TIDMCCZ
RNS Number : 6200S
Castillo Copper Limited
10 March 2023
10 March 2023
CASTILLO COPPER LIMITED
("Castillo", the "Company" or the "Group")
Half-year Financial Report
Castillo Copper Limited (LSE and ASX: CCZ), a base metal
explorer primarily focused on copper across Australia and Zambia,
is pleased to announce it has submitted the financial report of the
Group for the half-year ended 31 December 2022.
In addition to this release, a PDF version of this report with
supplementary information can be found on the Company's website:
https://www.castillocopper.com/asx-announcements/
Results
The loss after tax for the half-year ended 31 December 2022 was
$625,672 (31 December 2021 loss of $781,670).
Review of Operations
During the financial period, the principal activity of the Group
(or "CCZ") was mineral exploration in eastern Australia and
Zambia.
The Group has four properties comprising the NWQ Copper Project
in Mt Isa's copper-belt, the BHA Project near Broken Hill's world
class silver-zinc-lead deposit in NSW, the historic Cangai Copper
Mine and four assets across Zambia's copper-belt.
A more detailed summary of key events undertaken during the
financial period follows:
East Zone, BHA Project, NSW
On 2 August 2022, CCZ announced metallurgical test-work on BH1
drill-core extracted from The Sisters Prospect - BHA Project's East
Zone - delivered excellent beneficiation results for cobalt and,
surprisingly, copper-gold - with the best outcomes:
v Cobalt: 200ppm head-grade up to 2,500ppm post-test-work; 12x
upgrade
v Copper: 520ppm head-grade up to 16,000ppm (1.6%)
post-test-work; 30x upgrade
v Gold: 0.02g/t Au head-grade up to 3.87g/t Au post-test-work;
>190x upgrade
Pleasingly, the metallurgical test-work showed that
cobalt-copper-gold liberated easily from BH1 drill-core samples to
produce a potentially viable concentrate. Further, the original BH1
drill-core samples were extracted from comprised:
24m @ 424ppm Co from 103m including 2m @ 1,120ppm Co from 107m;
1m @ 873ppm Co from 120m; and 2m @ 486ppm Co from 125m (BH1)
Moving forward, the Board's primary focus for the East Zone is
to increase the confidence in the current inferred Mineral Resource
Estimate (MRE) which stands at 21,556t cobalt (64Mt @ 318 ppm Co)
and 44,260t copper (63Mt @ 0.07% Cu).
On 9 August 2022, CCZ stated it had finalised targets for the
upcoming drilling campaign at the BHA Project's East Zone which
comprises one diamond core and 17 RC drill-holes for 2,100m, with
depths ranging from 100m to 160m.
Of these, two drill-holes were earmarked for The Sisters, with
the balance across Fence Gossan, Reefs & Tors Tanks
Prospects.
Notably, for the Fence Gossan, Reefs & Tors Tanks Prospects,
the campaign was designed to penetrate deep enough to intersect two
lower cobalt-rich zones that are interpreted to host higher grade
mineralisation than has been modelled to date.
On 31 August 2022, CCZ announced the appointment of two key
contractors:
v AllState Drilling's team will perform the campaign; and
v FieldCrew, which has performed work at the NWQ Copper Project
in Queensland, will manage the day-to- day aspects of the drilling
campaign.
In addition, post-announcing Australia secured preferred status
for the supply of critical minerals to the US's electric vehicle
battery program, the Board stated it wanted to deepen its
understanding of the East Zone's Rare Earth Element (REE) potential
at two targets:
v The Sisters Prospect: both planned RC drill-holes will be
analysed for copper-cobalt-gold and REEs; and
v Iron Blow: having already confirmed the presence of REEs, the
geology team is targeting to test additional drill-core samples
from the core library to determine if there are further extensions
to known mineralisation.
On 21 September 2022, the Board announced the drilling campaign
at the BHA Project's East Zone was to commence imminently, after
approval was secured from the New South Wales Resources
Regulator.
On 3 October 2022, a four-week long cobalt-focused drilling
campaign at the East Zone commenced (Figure 1 & 2).
FIGURE 1: PROPOSED DRILLING CAMPAIGN BHA PROJECT EAST ZONE
Prospects # Target Commodity Depth range Type Objective
Drillholes (m)
Reefs Tank,
Tors Tank, Target primary cobalt
Fence Co, Au, Ag, whilst assays to investigate
Gossan 16 Cu 100- 160 RC, DDH PGE & REE potential
=========== =========================== =========== ========== =================================
Test known EM interpretation;
drill extensions north
The Sisters 2 Co, Cu, REE 120- 160 RC & south
=========== =========================== =========== ========== =================================
Source: CCZ geology team
A key focus for the campaign is drilling two lower potentially
cobalt-rich zones at Fence Gossan, Reefs Tanks & Tors Tank,
which are interpreted to host higher-grade mineralisation than
modelled to date.
