21 October 2024

CASTILLO COPPER LIMITED
("Castillo" or the "Company")

Castillo to acquire highly prospective Niobium, Uranium & Heavy Rare Earths project

Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily focused on copper across Australia and Zambia, is delighted to announce it has entered into a binding agreement with Audax Holdings Pty Ltd (ACN: 678 403 864) to acquire 85% of the highly prospective Harts Range Niobium, Uranium and Heavy Rare Earths Project via an earn-in arrangement (refer Deal Terms below).

Highlights:

·    Signed a binding term sheet to acquire 85% of the highly prospective Harts Range Niobium, Uranium and Heavy Rare Earths Project (via a two step earn in process - refer Deal Terms), circa 120km north-east from Alice Springs in the Northern Territory (NT)

·    Comprising two granted tenements (110km²), historical assays from 28 rock chip samples from outcropping pegmatites across five prospects reported grades up to 23.2% Nb, 12.7% U and 12.7% TREE (including 2.85% Dy, 0.32% Tb, 14.9% Ta)¹:

o  Notably, the results from the Cusp Prospect, show consistently high Niobium, Heavy Rare Earths and Uranium grades (Figure 1)

Note: Niobium is typically coincident with Heavy Rare Earths mineralisation, Tantalum and Uranium

Source: Barfuss Corporation (Reference 1)

·    With global geopolitics and the energy transition Niobium, Uranium and Heavy Rare Earths are crucial commodities with strong long-term demand drivers for a decarbonised future:

o  The compelling mix of coincident critical minerals¹ identified at surface underscores the Harts Range Project's exploration potential

·    Castillo's geology team just completed an inaugural field trip to the Harts Range Project as part of preliminary due diligence, noting the following:

o  Multiple outcropping pegmatites and field observations which appear to validate previous surface sampling work for critical minerals¹;

o  There is an interpreted 12km corridor, which incorporates the five historical prospects, that is the primary exploration focus area;

o  The main objective of historical exploration was gemstones and vermiculite, which included only shallow (<60m) drilling¹ - no drilling has been undertaken to test for Niobium, Uranium or Heavy Rare Earths;

o  The NT's Department of Minerals and Mining has confirmed there are no native title issues, but CCZ must continuously comply with the Code of Conduct for Mineral Explorers; and

o  Readily accessible most of the year via sealed roads then well-maintained tracks, with strong supportive mining infrastructure across the region

·    A systematic and rigorous exploration strategy is set to be devised for the Harts Range Project that should generate priority targets to test-drill

o  Notably, this will include comprehensive surface sampling, geophysical surveys and collecting bulk samples for metallurgical testing

·    The Board will continue with previously announced plans to advance the NWQ Copper Project, possibly with a development partner, and sell the two remaining copper assets - BHA West Project (NSW) and Mkushi Project (Zambia) 

Ged Hall, Chairman, commented: "The Board is pleased to announce that our search for a transformational asset has been successfully fulfilled with the acquisition of the Harts Range Niobium and Uranium-Heavy Rare Earth Project. The compelling mix of coincident critical minerals identified at surface underscores the Harts Range Project's exploration potential, which could substantially enhance shareholder value as we progress with development initiatives. This optimism is further bolstered by favourable global dynamics, which have allowed other ASX explorers in the niobium and uranium sectors to achieve noteworthy successes."

HARTS RANGE NIOBIUM, URANIUM & HEAVY RARE EARTHS PROJECT

Across a 12km corridor, which includes five prospects - Cusp, Bobs, Bobs West, Thorium Anomaly and Niobium Anomaly - circa 28 assayed historical rock chips from outcropping pegmatites produced stellar grades up to grades up to 23.2% Nb, 12.7% U and 12.7% TREE including 2.85% Dy, 0.32% Tb, 14.9% Ta¹ (Figure 3).

At the macro level, geopolitics and the energy transition are long term demand drivers for Niobium, Uranium and Heavy Rare Earths which provides a compelling backdrop. As the tenure could host these critical minerals in economic quantities, the geology team will devise a comprehensive development campaign to fully assess the exploration potential.

