Castillo Copper (ASX:CCZ) continues to attract investor’s attention as it prepares for its inaugural drill program at the recently secured Cangai Copper Mine in northern New South Wales.
During the September quarter, Castillo completed multiple acquisitions that resulted in it owning four projects, each with multiple prospects, across New South Wales and Queensland.
The Jackaderry Project hosts the historical Cangai Copper Mine, which has a JORC Inferred Resource of 3.2 million tonnes at 3.35% copper, one of Australia’s highest grade copper resources.
After delineating Cangai’s JORC resource using historical exploration data recently in September, Castillo sees good potential for resource expansion in its maiden drilling program.
Drilling will focus on unmined working sections and the mineralisation halo within the JORC modelled boundary at Cangai.
Recent visit to Cangai reveals growth potential
A recent site visit to Cangai confirmed evidence of extensive high-grade copper mineralisation materially above initial expectations.
This significantly enhances the potential for a resource size upgrade post the upcoming inaugural drilling program.
The geological team examined legacy working sections, extensive outcropping and three ore stockpiles – all showing copper mineralisation is more extensive than initially modelled.
Early cash flow opportunity
XRF analysis confirmed high-grade copper mineralisation apparent in five historical stockpiles, showing up to 30% grades which is consistent with legacy assays.
The high-grade ore stockpile areas are early potential targets for cash flow generation, if mining operations re-commence.
Furthermore, the Cangai Copper Mine’s high-grade supergene ore is able to be shipped to Asian customers, by trucking the ore to Grafton nearby to access the railway network.
Near-term priorities at Cangai
The Castillo board has determined the following to be priorities at Cangai:
- Target extensions to higher grade lenses as potential direct shipping ore material;
- Focus on proving up and extending the defined supergene ore lodes within the resource using legacy data and an inaugural drilling program;
- Undertake a preliminary assessment of having an open pit mine, given the resource is relatively shallow and this is the most economic way to extract the ore;
- Expedite re-assaying legacy core samples for cobalt given that builds in additional upside; and
- Progress desktop work identifying other mineralised anomalous zones within the Jackaderry Project to expand the overall resource size.
Supported by a rising copper price
This is a fortuitous period to be developing a copper mine with copper prices having rebounded over 50% from their 2016 lows.
Copper is trading near to its 3-year high and investment bank, Goldman Sachs, recently increased its copper forecasts based on the outlook for global growth.
It also believes the market now faces a potential deficit next year, not the surplus it and others previously forecast.
Project portfolio
Castillo is a base metal explorer primarily focused on copper, cobalt, zinc and nickel with the bulk of its core operating assets in eastern Australia.
Its project portfolio includes:
- Jackaderry Project (100%, New South Wales): 3 prospects including the Cangai Copper Mine;
- Broken Hill Project (100%, New South Wales): 2 prospects;
- Mt Oxide Project (100%, Queensland): 3 prospects;
- Marlborough Project (under application, Queensland): 3 prospects; and
- Chilean Projects (100%).
Zinc and cobalt targets at Broken Hill Project
During September, evidence of surface mineralisation for zinc and cobalt was uncovered as part of the desktop review process at the Broken Hill Project.
Just outside the western boundary but striking into the project area, surface mineralisation grading up to 3,000ppm cobalt was been found.
Within the same anomalous zone, legacy drill-holes had intersections that contained 7,000 ppm cobalt.
The review has also uncovered multiple legacy drill holes with grades of up to 3% zinc.
Given the prices of zinc and cobalt are also very strong, generating drill targets within the Broken Hill Project will follow the Cangai drilling campaign.