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Castillo Copper Limited announced its financial results for the year ended 30 June 2023 on October 3, 2023, reporting a net loss of $6,942,228 and net assets of $12,071,269, and recognized a $5,762,872 impairment charge on exploration assets. The company reported an updated JORC compliant Mineral Resource Estimate for Cangai Copper Mine of 4.4Mt @ 2.5% Cu inferred and 0.2Mt @ 1.35% Cu indicated for ~114kt contained copper, and confirmed a shallow rare earth element discovery at the BHA Project with assays up to 2,410ppm TREO from a 2,000m drilling campaign. Additionally, Metallea Group did not proceed with its option to acquire the Zambia Copper Projects after providing a US$100,000 deposit, and David Drakeley and Jack Sedgwick were appointed as Non-Executive Directors on January 30, 2023.
| Date | 3 Oct 2023 |
| Time | 18:15:17 |
| Category | Results |
| ID | 5867O |
03 October 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
CASTILLO COPPER LIMITED
("Castillo" or the "Company")
Final Results
Publication of Annual Report
Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily focused on copper across Australia and Zambia, announces its financial results for the year ended 30 June 2023.
Annual Address
Dear Shareholders,
Challenges thrown up by the external environment in FY2023 - rapid increase in interest rates to combat inflation, ongoing war in Ukraine, pedestrian commodity prices and subdued equity markets - forced the Board to undertake thorough due diligence before making decisions.
The Board's core theme, which remains a constant moving forward, is to align with strategic development partners to optimise the value creating potential from the current asset portfolio. Further, the Board will consider any outright offer to acquire one of the assets based on its merits.
Reflecting on FY2023, extremely weak stock market conditions in the UK resulted in London-based Metallea Group not proceeding with plans to acquire the Zambia Copper Projects. However, the Board has committed to further exploratory work and re-doubled efforts to align with a new strategic development partner.
In Australia, solid progress was made advancing the three projects, summarised as follows:
· East Zone, BHA Project (NSW): Post defining a JORC compliant inferred cobalt resource from legacy data (64Mt @ 318 ppm Co for 21,556t), the Board commissioned a 2,000m drilling campaign.
The surprise upshot from this campaign was the discovery of a significant shallow rare earth element system proximal to the Fence Gossan, Reef and Tors Tank Prospects.
While initial metallurgy samples were inconclusive, the Board is investigating trialling several alternate metallurgical test-work techniques to improve extraction results.
· NWQ Copper Project (QLD): Metallurgical test-work undertaken on samples from the Big One Deposit to produce a concentrate were encouraging, with upgrades ranging from 5-10x copper metal. Further, combined with a JORC compliant inferred Mineral Resource Estimate - 2.1Mt @ 1.1% Cu for 21,886kt copper metal - and known targets to test-drill, the Big One Deposit offers significant exploration potential.
More broadly, across the NWQ Copper Project are over 20 incremental under explored prospects that are highly prospective for copper mineralisation which potentially provide the foundations for developing a series of satellite deposits.
· Cangai Copper Mine (NSW): Post the review period, the geology team produced an updated JORC compliant inferred Mineral Resource Estimate at 4.4Mt @ 2.5% Cu and 0.2Mt @ 1.35% Cu indicated from historic stockpiles for ~114kt contained copper metal.
Ged Hall
Chairman
Dennis Jensen
Managing Director
For further information, please contact:
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Castillo Copper Limited |
+61 8 6558 0886 |
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Dr Dennis Jensen (Australia), Managing Director Gerrard Hall (UK), Chairman |
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SI Capital Limited (Financial Adviser and Corporate Broker) |
+44 (0)1483 413500 |
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Nick Emerson |
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Gracechurch Group (Financial PR) |
+44 (0)20 4582 3500 |
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Harry Chathli, Alexis Gore, Henry Gamble
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About Castillo Copper
Castillo Copper Limited is an Australian-based explorer primarily focused on copper across Australia and Zambia. The group is embarking on a strategic transformation to morph into a mid-tier copper group underpinned by its core projects:
· A large footprint in the Mt Isa copper-belt district, north-west Queensland, which delivers significant exploration upside through having several high-grade targets and a sizeable untested anomaly within its boundaries in a copper-rich region.
· Four high-quality prospective assets across Zambia's copper-belt which is the second largest copper producer in Africa.
· A large tenure footprint proximal to Broken Hill's world-class deposit that is prospective for zinc-silver-lead-copper-gold and platinoids.
· Cangai Copper Mine in northern New South Wales, which is one of Australia's highest grading historic copper mines.
The group is listed on the LSE and ASX under the ticker "CCZ."
Annual Report and Accounts
The Company's Annual Report and Accounts is available on the Company's website at: https://castillocopper.com/investors/
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was $6,942,228 (2022: $1,653,183) and the net assets of the Group at 30 June 2023 were $12,071,269 (2022: $19,012,138).
DIVIDENDS
No dividend was paid or declared by the Group during the year and up to the date of this report.
CORPORATE STRUCTURE
Castillo Copper Limited is a company limited by shares that is incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
During the financial year, the principal activity of the Group was mineral exploration and examination of new resource opportunities. The Group currently holds copper projects in Queensland and New South Wales in Australia as well as copper projects in Zambia.
EMPLOYEES
Other than the Directors, the Group had no employees at 30 June 2023 (2022: Nil).
REVIEW OF OPERATIONS
During the financial year, the principal activity of the group was mineral exploration primarily focused on copper, cobalt and rare earth elements ("REE") projects in Australia and Zambia.
East Zone, BHA Project, NSW
On 2 August 2022, metallurgical test-work on BH1 drill-core extracted from The Sisters Prospect - BHA Project's East Zone - delivered excellent beneficiation results for cobalt and, surprisingly, copper-gold - with the best outcomes:
· Cobalt: 200ppm head-grade up to 2,500ppm post-test-work; 12x upgrade.
· Copper: 520ppm head-grade up to 16,000ppm (1.6%) post-test-work; 30x upgrade.
· Gold: 0.02g/t Au head-grade up to 3.87g/t Au post-test-work; >190x upgrade.
Pleasingly, the metallurgical test-work showed that cobalt-copper-gold liberated easily from BH1 drill-core samples to produce a potentially viable concentrate. Further, the original BH1 drill-core the samples were extracted from comprised:
24m @ 424ppm Co from 103m including 2m @ 1,120ppm Co from 107m; 1m @ 873ppm Cofrom 120m; and 2m @ 486ppm Co from 125m (BH1)
Moving forward, the Board's primary focus for the East Zone is to increase the confidence in the current inferred Mineral Resource Estimate which stands at 21,556t cobalt (64Mt @ 318 ppm Co) and 44,260t copper (63Mt @ 0.07% Cu).
On 9 August 2022, targets were finalised for the drilling campaign at the East Zone which comprised one diamond core and 17 RC drill-holes for 2,100m, with depths ranging from 100m to 160m.
Of these, two drill-holes were earmarked for The Sisters, with the balance across Fence Gossan, Reefs & Tors Tanks Prospects.
Notably, for the Fence Gossan, Reefs & Tors Tanks Prospects, the campaign was designed to penetrate deep enough to intersect two lower cobalt-rich zones that were interpreted to host higher grade mineralisation than had been modelled.
On 31 August 2022, two key contractors were appointed:
· AllState Drilling's team to perform the campaign; and
· FieldCrew to manage day-to-day aspects of the drilling campaign.
In addition, with Australia securing preferred status for the supply of critical minerals to the USA's electric vehicle battery program, the Board determined it necessary to deepen its understanding of the East Zone's REE potential at two targets:
· The Sisters Prospect: both RC drill-holes were analysed for copper-cobalt-gold and REEs; and
· Iron Blow: having already confirmed the presence of REEs, the geology team tested additional drill- core samples from the core library to determine if there are further extensions to known mineralisation.
On 3 October 2022, after approval was secured from the New South Wales Resources Regulator, a four-week long drilling campaign at the East Zone commenced across four prospects (Figure 1 & 2).
