ASX Announcement 

 Friday 10th July 2020 

 High Grade Copper-Gold Core Growing Rapidly at Cortadera 

 Results Expected Shortly 

Highlights

Hot Chili Limited (ASX code HCH) (“Hot Chili” or “Company”) is pleased to announce that diamond drilling is providing strong encouragement for continued growth of the high grade copper-gold core at the Company’s Cortadera discovery in Chile.

Strongly mineralised porphyry has been observed over a broad 220m zone in recently completed drill hole CRP0016D.

CRP0016D – a 350m diamond tail – was designed to test the potential for a significant up-dip extension to the southern flank of the high grade copper-gold core.

Results from CRP0016D are being prioritised for analysis and are expected to be reported within the coming fortnight.

Diamond drill hole CRP0042D recorded approximately 330m of mineralised porphyry. The hole was terminated early (in mineralisation) owing to significant deviation from its intended target and will be re-entered for a wedge hole at a later date.

Hot Chili has just commenced its third diamond drill hole (CRP0043D), designed to test a major up-dip extension to the northern flank of the high grade copper-gold core.

Resource workstreams remain on-track for delivering first resource estimates at Cortadera and then San Antonio in late July.

The Company will carefully assess the potential implications of these new drill holes on the forthcoming resource estimate for Cortadera. The maiden resource estimate, currently in preparation, incorporates all previous drilling.

The current drilling programme is initially focussed on growth of high grade copper and gold within the 2.3km discovery zone and aims to facilitate a second resource estimate for Cortadera.

Photograph 1 – Strongly mineralised proximal skarn xenolith within host porphyry, displaying strongly disseminated chalcopyrite and pyrite in association with biotite-magnetite-chlorite alteration and +10% B-vein abundance (516m down-hole depth, CRP0016D) 

The Company looks forward to releasing drilling results from CRP0016D and CRP0042D once all assays are received. 

This announcement is authorised by the Board of Directors for release to ASX. 

For more information please contact: 

Christian Easterday (Managing Director) : +61 8 9315 9009

Email: christian@hotchili.net.au

or visit Hot Chili’s website at www.hotchili.net.au 

Figure 1 Plan view across the Cortadera discovery area displaying significant historical copper-gold DD intersections across Cuerpo 1, 2, 3 and 4 tonalitic porphyry intrusive centres (represented by modelled copper envelopes, yellow- +0.1% Cu and majenta +0.4% Cu). Note the location of the inset plan area for Cuerpo3 associated with the following figures. Note the HCH drilling intersection (Red) and historical drilling intersections (white). 

Figure 2 Plan view of Cuerpo 3 – the Main porphyry of the four porphyry centres discovered to date at Cortadera. Note the growing extent of the modelled higher grade copper zone (majenta wireframe – +0.4% Cu) and the location of open boundaries for growth of the bulk copper envelope at Cortadera (yellow wireframe – +0.1% Cu). 

Figure 3 Long Section of the Cortadera discovery copper distribution model from the recently updated 4-dimmensional geological model. Note the growing extent of the high grade core within Cuerpo 3 and Cuerpo 2, and the location of CRP0042D

Figure 4 Type Section A displaying HCH DD extensional drill results and recent 3D modelling of copper distribution at Cortadera. The section lies in the centre of Cuerpo 3. Note the location of hole CRP0016D in relation to the modelled high grade zone. 

Figure 5 Type Section B displaying HCH DD drill results and recent 3D modelling of copper distribution at Cortadera. The section lies along the southeastern extent of Cuerpo 3 and displays the recently abandoned diamond hole CRP0042D which ended in mineralised porphyry. Note the location of where CRP0042D was meant to extend. This hole deviated significantly in its azimuth and is planned to be re-entered and navi/wedge drilled at a later date. 

About Cortadera 

Cortadera is a privately-owned, major copper-gold porphyry discovery located 600km north of Santiago along the Chilean coastal range, where historical world-class discovery drill results were only publicly released by Hot Chili in February 2019. 

Importantly, Cortadera lies 14km from the Company’s large-scale Productora copper development and adjacent to the high grade El Fuego satellite copper projects, as displayed in Figure 1 below. 

Figure 6 Location of Productora and the Cortadera discovery in relation to te consolidation of new growth projects and coastal range infrastructure 

On 22 February 2019, Hot Chili announced the execution of a formal Option Agreement to acquire a 100% interest in Cortadera. In early April, the Company commenced a confirmation drilling programme comprising 17 holes. 

The drilling has confirmed and extended areas of surface enrichment and wide, higher-grade, copper-gold sulphide mineralisation at depth, which had not previously been closed off by 23,000m of historical diamond drilling. 

