REG - Castillo Copper Ltd - March 2021 Quarterly Report

Castillo CopperAnnouncement

29/04/2021 07:06

RNS Number : 9824W
  
Castillo Copper Limited
  
29 April 2021
  
 

29 April 2021
 
CASTILLO COPPER LIMITED

("Castillo" or the "Company")
 
March 2021 Quarterly Report
 
Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily focused on copper across Australia and Zambia, is pleased to announce its quarterly report for the period 1 January to 31 March 2021.
 
During the period, the focus was primarily on developing the Big One Deposit within the Mt Oxide Project in the Mt Isa copper-belt, north-west Queensland, Australia. An overview of key events follows:   
 
HIGHLIGHTS 
 
Mt Oxide Project - Big One Deposit and Arya Prospect:
 
·    Assays confirm major copper discovery at the high-grade Big One Deposit, as two 40-44m wide intercepts from surface, with up to 16.65% Cu, significantly extended known mineralisation
 
·    The best apparent intercepts comprise:
 
o  303RC: 40m @ 1.64% from surface including 11m @ 4.40% from 24m, 5m @ 7.34% from 28m & 1m @ 16.65% from 29m
o  301RC: 44m @ 1.19% Cu from surface including 14m @ 3.55% from 27m, 3m @ 10.88% from 37m & 1m @ 12.6% from 37m
 
·    Subsequent to quarter end, the compelling case for the Arya Prospect, which has an interpreted 130m thick potential massive sulphide target (circa 1,500m by 450m and 426m deep), was outlined post reviewing legacy BHP and MIM data
 
BHA Project:
 
·    Divestment strategies being considered for prime Broken Hill asset, which is prospective for IOCG and BHT mineralisation
 
 
DEVELOPMENT WORK    
 
Castillo has four properties comprising the Mt Oxide Project in Mt Isa's copper-belt, four assets across Zambia's copper-belt, the historic Cangai Copper Mine and a large footprint near Broken Hill's world class silver-zinc-lead deposit in NSW. 
Mt Oxide Project 
On 11 January 2021, Castillo released assays, which comprised final laboratory reporting for the 200 (complete) and 300 (partial) series, including two 40-44m wide intercepts from surface, with up to 16.65% Cu: 
·    303RC: 40m @ 1.64% from surface including 11m @ 4.40% from 24m, 5m @ 7.34% from 28m & 1m @ 16.65% from 29m 
·    301RC: 44m @ 1.19% Cu from surface including 14m @ 3.55% from 27m, 3m @ 10.88% from 37m & 1m @ 12.6% from 37m 
These were excellent assays results, as they make the geological case more compelling by clearly confirming there is potential for a high-grade, shallow copper system to be apparent at the Big One Deposit. Notably, the latest assays significantly extend known mineralisation and build on high-grade historical intercepts which produced stellar intercepts from supergene copper mineralisation up to 28.4% Cu. 
On 19 January 2021, Castillo announced the appointment of two key service providers to facilitate accelerating developing the new copper discovery at the Big One Deposit, detailed as follows:   
·    ROM Resources has been appointed to utilise legacy and current data to progress the modelling of an inaugural JORC compliant inferred resource; and,  
·    GeoDiscovery Group, has been mandated to undertake an extensive geophysical survey with two core goals: 
1)   Potentially extend known mineralisation through the identification of massive sulphide bedrock conductors along the 1,200m strike extent; and  
2)   Deliver fresh geophysical insights into several known yet under-explored nearby anomalies, particularly previously mapped gossanous outcrops north-east of the recent drilling campaign.
 
On 10 February 2021, Castillo's geology consultant, ROM Resources, uncovered comprehensive historical assays from a drilling campaign undertaken by previously listed Forsayth Minerals Exploration NL (FME). Combining these findings from FME, with the final assay results from Castillo's 2020 campaign, clearly extended the known mineralisation at the Big One Deposit. 
 
The best intercepts include the standout B0017 with up to 9.4% Cu: 
 
·    BO017: 34m @ 1.51% Cu from surface including 21m @ 2.25% Cu from surface, 12m @ 3.44% Cu from 3m, 6m @ 4.79% Cu from 3m and 1m @ 9.4% from 9m 
 
·    BO015: 18m @ 0.86% Cu fm 11m including 6m @ 1.85% Cu from 20m, 3m @ 2.98% Cu from 20m and 1m @ 8% from 20m
 
Note: Due to the lack of QA/QC and a positional accuracy of ±10-20m, FME's drill-holes are regarded as historical "Exploration Results" and whilst providing support to the existing information cannot form the basis alone of any resource estimate.
 
On 3 March 2021, Castillo stated that due to the prevailing solid outlook for the global copper market, the Board decided to re-shape its strategic intent for the Big One Deposit to capitalise on this prevailing opportunity. In addition, the Board noted it is cognisant of the improving fundamentals for the global cobalt market, as the recent drilling campaign verified there is ore grade cobalt mineralisation also apparent at the Big One Deposit. 
 
