Breaking ground: inside Castillo Copper’s latest extraction push

Earlier this year, Castillo Copper announced plans to visit a number of copper deposits across Australia to identify targets for test-drilling. The Perth-based company, which operates mines across the country, and in Zambia, is on the lookout for new mineral deposits as it looks to expand its operations. 

In January this year, the miner announced the results of a review of prospects within its NWQ Copper Project, a stretch of land 150km north of Mt Isa entirely owned by Castillo, that could be home to as many as 22 individual mineral deposits. The company’s geology team will visit several prospects – Big One, Arya and Valparaisa – during 2023 as it looks to make the most of the land under its control. 

This new exploration work could also be a fine opportunity to test new exploration and drilling processes, notably ones that help yield information about as-yet unworked deposits. With the mining industry constantly looking for innovation, and a competitive edge for companies, such drills can be an important opportunity to experiment with these processes, aligned, of course, with market demand.

Initial focus will be on Big One, which has an inferred mineral resource estimate (MRE) of 2.1 million tonnes (Mt) at a copper quality of 1.1%, which would yield21,886 tonnes of copper. Castillo’s geological consultant has set an exploration target for the project, that estimates that from the deposit will yield between two and six million tonnes, at a copper quality of .6%-1% for between 12,000 and 60,000 tonnes of copper. 

The Valparaisa Prospect comprises copper mineralisation across two horizons over a 6km area, with the interaction of two intersecting faults suggesting a structurally controlled copper system. At the Arya Prospect, meanwhile, there is a significant magnetic anomaly, south of a known graphite system that was test drilled in late 2021, that shows potential to be a primary source of copper mineralisation. 

The team at Big One believes a well-designed drilling campaign focusing on diamond coring has the potential to materially increase the grade and confidence in the current MRE. Similarly, at Valparaisa, previous rock chip sampling has already taken place and the identification of a Whitworth quartzite rock formation within the Valparaisa fault is a significant development, as this confirms that the deposit hosts copper sulphide mineralisation. Across Castillo’s potential new mines, there is growing optimism about the viability of the deposits.

“With the macro-outlook for copper remaining upbeat, the board has authorised the geology team to visit several prospects to identify new targets to test-drill,” said Dr Dennis Jensen, managing director of Castillo Copper. “Key areas of focus include increasing the grade and confidence in the current MRE at Big One and the magnetic anomaly at the Arya Prospect. Given the large size of the NWQ Copper Project, the board remains open to aligning with a strategic partner to further advance development work.” 

Additionally, pending drill and auger assays, there is also the potential presence of rare earth elements at the BHA Project’s east zone. While the extent of these minerals is as yet unknown, the discovery of a significant deposit could help Castillo diversify its operations in the future.

Jensen says that in terms of the potential drilling plan, it is early days, but he is looking in the order of drilling at 50 sites, as well as carrying out an auger campaign between two prospects that are located about 5km apart, as these two sites have very good rare earth results. 

“The combination of the auger campaign at Fence Gossan [5km from the Tors Tank deposit] and drilling results at both sites give high confidence that this potential rare earth resource extends contiguously at surface or near surface between both sites,” says Jensen.“We have early metallurgy results that are being analysed, and we have a follow up advanced metallurgy study being planned.” 

More widely, he notes that pricing of rare earths is highly dependent on which rare earth is being considered. “The rare earths with the highest value are the so-called magnet rare earth oxides that are used for rare earth magnets that are ubiquitous in electric motors [and] wind turbines. Demand for rare earths is anticipated to grow at 9% per annum until 2030 [and] is anticipated to grow more quickly than supply.”

“Australia is well placed to take on a larger role in the supply of rare earths, as there is a growing appetite for exploration in Australia at the same time that the world markets are viewing China with more suspicion and so want alternative supply alternatives. Russia and the gas/petroleum supply issue has been a very salient lesson.” 

No matter what the mineral being mined, or the potential value of that commodity, test drilling is a tough business. Castillo's teams have previously faced wet weather and flooding, compressors and other machinery overheating, drill threads breaking and large water flows into each hole drilled. 

Add in the risk of bushfires, the need for helicopter lifts of all gear required between sites and the stresses of daily travel on human workers, and it becomes plain this isn't a game for the weak hearted.

Speaking specifically about the investments Castillo has made into new exploration and drilling work, Jensen explained that alongside the usual technologies, Castillo is looking at using the Loupe system to determine clay thickness. Some of Castillo's sites are expected to contain rare earths at depths of 25m, deposited in highly weathered pegamatite or clay. 

“Having this information will assist in planning a drilling campaign, as we will not need to go any deeper than that depth in that location [Broken Hill],” says Jensen. “It is very important to note that many people concentrate on headline TREO figures, without considering the geology that hosts the rare earths. 

“Many of the headline high number resources are hosted in hard rock, where the rare earths are more difficult and expensive to extract. Ours are hosted in clay, and our results are better than industry average for those hosted in similar geology in Australia.”

On a broader scale, this emphasis on gathering information could stand the company in good stead as it makes the investments necessary to mine minerals from these deposits. Test drilling and extractive work are a mix of capitalisation and risk, and Castillo successfully listed on the London Stock Exchange in August 2020 and has raised well over $6.8m (A$10m) from placements and option conversions.

As ever, millions if not billions are required to seek, test and haul rare earths out of holes in the ground, and the potential financial cost of such work is always amplified when drilling into entirely new deposits. Castillo’s willingness to engage in strategic partnerships could help limit some of these risks, but it remains to be seen how close its latest round of copper exploration will come to its lofty predictions.