Castillo Copper Limited
30 June 2023 Annual Report
ABN 52 137 606 476
Corporate Directory
Directors
Gerrard (Ged) Hall (Non-Executive Chairman)
Dr Dennis Jensen (Managing Director)
David Drakeley (Director) (Appointed 30 January 2023)
Jack Sedgwick (Director) (Appointed 30 January 2023)
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
Annual 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
18
19
20
21
22
43
44
45
49
51
Annual Address
Dear Shareholders,
Challenges thrown up by the external environment in FY2023 – rapid increase in interest rates to
combat inflation, ongoing war in Ukraine, pedestrian commodity prices and subdued equity markets –
forced the Board to undertake thorough due diligence before making decisions.
The Board’s core theme, which remains a constant moving forward, is to align with strategic
development partners to optimise the value creating potential from the current asset portfolio. Further,
the Board will consider any outright offer to acquire one of the assets based on its merits.
Reflecting on FY2023, extremely weak stock market conditions in the UK resulted in London-based
Metallea Group not proceeding with plans to acquire the Zambia Copper Projects. However, the Board
has committed to further exploratory work and re-doubled efforts to align with a new strategic
development partner.
In Australia, solid progress was made advancing the three projects, summarised as follows:
East Zone, BHA Project (NSW): Post defining a JORC compliant inferred cobalt resource from
legacy data (64Mt @ 318 ppm Co for 21,556t), the Board commissioned a 2,000m drilling
campaign.
The surprise upshot from this campaign was the discovery of a significant shallow rare earth
element system proximal to the Fence Gossan, Reef and Tors Tank Prospects.
While initial metallurgy samples were inconclusive, the Board is investigating trialling several
alternate metallurgical test-work techniques to improve extraction results.
NWQ Copper Project (QLD): Metallurgical test-work undertaken on samples from the Big One
Deposit to produce a concentrate were encouraging, with upgrades ranging from 5-10x copper
metal. Further, combined with a JORC compliant inferred Mineral Resource Estimate – 2.1Mt
@ 1.1% Cu for 21,886kt copper metal – and known targets to test-drill, the Big One Deposit
offers significant exploration potential.
More broadly, across the NWQ Copper Project are over 20 incremental under-explored
prospects that are highly prospective for copper mineralisation which potentially provide the
foundations for developing a series of satellite deposits.
Cangai Copper Mine (NSW): Post the review period, the geology team produced an updated
JORC compliant inferred Mineral Resource Estimate at 4.4Mt @ 2.5% Cu and 0.2Mt @ 1.35%
Cu indicated from historic stockpiles for ~114kt contained copper metal.
Ged Hall
Chairman
London, United Kingdom
28 Septembe 2023r
Dr Dennis Jensen
Managing Director
Perth, Australia
28 Septembe 2023r
1
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 2023. 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 holds 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
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 holds a Masters in Science from Melbourne University and a PhD from Monash University.
Mr David Drakeley (appointed 30 January 2023)
Non-Executive Director
With over 15 years' experience in Australia's exploration industry, Mr Drakeley has distinguished himself across a range
of commodities. Known for his unwavering commitment to safety, Mr Drakeley ensures that every project under his
leadership prioritises the well-being of its team members.
Mr Drakeley is acutely aware of the critical importance of accurate data in today's mining environment. He has
meticulously championed the collection, management, and interpretation of exploration data, ensuring all decisions are
informed and reliable.
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Castillo Copper Limited – Directors’ Report
Mr Drakeley demonstrates the capability to bridge the gap between geological science and practical application. His
projects are a testament to his holistic approach, always seeking to balance the economic potential of an exploration
site with its environmental and social implications.
Mr Drakeley holds a Bachelor (Hons) of Earth Science and Combined Subjects, QLD Site Senior Executive (SSE) for
Surface Mines or Quarries, and QLD Site Senior Executive (SSE) for Coal Mines.
Mr Jack Sedgwick (appointed 30 January 2023)
Non-Executive Director
Mr Sedgwick is a hands-on corporate strategist and business improvement specialist with blue-chip experience across
the mining and energy sectors. In a varied career, spanning 15 years, Mr Sedgwick has gained considerable frontline
and managerial experience across a broad range of roles and industries. He has extensive experience in structural,
civil, and marine engineering, including three years working across multiple Rio Tinto operational mine sites. Prior
management consulting experience predominantly focused on mining, oil and gas, and industrials advising clients on
post-merger integration, construction productivity, continuous improvement, organisation design, and cost optimisation
strategies. Mr Sedgwick currently heads up corporate strategy for Horizon Power, Australia’s only vertically integrated
utility, and the most geographically dispersed utility in the world. Based in Perth, Mr Sedgwick oversees portfolio
optimisation and the Group’s finances.
Mr Sedgwick holds a Bachelor of Engineering, Bachelor of Commerce, and a Master of Business Administration (with
Distinction) from the University of Western Australia. He is a graduate of the Australian Institute of Company Directors.
Mr Geoff Reed (Resigned 30 January 2023)
Executive Director
Mr Reed 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. 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.
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)).
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
Dr. Dennis Jensen
Mr. Geoff Reed
Mr. Gerard Hall
Mr. David Drakeley
Mr. Jack Sedgwick
Number of Meetings Eligible
Number of Meetings
to Attend
Attended
5
3
5
2
2
3
5
3
5
2
2
Castillo Copper Limited – Directors’ Report
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
Gerrard Hall
Dennis Jensen
Geoff Reed
David Drakeley
Jack Sedgwick
Nil
Nil
Nil
Nil
Nil
COMPANY SECRETARY
Period of Directorship
From
N/A
N/A
N/A
N/A
N/A
To
N/A
N/A
N/A
N/A
N/A
Mr. Dale Hanna served as company secretary for the 2023 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.
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.
4
Castillo Copper Limited – Directors’ Report
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
2023
2022
2021
2020
2019
Net profit/(loss) before tax ($)
(6,942,228)
(1,653,183)
(1,624,984)
(1,842,170)
(1,924,982)
Net profit/(loss) after tax ($)
(6,942,228)
(1,653,183)
(1,624,984)
(1,842,170)
(1,924,982)
Share price at end of year
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Return on capital
0.007
(0.53)
(0.53)
(0.19)
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)
(0.108)
Details of Remuneration
Details of Key Management Personnel
Mr. David Drakeley (Non-Executive Director)
Mr. Jack Sedgwick (Non-Executive Director)
Mr. Gerrard Hall (Non-Executive Director)
Dr. Dennis Jensen (Managing Director)
Mr. Geoff Reed (Executive Director)
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
2023
Directors’
Consulting
Share-
Superannuation
Total Remuneration
Fees
Fees
based
Payments
$
Director
Mr. Jackson Sedgwick1
Mr. David Drakeley2
20,369
22,508
Dr. Dennis Jensen
198,900
Mr. Geoff Reed3
Mr. Gerrard Hall4
58,329
60,447
360,553
$
-
-
-
-
-
-
$
-
-
-
-
-
-
linked to
performance
$
$
%
2,139
22,508
-
-
-
-
22,508
198,900
58,329
60,447
2,139
362,692
-
-
-
-
-
-
1Mr. Jackson Sedgwick was appointed director on 30 January 2023
2Mr. David Drakeley was appointed director on 30 January 2023
3Mr. Geoff Reed resigned as director on 30 January 2023
4Mr. Gerrard Hall is employed by SI Capital & his entitlement to director fees are included in SI Capital’s mandate.
5
Castillo Copper Limited – Directors’ Report
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 Scott
Mr. Simon Paull
Dr. Dennis Jensen
Mr. Geoff Reed
Mr. Gerrard Hall
$
-
-
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
There were no other key management personnel of the Group during the financial years ended 30 June 2023.
Service Agreements
Managing Directors’ remuneration
Dr Jensen is entitled to a Managing Director fee of $198,900 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 was 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.
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 2023.
Options
No options have been granted as remuneration during the 2023 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 2023 by key management
personnel of Castillo Copper Limited, including their personally related parties, is set out below.
