11 January 2024

CASTILLO COPPER LIMITED
("Castillo" or the "Company")

Sale of Two Broken Hill Exploration Licences

Castillo Copper Limited (LSE and ASX: CCZ), a base metal explorer primarily focused on copper across Australia and Zambia, announces that it has agreed the sale of two of its 100% owned Exploration Licences, EL 8572 and EL 8599, at the Broken Hill Project ("Broken Hill"), to Rimfire Pacific Mining LTD ("Rimfire")(ASX:RIM).

Highlights

      ·    Castillo to complete the sale of two of its 100% owned Exploration Licences at Broken Hill, EL 8572 and EL 8599, to Rimfire

·    Under the terms of the agreement, Rimfire will issue Castillo with 8,064,516 Rimfire Ordinary Shares ("Consideration Shares") being $150,000 worth of shares at an issue price of $0.0186 ("Consideration Shares Issue Price")

·    Rimfire to issue a further $150,000 worth of Rimfire Ordinary Shares ("Subsequent Shares") to Castillo Copper if at any time after Completion, Rimfire's share price 5-day Volume Weighted Average Price ("VWAP") is greater than $0.0279, which is 50% above the Consideration Shares Issue Price ("Subsequent Shares Issue Price")

·    The Board believes that this is an excellent outcome for all stakeholders, allowing Castillo to focus on the development of its core portfolio, whilst simultaneously ensuring it accrues the benefits of the development potential at EL 8572 and EL 8599 through the Consideration Shares received

·    Castillo still holds Exploration Licences EL 8434 and EL 8435 at Broken Hill

Ged Hall, Chairman of Castillo Copper, said: "We are pleased to have agreed what the Board views as a mutually beneficial agreement to sell two of our exploration licences at Broken Hill to Rimfire. Following the Strategic Review we completed late last year, the Company is streamlining its portfolio of high-quality assets and focusing on those it deems as core, which the Board believes will allow Castillo to most optimally generate value for shareholders. This agreement will allow Castillo to focus on the development of our portfolio of assets, while still retaining interest in the Broken Hill Project."

Details of Agreement

Rimfire will acquire the Castillo tenements on the following terms:

·    Rimfire to issue Castillo Copper with 8,064,516 Rimfire Ordinary Shares being $150,000 worth of shares at an issue price of $0.0186. The issue price is the 5-day VWAP up to and including the last day of trading immediately before the date of execution of the Tenement Purchase Agreement; and

·    Rimfire to issue a further $150,000 worth of Rimfire Ordinary Shares to Castillo Copper if at any time after Completion Rimfire's share price 5-day VWAP is greater than $0.0279, which is 50% above the Consideration Shares Issue Price. The Subsequent Shares to be issued would be at the Subsequent Shares Issue Price, resulting in the issue of 5,376,345 Rimfire Ordinary Shares if the Subsequent Shares Issue Price is met.

All Consideration Shares and Subsequent Shares are subject to a 6-month escrow period.

The Castillo tenements are subject to historic royalties of a 3% Net Smelter Return (EL8599) and a 1% Net Smelter Return (EL8572).

In return for the waiving of all Royalties, Rimfire has agreed to issue the individual Royalty holders with 5,376,337 Rimfire Ordinary Shares being $100,000 worth of shares at the Consideration Shares Issue Price $0.0186 (Royalty Holder Shares).

All Royalty Holder Shares are subject to a 6-month escrow period.

At the time of writing, Rimfire, Castillo Copper and the Royalty Holders are completing all necessary ancillary legal documentation, and the transaction is still subject to standard regulatory conditions such as Ministerial consent for the transfer of the tenements.

The Consideration Shares, Subsequent Shares and Royalty Holder Shares will be issued under Rimfire's ASX Listing Rule 7.1 capacity.

Overview

BHA No.1 Pty Ltd, a wholly owned subsidiary of Castillo Copper Ltd (ASX: CCZ), has executed an agreement with Rimfire to sale an unencumbered 100% of their Exploration Licences EL 8572 and EL 8599 ("Castillo tenements") which lie adjacent to, and contain the same host rocks as that found at Rimfire's Bald Hill Cobalt prospect, 30 kilometres west of Broken Hill, NSW.

Diamond drilling by Rimfire at Bald Hill last year successfully intersected high-grade cobalt (Co) associated with strongly disseminated to semi-massive sulphide (pyrite, pyrrhotite and trace chalcopyrite + sphalerite) mineralisation (See Rimfire ASX Announcement dated 18 September 2023), including;

·    125m @ 0.13% Co from 198 metres in FI2470 including 97m @ 0.15% Co,

·    58m @ 0.13% Co from 62 metres in FI2471 including 2m @ 0.24% Co and 17m @ 0.15% Co,

·    33m @ 0.11% Co from 58 metres including 4m @ 0.23% Co and 2m @ 0.21% Co, and

·    100m @ 0.08% Co from 71 metres in FI2470 including 68m @ 0.10% Co.

The Castillo tenements cover the same sequence of Proterozoic age deformed and metamorphosed gneiss, psammite, and amphibolite units that host the Bald Hill cobalt sulphide mineralisation and as such are considered prospective for:

·    Bald Hill style cobalt sulphide mineralisation hosted within quartz - albite - magnetite gneiss and psammopelitic composite gneiss; and

·    Bedrock Rare Earth Element ("REEs") mineralisation associated with shear - hosted pegmatite occurrences.

An examination of the NSW Government Minview online GIS portal reveals several historic mineral occurrences that require follow up to better determine their geological significance and exploration potential.

Of initial interest are a cluster of gossanous, quartz veined and copper-stained occurrences within the northwestern portion of EL8572 (NSW Mineral Occurrences 181678, 181681, 181683 - 181684, 181686, and 181688) and multiple shear - hosted davidite - bearing pegmatite occurrences within the southern portion of EL8572 and EL8599 (NSW Mineral Occurrences 181344 - 181348). Davidite is a rare earth oxide  mineral with chemical end members of either Lanthanum or Cerium.