TIDMCCZ
RNS Number : 5867O
Castillo Copper Limited
03 October 2023
03 October 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014
WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL)
ACT 2018, AS AMED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO
BE IN THE PUBLIC DOMAIN.
CASTILLO COPPER LIMITED
("Castillo" or the "Company")
Final Results
Publication of Annual Report
Castillo Copper Limited (LSE and ASX: CCZ), a base metal
explorer primarily focused on copper across Australia and Zambia,
announces its financial results for the year ended 30 June
2023.
Annual Address
Dear Shareholders,
Challenges thrown up by the external environment in FY2023 -
rapid increase in interest rates to combat inflation, ongoing war
in Ukraine, pedestrian commodity prices and subdued equity markets
- forced the Board to undertake thorough due diligence before
making decisions.
The Board's core theme, which remains a constant moving forward,
is to align with strategic development partners to optimise the
value creating potential from the current asset portfolio. Further,
the Board will consider any outright offer to acquire one of the
assets based on its merits.
Reflecting on FY2023, extremely weak stock market conditions in
the UK resulted in London-based Metallea Group not proceeding with
plans to acquire the Zambia Copper Projects. However, the Board has
committed to further exploratory work and re-doubled efforts to
align with a new strategic development partner.
In Australia, solid progress was made advancing the three
projects, summarised as follows:
-- East Zone, BHA Project (NSW): Post defining a JORC compliant
inferred cobalt resource from legacy data (64Mt @ 318 ppm Co for
21,556t), the Board commissioned a 2,000m drilling campaign.
The surprise upshot from this campaign was the discovery of a
significant shallow rare earth element system proximal to the Fence
Gossan, Reef and Tors Tank Prospects.
While initial metallurgy samples were inconclusive, the Board is
investigating trialling several alternate metallurgical test-work
techniques to improve extraction results.
-- NWQ Copper Project (QLD): Metallurgical test-work undertaken
on samples from the Big One Deposit to produce a concentrate were
encouraging, with upgrades ranging from 5-10x copper metal.
Further, combined with a JORC compliant inferred Mineral Resource
Estimate - 2.1Mt @ 1.1% Cu for 21,886kt copper metal - and known
targets to test-drill, the Big One Deposit offers significant
exploration potential.
More broadly, across the NWQ Copper Project are over 20
incremental under explored prospects that are highly prospective
for copper mineralisation which potentially provide the foundations
for developing a series of satellite deposits.
-- Cangai Copper Mine (NSW): Post the review period, the geology
team produced an updated JORC compliant inferred Mineral Resource
Estimate at 4.4Mt @ 2.5% Cu and 0.2Mt @ 1.35% Cu indicated from
historic stockpiles for 114kt contained copper metal.
Ged Hall
Chairman
Dennis Jensen
Managing Director
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."
Annual Report and Accounts
The Company's Annual Report and Accounts is available on the
Company's website at: https://castillocopper.com/investors/
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was
$6,942,228 (2022: $1,653,183) and the net assets of the Group at 30
June 2023 were $12,071,269 (2022: $19,012,138).
DIVIDS
No dividend was paid or declared by the Group during the year
and up to the date of this report.
CORPORATE STRUCTURE
Castillo Copper Limited is a company limited by shares that is
incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
During the financial year, the principal activity of the Group
was mineral exploration and examination of new resource
opportunities. The Group currently holds copper projects in
Queensland and New South Wales in Australia as well as copper
projects in Zambia.
EMPLOYEES
Other than the Directors, the Group had no employees at 30 June
2023 (2022: Nil).
REVIEW OF OPERATIONS
During the financial year, the principal activity of the group
was mineral exploration primarily focused on copper, cobalt and
rare earth elements ("REE") projects in Australia and Zambia.
East Zone, BHA Project, NSW
On 2 August 2022, 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:
-- Cobalt: 200ppm head-grade up to 2,500ppm post-test-work; 12x upgrade.
-- Copper: 520ppm head-grade up to 16,000ppm (1.6%) post-test-work; 30x upgrade.
-- 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 the samples were extracted from comprised:
24m @ 424ppm Co from 103m including 2m @ 1,120ppm Co from 107m;
1m @ 873ppm Cofrom 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 which stands at 21,556t cobalt (64Mt @ 318 ppm Co) and
44,260t copper (63Mt @ 0.07% Cu).
On 9 August 2022, targets were finalised for the drilling
campaign at the East Zone which comprised 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 were interpreted to host higher grade
mineralisation than had been modelled.
On 31 August 2022, two key contractors were appointed:
-- AllState Drilling's team to perform the campaign; and
-- FieldCrew to manage day-to-day aspects of the drilling campaign.
In addition, with Australia securing preferred status for the
supply of critical minerals to the USA's electric vehicle battery
program, the Board determined it necessary to deepen its
understanding of the East Zone's REE potential at two targets:
-- The Sisters Prospect: both RC drill-holes were analysed for
copper-cobalt-gold and REEs; and
-- Iron Blow: having already confirmed the presence of REEs, the
geology team tested additional drill- core samples from the core
library to determine if there are further extensions to known
mineralisation.
On 3 October 2022, after approval was secured from the New South
Wales Resources Regulator, a four-week long drilling campaign at
the East Zone commenced across four prospects (Figure 1 &
2).
FIGURE 1: PROPOSED DRILLING CAMPAIGN BHA PROJECT EAST ZONE
Prospects # Target Commodity Depth range Type Objective
Drillholes (m)
Reefs Tank, Target primary cobalt
Tors Tank, Co, Au, Ag, RC, whilst assays to investigate
Fence Gossan 16 Cu 100- 160 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
FIGURE 2: DRILLING UNDERWAY AT BHA PROJECT'S EAST ZONE
Location:6460000mN, 570000mE
Source: CCZ geology team
On 12 October 2022, four drill-holes for 488m were completed at
the Tors Tank Prospect which delivered encouraging initial
observations, including:
-- All four drill-holes hit targeted cobalt mineralisation
zones, evidenced by intersecting sequences comprising clay,
amphibolite, schist, and gneiss;
-- Qualitative logging identified multiple disseminated sulphide
layers (mostly pyrite), up to 12m thick, associated with
amphibolite layers that can potentially host cobalt
mineralisation;
-- Field XRF observations, subject to final assay results,
indicated the presence of cobalt mineralisation within these
amphibolite zones; and
-- 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 was 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, four drill-holes for a total of 516m were
completed at the Fence Gossan Prospect, with positive initial
observations comparable to the Tors Tank Prospect:
-- Targeted cobalt mineralisation zones were hit across the four
drill-holes, as sequences intersected comprised clay, amphibolite,
schist and gneiss;
-- Numerous disseminated sulphide layers (mostly pyrite linked
to amphibolite), up to 17m thick, were logged which could
potentially host cobalt mineralisation; and
-- 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.
On 31 October 2022, after reconciling geochemical and
geophysical data for the Iron Blow Prospect, several viable targets
were selected 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 is 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:
-- 8m @ 1,460ppm TREO from 150m
-- 12m @ 297ppm TREO from 199m
-- 6.4m @ 290ppm TREO from 189m
-- 4.8m @ 311ppm TREO from 232m
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
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 ordered follow
up geological mapping, sampling and auger drilling to target
extending the known strike event to the west.
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 East Zone.
On 23 November 2022, 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:
-- 11m @ 1,078 TREO from 8m (RT_001RC)
-- 20m @ 609ppm TREO from surface incl. 4m @ 1,709ppm REO from 8m (FG_001RC)
-- 11m @ 862ppm TREO from 58m (FG_001RC)
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, which
confirmed that shallow REE mineralisation is widely apparent, the
Board commissioned an extensive auger sampling campaign.
Encouragingly, the auger sampling campaign, which covered a
6.5km2area proximal to the Fence Gossan Prospect, was designed to
identify the full extent of REE mineralisation and new targets to
test-drill.
All samples were sent to the laboratory for further analysis,
with subsequent interpretation charting the next phase of
REE-focused exploration across the East Zone.
On 15 February 2023, the assay results for diamond core from
TT_005DD (Figure 4) - undertaken at the Tors Tank Prospect -
significantly boosted confidence in the shallow, clay-hosted, REE
discovery, with the best intercept:
-- 13m @ 1,550ppm Total Rare Earth Oxides (TREO) from 5m
FIGURE 4: TORS TANK DIAMOND CORE FROM 5.3-11.8M (TT_OO5DD)
Source: CCZ geology team
Notably, high value Magnetic REO (Nd+Pr+Dy+Tb) represented an
exceptional 38.9% of the TREO grade vs 25% peer average.
