. Such expenditure
comprises net direct costs and an appropriate portion of related overhead
expenditure, but does not include general overheads or administrative
expenditure not having a specific nexus with a particular area of interest.
Each area of interest is limited to a size related to a known or probable
mineral resource capable of supporting a mining operation.
Exploration and evaluation expenditure for each area of interest is carried
forward as an asset provided that one of the following conditions is met:
· such costs are expected to be recouped through successful development
and exploitation of the area of interest or, alternatively, by its sale; or
· exploration and evaluation activities in the area of interest have
not yet reached a stage which permits a reasonable assessment of the existence
or otherwise of economically recoverable reserves, and active and significant
operations in relation to the area are continuing.
Expenditure which fails to meet the conditions outlined above is impaired;
furthermore, the Directors regularly review the carrying value of exploration
and evaluation expenditure and make write downs if the values are not expected
to be recoverable.
Identifiable exploration assets acquired are recognised as assets at their
cost of acquisition, as determined by the requirements of AASB 6 Exploration
for and evaluation of mineral resources. Exploration assets acquired are
reassessed on a regular basis and these costs are carried forward provided
that at least one of the conditions referred to in AASB 6 is met.
Exploration and evaluation expenditure incurred subsequent to acquisition in
respect of an exploration asset acquired, is accounted for in accordance with
the policy outlined above for exploration expenditure incurred by or on behalf
of the entity.
Acquired exploration assets are not written down below acquisition cost until
such time as the acquisition cost is not expected to be recovered.
When an area of interest is abandoned, any expenditure carried forward in
respect of that area is written off.
Expenditure is not carried forward in respect of any area of interest/mineral
resource unless the Group's rights of tenure to that area of interest are
current.
(i) Trade and Other Receivables
Trade receivables, which generally have 30 - 90 day terms, are recognised and
carried at original invoice amount less an allowance for any uncollectible
amounts.
Impairment of trade receivables is continually reviewed and those that are
considered to be uncollectible are written off by reducing the carrying amount
directly. An allowance account is used when there is objective evidence that
the Group will not be able to collect all amounts due according to the
original contractual terms. Furthermore, the Group applies the simplified
approach permitted by AASB 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables. Factors considered by
the Group in making this determination include known significant financial
difficulties of the debtor, review of financial information and significant
delinquency in making contractual payments to the Group. The impairment
allowance is set equal to the difference between the carrying amount of the
receivable and the present value of estimated future cash flows, discounted at
the original effective interest rate. Where receivables are short-term,
discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of
comprehensive income within other expenses. When a trade receivable for which
an impairment allowance had been recognised becomes uncollectible in a
subsequent period, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against other
expenses in the statement of comprehensive income.
(j) Cash and Cash Equivalents
Cash and short term deposits in the statement of financial position include
cash on hand, deposits held at call with banks and other short term highly
liquid investments with original maturities of three months or less. Bank
overdrafts are shown as current liabilities in the statement of financial
position. For the purpose of the statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as described above.
(k) Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation.
Where the Group expects some or all of a provision to be reimbursed, for
example under an insurance contract, the reimbursement is recognised as a
separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the statement of
comprehensive income net of any reimbursement.
Provisions are measured at the present value or management's best estimate of
the expenditure required to settle the present obligation at the end of the
reporting period.
If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money, and where
appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of
time is recognised as a finance cost.
Restoration and rehabilitation
Refer to Note 2(m) for the Group's policy in respect of restoration and
rehabilitation.
(l) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that may
have a financial impact on the entity and that are believed to be reasonable
under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The 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 year are discussed below.
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation
expenditure is dependent on a number of factors, including whether the Group
decides to exploit the related lease itself or, if not, whether it
successfully recovers the related exploration and evaluation asset through
sale.
Factors which could impact the future recoverability include the level of
proved, probable and inferred mineral resources, future technological changes
which could impact the cost of mining, future legal changes (including changes
to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is
determined not to be recoverable in the future, this will reduce profits and
net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if
activities in the area of interest have not yet reached a stage which permits
a reasonable assessment of the existence or otherwise of economically
recoverable reserves. To the extent that it is determined in the future that
this capitalised expenditure should be written off, this will reduce profits
and net assets in the period in which this determination is made.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value is determined by using a Black and Scholes
model, using the assumptions detailed in note 11.
Rehabilitation provision
The Group's mining and exploration activities are subject to various laws and
regulations governing the protection of the environment. The Group recognises
management's best estimate for asset retirement obligations in the period in
which they are incurred. Actual costs incurred in the future periods could
differ materially from the estimates. Additionally, future changes to
environmental laws and regulations, life of mine estimates and discount rates
could affect the carrying amount of this provision.