Overall, the Board's strategic intent is to extend known
mineralisation plus enhance the confidence and grade of the current
global MRE.
FIGURE 2: DRILLING UNDERWAY AT BHA PROJECT'S EAST ZONE
Location: 6460000mN, 570000mE Source: CCZ geology team
On 12 October 2022, CCZ announced four drill-holes for 488m were
completed at the Tors Tank Prospect which delivered encouraging
initial observations, including:
v All four drill-holes hit targeted cobalt mineralisation zones,
evidenced by intersecting sequences comprising clay, amphibolite,
schist, and gneiss;
v Qualitative logging identified multiple disseminated sulphide
layers (mostly pyrite), up to 12m thick, associated with
amphibolite layers that can potentially host cobalt
mineralisation;
v Field XRF observations, which are subject to final assay
results, indicated the presence of cobalt mineralisation within
these amphibolite zones; and
v The intersected geology was interpreted to be consistent with
observations by previous explorers, including Broken Hill North,
across the 1970-80s.
In addition, proximal to the amphibolite layers, there are
significant magnetite-rich zones - associated with pegmatite up to
14m thick - that potentially hosts REEs. Notably, this
interpretation is based on recently re-assayed diamond core from
drill-hole DD90_IB3 at the Iron Blow Prospect which returned up to
1,270ppm TREO.
On 24 October 2022, CCZ provided an update on drilling at the
Fence Gossan Prospect, where four drill-holes for a total of 516m
were completed, with positive initial observations comparable to
the Tors Tank Prospect:
v Targeted cobalt mineralisation zones were hit across the four
drill-holes, as sequences intersected comprised clay, amphibolite,
schist and gneiss;
v Numerous disseminated sulphide layers (mostly pyrite linked to
amphibolite), up to 17m thick, were logged which could potentially
host cobalt mineralisation; and
v Interpreting the intersected geology suggests it is consistent
with observations noted by North Broken Hill in the 1970-80s, while
XRF field observations (subject to final assays) indicated cobalt
mineralisation is apparent.
Similar to the Iron Blow Prospect, there are significant
magnetite-rich zones - associated with pegmatite up to 19m thick -
which potentially hosts REEs. These are based on field XRF
observations and are subject to final assays.
On 31 October 2022, after reconciling geochemical and
geophysical data for the Iron Blow Prospect, CCZ announced several
viable targets for drill-testing with significant exploration
potential. These findings were based on a re-interpretation of
geophysical campaigns from 2000, 2001 and 2017 which identified
several significant bedrock conductors that could host
mineralisation.
The primary focus will be REEs since diamond core assays from
drill-hole DD90_1B3 (sourced from the core library) returned
positive readings - on a cumulative basis - over 35m, with the best
intersections:
v 8m @ 1,460ppm TREO from 150m
v 12m @ 297ppm TREO from 199m
v 6.4m @ 290ppm TREO from 189m
v 4.8m @ 311ppm TREO from 232m
Since there is still untested diamond core from DD90_1B3 at the
core library, the geology team are planning for this to be fully
re-assayed for REEs. Contingent on the outcome of the current
drilling campaign, the Board has earmarked the Iron Blow Prospect
as the next priority target to drill-test with nine holes
planned.
On 15 November 2022, assays from seven drill-holes across the
Fence Gossan and Tors Tank Prospects, confirmed a significant
shallow clay-hosted REE discovery - up to 2,410ppm TREO, with
high-value Magnet REOs representing up to 29.9% of the grade - the
best intercepts are highlighted in Figure 3 below:
FIGURE 3: BEST ASSAYED INTERCEPTS - FENCE GOSSAN / TORS
TANK PROSPECTS(1)
o 20m @ 1,780ppm TREO (28.9% Magnet REO) from surface including
4m @ 2,410ppm TREO from 16m (FG_003RC)
o 7m @ 1,048ppm TREO (29.9% Magnet REO) from 12m (TT_002RC)
o 19m @ 847ppm TREO (29.6% Magnet REO) from surface (TT_003RC)
o 8m @ 773ppm TREO (24.0% Magnet REO) from 48m (FG_004RC)
o 4m @ 732ppm TREO (27.1% Magnet REO) from 24m (TT_001RC)
o 19m @ 661ppm TREO (28.0% Magnet REO) from surface (FG_002RC)
o 32m @ 636ppm TREO (25.7% Magnet REO) from 52m (FG_003RC)
o 28m @ 614ppm TREO (27.8% Magnet REO) from 4m (FG_004RC)
Source: CCZ geology team
Of significance, the assays for FG_002-4RC delineated an initial
800m strike event starting near Fence Gossan's eastern boundary.
