Castillo Copper Limited
30 June 2022 Annual Report
ABN 52 137 606 476
Corporate Directory
Directors
Gerrard (Ged) Hall (Non-Executive Chairman)
Dr Dennis Jensen (Managing Director) (appointed 1 April 2022)
Geoff Reed (Executive Director) (appointed 16 August 2021)
Company Secretary
Dale Hanna
Registered Office and Principal Place of Business
45 Ventnor Avenue
West Perth, WA 6005 Australia
Telephone: + 618 6558 0886
Facsimile: + 618 6316 3337
Share Registry
Automic Registry Services Pty Ltd
Level 2
267 St Georges Terrace
Perth, WA 6000 Australia
Telephone: 1300 288 664
Auditors
HLB Mann Judd (WA Partnership)
Level 4
130 Stirling Street
Perth, WA 6000 Australia
Securities Exchange Listing
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
ASX Code: CCZ
London Stock Exchange
LSE Code: CCZ
Contents
Chairman’s Address
Managing Director’s Address
Directors’ Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
ASX Additional Information
Tenement Table
Page No
1
2
4
24
25
26
27
28
50
51
52
56
58
Chairman’s Address
Dear Shareholders,
Since becoming Chairman earlier in the year, the Board has undertaken a comprehensive strategic
review on how to create optimal value for shareholders from our existing copper-cobalt assets. The
Board is cognizant of the importance to factor in external factors given these can significantly influence
global commodity markets, particularly the conflict in Europe and prospect of tighter monetary policy to
reign in inflationary pressures.
As such, the Board determined the necessity, where practical, to align with partners that could either aid
project advancement or facilitate a path to market. Pleasingly, UK-based Hyperion Copper’s offer to
acquire and develop the Zambia assets, subject to due diligence, is an excellent outcome for both parties.
Post a planned listing on the Alternative Investment Market by Hyperion, a sub-set of the London Stock
Exchange, Castillo Copper will retain a least a 25% stake in Hyperion Copper and directly benefit from
exploration successes.
Our three assets in Australia – Cangai Copper Mine, BHA and NWQ Copper Projects – have either
cobalt or copper inferred mineral resource estimates which delivers a significant point of difference over
peers. The Board’s objective is to increase the confidence in the current MREs and, if achievable, extend
known mineralisation as this is a direct conduit to creating incremental value.
Whilst we have decided to progress developing the BHA Project on our own, the Board is in discussions
with a number of parties that could aid delivering paths to market for Cangai Copper Mine and NWQ
Copper Project.
Overall, the Board believes it has the strategy in place to maximise the valuation potential for
shareholders in fiscal 2023 and beyond.
Ged Hall
Chairman
London, United Kingdom
23 September 2022
1
Managing Director’s Address
Dear Shareholders,
As outlined by the Chairman, Castillo Copper has re-set its high-level strategic intent, which the Board
is now determined to effectively implement. The focus of this address is a deeper assessment of
operational issues and nuances involved for the four core projects.
ZAMBIAN PROJECTS
Over the past two years, our geology team in Zambia has undertaken soil sampling campaigns across
the prime Luanshya and Mkushi Projects which delineated significant surface anomalies. Follow up
Induced Polarisation (IP) campaigns, which were interpreted by a geophysicist, generated a plethora of
viable targets to test drill.
Consequently, the Board was delighted to have entered into an option agreement with Hyperion Copper
(UK) to sell these high-quality copper assets for circa A$4m plus milestones. If the option is exercised
and Hyperion Copper lists on AIM in late 2022 or early 2023, then Castillo Copper has the right to appoint
one Board director.
Further, this transaction should ensure the Zambia assets exploration potential is fully developed, with
any benefits accruing to Castillo Copper through retaining its shareholding in Hyperion Copper.
AUSTRALIA
BHA Project – East Zone, New South Wales
Having defined an inferred cobalt resource – 64Mt @ 318 ppm Co for 21,556t contained metal –
leveraging historical drilling data, the Board has approved a drilling campaign to focus on enhancing the
confidence and grade across a larger footprint.
The campaign will comprise one diamond core and 17 RC drill-holes for 2,100m across four prospects
including The Sisters, Fence Gossan, Reefs Tank & Tors Tank. A key area of interest will be drill-testing
two lower cobalt-rich zones (excluding The Sisters Prospect) the geology team interpret to host higher
grading cobalt mineralisation than has been modelled to date.
Although the primary target is cobalt-copper, the Board hopes to gain further insights on the potential for
rare earth elements and gold mineralisation once the assay results are returned. Further, the Board
believes improving the confidence and grade of the current MRE, coupled with recent favourable
metallurgical results, should aid securing support from prospective off-take partners.
NWQ Copper Project, Queensland
Within the NWQ Copper Project are circa 20 prospects which all have potential to host copper
mineralisation based on analysing historical geological reports. As part of the new strategic intent, the
Board has now formulated plans to systematically visit these prospects, once development work at the
Big One Deposit has concluded, to ascertain if there are viable targets for drill-testing. The Board’s
optimal goal is to discover several satellite copper deposits across the tenure which could ultimately feed
into a central processing mill.
To date, development work at Big One Deposit has produced an inferred copper resource – 2.1Mt @
1.1% Cu for 21,886t contained metal – with positive metallurgical test-work. More significantly, with a
sizeable target north of the line of lode, the Board is optimistic incremental drilling can extend known
mineralisation and enhance the confidence in the current resource.
2
Reconciling the exploration potential the NWQ Copper Project delivers, coupled with ongoing demand
across the Mt Isa region to identify future copper concentrate suppliers, the Board is targeting to align
with a processing partner to expedite development work.
Cangai Copper Mine
Previous work in 2017 delineated an inferred resource at 3.3Mt @ 3.35% Cu for 107,589t contained
metal at Cangai Copper Mine, which is one of Australia’s highest grading historic copper mines. More
recently, Castillo Copper’s geology team have reaffirmed there are several priority massive sulphide
targets that could potentially extend known copper mineralisation and enhance confidence in the current
inferred resource.
As a starting point to resuming development work at Cangai Copper Mine, the Board has asked the
geology team to update the inferred resource and factor the historic stockpiles into the mix. Concurrently,
the Board are seeking guidance from an environmental consultant on how to ensure any potential
resumption of active exploration work fully complies with protocols established by the NSW Resources
Regulator. This is particularly pertinent as the NSW has listed Cangai Copper Mine on its critical minerals
list.
Overall, with the Board having set clear targets on how to maximise shareholder value moving forward,
we are now highly focused on ensuring these are delivered in a timely manner.
Dr Dennis Jensen
Managing Director
Perth, Western Australia
23 September 2022
3
Castillo Copper Limited – Directors’ Report
The Directors of Castillo Copper Limited and its subsidiaries (“Castillo”, “CCZ” or the “Group”) submit the financial
report of the Group for the year ended 30 June 2022. In order to comply with the provisions of the Corporations Act
2001, the Directors report as follows:
DIRECTORS
The names, qualifications and experience of the Company’s Directors in office during the year and until the date of this
report are as follows. Directors were in office for the entire financial year unless otherwise stated.
Mr Gerrard (Ged) Hall
Non-Executive Chairman
For the past several years, Mr Hall has been aligned with SI Capital, working as a director in the corporate finance and
broking division. Mr Hall’s core responsibilities encompass managing corporate relationships, broadening the high-net-
worth client base and business development.
In a varied career, spanning over 25 years, Mr Hall has gained considerable frontline and managerial experience across
a broad spectrum of financial products, with notable institutions. From 1994-2004, he worked with JP Morgan then
UBS, focused mostly on trading equity & treasury derivatives as a primary trader and on behalf of clients.
Subsequently, Mr Hall spent six years in Bahrain, mostly with Saudi National Commercial Bank, as a Business Head
of Asset Management & Treasury Products. Notably, he established the Structured Investment Product division and
grew it into sub-business unit that generated US$20m in annual revenues within four years.
Upon returning to the UK in 2010, Mr Hall joined Barclays Wealth as a Head of Strategic Alliances for the MENA region.
In this role, he negotiated distribution agreements with Middle East banks and expanded the footprint across the Gulf
States and into Egypt primarily.
Following a two-year hiatus to complete post-graduate studies, Mr Hall established his own strategic management
consultancy in mid-2013 and has undertaken engagements for blue-chip groups including BFC Bank, Northern Trust
Natixis and HSBC.
Mr Hall has a Bachelor of Arts, with honours, in Economics & Finance from the University of Greenwich as well as MBA
and Masters of Science in Financial Management from Edinburgh Business School.
Dr Dennis Jensen
Managing Director (appointed 1 April 2022)
Dr Jensen is a former MP, with 12 years' experience in federal politics, and research scientist with stints at CSIRO and
DST (an agency of the Department of Defence). Since leaving politics, Dr Jensen consulted to several mining groups
prior to joining the Company. Other than being a highly qualified and adaptable executive, Dr Jensen has an excellent
understanding of how government and private sectors interact, coupled with a first-rate network. Dr Jensen has a
Masters in Science from Melbourne University and PhD from Monash University.
