REG - Castillo Copper Ltd - Half-year Financial Report
10/03/2023 13:00
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RNS Number : 6200S Castillo Copper Limited 10 March 2023
10 March 2023
CASTILLO COPPER LIMITED
("Castillo", the "Company" or the "Group")
Half-year Financial Report
Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily
focused on copper across Australia and Zambia, is pleased to announce it has
submitted the financial report of the Group for the half-year ended 31
December 2022.
In addition to this release, a PDF version of this report with supplementary
information can be found on the Company's website:
https://www.castillocopper.com/asx-announcements/
(https://www.castillocopper.com/asx-announcements/)
Results
The loss after tax for the half-year ended 31 December 2022 was $625,672 (31
December 2021 loss of $781,670).
Review of Operations
During the financial period, the principal activity of the Group (or "CCZ")
was mineral exploration in eastern Australia and Zambia.
The Group has four properties comprising the NWQ Copper Project in Mt Isa's
copper-belt, the BHA Project near Broken Hill's world class silver-zinc-lead
deposit in NSW, the historic Cangai Copper Mine and four assets across
Zambia's copper-belt.
A more detailed summary of key events undertaken during the financial period
follows:
East Zone, BHA Project, NSW
On 2 August 2022, CCZ announced metallurgical test-work on BH1 drill-core
extracted from The Sisters Prospect - BHA Project's East Zone - delivered
excellent beneficiation results for cobalt and, surprisingly, copper-gold -
with the best outcomes:
v Cobalt: 200ppm head-grade up to 2,500ppm post-test-work; 12x upgrade
v Copper: 520ppm head-grade up to 16,000ppm (1.6%) post-test-work; 30x upgrade
v Gold: 0.02g/t Au head-grade up to 3.87g/t Au post-test-work; >190x
upgrade
Pleasingly, the metallurgical test-work showed that cobalt-copper-gold
liberated easily from BH1 drill-core samples to produce a potentially viable
concentrate. Further, the original BH1 drill-core samples were extracted from
comprised:
24m @ 424ppm Co from 103m including 2m @ 1,120ppm Co from 107m; 1m @ 873ppm Co from 120m; and 2m @ 486ppm Co from 125m (BH1)
Moving forward, the Board's primary focus for the East Zone is to increase the
confidence in the current inferred Mineral Resource Estimate (MRE) which
stands at 21,556t cobalt (64Mt @ 318 ppm Co) and 44,260t copper (63Mt @ 0.07%
Cu).
On 9 August 2022, CCZ stated it had finalised targets for the upcoming
drilling campaign at the BHA Project's East Zone which comprises one diamond
core and 17 RC drill-holes for 2,100m, with depths ranging from 100m to 160m.
Of these, two drill-holes were earmarked for The Sisters, with the balance
across Fence Gossan, Reefs & Tors Tanks Prospects.
Notably, for the Fence Gossan, Reefs & Tors Tanks Prospects, the campaign
was designed to penetrate deep enough to intersect two lower cobalt-rich zones
that are interpreted to host higher grade mineralisation than has been
modelled to date.
On 31 August 2022, CCZ announced the appointment of two key contractors:
v AllState Drilling's team will perform the campaign; and
v FieldCrew, which has performed work at the NWQ Copper Project in Queensland,
will manage the day-to- day aspects of the drilling campaign.
In addition, post-announcing Australia secured preferred status for the supply
of critical minerals to the US's electric vehicle battery program, the Board
stated it wanted to deepen its understanding of the East Zone's Rare Earth
Element (REE) potential at two targets:
v The Sisters Prospect: both planned RC drill-holes will be analysed for
copper-cobalt-gold and REEs; and
v Iron Blow: having already confirmed the presence of REEs, the geology team
is targeting to test additional drill-core samples from the core library to
determine if there are further extensions to known mineralisation.
On 21 September 2022, the Board announced the drilling campaign at the BHA
Project's East Zone was to commence imminently, after approval was secured
from the New South Wales Resources Regulator.
On 3 October 2022, a four-week long cobalt-focused drilling campaign at the
East Zone commenced (Figure 1 & 2).
