Potential Divestment of Broken Hill Asset

19 January 2021

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

Potential Divestment of Broken Hill Asset

Divestment strategies being considered for the prime Broken Hill Asset, highly prospective for IOCG and BHT mineralisation

Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily focused on copper across Australia and Zambia, is pleased to announce that, following a strategic review of its non-copper focused projects, the Board has concluded that it will consider divestment opportunities for its prime Broken Hill Alliance ("BHA") Project in New South Wales, Australia.

The BHA Project is highly prospective for Broken Hill Type (BHT - silver-zinc-lead) in the West Zone and Iron Oxide Copper Gold (IOCG) mineralisation in the East Zone. The divestment would enable the Company to focus more resources on its core Mt Oxide Project in Queensland's copper-belt.

Summary:

·    Following a strategic review, factoring into account the excellent drill results from Big One Deposit, the Board believes it is an opportune time to capitalise on the prevailing base and precious metal upcycle to fast-track creating additional shareholder value

·    Castillo's BHA Project comprises a large footprint proximal to the world-class Broken Hill silver-zinc-lead deposit    

·   Notably, sophisticated work by the Geological Survey of NSW (GSNSW), which generated advanced predictive geological models for major mineral systems, highlighted:

o  BHA's tenure is highly prospective for Broken Hill Type (BHT - silver-zinc-lead) in the West Zone and Iron Oxide Copper Gold (IOCG) mineralisation in the East Zone

·    Consequently, this has generated numerous high priority drillable targets, which delivers a significant pipeline of exploratory work ahead

·    More significantly, much of the tenure has been under-explored over the past two decades, which underscores the upside potential from rolling out a comprehensive exploration campaign

·    With significant resurgence of interest in groups with footprints around Broken Hill, notably ASX listed Cobalt Blue (ASX: COB), Castillo is considering divestment opportunities including a possible spin-off of its sizeable Broken Hill Asset into a new vehicle which could be listed in either London or Australia

·    The Board is currently liaising with its UK corporate advisor, SI Capital, on the optimal way to move this proposed corporate action forward in a timely manner

Simon Paull, Managing Director of Castillo Copper, commented: "The resurgence of interest in the Broken Hill region is timely as it provides an excellent opportunity for Castillo to optimise the BHA Project and seek to create value for shareholders. Our commanding ground position at Broken Hill is under-explored yet highly prospective for BHT and IOCG mineralisation, with multiple drill-test targets already identified. Castillo is fortunate to have multiple high-quality assets across our portfolio and, following outstanding recent assay results at Big One Deposit, this divestment would enable the Board to focus resources on the core Mt Oxide Project."

Ged Hall, London-based Director of Castillo Copper, remarked: "The BHA Project is an excellent asset as it comprises a substantial prospective footprint surrounding the world-famous Broken Hill silver-zinc-lead mine. The Board has considered the most effective way to deliver value for shareholders and we are confident that our intent to spin this asset out into a new vehicle will be well received and supported by UK investors."

BHA PROJECT: PRIME LOCATION IN BROKEN HILL   

Proximal to world-class mine

The BHA Project comprises a sizeable, under explored footprint that is proximal to the world-class Broken Hill silver-zinc-lead deposit. The current base and precious metal upcycle has driven a resurgence of interest in the region, notably Cobalt Blue (ASX: COB) which has ground to the south of the West Zone.

As announced on 30 September 2020, advanced predictive geological models developed by GSNSW highlight the BHA Project is prospective for BHT mineralisation in the West Zone and IOCG in the East Zone. Moreover, the model has identified a plethora of test-drill targets which provides a strong pipeline of exploratory work moving forward and significant upside potential. 

Next steps

Formalising a workable plan with SI Capital on structuring an optimal, value-creating corporate action.  

In addition to this release, a PDF version of this report with supplementary information can be found on the Company's website: https://www.castillocopper.com/asx-announcements/ 

For further information, please contact:

About Castillo Copper

Castillo Copper Limited is an Australian-based explorer primarily focused on copper across Australia and Zambia. The Company is embarking on a strategic transformation to morph into a mid-tier copper group underpinned by its core projects:

·    The Mt Oxide project 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

·    Cangai Copper Mine in northern New South Wales, which is one of Australia's highest grading historic copper mines

The Company is listed on the LSE and ASX under the ticker "CCZ".

Competent Person Statement

The information in this report that relates to Exploration Results for the "Big One Deposit" relates to Exploration Results is based on information compiled or reviewed by Mr Mark Biggs, a consultant to Castillo Copper Limited. Mr Biggs is a member of the Australian Institute of Mining and Metallurgy (member #107188) and has sufficient experience of relevance to the styles of mineralisation and types of deposits under consideration, and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, and Mineral Resources. Mr Biggs holds an AusIMM Online Course Certificate in 2012 JORC Code Reporting. Mr Biggs also consents to the inclusion in this report of the matters based on information in the form and context in which it appears.