(m) Rehabilitation provision
A provision for rehabilitation and restoration is recognised when there is a
present obligation as a result of activities undertaken, it is probable that
an outflow of economic benefits will be required to settle the obligation, and
the amount of the provision can be measured reliably. The estimated future
obligations include the costs of abandoning sites, removing facilities and
restoring the affected areas.
The provision for future restoration costs is the best estimate of the present
value of the expenditure required to settle the restoration obligation at the
balance date. Future restoration costs are reviewed annually and any changes
in the estimate are reflected in the present value of the restoration
provision at each balance date.
The initial estimate of the restoration and rehabilitation provision is
capitalised into the cost of the related asset and amortised on the same basis
as the related asset, unless the present obligation arises from the production
of inventory in the period, in which case the amount is included in the cost
of production for the period. Changes in the estimate of the provision for
rehabilitation are treated in the same manner, except that the unwinding of
the effect of discounting on the provision is recognised as a finance cost
rather than being capitalised into the cost of the related asset.
(n) Income Tax
Deferred income tax is provided for on all temporary differences at balance
date between the tax base of assets and liabilities and their carrying amounts
for financial reporting purposes.
No deferred income tax will be recognised from the initial recognition of
goodwill or of an asset or liability, excluding a business combination, where
there is no effect on accounting or taxable profit or loss. No deferred income
tax will be recognised in respect of temporary differences associated with
investments in subsidiaries if the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary differences
will not reverse in the near future.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or liability is settled. Deferred tax is
credited in the statement of comprehensive income except where it relates to
items that may be credited directly to equity, in which case the deferred tax
is adjusted directly against equity.
Deferred income tax assets are recognised for all deductible temporary
differences, carry forward of unused tax assets and unused tax losses to the
extent that it is probable that future tax profits will be available against
which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the
future is based on tax rates (and tax laws) that have been enacted or
substantially enacted at the balance date and the anticipation that the Group
will derive sufficient future assessable income to enable the benefit to be
realised and comply with the conditions of deductibility imposed by the law.
The carrying amount of deferred tax assets is reviewed at each balance date
and only recognised to the extent that sufficient future assessable income is
expected to be obtained. Income taxes relating to items recognised directly in
equity are recognised in equity and not in the statement of comprehensive
income.
(o) Issued capital
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.
(p) Revenue
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue is capable of being reliably
measured. The following specific recognition criteria must also be met before
revenue is recognised:
Interest income
Revenue is recognised as the interest accrues (using the effective interest
method, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial instrument) to the net
carrying amount of the financial asset.
(q) Earnings / loss per share
Basic earnings / loss per share
Basic earnings / loss per share is calculated by dividing the profit/loss
attributable to equity holders of the Group, excluding any costs of servicing
equity other than dividends, by the weighted average number of ordinary
shares, adjusted for any bonus elements.
Diluted earnings / loss per share
Diluted earnings / loss per share is calculated as net profit/loss
attributable to members of the Group, adjusted for:
· costs of servicing equity (other than dividends) and preference share
dividends;
· the after tax effect of dividends and interest associated with
dilutive potential ordinary shares that have been recognised as expenses; and
· other non-discretionary changes in revenues or expenses during the
period that would result from the dilution of potential ordinary shares; and
· divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus elements.
(r) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of GST, except
where the amount of GST incurred is not recoverable from the Australian Tax
Office. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and
payables in the statement of financial position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the Australian Tax
Office is included as part of receivables or payables in the statement of
financial position.
Cash flows are presented in the statement of cash flows on a gross basis,
except for the GST component of investing and financing activities, which are
disclosed as operating cash flows.
(s) Trade and other payables
Liabilities for trade creditors and other amounts are measured at amortised
cost, which is the fair value of the consideration to be paid in the future
for goods and services received that are unpaid, whether or not billed to the
Group.
(t) Share-based payment transactions
The Group provides benefits to individuals acting as, and providing services
similar to employees (including Directors) of the Group in the form of share
based payment transactions, whereby individuals render services in exchange
for shares or rights over shares ('equity settled transactions').
The cost of these equity settled transactions with employees is measured by
reference to the fair value at the date at which they are granted. The fair
value is determined by using the Black Scholes formula taking into account the
terms and conditions upon which the instruments were granted, as discussed in
note 11(e).
In valuing equity settled transactions, no account is taken of any performance
conditions, other than conditions linked to the price of the shares of
Castillo Copper Limited ('market conditions').