FIGURE 1: PROPOSED DRILLING CAMPAIGN BHA PROJECT EAST ZONE
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Prospects |
# Drillholes |
Target Commodity |
Depth range (m) |
Type |
Objective |
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Reefs Tank, Tors Tank, Fence Gossan |
16 |
Co, Au, Ag, Cu |
100-160 |
RC, DDH |
Target primary cobalt whilst assays to investigate PGE & REE potential |
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The Sisters |
2 |
Co, Cu, REE |
120-160 |
RC |
Test known EM interpretation; drill extensions north & south |
Source: CCZ geology team
FIGURE 2: DRILLING UNDERWAY AT BHA PROJECT'S EAST ZONE
Location:6460000mN, 570000mE
Source: CCZ geology team
On 12 October 2022, four drill-holes for 488m were completed at the Tors Tank Prospect which delivered encouraging initial observations, including:
· All four drill-holes hit targeted cobalt mineralisation zones, evidenced by intersecting sequences comprising clay, amphibolite, schist, and gneiss;
· Qualitative logging identified multiple disseminated sulphide layers (mostly pyrite), up to 12m thick, associated with amphibolite layers that can potentially host cobalt mineralisation;
· Field XRF observations, subject to final assay results, indicated the presence of cobalt mineralisation within these amphibolite zones; and
· The intersected geology was interpreted to be consistent with observations by previous explorers, including Broken Hill North, across the 1970-80s.
In addition, proximal to the amphibolite layers, there are significant magnetite-rich zones - associated with pegmatite up to 14m thick - that potentially hosts REEs. Notably, this interpretation was based on recently re-assayed diamond core from drill-hole DD90_IB3 at the Iron Blow Prospect which returned up to 1,270ppm TREO.
On 24 October 2022, four drill-holes for a total of 516m were completed at the Fence Gossan Prospect, with positive initial observations comparable to the Tors Tank Prospect:
· Targeted cobalt mineralisation zones were hit across the four drill-holes, as sequences intersected comprised clay, amphibolite, schist and gneiss;
· Numerous disseminated sulphide layers (mostly pyrite linked to amphibolite), up to 17m thick, were logged which could potentially host cobalt mineralisation; and
· Interpreting the intersected geology suggests it is consistent with observations noted by North Broken Hill in the 1970-80s, while XRF field observations (subject to final assays) indicated cobalt mineralisation is apparent.
Similar to the Iron Blow Prospect, there are significant magnetite-rich zones - associated with pegmatite up to 19m thick - which potentially hosts REEs.
On 31 October 2022, after reconciling geochemical and geophysical data for the Iron Blow Prospect, several viable targets were selected for drill-testing with significant exploration potential. These findings were based on a re- interpretation of geophysical campaigns from 2000, 2001 and 2017 which identified several significant bedrock conductors that could host mineralisation.
The primary focus is REEs since diamond core assays from drill-hole DD90_1B3 (sourced from the core library) returned positive readings - on a cumulative basis - over 35m, with the best intersections:
· 8m @ 1,460ppm TREO from 150m
· 12m @ 297ppm TREO from 199m
· 6.4m @ 290ppm TREO from 189m
· 4.8m @ 311ppm TREO from 232m
On 15 November 2022, assays from seven drill-holes across the Fence Gossan and Tors Tank Prospects, confirmed a significant shallow clay-hosted REE discovery - up to 2,410ppm TREO, with high-value Magnet REOs representing up to 29.9% of the grade - the best intercepts are highlighted in Figure 3 below:
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FIGURE 3: BEST ASSAYED INTERCEPTS - FENCE GOSSAN / TORS TANK PROSPECTS |
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o 20m @ 1,780ppm TREO (28.9% Magnet REO) from surface including 4m @ 2,410ppm TREO from 16m (FG_003RC) |
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o 7m @ 1,048ppm TREO (29.9% Magnet REO) from 12m (TT_002RC) |
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o 19m @ 847ppm TREO (29.6% Magnet REO) from surface (TT_003RC) |
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o 8m @ 773ppm TREO (24.0% Magnet REO) from 48m (FG_004RC) |
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o 4m @ 732ppm TREO (27.1% Magnet REO) from 24m (TT_001RC) |
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o 19m @ 661ppm TREO (28.0% Magnet REO) from surface (FG_002RC) |
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o 32m @ 636ppm TREO (25.7% Magnet REO) from 52m (FG_003RC) |
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o 28m @ 614ppm TREO (27.8% Magnet REO) from 4m (FG_004RC) |
Source: CCZ geology team
Of significance, the assays for FG_002-4RC delineated an initial 800m strike event starting near Fence Gossan's eastern boundary. Moreover, with REE mineralisation open in all directions, and Fence Gossan circa 4km long by 1km wide (W-E), the Board ordered follow up geological mapping, sampling and auger drilling to target extending the known strike event to the west.
The new REE discovery has pivoted the Board's strategic focus for the current drilling campaign and beyond to fully understanding the extent of REE mineralisation across the East Zone.
On 23 November 2022, new assays for RT_001RC and FG_001RC were positive for TREO, confirming REEs are more widely apparent across the East Zone than initially envisaged - the best intercepts comprise:
· 11m @ 1,078 TREO from 8m (RT_001RC)
· 20m @ 609ppm TREO from surface incl. 4m @ 1,709ppm REO from 8m (FG_001RC)
· 11m @ 862ppm TREO from 58m (FG_001RC)
More significantly, all the assays returned to date from Fence Gossan, Tors Tank and Reefs Tank highlight the REE mineralisation discovered is extensive and shallow.
On 20 December 2022, following the receipt of drill assays for the Fence Gossan, Tors Tank and partly Reefs Tank Prospects, which confirmed that shallow REE mineralisation is widely apparent, the Board commissioned an extensive auger sampling campaign.
Encouragingly, the auger sampling campaign, which covered a 6.5km2area proximal to the Fence Gossan Prospect, was designed to identify the full extent of REE mineralisation and new targets to test-drill.
All samples were sent to the laboratory for further analysis, with subsequent interpretation charting the next phase of REE-focused exploration across the East Zone.
On 15 February 2023, the assay results for diamond core from TT_005DD (Figure 4) - undertaken at the Tors Tank Prospect - significantly boosted confidence in the shallow, clay-hosted, REE discovery, with the best intercept:
· 13m @ 1,550ppm Total Rare Earth Oxides (TREO) from 5m
FIGURE 4: TORS TANK DIAMOND CORE FROM 5.3-11.8M (TT_OO5DD)
Source: CCZ geology team
Notably, high value Magnetic REO (Nd+Pr+Dy+Tb) represented an exceptional 38.9% of the TREO grade vs 25% peer average.
Re-assays of 4m composite samples at Tors Tank & Fence Gossan to 1m provided greater clarity on the underlying geology, whilst delivering further evidence of an extensive, shallow REE mineralisation system - the best intercepts comprise:
· 17m @ 1,605ppm TREO from 2m and 1m @ 3,236 TREO from 19m (FG_003RC)
· 10m @ 1,013ppm TREO from 49m (FG_001RC)
· 6m @ 1,480ppm TREO from 7m (FG_004RC)
· 5m @ 1,598ppm TREO from 14m (TT_002RC)
· 4m @ 1,342ppm TREO from 28m (FG_004RC)
· 2m @ 3,491ppm TREO from 7m (TT_003RC)
Assays for circa 70% of the recent hand auger surface sampling campaign across Fence Gossan delineated a sizeable
4.5km2anomalous area for REE mineralisation. Notably, a preliminary interpretation suggests there are several more prime targets to test-drill that could potentially extend known mineralisation between the Fence Gossan and Tors Tank Prospects.
On 13 April 2023, specialist consultant, ANSTO, was appointed to undertake comprehensive metallurgical test-work on six samples from Fence Gossan, Reefs and Tors Tanks Prospects to understand the potential to extract REE from shallow clay zones.
The scope of work focused on characterising REE leachability from the six samples which comprise fresh pegmatite to highly weathered clay, especially with Magnetic Rare Earth Oxide (MREO) grades ranging from 362-603ppm.
This was an important step towards advancing the viability of the East Zone's REE potential and securing interest from prospective development partners, especially given the extent of high-value MREO (Nd+Pr+Dy+Tb) within the system.
