Castillo Coppe. Regulatory News (CCZ)

22 July 2022

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

June 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 April to 30 June 2022. During the period, most of the focus remained on developing the cobalt potential at the East Zone, BHA Project in Broken Hill and successfully negotiating an option to sell the Zambia Projects.

HIGHLIGHTS

· EAST ZONE, BHA PROJECT

o  Maiden Mineral Resource Estimate ("MRE") to the JORC (2012) Code for BHA Project's East Zone is 64Mt @ 318 ppm Co for 21,556t contained metal at relatively shallow depths1

o  Further, the global MRE includes 44,260t of contained copper (63Mt @ 0.07% Cu)1

· ZAMBIA

o  London-based, Hyperion Copper, granted a 12-month option to acquire 100%-owned subsidiary, Zed Copper ("Zed"), which owns four assets in Zambia's copper-belt including the prime Luanshya and Mkushi Projects1

o  Hyperion Copper paid a non-refundable US$100,000 fee (~A$142,000) for the exclusive option and, if exercised, will issue £2.25m (~A$4m) in Hyperion shares to acquire 100% of the issued capital of Zed1

o  Further, Castillo will receive £1.5m (~A$2.7m) in Hyperion shares upon a global MRE of 200,000t contained copper metal being delineated1

DEVLOPMENT 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 13 April 2022, Castillo announced compelling new assays uncovered at the Fence Gossan and Ziggy's Hill Prospects within the Defined Target Area which provided incremental evidence there is potentially an extensive cobalt system apparent within the BHA Project's East Zone1 (Figure A1, Appendix A).

The new cobalt assays, especially from Fence Gossan, are relatively shallow (from surface to circa 100m) and include several standout intercepts which align with earlier results at the Tors & Reef Tank1 Prospects (Figure 1 & 2).

FIGURE 1: BEST ASSAYED INTERCEPTS - DEFINED TARGET AREA

Source: CCZ geology team

On 5 May 2022, diamond core assay results for drill-hole BH1 at The Sisters Prospect confirmed significant cobalt mineralisation, with the best intercept:

· 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

Notably, the new assays are in line with previously reported results from within the Defined Target Area1 (Figure 2).

FIGURE 2: DRILL-HOLES & PROSPECTS; EAST ZONE, BHA PROJECT

Source: CCZ geology team

On 1 June 2022, Castillo announced the maiden MRE to the JORC (2012) Code for BHA Project's East Zone totaled 64Mt @ 318 ppm Co for 21,556t contained cobalt metal (Figure 3) at relatively shallow depths (0-80m). Furthermore, the global MRE has 44,260t (64Mt @ 0.07% Cu) of contained copper metal that enhances the overall result1.

FIGURE 3: JORC RESOURCE TONNAGES BHA EAST ZONE PROSPECTS

Notes: (1) Contained content reported is insitu at 100%, no mining assumptions or dilution yet applied.

Source: CCZ geology team

Moving forward, to extend known cobalt mineralisation, primary targets have already been factored into an inaugural drilling campaign which the Board plans to progress. Further, the Board intends to open discussions with potential off-take partners keen to lock in future cobalt supply chains and actively participate in the NSW government's critical minerals initiative1. 

Zambia

On 5 April 2022, an Induced Polarisation survey campaign undertaken at the Mkushi Project highlighted multiple zones of high chargeability coincident with known copper soil anomalies.

More significantly, according to the geophysicist's interpretation, these are potential bodies of disseminated copper sulphide mineralisation and prime targets to test drill.

On 22 June 2022, in a landmark deal, Castillo announced that it granted London-based Hyperion Copper a 12-month option to acquire 100%-owned subsidiary, Zed, which owns four projects in Zambia's copper-belt - including the prime Luanshya and Mkushi Projects (Figure A2, Appendix A) - for total consideration of £3.75m (A$6.7m) in a value creating transaction.

The Board believes this is an excellent outcome for all stakeholders since it secures a strategic partner that is committed to fully develop the exploration potential of the Zambia projects. Moreover, with Hyperion Copper planning to list on the LSE's AIM market in H2 2022, Castillo is set to accrue benefits via retaining its shareholding in Hyperion post listing.

Hyperion is positioning itself as an Africa-focused, copper-gold explorer as it owns 100% of the Yansse Gold Project in Burkina Faso. Notably, the Yansse Gold Project is located in the highly prolific West African Birimian Terrane, which is host to some of the world's largest gold deposits.

CORPORATE

· Board changes: On 1 April 2022, Castillo announced that Mr Ged Hall (non-executive director based in London) was promoted to Chairman and Dr Dennis Jensen to Managing Director (from CEO). These promotions follow on post the retirement of long-standing Chairman, Mr Rob Scott, with effect from 31 March 2022.

· Strategic update: On 7 June 2022, Managing Director Dr Dennis Jensen summarised Castillo's latest strategy: "The Board's strategic intent is to create value for shareholders via developing the core projects. With cobalt remaining over U$$70,000/t, the priority is to extend known mineralisation across the BHA Project's East & West Zones via targeted drilling campaigns and formalising a clear path to market. Similarly, with copper above US$9,000/t, the Board will apply the same formula for the Big One Deposit within the NWQ Copper Project. Concurrently, the Board intends to align with development partners to advance the Cangai Copper Mine and four prospective copper projects in Zambia."

POST-PERIOD EVENT

· Big One Deposit, NWQ Copper Project: On 19 July 2022, 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, with the best result: 0.72% Cu head-grade to 7.2% Cu post-test-work.

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

During the quarter, $98,000 was paid to related parties of the Company relating to executive director consulting fees and non-executive director fees.

SUMMARY OF THE EXPLORATION EXPENDITURE INCURRED DURNG THE QUARTER

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/ 

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. 

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 April 2022 to 30 June 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 B: 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 information in this announcement that relates to exploration results is based on and fairly represents information reviewed or compiled by Mr Matt Bull, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Bull is a beneficiary of Southern River Investments, a trust which is a shareholder of Castillo Copper Limited. Mr Bull is a shareholder and director of Trilogy Metals Pty Ltd, a company which provides ad hoc geological consultancy services to Castillo Copper Limited. Mr Bull is a Consultant of Castillo Copper Limited. Mr Bull has sufficient experience that is relevant to the styles of mineralisation and types of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Bull has provided his prior written consent to the inclusion in this announcement of the matters based on information in the form and context in which it appears.

The information in this report that relates to Exploration Results for "Litchfield" and "Picasso" is based on information compiled or reviewed by Mr Geoffrey Reed, a Non- Executive Director of CCZ. Mr Reed is both a shareholder and director of Bluespoint Mining Services, a company which is a shareholder of Castillo Copper Limited. Bluespoint Mining Services provides ad hoc geological consultancy services to Castillo Copper Limited. Mr Reed is a member of the Australian Institute of Mining and Metallurgy (CP) (member #250422) 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 Reed is a member of the Australian Institute of Geoscientists. Further, Mr Reed consents to the inclusion in this report of the matters based on information in the form and context in which it appears. Mr Reed has not verified any of the information regarding any of the properties or projects referred to herein other than the "Litchfield" and "Picasso" Properties.

APPENDIX C: INTEREST IN EXPLORATION MINING TENEMENTS HELD

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

Appendix 5B

Mining exploration entity or oil and gas exploration entityquarterly 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: 22 July 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.