REG - Castillo Copper Ltd - September 2022 Quarterly Activities Report
07/11/2022 07:00
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RNS Number : 4285F Castillo Copper Limited 07 November 2022
07 November 2022
CASTILLO COPPER LIMITED
("Castillo", or the "Company")
September 2022 Quarterly Activities Report
Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily
focused on copper across Australia and Zambia, is pleased to present
shareholders its latest quarterly report for the period 1 July to 30 September
2022.
HIGHLIGHTS
· EAST ZONE, BHA PROJECT, NEW SOUTH WALES
o Inaugural cobalt-focused drilling campaign - one diamond and 17 RC
drill-holes for 2,100m - commenced shortly after the close of the review
period(1)
o Metallurgical test-work on diamond core from The Sisters Prospect
delivered solid beneficiation results for cobalt-copper-gold(1) ( )
· NWQ COPPER PROJECT, QUEENSLAND
o Preliminary metallurgical test-work on samples extracted from drill-hole
BO_318RC1 at the Big One Deposit produced a concentrate with confirmed
upgrades ranging from 5x to 10x for copper metal(1)
ACTIVITIES REPORT
During the period, most of the focus remained on developing the cobalt
potential at the East Zone, BHA Project in Broken Hill.
An overview of key events follows:
DEVELOPMENT WORK
Castillo has four properties comprising the NWQ Copper Project in Mt Isa's
copper-belt, the BHA Project near Broken Hill's world class silver-zinc-lead
deposit in NSW, the historic Cangai Copper Mine and four assets across
Zambia's copper-belt.
East Zone, BHA Project, NSW
On 2 August 2022, Castillo announced metallurgical test-work on BH1 drill-core
extracted from The Sisters Prospect - BHA Project's East Zone (Appendix A) -
delivered excellent beneficiation results for cobalt and, surprisingly,
copper-gold - with the best outcomes:
· Cobalt: 200ppm head-grade up to 2,500ppm post-test-work; 12x
upgrade(1)
· Copper: 520ppm head-grade up to 16,000ppm (1.6%) post-test-work; 30x
upgrade(1)
· Gold: 0.02g/t Au head-grade up to 3.87g/t Au post-test-work; >190x
upgrade(1)
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 the 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)(1)
Moving forward, the Board's primary focus for the East Zone is to increase the
confidence in the current inferred Mineral Resource Estimate which stands at
21,556t cobalt (64Mt @ 318 ppm Co) and 44,260t copper (63Mt @ 0.07% Cu)(1).
On 9 August 2022, Castillo 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 (Appendix A).
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(1).
On 31 August 2022, Castillo announced the appointment of two key contractors:
· AllState Drilling's team will perform the campaign; and
· FieldCrew, which has performed work at the NWQ Copper Project in
Queensland, will manage the day-to-day aspects of the drilling campaign(1).
In addition, post-announcing Australia secured preferred status for the supply
of critical minerals to the US's electric vehicle battery program(1), the
Board stated it wanted to deepen its understanding of the East Zone's Rare
Earth Element (REE) potential at two targets:
· The Sisters Prospect: both planned RC drill-holes will be analysed
for copper-cobalt-gold and REEs; and
· 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.
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 1)
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(1).
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)(1), the Big One Deposit has already been significantly
de-risked.
FIGURE 1: METALLURGICAL TESTING - FROTHER PRODUCT EXAMPLE
Source: ALS Metallurgy, Perth, Western Australia
Cangai Copper Mine
No work was undertaken at Cangai Copper Mine during the review period.
Zambia
During the review period, Castillo's geology team continued to assist Hyperion
Copper (UK), which have signed an option agreement to purchase the Zambia
copper assets for circa A$4m plus milestones, with ongoing due diligence.
CORPORATE
· Strategic update: On 15 August 2022, Managing Director Dr Dennis
Jensen summarised Castillo's latest strategy: ""Recent gyrations in global
commodity markets have further galvanised the Board's resolve to create value
for shareholders via developing the core copper-cobalt projects. Moreover,
having signed an option agreement with Hyperion Copper to sell the Zambia
assets, the Board's focus is now steadfast on advancing the Australian
projects which all have Mineral Resource Estimates."
POST PERIOD EVENT
· Cobalt-focused drilling campaign now underway at Broken Hill Project:
On 3 October 2022, the Board announced the cobalt-focused drilling campaign at
the BHA Project's East Zone commenced.