On 14 June 2023, specialist consultant, ANSTO, produced the following preliminary findings from metallurgical test- work performed on six samples from the Fence Gossan, Reefs, and Tors Tanks Prospects:
· The Total Rare Earth Element plus Yttrium (TREY) grades for the six samples ranged from 227 to 1,632 ppm TREY;
· The proportion of high-value Magnetic Rare Earth Oxides (MREO; Nd+Pr+Dy+Tb) to Total REO (TREO) across the six samples ranged from 22% to 27%; and
· The best TREY extraction, using a direct leach process at pH 1, was 30%
The Board is reviewing next steps, including trialing alternate leach tests proposed by ANSTO to improve extraction results.
NWQ Copper Project, Queensland
On 19 July 2022, preliminary metallurgical test-work on samples extracted from drill-hole BO_318RC1 at the Big One Deposit produced a concentrate (Figure 5) with confirmed upgrades ranging from 5x to 10x for copper metal. The best result for copper comprised: 0.72% head-grade to 7.2% post-test-work.
Further test-work is underway on samples from the Big One Deposit to determine the final optimal results. Notably, this is an important proof of concept and de-risking exercise as part of the Board's strategic intent to secure a processing agreement.
FIGURE 5: METALLURGICAL TESTING - FROTHER PRODUCT EXAMPLE
Source: ALS Metallurgy, Perth, Western Australia
On 23 January 2023, following a review of prospects at the NWQ Copper Project, CCZ's geology team visited several prospects - including Big One, Arya and Valparaisa - to identify new drill targets.
The initial focus was on the Big One, which has an inferred MRE of 2.1Mt @ 1.1% Cu for 21,886kt copper metal post- two drilling campaigns across 2020-21. Moreover, factoring in a large conductor north of the line of lode, plus reconciling available geophysics and geochemical data, CCZ's geological consultant set an Exploration Target that ranges from 2-6Mt @ 0.6-1% Cu for 12-60kt copper metal.
Cautionary Statement: It should be noted that the Exploration Target tonnage range quoted above are conceptual in nature and there has been insufficient exploration to define a copper resource. Although a preliminary analysis was undertaken, insufficient data exists to confidently correlate mineralised horizons within the Exploration Target area. It is uncertain whether further exploration may lead to the reporting of a JORC-standard resource, however, there is some evidence to support the current exploration tonnage calculations, and the sufficient mineralised thicknesses interpreted from historical drilling to warrant further investigation in some areas.
The Valparaisa Prospect comprises copper mineralisation across two horizons over a 6km strike event, with the interaction of two intersecting faults suggesting a structurally controlled copper system that can potentially be drill- tested.
At the Arya Prospect, there is a significant magnetic anomaly, south of a known graphite system (test drilled in late 2021), that shows potential to be a primary source of copper mineralisation.
On 20 February 2023, CCZ's Board approved plans to assess optimising the Big One Deposit via implementing the following:
· Commissioning an independent engineering contractor to conduct a pit optimisation study on the viability of commencing copper mining operations, utilising prospective third-party processors and effective path to market.
· Re-formulating optimal plans for a third drilling campaign and companion geophysical surveys to extend known mineralisation beyond the line of lode.
Previous drilling campaigns have demonstrated the Big One Deposit remains highly prospective for copper mineralisation, with the best intercepts comprising:
· 40m @ 1.64% Cu from surface incl: 11m @ 4.40% Cu from 24m, 5m @ 7.34% Cu from 28m & 1m @ 16.65% Cu from 29m (303RC)
· 44m @ 1.19% Cu from surface incl: 14m @ 3.55% Cu from 27m, 3m @ 10.88% Cu from 37m & 1m @ 12.6% Cu from 37m (301RC)
· 34m @ 1.51% Cu from surface incl: 21m @ 2.25% Cu from surface, 12m @ 3.44% Cu from 3m, 6m @ 4.79% Cu from 3m and 1m @ 9.4% Cu from 9m (B0017)
On 28 March 2023, CCZ appointed Entech Mining to undertake a pit optimisation and mine design study for the Big One Deposit. If the findings are positive then next steps comprise determining the optimal path to market and effective use of third-party processors.
Concurrently, work can focus on capitalising on Big One Deposit's exploration potential via drill-testing known targets north of the line of lode.
On 13 July 2023 the Board received the preliminary pit optimisation study for the Big One Deposit.
Drilling down, the study focused on the near-surface component of known mineralisation at the Big One Deposit and provided significant confidence a standalone mining operation could potentially be developed.
Key findings indicate an initially optimised pit shell could potentially deliver up to 6,266t copper (head grade: 1.42% Cu), 4,362oz silver (head grade: 0.31 g/t Ag) and 1,469t cobalt (head grade: 0.33% Co).
As known mineralisation is open south-west and down dip from the pit shell, there is significant potential to build on the preliminary findings and progress a mining license once a strategic development partner is secured.
Cangai Copper Mine
On 9 March 2023, following a site visit to Cangai Copper Mine by geologist and director David Drakeley, the Board approved plans to update and enhance the confidence in the 2017 inferred JORC MRE - 107,589t contained copper metal (3.2Mt @ 3.35%).
Considerable drilling work post-2017, which includes 34 RC drill-holes for a total of circa 5,000m are to be factored into the updated geological model - the best intercepts from these campaigns comprised:
· 11m @ 5.94% Cu; 2.45% Zn & 19.13g/t Ag from 40m including:
o 3m @ 8.1% Cu; 2.84% Zn & 23.42g/t Ag from 41m
o 1m @ 10.25% Cu; 1.68% Zn & 32.50g/t Ag from 48m
o 1m @ 7.53% Cu; 6.04% Zn & 30.60g/t Ag from 50m (CC0023R)
• 5m @ 1.56% Cu, 4.43g/t Ag & 0.4% Zn from 92m including:
o 3m @ 2.22% Cu, 6.38g/t Ag & 0.60% Zn (CC004RC)
• 4.39m @ 5.06% Cu, 2.56% Zn and 20.1 g/t Ag from 49.9m (CC0036D)
Furthermore, the model will factor in bulk sampling done on several historic stockpiles (which should support a higher confidence Indicated MRE), drone topographic survey and re-positioned mine workings that are accurately georeferenced.
On 24 July 2023 CCZ's geology team, working in conjunction with a specialist geological consultancy, produced an updated JORC (2012) compliant MRE for Cangai Copper Mine at:
· 4.4Mt @ 2.5% Cu inferred insitu and 0.2Mt @ 1.35% Cu indicated from historic stockpiles for ~114kt contained copper metal; augmented further by zinc, gold, and silver credits
At each reporting date, the Group undertakes an assessment of the carrying amount of its exploration and evaluation assets. During the period, the Group identified indicators of impairment on certain exploration and evaluation assets under AASB 6 Exploration and Evaluation of Mineral Resources. As a result of this review, an impairment charge of
$5,762,872 has been recognised in the statement of profit or loss and other comprehensive income in relation to areas of interest where no future exploration and evaluation activities are expected.
Zambia Copper Projects
On 7 December 2022, CCZ's Board approved incremental development work on known key targets - focusing on the highly prospective Luanshya Project which is in the heart of Zambia's copper belt.
Specifically, the geology team planned to roll out an Induced Polarisation (IP) geophysics campaign to build on earlier work undertaken in 2021 which focused on a 6km zone of copper surface anomalism that delineated up to 14 chargeable zones. A key focus of the IP campaign was to refine targets for test drilling and enhance the confidence of finding structurally controlled copper mineralisation.
The plans for development work follow London-based, Metallea Group's (previously Hyperion Copper) decision to cancel plans to list on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE), due to extremely difficult equity market conditions. As this was a key requirement to secure funds to progress development work, Metallea has further advised it was not exercising the option - which delivered a US$100,000 non-refundable deposit to CCZ - to acquire the Zambia Copper Projects.
Moving forward, as CCZ's Board remains committed to aligning with a development partner or undertaking a trade sale for the Zambia Copper Projects, efforts will be redoubled to deliver this outcome.
