Last checked at 29 Oct 2021 07:00
29 October 2021
CASTILLO COPPER LIMITED("Castillo" or the "Company")
September 2021 Quarterly Report
Castillo Copper Limited's (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 July to 30 September 2021. During the period, most of the focus remained 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:
· The initial assays were received for drill-holes BO_315-317RC verify up to 9.19% Cu and clearly extended known mineralisation - the best intercepts being:
o 9m @ 1.42% Cu from 88m including 4m @ 3.06% Cu from 92m & 1m @ 9.19% Cu from 92m (BO_317RC)
o 5m @ 1.06% Cu from 141m (BO_316RC)
o 3m @ 1.22% Cu from 65m (BO_315RC)1
Lithium Projects:
· CCZ secured an option for 90 days to acquire, subject to successful due diligence, two prospective lithium projects in prime locations:
o Litchfield Lithium Project in the Northern Territory, contiguous to Core Lithium (ASX: CXO) Finniss Lithium Project which has JORC compliant ore reserves (7.4Mt @ 1.3% Li2O)1 and
o Picasso Lithium Project (Norseman region, WA) is proximal to Liontown's Resources' (ASX: LTR) Buldania Project, with a JORC compliant resource at 14.9Mt @ 0.97% Li2O, and has mapped pegmatites that potentially host lithium mineralisation1
Zambia Projects:
· Large targets were identified from an Induced Polarisation ("IP") survey across the Luanshya Project in Zambia's copper belt
o Reconciling the IP survey findings with previous geochemical results confirmed the high chargeability targets are directly coincident - this significantly enhances the potential for a discovery1
Corporate:
· CCZ announced the appointment of Mr Geoff Reed as Non-Executive Director1
DEVELOPMENT WORK
CCZ 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 located in New South Wales.
MT ISA COPPER-BELT, QUEENSLAND
Big One Deposit and Arya Prospects
On 15 July 2021, CCZ announced the intersection of significant visible copper mineralisation in drill-hole BO_318RC in two distinct zones - 11m from 89-100m and 34m from 153-187m (apparent thickness)1.
Reconciling these new data points with the geological modelling completed to date, clearly verified material extensions to known mineralisation and potentially a larger underlying system than initially envisaged.
A key feature behind the success of the current campaign has been the significantly improved targeting, resulting from the effective utilisation of geophysical insights to refine and reshape the drilling programme to boost the collective exploration potential1.
On 26 July 2021, CCZ announced up to 9% copper in Big One Deposit assays plus more visible mineralisation up to 26m thick. Initial assays for drill-holes BO_315-317RC verified up to 9.19% Cu and clearly extended known mineralisation - the best intercepts are summarised below:
· 9m @ 1.42% Cu from 88m including 4m @ 3.06% Cu from 92m & 1m @ 9.19% Cu from 92m (BO_317RC),
· 5m @ 1.06% Cu from 141m (BO_316RC) and
· 3m @ 1.22% Cu from 65m (BO_315RC)1.
On 10 August 2021, CCZ announced logistics were in place to test drill the 130m thick target at the Arya Prospect. All key logistics to enable work to commence at the prime Arya Prospect were finalised during September 20211.
A re-interpretation of legacy data by CCZ's geophysicist consultant - which enabled better targeting at the Big One Deposit - provided new insights and re-emphasised the Arya Prospect's merits as a major exploration target in Mt Isa's copper-belt. Notably, re-processing data from AusAEM Survey, commissioned by Geoscience Australia, shows the EG01 anomaly - interpreted to be 130m thick, 1,500m long & 450m wide - is only around 100-200m deep1.
This is a significant finding, as it highlighted EG01 is much shallower than the initial ~430m depth estimate based on analysing data from BHP, which discovered the Arya Prospect in the mid-1990s and recommended it be drill-tested1.
Post period close
At the Big One Deposit, results from the second drilling campaign (out of three planned) verified the known system runs for ~400m along the strike event then intersects at a sharp angle with a major regional fault1.
The third drilling campaign at Big One Deposit, comprising at least 22 drill-holes, will target several prime areas including the sizeable bedrock conductor on the north side of the dacite dyke1.