Hot Chili’s recent drill holes at Cuerpo 3 (the largest of the four porphyries discovered to date) include some of the worlds’ stand-out copper-gold porphyry drill results reported in recent time. The Cuerpo 3 porphyry remains open to the north, south and at depth. Significant intersections include: 

• 972m grading 0.5% copper and 0.2g/t gold from surface (including 412m grading 0.7% copper and 0.3g/t gold)
• 750m grading 0.6% copper and 0.2g/t gold from 204m down-hole depth (including 188m grading 0.9% copper and 0.4g/t gold)
• 848m grading 0.4% copper and 0.2g/t gold from 112m down-hole depth (including 184m grading 0.7% copper and 0.3g/t gold)
• 864m grading 0.4% copper and 0.1g/t gold from 62m down-hole depth (including 348m grading 0.6% copper and 0.2g/t gold),
• 649m grading 0.4% copper and 0.1g/t gold from 328m down-hole depth (including 440m grading 0.5% copper and 0.2g/t gold),
• 596m grading 0.5% copper and 0.2g/t gold from 328m down-hole depth (including 184m grading 0.7% copper and 0.3g/t gold), and
• 542m grading 0.5% copper and 0.2g/t gold from 422m down-hole depth, (including 218m grading 0.7% copper and 0.2g/t gold)

Note: Please refer to ASX announcement “Another Record Step-Out Drill Result at Cortadera” 20th March 2020 for Table 1 information relating to the reporting of exploration results, data and sampling techniques

Source- Regulus Resources (TSXV. REG) November 2019 Corporate Presentation (slide 10) as per SNL financial, SNL search criteria include: >450 m interval, primarily copper interval & reported after Jan 1, 2018. Only longest reported interval considered. Results ordered by down-hole width of drill intersection and addition of CRP0029D and CRP0040D result. 

Cortadera is shaping up as a globally significant standalone copper-gold project which can utilise the Productora project resources, and leverage from a central processing and combined infrastructure approach along the coastline of Chile. 

The Company’s recent discovery and definition of a higher grade bulk tonnage underground development opportunity in combination with shallow, high grade bulk tonnage open pit sources – places Cortadera in a unique position amongst potential large-scale global copper-gold developments. 

Qualifying Statements 

Competent Person’s Statement- Exploration Results

Exploration information in this Announcement is based upon work compiled by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscientists (AIG). Mr Easterday has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a ‘Competent Person’ as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code). Mr Easterday consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Forward Looking Statements

This Announcement is provided on the basis that neither the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Announcement and nothing contained in the Announcement is, or may be relied upon as a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law. The Announcement contains material which is predictive in nature and may be affected by inaccurate assumptions or by known and unknown risks and uncertainties and may differ materially from results ultimately achieved.

The Announcement contains “forward-looking statements”. All statements other than those of historical facts included in the Announcement are forward-looking statements including estimates of Mineral Resources. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, copper, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade recovery rates from those assumed in mining plans, as well as political and operational risks and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of the Announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. All persons should consider seeking appropriate professional advice in reviewing the Announcement and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the Announcement nor any information contained in the Announcement or subsequently communicated to any person in connection with the Announcement is, or should be taken as, constituting the giving of investment advice to any person

Positive Metallurgical Test Work

ASX Announcement 

Tuesday 4th August 2020

AMENDED RELEASE

Further to the Company’s release to the Australian Securities Exchange, dated 31 July 2020 and titled “Positive Metallurgical Test Work”, please find an amended release which includes additional details in relation to the separate drill hole and ore drive samples included in the testwork, additional maps and sections to provide context and the removal of information that does not relate to the results being published.

 ASX Announcement 

 Friday 31st July 2020 

 Positive Results from Initial Metallurgical Test Work 

 Combined Development Confirmed 

Highlights

Metallurgical testwork at Hot Chili Limited’s (ASX code HCH) (“Hot Chili” or “Company”) Cortadera and San Antonio copper projects in Chile has produced highly encouraging initial results.

Rougher sulphide flotation results indicate high copper recoveries and similar crushing/grinding characteristics, allowing all of Hot Chili’s coastal copper deposits (Cortadera, Productora and San Antonio) to be combined into one development, now named “Costa Fuego”, utilising a single conventional processing facility.

Initial rougher recoveries suggest that final copper recovery levels into a commercial grade concentrate are likely to be high. Optimised commercial concentrate grade estimation will be determined following the completion of grind size optimisation, cleaner flotation and locked-cycle test work.

These first results provide a solid foundation from which to carry out further optimisation of the metallurgical flowsheet for life-of-mine ore source supply from the Costa Fuego copper development.

Initial Sulphide Metallurgical Testwork Results

The Company has completed preliminary metallurgical testwork (mineralogy, comminution and flotation) on two composite samples of sulphide ore from Cortadera and one run-of mine (ROM) sample from San Antonio.

Testwork has been managed by Wood Plc with parameters aligned to the previous metallurgical testwork programmes undertaken during the Company’s Productora Pre-feasibility Study (PFS).

Samples at Cortadera comprised quarter drill core sample intervals across the high grade and low grade domains of the main porphyry (Cuerpo 3), and the ROM sample at San Antonio was taken from an ore drive in the existing underground mine.