Mr Geoff Reed (appointed 16 August 2021)
Non-Executive Director
Mr Reed, who is based in New South Wales, is a geologist with over 25 years' experience, focused on GIS and 3D
technical work. Most of Mr Reed's experience relates to underground / open-cut metalliferous mining and various
exploration projects.
During his career, Mr Reed has undertaken geological and resource management roles across several regions in
Australia including Mt Isa / Century in Queensland; and Broken Hill / Cobar in New South Wales.
Incrementally, Mr Reed has worked on numerous international projects in Europe (Finland, Ireland, Portugal, Spain,
Sweden), Africa (Angola, South Africa), Asia (China, Indonesia, Mongolia) and Canada.
4
Castillo Copper Limited – Directors’ Report
Prior to establishing his own consultancy in 2008, Mr Reed held positions as a mine geologist with MlM/Xstrata in Mt
Isa and Pasminco / Perilya in Broken Hill.
Whilst Mr Reed is well versed in base-and-precious metals, he has worked on numerous copper-gold projects and has
spent a considerable amount of time in the Mt Isa region. Consequently, this knowledge will be invaluable to the
Company as it progresses development work at the Big One Deposit and Arya Prospect in the Mt Isa copper-belt.
Mr Reed can provide Mineral Resource Estimations for metalliferous projects as a Competent Person in accordance
with the JORC Code or a Qualified Person for technical reports that meet N ll-43~11 01 standards. Further, Mr Reed
has a Bachelor of Applied Science (Geology) from the University of Technology (Sydney), with memberships at the
Australian Institute of Geoscientists (MAIG), Australian Institute of Company Directors (MAICD) and Australasian
Institute of Mining and Metallurgy (MAusIMM(CP)).
Mr Robert Scott – resigned 31 March 2022
Non-executive Chairman
Mr Simon Paull – resigned 1 February 2022
Managing Director
DIRECTORS’ MEETINGS
During the financial year, in addition to regular Board discussions, the number of meetings of Directors held and the
number of meetings attended by each director were as follows:
Director
Mr. Robert Scott
Mr. Simon Paull
Mr. Gerard Hall
Dr. Dennis Jensen
Mr. Geoff Reed
Number of Meetings Eligible
Number of Meetings
to Attend
Attended
4
3
4
0
4
4
3
3
0
4
DIRECTORSHIPS IN OTHER LISTED ENTITIES
Directorships of other listed entities held by current Directors of the Company during the last 3 years immediately
before the end of the year are as follows:
Director
Company
Period of Directorship
From
To
Gerrard Hall
Armadale Capital Plc (AIM)
Nov 2019
April 2020
Dennis Jensen
Geoff Reed
Nil
Nil
COMPANY SECRETARY
Mr. Dale Hanna served as company secretary for the 2022 financial year. Mr. Hanna has over 20 years’ experience
working in CFO, Company Secretary, corporate advisory and governance roles. Mr Hanna commenced his career with
Ernst & Young, Perth. Subsequently, he has worked with many listed-ASX groups primarily involved in the mining and
natural resources sectors, ranging from exploration, development and production phases.
Mr Hanna is a Chartered Accountant and Secretary, with current memberships at Chartered Accountants Australia &
New Zealand and Governance Institute of Australia respectively. In addition, Mr Hanna has a Bachelor of Commerce
degree from Curtin University.
5
Castillo Copper Limited – Directors’ Report
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Directors and executives of Castillo Copper Limited in
accordance with the requirements of the Corporation Act 2001 and its Regulations. For the purpose of this report, Key
Management Personnel (KMP) of the Group are defined as those persons having authority and responsibility for
planning, directing and controlling the major activities of the Group, directly or indirectly, including any officer (whether
executive or otherwise) of the Group.
The remuneration report is set out under the following main headings:
• Principles used to determine the nature and amount of remuneration
• Details of remuneration
• Service agreements
• Share-based compensation
• Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The Board is responsible for determining and reviewing compensation arrangements for the Directors. The Board
assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference
to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the
retention of a high quality board and executive team. The Group does not link the nature and amount of the emoluments
of such officers to the Group’s financial or operational performance. The expected outcome of this remuneration
structure is to retain and motivate Directors.
As part of its Corporate Governance Policies and Procedures, the Board has adopted a formal Remuneration
Committee Charter. Due to the current size of the Group and number of Directors, the Board has elected not to create
a separate Remuneration Committee but has instead decided to undertake the function of the Committee as a full
Board under the guidance of the formal charter.
The rewards for Directors have no set or pre-determined performance conditions or key performance indicators as part
of their remuneration due to the current nature of the business operations. The Board determines appropriate levels of
performance rewards as and when they consider rewards are warranted. The Group has a policy which disallows
executives and Directors entering into contracts to hedge their exposure to options or shares granted as part of their
remuneration package.
The table below shows the performance of the Group as measured by loss per share.
As at 30 June
2022
2021
2020
2019
2018
Net profit/(loss) before tax ($)
(1,653,183)
(1,624,984)
(1,842,170)
(1,924,982)
(2,402,843)
Net profit/(loss) after tax ($)
(1,653,183)
(1,624,984)
(1,842,170)
(1,924,982)
(2,402,843)
Share price at end of year
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Return on capital
0.010
(0.13)
(0.13)
(0.05)
0.038
(0.16)
(0.16)
(0.08)
0.026
(0.25)
(0.25)
(0.08)
0.016
(0.31)
(0.31)
0.033
(0.45)
(0.45)
(0.108)
(0.143)
Details of Remuneration
Details of Key Management Personnel
Mr. Robert Scott (Non-Executive Chairman)
Mr. Simon Paull (Managing Director)
Mr. Gerrard Hall (Non-Executive Director)
Dr. Dennis Jensen (Managing Director)
Mr. Geoff Reed (Non-Executive Director)
6
Castillo Copper Limited – Directors’ Report
Details of the nature and amount of each element of the emolument of each Key Management Personnel of the
Group for the financial year are as follows:
Short term
Options Post-employment
2022
Directors’
Consulting
Share-
Superannuation
Total Remuneration
Fees
Fees
based
$
45,000
38,036
79,500
69,626
60,170
Payments
$
-
-
57,120
28,560
-
$
-
95,089
-
1,800
-
Director
Mr. Robert Scott1
Mr. Simon Paull2
Dr. Dennis Jensen3
Mr. Geoff Reed4
Mr. Gerrard Hall5
$
-
-
45,000
133,125
3,000
139,620
-
-
99,986
60,170
linked to
performance
$
%
-
-
-
-
-
-
292,332
96,889
85,680
3,000
477,901
Short term
Options Post-employment
2021
Directors’
Consulting
Share-
Superannuation
Total Remuneration
Director
Mr. Robert Scott1
Mr. Simon Paull2
Mr. Gerrard Hall5
Fees
Fees
based
$
48,000
48,000
39,829
Payments
$
52,710
$
-
120,000
105,420
-
52,710
135,829
120,000
210,840
linked to
performance
%
-
-
-
-
$
-
-
-
-
$
100,710
273,420
92,539
466,669
1Mr. Robert Scott resigned 31 March 2022
2Mr. Simon Paull resigned 1 February 2022
3Dr Dennis Jensen was appointed as CEO on 1 February 2022 and subsequently as Managing Director on 1 April 2022.
4Mr. Geoff Reed was appointed on 16 August 2021
5Mr Gerrard Hall is employed by SI Capital & his entitlement to director fees are included in SI Capital’s mandate.
There were no other key management personnel of the Group during the financial years ended 30 June 2022 and 30
June 2021.
Service Agreements
Managing Directors’ remuneration
Dr Jensen is entitled to a Managing Director fee of $198,000 per annum. All fees are on an “as required” basis and as
such, have no fixed termination clauses. Full details were announced to the ASX on 28 January 2022.
Executive Directors’ remuneration
Mr Reed is entitled to an Executive Director fee of $100,000 per annum. All fees are on an “as required” basis and as
such, have no fixed termination clauses. Full details were announced to the ASX on 28 January 2022.
Non-Executive Directors’ remuneration
The aggregate remuneration for non-executive Directors has been set at an amount not to exceed $500,000 per annum.
This amount may only be increased with the approval of Shareholders at a general meeting.
7
Castillo Copper Limited – Directors’ Report
Share-based compensation
Issue of shares
There were no shares issued to Directors and other key management personnel as part of compensation during the
year ended 30 June 2022.
Options
On 30 November 2021, Mr Reed was issued 3 million options, exercisable at $0.08 each before 31 July 2024 and on
1 February 2022, Dr Jensen was issued 8 million options, exercisable at $0.08 each before 31 January 2025 in
recognition of their services to the Company and to further incentivise their performance. These options were issued
for nil cash consideration, were valued at $85,680 in total and were recognised as share-based payments for the year
ended 30 June 2022. The key terms of the options are shown below.
Number of
options
Vesting date and
exercisable date
Expiry date
Exercise price
Fair value per
option at grant
date
Mr. Geoff Reed
Dr. Dennis Jensen
3,000,000
30/11/2021 31/07/2024
8,000,000
1/02/2022 31/01/2025
$0.08
$0.08
$0.0095
$0.0071
No options have been granted as remuneration since the end of the financial year.
Additional disclosures relating to key management personnel
Key Management Personnel Options
The number of options in the company held during the financial year ended 30 June 2022 by key management
personnel of Castillo Copper Limited, including their personally related parties, is set out below.