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Castillo Copper Limited – Directors’ Report
Balance at
the start of
the year
Balance at
appointment
Granted
during the
year as
compensation
Exercised
Expired
Balance at
resignation
Balance at
the end of
the year
Mr. Gerrard Hall
Mr. Geoff Reed
Dr. Dennis Jensen
Mr. David Drakeley
Mr. Jack Sedgwick
8,941,176
3,000,000
8,000,000
-
-
-
-
-
-
-
Key Management Personnel Shareholdings
-
-
-
-
-
-
-
-
-
-
(3,000,000)
-
5,941,176
- (3,000,000)
-
-
-
-
-
-
-
8,000,000
-
-
The number of shares in the company held during the financial year ended 30 June 2023 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. Gerrard Hall
Mr. Geoff Reed
Dr. Dennis Jensen
Mr. David Drakeley
Mr. Jack Sedgwick
8,141,837
250,000
580,000
-
-
-
-
-
50,000
-
Other transactions with key management personnel
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,141,837
(250,000)
-
-
-
-
580,000
50,000
-
Field Crew Pty Ltd, a company of which Mr Drakeley is a director, charged the Group consulting fees of $115,135 (2022:
nil). There was nil outstanding at 30 June 2023 (2022: nil).
Transactions with key management personnel were made at arm’s length at normal market prices and normal commercial
terms.
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. David Drakeley
Mr. Jack Sedgwick
8,141,837
580,000
50,000
-
5,941,176
8,000,000
-
-
-
-
-
-
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was $6,942,228 (2022: $1,653,183) and the net assets of the
Group at 30 June 2023 were $12,071,269 (2022: $19,012,138).
DIVIDENDS
No dividend was paid or declared by the Group during the year and up to the date of this report.
7
Castillo Copper Limited – Directors’ Report
CORPORATE STRUCTURE
Castillo Copper Limited is a company limited by shares that is incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
During the financial year, the principal activity of the Group was mineral exploration and examination of new resource
opportunities. The Group currently holds copper projects in Queensland and New South Wales in Australia as well as
copper projects in Zambia.
EMPLOYEES
Other than the Directors, the Group had no employees at 30 June 2023 (2022: Nil).
REVIEW OF OPERATIONS
During the financial year, the principal activity of the group was mineral exploration primarily focused on copper, cobalt
and rare earth elements (REE) projects in Australia and Zambia.
East Zone, BHA Project, NSW
On 2 August 2022, metallurgical test-work on BH1 drill-core extracted from The Sisters Prospect – BHA Project’s East
Zone – delivered excellent beneficiation results for cobalt and, surprisingly, copper-gold – with the best outcomes:
Cobalt: 200ppm head-grade up to 2,500ppm post-test-work; 12x upgrade.
Copper: 520ppm head-grade up to 16,000ppm (1.6%) post-test-work; 30x upgrade.
Gold: 0.02g/t Au head-grade up to 3.87g/t Au post-test-work; >190x upgrade.
Pleasingly, the metallurgical test-work showed that cobalt-copper-gold liberated easily from BH1 drill-core samples to
produce a potentially viable concentrate. Further, the original BH1 drill-core the samples were extracted from
comprised:
24m @ 424ppm Co from 103m including 2m @ 1,120ppm Co from 107m; 1m @ 873ppm Cofrom 120m; and 2m
@ 486ppm Co from 125m (BH1)
Moving forward, the Board’s primary focus for the East Zone is to increase the confidence in the current inferred Mineral
Resource Estimate which stands at 21,556t cobalt (64Mt @ 318 ppm Co) and 44,260t copper (63Mt @ 0.07% Cu).
On 9 August 2022, targets were finalised for the drilling campaign at the East Zone which comprised one diamond core
and 17 RC drill-holes for 2,100m, with depths ranging from 100m to 160m.
Of these, two drill-holes were earmarked for The Sisters, with the balance across Fence Gossan, Reefs & Tors Tanks
Prospects.
Notably, for the Fence Gossan, Reefs & Tors Tanks Prospects, the campaign was designed to penetrate deep enough
to intersect two lower cobalt-rich zones that were interpreted to host higher grade mineralisation than had been
modelled.
On 31 August 2022, two key contractors were appointed:
AllState Drilling’s team to perform the campaign; and
FieldCrew to manage day-to-day aspects of the drilling campaign.
In addition, with Australia securing preferred status for the supply of critical minerals to the USA’s electric vehicle
battery program, the Board determined it necessary to deepen its understanding of the East Zone’s REE potential
at two targets:
The Sisters Prospect: both RC drill-holes were analysed for copper-cobalt-gold and REEs; and
Iron Blow: having already confirmed the presence of REEs, the geology team tested additional drill-
core samples from the core library to determine if there are further extensions to known
mineralisation.
On 3 October 2022, after approval was secured from the New South Wales Resources Regulator, a four-week long
drilling campaign at the East Zone commenced across four prospects (Figure 1 & 2).
8
Castillo Copper Limited – Directors’ Report
FIGURE 1: PROPOSED DRILLING CAMPAIGN BHA PROJECT EAST ZONE
Prospects
#
Drillholes
Target
Commodity
Depth range
(m)
Type
Objective
Reefs Tank,
Tors Tank,
Fence Gossan
The Sisters
Source: CCZ geology team
16 Co, Au, Ag, Cu
100-160
RC,
DDH
Target primary cobalt whilst assays
to investigate PGE & REE potential
2
Co, Cu, REE
120-160
RC
Test known EM interpretation; drill
extensions north & south
FIGURE 2: DRILLING UNDERWAY AT BHA PROJECT’S EAST ZONE
Location: 6460000mN, 570000mE
Source: CCZ geology team
On 12 October 2022, four drill-holes for 488m were completed at the Tors Tank Prospect which delivered encouraging
initial observations, including:
All four drill-holes hit targeted cobalt mineralisation zones, evidenced by intersecting sequences
comprising clay, amphibolite, schist, and gneiss;
Qualitative logging identified multiple disseminated sulphide layers (mostly pyrite), up to 12m thick,
associated with amphibolite layers that can potentially host cobalt mineralisation;
Field XRF observations, subject to final assay results, indicated the presence of cobalt mineralisation
within these amphibolite zones; and
The intersected geology was interpreted to be consistent with observations by previous explorers,
including Broken Hill North, across the 1970-80s.
In addition, proximal to the amphibolite layers, there are significant magnetite-rich zones – associated with pegmatite
up to 14m thick – that potentially hosts REEs. Notably, this interpretation was based on recently re-assayed diamond
core from drill-hole DD90_IB3 at the Iron Blow Prospect which returned up to 1,270ppm TREO.
On 24 October 2022, four drill-holes for a total of 516m were completed at the Fence Gossan Prospect, with positive
initial observations comparable to the Tors Tank Prospect:
Targeted cobalt mineralisation zones were hit across the four drill-holes, as sequences intersected
comprised clay, amphibolite, schist and gneiss;
Numerous disseminated sulphide layers (mostly pyrite linked to amphibolite), up to 17m thick, were
logged which could potentially host cobalt mineralisation; and
Interpreting the intersected geology suggests it is consistent with observations noted by North
Broken Hill in the 1970-80s, while XRF field observations (subject to final assays) indicated cobalt
mineralisation is apparent.
Similar to the Iron Blow Prospect, there are significant magnetite-rich zones – associated with pegmatite up to 19m
thick – which potentially hosts REEs.
On 31 October 2022, after reconciling geochemical and geophysical data for the Iron Blow Prospect, several viable
targets were selected for drill-testing with significant exploration potential. These findings were based on a re-
interpretation of geophysical campaigns from 2000, 2001 and 2017 which identified several significant bedrock
conductors that could host mineralisation.