Key outcomes from Sulphide Flotation testwork included:

• Rougher flotation test work over a range of relatively coarse primary grind sizes (106 μm, 150 μm and 212 μm) indicated that the copper recovery in all samples increased as the fineness of grind increased. All grind sizes performed on tests are in-line with results from the Productora PFS and indicate similar grind size is likely.
• Flotation recovery of copper minerals, gold, and molybdenum at Cortadera is similar to results from the Productora PFS. Flotation of silver (absent at Productora) is similar to gold.
• Cortadera test work included a high-grade and low-grade sample.
• The 106 μm P80 float test on the Cortadera high-grade sample recovered >95% of the copper in the rougher float. Recleaning produced a concentrate grading 28% copper with minor recovery loss.
• The corresponding float test on the Cortadera low-grade sample recovered 89% of copper in the rougher float. Recleaning produced a concentrate grading 22% copper with minor recovery loss.
• At San Antonio the Company tested a ROM sample from the operating underground mine. The float test on this sample recovered 95% of copper in the rougher float. Recleaning produced a concentrate grading 25% copper with minor recovery loss.
• Preliminary recovery estimates for other payable metals at Cortadera include gold (56-60%), molybdenum (83-90%) and silver (37-59%).
• Preliminary recovery estimates for other payable metals at San Antonio include molybdenum (88%) and silver (69%).
• Flotation was performed using salt water in alignment with the Productora PFS.
• Samples were assayed for multiple elements and no significant levels of concentrate impurities were identified.

Key outcomes from Comminution test work included:

• Samples were sent for SAG Mill Comminution (SMC) and Bond Ball Mill Work Index (BWI) tests.
• The same tests were used to design the sulphide concentrator for the Productora PFS.
• The comminution results for the high grade and low grade domains at Cortadera are within the range of Productora values measured. It is reasonable to assume that the sulphide ore from Cortadera will have a similar processing throughput and cost as ore from Productora.

The metallurgical test work undertaken supports processing of the Cortadera and San Antonio sulphide ore using the same conventional concentrator as the Productora PFS.

Following these initial positive results, the next phase of test work will be directed towards grind size optimisation, cleaner flotation and locked-cycle test work in advance of assessing the commercial grade of copper concentrates that may be produced from Cortadera and San Antonio.

Expansion drilling, resource workstreams and scoping studies are gathering momentum and the Company looks forward to providing further updates shortly.

This announcement is authorised by the Board of Directors for release to ASX.

For more information please contact:

Christian Easterday      Tel: +61 8 9315 9009 

Managing Director  Email: christian@hotchili.net.au

or visit Hot Chili’s website at www.hotchili.net.au

About Cortadera 

Cortadera is a privately-owned, major copper-gold porphyry discovery located 600km north of Santiago along the Chilean coastal range, where historical world-class discovery drill results were only publicly released by Hot Chili in February 2019. 

Importantly, Cortadera lies 14km from the Company’s large-scale Productora copper development and adjacent to the high grade El Fuego satellite copper projects, as displayed in Figure 1 below. 

On 22 February 2019, Hot Chili announced the execution of a formal Option Agreement to acquire a 100% interest in Cortadera. In early April, the Company commenced a confirmation drilling programme comprising 17 holes.

The drilling has confirmed and extended areas of surface enrichment and wide, higher-grade, copper-gold sulphide mineralisation at depth, which had not previously been closed off by 23,000m of historical diamond drilling.

Hot Chili’s recent drill holes at Cuerpo 3 (the largest of the four porphyries discovered to date) include some of the worlds’ stand-out copper-gold porphyry drill results reported in recent time. The Cuerpo 3 porphyry remains open to the north, south and at depth. Significant intersections include:

• 972m grading 0.5% copper and 0.2g/t gold from surface (including 412m grading 0.7% copper and 0.3g/t gold)
• 750m grading 0.6% copper and 0.2g/t gold from 204m down-hole depth (including 188m grading 0.9% copper and 0.4g/t gold)
• 848m grading 0.4% copper and 0.2g/t gold from 112m down-hole depth (including 184m grading 0.7% copper and 0.3g/t gold)
• 864m grading 0.4% copper and 0.1g/t gold from 62m down-hole depth (including 348m grading 0.6% copper and 0.2g/t gold),
• 649m grading 0.4% copper and 0.1g/t gold from 328m down-hole depth (including 440m grading 0.5% copper and 0.2g/t gold),
• 596m grading 0.5% copper and 0.2g/t gold from 328m down-hole depth (including 184m grading 0.7% copper and 0.3g/t gold), and
• 542m grading 0.5% copper and 0.2g/t gold from 422m down-hole depth, (including 218m grading 0.7% copper and 0.2g/t gold)

Note: Please refer to ASX announcement “Another Record Step-Out Drill Result at Cortadera” 20th March 2020 for Table 1 information relating to the reporting of exploration results, data and sampling techniques

techniques

Table 2 SNL List of Best 25 Cu-Au Drill Intercepts Since January 2018 (Ordered by Width of Drill Intersection)

Source- Regulus Resources (TSXV. REG) November 2019 Corporate Presentation (slide 10) as per SNL financial, SNL search criteria include: >450 m interval, primarily copper interval & reported after Jan 1, 2018. Only longest reported interval considered. Results ordered by down-hole width of drill intersection and addition of CRP0029D and CRP0040D result. SNL has not provided consent to Hot Chili to use this data and Hot Chili has not verified the individual exploration results from other companies reported in the table and sourced from Regulus Resources November 2019 Corporate Presentation. 