· Drilling hits targeted cobalt zones & wide pegmatite intercepts
at Broken Hill: On 12 October 2022, four drill-holes for 488m were completed
at the Tors Tank Prospect, within the BHA Project's East Zone, which delivered
encouraging initial observations.
PAYMENTS TO, OR TO AN ASSOCIATE OF, A RELATED PARTY OF THE ENTITY DURING
QUARTER DURING THE QUARTER
$97,000 was paid to related parties of Castillo relating to executive director
salary and non-executive director fees.
SUMMARY OF THE EXPLORATION EXPENDITURE INCURRED DURING THE QUARTER
Consulting fees Rates and mines departments fees
Cangai $30,000 $10,000
Broken Hill Alliance $107,000 $14,000
Mt Isa $61,000 $16,000
Zambia $17,000 $5,000
Total $215,000 $45,000
In addition to this release, a PDF version with supplementary information and
images can be found on the Company's website:
https://castillocopper.com/investors/announcements/
(https://castillocopper.com/investors/announcements/)
For further information, please contact:
Castillo Copper Limited +61 8 6558 0886
Dr Dennis Jensen (Australia), Managing Director
Gerrard Hall (UK), Chairman
SI Capital Limited (Financial Adviser and Corporate Broker) +44 (0)1483 413500
Nick Emerson
Gracechurch Group (Financial PR) +44 (0)20 4582 3500
Harry Chathli, Alexis Gore, Henry Gamble
About Castillo Copper
Castillo Copper Limited is an Australian-based explorer primarily focused on
copper across Australia and Zambia. The group is embarking on a strategic
transformation to morph into a mid-tier copper group underpinned by its core
projects:
· A large footprint in the Mt Isa copper-belt district, north-west
Queensland, which delivers significant exploration upside through having
several high-grade targets and a sizeable untested anomaly within its
boundaries in a copper-rich region.
· Four high-quality prospective assets across Zambia's copper-belt
which is the second largest copper producer in Africa.
· A large tenure footprint proximal to Broken Hill's world-class
deposit that is prospective for zinc-silver-lead-copper-gold and platinoids.
· Cangai Copper Mine in northern New South Wales, which is one of
Australia's highest grading historic copper mines.
The group is listed on the LSE and ASX under the ticker "CCZ."
References
1) Note - All information referenced is from CCZ ASX Releases,
as dated in text, from 1 July 2022 to 30 September 2022 inclusive
APPENDIX A: KEY PROJECTS
FIGURE A1: WEST AND EAST ZONE - BHA PROJECT, BROKEN HILL REGION
Source: CCZ geology team
FIGURE A2: ZAMBIA COPPER-BELT PROJECTS
Source: CCZ geology team
FIGURE A3: NWQ COPPER PROJECT, MT ISA REGION
Source: CCZ geology team
APPENDIX 1: INTEREST IN MINING TENEMENTS HELD
JACKADERRY (CANGAI)
New England Orogen in NSW
Tenement ID Ownership at start of Quarter Ownership at end of Quarter Change during the Quarter
EL8635 100% 100% -
EL8625 100% 100% -
EL8601 100% 100% -
BROKEN HILL
located within a 20km radius of Broken Hill, NSW
Tenement ID Ownership at start of Quarter Ownership at end of Quarter Change during the Quarter
EL8599 100% 100% -
EL8572 100% 100% -
EL 8434 - 100% 100%
EL 8435 - 100% 100%
MT OXIDE
Mt Isa region, northwest Queensland
Tenement ID Ownership at start of Quarter Ownership at end of Quarter Change during the Quarter
EPM 26513 100% 100% -
EPM 26525 100% 100% -
EPM 26574 100% 100% -
EPM 26462 100% 100% -
EPM 27440 - 100% 100%
ZAMBIA **
Project Tenement ID Ownership at start of Quarter Ownership at end of Quarter Change during the Quarter
Lumwana North 23914-HQ-SEL 100% 100% -
Lumwana North 23913-HQ-SEL 100% 100% -
Mkushi 24659-HQ-LEL 100% 100% -
Luanshya * 22448-HQ-LEL - - -
Luanshya 25195-HQ-LEL 55% 55% -
Luanshya 25273-HQ-LEL 55% 55% -
Mwansa 25261-HQ-LEL 100% 100% -
* Castillo can earn up to 80% by meeting previously disclosed milestones
** These tenements are the subject of an option agreement to be acquired by
Hyperion Copper (UK). Refer to ASX announcement dated 22 June 2022.