9
Castillo Copper Limited – Directors’ Report
The primary focus is REEs since diamond core assays from drill-hole DD90_1B3 (sourced from the core library)
returned positive readings – on a cumulative basis – over 35m, with the best intersections:
8m @ 1,460ppm TREO from 150m
12m @ 297ppm TREO from 199m
6.4m @ 290ppm TREO from 189m
4.8m @ 311ppm TREO from 232m
On 15 November 2022, assays from seven drill-holes across the Fence Gossan and Tors Tank Prospects, confirmed
a significant shallow clay-hosted REE discovery – up to 2,410ppm TREO, with high-value Magnet REOs representing
up to 29.9% of the grade – the best intercepts are highlighted in Figure 3 below:
FIGURE 3: BEST ASSAYED INTERCEPTS – FENCE GOSSAN / TORS TANK
PROSPECTS
o 20m @ 1,780ppm TREO (28.9% Magnet REO) from surface including 4m @
2,410ppm TREO from 16m (FG_003RC)
o 7m @ 1,048ppm TREO (29.9% Magnet REO) from 12m (TT_002RC)
o 19m @ 847ppm TREO (29.6% Magnet REO) from surface (TT_003RC)
o 8m @ 773ppm TREO (24.0% Magnet REO) from 48m (FG_004RC)
o 4m @ 732ppm TREO (27.1% Magnet REO) from 24m (TT_001RC)
o 19m @ 661ppm TREO (28.0% Magnet REO) from surface (FG_002RC)
o 32m @ 636ppm TREO (25.7% Magnet REO) from 52m (FG_003RC)
o 28m @ 614ppm TREO (27.8% Magnet REO) from 4m (FG_004RC)
Source: CCZ geology team
Of significance, the assays for FG_002-4RC delineated an initial 800m strike event starting near Fence Gossan’s
eastern boundary. Moreover, with REE mineralisation open in all directions, and Fence Gossan circa 4km long by 1km
wide (W-E), the Board ordered follow up geological mapping, sampling and auger drilling to target extending the known
strike event to the west.
The new REE discovery has pivoted the Board’s strategic focus for the current drilling campaign and beyond to fully
understanding the extent of REE mineralisation across the East Zone.
On 23 November 2022, new assays for RT_001RC and FG_001RC were positive for TREO, confirming REEs are more
widely apparent across the East Zone than initially envisaged – the best intercepts comprise:
11m @ 1,078 TREO from 8m (RT_001RC)
20m @ 609ppm TREO from surface incl. 4m @ 1,709ppm REO from 8m (FG_001RC)
11m @ 862ppm TREO from 58m (FG_001RC)
More significantly, all the assays returned to date from Fence Gossan, Tors Tank and Reefs Tank highlight the REE
mineralisation discovered is extensive and shallow.
On 20 December 2022, following the receipt of drill assays for the Fence Gossan, Tors Tank and partly Reefs Tank
Prospects, which confirmed that shallow REE mineralisation is widely apparent, the Board commissioned an extensive
auger sampling campaign.
Encouragingly, the auger sampling campaign, which covered a 6.5km2 area proximal to the Fence Gossan Prospect,
was designed to identify the full extent of REE mineralisation and new targets to test-drill.
All samples were sent to the laboratory for further analysis, with subsequent interpretation charting the next phase of
REE-focused exploration across the East Zone.
On 15 February 2023, the assay results for diamond core from TT_005DD (Figure 4) – undertaken at the Tors Tank
Prospect – significantly boosted confidence in the shallow, clay-hosted, REE discovery, with the best intercept:
13m @ 1,550ppm Total Rare Earth Oxides (TREO) from 5m
10
Castillo Copper Limited – Directors’ Report
FIGURE 4: TORS TANK DIAMOND CORE FROM 5.3-11.8M (TT_OO5DD)
Source: CCZ geology team
Notably, high value Magnetic REO (Nd+Pr+Dy+Tb) represented an exceptional 38.9% of the TREO grade vs 25% peer
average.
Re-assays of 4m composite samples at Tors Tank & Fence Gossan to 1m provided greater clarity on the underlying
geology, whilst delivering further evidence of an extensive, shallow REE mineralisation system – the best intercepts
comprise:
17m @ 1,605ppm TREO from 2m and 1m @ 3,236 TREO from 19m (FG_003RC)
10m @ 1,013ppm TREO from 49m (FG_001RC)
6m @ 1,480ppm TREO from 7m (FG_004RC)
5m @ 1,598ppm TREO from 14m (TT_002RC)
4m @ 1,342ppm TREO from 28m (FG_004RC)
2m @ 3,491ppm TREO from 7m (TT_003RC)
Assays for circa 70% of the recent hand auger surface sampling campaign across Fence Gossan delineated a sizeable
4.5km2 anomalous area for REE mineralisation. Notably, a preliminary interpretation suggests there are several more
prime targets to test-drill that could potentially extend known mineralisation between the Fence Gossan and Tors Tank
Prospects.
On 13 April 2023, specialist consultant, ANSTO, was appointed to undertake comprehensive metallurgical test-work
on six samples from Fence Gossan, Reefs and Tors Tanks Prospects to understand the potential to extract REE from
shallow clay zones.
The scope of work focused on characterising REE leachability from the six samples which comprise fresh pegmatite to
highly weathered clay, especially with Magnetic Rare Earth Oxide (MREO) grades ranging from 362-603ppm.
This was an important step towards advancing the viability of the East Zone’s REE potential and securing interest from
prospective development partners, especially given the extent of high-value MREO (Nd+Pr+Dy+Tb) within the system.
On 14 June 2023, specialist consultant, ANSTO, produced the following preliminary findings from metallurgical test-
work performed on six samples from the Fence Gossan, Reefs, and Tors Tanks Prospects:
The Total Rare Earth Element plus Yttrium (TREY) grades for the six samples ranged from 227 to
1,632 ppm TREY;
The proportion of high-value Magnetic Rare Earth Oxides (MREO; Nd+Pr+Dy+Tb) to Total REO
(TREO) across the six samples ranged from 22% to 27%; and
The best TREY extraction, using a direct leach process at pH 1, was 30%
The Board is reviewing next steps, including trialing alternate leach tests proposed by ANSTO to improve extraction
results.
NWQ Copper Project, Queensland
On 19 July 2022, preliminary metallurgical test-work on samples extracted from drill-hole BO_318RC1 at the Big One
Deposit produced a concentrate (Figure 5) with confirmed upgrades ranging from 5x to 10x for copper metal. The best
result for copper comprised: 0.72% head-grade to 7.2% post-test-work.
Further test-work is underway on samples from the Big One Deposit to determine the final optimal results. Notably, this
is an important proof of concept and de-risking exercise as part of the Board’s strategic intent to secure a processing
agreement.
11
Castillo Copper Limited – Directors’ Report
FIGURE 5: METALLURGICAL TESTING – FROTHER PRODUCT EXAMPLE
Source: ALS Metallurgy, Perth, Western Australia
On 23 January 2023, following a review of prospects at the NWQ Copper Project, CCZ’s geology team visited several
prospects – including Big One, Arya and Valparaisa – to identify new drill targets.
The initial focus was on the Big One, which has an inferred MRE of 2.1Mt @ 1.1% Cu for 21,886kt copper metal post-
two drilling campaigns across 2020-21. Moreover, factoring in a large conductor north of the line of lode, plus
reconciling available geophysics and geochemical data, CCZ’s geological consultant set an Exploration Target that
ranges from 2-6Mt @ 0.6-1% Cu for 12-60kt copper metal.
Cautionary Statement: It should be noted that the Exploration Target tonnage range quoted above are conceptual in
nature and there has been insufficient exploration to define a copper resource. Although a preliminary analysis was
undertaken, insufficient data exists to confidently correlate mineralised horizons within the Exploration Target area. It
is uncertain whether further exploration may lead to the reporting of a JORC-standard resource, however, there is
some evidence to support the current exploration tonnage calculations, and the sufficient mineralised thicknesses
interpreted from historical drilling to warrant further investigation in some areas.
The Valparaisa Prospect comprises copper mineralisation across two horizons over a 6km strike event, with the
interaction of two intersecting faults suggesting a structurally controlled copper system that can potentially be drill-
tested.
At the Arya Prospect, there is a significant magnetic anomaly, south of a known graphite system (test drilled in late
2021), that shows potential to be a primary source of copper mineralisation.
On 20 February 2023, CCZ’s Board approved plans to assess optimising the Big One Deposit via implementing the
following:
Commissioning an independent engineering contractor to conduct a pit optimisation study on the
viability of commencing copper mining operations, utilising prospective third-party processors and
effective path to market.
Re-formulating optimal plans for a third drilling campaign and companion geophysical surveys to
extend known mineralisation beyond the line of lode.
Previous drilling campaigns have demonstrated the Big One Deposit remains highly prospective for copper
mineralisation, with the best intercepts comprising:
12
Castillo Copper Limited – Directors’ Report
40m @ 1.64% Cu from surface incl: 11m @ 4.40% Cu from 24m, 5m @ 7.34% Cu from 28m & 1m
@ 16.65% Cu from 29m (303RC)
44m @ 1.19% Cu from surface incl: 14m @ 3.55% Cu from 27m, 3m @ 10.88% Cu from 37m &
1m @ 12.6% Cu from 37m (301RC)
34m @ 1.51% Cu from surface incl: 21m @ 2.25% Cu from surface, 12m @ 3.44% Cu from 3m,
6m @ 4.79% Cu from 3m and 1m @ 9.4% Cu from 9m (B0017)
On 28 March 2023, CCZ appointed Entech Mining to undertake a pit optimisation and mine design study for the Big
One Deposit. If the findings are positive then next steps comprise determining the optimal path to market and effective
use of third-party processors.
