Last checked at 30 Oct 2020 07:00
30 October 2020
CASTILLO COPPER LIMITED("Castillo" or the "Company")
September 2020 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 quarterly report for the period 1 July to 30 September 2020.
During the period, much of the focus remained on developing the Mt Oxide Project, especially progressing drilling campaigns at the Big One Deposit and Arya Prospect. In addition, Castillo successfully listed on the London Stock Exchange and secured sufficient capital to fund forward development work.
Highlights
· Mt Oxide Project:
o Maiden drilling campaign finalised for high-grade Big One Deposit and Arya Prospect which has an interpreted potential massive sulphide target ~130m thick, ~1,500m by ~450m and ~426m below surface
o Post period, drilling commenced at the Big One Deposit
· Zambia Projects:
o Ratification that a high-priority target for copper mineralisation, along a circa 6km strike event, is apparent at the Luanshya Project
· Broken Hill Project:
o Acquired additional tenure which delivers a large footprint proximal to Broken Hill's world-class silver-zinc-lead deposit
· Corporate:
o Prospectus for London Stock Exchange dual listing published and trading in shares commenced
o Funding in place to progress developing key projects
An overview of key events follows:
Development Work
Castillo now has four properties comprising the Mt Oxide Project in Mt Isa's copper-belt, four assets across Zambia's copper-belt, the historic Cangai Copper Mine, and a large footprint near Broken Hill's world class silver-zinc-lead deposit in New South Wales (NSW), Australia.
Mt Oxide Project
On 1 July 2020, Castillo's geology team finalised the RC drilling campaign for the Arya project, which comprises ~3,432m over 14 drill-holes, within an area ~1,500m by ~1,000m, with targets near surface and interpreted deeper geophysical anomalies.
Three deep vertical drill-holes, spaced ~210m apart, will target an interpreted potential massive sulphide bedrock conductor (EG01), which is ~130m thick, with dimensions ~1,500m by ~450m, and ~426m deep.
The remaining eleven drill-holes will focus on several near surface targets including bedrock conductors, EG02 and EG10, which have the potential to be supergene mineralisation. Both are ~25m below surface and ~25m thick, with dimensions ~160m by 50m and ~270m by 280m respectively.
On 14 July 2020, Castillo released detailed plans for the Big One Deposit drilling campaign which comprises a 4,385m RC drilling campaign, over 35 drill-holes, which will focus on a strike zone (~580m by ~120m) to test for mineralisation from ~26m up to ~190m below surface. Further, an incremental 160m diamond drilling campaign, targeting two drill-holes that are testing primarily for shallow mineralisation from ~26m up to ~52m below surface.
On 10 August 2020, Castillo announced it is now fully funded to ramp up its exploration efforts across tier one assets, with the Mt Oxide Project being the priority. As part of pre-drilling formalities, Castillo's geology team visited the high-grade Big One Deposit and noted:
o A prominent shear zone and surface outcrop with visible copper mineralisation; and
o confirmed the location of the three pits with visible copper mineralisation.
On 19 August 2020, Castillo's geology team pegged 35 drill-sites at Big One Deposit in readiness for the upcoming drilling campaign. In addition, massive hematite / cuprite chalcocite vein mineralisation was visually identified which provides credence that the Big One Deposit could potentially be part of a larger IOCG mineralised system.
Concurrently, the team collected 24 rock chip samples along strike - for follow up analysis - from stockpiles and historic pit workings which visually confirmed the presence of supergene oxide (malachite) and massive sulphide (chalcocite) mineralisation at surface.
On 31 August 2020, Castillo secured an agreement in-principle to appoint Depco Drilling as the lead contractor for the upcoming RC and diamond drilling campaigns at the Big One Deposit and Arya Prospect. Depco Drilling is a privately owned Queensland based group, which has been operating since the early 1960s and has significant experience across multiple projects in the Mt Isa Basin area.
Further, in a major validation for the Mt Oxide Project, Depco Drilling agreed, subject to legal review and Castillo shareholder approval if required, to accept a material proportion of their fees in Castillo shares, with a six-month voluntary escrow period.