FIGURE 1: PROPOSED DRILLING CAMPAIGN BHA PROJECT EAST ZONE
Prospects # Target Commodity Depth range Type Objective
Drillholes (m)
Reefs Tank, Tors Tank, Fence 16 Co, Au, Ag, 100-160 RC, DDH Target primary cobalt whilst assays to investigate PGE & REE potential
Gossan Cu
The Sisters 2 Co, Cu, REE 120-160 RC Test known EM interpretation; drill extensions north & south
Source: CCZ geology team
A key focus for the campaign is drilling two lower potentially cobalt-rich
zones at Fence Gossan, Reefs Tanks & Tors Tank, which are interpreted to
host higher-grade mineralisation than modelled to date.
Overall, the Board's strategic intent is to extend known mineralisation plus
enhance the confidence and grade of the current global MRE.
FIGURE 2: DRILLING UNDERWAY AT BHA PROJECT'S EAST ZONE
Location: 6460000mN, 570000mE Source: CCZ geology team
On 12 October 2022, CCZ announced four drill-holes for 488m were completed at
the Tors Tank Prospect which delivered encouraging initial observations,
including:
v All four drill-holes hit targeted cobalt mineralisation zones, evidenced by
intersecting sequences comprising clay, amphibolite, schist, and gneiss;
v Qualitative logging identified multiple disseminated sulphide layers (mostly
pyrite), up to 12m thick, associated with amphibolite layers that can
potentially host cobalt mineralisation;
v Field XRF observations, which are subject to final assay results, indicated
the presence of cobalt mineralisation within these amphibolite zones; and
v The intersected geology was interpreted to be consistent with observations
by previous explorers, including Broken Hill North, across the 1970-80s.
In addition, proximal to the amphibolite layers, there are significant
magnetite-rich zones - associated with pegmatite up to 14m thick - that
potentially hosts REEs. Notably, this interpretation is based on recently
re-assayed diamond core from drill-hole DD90_IB3 at the Iron Blow Prospect
which returned up to 1,270ppm TREO.
On 24 October 2022, CCZ provided an update on drilling at the Fence Gossan
Prospect, where four drill-holes for a total of 516m were completed, with
positive initial observations comparable to the Tors Tank Prospect:
v Targeted cobalt mineralisation zones were hit across the four drill-holes,
as sequences intersected comprised clay, amphibolite, schist and gneiss;
v Numerous disseminated sulphide layers (mostly pyrite linked to amphibolite),
up to 17m thick, were logged which could potentially host cobalt
mineralisation; and
v Interpreting the intersected geology suggests it is consistent with
observations noted by North Broken Hill in the 1970-80s, while XRF field
observations (subject to final assays) indicated cobalt mineralisation is
apparent.
Similar to the Iron Blow Prospect, there are significant magnetite-rich zones
- associated with pegmatite up to 19m thick - which potentially hosts REEs.
These are based on field XRF observations and are subject to final assays.
On 31 October 2022, after reconciling geochemical and geophysical data for the
Iron Blow Prospect, CCZ announced several viable targets for drill-testing
with significant exploration potential. These findings were based on a
re-interpretation of geophysical campaigns from 2000, 2001 and 2017 which
identified several significant bedrock conductors that could host
mineralisation.
The primary focus will be REEs since diamond core assays from drill-hole
DD90_1B3 (sourced from the core library) returned positive readings - on a
cumulative basis - over 35m, with the best intersections:
v 8m @ 1,460ppm TREO from 150m
v 12m @ 297ppm TREO from 199m
v 6.4m @ 290ppm TREO from 189m
v 4.8m @ 311ppm TREO from 232m
Since there is still untested diamond core from DD90_1B3 at the core library,
the geology team are planning for this to be fully re-assayed for REEs.
Contingent on the outcome of the current drilling campaign, the Board has
earmarked the Iron Blow Prospect as the next priority target to drill-test
with nine holes planned.