Balance at
the start of
the year
Balance at
appointment
Granted
during the
year as
compensation
On exercise
of share
options
Other
changes
during the
year
Balance at
resignation
Balance at
the end of
the year
Mr. Robert Scott
Mr. Simon Paull
Mr. Gerrard Hall
Mr. Geoff Reed
Dr. Dennis Jensen
8,000,000
12,000,000
8,941,176
-
-
-
-
-
-
-
-
-
-
3,000,000
8,000,000
-
-
-
-
-
595,239
8,595,239
595,239 12,595,239
-
-
-
-
-
-
-
-
8,941,176
3,000,000
8,000,000
Key Management Personnel Shareholdings
The number of shares in the company held during the financial year ended 30 June 2022 held by key management
personnel of Castillo Copper Limited, including their personally related parties, is set out below.
Balance at
the start of
the year
Balance at
appointment
Granted
during the
year as
compensation
On exercise
of share
options
Other
changes
during the
year
Balance at
resignation
Balance at
the end of
the year
Mr. Robert Scott
Mr. Simon Paull
Mr. Gerrard Hall
Mr. Geoff Reed
Dr. Dennis Jensen
1,405,361
1,000,000
8,141,837
-
-
-
-
-
250,000
580,000
-
-
-
-
-
-
-
-
-
-
1,190,477
2,595,838
1,190,477
2,190,477
-
-
-
-
-
-
-
-
8,141,837
250,000
580,000
8
Castillo Copper Limited – Directors’ Report
Other transactions with key management personnel
Yingyang Pty Ltd, a company of which Mr Paull is a director, charged the Group director’s fees of $38,036 (2021: $48,000)
and executive fees of $95,089 (2021: $120,000). There was nil outstanding at 30 June 2022 (2021: nil).
Coverley Management Services Pty Ltd, a company of which Mr Scott is a director, charged the Group director’s fees of
$45,000 (2021: $48,000). There was nil outstanding at 30 June 2022 (2021: $11,000).
Strategic Business Analysis Ltd, a company of which Mr Hall is a director, charged the Group director’s fees of $60,170
(2021: $36,062). There was $5,104 outstanding at 30 June 2022 (2021: nil)
Bluespoint Mining Services Pty Ltd, a company of which Mr Reed is a director, charged the Group executive fees of
$69,626 (2021: nil) and consulting fees of $1,800 (2021: nil). There was $9,166 outstanding at 30 June 2022 (2021: nil).
DTJ Enterprises Pty Ltd, a company of which Dr Jensen is a director, charged the Group executive fees of $79,500 (2021:
nil). There was nil outstanding at 30 June 2022 (2021: nil)
Transactions with key management personnel were made at arm’s length at normal market prices and normal commercial
terms. All remuneration amounts noted above are included in the remuneration table on page 7.
END OF REMUNERATION REPORT
INTERESTS IN THE SECURITIES OF THE GROUP
As at the date of this report, the interests of the Directors in the securities of Castillo Copper Limited were:
Director
Ordinary Shares
Unlisted Options
Performance Shares
Mr. Gerrard Hall
Dr. Dennis Jensen
Mr. Geoff Reed
8,141,837
580,000
250,000
8,941,176
8,000,000
3,000,000
-
-
-
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was $1,653,183 (2021: $1,624,984) and the net assets of the
Group at 30 June 2022 were $19,012,138 (2021: $19,025,358).
DIVIDENDS
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 2022 (2021: Nil).
REVIEW OF OPERATIONS
During the financial year, the principal activity of the group was mineral exploration primarily focused on copper and
cobalt projects in Australia and Zambia. However, in the second half of the financial year, the group’s strategic intent
9
Castillo Copper Limited – Directors’ Report
pivoted towards developing the core BHA and NWQ Copper Projects, whilst aligning with partners to advance Cangai
Copper Mine and Zambia assets.
EAST & WEST ZONES, BHA PROJECT, NEW SOUTH WALES
On 14 January 2022, a geological review on BHA’s East Zone (Figure 1), acquired from Wyloo Metals in 2020,
discovered numerous anomalous areas for cobalt-copper mineralisation delineated from surface and down-hole
assays. As such, with assayed values ranging from >300ppm Co up to 3,890ppm Co across >20 drill-holes (proximal
to Himalaya Formation outcrop and sub-crop) preliminary work on modelling a JORC 2012 cobalt Mineral Resource
Estimate (MRE) commenced. A key driver is that the Broken Hill region is well-known for its cobalt potential, as Cobalt
Blue (ASX: COB) has JORC Ore Reserves of 118Mt @ 687ppm Co for 81,100t contained metal.
In addition, the Board was highly encouraged by the NSW government’s new strategy, which targets building a viable
downstream industry for processing critical minerals (including cobalt-copper-REEs) and establishing a global supply
hub in the state’s central west region. More importantly, the BHA Project is on the NSW government’s critical minerals
list which is a significant positive as development work advances.
FIGURE 1: BHA PROJECT FOOTPRINT
Source: CCZ geology team
On 9 February 2022, further forensic work uncovered up to 6,182 drill-holes across the East Zone (BHA Project) –
undertaken by North Broken Hill Group in the 1980s. Consequently, the Board prioritised codifying the data then
modelling up a JORC 2012 cobalt MRE, with potential for base metal credits:
Incrementally, up to seven reverse circulation and diamond drill-core samples (in the Geological Survey
of New South Wales core library) were tested for cobalt mineralisation; and
As all previous drilling and assays completed by North Broken Hill Group meet current QAQC
requirements, there should be a high degree of confidence in the final modelled result.
Given encouraging results from an initial 108 drill-holes, all delivering assays from >200ppm Co up to 9,500ppm Co,
spinning-off the BHA Group (via an IPO) was shelved indefinitely. As a result, this enabled the Board to focus on
expediting the development of the East Zone.
10
Castillo Copper Limited – Directors’ Report
On 15 February 2022, preliminary interpretations, based on analysing assayed drill-hole data, suggested cobalt
mineralisation, with coincident base metal occurrences, is within four zones down to a relatively shallow 70m.
Moreover, a key advantage for the group is the ability to leverage legacy data to model a JORC 2012 MRE, as it
facilitates fast-track developing the BHA Project at a negligible cost.
On 9 March 2022, surface sampling undertaken in and around the Iron Blow Prospect (Figure 2) confirmed the potential
for shallow platinoid mineralisation within ultrabasic dykes & metamorphic rocks:
The best samples comprised: G3 – 3.7 g/t Pt; 25 – 1.45 g/t Pt; G1 – 2.2 g/t Pt (6.1 g/t Au); and MS2 – 2.9
g/t Pt.
Further, there is demonstrable base metal and cobalt potential, with assayed surface samples (including rock-chips,
bulked & grab) returning up to 12% Cu, 2,500 Zn, 9,400 Pb and 350ppm Co.
Meanwhile, historical diamond core drilling has confirmed cobalt is apparent at The Sisters Prospect (Figure 2), with
the best results: 1.8m @ 820ppm Co from 124.7m (BH1) and 1.5m @ 320ppm Co from 138.4m (BH2).
On 21 March 2022, following a visit to NSW’s core library, the geology team re-tested diamond core – from drill-holes
BH1 & BH2 at The Sisters Prospect, with encouraging results:
Utilising a PXRF analyser – to identify samples for follow up assays – readings up to 1,705ppm Co and
9.63% Zn were recorded; and
More significantly, several PXRF intervals (7-9m wide) were delineated with high-grade cobalt-zinc
readings (Figure 2).
FIGURE 2: PRXF INTERVALS BH1 & BH2 – THE SISTERS PROSPECT
Drill-hole
From
To
Apparent
Co (ppm)
Zn (%)
Thickness (m)
BH1
BH2
11.84
20.89
106.62
114.36
116.24
124.66
124.66
129.54
89.35
92.66
90.44
93.57
137.29
140.58
9.05
7.26
8.42
4.88
1.09
0.91
3.29
859
946
897
370
245
350
525
0.26
1.53
3.26
0.89
1.89
1.94
2.21
Source: CCZ geology team
In addition, there is a primary 1,200m synclinal structure at The Sisters Prospect – which BH1 intersected – that appears
to host high-grade cobalt-zinc mineralisation: this is now a key target for further drill-testing.
On 13 April 2022, compelling new assays uncovered at the Fence Gossan and Ziggy’s Hill Prospect (Figure 3) provide
incremental evidence there is potentially an extensive cobalt system apparent within the BHA Project’s East Zone.
11
Castillo Copper Limited – Directors’ Report
FIGURE 3: PROSPECTS WITHIN EAST ZONE, BHA PROJECT
Source: CCZ geology team
The new cobalt assays, especially from Fence Gossan, are relatively shallow (from surface to circa 100m) and include
several standout intercepts which align with earlier results at the Tors & Reef Tank (Figure 4).
