What else do we know about Cangai? With the exception of a period during the 1980s when major miners WMC and CRA (Rio Tinto) undertook limited exploration, since its closure a century ago, the site has remained largely unexplored - despite the excellent surrounding infrastructure, a skilled workforce within driving distance (just an hour by road from Grafton) and, most importantly, significant copper mineralisation clearly visible around the old workings (refer to virtual site trip video).
What work has Castillo completed recently? Last year Castillo announced a maiden JORC resource for Cangai of 3.2 Mt at 3.35% Cu. Castillo has since completed and exploration drill program earlier this year, noting numerous promising copper intersections. The company has also just announced a follow up 39 drill holes exploration drill program, focused predominately on the supergene ore area.
Is there other potential at Cangai? The Smelter Creek stockpiles are about one kilometre from Cangai. Given the exceptional high grade historical ore processed at this site and the poor metallurgical technology available at that time, it's likely significant mineralisation remains. Castillo has announced an initial 4 hole drill program at Smelter Creek whilst they have also had a number of enquiries from prospective off-take partners.
Broken Hill cobalt asset: as well as the Cangai project, Castillo has an early-stage cobalt project at Broken Hill, immediately north of Cobalt Blues (ASX:COB) (- market cap. $125 million) Thackaringa project. Castillo recently released a desktop study for Thackaringa which identified six highly prospective sites for cobalt mineralisation. Work is on-going at the Broken Hill project.
Valuation catalysts: the company will release a number of key announcements in the second half of this year, including the following.
- Drilling at Cangai deposit - commence shortly.
- Drilling at Smelter Creek stockpiles - commence shortly.
- Assay results - 3Q18.
- Metallurgical testwork (Smelter Creek) - 2H18.
- Field exploration at Broken Hill - commencing 2H18.
Analyst comments: given the clear evidence of copper mineralisation around the historical Cangai mine site, as well as its proximity to world-class infrastructure and a skilled workforce, it's surprising the project has remained idle for so long. However, with an aggressive 39 drill-hole program exploration program to commence shortly, Castillo is looking to quickly change this.
Unlike the initial program, which targeted deep mineralisation, this one is focusing on the shallower supergene material surrounding the historical workings. We believe this, as well as the use of smaller drill rigs better suited to the surrounding terrain, is likely to produce improved exploration results in comparisons to the first exploration program. Assuming exploration success, a resource upgrade at Cangai is likely in the near future.
In addition to Cangai, drilling will also take place at the Smelter Creek stockpiles. We were impressed by the potential there (as discussed above) and believe the results of this program may surprise on the upside. Longer term, the potential of the stockpiles will however be determined by the metallurgical testwork which is due to commence shortly after drilling.
In addition to Cangai/Smelter Creek, Castillo's Broken Hill cobalt project holds significant blue sky potential for shareholders. Given their neighbours COB recent announcement a strategic partnership with LG International (one of the world's largest lithium-ion battery makers), this alone we believe should add value to Castillo's long-term share price, particularly as work ramps up in the near future.
To view the video, please visit:
About Castillo Copper Ltd
Castillo Copper Limited (ASX:CCZ) is an ASX-listed base metal explorer that's flagship project is the historic Cangai Copper Mine near Grafton in northeast NSW. The project comprises a volcanogenic massive sulphide ore deposit, with one of Australia's highest grade JORC compliant Inferred Resources for copper: 3.2Mt @ 3.35% (6 September 2017). In terms of contained metal, the Inferred Resource is 107,600t Cu, 11,900t Zn, 2.1Moz Ag and 82,900 Moz Au. A notable positive is the presence of supergene ore with up to 35% copper and 10% zinc which is ideal feedstock for direct shipping ore. Incrementally, the project holds five historic stock piles of high-grade ore located near Cangai Copper Mine.
About The First Mover
The First Mover identifies and explains early stage ASX investment opportunities that we believe have a significant long term upside for investors.
About The Sophisticated Investor
The Sophisticated Investor is a new equity investment tool which seeks to assist investors in becoming more informed in their investment decision making. We show and tell investors about a company in a series of short, informative videos. We possess specialist equity analyst skills and are complemented by video professionals. We conduct site visits and interview management, in a way most investors simply aren’t able to access. We promote long term value creation for investors by employing detailed financial analysis and intrinsic value calculations.
Adam Kiley trading as The Sophisticated Investor ('TSI'), (AR No. 458224), is an authorised representative of Intelligent Financial Markets Pty Ltd (AFSL No. 426359). The information contained in this communication is intended as general advice only. Your personal objectives, financial situation and needs have not been taken into consideration. Accordingly, you should consider how appropriate the advice is (or is not) to your objectives, financial situation and needs before acting on the advice. The information in this communication should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.
Conflict of interest
TSI does and seeks to do business with companies featured in its articles and videos. As a result, investors should be aware that TSI may have a conflict of interest that could affect the objectivity of some articles or videos. Investors should consider TSI articles and videos as only a single factor in making any investment decision. The publishers also wish to disclose that they may hold stock in some companies featured in their articles and videos, and that any decision you make to purchase the stock of a company TSI profiles should be made only after you have initiated your own enquiries as to the validity of any information contained in those articles and videos.
TSI will only initiate coverage of a company that passes our internal investment checklist. Once a company has passed this checklist, we will initiate coverage of that company and follow up with ongoing updates and commentary on its activities. Articles and videos produced and published by TSI are NOT Research Reports in terms of ASIC Regulatory Guide 79.
The Sophisticated Investor
The First Mover
Cobalt Blue Holdings Limited
Castillo Copper Ltd