Climbing zinc price shines spotlight on CCZ’s Broken Hill Project

By Zoe Gross. Published at Aug 30, 2017, in Mining

ASX explorer, Castillo Copper Limited (ASX:CCZ), has today revealed that its Broken Hill Project in NSW holds significant high-grade zinc mineralisation.

This renamed Broken Hill Project remains CCZ’s second priority focus area, after its Cangai Copper Zinc and Cobalt Mine Project.

With zinc now at five-year highs, CCZ’s ability to generate a zinc resource seems especially timely.

A preliminary report by geology consultant, ROM Resources, has highlighted that JORC modelling for the project is focused on the southern part of CCZ’s tenure, exhibiting significant high-grade zinc mineralisation.

The area highlighted includes tenure recently acquired from Total Minerals, which could potentially provide significant resource size upside as contiguous mineralisation is apparent between the two sub-tenements. This is shown in the map below:

Castillo broken hill

Importantly, the project area is situated in close proximity to third-party concentrate processors, as well as excellent transport infrastructure through to the Adelaide port. This will allow for production to be fast-tracked.

Although, it should be noted that this is still an early stage play and investors should seek professional financial advice for further information before making an investment decision.

Initial desktop work already published has detailed maximum anomalous zones in the tenure neighbourhood at 12% copper, 17.7% zinc and 0.12% cobalt, highlighting the enhanced exploration upside for Broken Hill.

A promising start at Broken Hill

With the completion of its Total Minerals acquisition, CCZ’s Broken Hill Project now comprises two highly prospective project areas. In the southern sector of each sub-tenement is an area (marked in the map above) has significant zinc mineralisation and focus area for JORC modelling.

This is certainly an encouraging start for CCZ. However, further work needs to be completed to round out the JORC modelling process. Nonetheless, ROM Resources is confident that a primary zinc Inferred Resource could be proven up fairly soon.

As touched on earlier, desktop review was undertaken in July this year, highlighting numerous anomalous concentrations in the tenure neighbourhood, with near surface mineralisation up to a maximum 17.7% zinc, 12% copper, 8.2% lead and 0.12% cobalt.

Furthermore, there are circa 1,400 completed drill-holes completed within and around the Broken Hill Project, with maximum results recorded at 1.7% copper, 27.1% lead and 6.7% zinc.

Minimal historic work has been done on cobalt, which suggests that legacy records are at best outliers – these will be re-assayed in due course.

CCZ’s competitive edge

One of CCZ’s most critical comparative advantages over its peers is its ability to generate two JORC compliant Inferred Resources relatively quickly from legacy data for both its Cangai/Jackaderry South and Broken Hill Projects.

This presents a considerable cost saving, and makes clear CCZ’s ability to jump-start competitors with similar agendas.

What also stands out here is CCZ’s highly focused business plan. From the outset, management has been sharply focused on developing a mineralised footprint across NSW and QLD – ergo the accelerated asset acquisitions.

Importantly, the business plan has been focused on generating JORC compliant resources, with adequate ore to entice third-party processors within range of the tenures to become strategic partners.

CCZ has opted for the outsourced model to avoid the time-consuming and costly process of producing expensive feasibility studies and materially large funding requirements to build a processing plant onsite.

The company’s inquires have revealed significant excess processing capacity across Australia as a result of the long mining down-cycle, and which is only too willing to process third-party ore.

This is a clear point of difference for this ASX explorer – CCZ has a demonstrable action plan to fast-track end product to market (via selling on the spot or forward markets utilising the London Metal Exchange) and commence cash flow generation.

A key feature in this part of the place is the tenure’s close proximity to excellent transportation infrastructure and pathway to key Asian markets.

Impeccable timing for zinc

While the cobalt price has surged more than 150% over the past 18 months, owing to supply constraints and accelerating demand for lithium-ion batteries, other key base metals – copper and zinc – have commenced an upcycle.

Copper vs zinc price

A major driver has been a lack of investment in new global supply chains over the past few years, due to the downturn in base metals.

However, with demand starting to lift, particularly in China, the underlying sentiment is that copper-zinc supply deficits are potentially on the horizon, and this has seen prices trading at 5-year highs.

This comes as excellent timing for CCZ, whose chief focus is on base metals. The ability to deliver JORC compliant Inferred Resources for copper and zinc – and with easy paths to export markets as the cycle turns upwards – is highly fortuitous for this emerging explorer.

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