FIGURE 3: HARTS RANGE PROJECT - PROSPECTS, EXPLORATION CORRIDOR

Source: Barfuss Corporation (Reference 1)

Comprising two granted tenements (110km²), circa 120km north-east from Alice Springs, the project area is accessible for most of the year via a sealed highway and well-maintained tracks (Figure 3). Moreover, with the likes of ASX-listed Independence Group (ASX: IGO) having a substantial footprint in the region that flanks the Harts Range Project north, south and west², the mining infrastructure and access to a talented labour pool is first rate (Figure 4).

FIGURE 4: HARTS RANGE PROJECT RELAVITE TO MINING INFRASTRUCTURE

Source: Barfuss Corporation (Reference 1)

FIVE PRIORITY PROSPECTS TO EXPLORE

An overview of the five priority prospects, highlighting key attributes, within the 12km exploration focus corridor follows:

Cusp Prospect

As highlighted in Figure 1 above, the Cusp Prospect produced numerous high grade historical rock chips with the best results returning grades up to 23.2% Nb, 12.7% U and 14.6% TREE, including 1.88% Dy and 5.89% Ta¹.

Notably, historical reports indicate that Niobium-Tantalum and Heavy Rare Earths were identified in pegmatites running circa east-west, up to 10m thick and over 70m long¹. During the recent field trip (October 2024), Castillo's geology team (including Non-executive Director Joel Logan) spent considerable time at the Cusp Project and were able to validate the historically reported pegmatite observation (Figures 5 & 6).

FIGURE 5: CASTILLO'S JOEL LOGAN AT CUSP PEGMATITE

Location: 507859E 7447753N Cusp Prospect

Source: Castillo geology team (October 2024 field trip)

As no systematic follow up exploration has been undertaken, this will be a primary focus area to garner a greater understanding of the underlying geology for Niobium, Uranium and Heavy Rare Earths mineralisation.

FIGURE 6: CUSP PROSPECT - PEGMATITE ROCK CHIP SAMPLING

Source: Barfuss Corporation (Reference 1)

Bobs and Bobs West Prospect

The Bobs and Bobs West Prospects are located circa 1.5-2km along the same strike and to the west of the Cusp Prospect, exhibiting similar underlying mineralisation traits and geological settings¹ (Figure 7).

FIGURE 6: BOBS PROSPECT - CASTILLO FIELD TRIP PICTURE

Location: Bobs Prospect 506161E 7447407N

Source: Castillo geology team (October 2024 field trip)

Like the Cusp Prospect, the Bobs and Bobs West Prospects delivered multiple high grade historical rock chips, with the best results returning grades up to 3.4% Nb, 16.3% TREE, including up to 1.54% Dy and 14.9% Ta¹ (Figure 8).

Source: Barfuss Corporation (Reference 1)

As shown in Figure 9, the mineralisation in the pegmatites trends east-west, is several metres thick and over 30m long¹.

FIGURE 9: BOBS / BOBS WEST PROSPECTS - PEGMATITE ROCK CHIP SAMPLING

Source: Barfuss Corpopration (Reference 1)

The Bobs West Prospect (200m west of Bobs Prospect) comprises an outcropping pegmatite along the same orientation, hosted exclusively within felsic gneiss of the Irindina Gneiss. Significantly, the pegmatite is semi-continuous for circa 300m, with similar geology to Bobs¹.

Further work needs to be undertaken on the Bobs and Bobs West Prospects to follow up on the encouraging historical results, especially for Niobium and Uranium.

Niobium Anomaly Prospect

At the Niobium Anomaly Prospect there is a differing geological variant with, high historical Niobium rock chip assay results up to 13,000ppm (1.3%) Nb, but low Uranium and Heavy Rare Earths readings¹ (Figure 10).

Location: Samples HR423, HR424, HR425 in corner east area.

Source: Barfuss Corporation (Reference 1)

Historically, the prospect was identified by elevated radiometric anomalies. The radiometric anomalies appear to correlate with intrusions of porphyritic granitoid and granitic gneiss¹, which are geologically consistent with the pegmatites at Cusp, Bobs & Bobs West Prospects, warranting further investigation.

Thorium Anomaly Prospect

The Thorium Anomaly Prospect was previously located via airborne radiometric surveys which are low order (10-20x background) compared to the spot anomalies at Cusp, Bobs & Bobs West Prospects (50-200x background)¹.