Moreover, with REE mineralisation open in all directions, and Fence
Gossan circa 4km long by 1km wide (W-E), the Board has ordered
follow up geological mapping, sampling and auger drilling to target
extending the known strike event to the west.
While cobalt assays were consistent with previous observations,
the new REE discovery has pivoted the Board's strategic focus for
the current drilling campaign and beyond to fully understanding the
extent of REE mineralisation across the BHA Project's East
Zone.
On 23 November 2022, CCZ announced new assays for RT_001RC and
FG_001RC were positive for TREO, confirming REEs are more widely
apparent across the East Zone than initially envisaged - the best
intercepts comprise:
v 11m @ 1,078 TREO from 8m (RT_001RC) 1
v 20m @ 609ppm TREO from surface incl. 4m @ 1,709ppm REO from 8m
(FG_001RC) 1
v 11m @ 862ppm TREO from 58m (FG_001RC) 1
More significantly, all the assays returned to date from Fence
Gossan, Tors Tank and Reefs Tank highlight the REE mineralisation
discovered is extensive and shallow.
On 20 December 2022, following the receipt of drill assays for
the Fence Gossan, Tors Tank and partly Reefs Tank Prospects, CCZ's
Board confirmed that shallow REE mineralisation is more widely
apparent across the BHA Project's East Zone than initially
envisaged. As an immediate next step, the Board commissioned an
extensive auger sampling campaign.
Encouragingly, the auger sampling campaign, which covered a
6.5km2 area proximal to the Fence Gossan Prospect, was designed to
identify the full extent of REE mineralisation and new targets to
test-drill. As an immediate follow up, all samples were sent to the
laboratory for further analysis, with subsequent interpretation
charting the next phase of REE-focused exploration across the BHA
Project's East Zone.
NWQ Copper Project, Queensland
On 19 July 2022, preliminary metallurgical test-work on samples
extracted from drill-hole BO_318RC1 at the Big One Deposit produced
a concentrate (Figure 4) with confirmed upgrades ranging from 5x to
10x for copper metal. The best result for copper comprised: 0.72%
head-grade to 7.2% post-test-work.
Further test-work is underway on samples from the Big One
Deposit to determine the final optimal results. Notably, this is an
important proof of concept and de-risking exercise as part of the
Board's strategic intent to secure a processing agreement.
With an inferred Mineral Resource Estimate at 21,886t contained
copper metal (2.1Mt @ 1.1% Cu), the Big One Deposit has already
been significantly de-risked.
FIGURE 4: METALLURGICAL TESTING - FROTHER PRODUCT EXAMPLE
Source: ALS Metallurgy, Perth, Western Australia
On 20 December 2022, CCZ announced that the geology team planned
to visit several prospects at the NWQ Copper Project during 1Q 2023
to determine the potential to host copper mineralisation.
Zambia Copper Projects
On 7 December 2022, CCZ's Board approved incremental development
work on known key targets - scheduled to commence in 1H2023 -
focusing on the highly prospective Luanshya Project which is in the
heart of Zambia's copper belt.
Specifically, the geology team plan to roll out an Induced
Polarisation (IP) geophysics campaign to build on earlier work
undertaken in 2021 which focused on a 6km zone of copper surface
anomalism that delineated up to 14 chargeable zones. A key focus of
the upcoming IP campaign will be to refine targets for test
drilling and enhance the confidence of finding structurally
controlled copper mineralisation.
The plans for development work follow London-based, Metallea
Group's (previously Hyperion Copper) decision to cancel its plans
to list on the Alternative Investment Market (AIM) of the London
Stock Exchange (LSE), due to extremely difficult equity market
conditions. As this was a key requirement to secure funds to
progress development work, Metallea has further advised it will not
be exercising its option - which delivered a US$100,000
non-refundable deposit to CCZ - to acquire the Zambia Copper
Projects.
Moving forward, as CCZ's Board remains committed to aligning
with a development partner or undertaking a trade sale for the
Zambia Copper Projects, efforts will be redoubled to deliver this
outcome during 2023.
Cangai Copper Mine
During the review period, work was undertaken regarding
investigating minor rehabilitation requirements and keeping the
tenements current.
Corporate events
There were no corporate related events that occurred under the
period in review.