Re-assays of 4m composite samples at Tors Tank & Fence
Gossan to 1m provided greater clarity on the underlying geology,
whilst delivering further evidence of an extensive, shallow REE
mineralisation system - the best intercepts comprise:
-- 17m @ 1,605ppm TREO from 2m and 1m @ 3,236 TREO from 19m (FG_003RC)
-- 10m @ 1,013ppm TREO from 49m (FG_001RC)
-- 6m @ 1,480ppm TREO from 7m (FG_004RC)
-- 5m @ 1,598ppm TREO from 14m (TT_002RC)
-- 4m @ 1,342ppm TREO from 28m (FG_004RC)
-- 2m @ 3,491ppm TREO from 7m (TT_003RC)
Assays for circa 70% of the recent hand auger surface sampling
campaign across Fence Gossan delineated a sizeable
4.5km2anomalous area for REE mineralisation. Notably, a
preliminary interpretation suggests there are several more prime
targets to test-drill that could potentially extend known
mineralisation between the Fence Gossan and Tors Tank
Prospects.
On 13 April 2023, specialist consultant, ANSTO, was appointed to
undertake comprehensive metallurgical test-work on six samples from
Fence Gossan, Reefs and Tors Tanks Prospects to understand the
potential to extract REE from shallow clay zones.
The scope of work focused on characterising REE leachability
from the six samples which comprise fresh pegmatite to highly
weathered clay, especially with Magnetic Rare Earth Oxide (MREO)
grades ranging from 362-603ppm.
This was an important step towards advancing the viability of
the East Zone's REE potential and securing interest from
prospective development partners, especially given the extent of
high-value MREO (Nd+Pr+Dy+Tb) within the system.
On 14 June 2023, specialist consultant, ANSTO, produced the
following preliminary findings from metallurgical test- work
performed on six samples from the Fence Gossan, Reefs, and Tors
Tanks Prospects:
-- The Total Rare Earth Element plus Yttrium (TREY) grades for
the six samples ranged from 227 to 1,632 ppm TREY;
-- The proportion of high-value Magnetic Rare Earth Oxides
(MREO; Nd+Pr+Dy+Tb) to Total REO (TREO) across the six samples
ranged from 22% to 27%; and
-- The best TREY extraction, using a direct leach process at pH 1, was 30%
The Board is reviewing next steps, including trialing alternate
leach tests proposed by ANSTO to improve extraction results.
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 5) 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.
FIGURE 5: METALLURGICAL TESTING - FROTHER PRODUCT EXAMPLE
Source: ALS Metallurgy, Perth, Western Australia
On 23 January 2023, following a review of prospects at the NWQ
Copper Project, CCZ's geology team visited several prospects -
including Big One, Arya and Valparaisa - to identify new drill
targets.
The initial focus was on the Big One, which has an inferred MRE
of 2.1Mt @ 1.1% Cu for 21,886kt copper metal post- two drilling
campaigns across 2020-21. Moreover, factoring in a large conductor
north of the line of lode, plus reconciling available geophysics
and geochemical data, CCZ's geological consultant set an
Exploration Target that ranges from 2-6Mt @ 0.6-1% Cu for 12-60kt
copper metal.
Cautionary Statement: It should be noted that the Exploration
Target tonnage range quoted above are conceptual in nature and
there has been insufficient exploration to define a copper
resource. Although a preliminary analysis was undertaken,
insufficient data exists to confidently correlate mineralised
horizons within the Exploration Target area. It is uncertain
whether further exploration may lead to the reporting of a
JORC-standard resource, however, there is some evidence to support
the current exploration tonnage calculations, and the sufficient
mineralised thicknesses interpreted from historical drilling to
warrant further investigation in some areas.
The Valparaisa Prospect comprises copper mineralisation across
two horizons over a 6km strike event, with the interaction of two
intersecting faults suggesting a structurally controlled copper
system that can potentially be drill- tested.
At the Arya Prospect, there is a significant magnetic anomaly,
south of a known graphite system (test drilled in late 2021), that
shows potential to be a primary source of copper
mineralisation.
On 20 February 2023, CCZ's Board approved plans to assess
optimising the Big One Deposit via implementing the following:
-- Commissioning an independent engineering contractor to
conduct a pit optimisation study on the viability of commencing
copper mining operations, utilising prospective third-party
processors and effective path to market.
-- Re-formulating optimal plans for a third drilling campaign
and companion geophysical surveys to extend known mineralisation
beyond the line of lode.
Previous drilling campaigns have demonstrated the Big One
Deposit remains highly prospective for copper mineralisation, with
the best intercepts comprising:
-- 40m @ 1.64% Cu from surface incl: 11m @ 4.40% Cu from 24m, 5m
@ 7.34% Cu from 28m & 1m @ 16.65% Cu from 29m (303RC)
-- 44m @ 1.19% Cu from surface incl: 14m @ 3.55% Cu from 27m, 3m
@ 10.88% Cu from 37m & 1m @ 12.6% Cu from 37m (301RC)
-- 34m @ 1.51% Cu from surface incl: 21m @ 2.25% Cu from
surface, 12m @ 3.44% Cu from 3m, 6m @ 4.79% Cu from 3m and 1m @
9.4% Cu from 9m (B0017)
On 28 March 2023, CCZ appointed Entech Mining to undertake a pit
optimisation and mine design study for the Big One Deposit. If the
findings are positive then next steps comprise determining the
optimal path to market and effective use of third-party
processors.
Concurrently, work can focus on capitalising on Big One
Deposit's exploration potential via drill-testing known targets
north of the line of lode.
On 13 July 2023 the Board received the preliminary pit
optimisation study for the Big One Deposit.
Drilling down, the study focused on the near-surface component
of known mineralisation at the Big One Deposit and provided
significant confidence a standalone mining operation could
potentially be developed.
Key findings indicate an initially optimised pit shell could
potentially deliver up to 6,266t copper (head grade: 1.42% Cu),
4,362oz silver (head grade: 0.31 g/t Ag) and 1,469t cobalt (head
grade: 0.33% Co).
As known mineralisation is open south-west and down dip from the
pit shell, there is significant potential to build on the
preliminary findings and progress a mining license once a strategic
development partner is secured.
Cangai Copper Mine
On 9 March 2023, following a site visit to Cangai Copper Mine by
geologist and director David Drakeley, the Board approved plans to
update and enhance the confidence in the 2017 inferred JORC MRE -
107,589t contained copper metal (3.2Mt @ 3.35%).
Considerable drilling work post-2017, which includes 34 RC
drill-holes for a total of circa 5,000m are to be factored into the
updated geological model - the best intercepts from these campaigns
comprised:
-- 11m @ 5.94% Cu; 2.45% Zn & 19.13g/t Ag from 40m including:
o 3m @ 8.1% Cu; 2.84% Zn & 23.42g/t Ag from 41m
o 1m @ 10.25% Cu; 1.68% Zn & 32.50g/t Ag from 48m
o 1m @ 7.53% Cu; 6.04% Zn & 30.60g/t Ag from 50m
(CC0023R)
-- 5m @ 1.56% Cu, 4.43g/t Ag & 0.4% Zn from 92m including:
o 3m @ 2.22% Cu, 6.38g/t Ag & 0.60% Zn (CC004RC)
-- 4.39m @ 5.06% Cu, 2.56% Zn and 20.1 g/t Ag from 49.9m (CC0036D)
Furthermore, the model will factor in bulk sampling done on
several historic stockpiles (which should support a higher
confidence Indicated MRE), drone topographic survey and
re-positioned mine workings that are accurately georeferenced.
On 24 July 2023 CCZ's geology team, working in conjunction with
a specialist geological consultancy, produced an updated JORC
(2012) compliant MRE for Cangai Copper Mine at:
-- 4.4Mt @ 2.5% Cu inferred insitu and 0.2Mt @ 1.35% Cu
indicated from historic stockpiles for 114kt contained copper
metal; augmented further by zinc, gold, and silver credits
At each reporting date, the Group undertakes an assessment of
the carrying amount of its exploration and evaluation assets.