CORPORATE
Board Changes
On 30 January 2023, to strengthen and diverse the Board's skill set, two new Non-Executive Directors were appointed:
· Mr David Drakeley BSc (Hons), an experienced field geologist who has worked as point on CCZ's drilling campaigns in Broken Hill and Queensland, who will oversee designing and implementing all future exploratory work across the group's portfolio.
· Mr Jack Sedgwick BEng BCom MBA (Distinction) GAICD, a hands-on corporate strategist / business improvement specialist with blue-chip experience across the mining / energy sectors (including working on Rio Tinto's iron ore expansion projects), who will oversee portfolio optimisation and the group's finances.
Note, these new additions follow the departure of Mr Geoff Reed to pursue a new opportunity.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year, other than as outlined elsewhere in this report.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Other than as set out in the Review of Operations, there were no known material significant events from the end of the financial year to the date of this report that have significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Castillo Copper remains focused on progressing its four (4) pillared strategy which includes continued exploration efforts at NWQ Copper Project in Queensland, Cangai Copper Mine and Broken Hill Project in New South Wales, and its four Zambian properties.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The operations of the Group are presently subject to environmental regulation under the laws of the Commonwealth of Australia and the States of Queensland and New South Wales and the Republic of Zambia. The Group is, to the best of its knowledge, at all times in full environmental compliance with the conditions of its licenses.
SHARE OPTIONS
As at the date of this report, there were 52,000,000 unissued ordinary shares under unlisted options. The details of the unlisted options at the date of this report are as follows:
|
Number |
Exercise Price $ |
Expiry Date |
|
19,000,000 |
0.05 |
30 September 2023 |
|
17,000,000 |
0.10 |
31 December 2023 |
|
5,000,000 |
0.05 |
31 December 2023 |
|
3,000,000 |
0.08 |
31 July 2024 |
|
8,000,000 |
0.08 |
31 January 2025 |
In addition to the unlisted options, there are 163,439,781 listed options (ASX: CCZA, CCZB). The details of the listed options at the date of this report are as follows:
|
Number |
Exercise Price $ |
Expiry Date |
|
131,418,042 |
0.08 |
31 July 2024 |
|
32,021,739 |
£0.044 |
1 August 2024 |
No option holder has any right under the options to participate in any other share issue of the Group or any other entity.
PERFORMANCE SHARES
As part of the Zed Copper acquisition in the 2021 financial year, the Group issued 2 classes of performance shares to the vendors on 20 February 2021:
46,875,000 Class A performance shares
Conditions precedent - converting to an equal number of CCZ shares on delineation of a JORC resource of 200,000 tonnes of contained copper at a minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement.
46,875,000 Class B performance shares
Conditions precedent - converting to an equal number CCZ shares on completion of a preliminary feasibility study demonstrating an internal rate of return greater than 25% within 5 years of execution of the Share Sale Agreement.
None of the above conditions were met during the 2023 financial year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has made an agreement indemnifying all the Directors and Officers of the Group against all losses or liabilities incurred by each Director or Officer in their capacity as Directors or Officers of the Group to the extent permitted by the Corporation Act 2001. The indemnification specifically excludes wilful acts of negligence. The Group paid insurance premiums in respect of Directors' and Officers' Liability Insurance contracts for current officers of the Group. The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the Officers in their capacity as Officers of entities in the Group. The total amount of insurance premiums paid has not been disclosed due to confidentiality reasons.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of the court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Castillo Copper Limited support and have adhered to the principles of sound corporate governance. The Board recognises the recommendations of the Australian Securities Exchange Corporate Governance Council and considers that Castillo Copper is in compliance with those guidelines to the extent possible, which are of importance to the commercial operation of a junior listed resources company. During the financial year, shareholders continued to receive the benefit of an efficient and cost effective corporate governance policy for the Group. The Group's Corporate Governance Statement and disclosures can be found at https://castillocopper.com/investors/governance/.
for the year ended 30 June 2023
|
|
Notes |
2023 $ |
2022 $ |
|
Interest received |
|
15,615 |
619 |
|
Other income |
4 |
- |
144,509 |
|
|
|
15,615 |
145,128 |
|
Listing and public company expenses |
|
(158,585) |
(332,476) |
|
Accounting and audit expenses |
|
(125,358) |
(126,586) |
|
Consulting and Directors' fees |
|
(515,196) |
(647,641) |
|
Exploration expenditure expensed as incurred |
|
- |
(25,108) |
|
Impairment of exploration expenditure |
8 |
(5,672,872) |
- |
|
Share-based payments |
20 |
- |
(85,680) |
|
Other expenses |
4 |
(485,832) |
(580,820) |
|
LOSS BEFORE INCOME TAX |
|
(6,942,228) |
(1,653,183) |
|
Income tax expense |
5 |
- |
- |
|
LOSS AFTER INCOME TAX |
|
(6,942,228) |
(1,653,183) |
|
OTHER COMPREHENSIVE INCOME Item that may be reclassified subsequently to profit or loss |
|
|
|
|
Foreign currency translation |
|
1,359 |
1,594 |
|
TOTAL OTHER COMPREHENSIVE INCOME |
|
1,359 |
1,594 |
|
TOTAL COMPREHENSIVE LOSS FOR THE YEAR |
|
(6,940,870) |
(1,651,589) |
|
Basic and diluted loss per share (cents per share) |
12 |
(0.53) |
(0.13) |
The accompanying notes form part of these financial statements.
as at 30 June 2023
|
CURRENT ASSETS |
Notes |
2023 $ |
2022 $ |
|
Cash and cash equivalents |
6 |
2,897,611 |
5,754,049 |
|
Other assets |
7 |
78,845 |
78,994 |
|
TOTAL CURRENT ASSETS |
|
2,976,456 |
5,833,043 |
|
NON-CURRENT ASSETS |
|
|
|
|
Other assets |
7 |
486,961 |
404,961 |
|
Deferred exploration and evaluation expenditure |
8 |
8,736,198 |
12,899,486 |
|
TOTAL NON-CURRENT ASSETS |
|
9,223,159 |
13,304,447 |
|
TOTAL ASSETS |
|
12,199,615 |
19,137,490 |
|
CURRENT LIABILITIES |
|
|
|
|
Trade and other payables |
9 |
128,346 |
125,352 |
|
TOTAL CURRENT LIABILITIES |
|
128,346 |
125,352 |
|
TOTAL LIABILITIES |
|
128,346 |
125,352 |
|
NET ASSETS |
|
12,071,269 |
19,012,138 |
|
EQUITY |
|
|
|
|
Issued capital |
10 |
35,964,396 |
35,964,396 |
|
Reserves |
11 |
4,081,735 |
4,080,376 |
|
Accumulated losses |
|
(27,974,862) |
(21,032,634) |
|
TOTAL EQUITY |
|
12,071,269 |
19,012,138 |
The accompanying notes form part of these financial statements.
for the year ended 30 June 2023
|
|
Issued |
Share based payment |
Foreign currency translation |
Accumulated |
|
|
capital $ |
reserve $ |
reserve $ |
losses $ |
Total $ |
|
|
Balance at 1 July 2022 |
35,964,396 |
4,230,962 |
(150,586) |
(21,032,634) |
19,012,138 |
|
Loss for the year |
- |
- |
- |
(6,942,228) |
(6,942,228) |
|
Other comprehensive income |
- |
- |
1,359 |
- |
1,359 |
|
Total Comprehensive Loss |
- |
- |
1,359 |
(6,942,228) |
(6,940,869) |
|
Transactions with owners in their capacity as owners |
|
|
|
|
|
|
|
- |
- |
- |
- |
- |
|
Balance as at 30 June 2023 |
35,964,396 |
4,230,962 |
(149,227) |
(27,974,862) |
12,071,269 |
|
Balance at 1 July 2021 |
34,464,159 |
4,092,830 |
(152,180) |
(19,379,451) |
19,025,358 |
|
Loss for the year |
- |
- |
- |
(1,653,183) |
(1,653,183) |
|
Other comprehensive loss |
- |
- |
1,594 |
- |
1,594 |
|
Total comprehensive loss |
- |
- |
1,594 |
(1,653,183) |
(1,651,589) |
|
Transactions with owners in their capacity as owners |
|
|
|
|
|
|
Shares issued to sophisticated investors |
1,742,319 |
- |
- |
- |
1,742,319 |
|
Shares issued to advisors |
59,346 |
- |
- |
- |
59,346 |
|
Share issue costs |
(301,428) |
52,452 |
- |
- |
(248,976) |
|
Share based payments |
- |
85,680 |
- |
- |
85,680 |
|
Balance as at 30 June 2022 |
35,964,396 |
4,230,962 |
(150,586) |
(21,032,634) |
19,012,138 |
The accompanying notes form part of these financial statements.
