REG - Castillo Copper Ltd - Strategic Update: Confidence in copper-cobalt MREs

Castillo CopperAnnouncement

15/08/2022 07:00

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RNS Number : 9393V  Castillo Copper Limited  15 August 2022

15 August 2022

 

CASTILLO COPPER LIMITED

("Castillo" or the "Company")

 

Strategic update: Focus on increasing confidence in copper-cobalt MREs

Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily
focused on copper across Australia and Zambia, is pleased to provide a
strategic update across its projects.

INCREASING CONFIDENCE IN COPPER-COBALT MREs

As Castillo's three Australian assets all have inferred Mineral Resources
Estimates ("MRE") for copper or cobalt (Figure 1), the Board's strategic
intent moving forward is to advance these projects - with development partners
if merited - and create value for shareholders.

FIGURE 1: COPPER-COBALT MREs - HIGH LEVEL SUMMARY

 Asset                                Inferred (Mt)  Indicated (Mt)  Copper Grade (%)  Cobalt Grade (ppm)  Contained Copper (t)  Contained Cobalt (t)
 East Zone, BHA Project               64.4           -               0.07              318                 44,260                21,556
 Big One Deposit, NWQ Copper Project  2.1            0.007           1.10              -                   21,886                -
 Cangai Copper Mine                   3.2            -               3.35              0.003               107,589               153
 GLOBAL TOTAL                                                                                              173,735               21,709

Note: refer Figures 2, 3 & 6.  Source: CCZ geology team

 

DRILLING TARGETS AT BHA PROJECT'S EAST ZONE

Having produced an inferred cobalt MRE(1) (Figure 2), comprising two prospects
in the BHA Project's East Zone, the Board has decided to focus on enhancing
the confidence and grade. The upcoming drilling campaign, which includes one
diamond core and 17 RC drill-holes for 2,100m, will test targets at four
prospects including The Sisters, Fence Gossan, Reefs & Tors Tank(2) (refer
Appendix A).

FIGURE 2: 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

A key objective of the campaign, especially for Fence Gossan, Reefs & Tors
Tank Prospects, is to test two lower cobalt-rich zones the geology team
interpret to host higher grading mineralisation than has been modelled to
date(2).

With logistics already advanced and a drilling contractor to be appointed
shortly, the Board is targeting to secure regulatory / environmental approvals
from NSW Resources Regulator within the coming weeks so the campaign can
commence in Q4 2022.

While 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. Notwithstanding, the Board believes
potentially improving the confidence and grade of the current MRE, coupled
with the recent excellent metallurgical results, will aid securing support
from prospective off-take partners.

As a result of focusing on the East Zone, previously announced plans to
commence exploration work on the West Zone(3) (Appendix A) have been postponed
until 2023.

NWQ Copper Project

Big One Deposit

The recent metallurgical results (10x upgrade: 0.72% head-grade to 7.2%
post-test-work)(4) highlighted a potentially viable copper concentrate could
be produced from ore sourced from the Big One Deposit. Further metallurgical
test-work is currently being undertaken on diamond core samples to determine
if this can be further optimised.

The Board believes the next round of metallurgical test-work results will
further aid discussions with prospective processing partners in the Mt Isa
region that are keen to lock in forward copper concentrate supplies to keep
mills operating at optimal levels.

As a result, the Board remains committed to improving the confidence in the
current MRE(5) (refer Figure 3) and extending known mineralisation.

 

FIGURE 3: 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

Interest in the Mt Isa copper-belt remains strong among the majors (refer
Figure 4), evidenced by the recent complementary earn-in agreements between
Glencore Group's Mt Isa Mines and Austral Resources(6). More broadly, however,
BHP's current proposal to acquire Oz Minerals(7), highlights further potential
consolidation for the global copper supply chain as larger players seek to
scale their operations.

