Castillo Copper : BHA Assays Display Cobalt Potential/ Lithium Update

only	ASX Release
		CASTILLO COPPER
		LIMITED
use	14 January 2022
	CASTILLO COPPER
		LIMITED
		ACN 137 606 476
		45 Ventnor Avenue,
		West Perth,
		Western Australia 6005
		Tel: [phone]
		Contact:
		Simon Paull
		Managing Director
		E-mail:
		[e-mail]
		For the latest news:
personalwww.castillocopper.com
For	Directors / Officers:
Rob Scott

Simon Paull

Gerrard Hall

Geoff Reed

ASX/ LSE Symbol:

CCZ

Battery metal drill-hole assays unlock BHA East

Zone potential / lithium update

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Castillo Copper's Managing Director Simon Paull commented: "A recent geological review of the Broken Hill Alliance Project's East Zone uncovered 108 drill-holesyielding cobalt values >200ppm, with the highest being 9,500ppm. As a result, with the cobalt price now over US$70,000/t on the London Metal Exchange, work on modelling a JORC compliant mineral resource is now underway. Further, surface assays have enabled numerous zones anomalous for cobalt-copperand separately zinc to be delineated that are proximal to the Himalaya Formation out-cropand sub-crop.This is a timely discovery that significantly enhances the Project's exploration potential for battery metals, especially as it coincides with the NSW government launching its critical minerals and high-techmetals strategy. As such, the Board has decided to no longer pursue the acquisition of the Litchfield and Picasso lithium assets."

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FIGURE 1: BROKEN HILL ALLIANCE (BHA) PROJECT FOOTPRINT

Source: CCZ geology team

1. A review on BHA's East Zone, acquired from Wyloo Metals1 in 2020, discovered numerous areas anomalous for cobalt-copper and zinc mineralisation delineated from surface / down-hole assays:
2. • Notably, with assayed values ranging from >200ppm Co up to 9,500ppm Co across 108 drill-holes2 (proximal to the Himalaya Formation out-crop /sub-crop) work on modelling a JORC 2012 compliant mineral resource is now underway
   • The region is well-known for its cobalt potential, as Cobalt Blue (ASX: COB) has JORC 2012 compliant ore reserves of 118Mt @ 687ppm Co for 81,100t contained metal3

1. The Board is highly encouraged by the NSW government's new strategy, which targets building a viable downstream industry for processing critical minerals (including cobalt-copper-REE's) and establishing a global supply hub in the state's central west region4

1. With the BHA East Zone's exploration potential materially enhanced, the Board has dropped plans to acquire additional lithium assets5

1. Further, the Board will prioritise modelling a JORC 2012 compliant resource at the Big One Deposit and further developing the graphite- base metal discovery at the Arya Prospect

Castillo Copper Limited's ("CCZ") Board has received a fresh geological report on the BHA Project's East Zone which highlights significant exploration potential for cobalt-copper-zinc and possibly lithium mineralisation. A key insight was multiple drill-hole assays which delivered significant cobalt readings (refer to table A3-2). Consequently, with a risk-rewardtrade-off to the upside from a 100%-owned asset, the Board has decided to focus on developing the BHA Project and dropped plans to pursue the acquisition of the Litchfield and Picasso lithium assets.

BHA PROJECT'S EAST ZONE - BATTERY METAL POTENTIAL

onlyThe review drilled down into all available information to determine the battery mineral potential of the BHA Project's East Zone (acquired in late 2020 from Wyloo Metals1). Pleasingly, analysing assayed surface and down-hole samples enabled numerous zones anomalous for cobalt-copper-zinc mineralisation to be delineated that are proximal with the Himalaya Formation outcrop or sub-crop under shallow (<10m) cover. Further, several of the anomalous zones are proximal to shear zones that trend NE/NNE across the tenure.

More significantly, there are 108 drill-holes with at least one 1m or 2m assayed sample values >200ppm Co, with the highest up to 9,500ppm Co2 (Figure 2 and tables in Appendix A). As there are sufficient data points, the geology team are now working on a suitable geological model and estimating a mineral resource to the standard of the JORC 2012 Code.

useFIGURE 2: BHA EAST ZONE - ANOMALOUS COBALT AND ZINC AREAS personalFor

Source: CCZ geology team

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Within the East Zone, the primary geological target is the Thackaringa style of cobalt mineralisation - this is constrained in or at the margin of the Himalayan Formation. For greater context, Figure 3 shows previous drilling and surface sampling campaigns - there are 12 known prospects within the tenure.

Across the region, there are known cobalt deposits, with ASX: COB's JORC 2012 compliant ore reserve (118Mt @ 687ppm Co for 81,100t contained metal3) arguably one of the largest.

FIGURE 3: BHA EAST ZONE - HIMALAYA FORMATION VS DRILL-HOLES & SAMPLING

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Source: CCZ geology team

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Analysing data for copper in surface rock-chips demonstrates there are several prime anomalous zones (Figure 4), which like cobalt, appear to follow major shear boundaries and trends.

FIGURE 4: BHA EAST ZONE - COPPER IN SURFACE ROCK CHIPS

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Source: CCZ geology team

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Lithium potential

Within the tenure are numerous zones of pegmatites which have been confirmed through field observations. Furthermore, there is scattered Sundowner Group outcropping which is known to host pegmatites. However, while the pegmatites are prospective for lithium mineralisation, comprehensive sampling work is required to delineate any anomalous areas.

To jump start the process, the Board is considering accessing samples from previous drilling - currently retained in the Geological Survey of NSW's core libraries - and re-assaying for lithium and rare earth

onlyelements.

NSW GOVERNMENT CRITICAL MINERALS STRATEGY

The Board strongly supports the NSW governments recently launched Critical Minerals and High-TechMetals Strategy4. The core objective is to evolve NSW into a major global supplier and processor of critical minerals and high-tech metals. A key feature is developing significant processing capacity on shore, which is a significant move away from purely exporting raw materials, enabling a high value-adding manufacturing industry to rapidly evolve.

The government intends to take a "coordinated approach across the critical minerals supply chain, supporting the industry from early-stage exploration, through to end uses in manufacturing and recycling."

useThis is a major policy shift and could result in a critical minerals hub being established in the state's central west, which would have significant multiplier benefits for numerous stakeholders (including the BHA Project) along the supply chain. Most significantly, favourable government policy should enhance the central west of NSW as an attractive place for minerals investment.

OPTION AGREEMENT

The Board and companies, which hold the Litchfield and Picasso Lithium Projects, have mutually agreed to unwind the Option Agreement. As part of the break agreement terms, the $50,000 deposit has been returned to CCZ5.

Next steps

In Queensland, the priority is as follows:

1. Assay results for the Arya Prospect; and

1. Progress geological modelling and then a JORC 2012 compliant mineral resource for the Big One Deposit.

In New South Wales, the priority is as follows:

personal	o Commence geological modelling of a JORC 2012 compliant mineral resource for the BHA Project's
	priority targets for cobalt-copper-zinc mineralisation.
		East Zone; and
	o	Formulate surface geophysical surveys then develop inaugural RC drilling campaigns to test

In Zambia, the priority is to complete the Induced Polarisation survey for the Mkushi Project and deliver Forthe geophysicist consultant's review.

For and on behalf of Castillo Copper

Simon Paull

Managing Director

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