Last checked at 28 Apr 2022 07:00
28 April 2022
CASTILLO COPPER LIMITED("Castillo", "CCZ" or the "Company")
March 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 January to 31 March 2022. During the period, most of the focus remained on developing the East Zone, BHA Project in Broken Hill and Big One Deposit, NWQ Copper Project in the Mt Isa copper-belt in north-west Queensland.
HIGHLIGHTS
· NWQ Copper Project - Big One Deposit (Queensland):
o Modelling the 2020-21 reverse circulation and diamond core drilling campaigns at the Big One Deposit produced a maiden JORC 2012 Mineral Resource Estimate (MRE) of 2.1Mt @ 1.1% Cu for 21,886t contained metal1
· BHA Project (Broken Hill, NSW):
o Significant cobalt mineralisation uncovered in historical assayed drill intercepts within the East Zone1
o Work progressing on block model and potentially proving up a primary cobalt MRE which is working with the JORC (2012) Code1
· Corporate:
o Dr Dennis Jensen promoted to CEO (following the retirement of Mr Simon Paull) and Mr Geoff Reed to Executive Director1
o Mr Ged Hall promoted to Chairman (following the retirement of Mr Rob Scott) and Dr Dennis Jensen to Managing Director (from CEO)1
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.
Big One Deposit, NWQ Copper Project
On 28 February 2022, Castillo announced that modelling the 2020-21 reverse circulation and diamond core drilling campaigns at the Big One Deposit produced a maiden JORC 2012 MRE of 2.1Mt @ 1.1% Cu for 21,886t contained metal1 (Figure 1). The underlying orebody - which commences from surface - is not fully defined, as it remains open to the east, north and down dip.
FIGURE 1: 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
Moving forward, Castillo's geology team have already mapped out the next drilling campaign (slated to start once ground conditions improve), which will target extending the known orebody. Notably, the campaign comprises infill drilling around the known orebody (drill-holes 301RC, 303RC & 318R); and drill-testing a significant bedrock conductor, north of the line of lode, which is larger than the known orebody along strike1.
FIGURE 2: BIG ONE DEPOSIT - LINE OF LODE & 2022 DRILL TARGETS (Available to view on PDF version of the announcement)
On 14 January 2022, a geological review on BHA's East Zone, acquired from Wyloo Metals1 in 2020, discovered numerous anomalous areas for cobalt-copper mineralisation delineated from surface / down-hole assays:
· Notably, with assayed values ranging from >300ppm Co up to 3,890ppm Co across >20 drill-holes1 (proximal to Himalaya Formation outcrop/subcrop) work on modelling a JORC 2012 cobalt MRE commenced.
· The region is well-known for its cobalt potential, as Cobalt Blue (ASX: COB) has JORC Ore Reserves of 118Mt @ 687ppm Co for 81,100t contained metal1.
Further, pegmatites - prospective for lithium mineralisation - are apparent within the scattered Sundowner Group outcrop1, though comprehensive sampling is required to identify anomalous areas.
The Board is highly encouraged by the NSW government's new strategy, which targets building a viable downstream industry for processing critical minerals (including cobalt-copper-REEs) and establishing a global supply hub in the state's central west region1.
FIGURE 3: BHA PROJECT FOOTPRINT (Available to view on PDF version of the announcement)
On 9 February 2022, further forensic work uncovered up to 6,182 drill-holes across the East Zone1 (BHA Project) - undertaken by North Broken Hill Group. Consequently, the Board has prioritised codifying the data then modelling up a JORC 2012 cobalt MRE:
· Incrementally, up to seven reverse circulation and diamond drill-core samples (in the GSNSW core library) will be tested for cobalt mineralisation; and
· As all previous drilling / assays completed by North Broken Hill Group meet current QAQC requirements, there should be a high degree of confidence in the final modelled result.