The cost of the equity settled transactions is recognised, together with a
corresponding increase in equity, over the period in which the performance
conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award ('vesting date').
The cumulative expense recognised for equity settled transactions at each
reporting date until vesting date reflects (i) the extent to which the vesting
period has expired and (ii) the number of awards that, in the opinion of the
Directors of the Group, will ultimately vest. This opinion is formed based on
the best available information at balance date. No adjustment is made for the
likelihood of the market performance conditions being met as the effect of
these conditions is included in the determination of fair value at grant date.
The statement of comprehensive income charge or credit for a period represents
the movement in cumulative expense recognised at the beginning and end of the
period.
No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition.
Where the terms of an equity settled award are modified, as a minimum, an
expense is recognised as if the terms had not been modified. In addition, an
expense is recognised for any increase in the value of the transaction as a
result of the modification, as measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested
on the date of the cancellation, and any expense not yet recognised for the
award is recognised immediately. However if a new award is substituted for the
cancelled award, and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The cost of equity-settled transactions with non-employees is measured by
reference to the fair value of goods and services received unless this cannot
be measured reliably, in which case the cost is measured by reference to the
fair value of the equity instruments granted. The dilutive effect, if any, of
outstanding options is reflected in the computation of loss per share (see
note 13).
(u) Comparative information
When required by Accounting Standards, comparative information has been
reclassified to be consistent with the presentation in the current year.
(v) Operating segments
Operating segments are presented using the 'management approach', where the
information presented is on the same basis as the internal reports provided to
the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
(w) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair
value for recognition or disclosure purposes, fair value is based on the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date; and
assumes that the transaction will take place either: in the principle market;
or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming they act in their economic
best interest. For non-financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair
value, are used, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three
levels, using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. Classifications are reviewed each
reporting date and transfers between levels are determined based on a
reassessment of the lowest level input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may
be used when internal expertise is either not available or when the valuation
is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of
an asset or liability from one period to another, an analysis is undertaken,
which includes a verification of the major inputs applied in the latest
valuation and a comparison, where applicable, with external sources of data.
(x) Parent entity financial information
The financial information for the parent entity, Castillo Copper Limited,
disclosed in Note 17 has been prepared on the same basis as the consolidated
financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are
accounted for at cost in the parent entity's financial statements. Dividends
received from associates are recognised in the parent entity's profit or loss,
rather than being deducted from the carrying amount of these investments.
3. Segment Information
Management has determined the operating segments based on the reports reviewed
by the Board of Directors that are used to make strategic decisions. The
entity has four geographical segments being exploration in Northwest
Queensland (NWQ), New South Wales (Cangai), New South Wales (Broken Hill) and
Zambia. Revenue attributable to all segments is immaterial. Allocation of
asset, liabilities, income and expenses to each segment is shown below:
2022 NWQ (QLD) Cangai (NSW) Broken Hill (NSW) Zambia Unallocated Total
Segment assets and liabilities $ $ $ $ $ $
Current assets - - - - 5,833,043 5,833,043
Non-current assets 6,271,129 5,454,684 544,180 1,034,333 121 13,304,447
Current liabilities - - - - (125,352) (125,352)
Segment income and expenses
Interest income - - - - 619 619
Other income - - - 144,509 - 144,509
Other expenses - - - - (1,798,311) (1,798,311)
Loss before tax - - - 144,509 (1,797,692) (1,653,183)
2021 NWQ (QLD) Cangai (NSW) Broken Hill (NSW) Zambia Unallocated Total
Segment assets and liabilities $ $ $ $ $ $
Current assets - - - - 11,076,273 11,076,273
Non-current assets 1,973,078 5,380,977 289,580 877,167 119 8,520,921
Current liabilities - - - - (571,836) (571,836)
Segment income and expenses
Interest income - - - - 591 591
Other income - - - - 10,734 10,734
Other expenses - - - - (1,636,309) (1,636,309)
Loss before tax - - - - (1,624,984) (1,624,984)
4. Other income and expenses
2022 2021
Other income $ $
Interest expense over accrual - 10,734
Option fee(1) 144,509 -
Total other income 144,509 10,734
(1)Castillo Copper Ltd granted a 12 month option to Hyperion Copper Ltd
("Hyperion") for the acquisition of its 100% owned Subsidiary, Zed Copper Pty
Ltd, which owns the Group's mining tenements in Zambia, for a non-refundable
fee of US$100,000 (A$144,509). The consideration payable by Hyperion to
Castillo Copper Ltd for the exercise of the option is £2,250,000, which is to
be satisfied by the issue and allotment of ordinary shares in Hyperion. As
part of the transaction, Hyperion is proposing to undertake a listing and
initial public offering on the AIM Market of the London Stock Exchange.