Concurrently, work can focus on capitalising on Big One Deposit’s exploration potential via drill-testing known targets
north of the line of lode.
On 13 July 2023 the Board received the preliminary pit optimisation study for the Big One Deposit.
Drilling down, the study focused on the near-surface component of known mineralisation at the Big One Deposit and
provided significant confidence a standalone mining operation could potentially be developed.
Key findings indicate an initially optimised pit shell could potentially deliver up to 6,266t copper (head grade: 1.42%
Cu), 4,362oz silver (head grade: 0.31 g/t Ag) and 1,469t cobalt (head grade: 0.33% Co).
As known mineralisation is open south-west and down dip from the pit shell, there is significant potential to build on the
preliminary findings and progress a mining license once a strategic development partner is secured.
Cangai Copper Mine
On 9 March 2023, following a site visit to Cangai Copper Mine by geologist and director David Drakeley, the Board
approved plans to update and enhance the confidence in the 2017 inferred JORC MRE – 107,589t contained copper
metal (3.2Mt @ 3.35%).
Considerable drilling work post-2017, which includes 34 RC drill-holes for a total of circa 5,000m are to be factored into
the updated geological model – the best intercepts from these campaigns comprised:
11m @ 5.94% Cu; 2.45% Zn & 19.13g/t Ag from 40m including:
3m @ 8.1% Cu; 2.84% Zn & 23.42g/t Ag from 41m
1m @ 10.25% Cu; 1.68% Zn & 32.50g/t Ag from 48m
1m @ 7.53% Cu; 6.04% Zn & 30.60g/t Ag from 50m (CC0023R)
5m @ 1.56% Cu, 4.43g/t Ag & 0.4% Zn from 92m including:
3m @ 2.22% Cu, 6.38g/t Ag & 0.60% Zn (CC004RC)
4.39m @ 5.06% Cu, 2.56% Zn and 20.1 g/t Ag from 49.9m (CC0036D)
Furthermore, the model will factor in bulk sampling done on several historic stockpiles (which should support a higher
confidence Indicated MRE), drone topographic survey and re-positioned mine workings that are accurately
georeferenced.
On 24 July 2023 CCZ’s geology team, working in conjunction with a specialist geological consultancy, produced an
updated JORC (2012) compliant MRE for Cangai Copper Mine at:
4.4Mt @ 2.5% Cu inferred insitu and 0.2Mt @ 1.35% Cu indicated from historic stockpiles for ~114kt
contained copper metal; augmented further by zinc, gold, and silver credits
At each reporting date, the Group undertakes an assessment of the carrying amount of its exploration and evaluation
assets. During the period, the Group identified indicators of impairment on certain exploration and evaluation assets
under AASB 6 Exploration and Evaluation of Mineral Resources. As a result of this review, an impairment charge of
$5,762,872 has been recognised in the statement of profit or loss and other comprehensive income in relation to areas
of interest where no future exploration and evaluation activities are expected.
Zambia Copper Projects
On 7 December 2022, CCZ’s Board approved incremental development work on known key targets – focusing on the
highly prospective Luanshya Project which is in the heart of Zambia’s copper belt.
Specifically, the geology team planned to roll out an Induced Polarisation (IP) geophysics campaign to build on earlier
work undertaken in 2021 which focused on a 6km zone of copper surface anomalism that delineated up to 14
chargeable zones. A key focus of the IP campaign was to refine targets for test drilling and enhance the confidence of
finding structurally controlled copper mineralisation.
The plans for development work follow London-based, Metallea Group’s (previously Hyperion Copper) decision to
13
Castillo Copper Limited – Directors’ Report
cancel plans to list on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE), due to extremely
difficult equity market conditions. As this was a key requirement to secure funds to progress development work,
Metallea has further advised it was not exercising the option – which delivered a US$100,000 non-refundable deposit
to CCZ – to acquire the Zambia Copper Projects.
Moving forward, as CCZ’s Board remains committed to aligning with a development partner or undertaking a trade sale
for the Zambia Copper Projects, efforts will be redoubled to deliver this outcome.
CORPORATE
Board Changes
On 30 January 2023, to strengthen and diverse the Board’s skill set, two new Non-Executive Directors were appointed:
Mr David Drakeley BSc (Hons), an experienced field geologist who has worked as point on CCZ’s
drilling campaigns in Broken Hill and Queensland, who will oversee designing and implementing all
future exploratory work across the group’s portfolio.
Mr Jack Sedgwick BEng BCom MBA (Distinction) GAICD, a hands-on corporate strategist /
business improvement specialist with blue-chip experience across the mining / energy sectors
(including working on Rio Tinto’s iron ore expansion projects), who will oversee portfolio optimisation
and the group’s finances.
Note, these new additions follow the departure of Mr Geoff Reed to pursue a new opportunity.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year, other than as outlined elsewhere
in this report.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Other than as set out in the Review of Operations, there were no known material significant events from the end of the
financial year to the date of this report that have significantly affected, or may significantly affect the operations of the
Group, the results of those operations, or the state of affairs of the Group in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Castillo Copper remains focused on progressing its four (4) pillared strategy which includes continued exploration
efforts at NWQ Copper Project in Queensland, Cangai Copper Mine and Broken Hill Project in New South Wales, and
its four Zambian properties.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The operations of the Group are presently subject to environmental regulation under the laws of the Commonwealth of
Australia and the States of Queensland and New South Wales and the Republic of Zambia. The Group is, to the best
of its knowledge, at all times in full environmental compliance with the conditions of its licenses.
SHARE OPTIONS
As at the date of this report, there were 52,000,000 unissued ordinary shares under unlisted options. The details of the
unlisted options at the date of this report are as follows:
Number
Exercise Price $
Expiry Date
19,000,000
17,000,000
5,000,000
3,000,000
8,000,000
0.05
0.10
0.05
0.08
0.08
30 September 2023
31 December 2023
31 December 2023
31 July 2024
31 January 2025
14
Castillo Copper Limited – Directors’ Report
In addition to the unlisted options, there are 163,439,781 listed options (ASX: CCZA, CCZB). The details of the listed
options at the date of this report are as follows:
Number
Exercise Price $
131,418,042
32,021,739
0.08
£0.044
Expiry Date
31 July 2024
1 August 2024
No option holder has any right under the options to participate in any other share issue of the Group or any other entity.
PERFORMANCE SHARES
As part of the Zed Copper acquisition in the 2021 financial year, the Group issued 2 classes of performance shares to
the vendors on 20 February 2021:
46,875,000 Class A performance shares
Conditions precedent - converting to an equal number of CCZ shares on delineation of a JORC resource of 200,000
tonnes of contained copper at a minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement.
46,875,000 Class B performance shares
Conditions precedent - converting to an equal number CCZ shares on completion of a preliminary feasibility study
demonstrating an internal rate of return greater than 25% within 5 years of execution of the Share Sale Agreement.
None of the above conditions were met during the 2023 financial year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has made an agreement indemnifying all the Directors and Officers of the Group against all losses or
liabilities incurred by each Director or Officer in their capacity as Directors or Officers of the Group to the extent
permitted by the Corporation Act 2001. The indemnification specifically excludes wilful acts of negligence. The Group
paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance contracts for current officers of the
Group. The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal
proceedings that may be brought against the Officers in their capacity as Officers of entities in the Group. The total
amount of insurance premiums paid has not been disclosed due to confidentiality reasons.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of the court to bring proceedings on behalf of the Group or intervene in any proceedings
to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those
proceedings. The Group was not a party to any such proceedings during the year.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the company or any related entity against a liability incurred by the auditor.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Castillo
Copper Limited support and have adhered to the principles of sound corporate governance. The Board recognises the
recommendations of the Australian Securities Exchange Corporate Governance Council and considers that Castillo
Copper is in compliance with those guidelines to the extent possible, which are of importance to the commercial
operation of a junior listed resources company. During the financial year, shareholders continued to receive the benefit
of an efficient and cost effective corporate governance policy for the Group. The Group’s Corporate Governance
Statement and disclosures can be found at https://castillocopper.com/investors/governance/.
