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Castillo Copper ‘pleasantly surprised’ at Broken Hill copper results

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Castillo Copper [LSE:CCZ], the Perth-based, copper-focused mining and exploration company has released metallurgical results from its Sisters Prospect at Broken Hill in New South Wales, Australia.

The company announced: “excellent beneficiation results for cobalt and copper-gold,” which yielded 4 g/t gold and 1.6% copper, which Dennis Jensen, managing director, said may justify further follow-up exploration.

However, said Jensen, the exploration company’s: “current prime focus is to increase the confidence in the inferred cobalt resource with a highly targeted drilling campaign across several prospects, with planning to be finalised shortly.”

Castillo Copper is primarily focused on copper exploration in Zambia and Australia. It is dual-listed in the UK and Australia, listing in London in August 2020. The share price in mid-morning trading (3rd August) was 0.83p and has ranged between 2.4p and 0.6p over the last 52-weeks, offering a year-to-date return of -48.07% and a one-year return of -59.76%. The current market capitalisation of the company is GBP10.7m.

The company owns four projects which form the backbone of its strategy to become a mid-tier copper producer. The company said these projects were selected for their potential to develop economic mineral resources and we are actively progressing each project up the value curve.

The NWQ project in Queensland is a 100% owned copper project with potential to deliver material exploration upside. The company has been operating the Mount Isa since March 2017 and says it has 22 viable targets, including major copper discovery at Big One Deposit. Castillo commenced a 36-hole maiden RC drilling programme at in October 2020. This was focused on two stand-out targets that could deliver potential scale and exploration upside: Big One Deposit, which comprises shallow high-grade supergene ore up to 28.4%; and the Arya Prospect, which has a sizeable massive sulphide anomaly with IOCG potential.

Zambia retreat

Castillo has been in Zambia since February 2020, and is the sole shareholder of Zed, an Australian company that holds four highly-prospective exploration projects in Zambia, the second largest copper producer in Africa. The two priority targets, Mkushi and Luanshya, potentially have extensive mineralisation along known structures and are proximal to some of the world’s largest historic, producing copper mines.

In June Castillo Copper granted London-based Hyperion Copper a 12-month option to acquire its Zed and its Zambian projects for GBP3.8m. Under the terms of the agreement, Hyperion will pay a non-refundable fee of AUD142,000 to secure the 12-month exclusive option, and will issue a further GBP2.25m in Hyperion shares should it wish to exercise its option to acquire 100% of Zed Copper.

Hyperion plans to list on London’s AIM market in the second half of this year.  Jensen said at the time: “Securing a development partner for our Zambia Projects has been a strategic priority to ensure optimal value creation.” The parties are currently preparing a Definitive Acquisition Agreement.

Cobalt opportunity

The Broken Hill Project in New South Wales – for which the recent metallurgical report on the Sisters Prospect concerns – has four prospects and Castillo has been working on it since July 2017. The company said it is the world’s largest high-grade zinc-silver-lead deposit and is highly prospective for Broken Hill Type silver-zinc-lead in the West Zone and Iron Oxide Copper Gold mineralisation in the East Zone.

Broken Hill is also a focus of other miners, with more than 30 of the world’s largest battery manufacturers having their attention focused cobalt prospects in the area. With very good reason, as it will be one of the largest cobalt producers in the world. In fact, if Broken Hill were a country, it would rank number five for cobalt production. Currently, Australia is the third biggest producer of cobalt worldwide, at 5.6 million tonnes in 2021. One company operating in the region is Cobalt Blue [ASX:COB].

Castillo is also prospecting around the Cangai Copper Mine in New South Wales. The company said the Cangai Copper Mine is shown to be one of the highest-grade copper resources in Australia through completion of a JORC Code compliant Inferred Resource of 3.2Mt at 3.35% copper and up to 14.45% copper in assayed diamond core intersections. Castillo intends to develop and extend the Cangai Copper Mine.

Analyst, SI Capital covers Castillo Copper. It last published research on the company in June 2021. At the time Charlie Stephenson, ECM Analyst wrote: “Castillo Copper gives investors the opportunity to have focused exposure to copper, one of the most attractive commodities for the global growth recovery. Over the past five years copper exploration has been significantly under invested, with projections indicating that the up-coming demand from electrification development will significantly outstrip supply.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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