Following completion of the transaction and listing, Castillo Copper Ltd will
hold a minimum interest of 25% of the issued shares of Hyperion. The material
conditions precedent to the transaction include: a definitive agreement being
entered into once Hyperion is satisfied with their due diligence; all the
required approvals and consents being obtained, including shareholder approval
if necessary; obtaining a legal opinion and competent person's report
confirming that the tenements are in good standing; and Hyperion completing
preparation and publication of an AIM admission document in respect of an
initial public offering and receiving unconditional approval.
Other expenses $ $
Travel and accommodation 252 112
Legal 37,678 49,827
Insurance 95,415 72,221
Foreign Exchange (Gains)/Losses 164,792 (23,056)
Investor Relations 260,534 252,766
Other 22,149 18,990
Total other expenses 580,820 370,860
5. Income Tax 2022 2021
$ $
(a) Income tax expense
Major component of tax expense for the year:
Current tax - -
Deferred tax - -
- -
(b) Numerical reconciliation between aggregate tax expense recognised in the
statement of comprehensive income and tax expense calculated per the statutory
income tax rate
A reconciliation between tax expense and the product of accounting result
before income tax multiplied by the Group's applicable tax rate is as follows:
Loss from continuing operations before income tax expense (1,653,183) (1,624,984)
Tax at the Australian rate of 30% (2021: 30%) (495,955) (487,495)
Non-allowable expenses 25,929 96,145
Income tax benefit not bought to account 470,026 391,350
Income tax expense - -
(c) The following deferred tax balances have not been bought to account:
2022 2021
Assets $ $
Total losses available to offset against future taxable income 10,361,143 8,397,012
Total accrued expenses 9,867 53,960
Total share issue costs deductible over five years 483,299 565,080
Deferred tax liability on capitalised exploration costs (3,549,693) (2,188,397)
Deferred tax assets not brought to account as realisation is not regarded as (7,304,616) (6,827,655)
probable
Deferred tax asset recognised - -
2022 2021
$ $
(d) Unused tax losses
Unused tax losses 34,537,142 27,990,034
Potential tax benefit not recognised at 30% (2021: 30%) 10,361,143 8,397,012
The benefit for tax losses will only be obtained if:
(i) the Group derives future assessable income in
Australia of a nature and of an amount sufficient to enable the benefit from
the deductions for the losses to be realised;
(ii) the Group continues to comply with the conditions for
deductibility imposed by tax legislation in Australia; and
(iii) no changes in tax legislation in Australia, adversely
affect the Group in realising the benefit from the deductions for the losses.
6. Cash and cash equivalents
Reconciliation of operating loss after tax to net the cash flows used in 2022 2021
operations
$ $
Loss from ordinary activities after tax (1,653,183) (1,624,984)
Non-cash items
Share-based payments 85,680 318,830
Consultancy and adviser fees settled in shares 59,346 169,000
Foreign exchange (gain)/loss 164,792 (21,164)
Profit & loss items classed as investing activities
Consulting fees relating to exploration expenditure - 120,000
Other income - option fee (144,509) -
Changes in assets and liabilities
Increase / (decrease) in trade and other payables (60,167) (10,142)
(Increase) / decrease in other receivables 142,274 (159,730)
Net cash flow used in operating activities (1,405,767) (1,208,190)
(b) Reconciliation of cash
Cash balance comprises:
Cash at bank 5,754,049
10,854,829
Cash at bank earns interest at floating rates based on daily bank deposit
rates.
7. Other Assets 2022 2021
$ $
Current
GST/VAT receivable 45,150 178,642
Prepayments 33,844 42,802
78,994 221,444
Non-Current
Tenement guarantees 404,961 349,100
There are no current tenement guarantees.
8. Deferred Exploration and Evaluation Expenditure 2022 2021
$ $
Exploration and evaluation phase:
Opening balance 8,171,821 5,748,198
Exploration and evaluation expenditure on acquisition of Wyloo metals - 215,000
tenements
Exploration and evaluation expenditure during the period 4,727,665 2,329,713
Rehabilitation (note 10) - (121,090)
Closing balance 12,899,486 8,171,821
The recoupment of costs carried forward in relation to areas of interest in
the exploration and evaluation phase is dependent on the successful
development and commercial exploration or sale of respective areas.
9. Trade and other payables 2022 2021
Current $ $
Trade and other payables 92,462 383,303
Accruals 32,890 188,533
125,352 571,836
Trade and other payables are non-interest bearing and payable on demand. Due
to their short-term nature, the carrying value of trade and other payables is
assumed to approximate their fair value.