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 42.
15
Castillo Copper Limited – Directors’ Report
There were no non-audit services provided by the Group’s auditor during the year ended 30 June 2023.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors.
Gerard Hall
Non-Executive Chairman
28 September 2023
16
Castillo Copper Limited – Directors’ Report
Competent Person’s Statement
The information in this report that relates to Exploration Results for the Mkushi Project, Zambia, 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, Exploration Targets and Mineral Resources for the NWQ Project
contained in this announcement is based on a fair and accurate representation of the publicly available information at the time of
compiling this report and is based on information and supporting documentation compiled by Mark Biggs. The information in this report
that relates to Exploration Results and Mineral Resource Estimates for the BHA Project and Cangai Copper Mine is based on
information compiled or reviewed by Mr Mark Biggs. Mr Biggs is a director of ROM Resources, a company which is a shareholder of
Castillo Copper Limited. ROM Resources provides ad hoc geological consultancy services to Castillo Copper Limited. Mr Biggs is a
member of the Australian Institute of Mining and Metallurgy (member #107188) 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,
and Mineral Resources. Mr Biggs holds an AusIMM Online Course Certificate in 2012 JORC Code Reporting. Mr Biggs also consents
to the inclusion in this report of the matters based on information in the form and context in which it appears.
17
Castillo Copper Limited
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 30 June 2023
Interest received
Other income
Listing and public company expenses
Accounting and audit expenses
Consulting and Directors’ fees
Notes
4
2023
$
15,615
-
2022
$
619
144,509
15,615
145,128
(158,585)
(332,476)
(125,358)
(126,586)
(515,196)
(647,641)
Exploration expenditure expensed as incurred
-
(25,108)
Impairment of exploration expenditure
Share-based payments
Other expenses
LOSS BEFORE INCOME TAX
Income tax expense
LOSS AFTER INCOME TAX
8
20
4
5
(5,672,872)
-
-
(85,680)
(485,832)
(580,820)
(6,942,228)
(1,653,183)
-
-
(6,942,228)
(1,653,183)
OTHER COMPREHENSIVE INCOME
Item that may be reclassified subsequently to profit or loss
Foreign currency translation
TOTAL OTHER COMPREHENSIVE INCOME
1,359
1,359
1,594
1,594
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(6,940,870)
(1,651,589)
Basic and diluted loss per share (cents per share)
12
(0.53)
(0.13)
The accompanying notes form part of these financial statements.
Castillo Copper Limited
18
2023 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Financial Position
as at 30 June 2023
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
Notes
6
7
7
8
9
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
2023
$
2,897,611
78,845
2,976,456
2022
$
5,754,049
78,994
5,833,043
486,961
8,736,198
9,223,159
404,961
12,899,486
13,304,447
12,199,615
19,137,490
128,346
128,346
125,352
125,352
128,346
125,352
12,071,269
19,012,138
10
11
35,964,396
4,081,735
35,964,396
4,080,376
(27,974,862)
(21,032,634)
12,071,269
19,012,138
The accompanying notes form part of these financial statements.
Castillo Copper Limited
19 2023 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Changes in Equity
for the year ended 30 June 2023
Balance at 1 July 2022
Loss for the year
Other comprehensive income
Total Comprehensive Loss
Transactions with owners in their
capacity as owners
Share
based
payment
reserve
$
Foreign
currency
translation
reserve
$
Issued
capital
$
Accumulated
losses
$
Total
$
35,964,396
4,230,962
(150,586)
(21,032,634)
19,012,138
-
-
-
-
-
-
-
-
-
(6,942,228)
(6,942,228)
1,359
1,359
-
1,359
(6,942,228)
(6,940,869)
-
-
-
Balance as at 30 June 2023
35,964,396
4,230,962
(149,227)
(27,974,862)
12,071,269
Balance at 1 July 2021
Loss for the year
Other comprehensive loss
Total comprehensive loss
Transactions with owners in their
capacity as owners
Shares issued to sophisticated investors
1,742,319
Shares issued to advisors
Share issue costs
Share based payments
59,346
(301,428)
-
34,464,159
-
4,092,830
-
(152,180)
-
(19,379,451)
(1,653,183)
19,025,358
(1,653,183)
-
-
-
-
-
-
52,452
85,680
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
The accompanying notes form part of these financial statements.
Castillo Copper Limited
20 2023 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Cash Flows
for the year ended 30 June 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Notes
2023
$
2022
$
15,615
619
(1,115,720)
(1,406,386)
NET CASH USED IN OPERATING ACTIVITIES
6
(1,100,105)
(1,405,767)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for tenements bonds
Option fee received
Exploration and evaluation expenditure
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issues
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
8
10
10
(82,000)
-
(55,861)
144,509
(1,678,114)
(5,112,153)
(1,760,114)
(5,023,505)
-
-
-
1,742,319
(248,976)
1,493,343
(2,860,219)
(4,935,929)
5,754,049
10,854,829
3,781
(164,851)
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR
6
2,897,611
5,754,049
The accompanying notes form part of these financial statements.
Castillo Copper Limited
21 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
Corporate Information
1.
The financial report of Castillo Copper Limited and its subsidiaries (“Castillo Copper” or “the Group”) for the year ended
30 June 2023 was authorised for issue in accordance with a resolution of the Directors on 22 September 2023.
Castillo Copper Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange and London Stock Exchange. The nature of the operations and the principal activities of
the Group are described in the Directors’ Report.
2.
Summary of Significant Accounting Policies
(a) Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations Act 2001. The Group is a for profit entity for financial reporting
purposes under Australian Accounting Standards.
The financial report has been prepared on an accrual basis and is based on historical costs. Material accounting policies
adopted in preparation of this financial report are presented below and have been consistently applied unless otherwise
stated.
The presentation currency is Australian dollars.
(b) Statement of Compliance
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International
Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the
financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).
(c) Adoption of new and revised standards
Standards and Interpretations applicable 30 June 2023
In the year ended 30 June 2023, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period. As a result of
this review, the Directors have determined that there is no material impact of the new and revised Standards and
Interpretations on the Group and therefore, no material change is necessary to Group accounting policies.
Standards and interpretations issued, but not yet effective
The Directors have also reviewed all Standards and Interpretations issued, but not yet effective for the period 30 June
2023. As a result of this review the Directors have determined that there is no material impact of the Standards and
Interpretations issued but not yet effective on the Company.
(d) Going Concern
This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity
and the realisation of assets and settlement of liabilities in the normal course of business.
The Group incurred a net loss for the year ended 30 June 2023 of $6,942,228 and net cash outflows from operating
activities of $1,100,105 net cash outflows from investing activities of $1,760,114 and net cash flows from financing
activities of $Nil. At 30 June 2023, the Group had a net asset position of $12,071,269. The cash and cash equivalents
balance at 30 June 2023 was $2,897,611.
Castillo Copper Limited
22 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
The directors have reviewed the Group’s financial position and are of the opinion that the use of the going concern basis
of accounting is appropriate.
(e) Basis of Consolidation
The consolidated financial statements comprise the financial statements of Castillo Copper Limited and its subsidiaries
as at 30 June each year (‘the Company’).
Subsidiaries are all those entities (including special purpose entities) over which the Company has control. The Company
controls an entity when the company is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the Group.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using
consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses
and profit and losses resulting from intra-company transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Company and cease to be
consolidated from the date on which control is transferred out of the Company.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity
transaction.
(f) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The functional and presentation
currency of Castillo Copper Limited is Australian dollars. The functional currency of the Chilean subsidiary is Chilean
Peso. The functional currency of the Zambian subsidiaries is United States Dollars.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the statement of comprehensive income.
(iii) Group entities
The results and financial position of all the Company entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at
the date of that statement of financial position;
income and expenses for each statement of comprehensive income are translated at average exchange
rates (unless this is not a reasonable approximation of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the transactions); and
Castillo Copper Limited
23
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are taken to
foreign currency translation reserve.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share
of such exchange differences are recognised in the statement of comprehensive income, as part of the gain or loss on
sale where applicable.
(g)
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use
and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets of the Group. In such cases the asset is tested for impairment as part of the cash generating
unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount,
the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment
losses relating to continuing operations are recognised in those expense categories consistent with the function of the
impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a
revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying
amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the
reversal is treated as a revaluation increase.