 

 

FIGURE 4: NWQ COPPER PROJECT, MT ISA COPPERBELT

Source: CCZ geology team

 

Satellite deposits

Within the NWQ Copper Prospect, aside from the Big One Deposit and the Arya
Prospect, are circa 20 incremental copper prospects which all have potential
to host copper mineralisation based on analysing historical geological
reports(9) (refer Figure 5). The Board has now formulated plans to
systematically visit these prospects (including Arya), once development work
at the Big One Deposit has concluded, to determine if they have viable targets
for drill-testing. Ideally, the Board is targeting to discover several
satellite copper deposits across the tenure which could ultimately feed into a
central processing mill.

 

 

 

FIGURE 5: PROSPECTS ACROSS NWQ COPPER PROJECT

 

Source: CCZ geology team

 

 

Cangai Copper Mine

A key positive for revamping exploration efforts at Cangai Copper Mine is it
features on the NSW government's critical minerals list(10) (as does the BHA
Project). Moreover, it has a global MRE at 107,589t contained copper metal
(refer Figure 6)(11) and is one of Australia's highest grading historic copper
mines.

 

FIGURE 6: 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

 

The geology team have reviewed work carried out since 2017 and reaffirmed
there are several priority massive sulphide targets(11) that could potentially
extend known copper mineralisation (refer Figure 7). More immediate, however,
the geology team plan to update the global MRE and factor in several known
stockpiles.

 

FIGURE 7: CANGAI COPPER MINE - UNTESTED BEDROCK CONDUCTORS

 

Source: CCZ geology team

Zambia Copper Projects

The Board is delighted to have entered into an option agreement - receiving a
US$100,000 option fee - with Hyperion Copper (UK) to sell the Zambia copper
assets for circa A$4m plus milestones. If the option is exercised and Hyperion
Copper lists on the Alternative Investment Market (AIM), part of the London
Stock Exchange, later in the calendar year then Castillo will retain more than
a 25% stake, with the right to appoint one director to the Board(12).

More significantly, this transaction ensures the Zambia copper assets
exploration potential will be fully developed, whilst any benefits will accrue
to Castillo via retaining its shareholding in Hyperion Copper.

Castillo's geology team have been assisting Hyperion Copper progress due
diligence and making introductions to key stakeholders in Zambia. Further, in
a proactive move, Hyperion Copper's team will visit both the Luanshya and
Mkushi Projects (refer Figure 8) in September 2022 to finalise targets for
drill-testing, leveraging geochemical and geophysical campaigns undertaken by
Castillo over 2020-21.

 

FIGURE 8: ZAMBIA PROJECTS

Source: CCZ geology team

Dr Dennis Jensen, Managing Director of Castillo Copper, commented: "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."

 

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 3488 7510
 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." 

 

Competent Person's Statement

 

The information in this report that relates to Exploration Results for "BHA
Project, East Zone" is based on information compiled or reviewed by Mr Mark
Biggs.  Mr Biggs is a 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.

 

References

 

1)                             CCZ ASX Release - 1
June 2022

2)                             CCZ ASX Release - 9
August 2022

3)                             CCZ ASX Release - 7
June 2022

4)                             CCZ ASX Release -
19 July 2022

5)                             CCZ ASX Release -
28 February 2022

6)                             AR1 ASX Release - 8
June 2022

7)                             BHP ASX Release - 8
August 2022

8)                             CCZ ASX Release -
17 November 2021

9)                             CCZ ASX Release -
29 September 2021 (Annual Report 2021)

10)                          CCZ ASX Release - 28
January 2022 AND NSW government - Critical Minerals. Available at:
https://www.regional.nsw.gov.au/meg/nsw-resources/criticalminerals
(https://www.regional.nsw.gov.au/meg/nsw-resources/criticalminerals)

11)                          CCZ ASX Release - 28
September 2018 (Annual Report 2018), 3 September 2018, 19 February 2020 &
28 April 2020

12)                          COB ASX Release - 22
June 2022

 

 

Appendix A: BHA PROJECT

FIGURE A1: PROSPECTS IN BHA PROJECT'S EAST ZONE

Source: CCZ geology team

FIGURE A2: WEST AND EAST ZONE - BHA PROJECT

Source: CCZ geology team

 

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