During the period, the Group identified indicators of impairment on
certain exploration and evaluation assets under AASB 6 Exploration
and Evaluation of Mineral Resources. As a result of this review, an
impairment charge of
$5,762,872 has been recognised in the statement of profit or
loss and other comprehensive income in relation to areas of
interest where no future exploration and evaluation activities are
expected.
Zambia Copper Projects
On 7 December 2022, CCZ's Board approved incremental development
work on known key targets - focusing on the highly prospective
Luanshya Project which is in the heart of Zambia's copper belt.
Specifically, the geology team planned 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 IP campaign was 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 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 was not
exercising the 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.
CORPORATE
Board Changes
On 30 January 2023, to strengthen and diverse the Board's skill
set, two new Non-Executive Directors were appointed:
-- Mr David Drakeley BSc (Hons) , an experienced field geologist
who has worked as point on CCZ's drilling campaigns in Broken Hill
and Queensland, who will oversee designing and implementing all
future exploratory work across the group's portfolio.
-- Mr Jack Sedgwick BEng BCom MBA (Distinction) GAICD , a
hands-on corporate strategist / business improvement specialist
with blue-chip experience across the mining / energy sectors
(including working on Rio Tinto's iron ore expansion projects), who
will oversee portfolio optimisation and the group's finances.
Note, these new additions follow the departure of Mr Geoff Reed
to pursue a new opportunity.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the
Group during the year, other than as outlined elsewhere in this
report.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Other than as set out in the Review of Operations, there were no
known material significant events from the end of the financial
year to the date of this report that have significantly affected,
or may significantly affect the operations of the Group, the
results of those operations, or the state of affairs of the Group
in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Castillo Copper remains focused on progressing its four (4)
pillared strategy which includes continued exploration efforts at
NWQ Copper Project in Queensland, Cangai Copper Mine and Broken
Hill Project in New South Wales, and its four Zambian
properties.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The operations of the Group are presently subject to
environmental regulation under the laws of the Commonwealth of
Australia and the States of Queensland and New South Wales and the
Republic of Zambia. The Group is, to the best of its knowledge, at
all times in full environmental compliance with the conditions of
its licenses.
SHARE OPTIONS
As at the date of this report, there were 52,000,000 unissued
ordinary shares under unlisted options. The details of the unlisted
options at the date of this report are as follows:
Number Exercise Price Expiry Date
$
30 September
19,000,000 0.05 2023
-------------- ----------------
17,000,000 0.10 31 December 2023
-------------- ----------------
5,000,000 0.05 31 December 2023
-------------- ----------------
3,000,000 0.08 31 July 2024
-------------- ----------------
8,000,000 0.08 31 January 2025
-------------- ----------------
In addition to the unlisted options, there are 163,439,781
listed options (ASX: CCZA, CCZB). The details of the listed options
at the date of this report are as follows:
Number Exercise Price Expiry Date
$
131,418,042 0.08 31 July 2024
-------------- -------------
32,021,739 GBP0.044 1 August 2024
-------------- -------------
No option holder has any right under the options to participate
in any other share issue of the Group or any other entity.
PERFORMANCE SHARES
As part of the Zed Copper acquisition in the 2021 financial
year, the Group issued 2 classes of performance shares to the
vendors on 20 February 2021:
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.
None of the above conditions were met during the 2023 financial
year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has made an agreement indemnifying all the Directors
and Officers of the Group against all losses or liabilities
incurred by each Director or Officer in their capacity as Directors
or Officers of the Group to the extent permitted by the Corporation
Act 2001. The indemnification specifically excludes wilful acts of
negligence. The Group paid insurance premiums in respect of
Directors' and Officers' Liability Insurance contracts for current
officers of the Group. The liabilities insured are damages and
legal costs that may be incurred in defending civil or criminal
proceedings that may be brought against the Officers in their
capacity as Officers of entities in the Group. The total amount of
insurance premiums paid has not been disclosed due to
confidentiality reasons.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of the court to bring
proceedings on behalf of the Group or intervene in any proceedings
to which the Group is a party for the purpose of taking
responsibility on behalf of the Group for all or any part of those
proceedings. The Group was not a party to any such proceedings
during the year.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial
year, indemnified or agreed to indemnify the auditor of the company
or any related entity against a liability incurred by the
auditor.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate
behaviour and accountability, the Directors of Castillo Copper
Limited support and have adhered to the principles of sound
corporate governance. The Board recognises the recommendations of
the Australian Securities Exchange Corporate Governance Council and
considers that Castillo Copper is in compliance with those
guidelines to the extent possible, which are of importance to the
commercial operation of a junior listed resources company. During
the financial year, shareholders continued to receive the benefit
of an efficient and cost effective corporate governance policy for
the Group. The Group's Corporate Governance Statement and
disclosures can be found at
https://castillocopper.com/investors/governance/.
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 30 June 2023
Notes 2023 2022
$ $
Interest received 15,615 619
Other income 4 - 144,509
------------- -------------
15,615 145,128
Listing and public company expenses (158,585) (332,476)
Accounting and audit expenses (125,358) (126,586)
Consulting and Directors' fees (515,196) (647,641)
Exploration expenditure expensed
as incurred - (25,108)
Impairment of exploration expenditure 8 (5,672,872) -
Share-based payments 20 - (85,680)
Other expenses 4 (485,832) (580,820)
------------- -------------
LOSS BEFORE INCOME TAX (6,942,228) (1,653,183)
Income tax expense 5 - -
------------- -------------
LOSS AFTER INCOME TAX (6,942,228) (1,653,183)
OTHER COMPREHENSIVE INCOME
Item that may be reclassified subsequently
to profit or loss
Foreign currency translation 1,359 1,594
------------- -------------
TOTAL OTHER COMPREHENSIVE INCOME 1,359 1,594
------------- -------------
TOTAL COMPREHENSIVE LOSS FOR THE
YEAR (6,940,870) (1,651,589)
------------- -------------
Basic and diluted loss per share
(cents per share) 12 (0.53) (0.13)
The accompanying notes form part of these financial
statements.
Consolidated Statement of Financial Position
as at 30 June 2023
Notes 2023 2022
$ $
CURRENT ASSETS
Cash and cash equivalents 6 2,897,611 5,754,049
Other assets 7 78,845 78,994
------------ ------------
TOTAL CURRENT ASSETS 2,976,456 5,833,043
------------ ------------
NON-CURRENT ASSETS
Other assets 7 486,961 404,961
Deferred exploration and evaluation
expenditure 8 8,736,198 12,899,486
------------ ------------
TOTAL NON-CURRENT ASSETS 9,223,159 13,304,447
------------ ------------
TOTAL ASSETS 12,199,615 19,137,490
------------ ------------
CURRENT LIABILITIES
Trade and other payables 9 128,346 125,352
------------ ------------
TOTAL CURRENT LIABILITIES 128,346 125,352
------------ ------------
TOTAL LIABILITIES 128,346 125,352
------------ ------------
NET ASSETS 12,071,269 19,012,138
------------ ------------
EQUITY
Issued capital 10 35,964,396 35,964,396
Reserves 11 4,081,735 4,080,376
Accumulated losses (27,974,862) (21,032,634)
------------ ------------
TOTAL EQUITY 12,071,269 19,012,138
------------ ------------
The accompanying notes form part of these financial
statements.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2023
Share Foreign
Issued based payment currency Accumulated
translation
capital reserve reserve losses Total
$ $ $ $ $
------------- ------------------ --------------- --------------- -----------
Balance at 1 July 2022 35,964,396 4,230,962 (150,586) (21,032,634) 19,012,138
------------- ------------------ --------------- --------------- -----------
Loss for the year - - - (6,942,228) (6,942,228)
Other comprehensive income - - 1,359 - 1,359
------------- ------------------ --------------- --------------- -----------
Total Comprehensive Loss - - 1,359 (6,942,228) (6,940,869)
------------- ------------------ --------------- --------------- -----------
Transactions with owners
in their capacity as owners
- - - - -
------------- ------------------ --------------- --------------- -----------
Balance as at 30 June
2023 35,964,396 4,230,962 (149,227) (27,974,862) 12,071,269
------------- ------------------ --------------- --------------- -----------
Balance at 1 July 2021 34,464,159 4,092,830 (152,180) (19,379,451) 19,025,358
---------- --------- --------- ------------ -----------
Loss for the year - - - (1,653,183) (1,653,183)
Other comprehensive loss - - 1,594 - 1,594
---------- --------- --------- ------------ -----------
Total comprehensive loss - - 1,594 (1,653,183) (1,651,589)
---------- --------- --------- ------------ -----------
Transactions with owners
in their capacity as owners
Shares issued to sophisticated
investors 1,742,319 - - - 1,742,319
Shares issued to advisors 59,346 - - - 59,346
Share issue costs (301,428) 52,452 - - (248,976)
Share based payments - 85,680 - - 85,680
---------- --------- --------- ------------ -----------
Balance as at 30 June
2022 35,964,396 4,230,962 (150,586) (21,032,634) 19,012,138
---------- --------- --------- ------------ -----------
The accompanying notes form part of these financial
statements.