12
Castillo Copper Limited – Directors’ Report
FIGURE 4: BEST ASSAYED INTERCEPTS
Prospect Best Intercepts
New – Fence Gossan
23m @ 660ppm Co from 28m including
Prospect:
New – Ziggy’s Hill
Prospect:
Reported – Tors &
Reef
Tank
Prospects:
3m @ 1,300ppm Co from 37m (3E49N)
4m @ 925ppm Co from 53m including
2m @ 1,300ppm Co from 55m (3E45N)
4m @ 647ppm Co from 46m including
1m @ 1,700ppm Co from 48m (TT05W10N)
3m @ 620ppm Co from 52m including
1m @ 1,100ppm Co from 54m (TT05W14N)
2m @ 500ppm Co from 7m (TT4W035S)
14m @ 262ppm Co from 84m including
1m @ 600ppm Co from 93m (ZIG01)
6m @ 336ppm Co from 39m (RABZIG097)
7m @ 250ppm Co from 5m (ZH0210W)
15m @ 760ppm Co from 67m including
3m @ 1,500ppm Co from 70m (3E51N)
5m @ 1,200ppm Co from 15m (AGSO2740)
10m @ 510ppm Co from 5m including
5m @ 690ppm Co from 10m (AGSO2716)
7m @ 1,600ppm Co from 30m (1800E1180N)
10m @ 520ppm Co from surface (2925E1240S)
5m @ 520ppm Co from 45m (TT05W10N)
Source: CCZ geology team
On 5 May 2022, diamond core assay results for drill-hole BH1 at The Sisters Prospect confirmed significant cobalt
mineralisation, with the best intercept:
24m @ 424ppm Co from 103m including 2m @ 1,120ppm Co from 107m; 1m @ 873ppm Co from 120m;
and 2m @ 486ppm Co from 125m (BH1)
On 1 June 2022, the geology team produced the maiden MRE to the JORC (2012) Code for the East Zone – it totaled
64Mt @ 318 ppm Co for 21,556t contained cobalt metal (Figure 5) at relatively shallow depths (0-80m). Furthermore,
the global MRE comprised 44,260t (64Mt @ 0.07% Cu) of contained copper metal that enhances the overall result.
13
Castillo Copper Limited – Directors’ Report
FIGURE 5: JORC RESOURCE TONNAGES BHA EAST ZONE PROSPECTS
Deposit
Prospect
Model
Area
Mask
Ha
Surface
Area
Ha
Cut-
off
Co
ppm
Inferred
Co
Cu
Contained
Contained
Cobalt
Copper
Mt
ppm
%
t
t
Fence
Gossan
Reefs
Tank
2,335
218
125
22.1
315
0.08
6,962
17,680
5,363
2362
180
42.3
345
0.06
14,594
26,580
Notes: (1) Contained content reported is insitu at 100%, no mining assumptions or dilution yet applied.
64.4
318
0.07
21,556
44,260
Source: CCZ geology team
NWQ COPPER PROJECT
Big One Deposit
On 15 July 2021, a key insight was the intersection of significant visible copper mineralisation in drill-hole
BO_318RC in two distinct zones – 11m from 89-100m and 34m from 153-187m (apparent thickness).
Reconciling these new data points with the geological modelling completed at the time, clearly verified material
extensions to known mineralisation and potentially a larger underlying system than initially envisaged.
A key feature behind the success of the 2021 campaign (Figure 6) was significantly improved targeting, resulting
from the effective utilisation of geophysical insights to refine and reshape the drilling program to boost the
collective exploration potential.
FIGURE 6: DRILL RIG AT BIG ONE DEPOSIT
Location: 7,880,306E, 335,422N
Source: CCZ geology team
On 5 October 2021, CCZ announced that assays for the first four drill-holes of the second drilling campaign extended
known mineralisation at the Big One Deposit, as they were proximal to the dacite dyke, with the best intercepts
comprising:
9m @ 1.42% Cu from 88m including 4m @ 3.06% Cu from 92m & 1m @ 9.19% Cu from 92m (BO_317RC)
5m @ 1.06% Cu from 141m (BO_316RC)
14
Castillo Copper Limited – Directors’ Report
16m @ 0.59% Cu from 166m including 3m @ 1.76% Cu from 176m (BO_318RC)
3m @ 1.22% Cu from 65m (BO_315RC)
On 30 November 2021, based on fresh insights, post the chief geological consultant visiting the Big One Deposit, the
Board has prioritised geologically modelling an inaugural JORC compliant resource.
There are several reasons including:
1) Recent and historical drilling campaigns have intersected relatively shallow copper mineralisation; and
2) The significant bedrock conductor, north of the line of lode, which is larger and of different character than the
Induced Polarisation anomaly drilled in 2020, is yet to be drill-tested.
On 28 February 2022, modelling the 2020-21 reverse circulation and diamond core drilling campaigns at the Big One
Deposit produced a maiden JORC 2012 MRE of 2.1Mt @ 1.1% Cu for 21,886t contained metal (Figure 7). The
underlying orebody – which commences from surface – is not fully defined, as it remains open to the east, north and
down dip.
FIGURE 7: RESOURCE TONNAGES BIG ONE DEPOSIT
Tenure Name Ore Type
Inferred
Indicated
Measured
Copper
Silver Grade
Contained
Contained
(Mt)
(Mt)
(Mt)
Grade (%)
(g/t)
Copper (t)
Silver (kg)
Mine Dumps
Oxidised
0
0.007
Mine Insitu
Oxidised
1.7
Mine Insitu
Fresh
0.4
0
0
-
-
0
1.2
1.0
1.2
4.0
1.1
1.4
86
29
17,000
1,870
4,800
560
Sub-Totals
2.1
0.007
0
21,886
2,459
Note: Cut-off grade 0.45% Cu.
Source: CCZ geology team
Moving forward, CCZ’s geology team have mapped out the next drilling campaign (slated to start once ground
conditions improve), which will target extending the known orebody. Notably, the campaign comprises infill drilling
around the known orebody (drill-holes 301RC, 303RC & 318R; Figure 8); and drill-testing a significant bedrock
conductor, north of the line of lode, which is larger than the known orebody along strike.
15
Castillo Copper Limited – Directors’ Report
FIGURE 8: BIG ONE DEPOSIT – LINE OF LODE & 2022 DRILL TARGETS
Source: CCZ geology team
Arya Prospect
On 10 August 2021, logistics were in place to test drill the Arya Prospect.
A re-interpretation of legacy data by CCZ’s geophysicist consultant – which enabled better targeting at the Big One
Deposit – provided new insights and re-emphasised the Arya Prospect’s merits as a major exploration target in Mt Isa’s
copper-belt.
Notably, re-processing data from AusAEM Survey, commissioned by Geoscience Australia, shows the EG01 anomaly
– interpreted to be 130m thick, 1,500m long & 450m wide – is only around 100-200m deep (Figure 9).
FIGURE 9: RE-PROCESSED AUSAEM SURVEY DATA
Source: CCZ geology team
This is a significant finding, as it highlighted EG01 is much shallower than the initial ~430m depth estimate based on
analysing data from BHP, which discovered the Arya Prospect in the mid-1990s and recommended it be drill-tested.
16
Castillo Copper Limited – Directors’ Report
On 18 October 2021, the inaugural drilling campaign at the Arya Prospect commenced, after a massive logistical effort
to prepare the drill-pads then heli-lift the rig and all supporting equipment to site. After reconciling the geochemical and
geophysical data, the Board decided to orchestrate a strategic “proof of concept” campaign, comprising five initial RC
drill-holes.
On 17 November 2021, CCZ announced that three drill-holes had been completed from two drill pads, with standout,
AR_002RC, reaching a depth of 238m. Notably, around 200m of dark grey and black carbonaceous siltstone / schist
was intersected (Figure 10), with scattered base-metal sulphides, fine-grained graphite mineralisation occurrences and
remaining open at depth.
FIGURE 10: COMPLETE CHIP TRAY COLLECTION (AR_002RC)
Source: CCZ geology team
On 6 December 2021, CCZ announced the drilling campaign at the Arya Prospect had concluded, with five drill-holes
completed.
CANGAI COPPER MINE
A pleasing new developing is that Cangai Copper Mine features on the NSW government’s critical minerals list. As such,
the Board intends to determine the degree of government support that can be secured to aid further advancing Cangai
Copper Mine, considering it has an MRE at 107,589t contained copper metal (3.2Mt @ 3.35%) and is one of Australia’s
highest grading historic copper mines (Figure 11).
FIGURE 11: RESOURCE TONNAGES – CANGAI COPPER MINE
Mass (t)
Oxide
814,267
Cu
(%)
4.1
Zn
Co
(%)
(%)
0.010 0.63
Au
(g/t)
0.06
Ag
(g/t)
27.34
Cu
(t)
33,391
Co
(t)
78
Zn
(t)
5,165
Au
(Oz)
14,550
Ag
(Oz)
715,667
Fresh
2,397,342
3.1
0.003 0.28
0.89
17.74
74,198
75
6,762
68,349
1,367,456
Total
3,211,609
3.35 0.005 0.37
0.8
20.17
107,589
153
11,927
82,899
2,083,123
Note: Totals may not sum exactly due to rounding. Cut-off grade used: 1.0% Cu with top-cut applied: 10.0% Cu
Source: CCZ geology team
In addition, Cangai Copper Mine still delivers significant exploration potential as there are several untested bedrock
conductors that are interpreted to be open at depth (Figure 12).