Events subsequent to period end
The following significant events occurred after 31 December
2022:
-- Management changes: On 30 January 2023, CCZ announced the following management changes:
o Mr Geoff Reed, Executive Director, resigned from the Board
with immediate effect from 30 January 2023.
o Mr David Drakeley was appointed by the Board with immediate
effect from 30 January 2023 as a Non-Executive Director.
o Mr Jack Sedgwick was appointed by the Board with immediate
effect from 30 January 2023 as a Non-Executive Director.
Auditor's Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors,
HLB Mann Judd, to provide the directors of the company with an
Independence Declaration in relation to the review of the half-year
financial report. This Independence Declaration is set out on page
9 and forms part of this directors' report for the half-year ended
31 December 2022.
This report is signed in accordance with a resolution of the
Board of Directors.
Gerrard (Ged) Hall
Non-Executive Chairman 10 March 2023
COMPETENT PERSON STATEMENT
The information in this report that relates to Exploration
Results for the Mkushi Project is based on information compiled or
reviewed by Mr Matt Bull, a consultant of Castillo Copper Limited.
Mr Bull is a member of the Australian Institute of Geoscientists
and has sufficient experience of relevance to the styles of
mineralisation and types of deposits under consideration, and to
the activities undertaken, to qualify as a Competent Person as
defined in the 2012 Edition of the Joint Ore Reserves Committee
(JORC) Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves. Mr Bull consents to the
inclusion in this report of the matters based on information in the
form and context in which it appears.
The information in this report that relates to Exploration
Results for the Mt Oxide pillar contained in this announcement is
based on a fair and accurate representation of the publicly
available information at the time of compiling the ASX Release, and
is based on information and supporting documentation compiled by
Nicholas Ryan, a Competent Person who is a Member of The
Australasian Institute of Mining and Metallurgy. Nicholas Ryan is
an employee of Xplore Resources Pty Ltd. Mr Ryan has been a Member
of the Australian Institute of Mining and Metallurgy for 14 years
and is a Chartered Professional (Geology). Mr Ryan is employed by
Xplore Resources Pty Ltd. Mr Ryan has sufficient experience that is
relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. Mr Ryan consents to the inclusion in
the report of the matters based on his information and the form and
context in which it appears.
The information on the page that relates to Exploration Results
of the Smelter Creek stockpiles is based on information compiled or
reviewed by Mr Mark Biggs, a consultant of Castillo Copper Limited.
Mr Biggs is a member of the Australian Institute of Geoscientists
and has sufficient experience of relevance to the styles of
mineralisation and types of deposits under consideration, and to
the activities undertaken, to qualify as a Competent Person as
defined in the 2012 Edition of the Joint Ore Reserves Committee
(JORC) Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves. Mr Biggs consents to the
inclusion in this report of the matters based on information in the
form and context in which it appears.
The Australian Securities Exchange has not reviewed and does not
accept responsibility for the accuracy or adequacy of this
release.
For further information, please contact:
Castillo Copper Limited +61 8 6558 0886
Dr Dennis Jensen (Australia), Managing Director
Gerrard Hall (UK), Chairman
SI Capital Limited (Financial Adviser and
Corporate Broker) +44 (0)1483 413500
Nick Emerson
Gracechurch Group (Financial PR) +44 (0)20 4582 3500
Harry Chathli, Alexis Gore, Henry Gamble
About Castillo Copper
Castillo Copper Limited is an Australian-based explorer
primarily focused on copper across Australia and Zambia. The group
is embarking on a strategic transformation to morph into a mid-tier
copper group underpinned by its core projects:
-- A large footprint in the Mt Isa copper-belt district,
north-west Queensland, which delivers significant exploration
upside through having several high-grade targets and a sizeable
untested anomaly within its boundaries in a copper-rich region.
-- Four high-quality prospective assets across Zambia's
copper-belt which is the second largest copper producer in
Africa.
-- A large tenure footprint proximal to Broken Hill's
world-class deposit that is prospective for
zinc-silver-lead-copper-gold and platinoids.
-- Cangai Copper Mine in northern New South Wales, which is one
of Australia's highest grading historic copper mines.
The group is listed on the LSE and ASX under the ticker
"CCZ."
AUDITOR'S INDEPENCE DECLARATION
As lead auditor for the review of the consolidated financial
report of Castillo Copper Limited for the half-year ended 31
December 2022, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
a) the auditor independence requirements of the Corporations Act
2001in relation to the review; and
b) any applicable code of professional conduct in relation to the review.
