September 2023 Quarterly Activities Report

Castillo Copper Limited

30 October 2023

 

30 October 2023

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

September 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 July 2023 to 30 September 2023.

HIGHLIGHTS:

Cangai copper mine

·    Updated JORC (2012) compliant Mineral Resource Estimate for Cangai Copper Mine at 4.4Mt @ 2.5% Cu inferred insitu and 0.2Mt @ 1.35% Cu indicated from historic stockpiles for ~114kt contained copper metal; augmented further by zinc, gold, and silver credits¹

INTERIM EXECUTIVE DIRECTOR APPOINTMENT

·    Post the review period, the Board appointed Mr Jack Sedgwick as interim Executive Director

·    Mr Sedgwick's mandate is to undertake an asset review of the current portfolio, re-shape priorities then update the group's strategic intent

ACTIVITIES REPORT

 

An overview of key events follows:

 

DEVELOPMENT WORK   

 

Castillo has four properties comprising the NWQ Copper Project in Mt Isa's copper-belt in Queensland, the BHA Project near Broken Hill's world class silver-zinc-lead deposit in NSW, the historic Cangai Copper Mine in NSW and several assets across Zambia's copper-belt.

CANGAI COPPER MINE, NSW

On 25 July 2023, Castillo's geology team, working in conjunction with a specialist geological consultancy, produced an updated JORC (2012) compliant Mineral Resource Estimate (MRE) for the Cangai Copper Mine at:

·    4.4Mt @ 2.5% Cu inferred insitu and 0.2Mt @ 1.35% Cu indicated from historic stockpiles for ~114kt contained copper metal; augmented further by zinc, gold, and silver credits (Table 1)¹. 

Table 1: Cangai Copper Mine Resource Tonnages

Category	Inferred Mass (T)	Cu (%)	Co (%)	Zn (%)	Au (g/t)	Ag (g/t)	Cu (T)	Co (T)	Zn (T)	Au (Kg)	Ag (Kg)
Oxide Insitu	634,000	2.65	0.01	0.65	0.15	16.1	16,801	63	4,121	95	10,207
Fresh	3,773,000	2.48	0.01	0.55	0.31	15.2	93,570	226	20,752	1,170	57,350
Ex-Mine Oxide Dumps	29,000	2.10	0.02	0.3	0.58	14.5	609	5	87	17	421
Total	4,436,000	2.5	0.01	0.6	0.29	15.3	110,980	294	24,960	1,282	67,978
Historic Stockpiles
Category	Indicated Mass (T)	Cu (%)	Co (%)	Zn (%)	Au (g/t)	Ag (g/t)	Cu (T)	Co (T)	Zn (T)	Au (Kg)	Ag (Kg)
Smelter Slag and Ex-Mine Oxide Dumps	199,000	1.35	0.02	1.9	0.1	4.6	2,687	48	3,781	20	915
Total	199,000	1.35	0.02	1.9	0.1	4.6	2,687	48	3,781	20	915
Total	4,635,000	2.45	0.01	0.6	0.28	14.9	113,667	342	28,741	1,301	68,893

Notes:

1.        All resource tonnages rounded to the nearest 1,000 tonnes

2.        Refer to JORC Table 1 for details on data and estimation

3.        Insitu tonnages calculated as a guide only, no recovery factor, loss or dilution considered

Source: CCZ Geology Team

In calculating the updated MRE from the 2017 work (MRE: 3.3Mt @ 3.35% Cu for 108,000t⁴), the geology team factored in reverse circulation and diamond core drilling campaigns undertaken across 2017-18 and used more conservative assumptions to boost the confidence in the revised 2023 MRE. The geology team noted several encouraging observations that underpins significant exploration potential for the Cangai Copper Mine, including:

·    The underlying orebody - which commences from surface - is not fully defined, as it remains open to the east, south-east and down dip.

·    There are several sizeable downhole electromagnetic (DHEM) conductors, proximal to the line of lode, that can potentially extend known mineralisation along strike.

·    With the revised 2023 MRE enhancing the Cangai Copper Mine's resource size, the Board is highly optimistic Castillo can realise value for shareholders from this historical producing asset.