Consolidated Statement of Cash Flows
for the year ended 30 June 2023
Notes 2023 2022
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 15,615 619
Payments to suppliers and employees (1,115,720) (1,406,386)
NET CASH USED IN OPERATING ACTIVITIES 6 (1,100,105) (1,405,767)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for tenements bonds (82,000) (55,861)
Option fee received - 144,509
Exploration and evaluation expenditure 8 (1,678,114)
(5,112,153)
NET CASH USED IN INVESTING ACTIVITIES (1,760,114)
(5,023,505)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issues 10 - 1,742,319
Share issue costs 10 - (248,976)
------------- -------------
NET CASH FROM FINANCING ACTIVITIES - 1,493,343
------------- -------------
Net (decrease)/increase in cash and cash
equivalents (2,860,219) (4,935,929)
Cash and cash equivalents at beginning
of year 5,754,049 10,854,829
Foreign exchanges variances on cash 3,781 (164,851)
------------- -------------
CASH AND CASH EQUIVALENTS AT OF
FINANCIAL YEAR 6 2,897,611 5,754,049
------------- -------------
The accompanying notes form part of these financial
statements.
Notes to the consolidated financial statements
for the year ended 30 June 2023
1. Corporate Information
The financial report of Castillo Copper Limited and its
subsidiaries ("Castillo Copper" or "the Group") for the year ended
30 June 2023 was authorised for issue in accordance with a
resolution of the Directors on 22 September 2023.
Castillo Copper Limited is a company limited by shares
incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange and London Stock Exchange. The
nature of the operations and the principal activities of the Group
are described in the Directors' Report.
2. Summary of Significant Accounting Policies
(a) Basis of Preparation
The financial report is a general-purpose financial report,
which has been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other
authoritative pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001. The Group is a for profit
entity for financial reporting purposes under Australian Accounting
Standards.
The financial report has been prepared on an accrual basis and
is based on historical costs. Material accounting policies adopted
in preparation of this financial report are presented below and
have been consistently applied unless otherwise stated.
The presentation currency is Australian dollars.
(b) Statement of Compliance
The financial report complies with Australian Accounting
Standards, which include Australian equivalents to International
Financial Reporting Standards (AIFRS). Compliance with AIFRS
ensures that the financial report, comprising the financial
statements and notes thereto, complies with International Financial
Reporting Standards (IFRS).
(c) Adoption of new and revised standards
Standards and Interpretations applicable 30 June 2023
In the year ended 30 June 2023, the Directors have reviewed all
of the new and revised Standards and Interpretations issued by the
AASB that are relevant to the Company and effective for the current
annual reporting period. 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.
Standards and interpretations issued, but not yet effective
The Directors have also reviewed all Standards and
Interpretations issued, but not yet effective for the period 30
June 2023. As a result of this review the Directors have determined
that there is no material impact of the Standards and
Interpretations issued but not yet effective on the Company.
(d) 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 year ended 30 June 2023 of
$6,942,228 and net cash outflows from operating activities of
$1,100,105 net cash outflows from investing activities of
$1,760,114 and net cash flows from financing activities of $Nil. At
30 June 2023, the Group had a net asset position of $12,071,269.
The cash and cash equivalents balance at 30 June 2023 was
$2,897,611.
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.
(e) Basis of Consolidation
The consolidated financial statements comprise the financial
statements of Castillo Copper Limited and its subsidiaries as at 30
June each year ('the Company').
Subsidiaries are all those entities (including special purpose
entities) over which the Company has control. The Company controls
an entity when the company is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the
activities of the Group.
The financial statements of the subsidiaries are prepared for
the same reporting period as the parent Company, using consistent
accounting policies.
In preparing the consolidated financial statements, all
intercompany balances and transactions, income and expenses and
profit and losses resulting from intra-company transactions have
been eliminated in full.
Subsidiaries are fully consolidated from the date on which
control is obtained by the Company and cease to be consolidated
from the date on which control is transferred out of the
Company.
A change in the ownership interest of a subsidiary that does not
result in a loss of control, is accounted for as an equity
transaction.
(f) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Company's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The functional and presentation currency of Castillo
Copper Limited is Australian dollars. The functional currency of
the Chilean subsidiary is Chilean Peso. The functional currency of
the Zambian subsidiaries is United States Dollars.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement
of comprehensive income.
(iii) Group entities
The results and financial position of all the Company entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- assets and liabilities for each statement of financial
position presented are translated at the closing rate at
the date of that statement of financial position;
-- income and expenses for each statement of comprehensive
income are translated at average exchange rates (unless this is not
a reasonable approximation of the rates prevailing on the
transaction dates, in which case income and expenses are translated
at the dates of the transactions); and
-- all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities are taken to
foreign currency translation reserve.
When a foreign operation is sold or any borrowings forming part
of the net investment are repaid, a proportionate share of such
exchange differences are recognised in the statement of
comprehensive income, as part of the gain or loss on sale where
applicable.
(g) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset's recoverable amount. An
asset's recoverable amount is the higher of its fair value less
costs to sell and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets of the
Group. In such cases the asset is tested for impairment as part of
the cash generating unit to which it belongs. When the carrying
amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired
and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. Impairment losses relating to
continuing operations are recognised in those expense categories
consistent with the function of the impaired asset unless the asset
is carried at revalued amount (in which case the impairment loss is
treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether
there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A
previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the asset's
recoverable amount since the last impairment loss was recognised.
If that is the case the carrying amount of the asset is increased
to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in profit or loss
unless the asset is carried at revalued amount, in which case the
reversal is treated as a revaluation increase.
After such a reversal the depreciation charge is adjusted in
future periods to allocate the asset's revised carrying amount,
less any residual value, on a systematic basis over its remaining
useful life.
(h) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf
of the Group is accumulated separately for each area of interest.
Such expenditure comprises net direct costs and an appropriate
portion of related overhead expenditure, but does not include
general overheads or administrative expenditure not having a
specific nexus with a particular area of interest.
Each area of interest is limited to a size related to a known or
probable mineral resource capable of supporting a mining
operation.
Exploration and evaluation expenditure for each area of interest
is carried forward as an asset provided that one of the following
conditions is met:
-- such costs are expected to be recouped through successful
development and exploitation of the area of interest or,
alternatively, by its sale; or
-- exploration and evaluation activities in the area of interest
have not yet reached a stage which permits a reasonable assessment
of the existence or otherwise of economically recoverable reserves,
and active and significant operations in relation to the area are
continuing.
Expenditure which fails to meet the conditions outlined above is
impaired; furthermore, the Directors regularly review the carrying
value of exploration and evaluation expenditure and make write
downs if the values are not expected to be recoverable.
Identifiable exploration assets acquired are recognised as
assets at their cost of acquisition, as determined by the
requirements of AASB 6 Exploration for and evaluation of mineral
resources. Exploration assets acquired are reassessed on a regular
basis and these costs are carried forward provided that at least
one of the conditions referred to in AASB 6 is met.
Exploration and evaluation expenditure incurred subsequent to
acquisition in respect of an exploration asset acquired, is
accounted for in accordance with the policy outlined above for
exploration expenditure incurred by or on behalf of the entity.
Acquired exploration assets are not written down below
acquisition cost until such time as the acquisition cost is not
expected to be recovered.
When an area of interest is abandoned, any expenditure carried
forward in respect of that area is written off.
Expenditure is not carried forward in respect of any area of
interest/mineral resource unless the Group's rights of tenure to
that area of interest are current.
(i) Trade and Other Receivables
Trade receivables, which generally have 30 - 90 day terms, are
recognised and carried at original invoice amount less an allowance
for any uncollectible amounts.