On 15 November 2022, assays from seven drill-holes across the Fence Gossan and
Tors Tank Prospects, confirmed a significant shallow clay-hosted REE discovery
- up to 2,410ppm TREO, with high-value Magnet REOs representing up to 29.9% of
the grade - the best intercepts are highlighted in Figure 3 below:
FIGURE 3: BEST ASSAYED INTERCEPTS - FENCE GOSSAN / TORS TANK PROSPECTS(1)
o 20m @ 1,780ppm TREO (28.9% Magnet REO) from surface including 4m @
2,410ppm TREO from 16m (FG_003RC)
o 7m @ 1,048ppm TREO (29.9% Magnet REO) from 12m (TT_002RC)
o 19m @ 847ppm TREO (29.6% Magnet REO) from surface (TT_003RC)
o 8m @ 773ppm TREO (24.0% Magnet REO) from 48m (FG_004RC)
o 4m @ 732ppm TREO (27.1% Magnet REO) from 24m (TT_001RC)
o 19m @ 661ppm TREO (28.0% Magnet REO) from surface (FG_002RC)
o 32m @ 636ppm TREO (25.7% Magnet REO) from 52m (FG_003RC)
o 28m @ 614ppm TREO (27.8% Magnet REO) from 4m (FG_004RC)
Source: CCZ geology team
Of significance, the assays for FG_002-4RC delineated an initial 800m strike
event starting near Fence Gossan's eastern boundary. Moreover, with REE
mineralisation open in all directions, and Fence Gossan circa 4km long by 1km
wide (W-E), the Board has ordered follow up geological mapping, sampling and
auger drilling to target extending the known strike event to the west.
While cobalt assays were consistent with previous observations, the new REE
discovery has pivoted the Board's strategic focus for the current drilling
campaign and beyond to fully understanding the extent of REE mineralisation
across the BHA Project's East Zone.
On 23 November 2022, CCZ announced new assays for RT_001RC and FG_001RC were
positive for TREO, confirming REEs are more widely apparent across the East
Zone than initially envisaged - the best intercepts comprise:
v 11m @ 1,078 TREO from 8m (RT_001RC)1
v 20m @ 609ppm TREO from surface incl. 4m @ 1,709ppm REO from 8m (FG_001RC)1
v 11m @ 862ppm TREO from 58m (FG_001RC)1
More significantly, all the assays returned to date from Fence Gossan, Tors
Tank and Reefs Tank highlight the REE mineralisation discovered is extensive
and shallow.
On 20 December 2022, following the receipt of drill assays for the Fence
Gossan, Tors Tank and partly Reefs Tank Prospects, CCZ's Board confirmed that
shallow REE mineralisation is more widely apparent across the BHA Project's
East Zone than initially envisaged. As an immediate next step, the Board
commissioned an extensive auger sampling campaign.
Encouragingly, the auger sampling campaign, which covered a 6.5km2 area
proximal to the Fence Gossan Prospect, was designed to identify the full
extent of REE mineralisation and new targets to test-drill. As an immediate
follow up, all samples were sent to the laboratory for further analysis, with
subsequent interpretation charting the next phase of REE-focused exploration
across the BHA Project's East Zone.
NWQ Copper Project, Queensland
On 19 July 2022, preliminary metallurgical test-work on samples extracted from
drill-hole BO_318RC1 at the Big One Deposit produced a concentrate (Figure 4)
with confirmed upgrades ranging from 5x to 10x for copper metal. The best
result for copper comprised: 0.72% head-grade to 7.2% post-test-work.
Further test-work is underway on samples from the Big One Deposit to determine
the final optimal results. Notably, this is an important proof of concept and
de-risking exercise as part of the Board's strategic intent to secure a
processing agreement.
With an inferred Mineral Resource Estimate at 21,886t contained copper metal
(2.1Mt @ 1.1% Cu), the Big One Deposit has already been significantly
de-risked.
FIGURE 4: METALLURGICAL TESTING - FROTHER PRODUCT EXAMPLE
Source: ALS Metallurgy, Perth, Western Australia
On 20 December 2022, CCZ announced that the geology team planned to visit
several prospects at the NWQ Copper Project during 1Q 2023 to determine the
potential to host copper mineralisation.
Zambia Copper Projects
On 7 December 2022, CCZ's Board approved incremental development work on known
key targets - scheduled to commence in 1H2023 - focusing on the highly
prospective Luanshya Project which is in the heart of Zambia's copper belt.
Specifically, the geology team plan to roll out an Induced Polarisation (IP)
geophysics campaign to build on earlier work undertaken in 2021 which focused
on a 6km zone of copper surface anomalism that delineated up to 14 chargeable
zones. A key focus of the upcoming IP campaign will be to refine targets for
test drilling and enhance the confidence of finding structurally controlled
copper mineralisation.