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount,
less any residual value, on a systematic basis over its remaining useful life.
(h) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of
interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure, but
does not include general overheads or administrative expenditure not having a specific nexus with a particular area of
interest.
Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a mining
operation.
Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided that one of the
following conditions is met:
Castillo Copper Limited
24
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
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
25 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
(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
26 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached
a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To
the extent that it is determined in the future that this capitalised expenditure should be written off, this will reduce profits
and net assets in the period in which this determination is made.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using a Black and Scholes model,
using the assumptions detailed in note 10.
Rehabilitation provision
The Group’s mining and exploration activities are subject to various laws and regulations governing the protection of the
environment. The Group recognises management’s best estimate for asset retirement obligations in the period in which
they are incurred. Actual costs incurred in the future periods could differ materially from the estimates. Additionally, future
changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount
of this provision.
(m) Rehabilitation provision
A provision for rehabilitation and restoration is recognised when there is a present obligation as a result of activities
undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of
the provision can be measured reliably. The estimated future obligations include the costs of abandoning sites, removing
facilities and restoring the affected areas.
The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle
the restoration obligation at the balance date. Future restoration costs are reviewed annually and any changes in the
estimate are reflected in the present value of the restoration provision at each balance date.
The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and
amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory
in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of
the provision for rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on
the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset.
(n) Income Tax
Deferred income tax is provided for on all temporary differences at balance date between the tax base of assets and
liabilities and their carrying amounts for financial reporting purposes.
No deferred income tax will be recognised from the initial recognition of goodwill or of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxable profit or loss. No deferred income tax will be
recognised in respect of temporary differences associated with investments in subsidiaries if the timing of the reversal of
the temporary difference can be controlled and it is probable that the temporary differences will not reverse in the near
future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is
settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be
credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Castillo Copper Limited
27 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
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
28
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
The net amount of GST recoverable from, or payable to, the Australian Tax Office is included as part of receivables or
payables in the statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
(s) Trade and other payables
Liabilities for trade creditors and other amounts are measured at amortised cost, which is the fair value of the
consideration to be paid in the future for goods and services received that are unpaid, whether or not billed to the Group.
(t) Share-based payment transactions
The Group provides benefits to individuals acting as, and providing services similar to employees (including Directors) of
the Group in the form of share based payment transactions, whereby individuals render services in exchange for shares
or rights over shares (‘equity settled transactions’).
The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by using the Black Scholes formula taking into account the terms
and conditions upon which the instruments were granted, as discussed in note 10(e).
In valuing equity settled transactions, no account is taken of any performance conditions, other than conditions linked to
the price of the shares of Castillo Copper Limited (‘market conditions’).
The cost of the equity settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (‘vesting date’).
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects (i)
the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of
the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No
adjustment is made for the likelihood of the market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date. The statement of comprehensive income charge or credit for a
period represents the movement in cumulative expense recognised at the beginning and end of the period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a
market condition.
Where the terms of an equity settled award are modified, as a minimum, an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of
the modification, as measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and any
expense not yet recognised for the award is recognised immediately. However if a new award is substituted for the
cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award
are treated as if they were a modification of the original award, as described in the previous paragraph. The cost of
equity-settled transactions with non-employees is measured by reference to the fair value of goods and services received
unless this cannot be measured reliably, in which case the cost is measured by reference to the fair value of the equity
instruments granted. The dilutive effect, if any, of outstanding options is reflected in the computation of loss per share
(see note 12).
Castillo Copper Limited
29 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
(u) Comparative information
When required by Accounting Standards, comparative information has been reclassified to be consistent with the
presentation in the current year.
(v) Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for
the allocation of resources to operating segments and assessing their performance.
(w) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principle market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and
transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
(x) Parent entity financial information
The financial information for the parent entity, Castillo Copper Limited, disclosed in Note 16 has been prepared on the
same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s financial
statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being
deducted from the carrying amount of these investments.
Castillo Copper Limited
30
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
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:
2023
Segment assets and
liabilities
Current assets
Non-current assets
Current liabilities
Segment income and
expenses
Interest income
Other income
Other expenses
Loss before tax
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
NWQ
(QLD)
Cangai
(NSW)
Broken Hill
(NSW)
$
-
6,605,846
-
-
-
-
-
-
$
-
321,100
-
-
-
-
(5,322,762)
(5,322,762)
$
-
1,527,490
-
-
-
-
-
-
Zambia
Unallocated
Total
$
-
768,601
-
$
2,976,456
122
(128,346)
$
2,976,456
9,223,159
(128,346)
-
-
-
(350,110)
(350,110)
15,615
-
-
(1,284,971)
(1,269,356)
15,615
-
-
(6,957,843)
(6,942,228)
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)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.
Other income and expenses
Other income
Option fee
Total other income
Other expenses
Travel and accommodation
Legal
Insurance
Foreign Exchange (Gains)/Losses
Investor Relations
Other
Total other expenses
-
144,509
-
144,509
619
-
(1,798,311)
(1,797,692)
619
144,509
(1,798,311)
(1,653,183)
2023
$
2022
$
-
-
144,509
144,509
$
6,780
7,860
98,270
$
252
37,678
95,415
(482)
164,792
336,944
260,534
36,460
22,149
485,832
580,820
Castillo Copper Limited
31
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
5.
Income Tax
(a) Income tax expense
Major component of tax expense for the year:
Current tax
Deferred tax
tax expense
reconciliation between aggregate
(b) Numerical
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% (2022: 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% (2022: 30%)
The benefit for tax losses will only be obtained if:
2023
$
2022
$
-
-
-
-
-
-
(6,942,228)
(1,653,183)
(2,082,668)
(495,955)
-
25,929
2,082,668
470,026
-
-
2023
2022
$
$
11,431,629
10,361,143
12,461
9,867
285,972
483,299
(2,390,279)
(3,549,693)
(9,339,783)
(7,304,616)
-
-
2023
$
2022
$
38,105,431 34,537,142
11,431,629
10,361,143
(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.
Castillo Copper Limited
32 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
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
Impairment expense
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.
8.
Deferred Exploration and Evaluation Expenditure
Exploration and evaluation phase:
Opening balance
Exploration and evaluation expenditure during the period
Impairment1
Closing balance
2023
$
2022
$
(6,942,228)
(1,653,183)
-
-
85,680
59,346
5,672,872
-
(455)
164,792
150,000
-
-
(144,509)
26,942
(60,167)
(7,236)
142,274
(1,100,105)
(1,405,767)
2,897,611
5,754,049
2023
2022
$
$
37,764
41,081
78,845
45,150
33,844
78,994
486,961
404,961
2023
2022
$
$
12,899,486
8,171,821
1,509,584
4,727,665
(5,672,872)
-
8,736,198 12,899,486
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is
dependent on the successful development and commercial exploration or sale of respective areas.
Castillo Copper Limited
33
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
1At each reporting date, the Group undertakes an assessment of the carrying amount of its exploration and evaluation
assets. During the period, the Group identified indicators of impairment on certain exploration and evaluation assets
under AASB 6 Exploration and Evaluation of Mineral Resources. As a result of this review, an impairment charge of
$5,762,872 has been recognised in the statement of profit or loss and other comprehensive income in relation to areas
of interest where no future exploration and evaluation activities are expected.
9.
Trade and other payables
Current
Trade and other payables
Accruals
2023
$
87,586
40,758
2022
$
92,462
32,890
128,344
125,352
Trade and other payables are non-interest bearing and payable on demand. Due to their short-term nature, the carrying
value of trade and other payables is assumed to approximate their fair value.
10.
Issued Capital
(a) Issued and paid up capital
Ordinary shares fully paid
2023
$
2022
$
35,965,396
35,965,396
2023
Number of
shares
2022
Number of
shares
$
$
(b) Movements in ordinary shares on issue
Opening balance
Shares issued to sophisticated investors
Shares issued to advisors
Shares issued to consultants
Transaction costs on share issue
1,299,505,355
-
-
-
-
35,964,396 1,256,512,320 34,464,159
1,742,319
12,500
46,846
-
-
-
41,240,648
250,000
1,502,387
-
(301,428)
-
1,299,505,355
35,964,396 1,299,505,355 35,964,396
The shares issued to advisors and consultants were valued based on the fair value of the service received.
