Castillo Coppe. Regulatory News (CCZ)

07 November 2022

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

September 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 July to 30 September 2022.

HIGHLIGHTS

· EAST ZONE, BHA PROJECT, NEW SOUTH WALES

o Inaugural cobalt-focused drilling campaign - one diamond and 17 RC drill-holes for 2,100m - commenced shortly after the close of the review period1

o Metallurgical test-work on diamond core from The Sisters Prospect delivered solid beneficiation results for cobalt-copper-gold1

· NWQ COPPER PROJECT, QUEENSLAND

o 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 metal1

ACTIVITIES REPORT

During the period, most of the focus remained on developing the cobalt potential at the East Zone, BHA Project in Broken Hill. 

An overview of key events follows:

DEVELOPMENT 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 2 August 2022, Castillo announced metallurgical test-work on BH1 drill-core extracted from The Sisters Prospect - BHA Project's East Zone (Appendix A) - delivered excellent beneficiation results for cobalt and, surprisingly, copper-gold - with the best outcomes:

· Cobalt: 200ppm head-grade up to 2,500ppm post-test-work; 12x upgrade1

· Copper: 520ppm head-grade up to 16,000ppm (1.6%) post-test-work; 30x upgrade1

· Gold: 0.02g/t Au head-grade up to 3.87g/t Au post-test-work; >190x upgrade1

Pleasingly, the metallurgical test-work showed that cobalt-copper-gold liberated easily from BH1 drill-core samples to produce a potentially viable concentrate. Further, the original BH1 drill-core the samples were extracted from comprised:

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

Moving forward, the Board's primary focus for the East Zone is to increase the confidence in the current inferred Mineral Resource Estimate which stands at 21,556t cobalt (64Mt @ 318 ppm Co) and 44,260t copper (63Mt @ 0.07% Cu)1.

On 9 August 2022, Castillo stated it had finalised targets for the upcoming drilling campaign at the BHA Project's East Zone which comprises one diamond core and 17 RC drill-holes for 2,100m, with depths ranging from 100m to 160m.

Of these, two drill-holes were earmarked for The Sisters, with the balance across Fence Gossan, Reefs & Tors Tanks Prospects (Appendix A).

Notably, for the Fence Gossan, Reefs & Tors Tanks Prospects, the campaign was designed to penetrate deep enough to intersect two lower cobalt-rich zones that are interpreted to host higher grade mineralisation than has been modelled to date1.

On 31 August 2022, Castillo announced the appointment of two key contractors:

· AllState Drilling's team will perform the campaign; and

· FieldCrew, which has performed work at the NWQ Copper Project in Queensland, will manage the day-to-day aspects of the drilling campaign1.

In addition, post-announcing Australia secured preferred status for the supply of critical minerals to the US's electric vehicle battery program1, the Board stated it wanted to deepen its understanding of the East Zone's Rare Earth Element (REE) potential at two targets:

· The Sisters Prospect: both planned RC drill-holes will be analysed for copper-cobalt-gold and REEs; and

· Iron Blow: having already confirmed the presence of REEs, the geology team is targeting to test additional drill-core samples from the core library to determine if there are further extensions to known mineralisation.

On 21 September 2022, the Board announced the drilling campaign at the BHA Project's East Zone was to commence imminently, after approval was secured from the New South Wales Resources Regulator.

NWQ Copper Project, Queensland

On 19 July 2022, preliminary metallurgical test-work on samples extracted from drill-hole BO_318RC1 at the Big One Deposit produced a concentrate (Figure 1) with confirmed upgrades ranging from 5x to 10x for copper metal. The best result for copper comprised: 0.72% head-grade to 7.2% post-test-work1.

Further test-work is underway on samples from the Big One Deposit to determine the final optimal results. Notably, this is an important proof of concept and de-risking exercise as part of the Board's strategic intent to secure a processing agreement.

With an inferred Mineral Resource Estimate at 21,886t contained copper metal (2.1Mt @ 1.1% Cu)1, the Big One Deposit has already been significantly de-risked.

FIGURE 1: METALLURGICAL TESTING - FROTHER PRODUCT EXAMPLE

Source: ALS Metallurgy, Perth, Western Australia

Cangai Copper Mine

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

Zambia

During the review period, Castillo's geology team continued to assist Hyperion Copper (UK), which have signed an option agreement to purchase the Zambia copper assets for circa A$4m plus milestones, with ongoing due diligence.

CORPORATE

· Strategic update: On 15 August 2022, Managing Director Dr Dennis Jensen summarised Castillo's latest strategy: ""Recent gyrations in global commodity markets have further galvanised the Board's resolve to create value for shareholders via developing the core copper-cobalt projects. Moreover, having signed an option agreement with Hyperion Copper to sell the Zambia assets, the Board's focus is now steadfast on advancing the Australian projects which all have Mineral Resource Estimates."

POST PERIOD EVENT 

· Cobalt-focused drilling campaign now underway at Broken Hill Project: On 3 October 2022, the Board announced the cobalt-focused drilling campaign at the BHA Project's East Zone commenced.

· Drilling hits targeted cobalt zones & wide pegmatite intercepts at Broken Hill: On 12 October 2022, four drill-holes for 488m were completed at the Tors Tank Prospect, within the BHA Project's East Zone, which delivered encouraging initial observations.

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

$97,000 was paid to related parties of Castillo relating to executive director salary and non-executive director fees.

SUMMARY OF THE EXPLORATION EXPENDITURE INCURRED DURING 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 and platinoids.

· 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 July 2022 to 30 September 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 1: INTEREST IN MINING TENEMENTS HELD

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

** These tenements are the subject of an option agreement to be acquired by Hyperion Copper (UK). Refer to ASX announcement dated 22 June 2022.

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: 07 November 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.