10. Rehabilitation Provision
2022 2021
$ $
Rehabilitation provision - -
- -
Rehabilitation provision
Opening balance - 121,090
Rehabilitation completed during the year - (121,090)
Closing balance - -
11. Issued Capital 2022 2021
$ $
(a) Issued and paid up capital
35,965,396 34,464,159
Ordinary shares fully paid
2022 2021
Number of shares $ Number of shares $
(b) Movements in ordinary shares on issue
Opening balance 1,256,512,320 34,464,159 926,723,065 23,034,322
Shares issued in London Stock Exchange IPO - - 81,117,618 2,454,515
Shares issued to sophisticated investors 41,240,648 1,742,319 237,155,313 9,965,973
Shares issued to advisors 250,000 12,500 4,382,991 276,139
Shares issued from exercise of options - - 7,133,333 310,000
Shares issued to consultants 1,502,387 46,846 - -
Transaction costs on share issue - (301,428) - (1,576,790)
1,299,505,355 35,964,396 1,256,512,320 34,464,159
The shares issued to advisors and consultants were valued based on the fair
value of the service received.
(c) Ordinary shares
The Group does not have authorised capital nor par value in respect of its
issued capital. Ordinary shares have the right to receive dividends as
declared and, in the event of a winding up of the Company, to participate in
the proceeds from sale of all surplus assets in proportion to the number of
and amounts paid up on shares held. Ordinary shares entitle their holder to
one vote, either in person or proxy, at a meeting of the Company.
(d) Share options
At 30 June 2022 there were 354,362,757 (30 June 2021: 358,362,757) unlisted
options and 224,939,782 (30 June 2021: 61,500,000) listed options (ASX:CCZO,
CCZOA, CCZOB) with various exercise prices and expiry dates.
The following share-based payment arrangements were in place during the
period:
Series Number Grant date Expiry date Exercise price Fair value at grant date Vesting date
$
1 17,000,000 16 May 2018 31 December 2023 $0.10 $0.018 16 May 2018
2 5,000,000 1 February 2019 31 December 2023 $0.05 $0.005 1 February 2019
3 19,200,000 3 December 2019 2 December 2022 $0.05 $0.005 3 December 2019
4 3,000,000 3 December 2019 2 December 2022 $0.05 $0.005 3 December 2019
5 3,000,000 31 December 2019 31 December 2022 $0.05 $0.005 31 December 2019
6 6,000,000 31 December 2019 31 December 2022 $0.05 $0.004 30 June 2020
7 7,000,000 23 June 2020 30 June 2023 $0.05 $0.013 23 June 2020
8 1,582,353 2 October 2020 1 September 2023 £0.017 $0.023 2 October 2020
9 19,000,000 2 October 2020 30 September 2023 $0.05 $0.018 2 October 2020
10 14,285,714 15 June 2021 31 July 2024 $0.08 $0.022 15 June 2021
11 2,955,665 16 June 2021 1 August 2024 £0.044 $0.021 16 June 2021
12 1 2,418,044 5 August 2021 31 July 2024 $0.08 $0.007 5 August 2021
13 1 462,378 17 August 2021 1 August 2024 £0.044 $0.017 17 August 2021
14 1 4,000,000 27 October 2021 31 July 2024 $0.08 $0.007 27 October 2021
15 3,000,000 30 November 2021 31 July 2024 $0.08 $0.010 30 November 2021
16 8,000,000 1 February 2022 31 January 2025 $0.08 $0.007 1 February 2022
1 Issued to corporate advisors for broker services rendered in relation to
share placements during the year.
During the year 15,000,000 options expired, with an exercise price of $0.05
and a fair value at grant date of $0.003.
No options were exercised during the period.
Options granted as equity compensation benefits to Key Management Personnel
during the year are set out in the audited remuneration report.
No listed or unlisted options have been issued since the end of the year.
Weighted remaining contractual life (years) 1.21
Weighted average exercise price $0.0554
Options granted as equity compensation benefits to Key Management Personnel
during the year are set out in the audited remuneration report.
