REG - Castillo Copper Ltd - Initial pit optimisation - A$28m NPV for Big One

Castillo CopperAnnouncement

13/07/2023 07:15

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RNS Number : 8558F  Castillo Copper Limited  13 July 2023

13 July 2023

 

 

CASTILLO COPPER LIMITED

("Castillo", or the "Company")

 

Initial pit optimisation delivers A$28m NPV for Big One

 

Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily
focused on copper across Australia and Zambia, is pleased to announce that it
has received a preliminary pit optimisation study on Big One Deposit from
Entech Group(1) which produced a A$28m Net Present Value ("NPV") (Figure 1).

 

HIGHLIGHTS:

 

·     The preliminary pit optimisation study - completed by Perth-based
Entech Group ("Entech")(1) - for the Big One Deposit, which is part of the NWQ
Copper Project, delivered a $28m NPV

·     Drilling down, the study focused on the near-surface component of
known mineralisation at the Big One Deposit (Mineral Resource Estimate: 2.1Mt
@ 1.1% Cu for 21,886t copper metal - inferred)(2) and provides significant
confidence a standalone mining operation can potentially be developed

·     Key findings indicate an initially optimised pit shell could
potentially deliver up to 6,266t copper (head grade: 1.42% Cu), 4,362oz silver
(head grade: 0.31 g/t Ag) and 1,469t cobalt (head grade: 0.33% Co)

·     As known mineralisation is open south-west and down dip from the
pit shell, there is significant potential to build on the preliminary findings
and progress a mining license once a strategic development partner is secured

·     Further, there are over 20 incremental copper, gold, lead, and
zinc prospects across the NWQ Copper Project that are highly prospective for
copper mineralisation which potentially provide the foundations for developing
a series of satellite deposits

 

Ged Hall, Chairman of Castillo Copper, said: "The Board is delighted with the
findings from Entech's preliminary pit optimisation study, as it provides
significant confidence a standalone mining operation can potentially be
developed at Big One Deposit. More importantly, the Board believes the study's
insights will be key to securing a strategic partner to progress critical
development work moving forward."

 

PIT OPTIMISATION: A$28M NPV

 

The focus of the study was on the near-surface component of known
mineralisation based on the Inferred MRE at 2.1Mt at 1.1% Cu for 21,886t(2)
copper metal.

 

FIGURE 1: OPTIMISATION OUTCOMES - ULTIMATE PIT

 Mining Diluted & Recovered Material      Units    Total/Av
 Tonnes
 Waste                                    t                  567,427
 Ore                                      t                  441,998
 Total                                    t               1,009,425
 Strip ratio                              1:n      1.3
 Grade
 Copper                                   %                        1.42
 Silver                                   g/t      0.31
 Cobalt                                   %                        0.33
 Metal
 Copper                                   t                      6,266
 Silver                                   oz                     4,362
 Cobalt                                   t                      1,469

 SUMMARY
 Cost
 Mining                                   $m                         4.3
 Processing                               $m                       14.1
 Rate
 Mining                                   $/t ore  9.78
 Processing                               $/t ore  31.8
 Insitu Physicals
 Tonnes                                   t                  441,998
 Cu Grade                                 %        1.42
 Ag Grade                                 g/t      0.31
 Co Grade                                 %        0.33

Source: Entech Group

 

^ Cautionary Statement:

 

The study referred to in this RNS announcement is conceptual in nature. It is
a preliminary technical study to assess the potential for open pit base and
precious metal mining and to assist in determining the likely size and depth
of open pit mining. It is based on only JORC 2012 Inferred Resources. The
study is preliminary in nature and not intended as a Feasibility Study. It
should be understood by the reader that this announcement reports on
preliminary outcomes of early-stage open pit optimisation works on the Big One
deposit. It does not account for the capital costs of infrastructure such as
power stations, access roads, dewatering, processing infrastructure, offices,
camps etc, nor considers hydrogeology or geotechnical issues.

 

KEY FINDINGS

 

As shown in Figure 1 above, initially the optimised pit shell could
potentially deliver up to up to 6,266t copper (head grade: 1.42% Cu), 4,362oz
silver (head grade: 0.31 g/t Ag) and 1,469t cobalt (head grade: 0.33% Co).
However, this is only a starting point, as with known mineralisation open
south-west and down dip it can potentially be built upon with further
development work.

 

The Board is optimistic these initial findings provide significant confidence
a standalone mining operation can eventually be developed once a strategic
development partner is secured. Incrementally, there are circa 20 known
prospects across the NWQ Copper Project highly prospective for copper, gold,
lead, and zinc mineralisation, which potentially provide the foundations for
developing a series of satellite deposits. (Note: The NWQ Copper Project has
secured "project status" with the Queensland Department of Resources
(PROJ-0221) which comprises EPMs 26462, 26513, 26525, 26574, and 27440.)

 

METHODOLGY

 

In undertaking the open pit optimisation study, Castillo and Entech agreed the
input assumptions summarised in Figures 2, 3 and 4.

