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.
The long-term demand outlook for copper appears to be positive, particularly with the global transition to green energy gaining traction.
Reports suggest there is likely to be persistent upward pressure on the copper price and a greater number of exploration programs to be launched to establish new supply chains.
Goldman Sachs predicts the copper market will face a 178,000 tonne deficit this year, compared to its previous forecast for a 169,000 tonne surplus.
The copper price plummeted 22.5% at the end of last year after reaching a record high of $US10,845 per tonne in March 2022, amid recession concerns and slower Chinese growth. However, in November the ubiquitous metal recorded its largest monthly advance since April 2021, soaring nearly 11% on the London Metal Exchange (LME).
Goldman Sachs says prices will likely exceed their record high this year, increasing its 12-month price target to $US11,000 a tonne from $US9,000 a tonne.
Goldman Sachs says prices will likely exceed their record high this year, increasing its 12-month price target to $US11,000 a tonne from $US9,000 a tonne
With this positive backdrop, Castillo Copper (ASX:CCZ) has been progressing plans to expedite the development of its copper assets.
The company has 3 projects across Australia – NWQ Copper, which has 10 ‘high-grade’ targets including the Big One deposit in the Mt Isa copper-belt district; Broken Hill – a large tenure footprint proximal to Broken Hill’s ‘world-class’ deposit; and Cangai Copper Mine – one of Australia’s highest grading historic copper mines.
In late March, Castillo appointed multi-disciplinary specialist consultant Entech Mining to progress development work at the Big One deposit with Castillo’s geology team set to progress Cangai.
Managing Director Dr Dennis Jensen tells Mining.com.au that this work is timely, especially with the aforementioned global demand-supply dynamics for copper increasingly looking favourable.
Additionally, he says in recent times interest in the Mt Isa copper belt has been ‘significant’, as Castillo’s footprint is proximal to ground owned by majors including Rio Tinto (ASX:RIO), Anglo American (LON:AAL), Teck (NYSE:TECK), and Glencore (LON:GLEN).
It has led the company to start considering various options for its assets.
“In Northwest Queensland, we’ve made plans to head up to look at some prospects to determine where we’re going in the future with these prospects and that includes the Big One. In addition to that, with Big One, we are conducting a pit shell study because we’ve already got a JORC resource there with about 21,000 tonnes of contained copper at 1%. The pit shell study will work out the economics of mining Big One.”
Exploring a viable path to market
At the Big One deposit, Entech will undertake a pit optimisation and mine design study. Contingent on the study’s findings, next steps potentially comprise detailing effective processing options with third parties and a viable path to market.
The Big One deposit is looking promising. It has an inferred JORC Mineral Resource Estimate (MRE) at 2.1 million tonnes @ 1.1% Cu for 21,886t copper metal.
In addition, the MD says concurrently, work will focus on capitalising on Big One’s exploration potential via drill-testing known targets north of the line of lode in order to extend known mineralisation.
For the Cangai Copper Mine, the board has tasked its geology team with updating and enhancing the confidence in the 2017 inferred JORC MRE (107,589t copper metal; 3.2Mt @ 3.35%). A key feature will be including drilling work post-2017, which includes 34 RC drillholes for circa 5,000m into the geological model. This will be followed by a pit shell study to solidify the understanding of the economics of the resource.
Jensen says: “To reiterate, the Cangai Copper Mine still delivers exploration potential as DHEM surveys in 2018-19 identified several untested bedrock conductors that are open at depth. They weren’t included in the JORC resource.
What’s happening now is that these are being modelled up into the JORC resource. In addition, the position of the drillholes is being corrected because the topography was not quite accurate. These corrections and the addition of extra drillhole data could mean a larger same-grade resource than that already identified within the parameters of the existing JORC resource. It is already a reasonable size resource – over 100,000 tonnes of contained copper at 3%.
Then with Broken Hill, we’ve got rare earths. I’ve been doing extensive research on rare earths and, so far, we’ve done a total of 13 drillholes which we’ve had assayed, and which have returned some really good grades.”
Underlying shallow rare earths system
Castillo Copper in February said it was pleased with the initial REE metallurgical test-work results from a 20m composite sample (FG_003RC) from the Fence Gossan prospect within Broken Hill. The sample, which comprised clays – subjected to froth flotation – delivered up to 2-3 times REE enrichment from the head grade at up to 70% recovery.
On a holistic basis, results from the drilling, surface sampling, and metallurgical testwork at Broken Hill collectively demonstrate the forward value creating potential of the BHA Project’s East Zone. The underlying REE system is shallow, extends over at least 4.5km-square and has delivered results up to 3,491ppm TREO and produced up to 38.9% MREO in diamond core.