17
Castillo Copper Limited – Directors’ Report
FIGURE 12: CANGAI COPPER MINE – UNTESTED BEDROCK CONDUCTORS
Source: CCZ geology team
ZAMBIA PROJECTS
On 1 July 2021, a comprehensive geophysical campaign across the key Zambian projects commenced. The campaign
was estimated to take 6-8 weeks to complete and additional time to fully analyse the results, reconciling these with
known anomalous areas at surface to identify priority targets to drill.
On 25 October 2021, up to 14 drill targets were identified at the Luanshya Project. Notably, the 14 chargeable zones
were identified post an Induced Polarisation (IP) survey – within a 6km zone of copper surface anomalism (Figure 13).
Modelling was undertaken by CCZ’s consultant geophysicist, who interpreted the IP survey results that covered the
6km long soil anomaly, which was defined after extensive soil sampling campaigns.
18
Castillo Copper Limited – Directors’ Report
FIGURE 13: LUANSHYA PROJECT – IP SURVEY VS COPPER SURFACE ANOMALISM
Source: CCZ geology team
On 5 April 2022, an IP survey campaign undertaken at the Mkushi Project highlighted multiple zones of high
chargeability coincident with known copper soil anomalies. More significantly, according to the geophysicist’s
interpretation, these are potential bodies of disseminated copper sulphide mineralisation and prime targets to test drill.
On 22 June 2022, in a landmark deal, London-based Hyperion Copper was granted a 12-month option to acquire
100%-owned subsidiary, Zed Copper Pty Ltd, which owns the four projects in Zambia’s copper-belt – including the
prime Luanshya and Mkushi Projects – for total consideration of £3.75m (A$6.7m), subject to due diligence, in a value
creating transaction.
The Board believes this is an excellent outcome for all stakeholders since it secures a strategic partner that is
committed to fully develop the exploration potential of the Zambia projects (Figure 14). Moreover, with Hyperion Copper
planning to list on the LSE’s AIM market in 2H 2022, CCZ is set to accrue benefits via retaining its shareholding in
Hyperion post listing.
19
Castillo Copper Limited – Directors’ Report
FIGURE 14: ZAMBIA PROJECTS
Source: CCZ geology team
Hyperion is positioning itself as an Africa-focused, copper-gold explorer as it owns 100% of the Yansse Gold Project
in Burkina Faso.
CORPORATE
New Director Appointed
On 16 August 2021, Mr Geoff Reed was appointed Non-Executive Director. Mr Reed, who is an experienced geologist
and has worked with MIM/Xstrata in the Mt Isa region, will provide invaluable oversight of CCZ’s exploration programs
in NSW and north-west Queensland.
Board changes
On 28 January 202, Dr Dennis Jensen was promoted to Chief Executive Officer and Mr Geoff Reed to Executive
Director with effect 1 February 2022. They assume responsibility for executing the Board’s revised strategic intent to
prove up JORC 2012 mineral resources. They take over from Mr Simon Paull who retired after building up an excellent
platform during his tenure with the group.
On 1 April 2022, Mr Ged Hall (non-executive director based in London) was promoted to Chairman and Dr Dennis
Jensen to Managing Director (from CEO) with effect from 1 April 2022. These promotions follow on post the retirement
of long-standing Chairman, Mr Rob Scott, with effect from 31 March 2022.
20
Castillo Copper Limited – Directors’ Report
Option agreement unwound
On 14 January 2022, the Board and companies, which hold the Litchfield and Picasso Lithium Projects, mutually agreed
to unwind the option agreement enabling CCZ to acquire these assets. As part of the break agreement terms, the
$50,000 deposit has been returned to CCZ.
CAPITAL RAISING
On 4 August 2021 and 6 August 2021, the Company issued 41,240,648 new ordinary shares and 159,439,781 listed
options to complete the capital raising on the Australian Securities Exchange and London Stock Exchange. Total
proceeds raised were $1,368,966 (AUD) and £177,245 (GBP) ($1,742,314 AUD total).
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 three (3) pillared strategy which includes continued exploration
efforts at NWQ Copper Project in Queensland, Cangai Copper Mine 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 354,362,757 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
5,000,000
17,000,000
57,716,574
52,491,667
9,000,000
102,454,545
1,582,353
79,117,618
19,000,000
3,000,000
8,000,000
0.05
0.10
0.05
0.05
0.05
0.05
31 December 2023
31 December 2023
1 August 2022
2 December 2022
31 December 2022
30 June 2023
£0.017
£0.028
1 September 2023
1 September 2023
0.05
0.08
0.08
30 September 2023
31 July 2024
31 January 2025
21
Castillo Copper Limited – Directors’ Report
In addition to the unlisted options, there are 224,939,782 listed options (ASX:CCZO, CCZA, CCZB). The details of the
listed options at the date of this report are as follows:
Number
Exercise Price $
Expiry Date
61,500,000
127,418,042
32,021,739
4,000,000
0.05
0.08
£0.044
0.08
27 March 2023
31 July 2024
1 August 2024
31 July 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.
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/.
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
Section 307C of the Corporations Act 2001 requires the Group’s auditors to provide the Directors of Castillo Copper
Limited with an Independence Declaration in relation to the audit of the financial report. A copy of that declaration is
included on page 51.
22
Castillo Copper Limited – Directors’ Report
There were no non-audit services provided by the Group’s auditor during the year ended 30 June 2022.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors.
Dennis Jensen
Managing Director
23 September 2022
Competent Person’s Statement
The information in this report that relates to Exploration Results for the Mkushi Project is based on information compiled or reviewed
by Mr Matt Bull, a consultant of Castillo Copper Limited. Mr Bull is a member of the Australian Institute of Geoscientists and has
sufficient experience of relevance to the styles of mineralisation and types of deposits under consideration, and to the activities
undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC)
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Bull consents to the inclusion in
this report of the matters based on information in the form and context in which it appears.
The information in this report that relates to Exploration Results for the Mt Oxide pillar contained in this announcement is based on a
fair and accurate representation of the publicly available information at the time of compiling the ASX Release, and is based on
information and supporting documentation compiled by Nicholas Ryan, a Competent Person who is a Member of The Australasian
Institute of Mining and Metallurgy. Nicholas Ryan is an employee of Xplore Resources Pty Ltd. Mr Ryan has been a Member of the
Australian Institute of Mining and Metallurgy for 14 years and is a Chartered Professional (Geology). Mr Ryan is employed by Xplore
Resources Pty Ltd. Mr Ryan has sufficient experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Ryan consents to the inclusion in the report of
the matters based on his information and the form and context in which it appears.
The information on the page that relates to Exploration Results of the Smelter Creek stockpiles is based on information compiled or
reviewed by Mr Mark Biggs, a consultant of Castillo Copper Limited. Mr Biggs is a member of the Australian Institute of Geoscientists
and has sufficient experience of relevance to the styles of mineralisation and types of deposits under consideration, and to the activities
undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC)
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Biggs consents to the inclusion in
this report of the matters based on information in the form and context in which it appears.
23
Castillo Copper Limited
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 30 June 2022
Interest received
Other income
Listing and public company expenses
Accounting and audit expenses
Consulting and Directors’ fees
Notes
4
2022
$
619
144,509
2021
$
591
10,734
145,128
11,325
(332,476)
(302,671)
(126,586)
(119,396)
(647,641)
(524,552)
Exploration expenditure expensed as incurred
(25,108)
-
Share-based payments
Other expenses
LOSS BEFORE INCOME TAX
Income tax expense
LOSS AFTER INCOME TAX
21
4
5
(85,680)
(318,830)
(580,820)
(370,860)
(1,653,183)
(1,624,984)
-
-
(1,653,183)
(1,624,984)
OTHER COMPREHENSIVE INCOME
Item that may be reclassified subsequently to profit or loss
Foreign currency translation
TOTAL OTHER COMPREHENSIVE INCOME
1,594
1,594
(335)
(335)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(1,651,589)
(1,625,319)
Basic and diluted loss per share (cents per share)
13
(0.13)
(0.16)
The accompanying notes form part of these financial statements.
Castillo Copper Limited
24 2022 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Financial Position
as at 30 June 2022
Notes
2022
$
2021
$
CURRENT ASSETS
Cash and cash equivalents
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other assets
Deferred exploration and evaluation expenditure
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
6
7
7
8
9
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
5,754,049
78,994
10,854,829
221,444
5,833,043
11,076,273
404,961
12,899,486
13,304,447
349,100
8,171,821
8,520,921
19,137,490
19,597,194
125,352
125,352
571,836
571,836
125,352
571,836
19,012,138
19,025,358
11
12
35,964,396
4,080,376
34,464,159
3,940,650
(21,032,634)
(19,379,451)
19,012,138
19,025,358
The accompanying notes form part of these financial statements.