Exploration potential

A key positive for the Cangai Copper Mine is the copper orebody commences from surface. More encouragingly, the full extent of the underlying copper orebody remains undetermined, as it remains open to the east, south-east and down dip.  As shown in Figure 1, there are several sizeable DHEM conductors¹, which are north and south of the line of lode, that can potentially extend known mineralisation along strike. 

Figure 1: DHEM conductors at Cangai Copper Mine

POST PERIOD EVENT

On 9 October 2023, the Board announced the appointment of Mr Jack Sedgwick as interim Executive Director², following the departure of former Managing Director, Dr Dennis Jensen. Mr Sedgwick's mandate is to undertake a thorough asset review, re-shape priorities then update the group's strategic intent³.

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

$172,000 was paid to related parties of Castillo relating to executive director salary and non-executive director fees.

Table 2: Summary of the exploration expenditure incurred during the quarter

Asset	Consulting fees	Rates and mines departments fees
Cangai	$164,000	$10,000
Broken Hill Alliance	$75,000	$15,000
Mt Isa	$28,000	$16,000
Zambia	$18,000	-
Total	$285,000	$41,000

For further information, please contact:  

Castillo Copper Limited	[phone]
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)                    Updated Mineral Resource Estimate for Cangai Copper Mine announcement 25 July 2023

2)                    Board Changes announcement 10 October 2023

3)                    Strategic Asset Portfolio Review Underway announcement 17 October 2023

4)                    High-grade JORC Inferred Resource at Cangai Copper Mine Exceeds Expectations announcement 6 September 2017

 

APPENDIX A: Key PROJECTS

Figure 2: West and East Zone - BHA Project, Broken Hill Region (Source: CCZ Geology Team)

Figure 3: Zambia Copper-Belt Projects (Source: CCZ Geology Team)

Figure 4: NWQ Copper Project, Mt Isa Region (Source: CCZ Geology Team)

APPENDIX B: Interest in mining tenements held

Table 3: 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%	-

Table 4: Broken Hill, located within a 20km radius of Broken Hill in 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%	-

Table 5: Mt Oxide, Mt Isa region in North West 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%	-

Table 6: Zambia

Tenement ID	Ownership at start of Quarter	Ownership at end of Quarter	Change during the Quarter
24659-HQ-LEL (Mkushi)	100%	100%	-
25195-HQ-LEL (Luanshya)	55%	55%	-
25273-HQ-LEL (Luanshya)	55%	55%	-
25261-HQ-LEL (Mwansa)	100%	100%	-

 

 

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 September 2023

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	(282)	(282)
1.3	Dividends received (see note 3)
1.4	Interest received	8	8
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	(274)	(274)
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	(327)	(327)
	(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	(327)	(327)
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	2,897	2,897
4.2	Net cash from / (used in) operating activities (item 1.9 above)	(274)	(274)
4.3	Net cash from / (used in) investing activities (item 2.6 above)	(327)	(327)
4.4	Net cash from / (used in) financing activities (item 3.10 above)	-	-
4.5	Effect of movement in exchange rates on cash held	(2)	(2)
4.6	Cash and cash equivalents at end of period	2,294	2,294

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	1,354	2,805
5.2	Call deposits	940	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)	2,294	2,897

 

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	591
6.2	Aggregate amount of payments to related parties and their associates included in item 2	1132
1Comprises director's fees for the quarter. 2Comprises consulting fees paid to the Managing Director and exploration expenditure paid to Field Crew Pty Ltd, 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)	(274)
8.2	(Payments for exploration & evaluation classified as investing activities) (item 2.1(d))	(327)
8.3	Total relevant outgoings (item 8.1 + item 8.2)	(601)
8.4	Cash and cash equivalents at quarter end (item 4.6)	2,294
8.5	Unused finance facilities available at quarter end (item 7.5)
8.6	Total available funding (item 8.4 + item 8.5)	2,294
8.7	Estimated quarters of funding available (item 8.6 divided by item 8.3)	3.8
	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 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