(e) Weighted average fair value
The fair value of the equity-settled unlisted options granted during the
period was estimated as at the date of grant using the Black and Scholes model
taking into account the terms and conditions upon which they were granted, as
follows:
Series
1 2 3 4 5 6 7 8 9 15 16
Expected volatility (%) 100 87 92 92 92 93 100 104 104 99 100
Risk-free interest rate (%) 1.90 2.00 0.77 0.77 0.77 0.77 0.27 0.18 0.18 0.87 1.21
Expected life of option (years) 5.6 4.9 3.0 3.0 3.0 3.0 3.0 2.9 3.0 2.7 3.0
Exercise price (cents/pence) 10 5 5 5 5 5 5 1.7p 5 8 8
Grant date share price (cents/pence) 3.9 1.6 1.8 1.8 2.0 1.7 2.6 2.6p 4.2 3.4 2.6
The expected life of the options is based on historical data and is not
necessarily indicative of exercise patterns that may occur. The expected
volatility reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual
outcome. No other features of options granted were incorporated into the
measurement of fair value.
(f) Performance Shares
At 30 June 2022 there were 46,875,000 Class A performance shares and
46,875,000 Class B performance shares on issue in relation to the Zambian
tenements held by Zed Copper Pty Ltd.
46,875,000 Class A performance shares
Conditions precedent - converting to an equal number of CCZ shares on
delineation of a JORC resource of 200,000 tonnes of contained copper at a
minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement.
46,875,000 Class B performance shares
Conditions precedent - converting to an equal number CCZ shares on completion
of a preliminary feasibility study demonstrating an internal rate of return
greater than 25% within 5 years of execution of the Share Sale Agreement.
12. Reserves
Share based payment reserve
The share based payment reserve is used to record the value of equity benefits
provided to Directors and executives as part of their remuneration and
non-employees for their services.
Foreign currency translation reserve
The foreign exchange differences arising on translation of balances originally
denominated in a foreign currency into the functional currency are taken to
the foreign currency translation reserve. The reserve is recognised in profit
or loss when the net investment is disposed of.
13. Loss per Share
2022 2021
$ $
Loss used in calculating basic and dilutive EPS (1,653,183) (1,624,894)
Number of Shares
Weighted average number of ordinary shares used in 1,294,183,748 1,019,444,466
calculating basic loss per share:
Effect of dilution:
Share options -
Adjusted weighted average number of ordinary shares used in calculating 1,294,183,748 1,019,444,466
diluted loss per share:
Basic and diluted loss per share (cents per share) (0.13) (0.16)
There have been no transactions involving ordinary shares or potential
ordinary shares that would significantly change the number of ordinary shares
or potential ordinary shares outstanding between the reporting date and the
date of completion of these financial statements.
There are no potential ordinary shares on issue that are considered to be
dilutive, therefore basic earnings per share also represents diluted earnings
per share.
14. Auditor's Remuneration 2022 2021
The auditor of Castillo Copper Limited is HLB Mann Judd. $ $
Amounts received or due and receivable for:
Audit or review of the financial report of the entity and any other entity in 40,851 41,607
the Group
Non-audit services - preparation of various reports in relation to the LSE - 10,000
listing
40,851 51,607
15. Related party disclosures
a) Key management personnel
2022 2021
Compensation of key management personnel $ $
Short term employee benefits 389,221 255,829
Post-employment benefits 3,000 -
Share-based payments 85,680 210,840
Total remuneration 477,901 466,669
b) Other transactions with key management personnel
Yingyang Pty Ltd, a company of which Mr Paull is a director, charged the Group
director's fees of $38,036 (2021: $48,000) and executive fees of $95,089
(2021: $120,000). There was nil outstanding at 30 June 2022 (2021: $nil).
Coverley Management Services Pty Ltd, a company of which Mr Scott is a
director, charged the Group director's fees of $45,000 (2021: $48,000). There
was nil outstanding at 30 June 2022 (2021: nil).
Strategic Business Analysis Ltd, a company of which Mr. Hall is a director,
charged the Group directors fees of $60,170 (2021: $39,829). There was $5,104
outstanding at 30 June 2022 (2021: nil).
Bluespoint Mining Services Pty Ltd, a company of which Mr Reed is a director,
charged the Group executive fees of $69,626 (2021: nil) and consulting fees of
$1,800 (2021: nil). There was $9,166 outstanding at 30 June 2022 (2021:
nil).
DTJ Enterprises Pty Ltd, a company of which Dr Jensen is a director, charged
the Group executive fees of $79,500 (2021: nil). There was nil outstanding at
30 June 2022 (2021: nil).
c) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and
results of Castillo Copper Limited and the following subsidiaries:
Name of Entity Country of Incorporation Equity Holding
2022 2021
Castillo Copper Chile SPA Chile 100% 100%
Castillo Exploration Limited Australia 100% 100%
Qld Commodities Pty Ltd Australia 100% 100%
Total Iron Pty Ltd Australia 100% 100%
Total Minerals Pty Ltd Australia 100% 100%
BHA No. 1 Pty Ltd Australia 100% 100%
Atlantica Holdings (Bermuda) Bermuda 75% 75%
Zed Copper Pty Ltd Australia 100% 100%
Chalo Mining Group Ltd Zambia 100% 100%
Luflilian Resources Zambia Ltd Zambia 100% 100%
Belmt Resources Mining Company Ltd Zambia 50% 50%
Broken Hill Alliance Ltd Australia 100% N/A
Castillo Copper Limited is the ultimate Australian parent entity and ultimate
parent of the Group.
