Final Results and Publication of Annual Report
03 October 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
CASTILLO COPPER LIMITED
("Castillo" or the "Company")
Final Results
Publication of Annual Report
Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily focused on copper across Australia and Zambia, announces its financial results for the year ended 30 June 2022.
Chairman's Address
Dear Shareholders,
Since becoming Chairman earlier in the year, the Board has undertaken a comprehensive strategic review on how to create optimal value for shareholders from our existing copper-cobalt assets. The Board is cognizant of the importance to factor in external factors given these can significantly influence global commodity markets, particularly the conflict in Europe and prospect of tighter monetary policy to reign in inflationary pressures.
As such, the Board determined the necessity, where practical, to align with partners that could either aid project advancement or facilitate a path to market. Pleasingly, UK-based Hyperion Copper's offer to acquire and develop the Zambia assets, subject to due diligence, is an excellent outcome for both parties.
Post a planned listing on the Alternative Investment Market by Hyperion, a sub-set of the London Stock Exchange, Castillo Copper will retain a least a 25% stake in Hyperion Copper and directly benefit from exploration successes.
Our three assets in Australia - Cangai Copper Mine, BHA and NWQ Copper Projects - have either cobalt or copper inferred mineral resource estimates which delivers a significant point of difference over peers. The Board's objective is to increase the confidence in the current MREs and, if achievable, extend known mineralisation as this is a direct conduit to creating incremental value.
Whilst we have decided to progress developing the BHA Project on our own, the Board is in discussions with a number of parties that could aid delivering paths to market for Cangai Copper Mine and NWQ Copper Project.
Overall, the Board believes it has the strategy in place to maximise the valuation potential for shareholders in fiscal 2023 and beyond.
Ged Hall
Chairman
Managing Director's Address
Dear Shareholders,
As outlined by the Chairman, Castillo Copper has re-set its high-level strategic intent, which the Board is now determined to effectively implement. The focus of this address is a deeper assessment of operational issues and nuances involved for the four core projects.
ZAMBIAN PROJECTS
Over the past two years, our geology team in Zambia has undertaken soil sampling campaigns across the prime Luanshya and Mkushi Projects which delineated significant surface anomalies. Follow up Induced Polarisation (IP) campaigns, which were interpreted by a geophysicist, generated a plethora of viable targets to test drill.
Consequently, the Board was delighted to have entered into an option agreement with Hyperion Copper (UK) to sell these high-quality copper assets for circa A$4m plus milestones. If the option is exercised and Hyperion Copper lists on AIM in late 2022 or early 2023, then Castillo Copper has the right to appoint one Board director.
Further, this transaction should ensure the Zambia assets exploration potential is fully developed, with any benefits accruing to Castillo Copper through retaining its shareholding in Hyperion Copper.
AUSTRALIA
BHA Project - East Zone, New South Wales
Having defined an inferred cobalt resource - 64Mt @ 318 ppm Co for 21,556t contained metal - leveraging historical drilling data, the Board has approved a drilling campaign to focus on enhancing the confidence and grade across a larger footprint.
The campaign will comprise one diamond core and 17 RC drill-holes for 2,100m across four prospects including The Sisters, Fence Gossan, Reefs Tank & Tors Tank. A key area of interest will be drill-testing two lower cobalt-rich zones (excluding The Sisters Prospect) the geology team interpret to host higher grading cobalt mineralisation than has been modelled to date.
Although the primary target is cobalt-copper, the Board hopes to gain further insights on the potential for rare earth elements and gold mineralisation once the assay results are returned. Further, the Board believes improving the confidence and grade of the current MRE, coupled with recent favourable metallurgical results, should aid securing support from prospective off-take partners.
NWQ Copper Project, Queensland
Within the NWQ Copper Project are circa 20 prospects which all have potential to host copper mineralisation based on analysing historical geological reports. As part of the new strategic intent, the Board has now formulated plans to systematically visit these prospects, once development work at the Big One Deposit has concluded, to ascertain if there are viable targets for drill-testing. The Board's optimal goal is to discover several satellite copper deposits across the tenure which could ultimately feed into a central processing mill.
To date, development work at Big One Deposit has produced an inferred copper resource - 2.1Mt @ 1.1% Cu for 21,886t contained metal - with positive metallurgical test-work. More significantly, with a sizeable target north of the line of lode, the Board is optimistic incremental drilling can extend known mineralisation and enhance the confidence in the current resource.
Reconciling the exploration potential the NWQ Copper Project delivers, coupled with ongoing demand across the Mt Isa region to identify future copper concentrate suppliers, the Board is targeting to align with a processing partner to expedite development work.
Cangai Copper Mine
Previous work in 2017 delineated an inferred resource at 3.3Mt @ 3.35% Cu for 107,589t contained metal at Cangai Copper Mine, which is one of Australia's highest grading historic copper mines. More recently, Castillo Copper's geology team have reaffirmed there are several priority massive sulphide targets that could potentially extend known copper mineralisation and enhance confidence in the current inferred resource.
As a starting point to resuming development work at Cangai Copper Mine, the Board has asked the geology team to update the inferred resource and factor the historic stockpiles into the mix. Concurrently, the Board are seeking guidance from an environmental consultant on how to ensure any potential resumption of active exploration work fully complies with protocols established by the NSW Resources Regulator. This is particularly pertinent as the NSW has listed Cangai Copper Mine on its critical minerals list.
Overall, with the Board having set clear targets on how to maximise shareholder value moving forward, we are now highly focused on ensuring these are delivered in a timely manner.
Dr Dennis Jensen
Managing Director
For further information, please contact:
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Castillo Copper Limited |
+61 8 6558 0886 |
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Dr Dennis Jensen (Australia), Managing Director Gerrard Hall (UK), Chairman |
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SI Capital Limited (Financial Adviser and Corporate Broker) |
+44 (0)1483 413500 |
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Nick Emerson |
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Gracechurch Group (Financial PR) |
+44 (0)20 4582 3500 |
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Harry Chathli, Alexis Gore
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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."
Annual Report and Accounts
The Company's Annual Report and Accounts is available on the Company's website at: https://castillocopper.com/investors/
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was $1,653,183 (2021: $1,624,984) and the net assets of the Group at 30 June 2022 were $19,012,138 (2021: $19,025,358).
DIVIDENDS
No dividend was paid or declared by the Group during the year and up to the date of this report.
CORPORATE STRUCTURE
Castillo Copper Limited is a company limited by shares that is incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
During the financial year, the principal activity of the Group was mineral exploration and examination of new resource opportunities. The Group currently holds copper projects in Queensland and New South Wales in Australia as well as copper projects in Zambia.
EMPLOYEES
Other than the Directors, the Group had no employees at 30 June 2022 (2021: Nil).
REVIEW OF OPERATIONS
During the financial year, the principal activity of the group was mineral exploration primarily focused on copper and cobalt projects in Australia and Zambia. However, in the second half of the financial year, the group's strategic intent pivoted towards developing the core BHA and NWQ Copper Projects, whilst aligning with partners to advance Cangai Copper Mine and Zambia assets.
EAST & WEST ZONES, BHA PROJECT, NEW SOUTH WALES
On 14 January 2022, a geological review on BHA's East Zone (Figure 1), acquired from Wyloo Metals in 2020, discovered numerous anomalous areas for cobalt-copper mineralisation delineated from surface and down-hole assays. As such, with assayed values ranging from >300ppm Co up to 3,890ppm Co across >20 drill-holes (proximal to Himalaya Formation outcrop and sub-crop) preliminary work on modelling a JORC 2012 cobalt Mineral Resource Estimate (MRE) commenced. A key driver is that the Broken Hill region is well-known for its cobalt potential, as Cobalt Blue (ASX: COB) has JORC Ore Reserves of 118Mt @ 687ppm Co for 81,100t contained metal.
In addition, the Board was highly encouraged by the NSW government's new strategy, which targets building a viable downstream industry for processing critical minerals (including cobalt-copper-REEs) and establishing a global supply hub in the state's central west region . More importantly, the BHA Project is on the NSW government's critical minerals list which is a significant positive as development work advances.
FIGURE 1: BHA PROJECT FOOTPRINT
Source: CCZ geology team
On 9 February 2022, further forensic work uncovered up to 6,182 drill-holes across the East Zone (BHA Project) - undertaken by North Broken Hill Group in the 1980s. Consequently, the Board prioritised codifying the data then modelling up a JORC 2012 cobalt MRE, with potential for base metal credits :
v Incrementally, up to seven reverse circulation and diamond drill-core samples (in the Geological Survey of New South Wales core library) were tested for cobalt mineralisation; and
v As all previous drilling and assays completed by North Broken Hill Group meet current QAQC requirements, there should be a high degree of confidence in the final modelled result.
Given encouraging results from an initial 108 drill-holes, all delivering assays from >200ppm Co up to 9,500ppm Co, spinning-off the BHA Group (via an IPO) was shelved indefinitely. As a result, this enabled the Board to focus on expediting the development of the East Zone.