Castillo Copper Limited
25 2022 Annual Report to Shareholders
-
-
-
-
-
Castillo Copper Limited
Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
Share
based
payment
reserve
$
Foreign
currency
translation
reserve
$
Issued
capital
$
Accumulated
losses
$
Total
$
34,464,159
4,092,830
(152,180)
(19,379,451)
19,025,358
Balance at 1 July 2021
Loss for the year
Other Comprehensive Income
Total Comprehensive Loss
Transactions with owners in their
capacity as owners
Shares issued to sophisticated investors
1,742,319
Shares issued to advisors and
consultants
Share issue costs
Share based payments
59,346
(301,428)
-
-
-
-
-
-
52,452
85,680
-
(1,653,183)
(1,653,183)
1,594
1,594
-
1,594
(1,653,183)
(1,651,589)
-
-
-
-
-
-
-
-
1,742,319
59,346
(248,976)
85,680
Balance as at 30 June 2022
35,964,396
4,230,962
(150,586)
(21,032,634)
19,012,138
Balance at 1 July 2020
Loss for the year
Other comprehensive loss
Total comprehensive loss
23,034,322
-
3,366,315
-
(151,845)
-
(17,754,467)
(1,624,984)
8,494,325
(1,624,984)
Transactions with owners in their
capacity as owners
Shares issued in London Stock Exchange
IPO
2,454,515
Shares issued to sophisticated investors
9,965,973
Shares issued to advisors
276,139
Share issue costs
(1,576,790)
407,685
Shares issued from exercise of options
310,000
-
Share based payments
-
318,830
-
-
-
-
-
(335)
(335)
-
(335)
(1,624,984)
(1,625,319)
-
-
-
-
-
-
-
-
-
-
-
-
2,454,515
9,965,973
276,139
(1,169,105)
310,000
318,830
Balance as at 30 June 2021
34,464,159
4,092,830
(152,180)
(19,379,451)
19,025,358
The accompanying notes form part of these financial statements.
Castillo Copper Limited
26 2022 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Cash Flows
for the year ended 30 June 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Notes
2022
$
2021
$
619
591
(1,406,386)
(1,208,781)
NET CASH USED IN OPERATING ACTIVITIES
6
(1,405,767)
(1,208,190)
CASH FLOWS FROM INVESTING ACTIVITIES
Tenement expenditure guarantees
Payments for tenements bonds
Payment for acquisition of tenements
Option fee received
Exploration and evaluation expenditure
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issues
Proceeds from exercise of options
Share issue costs
NET CASH FROM FINANCING ACTIVITIES
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Foreign exchanges variances on cash
6
11
11
11
-
(232,000)
(55,861)
-
-
(217,285)
144,509
-
(5,112,153)
(2,236,420)
(5,023,505)
(2,685,705)
1,742,319
12,420,488
-
310,000
(248,976)
(1,132,902)
1,493,343
11,597,586
(4,935,929)
7,703,691
10,854,829
3,129,958
(164,851)
21,180
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR
6
5,754,049
10,854,829
The accompanying notes form part of these financial statements.
Castillo Copper Limited
27 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
Corporate Information
1.
The financial report of Castillo Copper Limited and its subsidiaries (“Castillo Copper” or “the Group”) for the year ended
30 June 2022 was authorised for issue in accordance with a resolution of the Directors on 23 September 2022.
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 2022
In the year ended 30 June 2022, 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
2022. 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 2022 of $1,653,183 and net cash outflows from operating
activities of $1,405,767, net cash outflows from investing activities of $5,023,505 and net cash inflows from financing
Castillo Copper Limited
28 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
activities of $1,493,343. At 30 June 2022, the Group had a net asset position of $19,012,138. The cash and cash
equivalents balance at 30 June 2022 was $5,754,049.
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;
Castillo Copper Limited
29 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
•
•
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.
Castillo Copper Limited
30 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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.
Castillo Copper Limited
31 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
(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.
Castillo Copper Limited
32 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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 11.
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.
Castillo Copper Limited
33 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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.
Castillo Copper Limited
34 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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 11(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 13).
Castillo Copper Limited
35 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
(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 17 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.
Castillo Copper Limited
36 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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:
2022
Segment assets and
liabilities
Current assets
Non-current assets
Current liabilities
Segment income and
expenses
Interest income
Other income
Other expenses
Loss before tax
2021
Segment assets and
liabilities
Current assets
Non-current assets
Current liabilities
Segment income and
expenses
Interest income
Other income
Other expenses
Loss before tax
4.
Other income and expenses
Other income
Interest expense over accrual
Option fee1
Total other income
NWQ
(QLD)
Cangai
(NSW)
Broken Hill
(NSW)
Zambia
Unallocated
Total
$
-
6,271,129
$
-
5,454,684
$
-
544,180
$
-
1,034,333
$
5,833,043
121
(125,352)
$
5,833,043
13,304,447
(125,352)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
144,509
-
144,509
619
-
(1,798,311)
(1,797,692)
619
144,509
(1,798,311)
(1,653,183)
NWQ
(QLD)
Cangai
(NSW)
Broken Hill
(NSW)
Zambia
Unallocated
Total
$
-
1,973,078
$
-
5,380,977
$
-
289,580
$
-
877,167
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
11,076,273
119
(571,836)
$
11,076,273
8,520,921
(571,836)
591
10,734
(1,636,309)
(1,624,984)
591
10,734
(1,636,309)
(1,624,984)
2022
$
-
144,509
144,509
2021
$
10,734
-
10,734
1Castillo Copper Ltd granted a 12 month option to Hyperion Copper Ltd (“Hyperion”) for the acquisition of its 100%
owned Subsidiary, Zed Copper Pty Ltd, which owns the Group’s mining tenements in Zambia, for a non-refundable fee
of US$100,000 (A$144,509). The consideration payable by Hyperion to Castillo Copper Ltd for the exercise of the option
is £2,250,000, which is to be satisfied by the issue and allotment of ordinary shares in Hyperion. As part of the
transaction, Hyperion is proposing to undertake a listing and initial public offering on the AIM Market of the London Stock
Exchange. Following completion of the transaction and listing, Castillo Copper Ltd will hold a minimum interest of 25%
of the issued shares of Hyperion. The material conditions precedent to the transaction include: a definitive agreement
being entered into once Hyperion is satisfied with their due diligence; all the required approvals and consents being
obtained, including shareholder approval if necessary; obtaining a legal opinion and competent person's report
confirming that the tenements are in good standing; and Hyperion completing preparation and publication of an AIM
admission document in respect of an initial public offering and receiving unconditional approval.
Castillo Copper Limited
37 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
Other expenses
Travel and accommodation
Legal
Insurance
Foreign Exchange (Gains)/Losses
Investor Relations
Other
Total other expenses
5.
Income Tax
(a) Income tax expense
Major component of tax expense for the year:
Current tax
Deferred tax
(b) Numerical
tax expense
reconciliation between aggregate
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
Tax at the Australian rate of 30% (2021: 30%)
Non-allowable expenses
Income tax benefit not bought to account
Income tax expense
(c) The following deferred tax balances have not been bought to account:
Assets
Total losses available to offset against future taxable income
Total accrued expenses
Total share issue costs deductible over five years
Deferred tax liability on capitalised exploration costs
Deferred tax assets not brought to account as realisation is not regarded as
probable
Deferred tax asset recognised
(d) Unused tax losses
Unused tax losses
Potential tax benefit not recognised at 30% (2021: 30%)
$
252
37,678
95,415
164,792
260,534
22,149
$
112
49,827
72,221
(23,056)
252,766
18,990
580,820
370,860
2022
$
2021
$
-
-
-
-
-
-
(1,653,183)
(1,624,984)
(495,955)
(487,495)
25,929
96,145
470,026
391,350
-
-
2022
2021
$
$
10,361,143
8,397,012
9,867
483,299
53,960
565,080
(3,549,693)
(2,188,397)
(7,304,616)
(6,827,655)
-
-
2022
$
2021
$
34,537,142 27,990,034
10,361,143
8,397,012
Castillo Copper Limited
38 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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
operations
Loss from ordinary activities after tax
Non-cash items
Share-based payments
Consultancy and adviser fees settled in shares
Foreign exchange (gain)/loss
Profit & loss items classed as investing activities
Consulting fees relating to exploration expenditure
Other income – option fee
Changes in assets and liabilities
Increase / (decrease) in trade and other payables
(Increase) / decrease in other receivables
Net cash flow used in operating activities
(b) Reconciliation of cash
Cash balance comprises:
Cash at bank
Cash at bank earns interest at floating rates based on daily bank deposit rates.
7.
Other Assets
Current
GST/VAT receivable
Prepayments
Non-Current
Tenement guarantees
There are no current tenement guarantees.
2022
$
2021
$
(1,653,183)
(1,624,984)
85,680
59,346
318,830
169,000
164,792
(21,164)
-
120,000
(144,509)
-
(60,167)
(10,142)
142,274
(159,730)
(1,405,767)
(1,208,190)
5,754,049 10,854,829
2022
2021
$
$
45,150
33,844
178,642
42,802
78,994
221,444
404,961
349,100
Castillo Copper Limited
39 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
8.
Deferred Exploration and Evaluation Expenditure
Exploration and evaluation phase:
Opening balance
Exploration and evaluation expenditure on acquisition of Wyloo metals
tenements
Exploration and evaluation expenditure during the period
Rehabilitation (note 10)
Closing balance
2022
2021
$
$
8,171,821
5,748,198
-
215,000
4,727,665
2,329,713
-
(121,090)
12,899,486
8,171,821
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.
9.
Trade and other payables
Current
Trade and other payables
Accruals
2022
$
92,462
32,890
125,352
2021
$
383,303
188,533
571,836
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.
