Possibly the Best Copper Stock on the ASX : Castillo Copper (ASX:CCZ)

Possibly the Best Copper Stock on the ASX : Castillo Copper (ASX:CCZ)

I have been following Castillo Copper Limited (ASX: CCZ) for the last 12 months because I felt that it is possibly one of the Best Copper Stock on the ASX.  A small-cap stock but one I feel has a potential to have some upside.  Over that time, I have traded the stock and was a shareholder for a good 12 months.   This story with time and effort could be a dark horse in this sector.

Castillo Copper Limited (ASX: CCZ) is an ASX-listed base metal explorer that’s flagship project is the historic Cangai Copper Mine near Grafton in northeast NSW. The project comprises a volcanogenic massive sulphide ore deposit, with one of Australia’s highest grade JORC compliant Inferred Resources for copper: 3.2Mt @ 3.35{e84228ce8c9f7001611629be1db85467cf541581cf1fd5424de0612b3249e3f5} (6 September 2017).

In terms of contained metal, the Inferred Resource is 107,600t Cu, 11,900t Zn, 2.1Moz Ag and 82,900 Moz Au. A notable positive is the presence of supergene ore with up to 35{e84228ce8c9f7001611629be1db85467cf541581cf1fd5424de0612b3249e3f5} copper and 10{e84228ce8c9f7001611629be1db85467cf541581cf1fd5424de0612b3249e3f5} zinc which is ideal feedstock for direct shipping ore. Incrementally, the project holds five historic stockpiles of high-grade ore located near Cangai Copper Mine.

 

Corporate Information

According to the September presentation, it shows the following,

  • Total Shares Issued: 580.1M
  • Options: 84.5M
  • Market Cap: AUD$24.9M
  • Cash At Bank: AUD$1.7M

 

The company have four projects in Australia and one in Chile,

  • Jackaderry Project (100%, New South Wales): 3 prospects including the Cangai Copper Mine;
  • Broken Hill Project (100%, New South Wales): 2 prospects;
  • Mt Oxide Project (100%, Queensland): 4 prospects;
  • Marlborough Project (under application, Queensland): 3 prospects; and
  • Chilean Projects (100%).

My main interest was really the Cangai Copper Mine.  I think the others are too greenfields. Not saying that they are not good, I just think that the Cangai is more advanced to bring a story to the market.

 

Project Location

The Cangai project is in northern NSW.  The location is perfect as it has the good infrastructure you would need to make the project work if it ever became a realistic proposition.  If you have read any of my postings, you would know that my preference with projects is one with the least amount of things to do. Things that does not realte to drilling for results.

 

 

Historical Facts

The mine operated from 1904-17 and was re-evaluated by Western Mining (1982-84) and CRA Exploration (1990-92) but not progressed due to prevailing tough economic conditions at both times. However, with a JORC Inferred Resource of 3.2Mt @ 3.35{e84228ce8c9f7001611629be1db85467cf541581cf1fd5424de0612b3249e3f5} Cu confirmed by CCZ’s geology team, the next step is to focus on proving this up and increasing the resource size across the southern part of the project area. Notably, within 5km of the Cangai Mine is the smaller historic Smelter Creek Copper Mine and several highly mineralised satellite deposits.

A key feature with the Cangai Mine was discovering supergene ore – with up to 35 percent Cu and 10 percent Zn – which is a relatively rare geological occurrence. A key feature of supergene ore is that it potentially can be directly shipped to customers, if the grade is high enough, which implies high operating margins as costly processing costs are avoided.

 

Why the Interest?

First of all,  I don’t think that it is one of those that fall into the “Don’t drill a perfectly good project”.

This project is interesting to me because it has not really been worked at for decades.  It is not one of those projects that have been reprocessed from the 80s or 90s.  It was played with but there was nothing serious done to it.  As the grandchild of a gold miner in the 1940s and 1950s, I appreciate how primitive mining was back then and there would pretty much be not much mine planning.  It is this lack of precision that gives me the optimism for the project.

The miners would have gone for the higher grade material and left the other “lower grades”.  When you look at the size of the old mine and what the management have found or reconfirmed with recent drilling, one must have high hopes for success.

The two diagrams above highlights the potential of the area.  One could be forgiven to think that it may be mineralised enough for a nice open pit approach. However, I will say that a schematic diagram can be just a little bit misleading…….  🙂  However, the intercepts are so encouraging.  The good part as I may have already mentioned is the unknown. The unknown factor of how big this mine could be if management work this properly (Figure 3 and Figure 4).