for the year ended 30 June 2023
|
CASH FLOWS FROM OPERATING ACTIVITIES |
Notes |
2023 $ |
2022 $ |
|
Interest received |
|
15,615 |
619 |
|
Payments to suppliers and employees |
|
(1,115,720) (1,406,386) |
|
|
NET CASH USED IN OPERATING ACTIVITIES |
6 |
(1,100,105) (1,405,767) |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
Payments for tenements bonds |
(82,000) |
(55,861) |
|
|
Option fee received |
- |
144,509 |
|
Exploration and evaluation expenditure 8 (1,678,114) (5,112,153)
NET CASH USED IN INVESTING ACTIVITIES (1,760,114) (5,023,505)
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
||
|
Proceeds from share issues |
10 |
- |
1,742,319 |
|
Share issue costs |
10 |
- |
(248,976) |
|
NET CASH FROM FINANCING ACTIVITIES |
|
- |
1,493,343 |
|
Net (decrease)/increase in cash and cash equivalents |
|
(2,860,219) |
(4,935,929) |
|
Cash and cash equivalents at beginning of year |
|
5,754,049 |
10,854,829 |
|
Foreign exchanges variances on cash |
|
3,781 |
(164,851) |
|
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR |
6 |
2,897,611 |
5,754,049 |
The accompanying notes form part of these financial statements.
Notes to the consolidated financial statements
for the year ended 30 June 2023
1. Corporate Information
The financial report of Castillo Copper Limited and its subsidiaries ("Castillo Copper" or "the Group") for the year ended 30 June 2023 was authorised for issue in accordance with a resolution of the Directors on 22 September 2023.
Castillo Copper Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange and London Stock Exchange. The nature of the operations and the principal activities of the Group are described in the Directors' Report.
2. Summary of Significant Accounting Policies
(a) Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is a for profit entity for financial reporting purposes under Australian Accounting Standards.
The financial report has been prepared on an accrual basis and is based on historical costs. Material accounting policies adopted in preparation of this financial report are presented below and have been consistently applied unless otherwise stated.
The presentation currency is Australian dollars.
(b) Statement of Compliance
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).
(c) Adoption of new and revised standards
Standards and Interpretations applicable 30 June 2023
In the year ended 30 June 2023, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current annual reporting period. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Group and therefore, no material change is necessary to Group accounting policies.
Standards and interpretations issued, but not yet effective
The Directors have also reviewed all Standards and Interpretations issued, but not yet effective for the period 30 June 2023. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations issued but not yet effective on the Company.
(d) Going Concern
This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.
The Group incurred a net loss for the year ended 30 June 2023 of $6,942,228 and net cash outflows from operating activities of $1,100,105 net cash outflows from investing activities of $1,760,114 and net cash flows from financing activities of $Nil. At 30 June 2023, the Group had a net asset position of $12,071,269. The cash and cash equivalents balance at 30 June 2023 was $2,897,611.
The directors have reviewed the Group's financial position and are of the opinion that the use of the going concern basis of accounting is appropriate.
(e) Basis of Consolidation
The consolidated financial statements comprise the financial statements of Castillo Copper Limited and its subsidiaries as at 30 June each year ('the Company').
Subsidiaries are all those entities (including special purpose entities) over which the Company has control. The Company controls an entity when the company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the Group.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-company transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Company and cease to be consolidated from the date on which control is transferred out of the Company.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction.
(f) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The functional and presentation currency of Castillo Copper Limited is Australian dollars. The functional currency of the Chilean subsidiary is Chilean Peso. The functional currency of the Zambian subsidiaries is United States Dollars.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
(iii) Group entities
The results and financial position of all the Company entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
· assets and liabilities for each statement of financial position presented are translated at the closing rate at
the date of that statement of financial position;
· income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
· all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are taken to foreign currency translation reserve.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are recognised in the statement of comprehensive income, as part of the gain or loss on sale where applicable.
(g) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets of the Group. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(h) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure, but does not include general overheads or administrative expenditure not having a specific nexus with a particular area of interest.
Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a mining operation.
Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided that one of the following conditions is met:
· such costs are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or
· exploration and evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in relation to the area are continuing.
Expenditure which fails to meet the conditions outlined above is impaired; furthermore, the Directors regularly review the carrying value of exploration and evaluation expenditure and make write downs if the values are not expected to be recoverable.
Identifiable exploration assets acquired are recognised as assets at their cost of acquisition, as determined by the requirements of AASB 6 Exploration for and evaluation of mineral resources. Exploration assets acquired are reassessed on a regular basis and these costs are carried forward provided that at least one of the conditions referred to in AASB 6 is met.
Exploration and evaluation expenditure incurred subsequent to acquisition in respect of an exploration asset acquired, is accounted for in accordance with the policy outlined above for exploration expenditure incurred by or on behalf of the entity.
Acquired exploration assets are not written down below acquisition cost until such time as the acquisition cost is not expected to be recovered.
When an area of interest is abandoned, any expenditure carried forward in respect of that area is written off.
Expenditure is not carried forward in respect of any area of interest/mineral resource unless the Group's rights of tenure to that area of interest are current.
(i) Trade and Other Receivables
Trade receivables, which generally have 30 - 90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms. Furthermore, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term, discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income.
(j) Cash and Cash Equivalents
Cash and short term deposits in the statement of financial position include cash on hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown as current liabilities in the statement of financial position. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as described above.
(k) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.
Provisions are measured at the present value or management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money, and where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Restoration and rehabilitation
Refer to Note 2(m) for the Group's policy in respect of restoration and rehabilitation.
(l) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in the period in which this determination is made
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent that it is determined in the future that this capitalised expenditure should be written off, this will reduce profits and net assets in the period in which this determination is made.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black and Scholes model, using the assumptions detailed in note 10.
Rehabilitation provision
The Group's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Group recognises management's best estimate for asset retirement obligations in the period in which they are incurred. Actual costs incurred in the future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision.
(m) Rehabilitation provision
A provision for rehabilitation and restoration is recognised when there is a present obligation as a result of activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of abandoning sites, removing facilities and restoring the affected areas.
The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the balance date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each balance date.
The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset.
(n) Income Tax
Deferred income tax is provided for on all temporary differences at balance date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes.
No deferred income tax will be recognised from the initial recognition of goodwill or of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. No deferred income tax will be recognised in respect of temporary differences associated with investments in subsidiaries if the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary differences will not reverse in the near future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on tax rates (and tax laws) that have been enacted or substantially enacted at the balance date and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. The carrying amount of deferred tax assets is reviewed at each balance date and only recognised to the extent that sufficient future assessable income is expected to be obtained. Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income.
(o) Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(p) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue is capable of being reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Interest income
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.
(q) Earnings / loss per share
Basic earnings / loss per share
Basic earnings / loss per share is calculated by dividing the profit/loss attributable to equity holders of the Group, excluding any costs of servicing equity other than dividends, by the weighted average number of ordinary shares, adjusted for any bonus elements.
Diluted earnings / loss per share
Diluted earnings / loss per share is calculated as net profit/loss attributable to members of the Group, adjusted for:
· costs of servicing equity (other than dividends) and preference share dividends;
· the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
· other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; and
· divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus elements.
(r) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the Australian Tax Office is included as part of receivables or payables in the statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
(s) Trade and other payables
Liabilities for trade creditors and other amounts are measured at amortised cost, which is the fair value of the consideration to be paid in the future for goods and services received that are unpaid, whether or not billed to the Group.