On 7 September 2020, as part of an ongoing geological review, CCZ's geology team completed a review of the Valparaisa Prospect, interpreting it to be prospective for structurally controlled copper mineralisation.
On 14 September 2020, Castillo announced its geology team continued detailed field analysis at the Big One Deposit with 24 rock-chip samples collected from historic workings at the Big One Deposit, being reconciled against desktop reports which determined the following:
o Most of the rock-chip samples are interpreted to be from highly mineralised ore, since they comprise high-grade copper oxide and supergene mineralisation;
o Specifically, observed copper mineralisation occurs as massive veinlets / crackfill veins, while at surface as malachite, azurite, cuprite and chalcocite; and
o Castillo's geology team believe the previous operator excavated high-grade mineralised ore but never dispatched it for processing, possibly due to financial constraints at the time.
On 24 September 2020, Castillo released assay results from 24 rock chip samples - taken from excavated ore and unexplored areas across the Big One Deposit which confirmed the existence of high-grade copper mineralisation. Notably, the best results comprised 33.2% Cu (11515), 32.1% Cu (11518) and 26.6% Cu (11508) respectively with the average 6.7% Cu across the 24 samples.
During the quarter, the Company paid $167,000 in consultants fees and $1,000 in rates and mines departments fees.
Post period
On 6 October 2020, to conclude the Mt Oxide Project geological review, Castillo's geology team interpreted the Eldorado prospect, which is circa 4km south-east from the Arya prospect, to be prospective for structurally controlled copper mineralisation.
On 27 October 2020, Castillo confirmed that drilling commenced at Big One Deposit and will then progress to the Arya Prospect.
Zambia Pillar
On 3 September 2020, Castillo's Zambian geology team completed a comprehensive infill surface sampling campaign at the highly prospective Luanshya Project which delivered encouraging results including:
o Ratification that a high-priority target for copper mineralisation, along a circa 6km strike event, is apparent; and
o Building on the first campaign, undertaken in April 2020, the geology team properly demarcated the anomalous area which highlighted portable XRF results up to 2,600ppm Cu.
During the quarter, the Company paid $19,000 in consultants fees and $17,000 in rates and mines departments fees.
Broken Hill Alliance
On 30 September 2020, in a transformational move which delivered a large footprint proximal to Broken Hill's world-class silver-zinc-lead deposit, CCZ agreed terms to acquire Wyloo Metals tenements. The acquisition delivers Castillo a commanding ground position in Broken Hill, while significant technological advances now indicate this footprint is prospective for Broken Hill Type zinc-silver-lead and Iron-Oxide-Copper-Gold mineralisation.
During the quarter, the Company paid $5,000 in consultants fees.
Cangai Copper Mine
During the quarter, the Company paid $25,000 in consultants fees and $11,000 in rates and mines departments fees.
Corporate
o Publication of Prospectus: On 27 July 2020, Castillo's prospectus, which relates to admitting its ordinary shares to the Standard Segment of the Official List of the Financial Conduct Authority (FCA) and London Stock Exchange (LSE), was published.
o LSE admission: The Company was admitted to the LSE and dealings commenced at 08:00 a.m. on 4 August 2020.
For further information, please contact:
Castillo Copper Limited | +61 8 6558 0886 |
Simon Paull (Australia), Managing Director Gerrard Hall (UK), Director | |
SI Capital Limited (Financial Adviser and Corporate Broker) | +44 (0)1483 413500 |
Nick Emerson | |
Luther Pendragon (Financial PR) | +44 (0)20 7618 9100 |
Harry Chathli, Alexis Gore, Joe Quinlan |
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:
· The Mt Oxide project 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."
