Castillo Copper Limited

CCZ Details
 
Secured Funding to Expedite Drilling Campaign at The Mt Oxide Pillar: Castillo Copper Limited (ASX: CCZ) is a base metal explorer with a market capitalisation of $21.61 million. The company is primarily involved in the mineral exploration and examination of new resources in eastern Australia and Zambia. The company recently completed a placement and raised $2.1 million to expedite the drilling campaign at the Mt Oxide pillar in Queensland’s copper-belt. Under the placement, the company will issue around 95.45 million fully paid ordinary shares, priced at $0.022 per share and one free attaching unlisted option exercisable at $0.05 expiring three years from the date of issue. Currently, there are several mineralisation styles within the Mt Oxide pillar, which boosts the overall exploration upside. The company recently interpreted 130m thick massive sulphide drilling target at Arya prospect within Mt Oxide pillar. The company is currently focused on eight prospects, with varying styles of mineralisation including four IOCG targets. 
 

The Mt Oxide Pillar Prospects (Source: Company Reports)

Progressing on Three Core Pillars: CCZ is focused on transforming itself into a mid-tier copper group underpinned by three core pillars which comprise the Mt Oxide project in Mt Isa’s copper-belt, four assets across Zambia’s copper-belt and the historic Cangai Copper Mine (CCM) in NSW. At its Mt Oxide project, the company has executed plans to expedite drilling Arya prospect and Big One Deposit which has supergene ore up to 28.4% Cu. At its Zambia Projects, the company’s deliverable objective is to prove up a JORC compliant resource within 12-18 months. At Cangai Copper Mine, CCZ has commenced progressing the steps to take Cangai Copper Mine through to BFS. 
 
Progressing on Dual Listing: The company is currently in the final stages of completing its listing on the Standard Board of the London Stock Exchange (LSE). This listing will increase the company’s access to additional capital. The company will be raising additional funds upon the completion of the London listing which will fund its exploration activities through 2020.
 
March Quarter Highlights: During the March 2020 quarter, the company spent $334k of cash on operating activities and $170k on investing activities. During the quarter, the company received net cash of $58k from financing activities. The company’s cash balance at the end of the quarter stood at $1.353 million.
 

Cashflow from Operating Activities (Source: Company Reports)
 
Key Risks: The company is exposed to interest rate, liquidity, and credit risks, which may arise in the normal course of the company’s business. Further, there is also some material uncertainty that may cast significant doubt on whether the company will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.
 
Stock Recommendation: Over the last three months, CCZ’s stock has increased by 188.89% on ASX, and is inclined towards its 52-week high of $0.034. The stock is currently trading at a price to book value multiple of 3.5x, higher than the industry median (basic materials) of 1.7x.Presently, the company is close to being listed on the London Stock Exchange. Following the listing, the company will get additional funding support for its exploration activities. Considering the aforesaid facts, the company’s progress towards its three core pillars and its current trading levels, we advise investors to keep a close eye on CCZ and have a watch stance for the stock at the current market price of $0.024, down by 7.692% on 29 June 2020. 

 
CCZ Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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