(t) Share-based payment transactions
The Group provides benefits to individuals acting as, and providing services similar to employees (including Directors) of the Group in the form of share based payment transactions, whereby individuals render services in exchange for shares or rights over shares ('equity settled transactions').
The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by using the Black Scholes formula taking into account the terms and conditions upon which the instruments were granted, as discussed in note 10(e).
In valuing equity settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Castillo Copper Limited ('market conditions').
The cost of the equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('vesting date').
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of the market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The statement of comprehensive income charge or credit for a period represents the movement in cumulative expense recognised at the beginning and end of the period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where the terms of an equity settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised for the award is recognised immediately. However if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The cost of equity-settled transactions with non-employees is measured by reference to the fair value of goods and services received unless this cannot be measured reliably, in which case the cost is measured by reference to the fair value of the equity instruments granted. The dilutive effect, if any, of outstanding options is reflected in the computation of loss per share (see note 12).
(u) Comparative information
When required by Accounting Standards, comparative information has been reclassified to be consistent with the presentation in the current year.
(v) Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.
(w) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principle market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
(x) Parent entity financial information
The financial information for the parent entity, Castillo Copper Limited, disclosed in Note 16 has been prepared on the same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity's financial statements. Dividends received from associates are recognised in the parent entity's profit or loss, rather than being deducted from the carrying amount of these investments.
3. Segment Information
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The entity has four geographical segments being exploration in Northwest Queensland (NWQ), New South Wales (Cangai), New South Wales (Broken Hill) and Zambia. Revenue attributable to all segments is immaterial. Allocation of asset, liabilities, income and expenses to each segment is shown below:
|
2023 |
NWQ (QLD) |
Cangai (NSW) |
Broken Hill (NSW) |
Zambia |
Unallocated |
Total |
|
Segment assets and liabilities |
$ |
$ |
$ |
$ |
$ |
$ |
|
Current assets |
- |
- |
- |
- |
2,976,456 |
2,976,456 |
|
Non-current assets |
6,605,846 |
321,100 |
1,527,490 |
768,601 |
122 |
9,223,159 |
|
Current liabilities |
- |
- |
- |
- |
(128,346) |
(128,346) |
|
Segment income and expenses |
- |
- |
- |
- |
15,615 |
15,615 |
|
Interest income |
- |
- |
- |
- |
- |
- |
|
Other income |
- |
- |
- |
- |
- |
- |
|
Other expenses |
- |
(5,322,762) |
- |
(350,110) |
(1,284,971) |
(6,957,843) |
|
Loss before tax |
- |
(5,322,762) |
- |
(350,110) |
(1,269,356) |
(6,942,228) |
|
2022 |
NWQ (QLD) |
Cangai (NSW) |
Broken Hill (NSW) |
Zambia |
Unallocated |
Total |
|
Segment assets and liabilities |
$ |
$ |
$ |
$ |
$ |
$ |
|
Current assets |
- |
- |
- |
- |
5,833,043 |
5,833,043 |
|
Non-current assets |
6,271,129 |
5,454,684 |
544,180 |
1,034,333 |
121 |
13,304,447 |
|
Current liabilities |
- |
- |
- |
- |
(125,352) |
(125,352) |
|
Segment income and expenses |
|
|
|
|
|
|
|
Interest income |
- |
- |
- |
- |
619 |
619 |
|
Other income |
- |
- |
- |
144,509 |
- |
144,509 |
|
Other expenses |
- |
- |
- |
- |
(1,798,311) |
(1,798,311) |
|
Loss before tax |
- |
- |
- |
144,509 |
(1,797,692) |
(1,653,183) |
4. Other income and expenses
|
Other income
Option fee |
2023 $
- |
2022 $
144,509 |
|
Total other income |
- |
144,509 |
|
Other expenses |
$ |
$ |
|
Travel and accommodation |
6,780 |
252 |
|
Legal |
7,860 |
37,678 |
|
Insurance |
98,270 |
95,415 |
|
Foreign Exchange (Gains)/Losses |
(482) |
164,792 |
|
Investor Relations |
336,944 |
260,534 |
|
Other |
36,460 |
22,149 |
|
Total other expenses |
485,832 |
580,820 |
5. Income Tax 2023 2022
$ $
(a) Income tax expense
Major component of tax expense for the year:
Current tax - -
Deferred tax - -
 |
|
(b) Numerical reconciliation between aggregate tax expense recognised in the statement of comprehensive income and tax expense calculated per the statutory income tax rate |
|
|
|
A reconciliation between tax expense and the product of accounting result |
||
|
before income tax multiplied by the Group's applicable tax rate is as follows: |
||
|
Loss from continuing operations before income tax expense |
(6,942,228) |
(1,653,183) |
|
Tax at the Australian rate of 30% (2022: 30%) |
(2,082,668) |
(495,955) |
|
Non-allowable expenses |
- |
25,929 |
|
Income tax benefit not bought to account |
2,082,668 |
470,026 |
|
Income tax expense |
- |
- |
|
(c) The following deferred tax balances have not been bought to account: |
|
|
|
Assets |
2023 $ |
2022 $ |
|
Total losses available to offset against future taxable income |
11,431,629 |
10,361,143 |
|
Total accrued expenses |
12,461 |
9,867 |
|
Total share issue costs deductible over five years |
285,972 |
483,299 |
|
Deferred tax liability on capitalised exploration costs |
(2,390,279) |
(3,549,693) |
|
Deferred tax assets not brought to account as realisation is not regarded as |
|
|
|
probable |
|
(7,304,616) |
|
Deferred tax asset recognised |
- |
- |
|
|
2023 |
2022 |
|
|
$ |
$ |
|
(d) Unused tax losses |
|
|
|
Unused tax losses |
38,105,431 |
34,537,142 |
|
Potential tax benefit not recognised at 30% (2022: 30%) |
11,431,629 |
10,361,143 |
|
The benefit for tax losses will only be obtained if: |
|
|
(i) the Group derives future assessable income in Australia of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised;
(ii) the Group continues to comply with the conditions for deductibility imposed by tax legislation in Australia; and
(iii) no changes in tax legislation in Australia, adversely affect the Group in realising the benefit from the deductions for the losses.
6. Cash and cash equivalents
|
Reconciliation of operating loss after tax to net the cash flows used in operations |
2023 $ |
2022 $ |
|
|
|
Loss from ordinary activities after tax Non-cash items |
(6,942,228) |
(1,653,183) |
|
|
|
Share-based payments |
- |
85,680 |
|
|
|
Consultancy and adviser fees settled in shares |
- |
59,346 |
|
|
|
Impairment expense |
5,672,872 |
- |
|
|
|
Foreign exchange (gain)/loss |
(455) |
164,792 |
|
|
|
Profit & loss items classed as investing activities |
|
|
|
|
|
Consulting fees relating to exploration expenditure |
150,000 |
- |
|
|
|
Other income - option fee |
- |
(144,509) |
|
|
|
Changes in assets and liabilities |
|
|
|
|
|
Increase / (decrease) in trade and other payables |
26,942 |
(60,167) |
|
|
|
(Increase) / decrease in other receivables |
(7,236) |
142,274 |
|
|
|
Net cash flow used in operating activities |
(1,100,105) |
(1,405,767) |
|
|
|
(b) Reconciliation of cash |
|
|
|
|
|
Cash balance comprises: Cash at bank |
2,897,611 |
5,754,049 |
|
|
|
Cash at bank earns interest at floating rates based on daily bank deposit rates. |
|
|
|
|
|
7. Other Assets |
2023 $ |
2022 $ |
|
|
|
Current |
|
|
|
|
|
GST/VAT receivable |
37,764 |
45,150 |
|
|
|
Prepayments |
41,081 |
33,844 |
|
|
|
|
78,845 |
78,994 |
|
|
|
Non-Current |
|
|
|
|
|
Tenement guarantees |
486,961 |
404,961 |
|
|
|
There are no current tenement guarantees. |
|
|
|
|
|
8. Deferred Exploration and Evaluation Expenditure |
2023 $ |
2022 $ |
|
|
|
Exploration and evaluation phase: |
|
|
|
|
|
Opening balance |
12,899,486 |
8,171,821 |
|
|
|
Exploration and evaluation expenditure during the period |
1,509,584 |
4,727,665 |
|
|
|
Impairment1 |
(5,672,872) |
- |
|
|
|
Closing balance |
8,736,198 |
12,899,486 |
|
|
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on the successful development and commercial exploration or sale of respective areas.