Interest in Mining Tenements Held
JACKADERRY | |||
New England Orogen in NSW | |||
Tenement ID | Ownership at start of Quarter | Ownership at end of Quarter | Change during the Quarter |
EL8635 | 100% | 100% | - |
EL8625 | 100% | 100% | - |
EL8601 | 100% | 100% | - |
BROKEN HILL | |||
located within a 20km radius of Broken Hill, NSW | |||
Tenement ID | Ownership at start of Quarter | Ownership at end of Quarter | Change during the Quarter |
EL8599 | 100% | 100% | - |
EL8572 | 100% | 100% | - |
MT OXIDE | |||
Mt Isa region, northwest Queensland | |||
Tenement ID | Ownership at start of Quarter | Ownership at end of Quarter | Change during the Quarter |
EPM 26513 | 100% | 100% | - |
EPM 26525 | 100% | 100% | - |
EPM 26574 | 100% | 100% | - |
EPM 26462 | 100% | 100% | - |
EPM 27440 | - | - | Application |
Zambia | ||||
Project | Tenement ID | Ownership at start of Quarter | Ownership at end of Quarter | Change during the Quarter |
Lumwana North | 23914-HQ-SEL | - | 100% | 100% |
Lumwana North | 23913-HQ-SEL | - | 100% | 100% |
Mkushi | 24659-HQ-LEL | - | 100% | 100% |
Luanshya | 22448-HQ-LEL | - | 0%* | 0%* |
Luanshya | 25195-HQ-LEL | - | 55% | 55%* |
Luanshya | 25273-HQ-LEL | - | 55%^ | 55%^* |
Mwansa | 25261-HQ-LEL | - | 100%^ | 100%^ |
*CCZ can earn up to 80% by meeting previously disclosed milestones
^ Indicates the tenement is still under application
Summary of Exploration Expenditure Incurred Per Project
Project | Quarter Cash Spend $A'000 |
Jackaderry | 33 |
Broken Hill | 2 |
Mt Oxide North | 143 |
Zambia | 36 |
Total | 214 |
Appendix 5B
Mining exploration entity or oil and gas exploration entityquarterly cash flow report
Consolidated statement of cash flows | Current quarter$A'000 | Year to date (3 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 | (423) | (423) | |
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 | (423) | (423) |
2. | Cash flows from investing activities | ||
2.1 | Payments to acquire or for: | ||
(a) entities | |||
(b) tenements | (18) | (18) | |
(c) property, plant and equipment | |||
(d) exploration & evaluation | (226) | (226) | |
(e) investments | |||
(f) other non-current assets | |||
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 | (244) | (244) |
3. | Cash flows from financing activities | 2,246 | 2,246 |
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 | 70 | 70 |
3.4 | Transaction costs related to issues of equity securities or convertible debt securities | (323) | (323) |
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) | ||
3.10 | Net cash from / (used in) financing activities | 1,993 | 1,993 |
4. | Net increase / (decrease) in cash and cash equivalents for the period | ||
4.1 | Cash and cash equivalents at beginning of period | 3,130 | 3,130 |
4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (423) | (423) |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (244) | (244) |
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | 1,993 | 1,993 |
4.5 | Effect of movement in exchange rates on cash held | 30 | 30 |
4.6 | Cash and cash equivalents at end of period | 4,486 | 4,486 |
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$A'000 |
5.1 | Bank balances | 4,486 | 3,130 |
5.2 | Call deposits | - | - |
5.3 | Bank overdrafts | - | - |
5.4 | Other (provide details) | - | - |
5.5 | Cash and cash equivalents at end of quarter (should equal item 4.6 above) | 4,486 | 3,130 |
6. | Payments to related parties of the entity and their associates | Current quarter$A'000 |
6.1 | Aggregate amount of payments to related parties and their associates included in item 1 | 851 |
6.2 | Aggregate amount of payments to related parties and their associates included in item 2 | - |
1 Comprises director's fees for the quarter.
| ||
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. | ||
| |||
8. | Estimated cash available for future operating activities | $A'000 |
8.1 | Net cash from / (used in) operating activities (item 1.9) | (423) |
8.2 | (Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) | (226) |
8.3 | Total relevant outgoings (item 8.1 + item 8.2) | (649) |
8.4 | Cash and cash equivalents at quarter end (item 4.6) | 4,486 |
8.5 | Unused finance facilities available at quarter end (item 7.5) | - |
8.6 | Total available funding (item 8.4 + item 8.5) | 4,486 |
8.7 | Estimated quarters of funding available (item 8.6 divided by item 8.3) | 6.9 |
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: 30 October 2020
Authorised: By the Board
(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.