The company had a transformational September quarter with high-grade assay results confirming the presence of extensive massive sulphide mineralisation across the first 5 holes completed in the current 39-hole campaign.
Castillo’s geology team believe the newly found semi-massive and massive sulphides indicate substantial incremental mineralisation may be discovered as the drilling progresses.
A memorandum of understanding (MoU) with Noble Group was also signed in early October to facilitate the monetisation of historical stockpiles at Cangai, which represent a near-term cashflow opportunity.
The company is involved in several financing discussions with prospective long-term strategic partners, including ASX200 companies and institutional investors, to fund Cangai’s ongoing development.
Initial holes from the current drilling program have confirmed extensive mineralisation as well as high grades at shallow depth.
The best intersection of 11 metres at 5.94% copper, 2.45% zinc and 19.13 g/t silver from 40 metres included:
3 metres at 8.1% copper, 2.84% zinc and 23.42 g/t silver from 41 metres;
1 metre at 10.25% copper, 1.68% zinc and 32.5 g/t silver from 48 metres; and
1 metre at 7.53% copper, 6.04% zinc and 30.60 g/t silver from 50 metres.
The massive sulphides intersected in the best hole have extensive visible chalcopyrite, sphalerite, pyrite and pyrrhotite present which is consistent with historic mine reports.
Castillo executive chairman Alan Armstrong said to Proactive Investor’s Stocktube channel the assays had confirmed Cangai’s high-grade mineralisation.
He said: “As we look over the last 12 months there are very few results … like this across the broader sector, let alone just on the ASX.”
Best intersections from the first five holes
Other highlighted intersections include: 3 metres at 2.66% copper, 0.5% zinc and 7.38 g/t silver from 90 metres, including 1 metre at 4.53% copper, 0.41% zinc and 9.71 g/t silver from 90 metres; and 2 metres at 2.5% copper, 0.38% zinc and 9.78 g/t silver from 92 metres, including 5 metres at 1.5% copper, 0.37% zinc and 6.9 g/t silver from 85 metres.
The full assay results verify that Cangai is a high-grade polymetallic mineralised system.
During the quarter, reverse circulation (RC) drilling and downhole electromagnetic (DHEM) surveying was finished at the Volkhardts lode and will next focus on the Mark’s and McDonoughs lodes.
Castillo’s board has recommended the drilling campaign be ramped up and its trajectory refined through contracting a DHEM survey team and mobilising a diamond drill rig to undertake infill work.
Cangai's stockpiles at the Jackaderry South Project
Metallurgical test work was carried out during the quarter on ore from historical stockpiles at McDonoughs and demonstrated positive results from beneficiation.
The five stockpiles surrounding Cangai are at the McDonoughs, Victory, Sellars, Volkhardts and Smelter Creek lodes.
Copper concentrate recoveries exceeded 80% with copper grades up to 22% and cobalt up to 300 ppm.
Castillo’s MoU with Noble Group will aim to monetise the five stockpiles through a binding offtake agreement where Noble will have exclusive rights to distribute up to 200,000 tonnes of copper concentrate from all five stockpiles.
Castillo will receive $500,000 on signing a binding offtake agreement with Hong Kong-based Noble.
Armstrong reported the two companies would work towards finding third parties to undertake processing, transportation, direct-shipping-ore (DSO) product logistics and financing.
A sample from Smelter Creek
Several large conductors were identified at the Volkhardts lode subsequent to the September quarter’s end, which Castillo believes are likely to be accumulations of massive sulphide mineralisation.
The company is confident in its interpretation as no conductive source material other than massive sulphides have been identified and the massive sulphides intersected in the drilling also delivered strong DHEM responses in-hole and in adjacent holes.
Optimisation work will be undertaken by the geophysics team before interpretations are finalised, but preliminary work suggests this may be a priority target for diamond drilling.
Further off-hole conductors have also been identified, which hint at the potential scalability of the project.
Soil and rock chip sampling at the eastern end of Cangai’s line-of-lode has uncovered a potential high-grade extension to known mineralisation.
Two anomalies had assay results from surface sampling grading 1,660 and 500 ppm copper, respectively.
Rock chip samples taken while mapping historic workings assayed up to 23.9% copper and 55.5 g/t silver, providing further evidence of potential extensions to the known mineralised footprint.
Exploration work at Castillo’s Broken Hill project targeted the area’s zinc-lead-copper potential as historic geochemistry data highlights the project’s base metal prospectivity.
Historical assays of up to 5,300 pp, zinc, 12,800 ppm lead and 2,900 ppm copper have been confirmed at the Area 1 prospect in the southern portion of the project.
Castillo collected 106 rock chip samples in a follow up site visit to Area 1, returning assay results up to 1,440 ppm cobalt and 23,700 ppm copper within an anomalous zone.
Results up to 126,000 ppm lead and 73,910 ppm zinc from outside the tenement, but interpreted to strike along the same mineralised trend, indicated the project’s potential.
A-Cap agreed to invest $2.25 million over the next two years to develop the Marlborough project in Queensland and Castillo will be free-carried for a 40% stake in the project through to the bankable feasibility study stage.