Perth, Western Australia M R Ohm
10 March 2023 Partner
Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income
for the half-year ended 31 December 2022
31 December 31 December
Note 2022 2021
$ $
Interest revenue 3,453 293
------------ ------------
Revenue 3,453 293
------------ ------------
Listing and public company expenses (76,956) (147,248)
Accounting and audit expenses (57,074) (67,204)
Consulting and directors' fees (250,113) (325,401)
Other expenses 3 (244,982) (242,110)
------------ ------------
Loss before income tax (625,672) (781,670)
Income tax expense - -
------------ ------------
Loss after income tax (625,672) (781,670)
Other comprehensive (loss) / income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation
of foreign operations 2,179 1,251
------------ ------------
Total comprehensive loss for the
half-year (623,493) (780,419)
============ ============
Loss per share attributable to
owners of Castillo Copper Limited
Basic loss per share (cents per
share) (0.05) (0.06)
Diluted loss per share (cents per
share) (0.05) (0.06)
The accompanying notes form part of these financial
statements.
Condensed Consolidated Statement of Financial Position
as at 31 December 2022
Note 31 December 30 June
2022 2022
$ $
Assets
Current Assets
Cash and cash equivalents 3,848,331 5,754,049
Other receivables 213,173 78,994
Total Current Assets 4,061,504 5,833,043
Non-Current Assets
Other receivables 486,961 404,961
Deferred exploration and evaluation
expenditure 4 13,879,681 12,899,486
Total Non-Current Assets 14,366,642 13,304,447
Total Assets 18,428,146 19,137,490
Current Liabilities
Trade and other payables 39,501 125,352
Total Current Liabilities 39,501 125,352
---------------------------- -------------------------
Total Liabilities 39,501 125,352
---------------------------- -------------------------
Net Assets 18,388,645 19,012,138
Equity
Issued capital 5 35,964,396 35,964,396
Reserves 4,082,555 4,080,376
Accumulated losses (21,658,306) (21,032,634)
Total Equity 18,388,645 19,012,138
The accompanying notes form part of these financial
statements.
Condensed Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2022
Foreign
Issued Share-Based Currency Accumulated
Capital Payment Translation Losses Total
$ Reserve Reserve $ $
$ $
------------------ --------------------- ------------------- ---------------- ----------
Balance as at 1 July
2021 34,464,159 4,092,830 (152,180) (19,379,451) 19,025,358
------------------ --------------------- ------------------- ---------------- ----------
Loss for the half-year - - - (781,670) (781,670)
Other comprehensive
income - - 1,251 - 1,251
------------------ --------------------- ------------------- ---------------- ----------
Total comprehensive loss
for the half-year - - 1,251 (781,670) (780,419)
------------------ --------------------- ------------------- ---------------- ----------
Transactions with
owners in their
capacity as
owners
Shares issued to
sophisticated
investors 1,742,319 - - - 1,742,319
Shares issued to
advisors as share
based payment 12,500 - - - 12,500
Share issue costs (367,776) 118,800 - - (248,976)
------------------ --------------------- ------------------- ---------------- ----------
Balance at 31 December
2021 35,851,202 4,211,630 (150,929) (20,161,121) 19,750,782
================== ===================== =================== ================ ==========
Balance as at 1 July
2022 35,964,396 4,230,962 (150,586) (21,032,634) 19,012,138
------------------ --------------------- ------------------- ---------------- ----------
Loss for the half-year - - - (625,672) (625,672)
Other comprehensive
income - - 2,179 - 2,179
------------------ --------------------- ------------------- ---------------- ----------
Total comprehensive loss
for the half-year - - 2,179 (625,672) (623,493)
------------------ --------------------- ------------------- ---------------- ----------
Balance at 31 December
2022 35,964,396 4,230,962 (148,407) (21,658,306) 18,388,645
================== ===================== =================== ================ ==========
The accompanying notes form part of these financial
statements.
Condensed Consolidated Statement of Cash Flows
for the half-year ended 31 December 2022
Note 31 December 31 December
2022 2021
$ $
Cash flows from operating activities
Payments to suppliers and employees (732,607) (931,440)
Interest received 3,453 293
Interest paid (1,936) -
Net cash outflow from operating activities (731,090) (931,147)
Cash flows from investing activities
Tenement expenditure guarantees (82,000) (62,490)
Payments for exploration and evaluation expenditure (1,113,264) (3,900,305)
Net cash outflow from investing activities (1,195,264) (3,962,795)
Cash flows from financing activities
Proceeds from issue of shares - 1,742,319
Share issue costs paid - (248,976)
Net cash inflow from financing activities - 1,493,343
Net decrease in cash and cash equivalents (1,926,354) (3,400,599)
Cash and cash equivalents at 1 July 5,754,049 10,854,829
Effect of exchange rate fluctuations on cash
held 20,636 30,678
Cash and cash equivalents at 31 December 3,848,331 7,484,908
The accompanying notes form part of these financial
statements.