The plans for development work follow London-based, Metallea Group's
(previously Hyperion Copper) decision to cancel its plans to list on the
Alternative Investment Market (AIM) of the London Stock Exchange (LSE), due to
extremely difficult equity market conditions. As this was a key requirement to
secure funds to progress development work, Metallea has further advised it
will not be exercising its option - which delivered a US$100,000
non-refundable deposit to CCZ - to acquire the Zambia Copper Projects.
Moving forward, as CCZ's Board remains committed to aligning with a
development partner or undertaking a trade sale for the Zambia Copper
Projects, efforts will be redoubled to deliver this outcome during 2023.
Cangai Copper Mine
During the review period, work was undertaken regarding investigating minor
rehabilitation requirements and keeping the tenements current.
Corporate events
There were no corporate related events that occurred under the period in
review.
Events subsequent to period end
The following significant events occurred after 31 December 2022:
· Management changes: On 30 January 2023, CCZ announced the
following management changes:
o Mr Geoff Reed, Executive Director, resigned from the Board with
immediate effect from 30 January 2023.
o Mr David Drakeley was appointed by the Board with immediate effect from
30 January 2023 as a Non-Executive Director.
o Mr Jack Sedgwick was appointed by the Board with immediate effect from
30 January 2023 as a Non-Executive Director.
Auditor's Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann
Judd, to provide the directors of the company with an Independence Declaration
in relation to the review of the half-year financial report. This Independence
Declaration is set out on page 9 and forms part of this directors' report for
the half-year ended 31 December 2022.
This report is signed in accordance with a resolution of the Board of
Directors.
Gerrard (Ged) Hall
Non-Executive Chairman 10 March 2023
COMPETENT PERSON STATEMENT
The information in this report that relates to Exploration Results for the
Mkushi Project is based on information compiled or reviewed by Mr Matt Bull, a
consultant of Castillo Copper Limited. Mr Bull is a member of the Australian
Institute of Geoscientists and has sufficient experience of relevance to the
styles of mineralisation and types of deposits under consideration, and to the
activities undertaken, to qualify as a Competent Person as defined in the 2012
Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Bull
consents to the inclusion in this report of the matters based on information
in the form and context in which it appears.
The information in this report that relates to Exploration Results for the Mt
Oxide pillar contained in this announcement is based on a fair and accurate
representation of the publicly available information at the time of compiling
the ASX Release, and is based on information and supporting documentation
compiled by Nicholas Ryan, a Competent Person who is a Member of The
Australasian Institute of Mining and Metallurgy. Nicholas Ryan is an employee
of Xplore Resources Pty Ltd. Mr Ryan has been a Member of the Australian
Institute of Mining and Metallurgy for 14 years and is a Chartered
Professional (Geology). Mr Ryan is employed by Xplore Resources Pty Ltd. Mr
Ryan has sufficient experience that is relevant to the style of mineralisation
and type of deposit under consideration and to the activity being undertaken
to qualify as a Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves'. Mr Ryan consents to the inclusion in the report of the matters
based on his information and the form and context in which it appears.
The information on the page that relates to Exploration Results of the Smelter
Creek stockpiles is based on information compiled or reviewed by Mr Mark
Biggs, a consultant of Castillo Copper Limited. Mr Biggs is a member of the
Australian Institute of Geoscientists and has sufficient experience of
relevance to the styles of mineralisation and types of deposits under
consideration, and to the activities undertaken, to qualify as a Competent
Person as defined in the 2012 Edition of the Joint Ore Reserves Committee
(JORC) Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves. Mr Biggs consents to the inclusion in this report
of the matters based on information in the form and context in which it
appears.
The Australian Securities Exchange has not reviewed and does not accept
responsibility for the accuracy or adequacy of this release.
