Castillo Coppe. Regulatory News (CCZ)

27 July 2021

CASTILLO COPPER LIMITED("Castillo" or the "Company")

June 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 latest quarterly report for the period 1 April to 30 June 2021. During the period, the focus remained primarily on developing the Big One Deposit within the Mt Isa copper-belt in north-west Queensland. An overview of key events follows:

HIGHLIGHTS

Big One Deposit:

· Interpretations by Castillo's geophysicist consultant, post the inaugural Induced Polarisation ("IP") survey, suggests there is compelling evidence that significant incremental mineralisation is located along fault structures rather than constrained within the trachyte dyke

· IP survey identified a significant untested bedrock conductor north of the line of lode that is materially larger than the high-grade anomaly drilled in 2020

· The drilling campaign, comprising reverse circulation and diamond drilling over 26 drill-holes for 2,828m, resumed and will focus on intersecting new targets off the 1,200m strike event to extend known copper mineralisation

· The first three drill-holes, BO_315RC-17RC, proximal to BO_2020_201RC-03RC, all intercepted mineralisation - up to 17.5m thick - based on the field geologist's estimates

Corporate:

· Castillo raised A$11.7m (£6.4m) to rapidly progress developing core projects in Australia and Zambia

Post period events:

· Castillo confirmed a comprehensive IP survey will commence across the key Luanshya and Mkushi Projects located in Zambia's copper-belt

In addition to this release, a PDF version of this report with supplementary information and images can be found on the Company's website: https://castillocopper.com/investors/announcements/

For further information, please contact:

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.

· Cangai Copper Mine in northern New South Wales, which is one of Australia's highest grading historic copper mines.

Castillo Copper is listed on the LSE and ASX under the ticker "CCZ." For further information, visit the Company's website: www.castillocopper.com

DEVELOPMENT WORK

Castillo has its core project in Mt Isa's copper-belt, four assets across Zambia's copper-belt, a large footprint near Broken Hill's world class silver-zinc-lead deposit and the historic Cangai Copper Mine in New South Wales.

Big One Deposit & Arya Prospect, Mt Isa copper-belt

On 7 April 2021, Castillo announced its geology team would be resuming exploratory work at the Big One Deposit. The pre-drilling work would comprise a geophysical survey campaign designed to extend known mineralisation.

In addition, the Queensland government's Department of Resources granted the final key tenement (EPM 27440) that expands the overall footprint in Mt Isa's copper-belt by circa 23% to 980km2. Within the granted ground are five well-profiled targets (Crescent, Pancake, Flapjack, The Wall & Johnnies) that are prospective for IOCG, Mt Isa Style & shear-hosted copper mineralisation.

Further forensic work by Castillo's geology team has uncovered the following:

· Historical reports showing there are potentially more targets within the vicinity of the Arya Prospect; and,

· An incremental 11 targets within the tenure that are prospective for various styles of copper-gold mineralisation.

On 13 April 2021, Castillo's geology team reviewed key historical reports - including several commissioned by BHP and Mt Isa Mines in the 1990s - that enhance the Arya Prospect's exploration potential. In a 1997 annual tenement report, BHP identified 11 GEOTEM anomalies worthy of attention (now in Castillo's tenure), however, ground geophysics and rock chip sampling was only completed on four (leaving seven viable targets yet to be investigated):

· At the time, BHP rated EG01 - which is interpreted to be a 130m thick potential massive sulphide bedrock conductor (circa 1,500m by 450m and 430m deep) - as a priority drill-test target.

· Secondary targets, comprising EG02 & EG10, are interpreted to be shallow (~25m), 25m thick - with respective dimensions 160m by 50m and 280m by 270m - and may contain supergene copper mineralisation.

Using aggregated historical rock-chip assay data - up to 1.84% Cu (MIM) - Castillo's geology team created a maiden copper heat map which seamlessly reconciles with geophysical findings to boost confidence in drill-test targets at the Arya Prospect.

In addition, to garner better insights of the current drilling campaign, comprising 3,625m across 14 drill-holes, Castillo's geology team, utilising 3D modelling to facilitate generating optimal results, have planned:

· Three deep vertical drill-holes, spaced 210m apart, and ranging from 590-680m in depth to test EG01, while 11 shallower drill-holes will focus on EG02, EG10 and three highly anomalous peaks along the fault (Figure 1).

FIGURE 1: PRIMARY TARGETS - EG01, EG02 & EG10 - AT THE ARYA PROSPECT (refer to link above)

In a fresh development, another deep bedrock conductor was identified at the newly named Sansa Prospect (Figure 2), which is immediately west of the Arya Prospect. Encouragingly, there are elevated surface copper readings at the Sansa Prospect - above the bedrock conductor - though further interpretation work is required to formulate dimensions and assess the geological potential.