Rehabilitation Provision
Rehabilitation provision
Rehabilitation provision
Opening balance
Rehabilitation completed during the year
Closing balance
11.
Issued Capital
(a) Issued and paid up capital
Ordinary shares fully paid
2022
$
-
-
2021
$
-
-
-
-
-
121,090
(121,090)
-
2022
2021
$
$
35,965,396 34,464,159
Castillo Copper Limited
40 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
2022
Number of
shares
2021
Number of
shares
$
$
(b) Movements in ordinary shares on issue
Opening balance
Shares issued in London Stock Exchange IPO
Shares issued to sophisticated investors
Shares issued to advisors
Shares issued from exercise of options
Shares issued to consultants
Transaction costs on share issue
1,256,512,320
-
41,240,648
250,000
-
1,502,387
-
34,464,159
-
1,742,319
12,500
-
46,846
(301,428)
926,723,065 23,034,322
2,454,515
9,965,973
276,139
310,000
-
81,117,618
237,155,313
4,382,991
7,133,333
-
-
(1,576,790)
1,299,505,355
35,964,396 1,256,512,320 34,464,159
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 2022 there were 354,362,757 (30 June 2021: 358,362,757) unlisted options and 224,939,782 (30 June
2021: 61,500,000) listed options (ASX:CCZO, 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
price
$
Fair value at
grant date
Vesting date
1
2
3
4
5
6
7
8
9
10
11
121
131
141
15
16
17,000,000
16 May 2018
31 December 2023
5,000,000
1 February 2019
31 December 2023
19,200,000
3 December 2019
2 December 2022
3,000,000
3 December 2019
2 December 2022
3,000,000
31 December 2019 31 December 2022
6,000,000
31 December 2019 31 December 2022
7,000,000
23 June 2020
30 June 2023
$0.10
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
1,582,353
2 October 2020
1 September 2023
£0.017
19,000,000
2 October 2020
30 September 2023
14,285,714
15 June 2021
31 July 2024
2,955,665
16 June 2021
1 August 2024
2,418,044
5 August 2021
31 July 2024
$0.05
$0.08
£0.044
$0.08
$0.018
$0.005
$0.005
$0.005
$0.005
$0.004
$0.013
$0.023
$0.018
$0.022
$0.021
$0.007
16 May 2018
1 February 2019
3 December 2019
3 December 2019
31 December 2019
30 June 2020
23 June 2020
2 October 2020
2 October 2020
15 June 2021
16 June 2021
5 August 2021
462,378
17 August 2021
1 August 2024
£0.044
$0.017
17 August 2021
4,000,000
27 October 2021
31 July 2024
3,000,000
30 November 2021
31 July 2024
8,000,000
1 February 2022
31 January 2025
$0.08
$0.08
$0.08
$0.007
27 October 2021
$0.010
$0.007
30 November 2021
1 February 2022
1 Issued to corporate advisors for broker services rendered in relation to share placements during the year.
During the year 15,000,000 options expired, with an exercise price of $0.05 and a fair value at grant date of $0.003.
No options were exercised during the period.
Castillo Copper Limited
41 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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)
1.21
Weighted average exercise price
$0.0554
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 during the period was estimated as at the date of grant using
the Black and Scholes model taking into account the terms and conditions upon which they were granted, as follows:
Series
1
2
3
4
5
6
7
8
9
15
16
100
87
92
92
92
93
100
104
104
99
100
1.90
2.00
0.77
0.77
0.77
0.77
0.27
0.18
0.18
0.87
1.21
5.6
4.9
3.0
3.0
3.0
3.0
3.0
2.9
3.0
2.7
3.0
10
5
5
5
5
5
5
1.7p
5
8
8
3.9
1.6
1.8
1.8
2.0
1.7
2.6
2.6p
4.2
3.4
2.6
Expected
volatility (%)
Risk-free interest
rate (%)
Expected life of
option (years)
Exercise price
(cents/pence)
Grant date share
price
(cents/pence)
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 2022 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.
Castillo Copper Limited
42 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
12.
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.
13.
Loss per Share
Loss used in calculating basic and dilutive EPS
Weighted average number of ordinary shares used in
calculating basic loss per share:
Effect of dilution:
Share options
Adjusted weighted average number of ordinary shares
used in calculating diluted loss per share:
2022
$
2021
$
(1,653,183)
(1,624,894)
Number of Shares
1,294,183,748
1,019,444,466
-
1,294,183,748
1,019,444,466
Basic and diluted loss per share (cents per share)
(0.13)
(0.16)
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.
14.
Auditor’s Remuneration
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
Non-audit services – preparation of various reports in relation to the LSE
listing
15.
Related party disclosures
a)
Key management personnel
Compensation of key management personnel
Short term employee benefits
Post-employment benefits
Share-based payments
Total remuneration
2022
$
2021
$
40,851
41,607
-
40,851
10,000
51,607
2022
$
2021
$
389,221
255,829
3,000
85,680
477,901
-
210,840
466,669
Castillo Copper Limited
43 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
b) Other transactions with key management personnel
Yingyang Pty Ltd, a company of which Mr Paull is a director, charged the Group director’s fees of $38,036 (2021: $48,000)
and executive fees of $95,089 (2021: $120,000). There was nil outstanding at 30 June 2022 (2021: $nil).
Coverley Management Services Pty Ltd, a company of which Mr Scott is a director, charged the Group director’s fees of
$45,000 (2021: $48,000). There was nil outstanding at 30 June 2022 (2021: nil).
Strategic Business Analysis Ltd, a company of which Mr. Hall is a director, charged the Group directors fees of $60,170
(2021: $39,829). There was $5,104 outstanding at 30 June 2022 (2021: nil).
Bluespoint Mining Services Pty Ltd, a company of which Mr Reed is a director, charged the Group executive fees of $69,626
(2021: nil) and consulting fees of $1,800 (2021: nil). There was $9,166 outstanding at 30 June 2022 (2021: nil).
DTJ Enterprises Pty Ltd, a company of which Dr Jensen is a director, charged the Group executive fees of $79,500 (2021:
nil). There was nil outstanding at 30 June 2022 (2021: 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
Castillo Copper Chile SPA
Castillo Exploration Limited
Qld Commodities Pty Ltd
Total Iron Pty Ltd
Total Minerals Pty Ltd
BHA No. 1 Pty Ltd
Atlantica Holdings (Bermuda)
Zed Copper Pty Ltd
Chalo Mining Group Ltd
Luflilian Resources Zambia Ltd
Belmt Resources Mining Company Ltd
Broken Hill Alliance Ltd
Chile
Australia
Australia
Australia
Australia
Australia
Bermuda
Australia
Zambia
Zambia
Zambia
Australia
2022
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
50%
100%
2021
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
50%
N/A
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.
16.
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:
Financial Assets
Cash and cash equivalents
Other receivables (current and non-current)
Financial Liabilities
Trade and other payables
2022
$
2021
$
5,754,049
450,111
6,204,160
10,854,829
527,741
11,382,570
125,352
571,836
Castillo Copper Limited
44 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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 2022, the Group has net
assets of $19,012,138 (2021: $19,025,358). 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 2022 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.
Cash and cash equivalents
Interest rate sensitivity
2022
$
2021
$
5,754,049
10,854,829
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 ($)
Effect on Equity including
Increase 100 basis points
Decrease 100 basis points
Increase/(Decrease)
retained earnings ($)
Increase/(Decrease)
2022
57,540
2021
108,548
2022
57,540
2021
108,548
(57,540)
(108,548)
(57,540)
(108,548)
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.
Castillo Copper Limited
45 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
(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 2022, 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 2022.
(e) Fair Value Measurement
There were no financial assets or liabilities at 30 June 2022 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)
Assets
Liabilities
British Pound Sterling (GBP)
Assets
Liabilities
2022
$
86,432
(10,350)
76,082
2021
$
101,338
(12,135)
89,203
2022
$
2021
$
3,542,364
3,631,057
(5,104)
(13,063)
3,537,260
3,617,994
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.
Castillo Copper Limited
46 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
10% Increase
Profit/(loss) and equity – CLP
Profit/(loss) and equity – GBP
10% Decrease
Profit/(loss) and equity – CLP
Profit/(loss) and equity – GBP
17.
Parent Entity Information
2022
$
7,810
353,726
361,536
2021
$
8,920
361,799
370,719
2022
$
2021
$
(7,810)
(8,920)
(353,726)
(361,799)
(361,536)
(370,719)
The following details information related to the parent entity, Castillo Copper Limited, at 30 June 2022. The information
presented here has been prepared using consistent accounting policies as presented in note 2.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total equity
Loss of the parent entity
Other comprehensive income for the year
2022
$
2021
$
5,831,937
11,074,975
10,479,490
5,885,974
16,311,427
16,960,949
115,003
559,701
-
-
115,003
559,701
16,196,424
16,401,248
35,898,048
34,464,159
4,297,310
4,092,830
(23,998,934)
(22,155,741)
16,196,424
16,401,248
1,843,193
1,790,221
-
-
Total comprehensive loss of the parent entity
1,843,193
1,790,221
a) Guarantees
Castillo Copper Limited has not entered into any guarantees in relation to the debts of its subsidiary.
