Castillo Copper Ltd (ASX:CCZ) has received encouraging assay results for legacy stockpiles which reinforce the upside from developing the Cangai Copper Mine in northern New South Wales.

Head grades from samples at the Smelter Creek stockpile and others along the line of lode at Cangai Copper Mine average 2.03% and 1.23% copper respectively.

Leveraging metallurgical test work, which demonstrated concentrate recoveries greater than 80% and grades up to 22%, there is strong evidence to process the stockpiles to generate early-stage cashflow.

Aiming for Noble Group offtake

The stockpile results have been shared with Singapore-based, Noble Group with which Castillo is aiming to finalise a binding offtake agreement for distribution of up to 200,000 tonnes of copper concentrate.

Castillo’s managing director Simon Paull said: “Reconciling the assay results for the legacy stockpiles with earlier metallurgical test work findings, clearly demonstrates the value-creating potential from closing the distribution agreement with Noble Group.

“More importantly, the potential ability to monetise the stockpile ore would generate early-stage cashflow.”

Exploration upside

As a core pillar to the company’s strategy to become a mid-tier copper producer, the board remains committed to developing and expanding the resource size at Cangai, which is one of the highest grading deposits in Australia with exploration upside.

Paull added: “Reflecting the board’s core commitment to Cangai, especially as one of the three key strategic pillars critical to transforming into a mid-tier copper group, the geology team is reviewing the best course of action to optimise the next phase of exploration.”

Straightforward process

In the event of securing regulatory approval from the NSW Resources Regulator (NSWRR), the ability to process then monetise Cangai’s stockpiles should be relatively straight forward since:

• The mine site is readily accessible and, critically, there are experienced labour pools in northern NSW;
• There are third-party facilities in the region that potentially are amenable to process the stockpile ore into copper concentrate for export; and
• Top-tier infrastructure, with sealed roads and rail network that lead directly to Newcastle port.

The value-creating opportunity is clearly the opportunity to generate early-stage cashflow that can be utilised to further develop Cangai’s potential and ultimately prove up a JORC-compliant resource.

Three core pillars

The three core pillars that form the basis for Castillo’s strategy are:

• Pillar I: Cangai Copper Mine, which is one of Australia’s highest grading historic copper mines with a JORC inferred resource of 3.2 million tonnes at 3.35% copper;
• Pillar II: The Mt Oxide project in the Mt Isa district, northwest Queensland, which delivers significant exploration upside through having a sizeable untested anomaly within its boundaries in a copper-rich region; and
• Pillar III: Several high-quality prospective assets in Zambia, which is the second-largest copper producer in Africa.

In addition, Castillo Copper is progressing a dual listing on the standard board of the London Stock Exchange.