Impairment of trade receivables is continually reviewed and
those that are considered to be uncollectible are written off by
reducing the carrying amount directly. An allowance account is used
when there is objective evidence that the Group will not be able to
collect all amounts due according to the original contractual
terms. Furthermore, the Group applies the simplified approach
permitted by AASB 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables. Factors
considered by the Group in making this determination include known
significant financial difficulties of the debtor, review of
financial information and significant delinquency in making
contractual payments to the Group. The impairment allowance is set
equal to the difference between the carrying amount of the
receivable and the present value of estimated future cash flows,
discounted at the original effective interest rate. Where
receivables are short-term, discounting is not applied in
determining the allowance.
The amount of the impairment loss is recognised in the statement
of comprehensive income within other expenses. When a trade
receivable for which an impairment allowance had been recognised
becomes uncollectible in a subsequent period, it is written off
against the allowance account. Subsequent recoveries of amounts
previously written off are credited against other expenses in the
statement of comprehensive income.
(j) Cash and Cash Equivalents
Cash and short term deposits in the statement of financial
position include cash on hand, deposits held at call with banks and
other short term highly liquid investments with original maturities
of three months or less. Bank overdrafts are shown as current
liabilities in the statement of financial position. For the purpose
of the statement of cash flows, cash and cash equivalents consist
of cash and cash equivalents as described above.
(k) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be
reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any
provision is presented in the statement of comprehensive income net
of any reimbursement.
Provisions are measured at the present value or management's
best estimate of the expenditure required to settle the present
obligation at the end of the reporting period.
If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time
value of money, and where appropriate, the risks specific to the
liability.
Where discounting is used, the increase in the provision due to
the passage of time is recognised as a finance cost.
Restoration and rehabilitation
Refer to Note 2(m) for the Group's policy in respect of
restoration and rehabilitation.
(l) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and
that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and
evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease
itself or, if not, whether it successfully recovers the related
exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the
level of proved, probable and inferred mineral resources, future
technological changes which could impact the cost of mining, future
legal changes (including changes to environmental restoration
obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation
expenditure is determined not to be recoverable in the future, this
will reduce profits and net assets in the period in which this
determination is made
In addition, exploration and evaluation expenditure is
capitalised if activities in the area of interest have not yet
reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves. To the
extent that it is determined in the future that this capitalised
expenditure should be written off, this will reduce profits and net
assets in the period in which this determination is made.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined
by using a Black and Scholes model, using the assumptions detailed
in note 10.
Rehabilitation provision
The Group's mining and exploration activities are subject to
various laws and regulations governing the protection of the
environment. The Group recognises management's best estimate for
asset retirement obligations in the period in which they are
incurred. Actual costs incurred in the future periods could differ
materially from the estimates. Additionally, future changes to
environmental laws and regulations, life of mine estimates and
discount rates could affect the carrying amount of this
provision.
(m) Rehabilitation provision
A provision for rehabilitation and restoration is recognised
when there is a present obligation as a result of activities
undertaken, it is probable that an outflow of economic benefits
will be required to settle the obligation, and the amount of the
provision can be measured reliably. The estimated future
obligations include the costs of abandoning sites, removing
facilities and restoring the affected areas.
The provision for future restoration costs is the best estimate
of the present value of the expenditure required to settle the
restoration obligation at the balance date. Future restoration
costs are reviewed annually and any changes in the estimate are
reflected in the present value of the restoration provision at each
balance date.
The initial estimate of the restoration and rehabilitation
provision is capitalised into the cost of the related asset and
amortised on the same basis as the related asset, unless the
present obligation arises from the production of inventory in the
period, in which case the amount is included in the cost of
production for the period. Changes in the estimate of the provision
for rehabilitation are treated in the same manner, except that the
unwinding of the effect of discounting on the provision is
recognised as a finance cost rather than being capitalised into the
cost of the related asset.
(n) Income Tax
Deferred income tax is provided for on all temporary differences
at balance date between the tax base of assets and liabilities and
their carrying amounts for financial reporting purposes.
No deferred income tax will be recognised from the initial
recognition of goodwill or of an asset or liability, excluding a
business combination, where there is no effect on accounting or
taxable profit or loss. No deferred income tax will be recognised
in respect of temporary differences associated with investments in
subsidiaries if the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary
differences will not reverse in the near future.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or liability is
settled. Deferred tax is credited in the statement of comprehensive
income except where it relates to items that may be credited
directly to equity, in which case the deferred tax is adjusted
directly against equity.
Deferred income tax assets are recognised for all deductible
temporary differences, carry forward of unused tax assets and
unused tax losses to the extent that it is probable that future tax
profits will be available against which deductible temporary
differences can be utilised.
The amount of benefits brought to account or which may be
realised in the future is based on tax rates (and tax laws) that
have been enacted or substantially enacted at the balance date and
the anticipation that the Group will derive sufficient future
assessable income to enable the benefit to be realised and comply
with the conditions of deductibility imposed by the law. The
carrying amount of deferred tax assets is reviewed at each balance
date and only recognised to the extent that sufficient future
assessable income is expected to be obtained. Income taxes relating
to items recognised directly in equity are recognised in equity and
not in the statement of comprehensive income.
(o) Issued capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
(p) Revenue
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue is capable
of being reliably measured. The following specific recognition
criteria must also be met before revenue is recognised:
Interest income
Revenue is recognised as the interest accrues (using the
effective interest method, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the
financial instrument) to the net carrying amount of the financial
asset.
(q) Earnings / loss per share
Basic earnings / loss per share
Basic earnings / loss per share is calculated by dividing the
profit/loss attributable to equity holders of the Group, excluding
any costs of servicing equity other than dividends, by the weighted
average number of ordinary shares, adjusted for any bonus
elements.
Diluted earnings / loss per share
Diluted earnings / loss per share is calculated as net
profit/loss attributable to members of the Group, adjusted for:
-- costs of servicing equity (other than dividends) and preference share dividends;
-- the after tax effect of dividends and interest associated
with dilutive potential ordinary shares that have been recognised
as expenses; and
-- other non-discretionary changes in revenues or expenses
during the period that would result from the dilution of potential
ordinary shares; and
-- divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus
elements.
(r) Goods and services tax
Revenues, expenses and assets are recognised net of the amount
of GST, except where the amount of GST incurred is not recoverable
from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as
part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the
Australian Tax Office is included as part of receivables or
payables in the statement of financial position.
Cash flows are presented in the statement of cash flows on a
gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash
flows.
(s) Trade and other payables
Liabilities for trade creditors and other amounts are measured
at amortised cost, which is the fair value of the consideration to
be paid in the future for goods and services received that are
unpaid, whether or not billed to the Group.
(t) Share-based payment transactions
The Group provides benefits to individuals acting as, and
providing services similar to employees (including Directors) of
the Group in the form of share based payment transactions, whereby
individuals render services in exchange for shares or rights over
shares ('equity settled transactions').
The cost of these equity settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted. The fair value is determined by using the Black
Scholes formula taking into account the terms and conditions upon
which the instruments were granted, as discussed in note 10(e).
In valuing equity settled transactions, no account is taken of
any performance conditions, other than conditions linked to the
price of the shares of Castillo Copper Limited ('market
conditions').
The cost of the equity settled transactions is recognised,
together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending on the
date on which the relevant employees become fully entitled to the
award ('vesting date').
The cumulative expense recognised for equity settled
transactions at each reporting date until vesting date reflects (i)
the extent to which the vesting period has expired and (ii) the
number of awards that, in the opinion of the Directors of the
Group, will ultimately vest. This opinion is formed based on the
best available information at balance date. No adjustment is made
for the likelihood of the market performance conditions being met
as the effect of these conditions is included in the determination
of fair value at grant date. The statement of comprehensive income
charge or credit for a period represents the movement in cumulative
expense recognised at the beginning and end of the period.
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition.
Where the terms of an equity settled award are modified, as a
minimum, an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase in
the value of the transaction as a result of the modification, as
measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if
it had vested on the date of the cancellation, and any expense not
yet recognised for the award is recognised immediately. However if
a new award is substituted for the cancelled award, and designated
as a replacement award on the date that it is granted, the
cancelled and new award are treated as if they were a modification
of the original award, as described in the previous paragraph. The
cost of equity-settled transactions with non-employees is measured
by reference to the fair value of goods and services received
unless this cannot be measured reliably, in which case the cost is
measured by reference to the fair value of the equity instruments
granted. The dilutive effect, if any, of outstanding options is
reflected in the computation of loss per share (see note 12).