Cortadera is shaping up as a globally significant standalone copper-gold project which can utilise the Productora project resources, and leverage from a central processing and combined infrastructure approach along the coastline of Chile.

The Company’s recent discovery and definition of a higher grade bulk tonnage underground development opportunity in combination with shallow, high grade bulk tonnage open pit sources – places Cortadera in a unique position amongst potential large-scale global copper-gold developments.

Qualifying Statements

JORC Compliant Ore Reserve Statement

Productora Open Pit Probable Ore Reserve Statement – Reported 2nd March 2016

Note 1: Figures in the above table are rounded, reported to two significant figures, and classified in accordance with the Australian JORC Code 2012 guidance on Mineral Resource and Ore Reserve reporting. Note 2: Price assumptions: Cu price – US$3.00/lb; Au price US$1200/oz; Mo price US$14.00/lb. Note 3: Mill average recovery for fresh Cu – 89%, Au – 52%, Mo – 53%. Mill average recovery for transitional; Cu 70%, Au – 50%, Mo – 46%. Heap Leach average recovery for oxide; Cu – 54%. Note 4: Payability factors for metal contained in concentrate: Cu – 96%; Au – 90%; Mo – 98%. Payability factor for Cu cathode – 100%.

JORC Compliant Mineral Resource Statements

Productora Higher Grade Mineral Resource Statement, Reported 2nd March 2016

Reported at or above 0.25 % Cu. Figures in the above table are rounded, reported to two significant figures, and classified in accordance with the Australian JORC Code 2012 guidance on Mineral Resource and Ore Reserve reporting. Metal rounded to nearest thousand, or if less, to the nearest hundred. 

Reported at or above 0.1% Cu and below 0.25 % Cu. Figures in the above table are rounded, reported to two significant figures, and classified in accordance with the Australian JORC Code 2012 guidance on Mineral Resource and Ore Reserve reporting. Metal rounded to nearest thousand, or if less, to the nearest hundred. Metal rounded to nearest thousand, or if less, to the nearest hundred. 

Mineral Resource and Ore Reserve Confirmation

The information in this presentation that relates to Mineral Resources, Ore Reserve estimates and Production Targets on the Productora copper project was previously reported in the ASX announcement “Hot Chili Delivers PFS and Near Doubles Reserves at Productora” dated 2nd March 2016, a copy of which is available on the ASX website at www.asx.com.au and the Company’s website at www.hotchili.net.au. The company confirms that it is not aware of any new formation or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the estimates in that announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement

Competent Person’s Statement- Exploration Results

Exploration information in this Announcement is based upon work compiled by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscientists (AIG). Mr Easterday has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a ‘Competent Person’ as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code). Mr Easterday consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Competent Person’s Statement– Mineral Resources

The information in this Announcement that relates to the Productora Project Mineral Resources, is based on information compiled by Mr J Lachlan Macdonald and Mr N Ingvar Kirchner. Mr Macdonald is employed by AMC Consultants (AMC), and is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Kirchner is employed by AMC Consultants (AMC). AMC has been engaged on a fee for service basis to provide independent technical advice and final audit for the Productora Project Mineral Resource estimates. Mr Kirchner is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and is a Member of the Australian Institute of Geoscientists (AIG). Both Mr Macdonald and Mr Kirchner have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code 2012).

Tonnage(Mt)Cu (%)Au (g/t)Mo (ppm)Copper (tonnes)Gold (ounces)Molybdenum (tonnes)Indicated150.90.150.0366233,000170,00010,000Inferred50.70.170.044486,00072,0002,000Sub-total201.60.160.0460320,000241,00012,000Indicated12.30.140.022917,0007,000400Inferred4.10.120.01205,0002,000100Sub-total16.40.130.022722,0009,000400Indicated163.20.150.0363250,000176,00010,000Inferred54.80.170.044391,00074,0002,000Total218.00.160.0458341,000250,00013,000DepositClassificationGradeContained MetalProductoraAliceCombined

Competent Person’s Statement– Ore Reserves

The information in this Announcement that relates to Productora Project Ore Reserves, is based on information compiled by Mr Carlos Guzmán, Mr Boris Caro, Mr Leon Lorenzen and Mr Grant King. Mr Guzmán is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM), a Registered Member of the Chilean Mining Commission (RM- a ‘Recognised Professional Organisation’ within the meaning of the JORC Code 2012) and a full time employee of NCL Ingeniería y Construcción SpA (NCL). Mr Caro is a former employee of Hot Chili Ltd, now working in a consulting capacity for the Company, and is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and a Registered Member of the Chilean Mining Commission. Mr Lorenzen is employed by Mintrex Pty Ltd and is a Chartered Professional Engineer, Fellow of Engineers Australia, and is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr King is employed by AMEC Foster Wheeler (AMEC FW) and is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). NCL, Mintrex and AMEC FW have been engaged on a fee for service basis to provide independent technical advice and final audit for the Productora Project Ore Reserve estimate. Mr. Guzmán, Mr Caro,Mr Lorenzen and Mr King have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Forward Looking Statements

This Announcement is provided on the basis that neither the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Announcement and nothing contained in the Announcement is, or may be relied upon as a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law. The Announcement contains material which is predictive in nature and may be affected by inaccurate assumptions or by known and unknown risks and uncertainties and may differ materially from results ultimately achieved.