For further information, please contact:
Castillo Copper Limited +61 8 6558 0886
Dr Dennis Jensen (Australia), Managing Director
Gerrard Hall (UK), Chairman
SI Capital Limited (Financial Adviser and Corporate Broker) +44 (0)1483 413500
Nick Emerson
Gracechurch Group (Financial PR) +44 (0)20 4582 3500
Harry Chathli, Alexis Gore, Henry Gamble
About Castillo Copper
Castillo Copper Limited is an Australian-based explorer primarily focused on
copper across Australia and Zambia. The group is embarking on a strategic
transformation to morph into a mid-tier copper group underpinned by its core
projects:
· A large footprint in the Mt Isa copper-belt district, north-west
Queensland, which delivers significant exploration upside through having
several high-grade targets and a sizeable untested anomaly within its
boundaries in a copper-rich region.
· Four high-quality prospective assets across Zambia's copper-belt
which is the second largest copper producer in Africa.
· A large tenure footprint proximal to Broken Hill's world-class
deposit that is prospective for zinc-silver-lead-copper-gold and platinoids.
· Cangai Copper Mine in northern New South Wales, which is one of
Australia's highest grading historic copper mines.
The group is listed on the LSE and ASX under the ticker "CCZ."
AUDITOR'S INDEPENDENCE DECLARATION
As lead auditor for the review of the consolidated financial report of
Castillo Copper Limited for the half-year ended 31 December 2022, I declare
that to the best of my knowledge and belief, there have been no contraventions
of:
a) the auditor independence requirements of the Corporations Act
2001in relation to the review; and
b) any applicable code of professional conduct in relation to the
review.
Perth, Western Australia M R Ohm
10 March 2023 Partner
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the half-year ended 31 December 2022
31 December 31 December
Note 2022 2021
$ $
Interest revenue 3,453 293
Revenue 3,453 293
Listing and public company expenses (76,956) (147,248)
Accounting and audit expenses (57,074) (67,204)
Consulting and directors' fees (250,113) (325,401)
Other expenses 3 (244,982) (242,110)
Loss before income tax (625,672) (781,670)
Income tax expense - -
Loss after income tax (625,672) (781,670)
Other comprehensive (loss) / income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
2,179 1,251
Total comprehensive loss for the half-year (623,493) (780,419)
Loss per share attributable to owners of Castillo Copper Limited
Basic loss per share (cents per share) (0.05) (0.06)
Diluted loss per share (cents per share) (0.05) (0.06)
The accompanying notes form part of these financial statements.
Condensed Consolidated Statement of Financial Position
as at 31 December 2022
Note 31 December 30 June
2022 2022
$ $
Assets
Current Assets
Cash and cash equivalents 3,848,331 5,754,049
Other receivables 213,173 78,994
Total Current Assets 4,061,504 5,833,043
Non-Current Assets
Other receivables 486,961 404,961
Deferred exploration and evaluation expenditure 4 13,879,681 12,899,486
Total Non-Current Assets 14,366,642 13,304,447
Total Assets 18,428,146 19,137,490
Current Liabilities
Trade and other payables 39,501 125,352
Total Current Liabilities 39,501 125,352
Total Liabilities 39,501 125,352
Net Assets 18,388,645 19,012,138
Equity
Issued capital 5 35,964,396 35,964,396
Reserves 4,082,555 4,080,376
Accumulated losses (21,658,306) (21,032,634)
Total Equity 18,388,645 19,012,138
The accompanying notes form part of these financial statements.
Condensed Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2022
Foreign Currency Translation Reserve
Issued Capital Share-Based $ Accumulated
$ Payment Reserve Losses Total
$ $ $
Balance as at 1 July 2021 34,464,159 4,092,830 (152,180) (19,379,451) 19,025,358
Loss for the half-year - - - (781,670) (781,670)
Other comprehensive income - - 1,251 - 1,251
Total comprehensive loss for the half-year - - 1,251 (781,670) (780,419)
Transactions with owners in their capacity as owners
Shares issued to sophisticated investors 1,742,319 - - - 1,742,319
Shares issued to advisors as share based payment 12,500 - - - 12,500
Share issue costs (367,776) 118,800 - - (248,976)
Balance at 31 December 2021 35,851,202 4,211,630 (150,929) (20,161,121) 19,750,782
Balance as at 1 July 2022 35,964,396 4,230,962 (150,586) (21,032,634) 19,012,138
Loss for the half-year - - - (625,672) (625,672)
Other comprehensive income - - 2,179 - 2,179
Total comprehensive loss for the half-year - - 2,179 (625,672) (623,493)
Balance at 31 December 2022 35,964,396 4,230,962 (148,407) (21,658,306) 18,388,645
The accompanying notes form part of these financial statements.
