June 2023 Quarterly Activities Report

Castillo Copper Limited

26 July 2023

 

26 July 2023

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

June 2023 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 2023.

HIGHLIGHTS:

·    EAST ZONE, BHA PROJECT, NSW

o  Specialist, consultant, ANSTO, performed metallurgical test-work on six samples from the Fence Gossan, Reefs and Tors Tanks Prospects¹

o  The Total Rare Earth Element plus Yttrium ("TREY") grades for the six samples ranged from 227 to 1,632 ppm TREY¹

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 13 April 2023, specialist consultant, ANSTO, was appointed to undertake comprehensive metallurgical test-work on six samples from Fence Gossan, Reefs and Tors Tanks Prospects to understand the potential to extract rare earth elements ("REE") from shallow clay zones.

The scope of work will focus on characterising REE leachability from the six samples which comprise fresh pegmatite to highly weathered clay, especially with Magnetic Rare Earth Oxide ("MREO") grades ranging from 362-603ppm.

This is an important step towards advancing the viability of the BHA Project's East Zone REE potential and securing interest from prospective development partners, especially given the extent of high-value MREO (Nd+Pr+Dy+Tb) within the system¹.    

On 14 June 2023, specialist consultant, ANSTO, performed metallurgical test-work on six samples from the Fence Gossan, Reefs, and Tors Tanks Prospects which produced the following preliminary findings:

·    The Total Rare Earth Element plus Yttrium grades for the six samples ranged from 227 to 1,632 ppm TREY;

·    The proportion of high-value Magnetic Rare Earth Oxides (MREO; Nd+Pr+Dy+Tb) to Total REO (TREO) across the six samples ranged from 22% to 27%; and

·    The best TREY extraction, using a direct leach process at pH 1, was 30% 

The Board is reviewing next steps, including trialling alternate leach tests proposed by ANSTO to improve extraction results¹.

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

$202,000 was paid to related parties of Castillo relating to executive director salary, non-executive director fees and exploration expenditure paid to Field Crew, a related entity of director David Drakeley.

SUMMARY OF THE EXPLORATION EXPENDITURE INCURRED DURING THE QUARTER

	Consulting fees	Rates and mines departments fees
Cangai	$96,000	-
Broken Hill Alliance	$28,000	$1,000
Mt Isa	$77,000	$38,000
Zambia	$27,000	$1,000
Total	$228,000	$40,000

For further information, please contact:  

Castillo Copper Limited	[phone]
Dr Dennis Jensen (Australia), Managing Director   Gerrard Hall (UK), Chairman
SI Capital Limited (Financial Adviser and Corporate Broker)	[phone]
Nick Emerson
Gracechurch Group (Financial PR)	[phone]
Harry Chathli, Alexis Gore, Henry Gamble

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 January 2022 to 28 April 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: 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%	nil	100%
Lumwana South	23913-HQ-SEL	100%	nil	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

The mining tenement interests relinquished during the quarter and their location

·             Lumwana North        23914-HQ-SEL        Zambia

·             Lumwana South        23913-HQ-SEL        Zambia

·             Luanshya ¹                  22448-HQ-LEL         Zambia

¹ CCZs right to earn up to 80% by meeting previously disclosed milestones lapsed during the quarter.

Appendix 5B

Mining exploration entity or oil and gas exploration entity
quarterly cash flow report

Name of entity
Castillo Copper Ltd
ABN		Quarter ended ("current quarter")
52 137 606 476		30 June 2023

Consolidated statement of cash flows		Current quarter $A'000	Year to date (12 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	(192)	(1,067)
1.3	Dividends received (see note 3)
1.4	Interest received	8	18
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	(184)	(1,049)
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	(268)	(1,722)
	(e)   investments
	(f)    other non-current assets	-	(82)
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	(268)	(1,804)
3.	Cash flows from financing activities
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
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	-	-
4.	Net increase / (decrease) in cash and cash equivalents for the period
4.1	Cash and cash equivalents at beginning of period	3,332	5,754
4.2	Net cash from / (used in) operating activities (item 1.9 above)	(184)	(1,049)
4.3	Net cash from / (used in) investing activities (item 2.6 above)	(268)	(1,804)
4.4	Net cash from / (used in) financing activities (item 3.10 above)	-	-
4.5	Effect of movement in exchange rates on cash held	20	(1)
4.6	Cash and cash equivalents at end of period	2,900	2,900

5.	Reconciliation of cash and cash equivalents at 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	2,808	3,240
5.2	Call deposits	92	92
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)	2,900	3,332

 

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	511
6.2	Aggregate amount of payments to related parties and their associates included in item 2	1512
1Comprises director's fees for the quarter. 2Comprises consulting fees paid to the Managing Director and exploration expenditure paid to Field Crew, a related entity of director David Drakeley.

7.	Financing facilities Note: 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)	(184)
8.2	(Payments for exploration & evaluation classified as investing activities) (item 2.1(d))	(268)
8.3	Total relevant outgoings (item 8.1 + item 8.2)	(452)
8.4	Cash and cash equivalents at quarter end (item 4.6)	2,900
8.5	Unused finance facilities available at quarter end (item 7.5)
8.6	Total available funding (item 8.4 + item 8.5)	2,900
8.7	Estimated quarters of funding available (item 8.6 divided by item 8.3)	6.4
	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:                25 July 2023

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.

 

 

END