On 15 February 2022, preliminary interpretations, based on analysing assayed drill-hole data, suggested cobalt mineralisation, with coincident base metal occurrences, is within four zones down to a relatively shallow 70m.
Moreover, a key advantage for the group is the ability to leverage legacy data to model a JORC 2012 MRE, as it facilitates fast-track developing the BHA Project at a negligible cost.
On 9 March 2022, surface sampling undertaken in and around the Iron Blow Prospect (Figure 2) confirmed the potential for shallow platinoid mineralisation within ultrabasic dykes & metamorphic rocks:
v The best samples comprised: G3 - 3.7 g/t Pt; 25 - 1.45 g/t Pt; G1 - 2.2 g/t Pt (6.1 g/t Au); and MS2 - 2.9 g/t Pt.
Further, there is demonstrable base metal and cobalt potential, with assayed surface samples (including rock-chips, bulked & grab) returning up to 12% Cu, 2,500 Zn, 9,400 Pb and 350ppm Co.
Meanwhile, historical diamond core drilling has confirmed cobalt is apparent at The Sisters Prospect (Figure 2), with the best results: 1.8m @ 820ppm Co from 124.7m (BH1) and 1.5m @ 320ppm Co from 138.4m (BH2).
On 21 March 2022, following a visit to NSW's core library, the geology team re-tested diamond core - from drill-holes BH1 & BH2 at The Sisters Prospect, with encouraging results:
v Utilising a PXRF analyser - to identify samples for follow up assays - readings up to 1,705ppm Co and 9.63% Zn were recorded; and
v More significantly, several PXRF intervals (7-9m wide) were delineated with high-grade cobalt-zinc readings (Figure 2).
FIGURE 2: PRXF INTERVALS BH1 & BH2 - THE SISTERS PROSPECT
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Drill-hole |
From |
To |
Apparent Thickness (m) |
Co (ppm) |
Zn (%) |
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BH1 |
11.84 |
20.89 |
9.05 |
859 |
0.26 |
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106.62 |
114.36 |
7.26 |
946 |
1.53 |
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116.24 |
124.66 |
8.42 |
897 |
3.26 |
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124.66 |
129.54 |
4.88 |
370 |
0.89 |
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BH2 |
89.35 |
90.44 |
1.09 |
245 |
1.89 |
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92.66 |
93.57 |
0.91 |
350 |
1.94 |
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137.29 |
140.58 |
3.29 |
525 |
2.21 |
Source: CCZ geology team
In addition, there is a primary 1,200m synclinal structure at The Sisters Prospect - which BH1 intersected - that appears to host high-grade cobalt-zinc mineralisation: this is now a key target for further drill-testing.
On 13 April 2022, compelling new assays uncovered at the Fence Gossan and Ziggy's Hill Prospect (Figure 3) provide incremental evidence there is potentially an extensive cobalt system apparent within the BHA Project's East Zone.
FIGURE 3: PROSPECTS WITHIN EAST ZONE, BHA PROJECT
Source: CCZ geology team
The new cobalt assays, especially from Fence Gossan, are relatively shallow (from surface to circa 100m) and include several standout intercepts which align with earlier results at the Tors & Reef Tank (Figure 4).
FIGURE 4: BEST ASSAYED INTERCEPTS
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Prospect Best Intercepts |
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New - Fence Gossan Prospect: |
23m @ 660ppm Co from 28m including 3m @ 1,300ppm Co from 37m (3E49N) 4m @ 925ppm Co from 53m including 2m @ 1,300ppm Co from 55m (3E45N) 4m @ 647ppm Co from 46m including 1m @ 1,700ppm Co from 48m (TT05W10N) 3m @ 620ppm Co from 52m including 1m @ 1,100ppm Co from 54m (TT05W14N) 2m @ 500ppm Co from 7m (TT4W035S) |
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New - Ziggy's Hill Prospect: |
14m @ 262ppm Co from 84m including 1m @ 600ppm Co from 93m (ZIG01) 6m @ 336ppm Co from 39m (RABZIG097) 7m @ 250ppm Co from 5m (ZH0210W) |
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Reported - Tors & Reef Tank Prospects: |
15m @ 760ppm Co from 67m including 3m @ 1,500ppm Co from 70m (3E51N) 5m @ 1,200ppm Co from 15m (AGSO2740) 10m @ 510ppm Co from 5m including 5m @ 690ppm Co from 10m (AGSO2716) 7m @ 1,600ppm Co from 30m (1800E1180N) 10m @ 520ppm Co from surface (2925E1240S) 5m @ 520ppm Co from 45m (TT05W10N) |
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Source: CCZ geology team
On 5 May 2022, diamond core assay results for drill-hole BH1 at The Sisters Prospect confirmed significant cobalt mineralisation, with the best intercept:
24m @ 424ppm Co from 103m including 2m @ 1,120ppm Co from 107m; 1m @ 873ppm Co from 120m; and 2m @ 486ppm Co from 125m (BH1)
On 1 June 2022, the geology team produced the maiden MRE to the JORC (2012) Code for the East Zone - it totaled 64Mt @ 318 ppm Co for 21,556t contained cobalt metal (Figure 5) at relatively shallow depths (0-80m). Furthermore, the global MRE comprised 44,260t (64Mt @ 0.07% Cu) of contained copper metal that enhances the overall result.
FIGURE 5: JORC RESOURCE TONNAGES BHA EAST ZONE PROSPECTS
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Deposit |
Prospect Area Mask |
Model Surface Area |
Cut-off |
Inferred |
Co |
Cu |
Contained Cobalt |
Contained Copper |
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Ha |
Ha |
Co ppm |
Mt |
ppm |
% |
t |
t |
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Fence Gossan |
2,335 |
218 |
125 |
22.1 |
315 |
0.08 |
6,962 |
17,680 |
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Reefs Tank |
5,363 |
2362 |
180 |
42.3 |
345 |
0.06 |
14,594 |
26,580 |
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64.4 |
318 |
0.07 |
21,556 |
44,260 |
Notes: (1) Contained content reported is insitu at 100%, no mining assumptions or dilution yet applied.
Source: CCZ geology team
NWQ COPPER PROJECT
Big One Deposit
On 15 July 2021, a key insight was 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).
Reconciling these new data points with the geological modelling completed at the time, clearly verified material extensions to known mineralisation and potentially a larger underlying system than initially envisaged.
A key feature behind the success of the 2021 campaign (Figure 6) was significantly improved targeting, resulting from the effective utilisation of geophysical insights to refine and reshape the drilling program to boost the collective exploration potential.
FIGURE 6: DRILL RIG AT BIG ONE DEPOSIT
Location: 7,880,306E, 335,422N
Source: CCZ geology team
On 5 October 2021, CCZ announced that assays for the first four drill-holes of the second drilling campaign extended known mineralisation at the Big One Deposit, as they were proximal to the dacite dyke, with the best intercepts comprising:
Ø 9m @ 1.42% Cu from 88m including 4m @ 3.06% Cu from 92m & 1m @ 9.19% Cu from 92m (BO_317RC)
Ø 5m @ 1.06% Cu from 141m (BO_316RC)
Ø 16m @ 0.59% Cu from 166m including 3m @ 1.76% Cu from 176m (BO_318RC)
Ø 3m @ 1.22% Cu from 65m (BO_315RC)
On 30 November 2021, based on fresh insights, post the chief geological consultant visiting the Big One Deposit, the Board has prioritised geologically modelling an inaugural JORC compliant resource.
There are several reasons including:
1) Recent and historical drilling campaigns have intersected relatively shallow copper mineralisation; and
2) The significant bedrock conductor, north of the line of lode, which is larger and of different character than the Induced Polarisation anomaly drilled in 2020, is yet to be drill-tested.
On 28 February 2022, modelling the 2020-21 reverse circulation and diamond core drilling campaigns at the Big One Deposit produced a maiden JORC 2012 MRE of 2.1Mt @ 1.1% Cu for 21,886t contained metal (Figure 7). The underlying orebody - which commences from surface - is not fully defined, as it remains open to the east, north and down dip.
FIGURE 7: RESOURCE TONNAGES BIG ONE DEPOSIT
|
Tenure Name |
Ore Type |
Inferred (Mt) |
Indicated (Mt) |
Measured (Mt) |
Copper Grade (%) |
Silver Grade (g/t) |
Contained Copper (t) |
Contained Silver (kg) |
|
Mine Dumps |
Oxidised |
0 |
0.007 |
- |
1.2 |
4.0 |
86 |
29 |
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Mine Insitu |
Oxidised |
1.7 |
0 |
- |
1.0 |
1.1 |
17,000 |
1,870 |
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Mine Insitu |
Fresh |
0.4 |
0 |
0 |
1.2 |
1.4 |
4,800 |
560 |
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Sub-Totals |
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2.1 |
0.007 |
0 |
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21,886 |
2,459 |
Note: Cut-off grade 0.45% Cu.
Source: CCZ geology team
Moving forward, CCZ's geology team have mapped out the next drilling campaign (slated to start once ground conditions improve), which will target extending the known orebody. Notably, the campaign comprises infill drilling around the known orebody (drill-holes 301RC, 303RC & 318R; Figure 8); and drill-testing a significant bedrock conductor, north of the line of lode, which is larger than the known orebody along strike.
