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Castillo Copper (CCZ:ASX)

Outstanding massive sulphide copper results at Cangai

1 Video - Sep 18

Castillo Copper Limited (ASX:CCZ) has announced assay results from its ongoing drill program at the company’s Cangai copper project in NSW. Highlights of the announcement include the following.

  • The current drilling campaign (five out of 39 drill-holes completed to date) has returned the following results.
    • CC0023R: 11 m @ 5.94% Cu; 2.45% Zn and 19.13 g/t Ag from 40 m, including:
      • 3 m @ 8.1% Cu, 2.84% Zn and 23.42 g/t Ag from 41m
      • 1 m @ 10.25% Cu, 1.68% Zn and 32.50g/t Ag from 48 m
      • 1 m @ 7.53% Cu, 6.04% Zn & 30.60 g/t Ag from 50 m
  • CC0025R: 3 m @ 2.66% Cu, 0.50% Zn and 7.38 g/t Ag from 90 m
  • CC0022R: 2 m @ 2.50% Cu, 0.38% Zn and 9.78 g/t Ag from 92 m
  • A downhole electromagnetic (DHEM) team has been deployed to site and is currently refining the drilling campaign’s trajectory to determine extensions to the newly discovered mineralisation.
  • A diamond drilling rig has been mobilised to perform follow-up infill work.

Analyst comments: This is an outstanding result from Castillo, with hole CC0023R (see above) one of the highest-grade copper intercepts for an Australian exploration project in recent memory.

Importantly, this could be the discovery of a new lode at Cangai, bringing the total number of lodes identified to date to seven. With none of the current lodes deeper than 150 metres from surface across a strike of less than 1 kilometre, the potential for additional discoveries is excellent.

Interestingly, hole CC0023R was targeting a deeper DHEM anomaly. However, it intercepted massive sulphide before the target was reached. That hole is now being used for further DHEM, which should provide a clearer understanding of the initial target, as well as, hopefully, identifying additional targets in the area. We see the potential for further discoveries at depth (to date largely untested) as the greatest upside for further high-grade discoveries in the near term.

We look forward to the results from the DHEM, an exploration technique which has proved to be highly successful at Cangai, as well as continued drilling results as they are released over the coming months. We maintain our assessment of Castillo as a SPECULATIVE BUY.

Significant sulphide mineralisation encountered at Cangai

1 Video - Aug 18

Castillo Copper Limited (ASX:CCZ) has announced initial results from its ongoing drill program at the company’s Cangai copper project in NSW. Highlights of the announcement include the following.

  • The current drilling campaign (five out of 39 drill-holes completed to date) has intersected massive sulphides, including:
    • CC0023R: 18 m significant mineralisation intersected – includes 10 m massive sulphides from 41 m and 2 m massive sulphides from 56 m;
    • CC0022R: 18 m significant mineralisation intersected – includes 1 m massive sulphides from 92 m and 4 m semi-massive sulphides from 110 m, and
    • CC0025R: 8 m significant mineralisation intersected – includes 3 m semi-massive sulphides from 90 m.
  • Present in the massive sulphide intersections are extensive visible chalcopyrite, sphalerite, pyrite and pyrrhotite, consistent with historic mine reports.
  • A downhole electromagnetic (DHEM) team deploying to site will refine the drilling campaign’s trajectory and determine extensions to the newly discovered mineralisation.
  • A diamond drilling rig is being mobilised to perform follow-up infill work along the line of lode.

Analyst comments: This is a positive announcement from Castillo, highlighting that the company is right on track with the current drill program at Cangai.

While the drill program earlier in the year failed to meet market expectations, we remained highly optimistic regarding the potential of the Cangai project, given historical results and the limited amount of exploration completed there in recent years.

The current drill results appear to have supported this optimism, as they are more in line with expectations for the project (assays pending), with strong, continuous sulphide mineralisation encountered. If assay results confirm the presence of high-grade copper mineralisation – which is probable on the basis of the information released by the company (ASX announcement), as well as what historical production revealed about the project – there is the potential for a share price re-rating in coming weeks.

On saying this, we do understand that one drill result does not make a deposit (or a mining operation, for that matter). However, Castillo’s approach is pleasing, given that DHEM, an exploration technique already used with success at Cangai, is now underway. DHEM will not only provide a better understanding of the new zone’s potential but may also identify other targets in the area. Moreover, DHEM will allow for a more targeted approach when diamond drilling commences at that new zone later in the present campaign.

We look forward to more results (assay results, DHEM and ongoing drilling) from Cangai over the coming months and maintain our assessment of Castillo as a SPECULATIVE BUY.

Divesting non-core asset crystalises value at Marlborough

1 Video - Jul 18

Castillo Copper Limited (ASX:CCZ) has announced a joint venture with A-Cap Resources (‘A-Cap’, ASX: ACB). A binding term sheet to explore the Marlborough nickel-cobalt project, near Rockhampton in north-east Queensland, has been signed. Highlights of the announcement include the following.

  • A-Cap will earn up to a 60% interest in the Marlborough project by spending up to $2.25 million on activities there over the next two years.
  • Subsequently, A-Cap will continue funding 100% of the project’s expenditure until completion of a bankable feasibility study.
  • The Marlborough project is a non-core asset for Castillo, as only limited work has been completed there to date.
  • Castillo remains focused on exploration activities at its Cangai copper project and Broken Hill cobalt project.

Analyst comments: although the Marlborough project is highly prospective, it is a non-core asset of Castillo’s and has added little, if any, value to the company’s current share price.