 

FIGURE 2: OPTIMISATION INPUT ASSUMPTIONS

 

 PROCESSING COSTS & ASSUMPTIONS
  Commodity Price:                          A$/t                                                    13,024
  Commodity Price:                          A$/g                                       1.22
  Commodity Price:                          A$/t                                                    51,515
  Commodity Price - calculated:             A$/t (including Royalty & Payability)                   10,158
  Commodity Price - calculated:             A$/g (including Royalty & Payability)      0.59
  Commodity Price - calculated:             A$/t (including Royalty & Payability)                   25,114
  State Royalty:                                                                                             0
  Processing Rate:                          tpa                                                   500,000
  Processing Cost Oxide:                    $/t ore                                                        30
  Processing Cost Fresh:                    $/t ore                                                        30
  Grade Control Costs:                      $/t ore                                                        30
  Concentrate Grade:                        Cu                                         15%
  Moisture Content:                                                                    8%
  Concentrate Costs:                        $/wmt                                                          15
  Annual Discounting:
  Payability (Cu)                                                                      80%
  Payability (Ag)                                                                      50%
  Payability (Co)                                                                      50%
  Processing recovery:
                                  Cu Oxide                                             70%
                                  Cu Fresh                                             88%
                                  Ag Oxide                                             50%
                                  AG Fresh                                             50%
                                  Co Oxide                                             95%
                                  Co Fresh                                             95%

Source: Entech Group

 

FIGURE 3: LOAD AND HAUL RATES PER BENCH

 

 Unit Load & Haul Rates:          Ore                Waste
 Bench 1         $/bcm                  9.23               8.58
 Bench 2         $/bcm                  9.40               8.60
 Bench 3         $/bcm                  9.57               8.62
 Bench 4         $/bcm                  9.75               8.95
 Bench 5         $/bcm                  9.92               9.03
 Bench 6         $/bcm                10.10                9.48
 Bench 7         $/bcm                10.27                9.49
 Bench 8         $/bcm                10.45                9.53
 Bench 9         $/bcm                10.62                9.64
 Bench 10        $/bcm                10.80                9.81
 Bench 11        $/bcm                10.97              10.04
 Bench 12        $/bcm                11.15              10.08
 Bench 13        $/bcm                11.32              10.12
 Bench 14        $/bcm                11.40              10.24
 Bench 15        $/bcm                11.44              10.24
 Bench 16        $/bcm                11.45              10.42
 Bench 17        $/bcm                11.47              10.43
 Bench 18        $/bcm                11.86              10.86
 Bench 19        $/bcm                11.92              10.88
 Bench 20        $/bcm                11.95              10.91
 Bench 21        $/bcm                11.89              10.94
 Bench 22        $/bcm                12.06              10.99
 Bench 23        $/bcm                12.05              11.01
 Bench 24        $/bcm                12.05              11.04
 Bench 25+       $/bcm                12.16              11.09

Source: Entech Group

 

FIGURE 4: DRILL AND BLAST RATES PER MATERIAL TYPE

 

 Unit Drill & Blast Rates:          Ore                Waste
 Bench 1 - Oxide  $/bcm                   9.23               8.58
 Bench 2 - Fresh  $/bcm                   9.40               8.60

 

Source: Entech Group

 

Items considered part of the open pit optimisation include the following:

·    Load and haul rates per bench RL ($/bcm mined)

·    Drill and blast rates per material type ($/bcm mined)

·    Processing costs ($/t ore):

o This included coast allocations for grade control

·    Processing (metallurgical) recoveries (%)

·    Metal payabilities (%)

 

Items that were not considered to be a part of the open pit optimisation
include the following:

·    Upfront Capital:

o  Power Stations, Access Roads, Dewatering, Processing Infrastructure,
Offices/Camps etc

·    Hydrology (No studies available)

·    Geotechnical Guidance (No studies available)

 

RESULTS

 

Open pit optimisation is a process of selecting the most profitable open pit
shell that matches a group's risk profile. Risk can be managed using a variety
of methods, such as using a conservative commodity price, increasing the
profit margin or by selecting a smaller pit than the one that generates the
maximum value.

 

Despite optimisation results generating larger NPV pit shells, by applying
this selection criterion, so long as a sufficient mill feed can be maintained,
then a more generous monthly net cash flow can be maintained.

 

Figure 5 graphically illustrates the outcomes for the nested pit shells
resulting from the assessment of the open pit optimisation (see Figures 6 and
7 for a cross-section and plan view). The open pit optimisation was run at an
input copper price of A$13,024/t.

 

FIGURE 5: OPTIMISATION OUTPUTS

Source: Entech Group

 

FIGURE 6: SECTION THROUGH RF 1 SHELL FOR THE BIG ONE OPTIMISATION

Note: Resource model filtered to NSR>10

Source: Entech Group

 

 

FIGURE 7: PLANVIEW OF RF 1 SHELL FOR THE BIG ONE OPTIMISATION

Note: Resource model filtered to NSR>10

Source: Entech Group

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." 

 

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. Further, Mr Biggs consents to the
inclusion in this report of the matters based on information in the form and
context in which it appears.

 

References

1)        Entech Mining. Available at: https://entechmining.com.au

2)        CCZ ASX Release - 28 February 2022

 

 

APPENDIX A:  NWQ COPPER PROJECT

 

FIGURE A1 NWQ COPPER PROJECT RELATIVE TO PEERS

 

Source: CCZ geology team

FIGURE A2: PROSPECTS WITHIN NWQ COPPER PROSPECT

Source: CCZ geology team

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