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
Castillo Copper Ltd
ABN Quarter ended ("current quarter")
52 137 606 476 30 September 2022
Consolidated statement of cash flows Current quarter Year to date (3 months)
$A'000
$A'000
1. Cash flows from operating activities
1.1 Receipts from customers
1.2 Payments for
(a) exploration & evaluation
(b) development
(c) production
(d) staff costs
(e) administration and corporate costs (251) (251)
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 (251) (251)
2. Cash flows from investing activities
2.1 Payments to acquire or for:
(a) entities
(b) tenements
(c) property, plant and equipment
(d) exploration & evaluation (260) (260)
(e) investments
(f) other non-current assets (92) (92)
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 (352) (352)
3. Cash flows from financing activities
3.1 Proceeds from issues of equity securities (excluding convertible debt
securities)
3.2 Proceeds from issue of convertible debt securities
3.3 Proceeds from exercise of options
3.4 Transaction costs related to issues of equity securities or convertible debt
securities
3.5 Proceeds from borrowings
3.6 Repayment of borrowings
3.7 Transaction costs related to loans and borrowings
3.8 Dividends paid
3.9 Other (provide details if material)
3.10 Net cash from / (used in) financing activities - -
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 5,754 5,754
4.2 Net cash from / (used in) operating activities (item 1.9 above) (251) (251)
4.3 Net cash from / (used in) investing activities (item 2.6 above) (352) (352)
4.4 Net cash from / (used in) financing activities (item 3.10 above) - -
4.5 Effect of movement in exchange rates on cash held (61) (61)
4.6 Cash and cash equivalents at end of period 5,090 5,090
5. Reconciliation of cash and cash equivalents Current quarter Previous quarter
at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts
$A'000
$A'000
5.1 Bank balances 4,998 5,754
5.2 Call deposits 92
5.3 Bank overdrafts
5.4 Other (provide details)
5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 5,090 5,754
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 59(1)
in item 1
6.2 Aggregate amount of payments to related parties and their associates included 38(2)
in item 2
(1)Comprises director's fees for the quarter.
(2)Comprises consulting fees paid to the Managing Director.
7. Financing facilities Total facility amount at quarter end Amount drawn at quarter end
Note: the term "facility' includes all forms of financing arrangements available to the entity.
$A'000
$A'000
Add notes as necessary for an understanding of the sources of finance available to the entity.
7.1 Loan facilities
7.2 Credit standby arrangements
7.3 Other (please specify)
7.4 Total financing facilities
7.5 Unused financing facilities available at quarter end
7.6 Include in the box below a description of each facility above, including the
lender, interest rate, maturity date and whether it is secured or unsecured.
If any additional financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing details of
those facilities as well.
8. Estimated cash available for future operating activities $A'000
8.1 Net cash from / (used in) operating activities (item 1.9) (251)
8.2 (Payments for exploration & evaluation classified as investing activities) (260)
(item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item 8.2) (511)
8.4 Cash and cash equivalents at quarter end (item 4.6) 5,090
8.5 Unused finance facilities available at quarter end (item 7.5)
8.6 Total available funding (item 8.4 + item 8.5) 5,090
8.7 Estimated quarters of funding available (item 8.6 divided by item 8.3) 10.0
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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: 07 November 2022
Authorised by: The Board of Directors
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the
accompanying activity report provide a basis for informing the market about
the entity's activities for the past quarter, how they have been financed and
the effect this has had on its cash position. An entity that wishes to
disclose additional information over and above the minimum required under the
Listing Rules is encouraged to do so.
2. If this quarterly cash flow report has been
prepared in accordance with Australian Accounting Standards, the definitions
in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral
Resources and AASB 107: Statement of Cash Flows apply to this report. If this
quarterly cash flow report has been prepared in accordance with other
accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the
corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as
cash flows from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
4. If this report has been authorised for release
to the market by your board of directors, you can insert here: "By the board".
If it has been authorised for release to the market by a committee of your
board of directors, you can insert here: "By the [name of board committee - eg
Audit and Risk Committee]". If it has been authorised for release to the
market by a disclosure committee, you can insert here: "By the Disclosure
Committee".
5. If this report has been authorised for release
to the market by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations, the board should have
received a declaration from its CEO and CFO that, in their opinion, the
financial records of the entity have been properly maintained, that this
report complies with the appropriate accounting standards and gives a true and
fair view of the cash flows of the entity, and that their opinion has been
formed on the basis of a sound system of risk management and internal control
which is operating effectively.
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