FIGURE 8: BIG ONE DEPOSIT - LINE OF LODE & 2022 DRILL TARGETS
Source: CCZ geology team
Arya Prospect
On 10 August 2021, logistics were in place to test drill the Arya Prospect.
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 deep (Figure 9).
FIGURE 9: RE-PROCESSED AUSAEM SURVEY DATA
Source: CCZ geology team
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-tested.
On 18 October 2021, the inaugural drilling campaign at the Arya Prospect commenced, after a massive logistical effort to prepare the drill-pads then heli-lift the rig and all supporting equipment to site. After reconciling the geochemical and geophysical data, the Board decided to orchestrate a strategic "proof of concept" campaign, comprising five initial RC drill-holes.
On 17 November 2021, CCZ announced that three drill-holes had been completed from two drill pads, with standout, AR_002RC, reaching a depth of 238m. Notably, around 200m of dark grey and black carbonaceous siltstone / schist was intersected (Figure 10), with scattered base-metal sulphides, fine-grained graphite mineralisation occurrences and remaining open at depth.
FIGURE 10: COMPLETE CHIP TRAY COLLECTION (AR_002RC)
Source: CCZ geology team
On 6 December 2021, CCZ announced the drilling campaign at the Arya Prospect had concluded, with five drill-holes completed.
CANGAI COPPER MINE
A pleasing new developing is that Cangai Copper Mine features on the NSW government's critical minerals list. As such, the Board intends to determine the degree of government support that can be secured to aid further advancing Cangai Copper Mine, considering it has an MRE at 107,589t contained copper metal (3.2Mt @ 3.35%) and is one of Australia's highest grading historic copper mines (Figure 11) .
FIGURE 11: RESOURCE TONNAGES - CANGAI COPPER MINE
|
|
Mass (t) |
Cu (%) |
Co (%) |
Zn (%) |
Au (g/t) |
Ag (g/t) |
Cu (t) |
Co (t) |
Zn (t) |
Au (Oz) |
Ag (Oz) |
|
Oxide |
814,267 |
4.1 |
0.010 |
0.63 |
0.06 |
27.34 |
33,391 |
78 |
5,165 |
14,550 |
715,667 |
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Fresh |
2,397,342 |
3.1 |
0.003 |
0.28 |
0.89 |
17.74 |
74,198 |
75 |
6,762 |
68,349 |
1,367,456 |
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Total |
3,211,609 |
3.35 |
0.005 |
0.37 |
0.8 |
20.17 |
107,589 |
153 |
11,927 |
82,899 |
2,083,123 |
Note: Totals may not sum exactly due to rounding. Cut-off grade used: 1.0% Cu with top-cut applied: 10.0% Cu
Source: CCZ geology team
In addition, Cangai Copper Mine still delivers significant exploration potential as there are several untested bedrock conductors that are interpreted to be open at depth (Figure 12).
FIGURE 12: CANGAI COPPER MINE - UNTESTED BEDROCK CONDUCTORS
Source: CCZ geology team
ZAMBIA PROJECTS
On 1 July 2021, a comprehensive geophysical campaign across the key Zambian projects commenced. The campaign was estimated to take 6-8 weeks to complete and additional time to fully analyse the results, reconciling these with known anomalous areas at surface to identify priority targets to drill.
On 25 October 2021, up to 14 drill targets were identified at the Luanshya Project. Notably, the 14 chargeable zones were identified post an Induced Polarisation (IP) survey - within a 6km zone of copper surface anomalism (Figure 13).
Modelling was undertaken by CCZ's consultant geophysicist, who interpreted the IP survey results that covered the 6km long soil anomaly, which was defined after extensive soil sampling campaigns.
FIGURE 13: LUANSHYA PROJECT - IP SURVEY VS COPPER SURFACE ANOMALISM
Source: CCZ geology team
On 5 April 2022, an IP survey campaign undertaken at the Mkushi Project highlighted multiple zones of high chargeability coincident with known copper soil anomalies. More significantly, according to the geophysicist's interpretation, these are potential bodies of disseminated copper sulphide mineralisation and prime targets to test drill.
On 22 June 2022, in a landmark deal, London-based Hyperion Copper was granted a 12-month option to acquire 100%-owned subsidiary, Zed Copper Pty Ltd, which owns the four projects in Zambia's copper-belt - including the prime Luanshya and Mkushi Projects - for total consideration of £3.75m (A$6.7m), subject to due diligence, in a value creating transaction.
The Board believes this is an excellent outcome for all stakeholders since it secures a strategic partner that is committed to fully develop the exploration potential of the Zambia projects (Figure 14). Moreover, with Hyperion Copper planning to list on the LSE's AIM market in 2H 2022, CCZ is set to accrue benefits via retaining its shareholding in Hyperion post listing.
FIGURE 14: ZAMBIA PROJECTS
Source: CCZ geology team
Hyperion is positioning itself as an Africa-focused, copper-gold explorer as it owns 100% of the Yansse Gold Project in Burkina Faso.
CORPORATE
New Director Appointed
On 16 August 2021, Mr Geoff Reed was appointed 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 programs in NSW and north-west Queensland.
Board changes
On 28 January 202, Dr Dennis Jensen was promoted to Chief Executive Officer and Mr Geoff Reed to Executive Director with effect 1 February 2022. They assume responsibility for executing the Board's revised strategic intent to prove up JORC 2012 mineral resources. They take over from Mr Simon Paull who retired after building up an excellent platform during his tenure with the group.
On 1 April 2022, Mr Ged Hall (non-executive director based in London) was promoted to Chairman and Dr Dennis Jensen to Managing Director (from CEO) with effect from 1 April 2022. These promotions follow on post the retirement of long-standing Chairman, Mr Rob Scott, with effect from 31 March 2022.
Option agreement unwound
On 14 January 2022, the Board and companies, which hold the Litchfield and Picasso Lithium Projects, mutually agreed to unwind the option agreement enabling CCZ to acquire these assets. As part of the break agreement terms, the $50,000 deposit has been returned to CCZ.
CAPITAL RAISING
On 4 August 2021 and 6 August 2021, the Company issued 41,240,648 new ordinary shares and 159,439,781 listed options to complete the capital raising on the Australian Securities Exchange and London Stock Exchange. Total proceeds raised were $1,368,966 (AUD) and £177,245 (GBP) ($1,742,314 AUD total).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year, other than as outlined elsewhere in this report.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Other than as set out in the Review of Operations, there were no known material significant events from the end of the financial year to the date of this report that have significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Castillo Copper remains focused on progressing its three (3) pillared strategy which includes continued exploration efforts at NWQ Copper Project in Queensland, Cangai Copper Mine in New South Wales and its four Zambian properties.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The operations of the Group are presently subject to environmental regulation under the laws of the Commonwealth of Australia and the States of Queensland and New South Wales and the Republic of Zambia. The Group is, to the best of its knowledge, at all times in full environmental compliance with the conditions of its licenses.
SHARE OPTIONS
As at the date of this report, there were 354,362,757 unissued ordinary shares under unlisted options. The details of the unlisted options at the date of this report are as follows:
|
Number |
Exercise Price $ |
Expiry Date |
|
5,000,000 |
0.05 |
31 December 2023 |
|
17,000,000 |
0.10 |
31 December 2023 |
|
57,716,574 |
0.05 |
1 August 2022 |
|
52,491,667 |
0.05 |
2 December 2022 |
|
9,000,000 |
0.05 |
31 December 2022 |
|
102,454,545 |
0.05 |
30 June 2023 |
|
1,582,353 |
£ 0.017 |
1 September 2023 |
|
79,117,618 |
£0.028 |
1 September 2023 |
|
19,000,000 |
0.05 |
30 September 2023 |
|
3,000,000 |
0.08 |
31 July 2024 |
|
8,000,000 |
0.08 |
31 January 2025 |
In addition to the unlisted options, there are 224,939,782 listed options (ASX:CCZO, CCZA, CCZB). The details of the listed options at the date of this report are as follows:
|
Number |
Exercise Price $ |
Expiry Date |
|
61,500,000 |
0.05 |
27 March 2023 |
|
127,418,042 |
0.08 |
31 July 2024 |
|
32,021,739 |
£ 0.044 |
1 August 2024 |
|
4,000,000 |
0.08 |
31 July 2024 |
No option holder has any right under the options to participate in any other share issue of the Group or any other entity.
PERFORMANCE SHARES
As part of the Zed Copper acquisition in the 2021 financial year, the Group issued 2 classes of performance shares to the vendors on 20 February 2021:
46,875,000 Class A performance shares
Conditions precedent - converting to an equal number of CCZ shares on delineation of a JORC resource of 200,000 tonnes of contained copper at a minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement.
