Castillo Copper : Formal Share Sale Agreement Signed

CASTILLO COPPER

LIMITED

ASX Release

20 February 2020

CASTILLO COPPER

LIMITED

ACN 137 606 476

Level 26

140 St Georges Terrace

Perth WA, 6000

Australia

Tel: [phone]

Fax: [phone]

Contact:

Simon Paull

Managing Director

E-mail:

[e-mail]

For the latest news:

www.castillocopper.com

Directors / Officers:

Rob Scott

Simon Paull

Gerrard Hall

Matt Bull

Issued Capital:

793.9 million shares 184 million options

ASX Symbol:

CCZ

Share sale agreement executed

Castillo Copper Limited ("CCZ" or "the Company") ("Buyer") is pleased to announce it has executed the Share Sale Agreement ("SSA") with Zed Copper Pty Ltd ("Zed") (ACN 634 154 331) ("Sellers") to acquire four high-quality projects across the copper-belt in Zambia.

As per the terms set out in the Heads of Agreement1 (HoA), which was announced on 10 July 2019, CCZ will pay the Zed Vendors $25,000 upon signing the SSA. Note, CCZ has already paid Zed $25,000 post executing the HoA in mid-2019.

Following the granting of a waiver from ASX Listing Rule 14.7 in relation to the Zed acquisition, which was approved by shareholders on 6 November 2019 and announced 19 February 2020, the outstanding conditions precedent to be satisfied are:

• Material adverse change - no material adverse changes having occurred in respect of any group entity;
• No default - no material default or breach of this agreement (including the Sellers' warranties) by the Sellers or CCZ prior to completion; and
• No actions restricting sale - no action or proceeding at law or in equity being commenced or pending or threatened by any person, including any government, governmental authority, regulatory body or agency to enjoin, restrict or prohibit the completing of the transactions contemplated by this agreement.

CCZ anticipates the outstanding conditions precedent to be met immediately prior to completion, which is expected to occur in a manner to allow CCZ to meet the terms of the waiver, being the issue consideration securities no later than Wednesday, 26 February 2020.

Simon Paull Managing Director remarked: "Behind the scenes our

various teams have been working towards formally closing the Zambia acquisition, which make up the critical third pillar of our strategy to transform CCZ into a mid-tier copper group. With exploration work across the three pillars and preparation plans for CCZ's upcoming dual listing in London moving ahead, we look forward to updating shareholders on developments shortly."

CCZ has grouped tenements into four projects - Mkushi, Luanshya, N&S Lumwana and Mwansa - to facilitate a comprehendible structure for corporate reporting purposes. Following the completion of the transaction, CCZ will own four tenements outright and ability to own up to 80% of the Luanshya tenements (Table 1).

TABLE 1: ZAMBIA TENEMENTS OWNERSHIP STRUCTURE

Project	License Code	Size (sq Km)	Ownership
Lumwana North	23914-HQ-SEL	5.01	100%
Lumwana South	23913-HQ-SEL	5.21	100%
Mkushi	24659-HQ-LEL	502.23	100%
Mwansa	25261-HQ-LEL	142.39	100%
Luanshya	22448-HQ-LEL	26.76	0% currently but ability to earn-
			in up to 80%
Luanshya	25195-HQ-LEL	43.49	55% currently but ability to earn-
			in up to 80%
Luanshya	25273-HQ-LEL	12.05	55% currently but ability to earn-
			in up to 80%

Consideration

To re-cap, upon completion of the sale and purchase of the Sale Shares and in accordance with the terms of the SSA, CCZ will issue to the Zed Vendors in their respective proportions:

1. 31,250,000 fully paid ordinary shares (subject to a 12-month escrow period);
2. 46,875,000 performance shares, converting to an equal number of CCZ shares on delineation of a JORC resource of 200,000 tonnes of contained copper at a minimum grade of 0.5% within 5 years of execution of the Share Sale Agreement; and;
3. 46,875,000 performance shares, converting to an equal number CCZ shares on completion of a preliminary feasibility study demonstrating an internal rate of return greater than 25% within 5 years of execution of the Share Sale Agreement.

In addition, the vendors can execute a royalty deed providing for a net smelter return of 2% on the sale of concentrates from the projects.

For and on behalf of Castillo Copper

Simon Paull

Managing Director

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References

1. CCZ ASX Release - 10 July 2019

ABOUT CASTILLO COPPER

Castillo Copper Limited (ASX: CCZ) is an ASX-listed base metal explorer primarily focused on copper then nickel, zinc & cobalt. The group is embarking on a strategic transformation to morph into a mid-tier copper group underpinned by three core pillars:

• Pillar I: Cangai Copper Mine in northern New South Wales, which is one of Australia's highest grading historic copper mines.
• Pillar II: The Mt Oxide project in the Mt Isa district, north-west Queensland, which delivers significant exploration upside through having a sizeable untested anomaly within its boundaries in a copper-rich region.
• Pillar III: Several high-quality prospective assets in Zambia, which is the second largest copper producer in Africa.

In addition, Castillo Copper is progressing a dual listing on the standard board of the London Stock Exchange.

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