Notes to the Condensed Consolidated Financial Statements
for the half-year ended 31 December 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Corporate Information
This general purpose financial report of Castillo Copper Limited
and its subsidiaries (the Group) for the half-year ended 31
December 2022 was authorised for issue in accordance with a
resolution of the directors on 10 March 2023.
Castillo Copper Limited is a company limited by shares
incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange and the London Stock Exchange.
The nature of the operations and principal activities of the
Group are described in the Directors' Report.
Basis of Preparation
This financial report for the half-year ended 31 December 2022
has been prepared in accordance with AASB 134 Interim Financial
Reporting and the Corporations Act 2001. The Group is a for profit
entity for financial reporting purposes under Australian Accounting
Standards. Compliance with AASB 134 ensures compliance with IAS 34
'Interim Financial Reporting'.
These half-year financial statements do not include all notes of
the type normally included within the annual financial statements
and therefore cannot be expected to provide as full an
understanding of the financial performance, financial position and
financing and investing activities of the Group as the full
financial statements.
It is recommended that the half-year financial statements be
read in conjunction with the annual financial statements for the
year ended 30 June 2022 and considered together with any public
announcements made by Castillo Copper Limited during the half-year
ended 31 December 2022 in accordance with the continuous disclosure
obligations of the ASX listing rules.
For the purpose of preparing the half-year report, the half-year
has been treated as a discrete reporting period. The accounting
policies and methods of computation adopted are consistent with
those of the previous financial year. These accounting policies are
consistent with Australian Accounting Standards and with
International Financial Reporting Standards.
The consolidated financial statements have been prepared on the
basis of historical cost.
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 period ended 31 December
2022 of $625,672 and a net cash outflow from operating activities
of $731,090. At 31 December 2022, the Group had a net asset
position of $18,388,645 and working capital of $4,022,003. The cash
and cash equivalents balance at 31 December 2022 was
$3,848,331.
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The directors have reviewed the Group's financial position and
are of the opinion that the use of the going concern basis of
accounting is appropriate.
New and amending Accounting Standards and Interpretations
In the half-year ended 31 December 2022, the Directors have
reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Group's operations and
effective for annual reporting periods beginning on or after 1 July
2022. 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.
The Directors have also reviewed all new Standards and
Interpretations that have been issued but are not yet effective for
the half-year ended 31 December 2022. As a result of this review
the Directors have determined that there is no impact, material or
otherwise, of the new and revised Standards and Interpretations on
the Group's business and, therefore, no change necessary to the
Group accounting policies.
NOTE 2: SEGMENT REPORTING
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 five 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 assets,
liabilities, income and expenses to each segment is shown
below:
NWQ Cangai Broken Hill
December 2022 (QLD) (NSW) (NSW) Zambia Unallocated Total
Segment assets
and liabilities $ $ $ $ $ $
Current assets - - - - 4,061,504 4,061,504
Non-current assets 6,416,742 5,498,371 1,374,496 1,076,912 121 14,366,642
Current liabilities - - - - (39,501) (39,501)
Segment income
and expenses
Interest income - - - - 3,453 3,453
Interest expense - - - - (1,936) (1,936)
Other expenses - - - - (627,189) (627,189)
----------- --------- ------------- ----------- ------------- ----------
Total - - - - (625,672) (625,672)
----------- --------- ------------- ----------- ------------- ----------
NWQ Cangai Broken Hill
December 2021 (QLD) (NSW) (NSW) Zambia Unallocated Total
Segment assets
and liabilities $ $ $ $ $ $
Current assets - - - - 7,948,906 7,948,906
Non-current assets 6,025,743 3,356,728 300,498 964,605 2,237,972 12,885,546
Current liabilities - - - - (1,083,670) (1,083,670)
Segment income
and expenses
Interest income - - - - 293 293
Other expenses - - - - (781,963) (781,963)
----------- --------- ------------- ----------- ------------- ------------
Total - - - - (781,670) (781,670)
----------- --------- ------------- ----------- ------------- ------------
NOTE 3: OTHER EXPENSES
Included in other expenses are the following items:
6 months to 6 months
to
31 December 31 December
2022 2021
$ $
Insurance 61,299 53,070
Interest expenses 1,936 -
Investor relations 175,461 105,868
Foreign exchange (gains) / losses (20,589) (30,737)
Legal fees 7,368 18,358
Travel and accommodation 2,948 239
Other expenses 16,559 95,312
------------- -------------
244,982 242,110
------------- -------------
NOTE 4: DEFERRED EXPLORATION AND EVALUATION EXPITURE
6 months Year ended
to
31 December 30 June
2022 2022
Exploration and evaluation phase: $ $
Opening balance 12,899,486 8,171,821
Exploration and evaluation expenditure during
the period 980,195 4,727,665
------------- -----------
Closing balance 13,879,681 12,899,486
------------- -----------
The ultimate recoupment of costs carried forward as exploration
expenditure is dependent on the successful development and
commercial exploitation or sale of the respective areas of
interest.
