This article is a sponsored feature from Mining.com.au partner Castillo Copper Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Junior exploration companies are arguably the most important future mine suppliers due to their focus on the discovery of new deposits.
Without them, supply will unlikely ever be able to meet the insatiable demand for important commodities, not least of which are the critical minerals and battery metals needed for decarbonisation and green technologies.
One characteristic that defines junior exploration companies is their chameleon-like ability to adapt and transform their strategy in line with their ever-changing and evolving environment.
Castillo Copper (ASX:CCZ) is a prime example of such a minnow that in 2022 received some unexpected results that ultimately led the Perth-based company to change and adapt its focus and strategy.
As Managing Director Dr Dennis Jensen explains: “Without question, the highlight event for 2022 has been the shallow rare earth element discovery within BHA Project’s East Zone.”
Game-changing discovery
The question you may have is, why?
In October, a cobalt-focused drilling campaign was launched at Castillo’s BHA Project’s East Zone in New South Wales. At the time, a key focus for the Fence Gossan, Reefs Tank, and Tors Tank prospects was to drill deep enough to intersect 2 lower potentially cobalt-rich zones that are interpreted to host higher grade mineralisation than has been modelled to date.
Several weeks later, Castillo announced that 4 drillholes for a total of 488m provided encouraging initial observations and interpretations with the early belief there was potential for cobalt and rare earth element (REE) mineralisation.
With the company’s focus then shifting from cobalt to also REE, by mid-November assays across the 3 prospects confirmed a significant shallow clay hosted REE discovery. Notably, the results returned up to 2,410ppm TREO, with ‘high-value’ magnet REO representing up to 29.9% of the grade.
On 23 November, Castillo announced assays for Reefs Tank and Fence Gossan were positive for TREO, confirming REEs are more widely apparent across the East Zone than initially envisaged.
The November assays also extended known mineralisation that in effect delineate a sizeable “REE exploration footprint” between the Fence Gossan, Tors Tank, and Reefs Tank triangle to channel future development work.
Jensen describes this confirmation of REE as a “game-changing event”.
Cobalt remains an important, complementary critical mineral to BHA Project’s East Zone following the REE discovery, and Castillo intends to improve the confidence and grade of the current inferred Mineral Resource Estimate (MRE).
However, the presence of REE means Castillo has evolved from a copper-focused mining company to one with a portfolio of critical minerals assets.
The CEO explains: “Sometimes these things are not planned. In my time at the helm, our resource geologist realised that there were thousands of holes that had previously been drilled and assayed. He conducted a study on those results, which is how the JORC copper and cobalt resources came about.
“It was found that at the 3 sites, there were significant rare earth elements from surface”
Cobalt assays were in the results, which helped, but rare earth elements were not assayed in any of the previous drilling. We re-assayed previous drill cores, and with Iron Blow it was found that there were significant amounts of rare earth elements. As a result, when we conducted our drilling campaign in Broken Hill, we were looking to extend our cobalt resource, so the drilling campaign was structured around that, but we decided to assay for rare earth elements.
It was found that at the 3 sites, there were significant rare earth elements from surface.”
Triangle of attention
The CEO says that from a mining and investment proposition the confirmation that REE mineralisation is extensive and shallow is an important one.
“From a mining and investment standpoint, the fact that the rare earth element mineralisation looks like it could extend for tens of square kilometres and is shallow is significant.
The potential large extensiveness of the discovery gives obvious economics of scale, and the fact that it is so shallow means that pretty much everything that is dug up is economic. There is essentially no strip ratio, it will almost all be ore.”
Adapting to the discovery of REE within BHA Project’s East Zone, Castillo has reorganised its strategy to have a ‘triangular’ focus on the 3 Fence Gossan, Reefs Tank, and Tors Tank prospects.
The company is now eagerly seeking to chart the next phase of exploration.
The sum of all the internal angles of a triangle is always 180 degrees no matter how it is constructed and the 3 altitudes of a triangle meet at a common point.
This is the approach Castillo is taking with the newfound strategy.
Its focus has almost taken a 180 degree turn towards critical minerals such as REE and the common point of each of the 3 prospects is Castillo’s BHA Project.
Jensen says Castillo is blessed with having such an exciting project in a well-known mining jurisdiction. The region has an abundance of infrastructure within close proximity to the project that Castillo could leverage off.
The CEO explains: “Broken Hill is a well-known and established mining town with a great deal of infrastructure available for mining. There are many businesses servicing the mining industry, and there is a well-established logistics supply chain in place.”
Castillo keen to keep exploring
In November last year, Castillo Copper’s Chairman Ged Hall said at the time that the company was “delighted” to confirm consistent shallow REE mineralisation across a wide part of the BHA Project’s East Zone.
“Moreover, the interpreted scale of this shallow REE discovery, within a mining friendly district, is an outstanding result which has the potential to create significant value for shareholders.”