(u) Comparative information
When required by Accounting Standards, comparative information
has been reclassified to be consistent with the presentation in the
current year.
(v) Operating segments
Operating segments are presented using the 'management
approach', where the information presented is on the same basis as
the internal reports provided to the Chief Operating Decision
Makers ('CODM'). The CODM is responsible for the allocation of
resources to operating segments and assessing their
performance.
(w) Fair value measurement
When an asset or liability, financial or non-financial, is
measured at fair value for recognition or disclosure purposes, fair
value is based on the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date; and assumes that the
transaction will take place either: in the principle market; or in
the absence of a principal market, in the most advantageous
market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interest. For
non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are classified,
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed each reporting date and transfers
between levels are determined based on a reassessment of the lowest
level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant.
External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an
asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs
applied in the latest valuation and a comparison, where applicable,
with external sources of data.
(x) Parent entity financial information
The financial information for the parent entity, Castillo Copper
Limited, disclosed in Note 16 has been prepared on the same basis
as the consolidated financial statements, except as set out
below.
Investments in subsidiaries, associates and joint venture
entities
Investments in subsidiaries, associates and joint venture
entities are accounted for at cost in the parent entity's financial
statements. Dividends received from associates are recognised in
the parent entity's profit or loss, rather than being deducted from
the carrying amount of these investments.
3. Segment Information
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 four 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 asset,
liabilities, income and expenses to each segment is shown
below:
NWQ Cangai Broken
2023 (QLD) (NSW) Hill Zambia Unallocated Total
(NSW)
Segment assets
and liabilities $ $ $ $ $ $
Current assets - - - - 2,976,456 2,976,456
Non-current assets 6,605,846 321,100 1,527,490 768,601 122 9,223,159
Current liabilities - - - - (128,346) (128,346)
Segment income
and expenses - - - - 15,615 15,615
Interest income - - - - - -
Other income - - - - - -
Other expenses - (5,322,762) - (350,110) (1,284,971) (6,957,843)
--------------- -------------- -------------- ----------- --------------- ------------
Loss before tax - (5,322,762) - (350,110) (1,269,356) (6,942,228)
--------------- -------------- -------------- ----------- --------------- ------------
NWQ (QLD) Cangai Broken
2022 (NSW) Hill (NSW) Zambia Unallocated Total
Segment assets
and liabilities $ $ $ $ $ $
Current assets - - - - 5,833,043 5,833,043
Non-current assets 6,271,129 5,454,684 544,180 1,034,333 121 13,304,447
Current liabilities - - - - (125,352) (125,352)
Segment income
and expenses
Interest income - - - - 619 619
Other income - - - 144,509 - 144,509
Other expenses - - - - (1,798,311) (1,798,311)
--------------- -------------- -------------- ----------- --------------- ------------
Loss before tax - - - 144,509 (1,797,692) (1,653,183)
--------------- -------------- -------------- ----------- --------------- ------------
4. Other income and expenses
2023 2022
Other income $ $
Option fee - 144,509
------- --------
Total other income - 144,509
------- --------
Other expenses $ $
Travel and accommodation 6,780 252
Legal 7,860 37,678
Insurance 98,270 95,415
Foreign Exchange (Gains)/Losses (482) 164,792
Investor Relations 336,944 260,534
Other 36,460 22,149
------- --------
Total other expenses 485,832 580,820
------- --------
5. Income Tax 2023 2022
$ $
(a) Income tax expense
Major component of tax expense for the year:
Current tax - -
Deferred tax - -
--
(b) Numerical reconciliation between aggregate
tax expense recognised in the statement of comprehensive
income and tax expense
calculated per the statutory income tax rate
A reconciliation between tax expense and the product
of accounting result
before income tax multiplied by the Group's applicable
tax rate is as follows:
Loss from continuing operations before income tax
expense (6,942,228) (1,653,183)
------------- -------------
Tax at the Australian rate of 30% (2022: 30%) (2,082,668) (495,955)
Non-allowable expenses - 25,929
Income tax benefit not bought to account 2,082,668 470,026
------------- -------------
Income tax expense - -
------------- -------------
(c) The following deferred tax balances have not
been bought to account:
2023 2022
Assets $ $
Total losses available to offset against future
taxable income 11,431,629 10,361,143
Total accrued expenses 12,461 9,867
Total share issue costs deductible over five years 285,972 483,299
Deferred tax liability on capitalised exploration
costs (2,390,279) (3,549,693)
Deferred tax assets not brought to account as realisation
is not regarded as
probable (9,339,783) (7,304,616)
------------- -------------
Deferred tax asset recognised - -
2023 2022
$ $
(d) Unused tax losses
Unused tax losses 38,105,431 34,537,142
------------- -------------
Potential tax benefit not recognised at 30% (2022:
30%) 11,431,629 10,361,143
------------- -------------
The benefit for tax losses will only be obtained
if:
(i) the Group derives future assessable income in Australia of a
nature and of an amount sufficient to enable the benefit from the
deductions for the losses to be realised;
(ii) the Group continues to comply with the conditions for
deductibility imposed by tax legislation in Australia; and
(iii) no changes in tax legislation in Australia, adversely
affect the Group in realising the benefit from the deductions for
the losses.
6. Cash and cash equivalents
Reconciliation of operating loss after tax to net
the cash flows used in 2023 2022
operations $ $
Loss from ordinary activities after tax
Non-cash items (6,942,228) (1,653,183)
Share-based payments - 85,680
Consultancy and adviser fees settled in shares - 59,346
Impairment expense 5,672,872 -
Foreign exchange (gain)/loss (455) 164,792
Profit & loss items classed as investing activities
Consulting fees relating to exploration expenditure 150,000 -
Other income - option fee - (144,509)
Changes in assets and liabilities
Increase / (decrease) in trade and other payables 26,942 (60,167)
(Increase) / decrease in other receivables (7,236) 142,274
-------------- --------------
Net cash flow used in operating activities (1,100,105) (1,405,767)
-------------- --------------
(b) Reconciliation of cash
Cash balance comprises: Cash at bank 2,897,611 5,754,049
-------------- --------------
Cash at bank earns interest at floating rates based
on daily bank deposit rates.
2023 2022
7. Other Assets $ $
Current
GST/VAT receivable 37,764 45,150
Prepayments 41,081 33,844
-------------- --------------
78,845 78,994
-------------- --------------
Non-Current
Tenement guarantees 486,961 404,961
-------------- --------------
There are no current tenement guarantees.
2023 2022
8. Deferred Exploration and Evaluation Expenditure $ $
Exploration and evaluation phase:
Opening balance 12,899,486 8,171,821
Exploration and evaluation expenditure during the
period 1,509,584 4,727,665
Impairment (1) (5,672,872) -
-------------- --------------
Closing balance 8,736,198 12,899,486
-------------- --------------
The recoupment of costs carried forward in relation to areas of
interest in the exploration and evaluation phase is dependent on
the successful development and commercial exploration or sale of
respective areas.
1 At each reporting date, the Group undertakes an assessment of
the carrying amount of its exploration and evaluation assets.
During the period, the Group identified indicators of impairment on
certain exploration and evaluation assets under AASB 6 Exploration
and Evaluation of Mineral Resources. As a result of this review, an
impairment charge of
$5,762,872 has been recognised in the statement of profit or
loss and other comprehensive income in relation to areas of
interest where no future exploration and evaluation activities are
expected.
9. Trade and other payables 2023 2022
Current $ $
Trade and other payables 87,586 92,462
Accruals 40,758 32,890
128,344 125,352
Trade and other payables are non-interest bearing and payable on
demand. Due to their short-term nature, the carrying value of trade
and other payables is assumed to approximate their fair value.
10. Issued Capital 2023 2022
(a) Issued and paid up capital $ $
Ordinary shares fully paid 35,965,396 35,965,396
2023 2022
Number of Number of
shares $ shares $
(b) Movements in ordinary
shares on issue
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)
------------- ------------ ---------------- -----------
1,299,505,355 35,964,396 1,299,505,355 35,964,396
------------- ------------ ---------------- -----------
The shares issued to advisors and consultants were valued based
on the fair value of the service received.