The anomalies appear to correlate with intrusions of porphyritic granitoid and granitic gneiss, which are presumed to be geological features comparable to the pegmatites at Cusp, Bobs & Bobs West Prospects¹; further investigative work is required.

FAVOURABLE UNDERLYING GEOLOGICAL STRUCTURAL SETTING

The Harts Range Niobium, Uranium-Heavy Rare Earth Project lies north-west of the Entia Dome (Figure 11) and is underlain by the Harts Range Group (Harts Range Meta-igneous Complex), which predominantly consists of feldspar-biotite-amphibole-garnet gneisses³.

The Harts Range region has undergone repeated and substantial crustal re-working between Proterozoic and Palaeozoic times. As a result, it is now believed to represent an ancient and strongly altered/metamorphosed version of a continental collision zone³.

Magnetotelluric data interpreted by a team consisting of Adelaide University and NTGS geologists (Selway et al, 2006)⁴ suggests the Entia Dome system is a deep-crustal feature that can be shown extending to the mantle.

FIGURE 11: HARTS RANGE PROJECT RELATIVE TO THE ENTIA DOME

Source: Scrimgeour 2013 (Reference 3)

PRELIMINARY DUE DILIGENCE FIELD TRIP

As part of preliminary due diligence, Castillo's geology team just completed an inaugural field trip (October 2024) to the Harts Range Niobium, Uranium and Heavy Rare Earths Project where they noted multiple outcropping pegmatites and field observations which appears to validate historical work.

NEXT STEPS

To fully unpack the potential of the Harts Range Niobium, Uranium and Heavy Rare Earth Project, the geology team intends to undertake a systematic and rigorous exploration strategy that will encompass the following steps in subsequent visits:

·    Full historic and spatial database compilation:

·    Reconnaissance programs;

·    Close spaced geophysical survey;

·    Detailed mapping and rock chip sampling across prospects;

·    Regional soil sampling campaigns as required;

·    Mineral characterisation studies and petrological analysis;

·    Trenching and bulk sample test work;

·    Target generation and prioritisation; and

·    Drill-testing.

DEAL TERMS

Under the terms of the Binding Agreement, Castillo has agreed to acquire 100% of the ordinary shares in Audax Holdings Pty Ltd (ACN: 678 403 864) ("Audax") from the shareholders of Audax (Audax Vendors) on the following terms:

Consideration

·    Exclusivity fee: the Company has paid a cash payment of $35,000 + GST to Audax for an exclusive right to undertake its due diligence on Audax and the Project until 20 November 2024 (Exclusivity Period);

·    Castillo issuing the Audax Vendors an aggregate of 145,500,000 fully paid ordinary shares (Consideration Shares) at a deemed issue price of $0.005 per Share; and

·    The Consideration Shares will be subject to a 6-month voluntary escrow period.

Note, the Consideration Shares will be issued using CCZ's existing ASX LR 7.1 15% capacity.

Conditions Precedent

Completion is conditional upon the satisfaction (or waiver) of the following conditions precedent on or before 5.00pm (WST), 20 November 2024:

·    Due diligence: completion of financial, legal and technical due diligence by the Castillo on Audax and Barfuss and the assets including a site visit to the Project, to the absolute satisfaction of the Castillo by the end of the Exclusivity Period;

·    Audax approvals: Audax obtaining any approvals it requires or considers in its sole discretion necessary, beneficial or incidental to the sale and purchase of the Audax Shares;

·    Third party approvals: the Parties obtaining all third-party approvals and consents necessary to lawfully complete the matters set out in the Agreement;

·    Material adverse change: there being no material adverse change between the date of this Agreement and Completion; 

·    Joint Venture Agreement: Audax entering into a joint venture agreement with Barfuss Corporation Pty Ltd (ACN 006 917 666) ("Barfuss Corporation") in relation to the Tenements on terms acceptable to Castillo (acting reasonably);

·    Consulting Agreement: Castillo entering into a consulting agreement with Kevin Das or his nominee for a minimum of 12 months consulting services at $5,000 per month to assist with Castillo's development of the Project, and otherwise on terms acceptable to Castillo, acting reasonably; and

·    Voluntary Escrow Agreement: the Audax Vendors each entering into a Voluntary Escrow Agreement in respect to the Consideration Shares.