The Announcement contains “forward-looking statements”. All statements other than those of historical facts included in the Announcement are forward-looking statements including estimates of Mineral Resources. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, copper, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade recovery rates from those assumed in mining plans, as well as political and operational risks and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of the Announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. All persons should consider seeking appropriate professional advice in reviewing the Announcement and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the Announcement nor any information contained in the Announcement or subsequently communicated to any person in connection with the Announcement is, or should be taken as, constituting the giving of investment advice to any person

JORC Code, 2012 Edition – Table 1 report template 

Section 1 Sampling Techniques and Data 

Section 1 Sampling Techniques and Data 

(Criteria in this section apply to all succeeding sections.) 

 ASX Announcement 

 Wednesday 24th June 2020 

$3.9 Million Entitlements Offer Closure and Arrangement of Shortfall 

Hot Chili Limited (ASX code HCH) (“Hot Chili” or “Company”) is pleased to advise the successful completion of the $3.9 million Entitlement Offer (“Offer”) announced on 18 May 2020.

The 3 for 20 non-renounceable Offer closed on 19 June 2020, raising a total of $1,481,344. A total of 98,756,215 shares (“New Shares”) were applied for by shareholders, representing a 37% take-up of the Offer.

In accordance with the timetable it is anticipated that the New Shares and the free attaching options will be issued on Friday 26 June 2020 with the quotation of the New Shares on Monday 29 June 2020. One option will be issued for every two New Shares applied for. The free attaching options will not be quoted.

The Company is also pleased to announce that the Lead Manager of the Rights Issue, Veritas Securities Limited has arranged for the entire shortfall of approximately $2.4 million to be placed to sophisticated and professional investors in Australia and overseas following strong demand.

A total of 162,023,840 shares (“Shortfall Shares”) and one free attaching option for every two Shortfall Shares are expected to be issued at the same time as the New Shares on Friday 26 June 2020 with quotation of the Shortfall Shares on Monday 29 June 2020. The free options attaching to the Shortfall Shares will not be quoted.

The Company is now well-funded to deliver an exciting period of growth and transformation centred around its rapidly emerging Cortadera copper-gold discovery in Chile, with key catalysts over the coming six months to include:

• First resource estimates for Cortadera and then San Antonio
• Completion of metallurgical testwork across Cortadera and San Antonio
• Completion of internal scoping studies into a large combined development scenario
• Commencement of first production from the Company’s Productora copper project in partnership with the Chilean government agency ENAMI

Funds raised will also be used to continue the Company’s diamond drilling programme aimed at expanding Cortadera beyond the limits of the discovery which remains open in most directions.

Drilling at Cortadera re-commenced two weeks ago and the Company plans to focus initial drilling toward expanding the high grade core to the main porphyry.

Performance Rights Plan for Management Team

The Board of Hot Chili have approved a Performance Rights plan for the Company’s executive and management team, which seeks to align management incentives with Company performance and shareholder return. A total of 60 million performance rights are proposed to be granted to management, vesting within a three year term.

Three classes of performance rights will exist which will entitle the holder of a performance right to be issued with one fully paid ordinary share on the satisfaction of one or more of the following conditions (each a “Vesting Condition”). Key Vesting Conditions for each class of Performance Right include:

For the purposes of Listing Rule 10.14, granting of performance rights to Hot Chili’s Managing Director Christian Easterday and Hot Chili’s General Manager of Technical Services (alternate Director) Melanie Leighton shall be subject to shareholder approval. The Company expects to hold a general meeting on or around Friday 31 July to approve the granting of such performance rights. Full details of the performance rights will be included in the notice of general meeting.

The Company looks forward to providing further updates on its diamond drilling activities and various resource workstreams over the coming weeks.

This announcement is authorised by the Board of Directors for release to ASX.

For more information please contact:

About Cortadera 

Cortadera is a privately-owned, major copper-gold porphyry discovery located 600km north of Santiago along the Chilean coastal range, where historical world-class discovery drill results were only publicly released by Hot Chili in February 2019. 

Importantly, Cortadera lies 14km from the Company’s large-scale Productora copper development and adjacent to the high grade El Fuego satellite copper projects, as displayed in Figure 1 below. 

Figure 3 Location of Productora and the Cortadera discovery in relation to the consolidation of new growth projects and coastal range infrastructure 

On 22 February 2019, Hot Chili announced the execution of a formal Option Agreement to acquire a 100% interest in Cortadera. In early April, the Company commenced a confirmation drilling programme comprising 17 holes. 