Balances and transactions between the Company and its subsidiaries, which are
related parties of the Company, have been eliminated on consolidation and not
disclosed in this note.
Broken Hill Alliance Ltd was incorporated during the year ended 30 June 2022
and was subsequently deregistered on 5 September 2022, after plans to spin-off
the BHA assets via an ASX listing were indefinitely deferred.
16. Financial Risk Management
Exposure to interest rate, liquidity, and credit risk arises in the normal
course of the Group's business. The Group does not hold or use derivative
financial instruments. The Group's principal financial instruments comprise
mainly of deposits with banks. The totals for each category of financial
instruments are as follows:
2022 2021
$ $
Financial Assets
Cash and cash equivalents 5,754,049 10,854,829
Other receivables (current and non-current) 450,111 527,741
6,204,160 11,382,570
Financial Liabilities
Trade and other payables 125,352 571,836
The Group uses different methods as discussed below to manage risks that arise
from these financial instruments. The objective is to support the delivery of
the financial targets while protecting future financial security.
(a) Capital risk management
The Group's capital comprises share capital and reserves less accumulated
losses. As at 30 June 2022, the Group has net assets of $19,012,138 (2021:
$19,025,358). The Group manages its capital to ensure its ability to continue
as a going concern and to optimise returns to its shareholders.
(b) Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
obligations associated with financial liabilities. The Group manages liquidity
risk by maintaining sufficient cash facilities to meet the operating
requirements of the business and investing excess funds in highly liquid short
term investments. The responsibility for liquidity risk management rests with
the Board of Directors.
Alternatives for sourcing future capital needs include the cash position and
future equity raising alternatives. These alternatives are evaluated to
determine the optimal mix of capital resources for our capital needs. The
Board expects that, assuming no material adverse change in a combination of
our sources of liquidity, present levels of liquidity will be adequate to meet
expected capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other payables. As at 30
June 2022 any financial liabilities that are contractually maturing within 60
days have been disclosed as current. Trade and other payables that have a
deferred payment date of greater than 12 months have been disclosed as
non-current.
(c) Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates
will affect future cash flows or the fair value of financial instruments. The
Group's exposure to changes to interest rate risk relates primarily to its
earnings on cash and term deposits. The Group manages the risk by investing in
short term deposits.
2022 2021
$ $
Cash and cash equivalents 5,754,049 10,854,829
Interest rate sensitivity
The following table demonstrates the sensitivity of the Group's statement of
comprehensive income to a reasonably possible change in interest rates, with
all other variables constant.
Change in Basis Points Effect on Post Tax Loss ($) Effect on Equity including retained earnings ($) Increase/(Decrease)
Increase/(Decrease)
2022 2021 2022 2021
Increase 100 basis points 57,540 108,548 57,540 108,548
Decrease 100 basis points (57,540) (108,548) (57,540) (108,548)
A sensitivity of 100 basis points has been used as this is considered
reasonable given the current level of both short term and long term Australian
Dollar interest rates. This would represent two to four movements by the
Reserve Bank of Australia.
(d) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial
instrument will fail to discharge an obligation and cause the Group to incur a
financial loss. The Group's maximum credit exposure is the carrying amounts on
the statement of financial position. The Group holds financial instruments
with credit worthy third parties.
At 30 June 2022, the Group held cash at bank. These were held with financial
institutions with a rating from Standard & Poors of AA- or above (long
term). The Group has no past due or impaired debtors as at 30 June 2022.
(e) Fair Value Measurement
There were no financial assets or liabilities at 30 June 2022 requiring fair
value estimation and disclosure as they are either not carried at fair value
or in the case for short term assets and liabilities, their carrying values
approximate fair value.
(f) Foreign Exchange
The Group undertakes certain transactions denominated in foreign currencies
hence exposures to exchange rate fluctuations arise. The Group does not manage
these exposures with foreign currency derivative products. The carrying
amounts of the Group's foreign currency denominated monetary assets and
monetary liabilities at the balance date expressed in Australian dollars are
as follows:
Chilean Peso (CLP)
2022 2021
$
$
Assets 86,432 101,338
Liabilities (10,350) (12,135)
76,082 89,203
British Pound Sterling (GBP)
2022 2021
$
$
Assets 3,542,364 3,631,057
Liabilities (5,104) (13,063)
3,537,260 3,617,994
The Group is exposed to Chilean Peso (CLP) and British Pound Sterling (GBP)
currency fluctuations.