Audax has an exclusive Option Agreement with Barfuss Corporation to enter into a Joint Venture Agreement to earn up to 85% of the Harts Range Niobium, Uranium and Heavy Rare Earths Project on the following terms set out below. On and from Completion under the Agreement between the CCZ and Audax, CCZ will assume the inherent responsibilities and obligations under the Option Agreement.

Conditions precedent

·    Completion in relation to either of the Tenements is subject to and conditional upon Audax, or its nominee, obtaining all necessary shareholder and regulatory approvals as may be required.

·    Completion in relation to EL32046 is subject to and conditional on the removal of two registered caveats and a registered mortgage.

Earn-in terms:

·    85% interest in the Harts Range Tenements (Tenements) including the rights to all minerals except for rubies, gemstones, vermiculite, garnet in host rock and garnet sands (including associated titanium and tungsten sands);

·    earn-in through the expenditure of AUD$375,000 on EL32513 over three years and a further $375,000 on EL32046 at the time in which it is included in the Joint Venture Agreement;

·    Barfuss Corporation is 15% free carried until any decision to mine (with loan carried into production);

·    upon any decision to mine, Barfuss Corporation has the right to elect to contribute;

·    the Audax or the Audax's nominee, has the first right of refusal to acquire Barfuss Corporation's 15% interest in the Tenements.

Upon signing and commencement of the Earn-in:

·    within five business days of execution of the Joint Venture Agreement CCZ will pay the amount of up to AUD$60,000 in relation to EL32513, and a further $20,000 at the time in which EL32046 is included in the Joint Venture Agreement to Barfuss Corporation, as reimbursement of the monies incurred on expenditure on one or both of the Tenements; and

·    upon the commencement of the joint venture in relation to EL32513, Barfuss Corporation shall provide mining and consulting services to the joint venture, as required, and issue invoices to CCZ for payment of such services in the amount of AUD$30,000.

Other payments and provisions to Barfuss Corporation;

·    Castillo shall reimburse the Barfuss Corporation for any administration costs incurred by the Barfuss Corporation to establish the joint venture up to an amount of AUD$20,000 upon the production of tax invoices by Barfuss Corporation;

·    upon reaching a JORC compliant resource Barfuss Corporation will be paid a AUD$0.25 million milestone payment if EL32046 is included in the Joint Venture Agreement and a further $0.25m if EL32046 and EL32513 are included in the Joint Venture Agreement. CCZ can elect to pay 50% of the milestone payment by way of shares in CCZ;

·    upon reaching a positive feasibility study Barfuss Corporation will be paid AUD$1.5 million milestone payment. Castillo can elect to pay 50% of the milestone payment by way of shares in Castillo;

·    upon commencement of production, Barfuss Corporation is entitled to a 2% net smelter royalty;

·    in the event that diamond drilling is required for all exploration and project development purposes, Barfuss Corporation will have the first option to provide those services at prevailing commercial rates;

·    (sunset clause) in the event that Castillo does not meet the expenditure of AUD$750,000 on the Tenements within 3 years of commencement of the joint venture, the Tenements (including any mining information) will be returned to Barfuss Corporation within 14 days at a cost of AUD$5,000;

·    on completion of Castillo meeting the expenditure of AUD$750,000 on the Tenements within 3 years, a final completion payment of AUD$0.5 million will be paid to Barfuss Corporation. Barfuss Corporation can elect to be paid 50% of the completion payment by way of shares in Castillo; and

·    Barfuss Corporation has the right to register a mining lease over areas that they have mineral rights, which include rubies, gemstones, vermiculite, garnet in host rock and garnet sands (including associated titanium and tungsten sands).

Corporate advisory fee

·    CCZ will issue 4,365,000 ordinary shares to Red Marlin Pty Ltd, and 4,365,000 ordinary shares to Taka Custodians Pty Ltd (or their nominees), parties which are not related to CCZ, for corporate advisory services in relation to the Harts Range acquisition.