(c) Ordinary shares
The Group does not have authorised capital nor par value in
respect of its issued capital. Ordinary shares have the right to
receive dividends as declared and, in the event of a winding up of
the Company, to participate in the proceeds from sale of all
surplus assets in proportion to the number of and amounts paid up
on shares held. Ordinary shares entitle their holder to one vote,
either in person or proxy, at a meeting of the Company.
(d) Share options
At 30 June 2023 there were 132,699,971 (30 June 2022:
354,362,757) unlisted options and 163,439,781 (30 June 2022:
224,939,782) listed options (ASX: CCZOA, CCZOB) with various
exercise prices and expiry dates.
The following share-based payment arrangements were in place
during the period:
Series Number Grant date Expiry date Exercise Fair value Vesting date Listed/
price at grant Unlisted
$ date
31 December
1 17,000,000 16 May 2018 2023 $0.10 $0.018 16 May 2018 Unlisted
---------- ------------- ------------- --------- ----------- ------------- ----------
1 February 31 December 31 December
2 5,000,000 2019 2023 $0.05 $0.005 2018 Unlisted
---------- ------------- ------------- --------- ----------- ------------- ----------
2 October 1 September 2 October
3 1,582,353 2020 2023 GBP0.017 $0.023 2020 Unlisted
---------- ------------- ------------- --------- ----------- ------------- ----------
2 October 30 September 2 October
4 19,000,000 2020 2023 $0.05 $0.018 2020 Unlisted
---------- ------------- ------------- --------- ----------- ------------- ----------
5 14,285,714 15 June 2021 31 July 2024 $0.08 $0.022 15 June 2021 Listed
---------- ------------- ------------- --------- ----------- ------------- ----------
6 2,955,665 16 June 2021 1 August 2024 GBP0.044 $0.021 16 June 2021 Listed
---------- ------------- ------------- --------- ----------- ------------- ----------
7 2,418,044 5 August 2021 31 July 2024 $0.08 $0.007 5 August 2021 Listed
---------- ------------- ------------- --------- ----------- ------------- ----------
17 August 17 August
8 462,378 2021 1 August 2024 GBP0.044 $0.017 2021 Listed
---------- ------------- ------------- --------- ----------- ------------- ----------
27 October 27 October
9 4,000,000 2021 31 July 2024 $0.08 $0.007 2021 Listed
---------- ------------- ------------- --------- ----------- ------------- ----------
30 November 30 November
10 3,000,000 2021 31 July 2024 $0.08 $0.010 2021 Unlisted
---------- ------------- ------------- --------- ----------- ------------- ----------
1 February 31 January 1 February
11 8,000,000 2022 2025 $0.08 $0.007 2022 Unlisted
---------- ------------- ------------- --------- ----------- ------------- ----------
No options were exercised during the period.
221,662,786 unlisted and 61,500,000 listed options expired
during the period. Since the end of the financial year, 80,699,971
unlisted options have expired.
Options granted as equity compensation benefits to Key
Management Personnel during the year are set out in the audited
remuneration report.
No listed or unlisted options have been issued since the end of
the year. Weighted remaining contractual life
(years) 0.57
Weighted average exercise price $0.0592
Options granted as equity compensation benefits to Key
Management Personnel during the year are set out in the audited
remuneration report.
(e) Weighted average fair value
The fair value of the equity-settled unlisted options granted in
prior periods 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:
Series
-------------------------------
1 2 3 4 10 11
------ ------ --------- -------- -------- ------
Expected volatility (%) 100 87 104 104 99 100
------ ------ --------- -------- -------- ------
Risk-free interest rate
(%) 1.90 2.00 0.18 0.18 0.87 1.21
------ ------ --------- -------- -------- ------
Expected life of option
(years) 5.6 4.9 2.9 3.0 2.7 3.0
------ ------ --------- -------- -------- ------
Exercise price (cents/pence) 10 5 1.7p 5 8 8
------ ------ --------- -------- -------- ------
Grant date share price
(cents/pence) 3.9 1.6 2.6p 4.2 3.4 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.
(f) Performance Shares
At 30 June 2023 there were 46,875,000 Class A performance shares
and 46,875,000 Class B performance shares on issue in relation to
the Zambian tenements held by 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.
11. Reserves
Share based payment reserve
The share based payment reserve is used to record the value of
equity benefits provided to Directors and executives as part of
their remuneration and non-employees for their services.
Foreign currency translation reserve
The foreign exchange differences arising on translation of
balances originally denominated in a foreign currency into the
functional currency are taken to the foreign currency translation
reserve. The reserve is recognised in profit or loss when the net
investment is disposed of.
12. Loss per Share
2023 2022
$ $
Loss used in calculating basic and dilutive EPS (6,942,228)
(1,653,183)
Number of Shares
--------------------------------
Weighted average number of ordinary shares
used in
calculating basic loss per share: 1,299,505,355 1,294,183,748
--------------- ---------------
Effect of dilution:
Share options - -
2023 2022
Adjusted weighted average number of ordinary
shares
used in calculating diluted loss per share: 1,299,505,355 1,294,183,748
--------------- ---------------
Basic and diluted loss per share (cents per
share) (0.53) (0.13)
--------------- ---------------
There have been no transactions involving ordinary shares or
potential ordinary shares that would significantly change the
number of ordinary shares or potential ordinary shares outstanding
between the reporting date and the date of completion of these
financial statements.
There are no potential ordinary shares on issue that are
considered to be dilutive, therefore basic earnings per share also
represents diluted earnings per share.
13. Auditor's Remuneration 2023 2022
The auditor of Castillo Copper Limited is HLB
Mann Judd. $ $
Amounts received or due and receivable for:
Audit or review of the financial report of the
entity and any other entity in the Group 46,358 40,851
46,358 40,851
14. Related party disclosures
a) Key management personnel
2023 2022
Compensation of key management personnel $ $
Short term employee benefits 360,553 389,221
Post-employment benefits 2,139 3,000
Share-based payments - 85,680
Total remuneration 362,692 477,901
b) Other transactions with key management personnel
Field Crew Pty Ltd, a company of which Mr Drakeley is a
director, charged the Group consulting fees of $115,135 (2022:
nil). There was nil outstanding at 30 June 2023 (2022: nil).
c) Subsidiaries
The consolidated financial statements incorporate the assets,
liabilities and results of Castillo Copper Limited and the
following subsidiaries:
Name of Entity Country of Incorporation Equity Holding
2023 2022
----------- -----------
Castillo Copper Chile SPA Chile 100% 100%
--------------------------------- ----------- -----------
Castillo Exploration Limited Australia 100% 100%
--------------------------------- ----------- -----------
Qld Commodities Pty Ltd Australia 100% 100%
--------------------------------- ----------- -----------
Total Iron Pty Ltd Australia 100% 100%
--------------------------------- ----------- -----------
Total Minerals Pty Ltd Australia 100% 100%
--------------------------------- ----------- -----------
BHA No. 1 Pty Ltd Australia 100% 100%
--------------------------------- ----------- -----------
Atlantica Holdings (Bermuda) Bermuda 75% 75%
--------------------------------- ----------- -----------
Zed Copper Pty Ltd Australia 100% 100%
--------------------------------- ----------- -----------
Chalo Mining Group Ltd Zambia 100% 100%
--------------------------------- ----------- -----------
Luflilian Resources Zambia
Ltd Zambia 100% 100%
--------------------------------- ----------- -----------
Belmt Resources Mining
Company Ltd Zambia 50% 50%
--------------------------------- ----------- -----------
Broken Hill Alliance Ltd Australia - 100%
--------------------------------- ----------- -----------
Castillo Copper Limited is the ultimate Australian parent entity
and ultimate parent of the Group. Balances and transactions between
the Company and its subsidiaries, which are related parties of the
Company, have been eliminated on consolidation and not disclosed in
this note.
Broken Hill Alliance Ltd was incorporated during the year ended
30 June 2022 and was subsequently deregistered on 5 September 2022,
after plans to spin-off the BHA assets via an ASX listing were
indefinitely deferred.
15. Financial Risk Management
Exposure to interest rate, liquidity, and credit risk arises in
the normal course of the Group's business. The Group does not hold
or use derivative financial instruments. The Group's principal
financial instruments comprise mainly of deposits with banks. The
totals for each category of financial instruments are as
follows:
2023 2022
$ $
Financial Assets
Cash and cash equivalents 2,897,611 5,754,049
Other receivables (current and non-current) 524,725 450,111
--------- ---------
Financial Liabilities 3,422,336 6,204,160
Trade and other payables 128,346 125,352
The Group uses different methods as discussed below to manage
risks that arise from these financial instruments. The objective is
to support the delivery of the financial targets while protecting
future financial security.