Castillo Copper Limited
47 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
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.
18.
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.
19.
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:
Within one year
After one year but not more than five years
Longer than five years
2022
$
2021
$
1,280,129
643,668
1,250,000
968,475
-
-
2,530,129
1,612,143
20.
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 2022.
The balance of the franking account is Nil at 30 June 2022 (2021: Nil).
21.
Share-based payments
(a) Shares issued to suppliers: During the year, 250,000 fully paid ordinary shares were issued to suppliers with a fair value
of $12,500 in lieu of cash payment of invoices and 1,502,387 fully paid ordinary shares were issued to consultants with a fair
value of $46,846 in lieu of cash payment of invoices.
(b) Reconciliation to share based payments expense in profit or loss:
Options issued to advisors and consultants
Options issued to directors
2022
2021
$
-
$
107,990
85,680
210,840
85,680
318,830
Castillo Copper Limited
48 2022 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2022
(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).
Subsequent events
22.
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.
Castillo Copper Limited
49 2022 Annual Report to Shareholders
Castillo Copper Limited
Directors’ Declaration
The directors of the company declare that:
1.
in the directors’ opinion, the financial statements and accompanying notes set out on pages 24 to 49 are in
accordance with the Corporations Act 2001 and:
a.
comply with Accounting Standards and the Corporations Regulations 2001, professional reporting
requirements and all other mandatory requirements; and
b.
give a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the
year ended on that date;
2.
in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable; and
3.
the directors have been given the declarations by the Chief Executive Officer (or equivalent) and Chief Financial
Officer (or equivalent) required by section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
directors by:
Dennis Jensen
Managing Director
23 September 2022
Castillo Copper Limited
50 2022 Annual Report to Shareholders
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Castillo Copper Limited for the
year ended 30 June 2022, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
23 September 2022
M R Ohm
Partner
INDEPENDENT AUDITOR’S REPORT
To the Members of Castillo Copper Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Castillo Copper Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June
2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial
performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (“the Code”) that are relevant to our audit of the financial report in Australia.
We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
We have determined the matter described below to be the key audit matters to be communicated in
our report.
Key Audit Matter
How our audit addressed the key audit matter
Carrying amount of deferred exploration
and evaluation expenditure
Refer to Note 8
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group
capitalises all exploration and evaluation
expenditure and as at 30 June 2022 had a
balance of $12,899,486.
We considered this to be a key audit matter due
to its materiality, its importance for the users’
understanding of the financial statements as a
whole and the degree of audit effort involved.
Our procedures included but were not limited to
the following:
- We obtained an understanding of the key
processes associated with management’s
review of the carrying values of each area of
interest;
- We considered the Directors’ assessment of
potential indicators of impairment;
- We obtained evidence that the Group has
current rights to tenure of its areas of interest;
- We examined the exploration budget and
discussed with management the nature of
planned ongoing activities;
- We substantiated a sample of additions to
exploration expenditure during the year;
- We determined if any areas of interest should
be characterised as discontinued or held for
sale as at balance date; and
- We examined the disclosures made in the
financial report.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2022, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
−
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
− Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
− Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
− Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
− Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the Directors’ Report for the year ended 30
June 2022.
In our opinion, the Remuneration Report of Castillo Copper Limited for the year ended 30 June 2022
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
23 September 2022
M R Ohm
Partner
Castillo Copper Limited
ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is
as follows. The information is current at 12 September 2022.
Distribution of Share Holders
1 - 1,000
1,001
- 5,000
5,001
- 10,000
10,001
- 100,000
100,001
- and over
TOTAL
Ordinary Shares
Number of Holders
Number of Shares
75
15
135
2,028
1,372
3,625
13,119
43,461
1,197,364
91,333,302
1,206,487,324
1,299,074,570
There were 1,448 holders of ordinary shares holding less than a marketable parcel, with total of 31,599,269 shares
amounting to 2.4% of Issued Capital.
Quoted equity securities as at 12 September 2022
Equity Security
Ordinary Shares
CCZO – Listed Options
CCZOA – Listed Options
CCZOB – Listed Options
Quoted
1,299,505,355
61,500,000
131,418,042
32,021,739
Voting Rights
Each fully paid ordinary share carries the rights of one vote per share.
Unquoted Securities
The number of unquoted securities on issue at 12 September 2022:
Unquoted Securities
Unquoted Options1
Unquoted Options2
Unquoted Options
Unquoted Options3
Performance Shares – Class A
Performance Shares – Class B
Unquoted Options
Unquoted Options6
Unquoted Options7
Unquoted Options
Unquoted Options8
Unquoted Options9
Number on Issue
17,000,000
5,000,000
52,491,667
9,000,000
46,875,000
46,875,000
102,454,545
1,582,353
19,000,000
79,117,618
3,000,000
8,000,000
Exercise Price
10c
5c
5c
5c
Nil6
Nil7
5c
1.7p
5c
2.8p
8c
8c
Expiry Date
31/12/2023
31/12/2023
3/12/2022
31/12/2022
-
-
30/06/2023
01/09/2023
30/09/2023
01/09/2023
31/07/2024
31/01/2025
Persons holding more than 20% of a given class of unquoted securities as at 12 September 2022:
1. 29% held by Bond Street Custodians Ltd, 26% held by Detroit Capital Pty Ltd, 21% Held by Mr Shane
Lehman
2. 100% held by Ferber Holdings Pty Ltd .
3. 33% held by JBO Assets Pty Ltd, 33% held by TWW Assets Pty Ltd, 28% held by Mr Shane Lehman.
4. 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. 50% held by N & E Beltz Pty Ltd and 50% held by Resource Corporate Pty Ltd.
5. 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. 50% held by N & E Beltz Pty Ltd and 50% held by Resource Corporate Pty Ltd.
6. 100% held by SI Capital Ltd
7. 32% held by Yingyang Pty Ltd
8. 100% held by Bluespoint Mining Services Pty Ltd
9. 100% held by DTJ Enterprises Pty Ltd
56
Castillo Copper Limited
Substantial Shareholders
There are no substantial shareholders.
Restricted Securities
There were 430,785 restricted securities under ASX imposed escrow at 12 September 2022.
Stock Exchange
The Company is listed on the Australian Securities Exchange and has been allocated the code “CCZ”. The “Home
Exchange” is Perth.
The Company is also listed on the London Stock Exchange and has been allocated the code “CCZ”.
Other information
Castillo Copper Limited, is incorporated and domiciled in Australia, and is a publicly listed company limited by
shares.
On-Market Buy-Back
There is currently no on-market buy-back in place.
Twenty largest holders of quoted securities as at 12 September 2022
Name
No. of Shares
%
COMPUTERSHARE CLEARING PTY LTD
185,682,557
14.29%
SUNSET CAPITAL MANAGEMENT PTY LTD
27,061,652
2.08%
TWW ASSETS PTY LTD
JBO ASSETS PTY LTD
24,459,524
1.88%
24,259,525
1.87%
BNP PARIBAS NOMINEES PTY LTD
23,352,548
1.80%
TAKA CUSTODIANS PTY LTD
BNP PARIBAS NOMS PTY LTD
MR JOHN MCDONALD & MR SHAUN MCDONALD
REBECCA BRADLEY
MR BRADLEY JOHN KENNEY
MR GREGORY BRUCE HILL
MR GREGORY BRUCE HILL
AGENS PTY LTD
FOUCART PTY LTD
BEARAY PTY LIMITED
REDIMA PTY LTD
MR KENNETH JOSEPH HALL
JD SQUARED INVESTMENTS PTY LTD
MRS MARIA KATALIN VAROLI
ONE MANAGED INVESTMENT FUNDS LIMITED
Total
57
17,793,750
1.37%
17,193,429
1.32%
17,088,944
1.32%
15,000,000
1.15%
15,000,000
1.15%
12,000,000
0.92%
12,000,000
0.92%
10,880,954
0.84%
8,507,500
0.65%
8,333,320
0.64%
8,155,887
0.63%
7,850,000
0.60%
7,750,000
0.60%
7,500,000
0.58%
7,142,858
0.55%
470,232,613
36.20%
Castillo Copper Limited
Tenement information as required by
Listing Rule 5.3.3
JACKADERRY
Tenement ID
New England Orogen in NSW
Ownership at
end of year
100%
100%
100%
Status
Granted
Granted
Granted
EL8635
EL8625
EL8601
BROKEN HILL
located within a 20km radius of Broken Hill, NSW
Ownership at
Tenement ID
end of year
100%
100%
100%
100%
Granted
Granted
Granted
Granted
EL8599
EL8572
EL8434
EL8435
Status
MT OXIDE
Tenement ID
Status
Mt Isa region, northwest Queensland
Ownership at
end of year
100%
100%
100%
100%
100%
Granted
Granted
Granted
Granted
Granted
EPM 26513
EPM 26525
EPM 26574
EPM 26462
EPM27440
Tenement ID
23914-HQ-
SEL
23913-HQ-
SEL
24659-HQ-LEL
22448-HQ-LEL
25195-HQ-LEL
25273-HQ-LEL
25261-HQ-LEL
Zambia
Ownership at
end of year
100%
100%
100%
0%*
55%*
55%*
100%
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
*CCZ can earn up to 80% by meeting previously
disclosed milestones
58