For further information, please contact:  

References

1)     Barfuss, R. (Barfuss Corporation Pty Ltd) 19 November 2007: "A Brief report on Samarskite Mineralisation in the Harts Range Project" (unpublished report) and Barfuss, R. (Barfuss Corporation) 2014: The Harts Range Project Exploration Licence (EL 24552) - inclusive of the following references:

a.     Caughey, A.R. (Flagstaff Geo Consultants Pty Ltd.), November 2007: Annual Report for Exploration Licence EL24552 for the period ending 25^th August 2007 (for Barfuss Corporation Pty. Ltd.)

b.     Caughey, R. (Flagstaff Geo Consultants Pty Ltd.) 2002 to 2006: various unpublished reports for Barfuss Corporation Pty. Ltd.

c.     PNC Exploration (Australia): various open-file tenement annual, final and partial relinquishment reports,1994 to 1997; Report Numbers CR1994-0325, CR995-0298, CR1995-0525, CR1995-0697, CR-1996-0285, CR1996-0286, CR-1997-0611. *

d.     Rutter, H. (Flagstaff Geo Consultants Pty Ltd.) 2006. 'An analysis of airborne radiometric data from the Harts Range, N.T.' (unpublished report)

e.     Shaw, R.D., Senior, B.R., Offe, L.A., Stirzaker, J.F., Walton, D.G., Apps, H.E., Freeman, M.J.1:250,000 Geological Map Series Explanatory Notes Illogwa Creek SF53-15. Bureau of Mineral Resources Australia & Northern Territory Geological Survey,1985.

Note: * Open file company reports sourced from the Northern Territory Mineral Industry Reports Management System (IRMS). Available at: https://geoscience.nt.gov.au/gemis/ntgsjspui/handle/1/3

2)     IGO Exploration Activities in Northern Territory. 2024 Annual Report (p.6) IGO ASX Release - 29 August 2024. Available at: https://www.igo.com.au/site/investor-center/annual-reports

3)     Scrimgeour IR, 2013. Chapter 29: Irindina Province: in Ahmad M and Munson TJ (compilers). 'Geology and mineral resources of the Northern Territory'. Northern Territory Geological Survey, Special Publication5.

4)     Selway K, Heinson G and Hand M, 2006: Electrical evidence of continental accretion: Steeply dipping crustal-scale conductivity contrast. Geophysical Research Letters 33, L06305, doi:10.1029/2005GL025328.

About Castillo Copper

Castillo Copper Limited is an Australian-based, Australian-focussed copper exploration Company with a strategy to develop multi-commodity assets that demonstrate future potential as an economic mining operation.

Through the application of disciplined and structured exploration and analysis, Castillo Copper has identified assets deemed core to the Company's sustained growth and is actively progressing these interests up the value curve.

Current focus will be on advancing exploration activity at the Company's wholly owned NWQ Project, situated in the copper-belt district approximately 150km north of Mt Isa in north-west Queensland.

Other interests include the Broken Hill Project in western New South Wales and the Cangai Copper Mine in north-east New South Wales, as well as exploration targets in Zambia.

Castillo Copper is listed on the LSE and ASX under the ticker "CCZ".

Competent Person's Statement

I, Mark Biggs, confirm that I am the Competent Person for the Competent Person Report from which the information to be publicly released has been obtained and confirm that:

·      I have read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition) and the relevant sections of Chapter 5 and Guidance Note 31 from the ASX Listing Rules.

·      I am a Competent Person as defined by the JORC Code 2012 Edition, having 25 years of experience that is relevant to the REE and industrial mineral mineralisation types, quality and potential mining method(s) of the deposit(s) described in the Report.  In addition, I have 21 years of experience in the estimation, assessment and evaluation of Exploration Results and Mineral Resource Estimates, the activity for which I am accepting responsibility.

•     I am a Member of The Australasian Institute of Mining and Metallurgy (Member # 107188).

·      I have reviewed the Report or Excerpt from the Report to which this Consent Statement applies.

·      I am a consultant working for ROM Resources and have been engaged by Castillo Copper Limited to prepare the documentation for various prospects within the Harts Range Deposit on which the Report is based.

In addition:

·      I have disclosed to Castillo Copper Limited the full nature of the relationship between myself and the Company, including any issues that could be perceived by investors as a conflict of interest.  I am a director of ROM Resources, a company which is a shareholder of Castillo Copper Limited.  ROM Resources provides ad-hoc geological consultancy services to Castillo Copper Limited.

·      I verify that the Report is based on and fairly and accurately reflects in the form and context in which it appears, the information in my supporting documentation relating to exploration results and any Mineral Resource Estimates.

·    I consent to the release of the Report and this Consent Statement by the Directors of Castillo Copper Limited.