Castillo Copper Ltd (ASX:CCZ) has inked a memorandum of understanding with base metals and commodities trader Noble Group Limited (SGX:CGP) to monetise legacy stockpiles at Cangai Copper Mine in New South Wales.
The five stockpiles are found at Castillo’s wholly-owned flagship Jackaderry South Project in north-eastern NSW, in a region prospective for copper-cobalt-zinc deposits.
The Cangai Copper Mine stockpiles at Castillo's Jackaderry South Project in NSW
The parties plan to finalise a binding off-take agreement for Noble to grab exclusive rights to distribute up to 200,000 tonnes of copper concentrate from the McDonoughs, Victory, Sellars, Volkhardts and Smelter Creek stockpiles.
Perth-based Castillo will receive a $500,000 reward on signing a binding offtake agreement with Hong Kong-headquartered Noble, allowing the Australian company to get cracking on removing ore from the stockpiles at the three-tenement mine site near Grafton.
READ: Castillo Copper to drill sizeable conductor targets at Cangai
Castillo Copper chairman Peter Meagher told the market: “We are delighted to have signed a collaboration agreement with Noble Group, with the objective being to generate early cash flow by processing of the legacy stockpiles at Cangai, provided regulatory approval can be secured and further test work on the stockpiles is successful.
“The board intends to work diligently with our counterparts from Noble Group to ensure a binding off-take agreement can be achieved in a timely manner.
“Concurrently, our legal team are working through the necessary legislative protocols that should hopefully deliver the necessary ministerial consent to remove the stockpiles.”
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Executive director Alan Armstrong reported the two companies would work towards finding third parties to undertake processing, transportation, direct-ore-shipping-product logistics and financing if they were required to monetise the stockpiles.
Armstrong said if practical Noble would facilitate forward sales of all base metals in the stockpiles.
He confirmed the company was “closely following” legislative protocols for ministerial approval to remove the stockpiles.
Armstrong said: “Work will continue in an attempt to expedite the process, in parallel with CCZ moving towards crystallising the binding off-take agreement.”
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A sample from Smelter Creek, another Cangai mine stockpile
The company is progressing a diamond-drilling campaign at massive conductors found at Cangai mine during a debut downhole electromagnetic (DHEM) survey.
Another DHEM survey will run in tandem to the latest drilling efforts as the survey team evaluates drill-holes conductors that were found during the first fixed loop electromagnetic program.
Western Australian company Castillo also holds wholly-owned projects in NSW’s Broken Hill, the Mt Isa region of northwest Queensland and Marlborough, northwest of Gladstone in Queensland, adjacent to Clive Palmer’s Queensland Nickel mining leases.