FIGURE 2: COPPER HEAT MAP ACROSS ARYA & SANSA PROSPECTS (refer to link above)

On 10 May 2021, Managing Director Simon Paull provided an update on the strategic intent to progress developing Castillo into a mid-tier copper group. The key takeaway was the Board remains optimistic that 2021 will be a transformative year as exploration efforts are ramped up at the Big One Deposit, Arya and Sansa Prospects, coupled with working towards successfully optimising the Zambia and NSW assets.

On 20 May 2021, Castillo announced preliminary interpretations of the inaugural IP survey at the Big One Deposit delivered outstanding results:

· There is compelling evidence significant incremental mineralisation is located along fault structures rather than constrained within the trachyte dyke; and

· Consequently, this increases the potential structural targets across the Big One Deposit.

Findings from line 3 (Figure 3) - which is 700m long - highlight a significant untested bedrock conductor north of the line of lode that is materially larger than the high-grade anomaly drilled in 2020 - where the best intercepts comprised:

· 303RC: 40m @ 1.64% from (fm) surface incl: 11m @ 4.40% fm 24m, 5m @ 7.34% fm 28m & 1m @ 16.65% fm 29m

· 301RC: 44m @ 1.19% Cu fm surface incl: 14m @ 3.55% fm 27m, 3m @ 10.88% fm 37m & 1m @ 12.6% fm 37m

FIGURE 3: LINE 3 - NEWLY IDENTIFIED BEDROCK CONDUCTORS (refer to link above)

Further, three more untested prospective anomalies along line 3 were discovered south of the line of lode which collectively bolster the Big One Deposit's exploration potential.

On 1 June 2020, Castillo stated an expanded drilling campaign is set to commence at the Big One Deposit. This follows on from the successful geophysics survey, which comprised six 500-700m lines across the 1,200m strike event.

On 16 June 2020, Castillo announced that a comprehensive drilling campaign, comprising reverse circulation and diamond drilling, had commenced at the Big One Deposit (Figure 4). The programme, comprising 26 drill-holes for 2,828m, is focused on intersecting new targets off the 1,200m strike event to extend known copper mineralisation.

In addition, a geophysics team will conduct a follow up DHEM survey to determine the relative density of the underlying copper mineralisation.

FIGURE 4: DRILLING UNDERWAY AT MT OXIDE PROJECT (refer to link above)

On 29 June 2021, Castillo announced that mineralisation had been intercepted - up to 17.5m thick - at the Big One Deposit. Factoring in results from the recent IP survey, the first three drill-holes, BO_315RC-17RC, proximal to BO_2020_201RC-03RC1, all intercepted mineralisation (Figure 5) based on the field geologist's estimates.

Compared to drill-holes 201RC-03RC1 from the 2020 campaign, 315RC-317RC were drilled deeper, intersecting mineralisation within and external to the trachyte dyke. This is significant, as it supports interpretations from the recent IP survey that copper mineralisation is controlled by major structural trends rather than constrained purely within the trachyte dyke.

More significantly, fresh interpretations from the preliminary observations verify that known mineralisation has clearly been extended. However, full insights will only become apparent once assays are returned from the laboratory.

New South Wales Projects

· BHA Project

The Board continued to market the BHA Project to prospective strategic partners as part of its strategy to optimise the sizeable footprint around Broken Hill's world class zinc-silver-lead deposit.

· Cangai Copper Mine

No material work was undertaken on Cangai Copper Mine during the review period.

CORPORATE

Capital raising: On 4 June 2021, Castillo secured ample funding, A$11.7m (£6.4m) before costs, to rapidly progress developing core projects in Australia and Zambia, which dovetails in with Castillo's strategic intent to transform into a mid-tier copper group.

Pleasingly, the placement was well supported by institutional and sophisticated investors in Australia and the UK.

Castillo will issue a total of 278,395,961 New Shares at $0.042 (£0.023) per share. 140,592,523 New Shares were issued using the Company's existing 7.1 capacity, 97,502,707 New Shares were issued using the Company's existing 7.1A capacity and 40,300,731 New Shares will be issued upon obtaining shareholder approval in a General Meeting to be held on 30 July 2021.

Castillo will issue a total of 157,041,087 Listed Options, all of which are subject to shareholder approval which will be sought at the above-mentioned general meeting.

POST QUARTER EVENT

On 1 July 2021, Castillo confirmed a comprehensive IP survey will commence across the key Luanshya and Mkushi Projects located in Zambia's copper-belt. Given the scale of the campaign, it will take 6-8 weeks to complete and fully analyse the results; however, reconciling these findings with known anomalous areas at surface should identify priority targets to test-drill.

PAYMENTS TO, OR TO AN ASSOCIATE OF, A RELATED PARTY OF THE ENTITY DURING QUARTER DURING THE QUARTER

$89,000 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

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. The Australian Securities Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this release.

APPENDIX 1: INTEREST IN MINING TENEMENTS HELD

*Castillo can earn up to 80% by meeting previously disclosed milestones

Appendix 5B

Mining exploration entity or oil and gas exploration entity

quarterly cash flow report

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: 27 July 2021

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.