46,875,000 Class B performance shares
Conditions precedent - converting to an equal number CCZ shares on completion of a preliminary feasibility study demonstrating an internal rate of return greater than 25% within 5 years of execution of the Share Sale Agreement.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has made an agreement indemnifying all the Directors and Officers of the Group against all losses or liabilities incurred by each Director or Officer in their capacity as Directors or Officers of the Group to the extent permitted by the Corporation Act 2001. The indemnification specifically excludes wilful acts of negligence. The Group paid insurance premiums in respect of Directors' and Officers' Liability Insurance contracts for current officers of the Group. The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the Officers in their capacity as Officers of entities in the Group. The total amount of insurance premiums paid has not been disclosed due to confidentiality reasons.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of the court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Castillo Copper Limited support and have adhered to the principles of sound corporate governance. The Board recognises the recommendations of the Australian Securities Exchange Corporate Governance Council and considers that Castillo Copper is in compliance with those guidelines to the extent possible, which are of importance to the commercial operation of a junior listed resources company. During the financial year, shareholders continued to receive the benefit of an efficient and cost effective corporate governance policy for the Group. The Group's Corporate Governance Statement and disclosures can be found at https://castillocopper.com/investors/governance/ .
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2022
|
|
|
|
|
|
|
Notes |
2022 |
2021 |
|
|
|
$ |
$ |
|
|
|
|
|
Interest received |
|
619 |
591 |
Other income |
4 |
144,509 |
10,734 |
|
|
|
|
|
|
|
|
145,128 |
11,325 |
|
|
|
|
|
|
Listing and public company expenses |
|
(332,476) |
(302,671) |
|
Accounting and audit expenses |
|
(126,586) |
(119,396) |
|
Consulting and Directors' fees |
|
(647,641) |
(524,552) |
|
Exploration expenditure expensed as incurred |
|
(25,108) |
- |
|
Share-based payments |
21 |
(85,680) |
(318,830) |
|
Other expenses |
4 |
(580,820) |
(370,860) |
|
|
|
|
|
|
LOSS BEFORE INCOME TAX |
|
(1,653,183) |
(1,624,984) |
|
Income tax expense |
5 |
- |
- |
|
LOSS AFTER INCOME TAX |
|
(1,653,183) |
(1,624,984) |
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME |
|
|
|
|
Item that may be reclassified subsequently to profit or loss |
|
|
|
|
Foreign currency translation |
|
1,594 |
(335) |
|
TOTAL OTHER COMPREHENSIVE INCOME |
|
1,594 |
(335) |
|
|
|
|
|
|
TOTAL COMPREHENSIVE LOSS FOR THE YEAR |
|
(1,651,589) |
(1,625,319) |
|
|
|
|
|
|
Basic and diluted loss per share (cents per share) |
13 |
(0.13) |
(0.16) |
|
|
|
|
|
The accompanying notes form part of these financial statements.
Consolidated Statement of Financial Position
As at 30 June 2022
|
|
Notes |
2022 |
2021 |
|
|
|
$ |
$ |
|
CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
6 |
5,754,049 |
10,854,829 |
|
Other assets |
7 |
78,994 |
221,444 |
|
TOTAL CURRENT ASSETS |
|
5,833,043 |
11,076,273 |
|
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
Other assets |
7 |
404,961 |
349,100 |
|
Deferred exploration and evaluation expenditure |
8 |
12,899,486 |
8,171,821 |
|
TOTAL NON-CURRENT ASSETS |
|
13,304,447 |
8,520,921 |
|
|
|
|
|
|
TOTAL ASSETS |
|
19,137,490 |
19,597,194 |
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Trade and other payables |
9 |
125,352 |
571,836 |
|
TOTAL CURRENT LIABILITIES |
|
125,352 |
571,836 |
|
|
|
|
|
|
TOTAL LIABILITIES |
|
125,352 |
571,836 |
|
|
|
|
|
|
NET ASSETS |
|
19,012,138 |
19,025,358 |
|
|
|
|
|
|
EQUITY |
|
|
|
|
Issued capital |
11 |
35,964,396 |
34,464,159 |
|
Reserves |
12 |
4,080,376 |
3,940,650 |
|
Accumulated losses |
|
(21,032,634) |
(19,379,451) |
TOTAL EQUITY |
|
19,012,138 |
19,025,358 |
|
|
|
|
|
The accompanying notes form part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
|
|
Issued capital $ |
Share based payment reserve $ |
Foreign currency translation reserve $ |
Accumulated losses $ |
Total $ |
|
Balance at 1 July 2021 |
34,464,159 |
4,092,830 |
(152,180) |
(19,379,451) |
19,025,358 |
|
Loss for the year |
- |
- |
- |
(1,653,183) |
(1,653,183) |
|
Other Comprehensive Income |
- |
- |
1,594 |
- |
1,594 |
|
Total Comprehensive Loss |
- |
- |
1,594 |
(1,653,183) |
(1,651,589) |
|
Transactions with owners in their capacity as owners |
|
|
|
|
|
|
Shares issued to sophisticated investors |
1,742,319 |
- |
- |
- |
1,742,319 |
|
Shares issued to advisors and consultants |
59,346 |
- |
- |
- |
59,346 |
|
Share issue costs |
(301,428) |
52,452 |
- |
- |
(248,976) |
|
Share based payments |
- |
85,680 |
- |
- |
85,680 |
|
Balance as at 30 June 2022 |
35,964,396 |
4,230,962 |
(150,586) |
(21,032,634) |
19,012,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 July 2020 |
23,034,322 |
3,366,315 |
(151,845) |
(17,754,467) |
8,494,325
|
|
Loss for the year |
- |
- |
- |
(1,624,984) |
(1,624,984) |
|
Other comprehensive loss |
- |
- |
(335) |
- |
(335) |
|
Total comprehensive loss |
- |
- |
(335) |
(1,624,984) |
(1,625,319) |
|
Transactions with owners in their capacity as owners |
|
|
|
|
|
|
Shares issued in London Stock Exchange IPO |
2,454,515 |
- |
- |
- |
2,454,515 |
|
Shares issued to sophisticated investors |
9,965,973 |
- |
- |
- |
9,965,973 |
|
Shares issued to advisors |
276,139 |
- |
- |
- |
276,139 |
|
Share issue costs |
(1,576,790) |
407,685 |
- |
- |
(1,169,105) |
|
Shares issued from exercise of options |
310,000 |
- |
- |
- |
310,000 |
|
Share based payments |
- |
318,830 |
- |
- |
318,830 |
|
Balance as at 30 June 2021 |
34,464,159 |
4,092,830 |
(152,180) |
(19,379,451) |
19,025,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
|
|
|
|
|
|
|
Notes |
2022 |
2021 |
|
|
|
$ |
$ |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
Interest received |
|
619 |
591 |
|
Payments to suppliers and employees |
|
(1,406,386) |
(1,208,781) |
|
NET CASH USED IN OPERATING ACTIVITIES |
6 |
(1,405,767) |
(1,208,190) |
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
Tenement expenditure guarantees |
|
- |
(232,000) |
|
Payments for tenements bonds |
|
(55,861) |
- |
|
Payment for acquisition of tenements |
|
- |
(217,285) |
|
Option fee received |
|
144,509 |
- |
|
Exploration and evaluation expenditure |
6 |
(5,112,153) |
(2,236,420) |
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(5,023,505) |
(2,685,705) |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
Proceeds from share issues |
11 |
1,742,319 |
12,420,488 |
|
Proceeds from exercise of options |
11 |
- |
310,000 |
|
Share issue costs |
11 |
(248,976) |
(1,132,902) |
|
NET CASH FROM FINANCING ACTIVITIES |
|
1,493,343 |
11,597,586 |
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(4,935,929) |
7,703,691 |
|
Cash and cash equivalents at beginning of year |
|
10,854,829 |
3,129,958 |
|
Foreign exchanges variances on cash |
|
(164,851) |
21,180 |
|
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR |
6 |
5,754,049 |
10,854,829 |
|
|
|
|
|
The accompanying notes form part of these financial statements.
Notes to the consolidated financial statements at and for the year ended 30 June 2022
1. Corporate Information
The financial report of Castillo Copper Limited and its subsidiaries ("Castillo Copper" or "the Group") for the year ended 30 June 2022 was authorised for issue in accordance with a resolution of the Directors on 23 September 2022.
Castillo Copper Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange and London Stock Exchange. The nature of the operations and the principal activities of the Group are described in the Directors' Report.
2. Summary of Significant Accounting Policies
(a) Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is a for profit entity for financial reporting purposes under Australian Accounting Standards.
The financial report has been prepared on an accrual basis and is based on historical costs. Material accounting policies adopted in preparation of this financial report are presented below and have been consistently applied unless otherwise stated.
The presentation currency is Australian dollars.
(b) Statement of Compliance
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).
(c) Adoption of new and revised standards
Standards and Interpretations applicable 30 June 2022
In the year ended 30 June 2022, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current annual reporting period. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Group and therefore, no material change is necessary to Group accounting policies.
Standards and interpretations issued, but not yet effective
The Directors have also reviewed all Standards and Interpretations issued, but not yet effective for the period 30 June 2022. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations issued but not yet effective on the Company.
(d) Going Concern
This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.