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 |
2023 |
2022 |
|
Current |
$ |
$ |
|
|
Trade and other payables |
87,586 |
92,462 |
|
|
Accruals |
40,758 |
32,890 |
|
|
|
128,344 |
125,352 |
|
Trade and other payables are non-interest bearing and payable on demand. Due to their short-term nature, the carrying value of trade and other payables is assumed to approximate their fair value.
10. Issued Capital 2023 2022
(a) Issued and paid up capital $ $
Ordinary shares fully paid 35,965,396 35,965,396
|
2023 |
2022 |
|||
|
|
Number of shares |
$ |
Number of shares |
$ |
|
(b) Movements in ordinary shares on issue |
|
|
|
|
|
Opening balance |
1,299,505,355 |
35,964,396 |
1,256,512,320 |
34,464,159 |
|
Shares issued to sophisticated investors |
- |
- |
41,240,648 |
1,742,319 |
|
Shares issued to advisors |
- |
- |
250,000 |
12,500 |
|
Shares issued to consultants |
- |
- |
1,502,387 |
46,846 |
|
Transaction costs on share issue |
|
|
|
(301,428) |
|
|
1,299,505,355 |
35,964,396 |
1,299,505,355 |
35,964,396 |
The shares issued to advisors and consultants were valued based on the fair value of the service received.
(c) Ordinary shares
The Group does not have authorised capital nor par value in respect of its issued capital. Ordinary shares have the right to receive dividends as declared and, in the event of a winding up of the Company, to participate in the proceeds from sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or proxy, at a meeting of the Company.
(d) Share options
At 30 June 2023 there were 132,699,971 (30 June 2022: 354,362,757) unlisted options and 163,439,781 (30 June 2022: 224,939,782) listed options (ASX: CCZOA, CCZOB) with various exercise prices and expiry dates.
The following share-based payment arrangements were in place during the period:
|
Series |
Number |
Grant date |
Expiry date |
Exercise price $ |
Fair value at grant date |
Vesting date |
Listed/ Unlisted |
|
1 |
17,000,000 |
16 May 2018 |
31 December 2023 |
$0.10 |
$0.018 |
16 May 2018 |
Unlisted |
|
2 |
5,000,000 |
1 February 2019 |
31 December 2023 |
$0.05 |
$0.005 |
31 December 2018 |
Unlisted |
|
3 |
1,582,353 |
2 October 2020 |
1 September 2023 |
£0.017 |
$0.023 |
2 October 2020 |
Unlisted |
|
4 |
19,000,000 |
2 October 2020 |
30 September 2023 |
$0.05 |
$0.018 |
2 October 2020 |
Unlisted |
|
5 |
14,285,714 |
15 June 2021 |
31 July 2024 |
$0.08 |
$0.022 |
15 June 2021 |
Listed |
|
6 |
2,955,665 |
16 June 2021 |
1 August 2024 |
£0.044 |
$0.021 |
16 June 2021 |
Listed |
|
7 |
2,418,044 |
5 August 2021 |
31 July 2024 |
$0.08 |
$0.007 |
5 August 2021 |
Listed |
|
8 |
462,378 |
17 August 2021 |
1 August 2024 |
£0.044 |
$0.017 |
17 August 2021 |
Listed |
|
9 |
4,000,000 |
27 October 2021 |
31 July 2024 |
$0.08 |
$0.007 |
27 October 2021 |
Listed |
|
10 |
3,000,000 |
30 November 2021 |
31 July 2024 |
$0.08 |
$0.010 |
30 November 2021 |
Unlisted |
|
11 |
8,000,000 |
1 February 2022 |
31 January 2025 |
$0.08 |
$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.
(f) Performance Shares
At 30 June 2023 there were 46,875,000 Class A performance shares and 46,875,000 Class B performance shares on issue in relation to the Zambian tenements held by Zed Copper Pty Ltd.
46,875,000 Class A performance shares
Conditions precedent - converting to an equal number of CCZ shares on delineation of a JORC resource of 200,000 tonnes of contained copper at a minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement.
46,875,000 Class B performance shares
Conditions precedent - converting to an equal number CCZ shares on completion of a preliminary feasibility study demonstrating an internal rate of return greater than 25% within 5 years of execution of the Share Sale Agreement.
11. Reserves
Share based payment reserve
The share based payment reserve is used to record the value of equity benefits provided to Directors and executives as part of their remuneration and non-employees for their services.
Foreign currency translation reserve
The foreign exchange differences arising on translation of balances originally denominated in a foreign currency into the functional currency are taken to the foreign currency translation reserve. The reserve is recognised in profit or loss when the net investment is disposed of.
12. Loss per Share
2023 2022
$ $
Loss used in calculating basic and dilutive EPS (6,942,228) (1,653,183)
|
|
Number of Shares
|
|
|
Weighted average number of ordinary shares used in calculating basic loss per share: |
1,299,505,355 |
1,294,183,748 |
|
Effect of dilution: Share options |
- |
- |
|
|
2023 |
2022 |
|
Adjusted weighted average number of ordinary shares used in calculating diluted loss per share: |
1,299,505,355 |
1,294,183,748 |
|
Basic and diluted loss per share (cents per share) |
(0.53) |
(0.13) |
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements.
There are no potential ordinary shares on issue that are considered to be dilutive, therefore basic earnings per share also represents diluted earnings per share.
|
13. Auditor's Remuneration The auditor of Castillo Copper Limited is HLB Mann Judd. |
2023 $ |
2022 $ |
|
|
Amounts received or due and receivable for: |
|
|
|
|
Audit or review of the financial report of the entity and any other entity in the Group |
46,358 |
40,851 |
|
|
|
46,358 |
40,851 |
|
|
14. Related party disclosures |
|
|
|
|
a) Key management personnel |
|
|
|
|
|
2023 |
2022 |
|
|
Compensation of key management personnel |
$ |
$ |
|
|
Short term employee benefits |
360,553 |
389,221 |
|
|
Post-employment benefits |
2,139 |
3,000 |
|
|
Share-based payments |
- |
85,680 |
|
|
Total remuneration |
362,692 |
477,901 |
|
b) Other transactions with key management personnel
Field Crew Pty Ltd, a company of which Mr Drakeley is a director, charged the Group consulting fees of $115,135 (2022: nil). There was nil outstanding at 30 June 2023 (2022: nil).
c) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of Castillo Copper Limited and the following subsidiaries:
|
Name of Entity |
Country of Incorporation |
Equity Holding |
|
|
2023 |
2022 |
||
|
Castillo Copper Chile SPA |
Chile |
100% |
100% |
|
Castillo Exploration Limited |
Australia |
100% |
100% |
|
Qld Commodities Pty Ltd |
Australia |
100% |
100% |
|
Total Iron Pty Ltd |
Australia |
100% |
100% |
|
Total Minerals Pty Ltd |
Australia |
100% |
100% |
|
BHA No. 1 Pty Ltd |
Australia |
100% |
100% |
|
Atlantica Holdings (Bermuda) |
Bermuda |
75% |
75% |
|
Zed Copper Pty Ltd |
Australia |
100% |
100% |
|
Chalo Mining Group Ltd |
Zambia |
100% |
100% |
|
Luflilian Resources Zambia Ltd |
Zambia |
100% |
100% |
|
Belmt Resources Mining Company Ltd |
Zambia |
50% |
50% |
|
Broken Hill Alliance Ltd |
Australia |
- |
100% |
Castillo Copper Limited is the ultimate Australian parent entity and ultimate parent of the Group. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and not disclosed in this note.
Broken Hill Alliance Ltd was incorporated during the year ended 30 June 2022 and was subsequently deregistered on 5 September 2022, after plans to spin-off the BHA assets via an ASX listing were indefinitely deferred.