The drilling has confirmed and extended areas of surface enrichment and wide, higher-grade, copper-gold sulphide mineralisation at depth, which had not previously been closed off by 23,000m of historical diamond drilling. 

Hot Chili’s recent drill holes at Cuerpo 3 (the largest of the four porphyries discovered to date) include some of the worlds’ stand-out copper-gold porphyry drill results reported in recent time. The Cuerpo 3 porphyry remains open to the north, south and at depth. Significant intersections include: 

• 972m grading 0.5% copper and 0.2g/t gold from surface (including 412m grading 0.7% copper and 0.3g/t gold)
• 750m grading 0.6% copper and 0.2g/t gold from 204m down-hole depth (including 188m grading 0.9% copper and 0.4g/t gold)
• 848m grading 0.4% copper and 0.2g/t gold from 112m down-hole depth (including 184m grading 0.7% copper and 0.3g/t gold)
• 864m grading 0.4% copper and 0.1g/t gold from 62m down-hole depth (including 348m grading 0.6% copper and 0.2g/t gold),
• 649m grading 0.4% copper and 0.1g/t gold from 328m down-hole depth (including 440m grading 0.5% copper and 0.2g/t gold),
• 596m grading 0.5% copper and 0.2g/t gold from 328m down-hole depth (including 184m grading 0.7% copper and 0.3g/t gold), and
• 542m grading 0.5% copper and 0.2g/t gold from 422m down-hole depth, (including 218m grading 0.7% copper and 0.2g/t gold)

Note: Please refer to ASX announcement “Another Record Step-Out Drill Result at Cortadera” 20th March 2020 for Table 1 information relating to the reporting of exploration results, data and sampling techniques 

Source- Regulus Resources (TSXV. REG) November 2019 Corporate Presentation (slide 10) as per SNL financial, SNL search criteria include: >450 m interval, primarily copper interval & reported after Jan 1, 2018. Only longest reported interval considered. Results ordered by down-hole width of drill intersection and addition of CRP0029D and CRP0040D result. 

Cortadera is shaping up as a globally significant standalone copper-gold project which can utilise the Productora project resources, and leverage from a central processing and combined infrastructure approach along the coastline of Chile. 

The Company’s recent discovery and definition of a higher grade bulk tonnage underground development opportunity in combination with shallow, high grade bulk tonnage open pit sources – places Cortadera in a unique position amongst potential large-scale global copper-gold developments. 

Qualifying Statements 

Competent Person’s Statement- Exploration Results

Exploration information in this Announcement is based upon work compiled by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscientists (AIG). Mr Easterday has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a ‘Competent Person’ as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code). Mr Easterday consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Forward Looking Statements

This Announcement is provided on the basis that neither the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Announcement and nothing contained in the Announcement is, or may be relied upon as a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law. The Announcement contains material which is predictive in nature and may be affected by inaccurate assumptions or by known and unknown risks and uncertainties and may differ materially from results ultimately achieved.

The Announcement contains “forward-looking statements”. All statements other than those of historical facts included in the Announcement are forward-looking statements including estimates of Mineral Resources. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, copper, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade recovery rates from those assumed in mining plans, as well as political and operational risks and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of the Announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. All persons should consider seeking appropriate professional advice in reviewing the Announcement and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the Announcement nor any information contained in the Announcement or subsequently communicated to any person in connection with the Announcement is, or should be taken as, constituting the giving of investment advice to any person

ASX Announcement 

 Wednesday 22nd July 2020 

 Mining Commences at Productora 

 Four Months Ahead of Schedule 

Highlights

Hot Chili Limited (ASX code HCH) (“Hot Chili” or “Company”) is pleased to announce that lease mining at its Productora copper project in Chile has commenced well ahead of schedule.

The Company is very pleased with the speed in which its partner, Chilean government agency ENAMI, has moved to appoint an experienced local mining group and coordinate necessary approvals for mining at Productora.

In addition, the Company confirms that it is in discussion with ENAMI to expand the scale of the existing 120,000 tonne per annum Lease Mining and Processing Agreement at Productora.

Hot Chili’s Managing Director Christian Easterday said that first production marked an important milestone and the beginning of first revenue for the Company.

“We have been able to deliver a unique transition from explorer and project developer to producer without the requirement for capital or operating cost.

“Even more unique is to have achieved this in partnership with the government of Chile while safe-guarding jobs in the local community in which we operate.

“Higher copper and gold prices in combination with high grade ore production is set to deliver stronger than anticipated first revenue.

“This is welcome news ahead of our plans to shortly unveil a maiden resource estimate for our neighbouring world-class Cortadera copper-gold discovery.”