Given encouraging results from the initial 108 drill-holes, all delivering assays from >200ppm Co up to 9,500ppm Co1, spinning-off the BHA Group1 (via an IPO) has been deferred. As a result, this will enable the Board to focus on expediting the development of the East Zone.
Overall, identifying the cobalt potential within the East Zone is timely, with the battery metal upcycle ongoing and the NSW government listing the BHA Project on its Critical Minerals list1.
On 15 February 2022, preliminary interpretations, based on analysing assayed drill-hole data, suggested cobalt mineralisation, with coincident base metal occurrences, is within four zones down to a relatively shallow 70m.
Furthermore, over 70% of 6,182 drill-holes are now coded, which should enable work on modelling a JORC 2012 MRE focused on cobalt with potential for base metal credits, to commence.
The ability to leverage legacy data to potentially model a JORC 2012 MRE is a win-win, as it can facilitate fast-track developing the BHA Project at a negligible cost and create material value for shareholders.
On 9 March 2022, surface sampling undertaken in and around the Iron Blow Prospect confirmed the potential for shallow platinoid mineralisation within ultrabasic dykes & metamorphic rocks:
· The best samples comprised: G3 - 3.7 g/t Pt; 25 - 1.45 g/t Pt; G1 - 2.2 g/t Pt (6.1 g/t Au); and MS2 - 2.9 g/t Pt1.
In addition, there is demonstrable base metal and cobalt potential, with assayed surface samples (including rock-chips, bulked & grab) returning up to 12% Cu, 2,500 Zn, 9,400 Pb and 350ppm Co1.
Diamond core drilling has confirmed cobalt is apparent at The Sisters Prospect, with the best results: 1.8m @ 820ppm Co from 124.7m (BH1) and 1.5m @ 320ppm Co from 138.4m (BH2)1.
Castillo's geology team visited the core library in NSW to re-test mineralised sections taken from Iron Blow and The Sisters Prospects for platinoids, base metals and cobalt - the findings will aid shaping the full extent of the inaugural field trip.
Work continues on modelling and a JORC 2012 MRE focused on cobalt, with the following adjustments:
· Up to 6,380 drill-holes (+198 from 15 Feb 2022 ASX release) are now in the defined target area, with the majority polarised around the Reef Tank and Tors Tank Prospects1; and
· Data from The Sisters will now be factored into a separate MRE.
FIGURE 4: PROSPECTS WITHIN EAST ZONE, BHA PROJECT (Available to view on PDF version of the announcement)
On 21 March 2022, Castillo's geology team re-tested diamond core - from drill-holes BH1 & BH2 at The Sisters Prospect1 (East Zone, BHA Project) - available at the core library in Londonderry, NSW, with encouraging results:
· Utilising a PXRF analyser - to identify samples for follow up assays - readings up to 1,705ppm Co and 9.63% Zn were recorded;
· More significantly, several PXRF intervals (7-9m wide) were delineated with high-grade cobalt-zinc readings (Figure 5); and
· These identified intervals from the BH1 & BH2 core are being sent to the laboratory for follow up analysis.
The results are an average of two readings taken for 60 seconds and are preliminary. They are being used to identify sections for core re-sampling and subsequent laboratory analyses. They are not being used in the block model and do not replace laboratory analyses.
FIGURE 5: PRXF INTERVALS BH1 & BH2 - THE SISTERS PROSPECT
Drill-hole | From | To | Apparent Thickness (m) | Co (ppm) | Zn (%) |
BH1 | 11.84 | 20.89 | 9.05 | 859 | 0.26 |
106.62 | 114.36 | 7.26 | 946 | 1.53 | |
116.24 | 124.66 | 8.42 | 897 | 3.26 | |
124.66 | 129.54 | 4.88 | 370 | 0.89 | |
BH2 | 89.35 | 90.44 | 1.09 | 245 | 1.89 |
92.66 | 93.57 | 0.91 | 350 | 1.94 | |
137.29 | 140.58 | 3.29 | 525 | 2.21 |
Source: CCZ geology team
The PXRF analysis for BH1 & BH2 is consistent with earlier assayed sections from the same diamond core (from different parts), with the best results comprising: 1.8m @ 820ppm Co from 124.7m (BH1) and 1.5m @ 320ppm Co from 138.4m (BH2)1.