15. Financial Risk Management
Exposure to interest rate, liquidity, and credit risk arises in the normal course of the Group's business. The Group does not hold or use derivative financial instruments. The Group's principal financial instruments comprise mainly of deposits with banks. The totals for each category of financial instruments are as follows:
|
Financial Assets |
2023 $ |
2022 $ |
|
Cash and cash equivalents |
2,897,611 |
5,754,049 |
|
Other receivables (current and non-current) |
524,725 |
450,111 |
|
Financial Liabilities |
3,422,336 |
6,204,160 |
|
Trade and other payables |
128,346 |
125,352 |
The Group uses different methods as discussed below to manage risks that arise from these financial instruments. The objective is to support the delivery of the financial targets while protecting future financial security.
(a) Capital Risk Management
The Group's capital comprises share capital and reserves less accumulated losses. As at 30 June 2023, the Group has net assets of $12,071,269 (2022: $19,012,138). The Group manages its capital to ensure its ability to continue as a going concern and to optimise returns to its shareholders.
(b) Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. The Group manages liquidity risk by maintaining sufficient cash facilities to meet the operating requirements of the business and investing excess funds in highly liquid short term investments. The responsibility for liquidity risk management rests with the Board of Directors.
Alternatives for sourcing future capital needs include the cash position and future equity raising alternatives. These alternatives are evaluated to determine the optimal mix of capital resources for our capital needs. The Board expects that, assuming no material adverse change in a combination of our sources of liquidity, present levels of liquidity will be adequate to meet expected capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other payables. As at 30 June 2023 any financial liabilities that are contractually maturing within 60 days have been disclosed as current. Trade and other payables that have a deferred payment date of greater than 12 months have been disclosed as non-current.
(c) Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial instruments. The Group's exposure to changes to interest rate risk relates primarily to its earnings on cash and term deposits. The Group manages the risk by investing in short term deposits.
2023 2022
$ $
 |
Interest rate sensitivity
The following table demonstrates the sensitivity of the Group's statement of comprehensive income to a reasonably possible change in interest rates, with all other variables constant.
|
Change in Basis Points |
Effect on Post Tax Loss ($) Increase/(Decrease) |
Effect on Equity including retained earnings ($) Increase/(Decrease) |
||
|
|
|
|
|
|
|
|
2023 |
2022 |
2023 |
2022 |
|
Increase 100 basis points |
28,976 |
57,540 |
28,976 |
57,540 |
|
Decrease 100 basis points |
(28,976) |
(57,540) |
(28,976) |
(57,540) |
A sensitivity of 100 basis points has been used as this is considered reasonable given the current level of both short term and long term Australian Dollar interest rates. This would represent two to four movements by the Reserve Bank of Australia.
(d) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause the Group to incur a financial loss. The Group's maximum credit exposure is the carrying amounts on the statement of financial position. The Group holds financial instruments with credit worthy third parties.
At 30 June 2023, the Group held cash at bank. These were held with financial institutions with a rating from Standard & Poors of AA- or above (long term). The Group has no past due or impaired debtors as at 30 June 2023.
(e) Fair Value Measurement
There were no financial assets or liabilities at 30 June 2023 requiring fair value estimation and disclosure as they are either not carried at fair value or in the case for short term assets and liabilities, their carrying values approximate fair value.
(f) Foreign Exchange
The Group undertakes certain transactions denominated in foreign currencies hence exposures to exchange rate fluctuations arise. The Group does not manage these exposures with foreign currency derivative products. The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the balance date expressed in Australian dollars are as follows:
|
Chilean Peso (CLP) |
2023 $ |
2022 $ |
|
Assets |
103,800 |
86,432 |
|
Liabilities |
(12,932) |
(10,350) |
|
|
90,868 |
76,082 |
 |
|
British Pound Sterling (GBP) |
|
|
|
|
2023 |
2022 |
|
|
$ |
$ |
|
Assets |
639,899 |
3,542,364 |
|
Liabilities |
(15,432) |
(5,104) |
|
|
624,467 |
3,537,260 |
The Group is exposed to Chilean Peso (CLP) and British Pound Sterling (GBP) currency fluctuations.
The following table details the Group's sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represent management's assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in profit and equity where the Australian Dollar weakens against the respective currency. For a strengthening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the profit and equity and the balances below would be negative.
|
10% Increase |
2023 |
2022 |
|
|
$ |
$ |
|
Profit/(loss) and equity - CLP |
9,343 |
7,810 |
|
Profit/(loss) and equity - GBP |
62,447 |
353,726 |
|
|
71,790 |
361,536 |
|
10% Decrease |
2023 |
2022 |
|
|
$ |
$ |
|
Profit/(loss) and equity - CLP |
(9,343) |
(7,810) |
|
Profit/(loss) and equity - GBP |
(62,447) |
(353,726) |
|
|
(71,790) |
(361,536) |
|
16. Parent Entity Information |
|
|
The following details information related to the parent entity, Castillo Copper Limited, at 30 June 2023. The information presented here has been prepared using consistent accounting policies as presented in note 2.
|
|
2023 $ |
2022 $ |
|
Current assets |
2,975,126 |
5,831,937 |
|
Non-current assets |
8,454,557 |
10,479,490 |
|
Total assets |
11,429,683 |
16,311,427 |
|
Current liabilities |
115,952 |
115,003 |
|
Non-current liabilities |
- |
- |
|
Total liabilities |
115,952 |
115,003 |
|
Net assets |
11,313,731 |
16,196,424 |
|
Issued capital |
35,964,396 |
35,964,396 |
|
Reserves |
4,230,962 |
4,230,962 |
|
Accumulated losses |
(28,881,627) |
(23,998,934) |
|
Total equity |
11,313,731 |
16,196,424 |
|
|
|
|
|
|
2023 $ |
2022 $ |
||
|
Loss of the parent entity |
4,882,693 |
1,843,193 |
|
|
Other comprehensive income for the year |
- |
- |
|
|
Total comprehensive loss of the parent entity |
4,882,693 |
1,843,193 |
|
a) Guarantees
Castillo Copper Limited has not entered into any guarantees in relation to the debts of its subsidiary.
b) Other Commitments and Contingencies
Castillo Copper Limited has not entered into any commitments and does not have any known contingent liabilities at year end.
17. Contingent liabilities
The Company has entered into the following royalty agreements:
· 1% net smelter return royalty in respect of the area covered by the tenements acquired from Qld Commodities Pty Ltd vendors (or their nominee);
· 3% net smelter return royalty in respect of the area covered by the tenements acquired from Total Minerals Pty Ltd vendors (or their nominee);
· 3% net smelter return royalty in respect of the area covered by the tenements acquired from Total Iron Pty Ltd vendors (or their nominee).
· 2% net smelter return royalty in respect of the area covered by the tenements acquired from Zed Copper Pty Ltd vendors (or their nominee).
Other than outlined above, there are no contingent liabilities.
18. Commitments
In order to maintain current contractual rights concerning its mineral projects, the Group has certain commitments to meet minimum expenditure or work program requirements. The current minimum commitments at balance date but not recognised as liabilities are as follows:
|
|
2023 $ |
2022 $ |
|
Within one year |
902,026 |
1,280,129 |
|
After one year but not more than five years |
870,000 |
1,250,000 |
|
Longer than five years |
- |
- |
|
|
1,772,026 |
2,530,129 |
19. Dividends
No dividend was paid or declared by the Group in the period since the end of the financial year, and up to the date of this report. The Directors' do not recommend that any amount be paid by way of a dividend for the financial year ended 30 June 2023.
The balance of the franking account is Nil at 30 June 2023 (2022: Nil).
20. Share-based payments
(a) Shares issued to suppliers: There were no shares issued to suppliers in lieu of cash payment during the year ended 30 June 2023.
(b) Reconciliation to share based payments expense in profit or loss:
|
|
|
2023 $ |
2022 $ |
|
Options issued to directors |
|
- |
85,680 |
|
|
|
- |
85,680 |
(c) Fair value of options
The fair value of all options noted above have been determined using the Black & Scholes model taking in to account the inputs outlined in Note 11(e).
21. Subsequent events
There were no known material significant events from the end of the financial year to the date of this report that have significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