NOTE 5: ISSUED CAPITAL
31 December 30 June
2022 2022
$ $
Issued and paid up capital
Issued and fully paid 35,964,396 35,964,396
6 months to Year ended
31 December 2022 30 June 2022
Number of Number of
shares $ shares
$
Movements in issued capital
Opening balance 1,299,505,355 35,964,396 1,256,512,320 34,464,159
Shares issued to
sophisticated
investors - - 41,240,648 1,742,319
Shares issued to
advisors - - 250,000 12,500
Shares issued to
consultants - - 1,502,387 46,846
Transaction costs
on share
issue - - - (301,428)
Closing balance 1,299,505,355 35,964,396 1,299,505,355 35,964,396
Share options
At 31 December 2022 there were 235,154,516 (30 June 2022:
354,362,757) unlisted options with various exercise prices and
expiry dates and 224,939,782 (30 June 2022: 224,939,782) listed
options (ASX:CCZO, CCZOA & CCZOB), with various exercise prices
and expiry dates.
NOTE 5: ISSUED CAPITAL (CONTINUED)
The following share-based payment arrangements were in place
during the period:
Series Number Grant date Expiry date Exercise Fair value Vesting date
price at grant
$ date
31 December
1 17,000,000 16 May 2018 2023 $0.10 $0.018 16 May 2018
----------- --------------- ------------- ------------ ----------- ---------------
1 February 31 December 1 February
2 5,000,000 2019 2023 $0.05 $0.005 2019
----------- --------------- ------------- ------------ ----------- ---------------
3 7,000,000 23 June 2020 30 June 2023 $0.05 $0.013 23 June 2020
----------- --------------- ------------- ------------ ----------- ---------------
1 September
4 1,582,353 2 October 2020 2023 GBP0.017 $0.023 2 October 2020
----------- --------------- ------------- ------------ ----------- ---------------
30 September
5 19,000,000 2 October 2020 2023 $0.05 $0.018 2 October 2020
----------- --------------- ------------- ------------ ----------- ---------------
6 14,285,714 15 June 2021 31 July 2024 $0.08 $0.022 15 June 2021
----------- --------------- ------------- ------------ ----------- ---------------
7 2,955,665 16 June 2021 1 August 2024 GBP0.044 $0.021 16 June 2021
----------- --------------- ------------- ------------ ----------- ---------------
8 2,418,044 5 August 2021 31 July 2024 $0.08 $0.007 5 August 2021
----------- --------------- ------------- ------------ ----------- ---------------
9 462,379 4 August 2021 1 August 2024 GBP0.044 $0.017 4 August 2021
----------- --------------- ------------- ------------ ----------- ---------------
27 October 27 October
10 4,000,000 2021 31 July 2024 $0.08 $0.007 2021
----------- --------------- ------------- ------------ ----------- ---------------
30 November 30 November
11 3,000,000 2021 31 July 2024 $0.08 $0.010 2021
----------- --------------- ------------- ------------ ----------- ---------------
1 February 31 January 1 February
12 8,000,000 2022 2025 $0.08 $0.007 2022
----------- --------------- ------------- ------------ ----------- ---------------
During the year 119,208,241 options expired, with an exercise
price of $0.05 and a fair value at grant date of
$0.005.
No options were exercised during the period.
(a) Weighted average fair value
The fair value of the equity-settled 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:
NOTE 5: ISSUED CAPITAL (CONTINUED)
Grant date
Series Expected Risk-free Expected life Exercise price share price
volatility interest rate of option (cents/pence) (cents/pence)
(%) (%) (years)
1 100 1.9 5.6 10 3.9
------------- ---------------- ---------------- ----------------- ----------------
2 87 2.0 3.0 5 1.6
------------- ---------------- ---------------- ----------------- ----------------
3 100 0.3 3.0 5 2.6
------------- ---------------- ---------------- ----------------- ----------------
4 104 0.2 2.9 1.7p 2.6p
------------- ---------------- ---------------- ----------------- ----------------
5 104 0.2 3.0 5 4.2
------------- ---------------- ---------------- ----------------- ----------------
6 104 0.1 3.1 8 4.2
------------- ---------------- ---------------- ----------------- ----------------
7 104 0.1 3.1 4.4p 2.2p
------------- ---------------- ---------------- ----------------- ----------------
8 101 0.2 3.0 8 3.7
------------- ---------------- ---------------- ----------------- ----------------
9 104 0.1 3.0 4.4p 2.0p
------------- ---------------- ---------------- ----------------- ----------------
10 99 0.8 2.8 8 3.9
------------- ---------------- ---------------- ----------------- ----------------
11 99 0.9 2.7 8 3.4
------------- ---------------- ---------------- ----------------- ----------------
12 100 1.2 3.0 8 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.