The Group incurred a net loss for the year ended 30 June 2022 of $1,653,183 and net cash outflows from operating activities of $1,405,767, net cash outflows from investing activities of $5,023,505 and net cash inflows from financing activities of $1,493,343. At 30 June 2022, the Group had a net asset position of $19,012,138. The cash and cash equivalents balance at 30 June 2022 was $5,754,049.
The directors have reviewed the Group's financial position and are of the opinion that the use of thegoing concern basis of accounting is appropriate.
(e) Basis of Consolidation
The consolidated financial statements comprise the financial statements of Castillo Copper Limited and its subsidiaries as at 30 June each year ('the Company').
Subsidiaries are all those entities (including special purpose entities) over which the Company has control. The Company controls an entity when the company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the Group.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-company transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Company and cease to be consolidated from the date on which control is transferred out of the Company.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction.
(f) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The functional and presentation currency of Castillo Copper Limited is Australian dollars. The functional currency of the Chilean subsidiary is Chilean Peso. The functional currency of the Zambian subsidiaries is United States Dollars.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year‑end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
(iii) Group entities
The results and financial position of all the Company entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
· assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
· income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
· all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are taken to foreign currency translation reserve.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are recognised in the statement of comprehensive income, as part of the gain or loss on sale where applicable.
(g) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets of the Group. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(h) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure, but does not include general overheads or administrative expenditure not having a specific nexus with a particular area of interest.
Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a mining operation.
Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided that one of the following conditions is met:
· such costs are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or
· exploration and evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in relation to the area are continuing.
Expenditure which fails to meet the conditions outlined above is impaired; furthermore, the Directors regularly review the carrying value of exploration and evaluation expenditure and make write downs if the values are not expected to be recoverable.
Identifiable exploration assets acquired are recognised as assets at their cost of acquisition, as determined by the requirements of AASB 6 Exploration for and evaluation of mineral resources. Exploration assets acquired are reassessed on a regular basis and these costs are carried forward provided that at least one of the conditions referred to in AASB 6 is met.
Exploration and evaluation expenditure incurred subsequent to acquisition in respect of an exploration asset acquired, is accounted for in accordance with the policy outlined above for exploration expenditure incurred by or on behalf of the entity.
Acquired exploration assets are not written down below acquisition cost until such time as the acquisition cost is not expected to be recovered.
When an area of interest is abandoned, any expenditure carried forward in respect of that area is written off.
Expenditure is not carried forward in respect of any area of interest/mineral resource unless the Group's rights of tenure to that area of interest are current.
(i) Trade and Other Receivables
Trade receivables, which generally have 30 - 90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms. Furthermore, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term, discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income.
(j) Cash and Cash Equivalents
Cash and short term deposits in the statement of financial position include cash on hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown as current liabilities in the statement of financial position. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as described above.
(k) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.
Provisions are measured at the present value or management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money, and where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Restoration and rehabilitation
Refer to Note 2(m) for the Group's policy in respect of restoration and rehabilitation.
(l) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent that it is determined in the future that this capitalised expenditure should be written off, this will reduce profits and net assets in the period in which this determination is made.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black and Scholes model, using the assumptions detailed in note 11.
Rehabilitation provision
The Group's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Group recognises management's best estimate for asset retirement obligations in the period in which they are incurred. Actual costs incurred in the future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision.
(m) Rehabilitation provision
A provision for rehabilitation and restoration is recognised when there is a present obligation as a result of activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of abandoning sites, removing facilities and restoring the affected areas.
The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the balance date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each balance date.
The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset.
(n) Income Tax
Deferred income tax is provided for on all temporary differences at balance date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes.
No deferred income tax will be recognised from the initial recognition of goodwill or of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. No deferred income tax will be recognised in respect of temporary differences associated with investments in subsidiaries if the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary differences will not reverse in the near future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on tax rates (and tax laws) that have been enacted or substantially enacted at the balance date and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. The carrying amount of deferred tax assets is reviewed at each balance date and only recognised to the extent that sufficient future assessable income is expected to be obtained. Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income.
(o) Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(p) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue is capable of being reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Interest income
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.
(q) Earnings / loss per share
Basic earnings / loss per share
Basic earnings / loss per share is calculated by dividing the profit/loss attributable to equity holders of the Group, excluding any costs of servicing equity other than dividends, by the weighted average number of ordinary shares, adjusted for any bonus elements.
Diluted earnings / loss per share
Diluted earnings / loss per share is calculated as net profit/loss attributable to members of the Group, adjusted for:
· costs of servicing equity (other than dividends) and preference share dividends;
· the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
· other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; and
· divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus elements.
(r) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the Australian Tax Office is included as part of receivables or payables in the statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
(s) Trade and other payables
Liabilities for trade creditors and other amounts are measured at amortised cost, which is the fair value of the consideration to be paid in the future for goods and services received that are unpaid, whether or not billed to the Group.
(t) Share-based payment transactions
The Group provides benefits to individuals acting as, and providing services similar to employees (including Directors) of the Group in the form of share based payment transactions, whereby individuals render services in exchange for shares or rights over shares ('equity settled transactions').
The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by using the Black Scholes formula taking into account the terms and conditions upon which the instruments were granted, as discussed in note 11(e).
In valuing equity settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Castillo Copper Limited ('market conditions').
The cost of the equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('vesting date').
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of the market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The statement of comprehensive income charge or credit for a period represents the movement in cumulative expense recognised at the beginning and end of the period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where the terms of an equity settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised for the award is recognised immediately. However if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The cost of equity-settled transactions with non-employees is measured by reference to the fair value of goods and services received unless this cannot be measured reliably, in which case the cost is measured by reference to the fair value of the equity instruments granted. The dilutive effect, if any, of outstanding options is reflected in the computation of loss per share (see note 13).
(u) Comparative information
When required by Accounting Standards, comparative information has been reclassified to be consistent with the presentation in the current year.
(v) Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.
(w) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principle market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
(x) Parent entity financial information
The financial information for the parent entity, Castillo Copper Limited, disclosed in Note 17 has been prepared on the same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity's financial statements. Dividends received from associates are recognised in the parent entity's profit or loss, rather than being deducted from the carrying amount of these investments.
3. Segment Information
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The entity has four geographical segments being exploration in Northwest Queensland (NWQ), New South Wales (Cangai), New South Wales (Broken Hill) and Zambia. Revenue attributable to all segments is immaterial. Allocation of asset, liabilities, income and expenses to each segment is shown below:
|
2022 |
NWQ (QLD) |
Cangai (NSW) |
Broken Hill (NSW) |
Zambia |
Unallocated |
Total |
|
Segment assets and liabilities |
$ |
$ |
$ |
$ |
$ |
$ |
|
Current assets |
- |
- |
- |
- |
5,833,043 |
5,833,043 |
|
Non-current assets |
6,271,129 |
5,454,684 |
544,180 |
1,034,333 |
121 |
13,304,447 |
|
Current liabilities |
- |
- |
- |
- |
(125,352) |
(125,352) |
|
|
|
|
|
|
|
|
|
Segment income and expenses |
|
|
|
|
|
|
|
Interest income |
- |
- |
- |
- |
619 |
619 |
|
Other income |
- |
- |
- |
144,509 |
- |
144,509 |
|
Other expenses |
- |
- |
- |
- |
(1,798,311) |
(1,798,311) |
|
Loss before tax |
- |
- |
- |
144,509 |
(1,797,692) |
(1,653,183) |
|
|
|
|
|
|
|
|
|
2021 |
NWQ (QLD) |
Cangai (NSW) |
Broken Hill (NSW) |
Zambia |
Unallocated |
Total |
|
Segment assets and liabilities |
$ |
$ |
$ |
$ |
$ |
$ |
|
Current assets |
- |
- |
- |
- |
11,076,273 |
11,076,273 |
|
Non-current assets |
1,973,078 |
5,380,977 |
289,580 |
877,167 |
119 |
8,520,921 |
|
Current liabilities |
- |
- |
- |
- |
(571,836) |
(571,836) |
|
|
|
|
|
|
|
|
|
Segment income and expenses |
|
|
|
|
|
|
|
Interest income |
- |
- |
- |
- |
591 |
591 |
|
Other income |
- |
- |
- |
- |
10,734 |
10,734 |
|
Other expenses |
- |
- |
- |
- |
(1,636,309) |
(1,636,309) |
|
Loss before tax |
- |
- |
- |
- |
(1,624,984) |
(1,624,984) |
|
4. Other income and expenses |
|
|
|
|
|
|
|
|
|
|
2022 |
2021 |
|
Other income |
|
|
|
$ |
$ |
|
Interest expense over accrual |
|
|
|
- |
10,734 |
|
Option fee 1 |
|
|
|
144,509 |
- |
|
Total other income |
|
|
|
144,509 |
10,734 |
|
|
|
|
|
|
|
|
1 Castillo Copper Ltd granted a 12 month option to Hyperion Copper Ltd ("Hyperion") for the acquisition of its 100% owned Subsidiary, Zed Copper Pty Ltd, which owns the Group's mining tenements in Zambia, for a non-refundable fee of US$100,000 (A$144,509). The consideration payable by Hyperion to Castillo Copper Ltd for the exercise of the option is £2,250,000, which is to be satisfied by the issue and allotment of ordinary shares in Hyperion. As part of the transaction, Hyperion is proposing to undertake a listing and initial public offering on the AIM Market of the London Stock Exchange. Following completion of the transaction and listing, Castillo Copper Ltd will hold a minimum interest of 25% of the issued shares of Hyperion. The material conditions precedent to the transaction include: a definitive agreement being entered into once Hyperion is satisfied with their due diligence; all the required approvals and consents being obtained, including shareholder approval if necessary; obtaining a legal opinion and competent person's report confirming that the tenements are in good standing; and Hyperion completing preparation and publication of an AIM admission document in respect of an initial public offering and receiving unconditional approval.