In addition, across the Big One Deposit are 12 separate legacy stockpiles from mid-1990 mining operations, which were assessed to comprise - 7,407t @ 1.17% Cu, while assayed rock chip samples returned up to 3.32% Cu1.
At the Arya Prospect, drilling commenced around 15 October 2021, with all equipment heli-lifted to site1.
LITHIUM PROJECTS
On 29 September 2021, CCZ announced they had secured an option over two prime lithium targets. The Litchfield Lithium Project in the Northern Territory, contiguous to Core Lithium (ASX: CXO) Finniss Lithium Project which has JORC compliant ore reserves (7.4Mt @ 1.3% Li2O)1. Analysing satellite imagery shows potential for lithium pegmatite bodies to be apparent along Litchfield's north-west boundary; this is the primary exploration target area1.
The second being the Picasso Lithium Project (Norseman region, WA) proximal to Liontown's Resources' (ASX: LTR) Buldania Project, with a JORC compliant resource at 14.9Mt @ 0.97% Li2O and has mapped pegmatites that potentially host lithium mineralisation1.
Post period close
On 4 October 2021, CCZ announced their due diligence had verified significant lithium surface occurrences across the Picasso Lithium Project. The surface occurrences aligned with pegmatites outcropping mapped by the Geological Society of Western Australia (GSWA), which confirmed 69 mapped pegmatites1.
A preliminary site visit by the Geological Consultant, organised by the Vendor Group, took numerous photographs of pegmatite outcropping and collected over 30 samples from within the tenure (east quadrant) which have been sent to the laboratory for analysis1.
On 7 October 2021, CCZ announced significant pegmatite outcropping along Litchfield Lithium Project's western boundary. The follow up site visit to the Litchfield Lithium Project in the Northern Territory, arranged by the Vendor Group's geological consultant, has highlighted significant pegmatite outcropping along the western boundary. This is contiguous to Core Lithium's (ASX: CXO) Finnis Lithium Project which has JORC compliant ore reserves (7.4Mt @ 1.3% Li2O)1.
With satellite imagery verifying the geology in the Litchfield Lithium Project (NW quadrant) is comparable to CXO's ground, CCZ is awaiting assay results on 657 surface samples (taken along the NW boundary) to determine the potential for contiguous mineralisation. Encouragingly, the site-visit geological reports noted the areas sampled mostly comprised metamorphic rocks linked to the Burrell Creek formation - a host rock for the regional occurrences of pegmatites1.
NEW SOUTH WALES PROJECTS
· BHA Project
On 5 August 2021, CCZ announced their Broken Hill assets are set to IPO, subject to achieving all regulatory requirements and shareholder approvals. CCZ's Board has appointed CPS Capital Group, to restructure and then list, on a best endeavours basis, via an IPO on the ASX, its wholly owned Broken Hill Alliance (BHA) Project which comprises a large footprint proximal to Broken Hill's world class zinc-lead-silver deposit1.
A new entity, Newco, will be formed to house the BHA Project, with CCZ slated to retain a significant minority interest post-IPO. Subject to final approvals to progress the IPO, Newco is targeting to raise a minimum of $4.5m up to a maximum of $7.0m (and will include a preferential subscription allocation to CCZ shareholders) to fund a comprehensive exploration campaign to develop the BHA Project1.
To recap, sophisticated work by Geological Survey of NSW (GSNSW), which generated advanced predictive geological models for major mineral systems, highlighted the BHA Project is highly prospective for Broken Hill Type (BHT - Silver-Zinc-Lead) mineralisation in the West Zone and Iron-Oxide-Copper-Gold (IOCG) mineralisation in the East Zone1.
For CCZ, spinning out the BHA Project is potentially a significant value creating event, while concurrently enabling the Board to focus resources on developing its project in Queensland and proving up suitable targets to test-drill in Zambia1.
· Cangai Copper Mine
No material work was undertaken on Cangai Copper Mine during the review period.
ZAMBIA PROJECTS
On 1 July 2021, CCZ announced the commencement of a comprehensive geophysical campaign across their key Zambian projects. The campaign was estimated to take 6-8 weeks to complete and fully analyse the results, reconciling with known anomalous areas at surface to identify priority targets to drill1.