Performance Shares
During the 2020 financial year, 46,875,000 Class A performance
shares and 46,875,000 Class B performance shares were issued to the
vendors of 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
No vesting expense has yet been recorded in relation to the
above performance rights based upon an assessment of the current
probability of vesting.
NOTE 6: CONTINGENT LIABILITIES
There has been no change in contingent liabilities since the
last annual reporting date.
NOTE 7: SUBSEQUENT EVENTS
The following significant events occurred after 31 December
2022:
-- Management changes: On 30 January 2023, CCZ announced the following management changes:
o Mr Geoff Reed, Executive Director, resigned from the Board
with immediate effect from 30 January 2023.
o Mr David Drakeley has been appointed by the Board with
immediate effect from 30 January 2023 as a Non-Executive
Director.
o Mr Jack Sedgwick has been appointed by the Board with
immediate effect from 30 January 2023 as a Non-Executive
Director.
NOTE 8: FINANCIAL INSTRUMENTS
The Group has a number of financial instruments which are not
measured at fair value on a recurring basis. The carrying amount of
these financial instruments approximates their fair values.
DIRECTORS' DECLARATION
In accordance with a resolution of the directors of Castillo
Copper Limited (the 'Company'), the directors of the company
declare that:
1. The financial statements and notes are in accordance with the
Corporations Act 2001, including:
a. complying with Accounting Standard AASB 134: Interim
Financial Reporting; the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
b. giving a true and fair view of the Group's financial position
as at 31 December 2022 and of its performance for the half-year
ended on that date.
2. In the directors' opinion there are reasonable grounds to
believe that the Company will be able to pay its debts as and when
they become due and payable.
Gerrard (Ged) Hall
Non-Executive Chairman 10 March 2023
INDEPENDENT AUDITOR'S REVIEW REPORT
To the members of Castillo Copper Limited
Report on the Condensed Half-Year Financial Report
Conclusion
We have reviewed the accompanying half-year financial report of
Castillo Copper Limited ("the company") which comprises the
condensed consolidated statement of financial position as at 31
December 2022, the condensed consolidated statement of profit or
loss and other comprehensive income, the condensed consolidated
statement of changes in equity and the condensed consolidated
statement of cash flows for the half-year ended on that date, notes
comprising a summary of significant accounting policies and other
explanatory information, and the directors' declaration, for the
Group comprising the company and the entities it controlled at the
half-year end or from time to time during the half-year.
Based on our review, which is not an audit, we have not become
aware of any matter that makes us believe that the half-year
financial report of Castillo Copper Limited does not comply with
the Corporations Act 2001 including:
(a) giving a true and fair view of the Group's financial
position as at 31 December 2022 and of its performance for the
half-year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reportingand the
Corporations Regulations 2001 .
Basis for conclusion
We conducted our review in accordance with ASRE 2410 Review of a
Financial Report Performed by the Independent Auditor of the
Entity. Our responsibilities are further described in the Auditor's
responsibilities for the review of the financial report section of
our report. We are independent of the company in accordance with
the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and
Ethical Standards Board's APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the annual financial report in Australia.
We have also fulfilled our other ethical responsibilities in
accordance with the Code.
Responsibility of the directors for the financial report
The directors of the company are responsible for the preparation
of the half-year financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the
half-year financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error
Auditor's responsibility for the review of the financial
report
Our responsibility is to express a conclusion on the half-year
financial report based on our review. ASRE 2410 requires us to
conclude whether we have become aware of any matter that makes us
believe that the half-year financial report is not in accordance
with the Corporations Act 2001 including giving a true and fair
view of the Group's financial position as at 31 December 2022 and
its performance for the half-year ended on that date, and complying
with Accounting Standard AASB 134 Interim Financial Reporting and
the Corporations Regulations 2001.
A review of a half-year financial report consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence
requirements of the
Corporations Act 2001 .
HLB Mann Judd M R Ohm
Chartered Accountants Partner
Perth, Western Australia 10 March 2023
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