There is a primary 1,200m synclinal structure at The Sisters Prospect1 - which BH1 intersected - that appears to host high-grade cobalt-zinc mineralisation: this is now a key target for further drill-testing.
In addition, further forensic work on codifying the 6,380 drill-holes around the Reef & Tors Tank Prospects found more evidence of shallow cobalt mineralisation, with the best intercepts: 7m @ 1,600ppm Co from 30m (1800E1180N); 15m @ 760ppm Co from 67m (3E51N); 10m @ 520ppm Co from surface (2925E1240S); and 5m @ 520ppm Co from 45m (TT05W10N)1.
The Board is optimistic there is adequate geological data across The Sisters, Reef & Tors Tank Prospects to potentially prove up a primary cobalt JORC 2012 MRE.
On 31 March 2022, Castillo announced that ongoing work on the block model and JORC mineral resource estimate uncovered new cobalt assays - within the Defined Target Area that hosts the Tors & Reef Tank Prospects - for 20 shallow drill-holes not captured in the Geological Survey of NSW's database:
· Figure 6 shows how the best two new intercepts align with previous results reported on 21 March 2022;
· The new results will be codified then added to the 6,380 drill-holes which are being factored into the geological model; and
· Holistically, the assays demonstrate a significant cobalt system could be apparent within the Defined Target Area.
Discovering high-quality incremental data sets further builds a compelling case there is ample geological data within the Defined Target Area to prove up a primary cobalt JORC 2012 MRE.
FIGURE 6: BEST ASSAYED INTERCEPTS - DEFINED TARGET AREA |
New: 5m @ 1,200ppm Co from 15m (AGSO2740) 10m @ 510ppm Co from 5m including 5m @ 690ppm Co from 10m (AGSO2716)1 |
Reported: 7m @ 1,600ppm Co from 30m (1800E1180N) 15m @ 760ppm Co from 67m (3E51N) 10m @ 520ppm Co from surface (2925E1240S) 5m @ 520ppm Co from 45m (TT05W10N)2 |
CCZ geology team
Cangai Copper Mine, New South Wales
No material work was undertaken on Cangai Copper Mine during the review period.
Zambia Projects
The IP survey at the Mkushi Project was completed during the review period. All the data was passed to Castillo's geophysicist consultant in Zambia for analysis and interpretation, and production of a final report with conclusions and recommendations.
CORPORATE
· Option agreement unwound: On 14 January 2022, the Board and companies, which hold the Litchfield and Picasso Lithium Projects, have mutually agreed to unwind the Option Agreement. As part of the break agreement terms, the $50,000 deposit has been returned to Castillo.
· Board changes: On 28 January 2022, Castillo announced that Dr Dennis Jensen was promoted to Chief Executive Officer and Mr Geoff Reed to Executive Director with effect 1 February 2022. They assume responsibility for executing the Board's revised strategic intent to prove up JORC 2012 mineral resources whilst continuing to develop the Arya Prospect. They take over from Mr Simon Paull who retired after building up an excellent platform during his tenure with the group.
POST-PERIOD EVENT
· Board changes: On 1 April 2022, Castillo announced that Mr Ged Hall (non-executive director based in London) has been promoted to Chairman and Dr Dennis Jensen to Managing Director (from CEO) with effect from 1 April 2022. These promotions follow on post the retirement of long-standing Chairman, Mr Rob Scott, with effect from 31 March 2022.
PAYMENTS TO, OR TO AN ASSOCIATE OF, A RELATED PARTY OF THE ENTITY DURING THE QUARTER
$114,000 was paid to related parties of the Company relating to executive director salary and non-executive director fees.