Condensed Consolidated Statement of Cash Flows
for the half-year ended 31 December 2022
Note 31 December 31 December
2022 2021
$
$
Cash flows from operating activities
Payments to suppliers and employees (732,607) (931,440)
Interest received 3,453 293
Interest paid -
(1,936)
Net cash outflow from operating activities (731,090) (931,147)
Cash flows from investing activities
Tenement expenditure guarantees (82,000) (62,490)
Payments for exploration and evaluation expenditure (1,113,264) (3,900,305)
Net cash outflow from investing activities (1,195,264) (3,962,795)
Cash flows from financing activities
Proceeds from issue of shares - 1,742,319
Share issue costs paid - (248,976)
Net cash inflow from financing activities - 1,493,343
Net decrease in cash and cash equivalents (1,926,354) (3,400,599)
Cash and cash equivalents at 1 July 5,754,049 10,854,829
Effect of exchange rate fluctuations on cash held 30,678
20,636
Cash and cash equivalents at 31 December 3,848,331 7,484,908
The accompanying notes form part of these financial statements.
Notes to the Condensed Consolidated Financial Statements
for the half-year ended 31 December 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Corporate Information
This general purpose financial report of Castillo Copper Limited and its
subsidiaries (the Group) for the half-year ended 31 December 2022 was
authorised for issue in accordance with a resolution of the directors on 10
March 2023.
Castillo Copper Limited is a company limited by shares incorporated in
Australia whose shares are publicly traded on the Australian Securities
Exchange and the London Stock Exchange.
The nature of the operations and principal activities of the Group are
described in the Directors' Report.
Basis of Preparation
This financial report for the half-year ended 31 December 2022 has been
prepared in accordance with AASB 134 Interim Financial Reporting and the
Corporations Act 2001. The Group is a for profit entity for financial
reporting purposes under Australian Accounting Standards. Compliance with AASB
134 ensures compliance with IAS 34 'Interim Financial Reporting'.
These half-year financial statements do not include all notes of the type
normally included within the annual financial statements and therefore cannot
be expected to provide as full an understanding of the financial performance,
financial position and financing and investing activities of the Group as the
full financial statements.
It is recommended that the half-year financial statements be read in
conjunction with the annual financial statements for the year ended 30 June
2022 and considered together with any public announcements made by Castillo
Copper Limited during the half-year ended 31 December 2022 in accordance with
the continuous disclosure obligations of the ASX listing rules.
For the purpose of preparing the half-year report, the half-year has been
treated as a discrete reporting period. The accounting policies and methods of
computation adopted are consistent with those of the previous financial year.
These accounting policies are consistent with Australian Accounting Standards
and with International Financial Reporting Standards.
The consolidated financial statements have been prepared on the basis of
historical cost.
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 period ended 31 December 2022 of
$625,672 and a net cash outflow from operating activities of $731,090. At 31
December 2022, the Group had a net asset position of $18,388,645 and working
capital of $4,022,003. The cash and cash equivalents balance at 31 December
2022 was $3,848,331.
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The directors have reviewed the Group's financial position and are of the
opinion that the use of the going concern basis of accounting is appropriate.
New and amending Accounting Standards and Interpretations
In the half-year ended 31 December 2022, the Directors have reviewed all of
the new and revised Standards and Interpretations issued by the AASB that are
relevant to the Group's operations and effective for annual reporting periods
beginning on or after 1 July 2022. 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.
The Directors have also reviewed all new Standards and Interpretations that
have been issued but are not yet effective for the half-year ended 31 December
2022. As a result of this review the Directors have determined that there is
no impact, material or otherwise, of the new and revised Standards and
Interpretations on the Group's business and, therefore, no change necessary to
the Group accounting policies.