|
|||||
|
Other expenses |
|
|
|
$ |
$ |
|
Travel and accommodation |
|
|
|
252 |
112 |
|
Legal |
|
|
|
37,678 |
49,827 |
|
Insurance |
|
|
|
95,415 |
72,221 |
|
Foreign Exchange (Gains)/Losses |
|
|
|
164,792 |
(23,056) |
|
Investor Relations |
|
|
|
260,534 |
252,766 |
|
Other |
|
|
|
22,149 |
18,990 |
|
Total other expenses |
|
|
|
580,820 |
370,860 |
|
5. Income Tax
|
|
|
2022 $ |
2021 $ |
|
|
(a) Income tax expense |
|||||
|
Major component of tax expense for the year: |
|
|
|
|
|
|
Current tax |
|
|
|
- |
- |
|
Deferred tax |
|
|
|
- |
- |
|
|
|
|
|
- |
- |
|
(b) Numerical reconciliation between aggregate tax expense recognised in the statement of comprehensive income and tax expense calculated per the statutory income tax rate |
|
|
|
|||
|
A reconciliation between tax expense and the product of accounting result before income tax multiplied by the Group's applicable tax rate is as follows: |
|
|
|
|||
|
|
|
|
|
|||
|
Loss from continuing operations before income tax expense |
|
(1,653,183) |
(1,624,984) |
|||
|
Tax at the Australian rate of 30% (2021: 30%) |
|
(495,955) |
(487,495) |
|||
|
Non-allowable expenses |
|
25,929 |
96,145 |
|||
|
Income tax benefit not bought to account |
|
470,026 |
391,350 |
|||
|
Income tax expense |
|
- |
- |
|||
|
|
|
|
|
|||
|
|
|
2022 |
2021 |
|||
|
Assets |
|
$ |
$ |
|||
|
Total losses available to offset against future taxable income |
|
10,361,143 |
8,397,012 |
|||
|
Total accrued expenses |
|
9,867 |
53,960 |
|||
|
Total share issue costs deductible over five years |
|
483,299 |
565,080 |
|||
|
Deferred tax liability on capitalised exploration costs |
|
(3,549,693) |
(2,188,397) |
|||
|
Deferred tax assets not brought to account as realisation is not regarded as probable |
|
(7,304,616) |
(6,827,655) |
|||
|
Deferred tax asset recognised |
|
- |
- |
|||
|
|
|
|
|
|
|
|
|
|
|
2022 |
2021 |
|
|
|
$ |
$ |
|
(d) Unused tax losses |
|
|
|
|
Unused tax losses |
|
34,537,142 |
27,990,034 |
|
Potential tax benefit not recognised at 30% (2021: 30%) |
|
10,361,143 |
8,397,012 |
The benefit for tax losses will only be obtained if:
(i) the Group derives future assessable income in Australia of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised;
(ii) the Group continues to comply with the conditions for deductibility imposed by tax legislation in Australia; and
(iii) no changes in tax legislation in Australia, adversely affect the Group in realising the benefit from the deductions for the losses.
|
6. Cash and cash equivalents
|
|
|
|
|
|
|
|
|
Reconciliation of operating loss after tax to net the cash flows used in operations |
2022 $ |
2021 $ |
|||||
|
Loss from ordinary activities after tax |
|
|
|
|
(1,653,183) |
(1,624,984) |
|
Non-cash items |
|
|
|
|
|||
Share-based payments |
|
|
85,680 |
318,830 |
|||
Consultancy and adviser fees settled in shares |
|
|
59,346 |
169,000 |
|||
Foreign exchange (gain)/loss |
|
|
164,792 |
(21,164) |
|||
Profit & loss items classed as investing activities |
|
|
|
|
|||
Consulting fees relating to exploration expenditure |
|
|
- |
120,000 |
|||
Other income - option fee |
|
|
(144,509) |
- |
|||
Changes in assets and liabilities |
|
|
|
|
|||
|
Increase / (decrease) in trade and other payables |
|
|
|
(60,167) |
(10,142) |
||
|
(Increase) / decrease in other receivables |
|
|
|
142,274 |
(159,730) |
||
|
Net cash flow used in operating activities |
|
|
|
(1,405,767) |
(1,208,190) |
||
|
|
|
|
|
|
|
|
|
|
(b) Reconciliation of cash |
|
|
|
|
|
|
|
Cash balance comprises: |
|
|
|
|
|
|
|
Cash at bank |
|
|
|
|
5,754,049 |
10,854,829 |
Cash at bank earns interest at floating rates based on daily bank deposit rates.
|
7. Other Assets |
|
2022 |
2021 |
|
|
|
$ |
$ |
|
Current |
|
|
|
|
GST/VAT receivable |
|
45,150 |
178,642 |
|
Prepayments |
|
33,844 |
42,802 |
|
|
|
78,994 |
221,444 |
|
Non-Current |
|
|
|
|
Tenement guarantees |
|
404,961 |
349,100 |
There are no current tenement guarantees.
|
8. Deferred Exploration and Evaluation Expenditure |
|
2022 |
2021 |
||
|
|
|
$ |
$ |
||
|
Exploration and evaluation phase: |
|
|
|
||
|
Opening balance |
|
8,171,821 |
5,748,198 |
||
|
Exploration and evaluation expenditure on acquisition of Wyloo metals tenements |
|
- |
215,000 |
||
|
Exploration and evaluation expenditure during the period |
|
4,727,665 |
2,329,713 |
||
|
Rehabilitation (note 10) |
|
- |
(121,090) |
||
|
Closing balance |
|
12,899,486 |
8,171,821 |
||
|
|
|
|
|
|
|
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on the successful development and commercial exploration or sale of respective areas.
|
9. Trade and other payables
|
|
|
|
2022 |
2021 |
|
Current |
|
|
|
$ |
$ |
|
Trade and other payables |
|
|
|
92,462 |
383,303 |
|
Accruals |
|
|
|
32,890 |
188,533 |
|
|
|
|
|
125,352 |
571,836 |
|
Trade and other payables are non-interest bearing and payable on demand. Due to their short-term nature, the carrying value of trade and other payables is assumed to approximate their fair value.
|
|||||
10. Rehabilitation Provision
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
$ |
$ |
|
Rehabilitation provision |
|
|
|
- |
- |
|
|
|
|
|
- |
- |
|
Rehabilitation provision |
|
|
|
|
Opening balance |
|
- |
121,090 |
|
Rehabilitation completed during the year |
|
- |
(121,090) |
|
Closing balance |
|
- |
- |
|
11. Issued Capital |
|
|
2022 |
2021 |
|
|
(a) Issued and paid up capital |
|
|
$ |
$ |
|
|
Ordinary shares fully paid |
|
|
35,965,396 |
34,464,159 |
|
|
|
|
|
|||
|
|
2022 |
2021 |
|||
|
|
Number of shares |
$ |
Number of shares |
$ |
|
|
(b) Movements in ordinary shares on issue |
|
|
|
|
|
|
Opening balance |
1,256,512,320 |
34,464,159 |
926,723,065 |
23,034,322 |
|
|
Shares issued in London Stock Exchange IPO |
- |
- |
81,117,618 |
2,454,515 |
|
|
Shares issued to sophisticated investors |
41,240,648 |
1,742,319 |
237,155,313 |
9,965,973 |
|
|
Shares issued to advisors |
250,000 |
12,500 |
4,382,991 |
276,139 |
|
|
Shares issued from exercise of options |
- |
- |
7,133,333 |
310,000 |
|
|
Shares issued to consultants |
1,502,387 |
46,846 |
- |
- |
|
|
Transaction costs on share issue |
- |
(301,428) |
- |
(1,576,790) |
|
|
|
1,299,505,355 |
35,964,396 |
1,256,512,320 |
34,464,159 |
|
|
|
|
|
|
|
|
The shares issued to advisors and consultants were valued based on the fair value of the service received.
|
(c) Ordinary shares |
|
|
|
|
|
The Group does not have authorised capital nor par value in respect of its issued capital. Ordinary shares have the right to receive dividends as declared and, in the event of a winding up of the Company, to participate in the proceeds from sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or proxy, at a meeting of the Company. |
||||
(d) Share options
At 30 June 2022 there were 354,362,757 (30 June 2021: 358,362,757) unlisted options and 224,939,782 (30 June 2021: 61,500,000) listed options (ASX:CCZO, CCZOA, CCZOB) with various exercise prices and expiry dates.