As outlined in the company’s announcement to the Australian Securities Exchange on 2nd June 2020 “Mining and Processing Agreement Executed with ENAMI”, the formal agreement with ENAMI involves:

• Two-year concession for lease mining and processing approximately 120,000 tonnes per annum of ore through ENAMI’s Vallenar plant (located 15km north of Productora) over a two-year period with an option to extend the agreement by a further year
• Productora joint venture company (Hot Chili 80%) to be paid US$2 per tonne ore processed and a 10% royalty for the sale value of extracted minerals

Lease mining will benefit from two existing underground mines at Productora (Santa Innes and Productora), with depletion of Hot Chili’s existing 167M tonne JORC compliant open pit reserve not considered material.

Given current spot prices of approximately US$2.95/lb copper and US$1,840/oz gold, projected annual revenue to Hot Chili from the ENAMI agreement at Productora is expected to be approximately A$1.4 million to $1.8 million per annum – based on 120,000 tonnes per annum and targeted annual head grade of 1.4% copper and 0.3g/t gold.

The Company will also gain important mining and processing reconciliation data for high grade ore at Productora.

Hot Chili is focussed on rapidly progressing the growth of its Cortadera discovery, located 14km from Productora, where expansion diamond drilling has recently re-commenced. The Cortadera discovery is still in Its infancy with recent drilling indicating that the forthcoming maiden resource estimate will continue to grow.

The Company looks forward to providing further updates over the coming weeks in relation to drilling results and key growth catalysts.

For more information please contact:

Christian Easterday (Managing Director)  : +61 8 9315 9009

Email: christian@hotchili.net.au

or visit Hot Chili’s website at www.hotchili.net.au 

Qualifying Statements 

JORC Compliant Ore Reserve Statement

Productora Open Pit Probable Ore Reser›ve Statement – Reported 2nd March 2016

Note 1: Figures in the above table are rounded, reported to two significant figures, and classified in accordance with the Australian JORC Code 2012 guidance on Mineral Resource and Ore Reserve reporting. Note 2: Price assumptions: Cu price – US$3.00/lb; Au price US$1200/oz; Mo price US$14.00/lb. Note 3: Mill average recovery for fresh Cu – 89%, Au – 52%, Mo – 53%. Mill average recovery for transitional; Cu 70%, Au – 50%, Mo – 46%. Heap Leach average recovery for oxide; Cu – 54%. Note 4: Payability factors for metal contained in concentrate: Cu – 96%; Au – 90%; Mo – 98%. Payability factor for Cu cathode – 100%.

JORC Compliant Mineral Resource Statements

Productora Higher Grade Mineral Resource Statement, Reported 2nd March 2016

Reported at or above 0.25 % Cu. Figures in the above table are rounded, reported to two significant figures, and classified in accordance with the Australian JORC Code 2012 guidance on Mineral Resource and Ore Reserve reporting. Metal rounded to nearest thousand, or if less, to the nearest hundred.

Reported at or above 0.1% Cu and below 0.25 % Cu. Figures in the above table are rounded, reported to two significant figures, and classified in accordance with the Australian JORC Code 2012 guidance on Mineral Resource and Ore Reserve reporting. Metal rounded to nearest thousand, or if less, to the nearest hundred. Metal rounded to nearest thousand, or if less, to the nearest hundred.

Mineral Resource and Ore Reserve Confirmation

The information in this Announcement that relates to Mineral Resources, Ore Reserve estimates and Production Targets on the Productora copper project was previously reported in the ASX announcement “Hot Chili Delivers PFS and Near Doubles Reserves at Productora” dated 2nd March 2016, a copy of which is available on the ASX website at www.asx.com.au and the Company’s website at www.hotchili.net.au. The company confirms that it is not aware of any new formation or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the estimates in that announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement

Competent Person’s Statement- Exploration Results

Exploration information in this Announcement is based upon work compiled by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscientists (AIG). Mr Easterday has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a ‘Competent Person’ as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code). Mr Easterday consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Competent Person’s Statement– Mineral Resources

The information in this Announcement that relates to the Productora Project Mineral Resources, is based on information compiled by Mr J Lachlan Macdonald and Mr N Ingvar Kirchner. Mr Macdonald is employed by AMC Consultants (AMC), and is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Kirchner is employed by AMC Consultants (AMC). AMC has been engaged on a fee for service basis to provide independent technical advice and final audit for the Productora Project Mineral Resource estimates. Mr Kirchner is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and is a Member of the Australian Institute of Geoscientists (AIG). Both Mr Macdonald and Mr Kirchner have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code 2012).

Competent Person’s Statement– Ore Reserves

The information in this Announcement that relates to Productora Project Ore Reserves, is based on information compiled by Mr Carlos Guzmán, Mr Boris Caro, Mr Leon Lorenzen and Mr Grant King. Mr Guzmán is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM), a Registered Member of the Chilean Mining Commission (RM- a ‘Recognised Professional Organisation’ within the meaning of the JORC Code 2012) and a full time employee of NCL Ingeniería y Construcción SpA (NCL). Mr Caro is a former employee of Hot Chili Ltd, now working in a consulting capacity for the Company, and is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and a Registered Member of the Chilean Mining Commission. Mr Lorenzen is employed by Mintrex Pty Ltd and is a Chartered Professional Engineer, Fellow of Engineers Australia, and is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr King is employed by AMEC Foster Wheeler (AMEC FW) and is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). NCL, Mintrex and AMEC FW have been engaged on a fee for service basis to provide independent technical advice and final audit for the Productora Project Ore Reserve estimate. Mr. Guzmán, Mr Caro,Mr Lorenzen and Mr King have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Forward Looking Statements

This Announcement is provided on the basis that neither the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Announcement and nothing contained in the Announcement is, or may be relied upon as a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law. The Announcement contains material which is predictive in nature and may be affected by inaccurate assumptions or by known and unknown risks and uncertainties and may differ materially from results ultimately achieved.