NOTE 2: SEGMENT REPORTING
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 five 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
assets, liabilities, income and expenses to each segment is shown below:
NWQ Cangai Broken Hill
December 2022 (QLD) (NSW) (NSW) Zambia Unallocated Total
Segment assets and liabilities
$ $ $ $ $ $
Current assets - - - - 4,061,504 4,061,504
Non-current assets 6,416,742 5,498,371 1,374,496 1,076,912 121 14,366,642
Current liabilities - - - - (39,501) (39,501)
Segment income and expenses
Interest income - - - - 3,453 3,453
Interest expense - - - - (1,936) (1,936)
Other expenses - - - - (627,189) (627,189)
Total - - - - (625,672) (625,672)
NWQ Cangai Broken Hill
December 2021 (QLD) (NSW) (NSW) Zambia Unallocated Total
Segment assets and liabilities
$ $ $ $ $ $
Current assets - - - - 7,948,906 7,948,906
Non-current assets 6,025,743 3,356,728 300,498 964,605 2,237,972 12,885,546
Current liabilities - - - - (1,083,670) (1,083,670)
Segment income and expenses
Interest income - - - - 293 293
Other expenses - - - - (781,963) (781,963)
Total - - - - (781,670) (781,670)
NOTE 3: OTHER EXPENSES
Included in other expenses are the following items:
6 months to 6 months to
31 December 31 December
2022 2021
$ $
Insurance 61,299 53,070
Interest expenses 1,936 -
Investor relations 175,461 105,868
Foreign exchange (gains) / losses (20,589) (30,737)
Legal fees 7,368 18,358
Travel and accommodation 2,948 239
Other expenses 16,559 95,312
244,982 242,110
NOTE 4: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE
6 months to Year ended
31 December 30 June
2022 2022
Exploration and evaluation phase: $ $
Opening balance 12,899,486 8,171,821
Exploration and evaluation expenditure during the period 980,195 4,727,665
Closing balance 13,879,681 12,899,486
The ultimate recoupment of costs carried forward as exploration expenditure is
dependent on the successful development and commercial exploitation or sale of
the respective areas of interest.
NOTE 5: ISSUED CAPITAL
31 December 30 June
2022 2022
$ $
Issued and paid up capital
Issued and fully paid 35,964,396 35,964,396
6 months to Year ended
31 December 2022 30 June 2022
Number of Number of
shares $ shares $
Movements in issued capital
Opening balance 1,299,505,355 35,964,396 1,256,512,320 34,464,159
Shares issued to sophisticated investors - - 41,240,648 1,742,319
Shares issued to advisors - - 250,000 12,500
Shares issued to consultants - - 1,502,387 46,846
Transaction costs on share issue - - (301,428)
-
Closing balance 1,299,505,355 35,964,396 1,299,505,355 35,964,396
Share options
At 31 December 2022 there were 235,154,516 (30 June 2022: 354,362,757)
unlisted options with various exercise prices and expiry dates and 224,939,782
(30 June 2022: 224,939,782) listed options (ASX:CCZO, CCZOA & CCZOB), with
various exercise prices and expiry dates.
NOTE 5: ISSUED CAPITAL (CONTINUED)
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 7,000,000 23 June 2020 30 June 2023 $0.05 $0.013 23 June 2020
4 1,582,353 2 October 2020 1 September 2023 £0.017 $0.023 2 October 2020
5 19,000,000 2 October 2020 30 September 2023 $0.05 $0.018 2 October 2020
6 14,285,714 15 June 2021 31 July 2024 $0.08 $0.022 15 June 2021
7 2,955,665 16 June 2021 1 August 2024 £0.044 $0.021 16 June 2021
8 2,418,044 5 August 2021 31 July 2024 $0.08 $0.007 5 August 2021
9 462,379 4 August 2021 1 August 2024 £0.044 $0.017 4 August 2021
10 4,000,000 27 October 2021 31 July 2024 $0.08 $0.007 27 October 2021
11 3,000,000 30 November 2021 31 July 2024 $0.08 $0.010 30 November 2021
12 8,000,000 1 February 2022 31 January 2025 $0.08 $0.007 1 February 2022
During the year 119,208,241 options expired, with an exercise price of $0.05
and a fair value at grant date of
$0.005.
No options were exercised during the period.