On 31 August 2021, CCZ announced multiple targets for test-drilling had been identified at the Luanshya Project in Zambia's copper-belt, following the completion of eight IP survey lines1. Work on the IP survey across the Luanshya Project in Zambia's copper-belt - focusing on a 6km strike delineated from previous soil sampling campaigns1 - is progressing to plan, with eight lines now complete.
Pleasingly, multiple high chargeability targets were identified within three interpreted lines that potentially indicate the presence of sulphides.
Reconciling the IP survey findings with the previous geochemical results confirmed the high chargeability targets are directly coincident - this significantly enhances the potential for a discovery.
As such, CCZ's geology team in Zambia can now formulate the inaugural drilling campaign and, pending the outcome of discussions with service providers, potentially commencing work in the fourth quarter of 2021.
The IP survey, which is being conducted by Geophex Surveys (a Zambian based geophysics consultancy), will soon finish up at Luanshya then progress to the Mkushi Project.
CORPORATE
· New Director Appointed: On 16 August 2021, CCZ announced the appointment of Mr Geoff Reed as Non-Executive Director.
Mr Reed, who is an experienced geologist and has worked with MIM/Xstrata in the Mt Isa region, will provide invaluable oversight of CCZ's exploration programmes in north-west Queensland and Zambia. Mr Reed's appointment will ensure that development work progresses at a steady pace and that every opportunity is leveraged to create shareholder value.
PAYMENTS TO, OR TO AN ASSOCIATE OF, A RELATED PARTY OF THE ENTITY DURING THE QUARTER
$100,000 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
Consulting Fees | Rates and mines departments fees | |
Cangai | 59,000 | 10,000 |
Broken Hill Alliance | 15,000 | 14,000 |
Mt Isa | 1,365,000 | 16,000 |
Zambia | 55,000 |
1) Note - All information referenced is from CCZ ASX Releases, as dated in text, from 1 June 2021 to 7 October 2021 inclusive
In addition to this release, a PDF version of this report with supplementary information can be found on the Company's website: https://www.castillocopper.com/asx-announcements/
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, Elsa Darlington |
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."
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 1: INTEREST IN MINING TENEMENTS HELD
JACKADERRY (CANGAI) | |||
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% | - |
EL 8434 | - | 100% | 100% |
EL 8435 | - | 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 | - | 100% | 100% |
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 | - | - | - |
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
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
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 | (518) | (518) | |
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 | (518) | (518) |
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 | (1,534) | (1,534) | |
(e) investments | (50) | (50) | |
(f) other non-current assets | (36) | (36) | |
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 | (1,620) | (1,620) |
3. | Cash flows from financing activities | 1,742 | 1,742 |
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 | (236) | (236) |
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 | 1,506 | 1,506 |
4. | Net increase / (decrease) in cash and cash equivalents for the period | ||
4.1 | Cash and cash equivalents at beginning of period | 10,854 | 10,854 |
4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (518) | (518) |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (1,620) | (1,620) |
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | 1,506 | 1,506 |
4.5 | Effect of movement in exchange rates on cash held | 38 | 38 |
4.6 | Cash and cash equivalents at end of period | 10,260 | 10,260 |
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$A'000 |
5.1 | Bank balances | 10,260 | 10,854 |
5.2 | Call deposits | ||
5.3 | Bank overdrafts | ||
5.4 | Other (provide details) | ||
5.5 | Cash and cash equivalents at end of quarter (should equal item 4.6 above) | 10,260 | 10,854 |
6. | Payments to related parties of the entity and their associates | Current quarter$A'000 |
6.1 | Aggregate amount of payments to related parties and their associates included in item 1 | 62 |
6.2 | Aggregate amount of payments to related parties and their associates included in item 2
| 38 |
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments
| ||
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) | (518) |
8.2 | (Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) | (1,534) |
8.3 | Total relevant outgoings (item 8.1 + item 8.2) | (2,052) |
8.4 | Cash and cash equivalents at quarter end (item 4.6) | 10,260 |
8.5 | Unused finance facilities available at quarter end (item 7.5) | |
8.6 | Total available funding (item 8.4 + item 8.5) | 10,260 |
8.7 | Estimated quarters of funding available (item 8.6 divided by item 8.3) | 5.0 |
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: 29 October 2021
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.