“,,,the interpreted scale of this shallow REE discovery, within a mining friendly district, is an outstanding result”
Jensen says being at the right address in this mining district, having access to important infrastructure, and with a renewed focus at the BHA Project’s East Zone, it is imperative Castillo keeps exploring in 2023.
It is eagerly awaiting some results which will help determine its next steps.
On 20 December, the company completed an auger sampling campaign, which focused on a 6.5km-square area proximal to the Fence Gossan Prospect – within the REE exploration footprint. The objective of the auger sampling campaign has been to determine the full extent of REE mineralisation within the area sampled and identify new targets to test-drill. Samples have been taken at depths of 0.1-0.4m by hand auger.
The geology team dispatched all samples to the laboratory for follow up analyses, with results likely back early this quarter to enable a full interpretation of the REE mineralisation potential.
The CEO says a surface and hand auger/geochemistry campaign at Fence Gossan is being carried out, while a further campaign will be conducted this year for Tors Tank and Reefs Tank, with some infill in the middle of these three prospects.
“This will lead to a further drilling campaign being undertaken in the April/May timeframe.”
Jensen adds that once assays for the auger sampling campaign and final 3 RC drill results for Reefs Tank / diamond core for Tors Tank are returned, Castillo will determine the next phase of REE-focused exploration across the BHA Project’s East Zone.
Grade is king
Meanwhile, the best intercepts reported in December at the 3 triangle prospects include 20m @ 1,780ppm TREO (28.9% Magnet REO) from surface including 4m @ 2,410ppm TREO from 16m (FG_003RC); 11m @ 1,078 TREO (24.7% Magnet REO) from 8m (RT_001RC); and 7m @ 1,048ppm TREO (29.9% Magnet REO) from 12m (TT_002RC).
Then in late December, the receipt of drill assays for the Fence Gossan, Tors Tank, and partly Reefs Tank prospects confirmed that shallow REE mineralisation is more widely apparent across the BHA Project’s East Zone than initially envisaged.
“These grades are competitive with many other results from other exploration companies”
The best intercepts were 20m @ 1,780ppm TREO (28.9% magnet REO) from surface including 4m @ 2,410ppm TREO from 16m (FG_003RC); 11m @ 1,078 TREO (24.7% magnet REO) from 8m (RT_001RC); 7m @ 1,048ppm TREO (29.9% magnet REO) from 12m (TT_002RC); and 11m @ 862ppm TREO (29.0% Magnet REO) from 58m (FG_001RC).
Jensen adds: “These grades are competitive with many other results from other exploration companies. Some are quite a bit higher, and there are a number that have worse results. The significance is that much of our find is at surface in clay or highly weathered pegmatite with easy access from main roads.”
Future looks bright
As the CEO notes, 2023 could be another transformational year for Castillo.
He says from a value perspective, having exposure to copper and REEs is attractive for a plethora of reasons as it opens the door to plenty of exciting opportunities.
“Obviously both copper and various rare earth elements (as well as cobalt) are strategically important given the fact that much of the vehicular transport market is going electric.
We have defined a JORC copper and cobalt resource at Broken Hill. Additionally, we conducted a drilling campaign in Broken Hill that was achieved despite awful weather like floods in the region. Who would think with Broken Hill in October/November?
Assays of the sites proved to host significant rare earth elements, hosted deep in pegmatite and shallow in clay and very weathered pegmatite. Also, we signed an exclusive option with Hyperion/Metallea in terms of them taking over the Zambia assets. Unfortunately, due to the equity market in the UK being shot, that fell through, so we will now do some further exploration while looking for equity partners or a buyer.”
“I think there is a very positive future for junior explorers that have copper, cobalt, rare earth minerals – those associated with electric motors and renewable electricity generation”
Jensen adds, moving forward, the competitive landscape for a junior exploration company with exposure to REE, cobalt, and copper looks electric.
“I think there is a very positive future for junior explorers that have copper, cobalt, rare earth minerals – those associated with electric motors and renewable electricity generation.
Given that we have JORC resources for copper and cobalt, and no doubt will have a significant REE JORC resource in the near-midterm future, Castillo is well placed headed into the future.
We are currently in discussions with a processor who is interested in mining and processing the Big One copper deposit and has also expressed interest in our Cangai deposit in the longer term. We also have discussions ongoing with various major mining companies. Our intent is to develop one or more of our copper deposits into mines, and further develop on our recent REE find in Broken Hill with further exploration/drilling to get a better handle on extent and grade of REEs.”
While 2022 was a tumultuous one for many miners due to COVID, labour shortages, supply chain issues, and inclement weather to name a few, Castillo will continue to hit the ground running.
Jensen adds: “We have well established contractors that will continue to serve us well and do not foresee particular problems from that perspective. I believe the bigger issue will be a global economic one, what the appetite in equity markets will be heading into the future under the current global economic situation, and particularly what the truth is regarding China in many areas, probably chief of which is the true state of their economy.”
Write to Adam Orlando at Mining.com.au
Images: Castillo Copper Ltd