(a) Weighted average fair value
The fair value of the equity-settled 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:
NOTE 5: ISSUED CAPITAL (CONTINUED)
Grant date share price (cents/pence)
Series Expected volatility (%) Risk-free interest rate (%) Expected life of option (years) Exercise price (cents/pence)
1 100 1.9 5.6 10 3.9
2 87 2.0 3.0 5 1.6
3 100 0.3 3.0 5 2.6
4 104 0.2 2.9 1.7p 2.6p
5 104 0.2 3.0 5 4.2
6 104 0.1 3.1 8 4.2
7 104 0.1 3.1 4.4p 2.2p
8 101 0.2 3.0 8 3.7
9 104 0.1 3.0 4.4p 2.0p
10 99 0.8 2.8 8 3.9
11 99 0.9 2.7 8 3.4
12 100 1.2 3.0 8 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.
Performance Shares
During the 2020 financial year, 46,875,000 Class A performance shares and
46,875,000 Class B performance shares were issued to the vendors of 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
No vesting expense has yet been recorded in relation to the above performance
rights based upon an assessment of the current probability of vesting.
NOTE 6: CONTINGENT LIABILITIES
There has been no change in contingent liabilities since the last annual
reporting date.
NOTE 7: SUBSEQUENT EVENTS
The following significant events occurred after 31 December 2022:
· Management changes: On 30 January 2023, CCZ announced the
following management changes:
o Mr Geoff Reed, Executive Director, resigned from the Board with
immediate effect from 30 January 2023.
o Mr David Drakeley has been appointed by the Board with immediate effect
from 30 January 2023 as a Non-Executive Director.
o Mr Jack Sedgwick has been appointed by the Board with immediate effect
from 30 January 2023 as a Non-Executive Director.
NOTE 8: FINANCIAL INSTRUMENTS
The Group has a number of financial instruments which are not measured at fair
value on a recurring basis. The carrying amount of these financial instruments
approximates their fair values.
DIRECTORS' DECLARATION
In accordance with a resolution of the directors of Castillo Copper Limited
(the 'Company'), the directors of the company declare that:
1. The financial statements and notes are in accordance with
the Corporations Act 2001, including:
a. complying with Accounting Standard AASB 134: Interim
Financial Reporting; the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
b. giving a true and fair view of the Group's financial
position as at 31 December 2022 and of its performance for the half-year ended
on that date.
2. In the directors' opinion there are reasonable grounds to
believe that the Company will be able to pay its debts as and when they become
due and payable.
Gerrard (Ged) Hall
Non-Executive Chairman 10 March 2023
INDEPENDENT AUDITOR'S REVIEW REPORT
To the members of Castillo Copper Limited
Report on the Condensed Half-Year Financial Report
Conclusion
We have reviewed the accompanying half-year financial report of Castillo
Copper Limited ("the company") which comprises the condensed consolidated
statement of financial position as at 31 December 2022, the condensed
consolidated statement of profit or loss and other comprehensive income, the
condensed consolidated statement of changes in equity and the condensed
consolidated statement of cash flows for the half-year ended on that date,
notes comprising a summary of significant accounting policies and other
explanatory information, and the directors' declaration, for the Group
comprising the company and the entities it controlled at the half-year end or
from time to time during the half-year.
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the half-year financial report of Castillo
Copper Limited does not comply with the Corporations Act 2001 including:
(a) giving a true and fair view of the Group's financial position as
at 31 December 2022 and of its performance for the half-year ended on that
date; and
(b) complying with Accounting Standard AASB 134 Interim Financial
Reportingand the
Corporations Regulations 2001.
Basis for conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial
Report Performed by the Independent Auditor of the Entity. Our
responsibilities are further described in the Auditor's responsibilities for
the review of the financial report section of our report. We are independent
of the company in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board's APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that
are relevant to our audit of the annual financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
Responsibility of the directors for the financial report
The directors of the company are responsible for the preparation of the
half-year financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the
preparation of the half-year financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error
Auditor's responsibility for the review of the financial report
Our responsibility is to express a conclusion on the half-year financial
report based on our review. ASRE 2410 requires us to conclude whether we have
become aware of any matter that makes us believe that the half-year financial
report is not in accordance with the Corporations Act 2001 including giving a
true and fair view of the Group's financial position as at 31 December 2022
and its performance for the half-year ended on that date, and complying with
Accounting Standard AASB 134 Interim Financial Reporting and the Corporations
Regulations 2001.
A review of a half-year financial report consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements
of the
Corporations Act 2001.
HLB Mann
Judd
M R Ohm
Chartered
Accountants
Partner
Perth, Western Australia 10 March 2023
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