SUMMARY OF THE EXPLORATION EXPENDITURE INCURRED DURNG THE QUARTER
Consulting fees | Rates and mines departments fees | |
Cangai | $17,000 | - |
Broken Hill Alliance | $33,000 | - |
Mt Isa | $645,000 | $12,000 |
Zambia | $60,000 | - |
Total | $755,000 | $12,000 |
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/
For further information, please contact:
Castillo Copper Limited | +61 8 6558 0886 |
Dr Dennis Jensen (Australia), Managing Director Gerrard Hall (UK), Chairman |
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SI Capital Limited (Financial Adviser and Corporate Broker) | +44 (0)1483 413500 |
Nick Emerson |
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Luther Pendragon (Financial PR) | +44 (0)20 7618 9100 |
Harry Chathli, Alexis Gore |
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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 January 2022 to 28 April 2022 inclusive
Appendix 5B
Mining exploration entity or oil and gas exploration entityquarterly cash flow report
Name of entity | ||
Castillo Copper Ltd | ||
ABN |
| Quarter ended ("current quarter") |
52 137 606 476 | 31 March 2022 | |
Consolidated statement of cash flows | Current quarter$A'000 | Year to date (9 months)$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 | (319) | (1,072) | |
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 | (319) | (1,072) |
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 | (767) | (4,810) | |
(e) investments | 51 | (25) | |
(f) other non-current assets | (20) | (56) | |
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 | (736) | (4,891) |
3. | Cash flows from financing activities | (13) | 1,743 |
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 | - | (249) |
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)* | (80) | - |
3.10 | Net cash from / (used in) financing activities | (93) | 1,494 |
*Relates to seed capital applications received and subsequently refunded by CCZ subsidiary Broken Hill Alliance Ltd | |||
4. | Net increase / (decrease) in cash and cash equivalents for the period | ||
4.1 | Cash and cash equivalents at beginning of period | 7,564 | 10,854 |
4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (319) | (1,072) |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (736) | (4,891) |
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | (93) | 1,494 |
4.5 | Effect of movement in exchange rates on cash held | (220) | (189) |
4.6 | Cash and cash equivalents at end of period | 6,196 | 6,196 |
5. | Reconciliation of cash and cash equivalentsat the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts | Current quarter$A'000 | Previous quarter$A'000 |
5.1 | Bank balances | 6,196 | 7,564 |
5.2 | Call deposits | ||
5.3 | Bank overdrafts | ||
5.4 | Other (provide details) | ||
5.5 | Cash and cash equivalents at end of quarter (should equal item 4.6 above) | 6,196 | 7,564 |
6. | Payments to related parties of the entity and their associates | Current quarter$A'000 |
6.1 | Aggregate amount of payments to related parties and their associates included in item 1 | 951 |
6.2 | Aggregate amount of payments to related parties and their associates included in item 2 | 192 |
1Comprises director's fees for the quarter. 2Comprises consulting fees paid to the Managing Director. | ||
7. | Financing facilitiesNote: the term "facility' includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. | Total facility amount at quarter end$A'000 | Amount drawn at quarter end$A'000 |
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. | ||
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8. | Estimated cash available for future operating activities | $A'000 |
8.1 | Net cash from / (used in) operating activities (item 1.9) | (319) |
8.2 | (Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) | (767) |
8.3 | Total relevant outgoings (item 8.1 + item 8.2) | (1,086) |
8.4 | Cash and cash equivalents at quarter end (item 4.6) | 6,196 |
8.5 | Unused finance facilities available at quarter end (item 7.5) | |
8.6 | Total available funding (item 8.4 + item 8.5) | 6,196 |
8.7 | Estimated quarters of funding available (item 8.6 divided by item 8.3) | 5.7 |
Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as "N/A". Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7. | ||
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: 28 April 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.