As Chairman Ged Hall commented on 28 February: “By all accounts, this is an excellent report card ahead of exploratory work ramping up.”
“By all accounts, this is an excellent report card ahead of exploratory work ramping up”
Jensen also adds that the preliminary metallurgy test-work proves REE mineralisation readily separates from clay. He says, Castillo’s TREOs are higher than average for clays, however the wider market doesn’t understand the important difference between REE mineralisation in clays compared to that in hard rock; the uninitiated often miss the importance of such aspects.
“For example, the market gets excited with headline TREO reports with rare earths, but they fail to understand the difference between REE mineralisation in hard rock from REE mineralisation in clays. Hard rock REE mineralisation, although exhibiting quantifiably higher TREOs, comes with a raft of added complications and expenses that reduce its economic viability. Whereas clay hosted REE mineralisation, despite exhibiting lower TREOs, can often be more economically viable.
So, at face value, if you’re just publishing the TREOs, hard rock rare earths look more attractive. However, the hard rock is generally deeper, it’s harder to work with and you only get about 30% recovery; it’s all in the extraction. With hard rock you’ve got to use high concentration acids, under extreme heat (250 degrees or more) to leach the rare earths out.”
Whereas, with clay hosted rare earths the leaching process is easier, particularly rare earths found in ionic clays. Initial metallurgy indicates a 60% to 70% rare earth recovery from our site at Broken Hill, and because they’re located in shallow clays they’re easily extracted and there is no concentration process, we effectively cut a number of stages out of the processing.
The other benefit of rare earths found in clays is that whilst all rare earths come with radioactive elements, for example thorium and uranium, the fact that shallow clay hosted rare earths don’t need to go through a process of concentrating alleviates the radioactivity problem that arises with concentrating rare earths from hard rock. This avoids the need for the expensive and problematic disposal of radioactive waste.”
Showing proof of concept
Basically, if Castillo has 10 tonnes that needs to be concentrated by a factor of 10, it also means that the concentrate of the uranium-thorium will likely be 10 times higher as well. Whereas if the company does not concentrate it at all, Castillo will not endure such an issue.
To date, Castillo has only drilled 13 drillholes and has received robust results for a first pass with the recovery. However, it is now in the hands of the Australian Nuclear Science and Technology Organisation (ANSTO), who are conducting detailed metallurgy.
The company is also undertaking a further auger program to illustrate how widespread the rare earths are and over what distance.
“We’re going to do another auger program to determine the extent of the rare earths to see if it’s contiguous between Fence Gossan and Tors Tank. We will also be doing some surface geophysics to further determine where we should focus our next drilling program. The idea with the next drilling program is to drill from surface to 30 metres, not deep holes like we have traditionally done (up to 150 metres). This is deliberate because we’re looking at the clays, not the hard rocks.
“We’re going to do another auger program to determine the extent of the rare earths to see if it’s contiguous between Fence Gossan and Tors Tank”
The clay generally only extends 20 to 22 metres, so we’re going a little bit further just to make sure. The area to be drilled will be about two square kilometres to get an inferred JORC resource, with a view to proving up the economic viability of the resource.”
Jensen adds that ultimately, Castillo is seeking to show a proof of concept that it can mine the asset economically and profitably by conducting a pit shell study following the drilling campaign.
Piecing it together with Broken Hill
Among the company’s assets, Broken Hill appears to be the one that may help piece it all together for Castillo. As mentioned earlier, it is a large tenure footprint proximal to Broken Hill’s ‘world-class’ deposit, which is the largest accumulation of lead, zinc, and silver on Earth.
While exploring there for cobalt initially, Castillo uncovered magnetic rare earths intersections, which the MD says changed its focus given demand for such critical minerals.
“The simple fact is that we were looking for cobalt and also potentially, how much copper do we have in there. How much gold is there economically. Is the cobalt in particular, economically viable? No one else has looked for it, so there was no history associated.
When we were looking for cobalt, we had historical drill results that were modelled up and it appeared that there were 2 deeper, higher grade cobalt layers that weren’t included in the resource. Because there were very few holes that went deep enough, we thought we’d go chasing layers, but we were assaying for other elements at the same time. And the rare earths just came up.”
“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 the company”
The MD says, the more Castillo looks into Broken Hill, the more exciting it gets. And as a result, it’s helping the company start to piece together what exactly it has in its portfolio.
As the company continues to crunch the numbers, taking into account just the magnetic rare earths that are present and not the credits for copper, gold, and cobalt, Castillo is likely to have a commercially viable operation at Broken Hill down the road.
Jensen adds: “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 the company.”
Write to Adam Orlando at Mining.com.au
Images: Castillo Copper Ltd