(c) Ordinary shares
The Group does not have authorised capital nor par value in respect of its issued capital. Ordinary shares have the right
to receive dividends as declared and, in the event of a winding up of the Company, to participate in the proceeds from
sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle
their holder to one vote, either in person or proxy, at a meeting of the Company.
(d) Share options
At 30 June 2023 there were 132,699,971 (30 June 2022: 354,362,757) unlisted options and 163,439,781 (30 June
2022: 224,939,782) listed options (ASX: CCZOA, CCZOB) with various exercise prices and expiry dates.
The following share-based payment arrangements were in place during the period:
Castillo Copper Limited
34
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
Series Number
Grant date
Expiry date
Exercise price
$
Fair value at
grant date
Vesting date
Listed/
Unlisted
1
2
3
4
5
6
7
8
9
10
11
17,000,000
16 May 2018
31 December 2023
5,000,000 1 February 2019 31 December 2023
$0.10
$0.05
$0.018
16 May 2018
Unlisted
$0.005
31 December 2018 Unlisted
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
462,378
17 August 2021
1 August 2024
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
$0.05
$0.08
£0.044
$0.08
£0.044
$0.08
$0.08
$0.08
$0.023
$0.018
$0.022
$0.021
$0.007
$0.017
$0.007
2 October 2020 Unlisted
2 October 2020 Unlisted
15 June 2021
16 June 2021
5 August 2021
17 August 2021
Listed
Listed
Listed
Listed
27 October 2021
Listed
$0.010
30 November 2021 Unlisted
$0.007
1 February 2022 Unlisted
No options were exercised during the period.
221,662,786 unlisted and 61,500,000 listed options expired during the period. Since the end of the financial year,
80,699,971 unlisted options have expired.
Options granted as equity compensation benefits to Key Management Personnel during the year are set out in the audited
remuneration report.
No listed or unlisted options have been issued since the end of the year.
Weighted remaining contractual life (years)
0.57
Weighted average exercise price
$0.0592
Options granted as equity compensation benefits to Key Management Personnel during the year are set out in the
audited remuneration report.
(e) Weighted average fair value
The fair value of the equity-settled unlisted options granted in prior periods was estimated as at the date of grant using
the Black and Scholes model taking into account the terms and conditions upon which they were granted, as follows:
Series
1
2
3
4
10
11
Expected volatility (%)
100
87
104
104
99
100
Risk-free interest rate (%)
1.90
2.00
0.18
0.18
0.87
1.21
Expected life of option (years)
5.6
4.9
2.9
3.0
2.7
3.0
Exercise price (cents/pence)
10
5
1.7p
5
8
8
Grant date share price (cents/pence)
3.9
1.6
2.6p
4.2
3.4
2.6
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may
occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may
also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement
of fair value.
Castillo Copper Limited
35
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
(f) Performance Shares
At 30 June 2023 there were 46,875,000 Class A performance shares and 46,875,000 Class B performance shares on
issue in relation to the Zambian tenements held by Zed Copper Pty Ltd.
46,875,000 Class A performance shares
Conditions precedent - converting to an equal number of CCZ shares on delineation of a JORC resource of 200,000 tonnes
of contained copper at a minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement.
46,875,000 Class B performance shares
Conditions precedent - converting to an equal number CCZ shares on completion of a preliminary feasibility study
demonstrating an internal rate of return greater than 25% within 5 years of execution of the Share Sale Agreement.
11.
Reserves
Share based payment reserve
The share based payment reserve is used to record the value of equity benefits provided to Directors and executives as
part of their remuneration and non-employees for their services.
Foreign currency translation reserve
The foreign exchange differences arising on translation of balances originally denominated in a foreign currency into the
functional currency are taken to the foreign currency translation reserve. The reserve is recognised in profit or loss when
the net investment is disposed of.
12.
Loss per Share
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:
2023
$
2022
$
(6,942,228)
(1,653,183)
Number of Shares
1,299,505,355
1,294,183,748
-
-
2023
2022
1,299,505,355
1,294,183,748
Basic and diluted loss per share (cents per share)
(0.53)
(0.13)
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the
number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion
of these financial statements.
There are no potential ordinary shares on issue that are considered to be dilutive, therefore basic earnings per share also
represents diluted earnings per share.
Castillo Copper Limited
36 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
13.
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
14.
Related party disclosures
a)
Key management personnel
Compensation of key management personnel
Short term employee benefits
Post-employment benefits
Share-based payments
Total remuneration
2023
$
2022
$
46,358
46,358
40,851
40,851
2023
$
2022
$
360,553
389,221
2,139
-
3,000
85,680
362,692
477,901
b) Other transactions with key management personnel
Field Crew Pty Ltd, a company of which Mr Drakeley is a director, charged the Group consulting fees of $115,135 (2022:
nil). There was nil outstanding at 30 June 2023 (2022: nil).
c) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of Castillo Copper Limited and the
following subsidiaries:
Name of Entity
Country of
Incorporation
Equity Holding
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
2023
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
50%
-
2022
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
50%
100%
Castillo Copper Limited is the ultimate Australian parent entity and ultimate parent of the Group. Balances and transactions
between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation
and not disclosed in this note.
Broken Hill Alliance Ltd was incorporated during the year ended 30 June 2022 and was subsequently deregistered on 5
September 2022, after plans to spin-off the BHA assets via an ASX listing were indefinitely deferred.
Castillo Copper Limited
37
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
15.
Financial Risk Management
Exposure to interest rate, liquidity, and credit risk arises in the normal course of the Group’s business. The Group does not
hold or use derivative financial instruments. The Group’s principal financial instruments comprise mainly of deposits with
banks. The totals for each category of financial instruments are as follows:
Financial Assets
Cash and cash equivalents
Other receivables (current and non-current)
Financial Liabilities
Trade and other payables
2023
$
2022
$
2,897,611
524,725
3,422,336
5,754,049
450,111
6,204,160
128,346
125,352
The Group uses different methods as discussed below to manage risks that arise from these financial instruments. The
objective is to support the delivery of the financial targets while protecting future financial security.
(a) Capital Risk Management
The Group’s capital comprises share capital and reserves less accumulated losses. As at 30 June 2023, the Group has net
assets of $12,071,269 (2022: $19,012,138). The Group manages its capital to ensure its ability to continue as a going
concern and to optimise returns to its shareholders.
(b) Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. The
Group manages liquidity risk by maintaining sufficient cash facilities to meet the operating requirements of the business and
investing excess funds in highly liquid short term investments. The responsibility for liquidity risk management rests with the
Board of Directors.
Alternatives for sourcing future capital needs include the cash position and future equity raising alternatives. These
alternatives are evaluated to determine the optimal mix of capital resources for our capital needs. The Board expects that,
assuming no material adverse change in a combination of our sources of liquidity, present levels of liquidity will be adequate
to meet expected capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other payables. As at 30 June 2023 any financial liabilities that are
contractually maturing within 60 days have been disclosed as current. Trade and other payables that have a deferred
payment date of greater than 12 months have been disclosed as non-current.
(c) Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of
financial instruments. The Group’s exposure to changes to interest rate risk relates primarily to its earnings on cash and
term deposits. The Group manages the risk by investing in short term deposits.
Cash and cash equivalents
Interest rate sensitivity
2023
$
2022
$
2,897,611
5,754,049
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.
Castillo Copper Limited
38
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
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)
2023
28,976
2022
57,540
2023
28,976
2022
57,540
(28,976)
(57,540)
(28,976)
(57,540)
A sensitivity of 100 basis points has been used as this is considered reasonable given the current level of both short term
and long term Australian Dollar interest rates. This would represent two to four movements by the Reserve Bank of Australia.
(d) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause
the Group to incur a financial loss. The Group’s maximum credit exposure is the carrying amounts on the statement of
financial position. The Group holds financial instruments with credit worthy third parties.
At 30 June 2023, the Group held cash at bank. These were held with financial institutions with a rating from Standard &
Poors of AA- or above (long term). The Group has no past due or impaired debtors as at 30 June 2023.
(e) Fair Value Measurement
There were no financial assets or liabilities at 30 June 2023 requiring fair value estimation and disclosure as they are
either not carried at fair value or in the case for short term assets and liabilities, their carrying values approximate fair
value.