The starting point is to firm up plans to apply for a new mining lease, ahead of Castillo's geology consultant releasing an inaugural JORC compliant resource. The arguments in favour of taking this assertive stance are compelling, as the Big One Deposit already has several high-quality fundamental strengths, including: 
·    A known high-grade shallow copper system that was mined in 1997 - producing 4,400t of supergene ore, averaging 3.5% Cu - via several open pits; 
·    Recent and historical drilling campaigns that have produced exceptional high-grade intercepts.
 
New South Wales Projects
 
·    BHA Project
 
On 19 January 2021, following a strategic review, Castillo's Board decided it was an opportune time to capitalise on the prevailing base and precious metal upcycle to fast-track creating additional shareholder value. Noting a significant resurgence of interest in groups with footprints around Broken Hill, notably ASX listed Cobalt Blue (ASX: COB), the Board decided to consider divestment opportunities including a possible spin-off of its sizeable Broken Hill asset into a new vehicle which could be listed in either London or Australia.
 
·    Cangai Copper Mine
 
No material work was undertaken on Cangai Copper Mine during the quarter.
 
·    Zambia Projects
 
No material work was undertaken on the Zambia Projects during the quarter.
 
POST QUARTER EVENT  
 
On 7 April 2021, Castillo confirmed that improving weather conditions should enable a resumption of exploratory work at the core Mt Oxide Project. In addition, further forensic work has uncovered eleven targets and more details on the Arya Prospect's geological potential.
 
On 13 April 2021, Castillo outlined further compelling insights into the Arya Prospect, arising from reviewing historical reports undertaken by BHP and MIM that bolster the exploration potential ahead of a resumption in the drilling campaign. In addition, another deep bedrock conductor has been identified at the newly named Sansa Prospect, immediately west of the Arya Prospect. However, further interpretation work is required to formulate the dimensions and determine the prospectivity for copper mineralisation.
 
PAYMENTS TO, OR TO AN ASSOCIATE OF, A RELATED PARTY OF THE ENTITY DURING QUARTER DURING THE QUARTER
 
$83,000 was paid to related parties of the Company relating to executive director salary and non-executive director fees.
 
SUMMARY OF THE EXPLORATION EXPENDITURE INCURRED DURING THE QUARTER







Consulting fees


Rates and mines departments fees




NSW


$85,000 


$18,000




QLD


$454,000 


 -  




Zambia


$15,000 


 -  








$554,000 


$18,000 



 
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/ 
 
For further information, please contact:
 



Castillo Copper Limited


+61 8 6558 0886




Simon Paull (Australia), Managing Director
Gerrard Hall (UK), Director


















SI Capital Limited (Financial Adviser and Corporate Broker)


+44 (0)1483 413500




Nick Emerson


















Luther Pendragon (Financial PR) 


+44 (0)20 7618 9100 




Harry Chathli, Alexis Gore, Joe Quinlan







 
 
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:
·      The Mt Oxide project 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.
·      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."
 
Competent Person Statement
The information in this report that relates to Exploration Results for "Big One Deposit" is based on information compiled or reviewed by Mr Mark Biggs. Mr Biggs is both a shareholder and director of ROM Resources, a company which is a shareholder of Castillo Copper Limited. ROM Resources provides ad hoc geological consultancy services to Castillo Copper Limited. Mr Biggs is a member of the Australian Institute of Mining and Metallurgy (member #107188) 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, and Mineral Resources. Mr Biggs holds an AusIMM Online Course Certificate in 2012 JORC Code Reporting. Mr Biggs also consents to the inclusion in this report of the matters based on information in the form and context in which it appears.
 
 
 




 
APPENDIX 1: INTEREST IN MINING TENEMENTS HELD



JACKADERRY (CANGAI)




New England Orogen in NSW




Tenement ID


Ownership at start of Quarter


Ownership at end of Quarter


Change during the Quarter




EL8635


100%


100%


-




EL8625


100%


100%


-




EL8601


100%


100%


-



 



BROKEN HILL




located within a 20km radius of Broken Hill, NSW




Tenement ID


Ownership at start of Quarter


Ownership at end of Quarter


Change during the Quarter




EL8599


100%


100%


-




EL8572


100%


100%


-




EL 8434


0%


100%


100%




EL 8435


0%


100%


100%



 



MT OXIDE




Mt Isa region, northwest Queensland




Tenement ID


Ownership at start of Quarter


Ownership at end of Quarter


Change during the Quarter




EPM 26513


100%


100%


-




EPM 26525


100%


100%


-




EPM 26574


100%


100%


-




EPM 26462


100%


100%


-




EPM 27440


-


100%


-



 



Zambia




Project


Tenement ID


Ownership at start of Quarter


Ownership at end of Quarter


Change during the Quarter




Lumwana North


23914-HQ-SEL


-


100%


100%




Lumwana North


23913-HQ-SEL


-


100%


100%




Mkushi


24659-HQ-LEL


-


100%


100%




Luanshya


22448-HQ-LEL


-


0%*


0%*




Luanshya


25195-HQ-LEL


-


55%


55%*




Luanshya


25273-HQ-LEL


-


55%^


55%^*




Mwansa


25261-HQ-LEL


-


100%^


100%^



*CCZ can earn up to 80% by meeting previously disclosed milestones
^ Indicates the tenement is still under application
 
 




 
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
 
 




Consolidated statement of cash flows


Current quarter

$A'000


Year to date (9 months)

$A'000





1.