The terms of the joint venture are favourable for Castillo (as outlined above). Moreover, it will retain a 40% interest in the project if a discovery is made without having to contribute any further expenditure until completion of a bankable feasibility study. Considering the limited amount of exploration work at the project to date, and the funds likely to be required to advance the project towards this stage of development, it is an excellent outcome for Castillo.

Importantly for Castillo, both its funds and management time will remain totally focused on its main assets at Cangai and Broken Hill. We look forward to initial assay results from the ongoing exploration drill program at Cangai to be release in late August/early September.   We maintain our assessment of Castillo as a SPECULATIVE BUY.

Initiation Report

7 Videos - Jun 18

Castillo Copper (CCZ.ASX) is developing the Cangai copper project in NSW, Australia.  Cangai historically mined exceptionally high grade copper (+13% Cu) over 100 years ago, however very limited work has been completed since its closure.  In the short term we see numerous catalysts, including drilling at the Cangai site, metallurgical test results from the tailing as well a ramp up in activity at the Broken hill cobalt project.

Cangai – Virtual Site Trip

1 Video - Jun 18

Virtual site trip to the Cangai historical copper mine in NSW, Australia.  This analysis reviews the following aspects:

  • Surrounding infrastructure
  • Historical operation
  • Exploration strategy
  • Future development potential.

 

 

Written Report – Re-discovering high grade copper in Australia

1 Video - Jun 18

Castillo Copper Limited (ASX:CCZ) is exploring the high grade Cangai copper project in New South Wales. The project was mined more than 100 years ago, which saw exceptionally high-grade copper (13% Cu) mined, as well as silver and gold credits.

What else do we know about Cangai?  With the exception of a period during the 1980s when major miners WMC and CRA (Rio Tinto) undertook limited exploration, since its closure a century ago, the site has remained largely unexplored – despite the excellent surrounding infrastructure, a skilled workforce within driving distance (just an hour by road from Grafton) and, most importantly, significant copper mineralisation clearly visible around the old workings (refer to virtual site trip video).

What work has Castillo completed recently? Last year Castillo announced a maiden JORC resource for Cangai of 3.2 Mt at 3.35% Cu. Castillo has  since completed and exploration drill program earlier this year, noting numerous promising copper intersections.  The company has also just announced a follow up 39 drill holes exploration drill program, focused predominately on the supergene ore area.

Is there other potential at Cangai? The Smelter Creek stockpiles are about one kilometre from Cangai. Given the exceptional high grade historical ore processed at this site and the poor metallurgical technology available at that time, it’s likely significant mineralisation remains. Castillo has announced an initial 4 hole drill program at Smelter Creek whilst they have also had a number of enquiries from prospective off-take partners.

Broken Hill cobalt asset: as well as the Cangai project, Castillo has an early-stage cobalt project at Broken Hill, immediately north of Cobalt Blues (ASX: COB – market cap. $125 million) Thackaringa project. Castillo recently released a desktop study for Thackaringa which identified six highly prospective sites for cobalt mineralisation.  Work is on-going at the Broken Hill project.

Valuation catalysts: the company will release a number of key announcements in the second half of this year, including the following.

  • Drilling at Cangai deposit – commence shortly.
  • Drilling at Smelter Creek stockpiles – commence shortly.
  • Assay results – 3Q18.
  • Metallurgical testwork (Smelter Creek) – 2H18.
  • Field exploration at Broken Hill – commencing 2H18.

Analyst comments: given the clear evidence of copper mineralisation around the historical Cangai mine site, as well as its proximity to world-class infrastructure and a skilled workforce, it’s surprising the project has remained idle for so long. However, with an aggressive 39 drill-hole program exploration program to commence shortly, Castillo is looking to quickly change this.

Unlike the initial program, which targeted deep mineralisation, this one is focusing on the shallower supergene material surrounding the historical workings. We believe this, as well as the use of smaller drill rigs better suited to the surrounding terrain, is likely to produce improved exploration results in comparisons to the first exploration program.  Assuming exploration success, a resource upgrade at Cangai is likely in the near future.

In addition to Cangai, drilling will also take place at the Smelter Creek stockpiles.  We were impressed by the potential there (as discussed above) and believe the results of this program may surprise on the upside. Longer term, the potential of the stockpiles will however be determined by the metallurgical testwork which is due to commence shortly after drilling.

In addition to Cangai/Smelter Creek, Castillo’s Broken Hill cobalt project holds significant blue sky potential for shareholders.  Given their neighbors COB recent announcement a strategic partnership with LG International (one of the world’s largest lithium-ion battery makers), this alone we believe should add value to Castillo’s long-term share price, particularly as work ramps up in the near future.

Broken Hill cobalt project – overview

1 Video - Jun 18

In addition to the Cangai copper project, Castillo owns the Broken Hill cobalt project.
Castillo has released a desk top study on the project which identified six highly prospective sites for cobalt mineralisation.  We discuss with management the strategy at Broken Hill moving forward.

Cangai – History

1 Video - Jun 18
  • The historical Cangai mininig operation was operational from 1904 until production ceased during the first world war in 1917.
  • We review the history of the project to highlight the potential which remains.

Cangai – Deposit & tailings projects development strategy

1 Video - Jun 18

The Cangai deposit has a current resource of 3.2Mt @ 3.35% Cu. We discuss with the company the strategy to grow this resources further as well as the potential to extract value from the historic tailings workings.

 

Cangai – Exploration strategy

1 Video - Jun 18

Review the exploration strategy and potential at the Cangai copper project and the surrounding areas.