(f) Foreign Exchange
The Group undertakes certain transactions denominated in foreign currencies hence exposures to exchange rate
fluctuations arise. The Group does not manage these exposures with foreign currency derivative products. The carrying
amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the balance date
expressed in Australian dollars are as follows:
Chilean Peso (CLP)
Assets
Liabilities
British Pound Sterling (GBP)
Assets
Liabilities
2023
$
103,800
(12,932)
90,868
2022
$
86,432
(10,350)
76,082
2023
$
2022
$
639,899
3,542,364
(15,432)
(5,104)
624,467
3,537,260
The Group is exposed to Chilean Peso (CLP) and British Pound Sterling (GBP) currency fluctuations.
Castillo Copper Limited
39 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the
relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key
management personnel and represent management’s assessment of the possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation
at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as
loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of
the lender or the borrower. A positive number indicates an increase in profit and equity where the Australian Dollar weakens
against the respective currency. For a strengthening of the Australian Dollar against the respective currency there would
be an equal and opposite impact on the profit and equity and the balances below would be negative.
10% Increase
Profit/(loss) and equity – CLP
Profit/(loss) and equity – GBP
10% Decrease
Profit/(loss) and equity – CLP
Profit/(loss) and equity – GBP
16.
Parent Entity Information
2023
$
9,343
62,447
71,790
2022
$
7,810
353,726
361,536
2023
$
2022
$
(9,343)
(7,810)
(62,447)
(353,726)
(71,790)
(361,536)
The following details information related to the parent entity, Castillo Copper Limited, at 30 June 2023. The information
presented here has been prepared using consistent accounting policies as presented in note 2.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total equity
2023
$
2022
$
2,975,126
5,831,937
8,454,557
10,479,490
11,429,683
16,311,427
115,952
115,003
-
-
115,952
115,003
11,313,731
16,196,424
35,964,396
35,964,396
4,230,962
4,230,962
(28,881,627)
(23,998,934)
11,313,731
16,196,424
Castillo Copper Limited
40
2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
Loss of the parent entity
Other comprehensive income for the year
2023
$
2022
$
4,882,693
1,843,193
-
-
Total comprehensive loss of the parent entity
4,882,693
1,843,193
a) Guarantees
Castillo Copper Limited has not entered into any guarantees in relation to the debts of its subsidiary.
b) Other Commitments and Contingencies
Castillo Copper Limited has not entered into any commitments and does not have any known contingent liabilities at year
end.
17.
Contingent liabilities
The Company has entered into the following royalty agreements:
1% net smelter return royalty in respect of the area covered by the tenements acquired from Qld Commodities Pty
Ltd vendors (or their nominee);
3% net smelter return royalty in respect of the area covered by the tenements acquired from Total Minerals Pty Ltd
vendors (or their nominee);
3% net smelter return royalty in respect of the area covered by the tenements acquired from Total Iron Pty Ltd
vendors (or their nominee).
2% net smelter return royalty in respect of the area covered by the tenements acquired from Zed Copper Pty Ltd
vendors (or their nominee).
Other than outlined above, there are no contingent liabilities.
18.
Commitments
In order to maintain current contractual rights concerning its mineral projects, the Group has certain commitments to
meet minimum expenditure or work program requirements. The current minimum commitments at balance date but not
recognised as liabilities are as follows:
Within one year
After one year but not more than five years
Longer than five years
19.
Dividends
2023
$
2022
$
902,026
1,280,129
870,000
1,250,000
-
-
1,772,026
2,530,129
No dividend was paid or declared by the Group in the period since the end of the financial year, and up to the date of this
report. The Directors’ do not recommend that any amount be paid by way of a dividend for the financial year ended 30
June 2023.
The balance of the franking account is Nil at 30 June 2023 (2022: Nil).
Castillo Copper Limited
41 2023 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2023
20.
Share-based payments
(a) Shares issued to suppliers: There were no shares issued to suppliers in lieu of cash payment during the year ended
30 June 2023.
(b) Reconciliation to share based payments expense in profit or loss:
Options issued to directors
(c) Fair value of options
2023
2022
$
-
-
$
85,680
85,680
The fair value of all options noted above have been determined using the Black & Scholes model taking in to account
the inputs outlined in Note 11(e).
21.
Subsequent events
There were no known material significant events from the end of the financial year to the date of this report that have
significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state
of affairs of the Group in future financial periods.
Castillo Copper Limited
42
2023 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 17 to 41 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 2023 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:
Gerard Hall
Non-Executive Chairman
28 September 2023
Castillo Copper Limited
43
2023 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 2023, 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
28 September 2023
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 2023, 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 2023 and of its financial
performance for the year then ended; and
(b) complying with International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IASB”), Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing issued by the International
Auditing and Assurance Standards Board in addition to 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 (including Independence Standards) (“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.
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 2023 had a
balance of $8,736,198.
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 in addition
to making our own assessment;
- We ensured that the impairment recognised
was appropriate and reflected the available
supported information;
- 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 2023, 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 International Financial Reporting Standards as issued by the IASB, 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 International Standards on Auditing and 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 International Standards on Auditing and 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, actions taken to eliminate threats
or safeguards applied.
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
2023.
In our opinion, the Remuneration Report of Castillo Copper Limited for the year ended 30 June 2023
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
28 September 2023
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 15 September 2023.
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
79
16
125
1,866
1,315
3,401
11,792
48,461
1,102,226
84,340,553
1,214,002,323
1,299,505,355
There were 1,336 holders of ordinary shares holding less than a marketable parcel, with total of 28,707,318 shares
amounting to 2.21% of Issued Capital.
Quoted equity securities as at 15 September 2023
Equity Security
Ordinary Shares
CCZOA – Listed Options
CCZOB – Listed Options
Quoted
1,299,505,355
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 15 September 2023:
Unquoted Securities
Unquoted Options1
Unquoted Options2
Performance Shares – Class A
Performance Shares – Class B
Unquoted Options5
Unquoted Options6
Unquoted Options7
Number on Issue
17,000,000
5,000,000
46,875,000
46,875,000
19,000,000
3,000,000
8,000,000
Exercise Price
10c
5c
Nil6
Nil7
5c
8c
8c
Expiry Date
31/12/2023
31/12/2023
-
-
30/09/2023
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
100% held by Ferber Holdings Pty Ltd .
2.
3. 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.
4. 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.
32% held by Yingyang Pty Ltd
100% held by Bluespoint Mining Services Pty Ltd
100% held by DTJ Enterprises Pty Ltd
5.
6.
7.
Substantial Shareholders
There are no substantial shareholders.
Restricted Securities
There were 430,785 restricted securities under ASX imposed escrow at 18 September 2023.
49
Castillo Copper Limited
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 15 September 2023
Name
COMPUTERSHARE CLEARING PTY LTD
MR JOHN MCDONALD & MR SHAUN MCDONALD
No. of Shares
%
167,446,396
12.89%
90,444,444
6.96%
REBECCA BRADLEY & MR BRADLEY JOHN KENNEY
30,000,000
2.31%
SUNSET CAPITAL MANAGEMENT PTY LTD
26,000,000
2.00%
BNP PARIBAS NOMINEES PTY LTD
24,481,849
1.88%
24,459,524
1.88%
24,259,525
1.87%
24,000,000
1.85%
16,793,750
1.29%
15,473,942
1.19%
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%
6,950,244
0.53%
6,693,508
0.52%
6,275,000
0.48%
6,000,000
0.46%
5,391,365
0.41%
515,266,254
39.65%
TWW ASSETS PTY LTD
JBO ASSETS PTY LTD
MR GREGORY BRUCE HILL
TAKA CUSTODIANS PTY LTD
CITICORP NOMINEES PTY LIMITED
FOUCART PTY LTD
MR BRIAN THOMAS CLAYTON & MRS JANET CLAYTON
REDIMA PTY LTD
MR KENNETH JOSEPH HALL
JD SQUARED INVESTMENTS PTY LTD
AUSFIN EMPIRE PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SARODAN PTY LTD
AGENS PTY LTD
VASSAGO PTY LTD
Total
50
Castillo Copper Limited
Tenement information as required by
Listing Rule 5.3.3
JACKADERRY (CANGAI)
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
0%
0%
100%
0%
55%*
55%*
100%
Status
Expired
Expired
Granted
Expired
Granted
Granted
Granted
*CCZ can earn up to 80% by meeting previously
disclosed milestones
51