Castillo Copper raises A$11.7M for copper projects in Australia and Zambia

Castillo Copper (ASX: CCZ; LSE: CCZ) plans to drill its flagship Mt. Oxide project in Australia’s Mt. Isa copper belt and its Luanshya and Mkushi projects in Zambia with the proceeds of an A$11.7 million ($10.9 million) financing.

The funds will be used to test copper targets across the Big One deposit, Arya and Sansa prospects at Mt. Oxide and for exploration programs at its copper projects across Zambia’s copper belt, the company says.

“Due to strong demand from current and new institutional investors in Australia and the U.K., we now have ample funds to ramp up our exploration efforts,” Simon Paull, Castillo’s managing director, stated in a press release. “The board now has significantly higher confidence that 2021 will be a transformative year for Castillo Copper.”

The company noted that “there has been a significant resurgence of interest” in Australia’s Mt. Isa copper belt — not just because of higher copper prices but also due to the upcoming initial public offering on Australia’s stock exchange of 29Metals, which owns the Capricorn copper mine, about 7 km southwest of Castillo’s Mt. Oxide project.

Under the financing, Castillo issued 278.4 million new shares at A4.2¢ apiece, an 11% discount to the junior’s 15-day volume weighted average price (VWAP), along with one option for every two new shares subscribed that can be exercised at A8¢ until July 12 2024.

The drill program at Mt. Oxide in northwest Queensland will focus on three prospects: the Big One deposit, with a 26-hole campaign (2,828 metres) to extend the known mineralization; and testing the Arya and Sansa prospects.

Castillo acquired Mt. Oxide in 2017 and identified 21 targets across the project area based on archived exploration data. It subsequently zeroed in on nine priority targets, including Arya.

Last October the company started a 36-hole drill program focused on the Big One deposit, which it says contains shallow high-grade supergene ore, and the Arya prospect, which is says has a “sizeable massive sulphide anomaly with IOCG potential.”

Highlights from the drilling at Big One included 40 metres of 1.64% copper from surface in drill hole 303RC, including 11 metres at 4.40% copper from 24 metres, 5 metres of 7.34% copper from 28 metres; and 1 metre of 16.65% copper from 29 metres. Drillhole 301RC returned 44 metres of 1.19% copper from surface, including 14 metres of 3.55% copper from 27 metres, 3 metres of 10.88% copper from 37 metres, and 1 metre of 12.6% copper from 37 metres. Other notable intercepts were 34 metres of 1.51% copper from surface in drillhole B0017; 3 metres of 12.25% copper from 42 metres in drillhole B07; and 8 metres of 2.33% copper from 44 metres in hole B05.

Around 4,000 tonnes of supergene ore was mined historically at Big One with an average grade of about 3.5% copper, and any potential copper extracted from the deposit could be sent to third-party processors in the Mt. Isa region, the company says.

At its Arya prospect, where copper outcrops have been found, Castillo says an aerial electromagnetic survey in early 2019 outlined a 130-metre-thick, 1,500 metre by 450 metre “bedrock conductor” at a depth of 450 metres. (BHP originally discovered it in 1997 but did not follow up, Castillo says.) The junior’s plan is to drill three deep holes 201 metres apart and ranging to depths of between 590 and 680 metres, along with 11 shallower holes. The objective, it says, is to “prove a clear nexus between the interpreted supergene copper mineralization at surface and massive sulphides at depth.”

The company also owns the historic Cangai copper mine in New South Wales, where it is seeking a strategic development partner. Cangai has a JORC-compliant inferred resource completed in August 2017 of 3.2 million tonnes grading 3.35% copper. The resource used a cut-off grade of 1% copper.  Diamond drill highlights from Cangai include 4.4 metres of 5.06% copper, 2.56% zinc and 20.1 grams silver per tonne from a depth of 50 metres, and RC drill highlights include 11 metres of 5.94% copper, 2.45% zinc, 19.13 grams silver from 40 metres downhole.

In Zambia, Castillo has four projects, Mkushi, Luanshya, North and South Lumwana and Mwansa, which together cover about 1,100 sq. km in the country’s copper belt.

The company says both Mkushi and Luanysha have well-defined soil anomalies.

At Luanysha, which is about 10 km south of three operating mines owned by China Nonferrous Mining, samples of copper in-soil anomalies have yielded up to 2,600 parts per million copper.