Cash flows from operating activities












1.1


Receipts from customers




1.2


Payments for
















(a)   exploration & evaluation 








(b)   development
















(c)   production
















(d)   staff costs
















(e)   administration and corporate costs


(423)


(1,200)




1.3


Dividends received (see note 3)












1.4


Interest received












1.5


Interest and other costs of finance paid












1.6


Income taxes paid












1.7


Government grants and tax incentives












1.8


Other (provide details if material)












1.9


Net cash from / (used in) operating activities


(423)


(1,200)










2.


Cash flows from investing activities












2.1


Payments to acquire or for:








(a)   entities








(b)   tenements






(233)








(c)   property, plant and equipment
















(d)   exploration & evaluation 


(572)


(1,357)








(e)   investments
















(f)    other non-current assets






(214)




2.2


Proceeds from the disposal of:
















(a)   entities








(b)   tenements
















(c)   property, plant and equipment
















(d)   investments
















(e)   other non-current assets












2.3


Cash flows from loans to other entities 












2.4


Dividends received (see note 3)












2.5


Other (provide details if material)












2.6


Net cash from / (used in) investing activities


(572)


(1,804)










3.


Cash flows from financing activities






2,246




3.1


Proceeds from issues of equity securities (excluding convertible debt securities)




3.2


Proceeds from issue of convertible debt securities












3.3


Proceeds from exercise of options


240


310




3.4


Transaction costs related to issues of equity securities or convertible debt securities






(323)




3.5


Proceeds from borrowings












3.6


Repayment of borrowings












3.7


Transaction costs related to loans and borrowings












3.8


Dividends paid












3.9


Other (provide details if material)












3.10


Net cash from / (used in) financing activities


240


2,233










4.


Net increase / (decrease) in cash and cash equivalents for the period












4.1


Cash and cash equivalents at beginning of period


3,115


3,130




4.2


Net cash from / (used in) operating activities (item 1.9 above)


(423)


(1,200)




4.3


Net cash from / (used in) investing activities (item 2.6 above)


(572)


(1,804)




4.4


Net cash from / (used in) financing activities (item 3.10 above)


240


2,233




4.5


Effect of movement in exchange rates on cash held


40


41




4.6


Cash and cash equivalents at end of period


2,400


2,400



 



5.


Reconciliation of cash and cash equivalents
at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts


Current quarter

$A'000


Previous quarter

$A'000




5.1


Bank balances


2,400


3,115




5.2


Call deposits












5.3


Bank overdrafts












5.4


Other (provide details)












5.5


Cash and cash equivalents at end of quarter (should equal item 4.6 above)


2,400


3,115



 



6.


Payments to related parties of the entity and their associates


Current quarter

$A'000




6.1


Aggregate amount of payments to related parties and their associates included in item 1


531




6.2


Aggregate amount of payments to related parties and their associates included in item 2


302




 
 1Comprises director's fees for the quarter.
 2Comprises consulting fees paid to the Managing Director.



 



7.


Financing facilities
Note: the term "facility' includes all forms of financing arrangements available to the entity.
Add notes as necessary for an understanding of the sources of finance available to the entity.


Total facility amount at quarter end

$A'000


Amount drawn at quarter end

$A'000




7.1


Loan facilities












7.2


Credit standby arrangements












7.3


Other (please specify)












7.4


Total financing facilities


























7.5


Unused financing facilities available at quarter end








7.6


Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.




 
 
 



 



8.


Estimated cash available for future operating activities


$A'000




8.1


Net cash from / (used in) operating activities (item 1.9)


(423)




8.2


(Payments for exploration & evaluation classified as investing activities) (item 2.1(d))


(572)




8.3


Total relevant outgoings (item 8.1 + item 8.2)


(995)




8.4


Cash and cash equivalents at quarter end (item 4.6)


2,400




8.5


Unused finance facilities available at quarter end (item 7.5)








8.6


Total available funding (item 8.4 + item 8.5)


2,400


















8.7


Estimated quarters of funding available (item 8.6 divided by item 8.3)


2.4




Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as "N/A". Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7.




8.8


If item 8.7 is less than 2 quarters, please provide answers to the following questions:








8.8.1     Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?








Answer: N/A
 








8.8.2     Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?








Answer: N/A
 








8.8.3     Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?








Answer: N/A
 








Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.



 
Compliance statement
 
1        This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
 
2        This statement gives a true and fair view of the matters disclosed.
 
Date:  29 April 2021
 
Authorised:   By the Board
(Name of body or officer authorising release - see note 4)
 
Notes
 
1.          This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.
2.          If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3.          Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
4.          If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee - eg Audit and Risk Committee]". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee".
5.          If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
 

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