The following table details the Group's sensitivity to a 10% increase and
decrease in the Australian dollar against the relevant foreign currencies. 10%
is the sensitivity rate used when reporting foreign currency risk internally
to key management personnel and represent management's assessment of the
possible change in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency rates. The
sensitivity analysis includes external loans as well as loans to foreign
operations within the Group where the denomination of the loan is in a
currency other than the currency of the lender or the borrower. A positive
number indicates an increase in profit and equity where the Australian Dollar
weakens against the respective currency. For a strengthening of the Australian
Dollar against the respective currency there would be an equal and opposite
impact on the profit and equity and the balances below would be negative.
10% Increase
2022 2021
$
$
Profit/(loss) and equity - CLP 7,810 8,920
Profit/(loss) and equity - GBP 353,726 361,799
361,536 370,719
10% Decrease
2022 2021
$
$
Profit/(loss) and equity - CLP (7,810) (8,920)
Profit/(loss) and equity - GBP (353,726) (361,799)
(361,536) (370,719)
17. Parent Entity Information
The following details information related to the parent entity, Castillo
Copper Limited, at 30 June 2022. The information presented here has been
prepared using consistent accounting policies as presented in note 2.
2022 2021
$ $
Current assets 5,831,937 11,074,975
Non-current assets 10,479,490 5,885,974
Total assets 16,311,427 16,960,949
115,003 559,701
Current liabilities
Non-current liabilities - -
Total liabilities 115,003 559,701
Net assets 16,196,424 16,401,248
35,898,048 34,464,159
Issued capital
Reserves 4,297,310 4,092,830
Accumulated losses (23,998,934) (22,155,741)
Total equity 16,196,424 16,401,248
Loss of the parent entity 1,843,193 1,790,221
Other comprehensive income for the year - -
Total comprehensive loss of the parent entity 1,843,193 1,790,221
a) Guarantees
Castillo Copper Limited has not entered into any guarantees in relation to the
debts of its subsidiary.
b) Other Commitments and Contingencies
Castillo Copper Limited has not entered into any commitments and does not have
any known contingent liabilities at year end.
18. Contingent liabilities
The Company has entered into the following royalty agreements:
· 1% net smelter return royalty in respect of the area covered by the
tenements acquired from Qld Commodities Pty Ltd vendors (or their nominee);
· 3% net smelter return royalty in respect of the area covered by the
tenements acquired from Total Minerals Pty Ltd vendors (or their nominee);
· 3% net smelter return royalty in respect of the area covered by the
tenements acquired from Total Iron Pty Ltd vendors (or their nominee).
· 2% net smelter return royalty in respect of the area covered by the
tenements acquired from Zed Copper Pty Ltd vendors (or their nominee).
Other than outlined above, there are no contingent liabilities.
19. Commitments
In order to maintain current contractual rights concerning its mineral
projects, the Group has certain commitments to meet minimum expenditure or
work program requirements. The current minimum commitments at balance date
but not recognised as liabilities are as follows:
2022 2021
$ $
Within one year 1,280,129 643,668
After one year but not more than five years 1,250,000 968,475
Longer than five years - -
2,530,129 1,612,143
20. Dividends
No dividend was paid or declared by the Group in the period since the end of
the financial year, and up to the date of this report. The Directors' do not
recommend that any amount be paid by way of a dividend for the financial year
ended 30 June 2022.
The balance of the franking account is Nil at 30 June 2022 (2021: Nil).
21. Share-based payments
(a) Shares issued to suppliers : During the year, 250,000 fully paid ordinary
shares were issued to suppliers with a fair value of $12,500 in lieu of cash
payment of invoices and 1,502,387 fully paid ordinary shares were issued to
consultants with a fair value of $46,846 in lieu of cash payment of invoices.
(b) Reconciliation to share based payments expense in profit or loss:
2022 2021
$ $
Options issued to advisors and consultants - 107,990
Options issued to directors 85,680 210,840
85,680 318,830
(c) Fair value of options
The fair value of all options noted above have been determined using the Black
& Scholes model taking in to account the inputs outlined in Note 11(e).
22. Subsequent events
There were no known material significant events from the end of the financial
year to the date of this report that have significantly affected, or may
significantly affect the operations of the Group, the results of those
operations, or the state of affairs of the Group in future financial periods.
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