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Castillo Copper prepares Broken Hill assets for IPO with CPS Capital appointment

Published: 10:56 05 Aug 2021 AEST

Castillo Copper Ltd - Castillo Copper prepares Broken Hill assets for IPO with CPS Capital appointment
Castillo is a step closer to spinning out a multi-element exploration project in New South Wales.

Castillo Copper Ltd (LSE:CCZ, FRA:7OR, ASX:CCZ) is primed to spin out its portfolio of Broken Hill assets in an initial public offering (IPO), appointing stockbroker CPS Capital Group Pty Ltd to lead the listing.

The boutique corporate financing arm will help Castillo restructure and list its wholly-owned Broken Hill Alliance (BHA) Project, which comprises a large footprint proximal to Broken Hill’s world-class zinc-lead-silver deposit.

A new entity will be formed to house the BHA Project, with Castillo slated to retain a significant interest in the ASX debutant post-IPO.

For CCZ, spinning out the BHA Project is viewed as a value-creating event, concurrently enabling the board to focus resources on developing its priority copper projects in Queensland and Zambia.

“Win-win outcome”

Castillo Copper managing director Simon Paull said: “This is an excellent win-win outcome that enables CCZ to benefit materially from the development of the BHA Project through retaining a significant minority interest.

“Furthermore, it will enable the Board to channel more time and resources into developing the Queensland and primary Zambia Projects.

“Pleasingly, our strategic intent to evolve into a mid-tier copper group remains on track.”

The spinout

Castillo intends to list the new entity on the ASX to divest the NSW project and have the new entity take charge of its Broken Hill Assets.

Subject to final approvals to progress the IPO, the new entity hopes to raise between $4.5 million and $7 million.

The capital raise will include a preferential subscription allocation to CCZ shareholders, while the cash injection will fund a comprehensive exploration campaign to develop the BHA project.

After the IPO finalises, CCZ will retain a significant interest in the exploration entity.

The new entity will be led by Managing Director Dr Dennis Jensen, a former Federal Member of Parliament and CSIRO scientist who has significant experience consulting in the mining industry.

CCZ has retained Steinepreis Paganin as its legal advisor. It will now set out to secure the necessary regulatory approvals and prepare the new entity's IPO prospectus.

BHA’s prospectivity

Castillo’s Broken Hill Alliance Project is a multi-element exploration play in New South Wales.

Within the West Zone, the project is highly prospective for Broken Hill-type silver-zinc-lead mineralisation, while East Zone plays host to iron-oxide-copper-gold (IOCG) mineralisation.

Notably, the project contains numerous, high-priority drillable targets — setting up a substantial pipeline of exploratory work for the ASX debutant.

Much of BHA’s tenure is under-explored, underscoring the potential to implement a broad exploration campaign.­­

Historical insights

Interestingly, previous exploration, using conventional techniques, missed the potential mineralised systems due to a 5-metre by 40-metre covering of surficial sand and clay.

CCZ’s geology team undertook a fresh review of historical data, which identified further mineralisation opportunities within the BHA Project.

Within the East Zone, although further validation is necessary, there are robust surface results for cobalt-copper-gold, including up to 9,500 parts per million cobalt, 1.1% copper and 3.46 parts per million silver.

Meanwhile, the West Zone contains the same geological formation that hosts Cobalt Blue Holdings Ltd (ASX:COB, OTC:CBBHF)’s Thackaringa cobalt-pyrite resource.

This has been verified through government mapping to be included within the BHA Project and confirmed by rock-chips up to 1,440 parts per million cobalt.

A large amount of data indicates the potential for incremental Broken Hill-type mineralisation throughout the region; however, it is believed to occur concurrently with IOCG mineralisation.

Overall, the IOCG and cobalt-copper potential present within the East Zone, coupled with the cobaltian pyrite and copper-cobalt and Broken Hill-type) prospectivity in the West Zone, delivers a target-rich project with significant exploration potential for gold-silver-copper-zinc-lead mineralisation.

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