(a) Capital Risk Management
The Group's capital comprises share capital and reserves less
accumulated losses. As at 30 June 2023, the Group has net assets of
$12,071,269 (2022: $19,012,138). The Group manages its capital to
ensure its ability to continue as a going concern and to optimise
returns to its shareholders.
(b) Liquidity Risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting obligations associated with financial
liabilities. The Group manages liquidity risk by maintaining
sufficient cash facilities to meet the operating requirements of
the business and investing excess funds in highly liquid short term
investments. The responsibility for liquidity risk management rests
with the Board of Directors.
Alternatives for sourcing future capital needs include the cash
position and future equity raising alternatives. These alternatives
are evaluated to determine the optimal mix of capital resources for
our capital needs. The Board expects that, assuming no material
adverse change in a combination of our sources of liquidity,
present levels of liquidity will be adequate to meet expected
capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other
payables. As at 30 June 2023 any financial liabilities that are
contractually maturing within 60 days have been disclosed as
current. Trade and other payables that have a deferred payment date
of greater than 12 months have been disclosed as non-current.
(c) Interest Rate Risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair value of
financial instruments. The Group's exposure to changes to interest
rate risk relates primarily to its earnings on cash and term
deposits. The Group manages the risk by investing in short term
deposits.
2023 2022
$ $
Cash and cash equivalents 2,897,611 5,754,049
Interest rate sensitivity
The following table demonstrates the sensitivity of the Group's
statement of comprehensive income to a reasonably possible change
in interest rates, with all other variables constant.
Change in Basis Points Effect on Post Tax Loss Effect on Equity
($) Increase/(Decrease) including retained
earnings ($) Increase/(Decrease)
--------------------------- -------------------------- -----------------------------------
2023 2022 2023 2022
--------------------------- ------------ ------------ ----------------- ----------------
Increase 100 basis points 28,976 57,540 28,976 57,540
Decrease 100 basis points (28,976) (57,540) (28,976) (57,540)
--------------------------- ------------ ------------ ----------------- ----------------
A sensitivity of 100 basis points has been used as this is
considered reasonable given the current level of both short term
and long term Australian Dollar interest rates. This would
represent two to four movements by the Reserve Bank of
Australia.
(d) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the
financial instrument will fail to discharge an obligation and cause
the Group to incur a financial loss. The Group's maximum credit
exposure is the carrying amounts on the statement of financial
position. The Group holds financial instruments with credit worthy
third parties.
At 30 June 2023, the Group held cash at bank. These were held
with financial institutions with a rating from Standard & Poors
of AA- or above (long term). The Group has no past due or impaired
debtors as at 30 June 2023.
(e) Fair Value Measurement
There were no financial assets or liabilities at 30 June 2023
requiring fair value estimation and disclosure as they are either
not carried at fair value or in the case for short term assets and
liabilities, their carrying values approximate fair value.
(f) Foreign Exchange
The Group undertakes certain transactions denominated in foreign
currencies hence exposures to exchange rate fluctuations arise. The
Group does not manage these exposures with foreign currency
derivative products. The carrying amounts of the Group's foreign
currency denominated monetary assets and monetary liabilities at
the balance date expressed in Australian dollars are as
follows:
Chilean Peso (CLP)
2023 2022
$ $
Assets 103,800 86,432
Liabilities (12,932) (10,350)
------------- --------
90,868 76,082
British Pound Sterling (GBP)
2023 2022
$ $
Assets 639,899 3,542,364
Liabilities (15,432) (5,104)
-------- ---------
624,467 3,537,260
-------- ---------
The Group is exposed to Chilean Peso (CLP) and British Pound
Sterling (GBP) currency fluctuations.
The following table details the Group's sensitivity to a 10%
increase and decrease in the Australian dollar against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting
foreign currency risk internally to key management personnel and
represent management's assessment of the possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency
rates. The sensitivity analysis includes external loans as well as
loans to foreign operations within the Group where the denomination
of the loan is in a currency other than the currency of the lender
or the borrower. A positive number indicates an increase in profit
and equity where the Australian Dollar weakens against the
respective currency. For a strengthening of the Australian Dollar
against the respective currency there would be an equal and
opposite impact on the profit and equity and the balances below
would be negative.
10% Increase 2023 2022
$ $
Profit/(loss) and equity - CLP 9,343 7,810
Profit/(loss) and equity - GBP 62,447 353,726
-------- ---------
71,790 361,536
-------- ---------
10% Decrease 2023 2022
$ $
Profit/(loss) and equity - CLP (9,343) (7,810)
Profit/(loss) and equity - GBP (62,447) (353,726)
-------- ---------
(71,790) (361,536)
-------- ---------
16. Parent Entity Information
The following details information related to the parent entity,
Castillo Copper Limited, at 30 June 2023. The information presented
here has been prepared using consistent accounting policies as
presented in note 2.
2023 2022
$ $
Current assets 2,975,126 5,831,937
Non-current assets 8,454,557 10,479,490
------------ ------------
Total assets 11,429,683 16,311,427
------------ ------------
Current liabilities 115,952 115,003
Non-current liabilities - -
------------ ------------
Total liabilities 115,952 115,003
------------ ------------
Net assets 11,313,731 16,196,424
------------ ------------
Issued capital 35,964,396 35,964,396
Reserves 4,230,962 4,230,962
Accumulated losses (28,881,627) (23,998,934)
------------ ------------
Total equity 11,313,731 16,196,424
------------ ------------
2023 2022
$ $
Loss of the parent entity 4,882,693 1,843,193
Other comprehensive income for the year - -
--------- ---------
Total comprehensive loss of the parent entity 4,882,693 1,843,193
--------- ---------
a) Guarantees
Castillo Copper Limited has not entered into any guarantees in
relation to the debts of its subsidiary.
b) Other Commitments and Contingencies
Castillo Copper Limited has not entered into any commitments and
does not have any known contingent liabilities at year end.
17. Contingent liabilities
The Company has entered into the following royalty
agreements:
-- 1% net smelter return royalty in respect of the area covered
by the tenements acquired from Qld Commodities Pty Ltd vendors (or
their nominee);
-- 3% net smelter return royalty in respect of the area covered
by the tenements acquired from Total Minerals Pty Ltd vendors (or
their nominee);
-- 3% net smelter return royalty in respect of the area covered
by the tenements acquired from Total Iron Pty Ltd vendors (or their
nominee).
-- 2% net smelter return royalty in respect of the area covered
by the tenements acquired from Zed Copper Pty Ltd vendors (or their
nominee).
Other than outlined above, there are no contingent
liabilities.
18. Commitments
In order to maintain current contractual rights concerning its
mineral projects, the Group has certain commitments to meet minimum
expenditure or work program requirements. The current minimum
commitments at balance date but not recognised as liabilities are
as follows:
2023 2022
$ $
Within one year 902,026 1,280,129
After one year but not more than
five years 870,000 1,250,000
Longer than five years - -
---------- ----------
1,772,026 2,530,129
---------- ----------
19. Dividends
No dividend was paid or declared by the Group in the period
since the end of the financial year, and up to the date of this
report. The Directors' do not recommend that any amount be paid by
way of a dividend for the financial year ended 30 June 2023.
The balance of the franking account is Nil at 30 June 2023
(2022: Nil).
20. Share-based payments
(a) Shares issued to suppliers: There were no shares issued to
suppliers in lieu of cash payment during the year ended 30 June
2023.
(b) Reconciliation to share based payments expense in profit or loss:
2023 2022
$ $
Options issued to directors - 85,680
------ -------
- 85,680
------ -------
(c) Fair value of options
The fair value of all options noted above have been determined
using the Black & Scholes model taking in to account the inputs
outlined in Note 11(e).
21. Subsequent events
There were no known material significant events from the end of
the financial year to the date of this report that have
significantly affected, or may significantly affect the operations
of the Group, the results of those operations, or the state of
affairs of the Group in future financial periods.
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FR BRBDGDGGDGXX
(END) Dow Jones Newswires
October 03, 2023 13:15 ET (17:15 GMT)
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