The following share-based payment arrangements were in place during the period:
|
Series |
Number |
Grant date |
Expiry date |
Exercise price |
Fair value at grant date |
Vesting date |
|
1 |
17,000,000 |
16 May 2018 |
31 December 2023 |
$0.10 |
$0.018 |
16 May 2018 |
|
2 |
5,000,000 |
1 February 2019 |
31 December 2023 |
$0.05 |
$0.005 |
1 February 2019 |
|
3 |
19,200,000 |
3 December 2019 |
2 December 2022 |
$0.05 |
$0.005 |
3 December 2019 |
|
4 |
3,000,000 |
3 December 2019 |
2 December 2022 |
$0.05 |
$0.005 |
3 December 2019 |
|
5 |
3,000,000 |
31 December 2019 |
31 December 2022 |
$0.05 |
$0.005 |
31 December 2019 |
|
6 |
6,000,000 |
31 December 2019 |
31 December 2022 |
$0.05 |
$0.004 |
30 June 2020 |
|
7 |
7,000,000 |
23 June 2020 |
30 June 2023 |
$0.05 |
$0.013 |
23 June 2020 |
|
8 |
1,582,353 |
2 October 2020 |
1 September 2023 |
£0.017 |
$0.023 |
2 October 2020 |
|
9 |
19,000,000 |
2 October 2020 |
30 September 2023 |
$0.05 |
$0.018 |
2 October 2020 |
|
10 |
14,285,714 |
15 June 2021 |
31 July 2024 |
$0.08 |
$0.022 |
15 June 2021 |
|
11 |
2,955,665 |
16 June 2021 |
1 August 2024 |
£0.044 |
$0.021 |
16 June 2021 |
|
12[1] |
2,418,044 |
5 August 2021 |
31 July 2024 |
$0.08 |
$0.007 |
5 August 2021 |
|
13[1] |
462,378 |
17 August 2021 |
1 August 2024 |
£0.044 |
$0.017 |
17 August 2021 |
|
14[1] |
4,000,000 |
27 October 2021 |
31 July 2024 |
$0.08 |
$0.007 |
27 October 2021 |
|
15 |
3,000,000 |
30 November 2021 |
31 July 2024 |
$0.08 |
$0.010 |
30 November 2021 |
|
16 |
8,000,000 |
1 February 2022 |
31 January 2025 |
$0.08 |
$0.007 |
1 February 2022 |
[1] Issued to corporate advisors for broker services rendered in relation to share placements during the year.
During the year 15,000,000 options expired, with an exercise price of $0.05 and a fair value at grant date of $0.003.
No options were exercised during the period.
Options granted as equity compensation benefits to Key Management Personnel during the year are set out in the audited remuneration report.
No listed or unlisted options have been issued since the end of the year.
|
Weighted remaining contractual life (years) |
1.21 |
|
Weighted average exercise price |
$0.0554 |
Options granted as equity compensation benefits to Key Management Personnel during the year are set out in the audited remuneration report.
(e) Weighted average fair value
The fair value of the equity-settled unlisted options granted during the period was estimated as at the date of grant using the Black and Scholes model taking into account the terms and conditions upon which they were granted, as follows:
|
|
Series |
||||||||||
|
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
15 |
16 |
|
Expected volatility (%) |
100 |
87 |
92 |
92 |
92 |
93 |
100 |
104 |
104 |
99 |
100 |
|
Risk-free interest rate (%) |
1.90 |
2.00 |
0.77 |
0.77 |
0.77 |
0.77 |
0.27 |
0.18 |
0.18 |
0.87 |
1.21 |
|
Expected life of option (years) |
5.6 |
4.9 |
3.0 |
3.0 |
3.0 |
3.0 |
3.0 |
2.9 |
3.0 |
2.7 |
3.0 |
|
Exercise price (cents/pence) |
10 |
5 |
5 |
5 |
5 |
5 |
5 |
1.7p |
5 |
8 |
8 |
|
Grant date share price (cents/pence) |
3.9 |
1.6 |
1.8 |
1.8 |
2.0 |
1.7 |
2.6 |
2.6p |
4.2 |
3.4 |
2.6 |
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value.
(f) Performance Shares
At 30 June 2022 there were 46,875,000 Class A performance shares and 46,875,000 Class B performance shares on issue in relation to the Zambian tenements held by Zed Copper Pty Ltd.
46,875,000 Class A performance shares
Conditions precedent - converting to an equal number of CCZ shares on delineation of a JORC resource of 200,000 tonnes of contained copper at a minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement.
46,875,000 Class B performance shares
Conditions precedent - converting to an equal number CCZ shares on completion of a preliminary feasibility study demonstrating an internal rate of return greater than 25% within 5 years of execution of the Share Sale Agreement.
|
|
|
12. Reserves |
Share based payment reserve
The share based payment reserve is used to record the value of equity benefits provided to Directors and executives as part of their remuneration and non-employees for their services.
Foreign currency translation reserve
The foreign exchange differences arising on translation of balances originally denominated in a foreign currency into the functional currency are taken to the foreign currency translation reserve. The reserve is recognised in profit or loss when the net investment is disposed of.
13. Loss per Share
|
|
|
2022 |
2021 |
||
|
|
|
$ |
$ |
||
Loss used in calculating basic and dilutive EPS |
|
|
(1,653,183) |
(1,624,894) |
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
||||
|
Weighted average number of ordinary shares used in calculating basic loss per share: |
|
|
1,294,183,748 |
1,019,444,466 |
|
|
Effect of dilution: |
|
|
|
|
|
|
Share options |
|
|
|
- |
|
|
Adjusted weighted average number of ordinary shares used in calculating diluted loss per share: |
|
|
1,294,183,748 |
1,019,444,466 |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share (cents per share) |
|
|
(0.13) |
(0.16) |
|
|
|
|
|
|
|
|
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements.
There are no potential ordinary shares on issue that are considered to be dilutive, therefore basic earnings per share also represents diluted earnings per share.
|
14. Auditor's Remuneration |
|
2022 |
2021 |
|
The auditor of Castillo Copper Limited is HLB Mann Judd. |
|
$ |
$ |
|
Amounts received or due and receivable for: |
|
|
|
|
Audit or review of the financial report of the entity and any other entity in the Group |
|
40,851 |
41,607 |
|
Non-audit services - preparation of various reports in relation to the LSE listing |
|
- |
10,000 |
|
|
|
40,851 |
51,607 |
15. Related party disclosures
a) Key management personnel
|
|
|
|
|
2022 |
2021 |
|
|
Compensation of key management personnel |
|
$ |
$ |
|
||
|
Short term employee benefits |
|
|
|
389,221 |
255,829 |
|
|
Post-employment benefits |
|
|
|
3,000 |
- |
|
|
Share-based payments |
|
|
|
85,680 |
210,840 |
|
|
Total remuneration
|
|
|
|
477,901 |
466,669 |
|
b) Other transactions with key management personnel
Yingyang Pty Ltd, a company of which Mr Paull is a director, charged the Group director's fees of $38,036 (2021: $48,000) and executive fees of $95,089 (2021: $120,000). There was nil outstanding at 30 June 2022 (2021: $nil).
Coverley Management Services Pty Ltd, a company of which Mr Scott is a director, charged the Group director's fees of $45,000 (2021: $48,000). There was nil outstanding at 30 June 2022 (2021: nil).
Strategic Business Analysis Ltd, a company of which Mr. Hall is a director, charged the Group directors fees of $60,170 (2021: $39,829). There was $5,104 outstanding at 30 June 2022 (2021: nil).
Bluespoint Mining Services Pty Ltd, a company of which Mr Reed is a director, charged the Group executive fees of $69,626 (2021: nil) and consulting fees of $1,800 (2021: nil). There was $9,166 outstanding at 30 June 2022 (2021: nil).
DTJ Enterprises Pty Ltd, a company of which Dr Jensen is a director, charged the Group executive fees of $79,500 (2021: nil). There was nil outstanding at 30 June 2022 (2021: nil).
c) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of Castillo Copper Limited and the following subsidiaries:
Name of Entity |
Country of Incorporation |
Equity Holding |
|
|
|
|
2022 |
2021 |
Castillo Copper Chile SPA |
Chile |
100% |
100% |
Castillo Exploration Limited |
Australia |
100% |
100% |
Qld Commodities Pty Ltd |
Australia |
100% |
100% |
Total Iron Pty Ltd |
Australia |
100% |
100% |
Total Minerals Pty Ltd |
Australia |
100% |
100% |
BHA No. 1 Pty Ltd |
Australia |
100% |
100% |
Atlantica Holdings (Bermuda) |
Bermuda |
75% |
75% |
Zed Copper Pty Ltd |
Australia |
100% |
100% |
Chalo Mining Group Ltd |
Zambia |
100% |
100% |
Luflilian Resources Zambia Ltd |
Zambia |
100% |
100% |
Belmt Resources Mining Company Ltd |
Zambia |
50% |
50% |
Broken Hill Alliance Ltd |
Australia |
100% |
N/A |
Castillo Copper Limited is the ultimate Australian parent entity and ultimate parent of the Group.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and not disclosed in this note.