The nature of the mineralisation has allowed management to look at the wider area for other forms of mineralisation.  A recent announcement indicates that there may be the possibility of parallel lodes from some indicative surface sampling (Figure 5).  I will point out that there have been many surface sampling that has lead many a company into a black hole of nothing. However, it is a good sign as I am a firm believer of where there is smoke there must be fire … 🙂

 

 

The Stockpile

The company has several stockpiles of copper ore within the area (Figure 6).  The company has made some metallurgical work showing a recovery of copper concentrate greater than 80 percent, grading up to 22 percent.  If they can make this work, it will be a great way to fund further exploration.  This is a simple business, dig the stockpile, concentrate the ore and sell.

 

My Concerns

This company have been promising the market on positive activity on the project for a long time.  The reason why I existed from the stock was that I just could not understand why it was taking so long to get things done.  As the share price started to go backwards, I decided to take my profit and wait.  With the share price hanging around the 2c area, I lost interest as I basically lost confidence on the whole story.

However, I never forgot about the story and when I started to see the rising share price, I was hoping this meant that things were going to happen.  Watching from the sidelines, I am slowly digesting the processes. A capital raising will happen soon.  It will be interesting to see if the rising share price is all about this requirement to raise funds.  If it is, then I will probably sit on the sideline for a bit longer :-).

 

Why Am I so interested in The Base Metal Story?

I have been watching the commodity price for the last 12 months and there seems to be a trend appearing.  There is something very interesting in the charts for Copper, Nickel, Zinc. Lead and Aluminium.  They are all at or near their 50 percent retracement value.  I am not saying that I am an expert but I just notice trends.  And currently, copper, nickel and to a lesser extent zinc are all showing signs of a bullish uptrend.  Well, it looks like it went for a run and then took a rest.  Now it may go for another run 🙂

When you look at the charts below, you will notice that they are all pretty much the same.  You can interpret it anyway you like, but I think the foundation is set for them to start going to higher pricing.  This is in line with my last post where I mentioned that there is a rising nickel price.

 

Copper Pricing Mystic

Copper pricing has always been the barometer of how the world economy is tracking.  It is called Dr Copper for that region.  Copper is an inexpensive and an abundant metal with myriad useful properties.  It resists corrosion and is a very effective conductor of both electricity and heat.

If the copper price is going up, it means the world is doing well, meaning we are buying plenty of copper to do this and that.  I think we are now growing as a world economy after a period of downturn and this is a good indicator of this growth.  Similarly when the world economy takes a dive, so doe the price of copper.

Over the past century, just “industrial” demand alone for refined copper has increased from 500,000 metric tons to over 19 million metric tons. As our increasingly smaller world continues to experience population growth along with the progressive expansion, the demand for copper will exponentially increase. — oilprice.com

 

In Conclusion

I am normally a small-cap investor and being an exploration geologist, I love the discovery story.  This is why I feel CCZ has some potential. My reservation is the fact that I can’t understand what is happening with the timeline of activities.  The other concern is the capital raising coming up, in regards to an entry price for the stock.  Other than that, I like the story.

 

NOTE: I am not a shareholder and I am not suggesting any advice to buy the stock or sell the stock 🙂  This is just me sharing my thoughts.

 

Source:

The information in regards to the company and the project has all been obtained from the announcements and presentations that are posted on the website of Castillo Copper LImited.

The project location plane was obtained from the article written by Proactive Investors on Castillo Copper.

The charts were taken from CommSec.

Also Check for:-  4 Best Nickel Stocks – Awaiting a Happy Ending on the ASX

7 Comments
  1. Disclaimer:The information contained herein is the writer’s personal opinion and is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints.Accordingly, no warranty whatsoever is given, and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before committing to purchase or invest in the investment product(s) mentioned herein.If you choose not to do so, you should consider whether the investment product(s) mentioned herein are suitable for you. The writer will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials appended herein. The information and/or materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
  2. Thanks for an interesting read. I hold and am hopeful.

    1. Thanks Wayne. Please feel free to put your email on my subscribe list. I will update weekly. Cheers

  3. This mine is going to be an environmental disaster – it is in close proximity to one of the most pristine river systems in NSW – The Mann River is the home of the endangered Clarence River Eastern Cod which has been bought back from extinction by well known Fisheries scientist Dr Stuart Rowland – the river is the longest whitewater river in Australia & wants to stay that way – we don’t your greed to change
    I have sent letters to the local Clarence Valley Council & the Minister of Land & Environment
    go somewhere else for your short term gain & longterm destruction
    Dr D Frogan

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