Broken Hill Alliance Ltd was incorporated during the year ended 30 June 2022 and was subsequently deregistered on 5 September 2022, after plans to spin-off the BHA assets via an ASX listing were indefinitely deferred.
16. Financial Risk Management
Exposure to interest rate, liquidity, and credit risk arises in the normal course of the Group's business. The Group does not hold or use derivative financial instruments. The Group's principal financial instruments comprise mainly of deposits with banks. The totals for each category of financial instruments are as follows:
|
|
|
2022 |
2021 |
|
|
|
$ |
$ |
|
Financial Assets |
|
|
|
|
Cash and cash equivalents |
|
5,754,049 |
10,854,829 |
|
Other receivables (current and non-current) |
|
450,111 |
527,741 |
|
Financial Liabilities |
|
6,204,160 |
11,382,570 |
|
Trade and other payables |
|
125,352 |
571,836 |
The Group uses different methods as discussed below to manage risks that arise from these financial instruments. The objective is to support the delivery of the financial targets while protecting future financial security.
(a) Capital risk management
The Group's capital comprises share capital and reserves less accumulated losses. As at 30 June 2022, the Group has net assets of $19,012,138 (2021: $19,025,358). The Group manages its capital to ensure its ability to continue as a going concern and to optimise returns to its shareholders.
(b) Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. The Group manages liquidity risk by maintaining sufficient cash facilities to meet the operating requirements of the business and investing excess funds in highly liquid short term investments. The responsibility for liquidity risk management rests with the Board of Directors.
Alternatives for sourcing future capital needs include the cash position and future equity raising alternatives. These alternatives are evaluated to determine the optimal mix of capital resources for our capital needs. The Board expects that, assuming no material adverse change in a combination of our sources of liquidity, present levels of liquidity will be adequate to meet expected capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other payables. As at 30 June 2022 any financial liabilities that are contractually maturing within 60 days have been disclosed as current. Trade and other payables that have a deferred payment date of greater than 12 months have been disclosed as non-current.
(c) Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial instruments. The Group's exposure to changes to interest rate risk relates primarily to its earnings on cash and term deposits. The Group manages the risk by investing in short term deposits.
|
|
|
|
2022 |
2021 |
|
|
|
|
$ |
$ |
|
Cash and cash equivalents |
|
|
5,754,049 |
10,854,829 |
Interest rate sensitivity
The following table demonstrates the sensitivity of the Group's statement of comprehensive income to a reasonably possible change in interest rates, with all other variables constant.
|
Change in Basis Points |
Effect on Post Tax Loss ($) Increase/(Decrease) |
Effect on Equity including retained earnings ($) Increase/(Decrease) |
||
|
|
2022 |
2021 |
2022 |
2021 |
|
Increase 100 basis points |
57,540 |
108,548 |
57,540 |
108,548 |
|
Decrease 100 basis points |
(57,540) |
(108,548) |
(57,540) |
(108,548) |
A sensitivity of 100 basis points has been used as this is considered reasonable given the current level of both short term and long term Australian Dollar interest rates. This would represent two to four movements by the Reserve Bank of Australia.
(d) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause the Group to incur a financial loss. The Group's maximum credit exposure is the carrying amounts on the statement of financial position. The Group holds financial instruments with credit worthy third parties.
At 30 June 2022, the Group held cash at bank. These were held with financial institutions with a rating from Standard & Poors of AA- or above (long term). The Group has no past due or impaired debtors as at 30 June 2022.
(e) Fair Value Measurement
There were no financial assets or liabilities at 30 June 2022 requiring fair value estimation and disclosure as they are either not carried at fair value or in the case for short term assets and liabilities, their carrying values approximate fair value.
(f) Foreign Exchange
The Group undertakes certain transactions denominated in foreign currencies hence exposures to exchange rate fluctuations arise. The Group does not manage these exposures with foreign currency derivative products. The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the balance date expressed in Australian dollars are as follows:
|
Chilean Peso (CLP) |
|
|
|
|
2022 |
2021 |
|
Assets |
86,432 |
101,338 |
|
Liabilities |
(10,350) |
(12,135) |
|
|
76,082 |
89,203 |
|
British Pound Sterling (GBP) |
|
|
|
|
2022 |
2021 |
|
Assets |
3,542,364 |
3,631,057 |
|
Liabilities |
(5,104) |
(13,063) |
|
|
3,537,260 |
3,617,994 |
The Group is exposed to Chilean Peso (CLP) and British Pound Sterling (GBP) currency fluctuations.
The following table details the Group's sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represent management's assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in profit and equity where the Australian Dollar weakens against the respective currency. For a strengthening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the profit and equity and the balances below would be negative.
|
10% Increase |
|
|
|
|
2022 |
2021 |
|
Profit/(loss) and equity - CLP |
7,810 |
8,920 |
|
Profit/(loss) and equity - GBP |
353,726 |
361,799 |
|
|
361,536 |
370,719 |
|
10% Decrease |
|
|
|
|
2022 |
2021 |
|
Profit/(loss) and equity - CLP |
(7,810) |
(8,920) |
|
Profit/(loss) and equity - GBP |
(353,726) |
(361,799) |
|
|
(361,536) |
(370,719) |
17. Parent Entity Information
The following details information related to the parent entity, Castillo Copper Limited, at 30 June 2022. The information presented here has been prepared using consistent accounting policies as presented in note 2.
|
|
2022 $ |
2021 $ |
|
Current assets |
5,831,937 |
11,074,975 |
|
Non-current assets |
10,479,490 |
5,885,974 |
|
Total assets |
16,311,427 |
16,960,949 |
|
Current liabilities |
115,003 |
559,701 |
|
Non-current liabilities |
- |
- |
|
Total liabilities |
115,003 |
559,701 |
|
Net assets |
16,196,424 |
16,401,248 |
|
Issued capital |
35,898,048 |
34,464,159 |
|
Reserves |
4,297,310 |
4,092,830 |
|
Accumulated losses |
(23,998,934) |
(22,155,741) |
|
Total equity |
16,196,424 |
16,401,248 |
|
|
|
|
|
Loss of the parent entity |
1,843,193 |
1,790,221 |
|
Other comprehensive income for the year |
- |
- |
|
Total comprehensive loss of the parent entity |
1,843,193 |
1,790,221 |
a) Guarantees
Castillo Copper Limited has not entered into any guarantees in relation to the debts of its subsidiary.
b) Other Commitments and Contingencies
Castillo Copper Limited has not entered into any commitments and does not have any known contingent liabilities at year end.
18. Contingent liabilities
The Company has entered into the following royalty agreements:
· 1% net smelter return royalty in respect of the area covered by the tenements acquired from Qld Commodities Pty Ltd vendors (or their nominee);
· 3% net smelter return royalty in respect of the area covered by the tenements acquired from Total Minerals Pty Ltd vendors (or their nominee);
· 3% net smelter return royalty in respect of the area covered by the tenements acquired from Total Iron Pty Ltd vendors (or their nominee).
· 2% net smelter return royalty in respect of the area covered by the tenements acquired from Zed Copper Pty Ltd vendors (or their nominee).
Other than outlined above, there are no contingent liabilities.
19. Commitments
In order to maintain current contractual rights concerning its mineral projects, the Group has certain commitments to meet minimum expenditure or work program requirements. The current minimum commitments at balance date but not recognised as liabilities are as follows:
|
|
2022 $ |
2021 $ |
|
Within one year |
1,280,129 |
643,668 |
|
After one year but not more than five years |
1,250,000 |
968,475 |
|
Longer than five years |
- |
- |
|
|
2,530,129 |
1,612,143 |
20. Dividends
No dividend was paid or declared by the Group in the period since the end of the financial year, and up to the date of this report. The Directors' do not recommend that any amount be paid by way of a dividend for the financial year ended 30 June 2022.
The balance of the franking account is Nil at 30 June 2022 (2021: Nil).
21. Share-based payments
(a) Shares issued to suppliers : During the year, 250,000 fully paid ordinary shares were issued to suppliers with a fair value of $12,500 in lieu of cash payment of invoices and 1,502,387 fully paid ordinary shares were issued to consultants with a fair value of $46,846 in lieu of cash payment of invoices.
(b) Reconciliation to share based payments expense in profit or loss:
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
$ |
$ |
|
Options issued to advisors and consultants |
|
|
|
- |
107,990 |
|
Options issued to directors |
|
|
|
85,680 |
210,840 |
|
|
|
|
|
85,680 |
318,830 |
(c) Fair value of options
The fair value of all options noted above have been determined using the Black & Scholes model taking in to account the inputs outlined in Note 11(e).
22. Subsequent events
There were no known material significant events from the end of the financial year to the date of this report that have significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
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