The Announcement contains “forward-looking statements”. All statements other than those of historical facts included in the Announcement are forward-looking statements including estimates of Mineral Resources. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, copper, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade recovery rates from those assumed in mining plans, as well as political and operational risks and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of the Announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. All persons should consider seeking appropriate professional advice in reviewing the Announcement and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the Announcement nor any information contained in the Announcement or subsequently communicated to any person in connection with the Announcement is, or should be taken as, constituting the giving of investment advice to any person

 ASX Announcement 

 Thursday 18th June 2020 

Drill Hole Intersecting Wide Zone of Mineralisation 

Highlights

Hot Chili Limited (ASX code HCH) (“Hot Chili” or “Company”) is pleased to announce that diamond drilling has re-commenced at the Company’s Cortadera copper-gold discovery in Chile and is on-track to deliver another exceptionally wide porphyry intersection.

The Company has re-entered a 250m step-out hole (CRP0042D), which was temporarily suspended at 616m depth in March 2020 due to COVID-19

Mineralised porphyry has been observed over 300m to date with the hole planned to extend a further 420m at this stage.

The Company plans to initially drill seven diamond holes focussed on significantly expanding the extent of high grade copper and gold at Cortadera. First drill holes, including CRP0042D, will target areas within the high grade core of the main porphyry (Cuerpo 3) which have not been tested and remain open.

With average drill intersection grades ranging between 0.7% to 0.9% copper and 0.2g/t to 0.5g/t gold, Cortadera’s high grade core has grown rapidly since its discovery in late July 2019.

Work is on-track to deliver first resource estimates at Cortadera and then San Antonio from drilling undertaken prior to March this year.

Update on Preparation for Commencement of Lease Mining at Productora

Hot Chili is assisting Chilean government agency ENAMI in its preparations for the commencement of lease mining and processing of high grade ore from Hot Chili’s Productora copper project, as outlined in the Company’s last announcement to the Australian Securities Exchange (ASX) on 2nd June 2020.

A review of high grade reserve areas located close to the existing underground mines at Productora has outlined the Habanero Lode as the likely target for lease mining.

Habanero was discovered by Hot Chili in 2013, lying immediately adjacent (80m development distance) to the Productora underground mine and hosting numerous high grade drilling intercepts over significant widths (including PRP00711 – 71m grading 1.6% copper & 0.4g/t gold from 91m down-hole depth, as announced to ASX 8th October 2013).

The recently executed agreement with ENAMI contemplates lease mining and processing of Productora ore at a target grade of 1% to 1.2% copper. Exploitation of Habanero is expected to commence later this year and has the potential to generate annual revenue in excess of A$1.2 million to A$1.5 million to Hot Chili.

The Company looks forward to providing further updates on its diamond drilling activities at Cortadera and releasing first results once assays are received during July.

This announcement is authorised by the Board of Directors for release to ASX.

Figure 1 Long Section of the Cortadera discovery copper distribution model from the recently updated 4-dimmensional geological model. Note the growing extent of the high grade core within Cuerpo 3 and Cuerpo 2, and the location of CRP0042D.

Figure 2 Type Section of the Cortadera discovery copper distribution model from the recently updated 4-dimmensional geological model. Note the location of CRP0042D.

About Cortadera

Cortadera is a privately-owned, major copper-gold porphyry discovery located 600km north of Santiago along the Chilean coastal range, where historical world-class discovery drill results were only publicly released by Hot Chili in February 2019.

Importantly, Cortadera lies 14km from the Company’s large-scale Productora copper development and adjacent to the high grade El Fuego satellite copper projects, as displayed in Figure 1 below.

Figure 3 Location of Productora and the Cortadera discovery in relation to the consolidation of new growth projects and coastal range infrastructure 

On 22 February 2019, Hot Chili announced the execution of a formal Option Agreement to acquire a 100% interest in Cortadera. In early April, the Company commenced a confirmation drilling programme comprising 17 holes.

The drilling has confirmed and extended areas of surface enrichment and wide, higher-grade, copper-gold sulphide mineralisation at depth, which had not previously been closed off by 23,000m of historical diamond drilling.

Hot Chili’s recent drill holes at Cuerpo 3 (the largest of the four porphyries discovered to date) include some of the worlds’ stand-out copper-gold porphyry drill results reported in recent time. The Cuerpo 3 porphyry remains open to the north, south and at depth. Significant intersections include:

• 972m grading 0.5% copper and 0.2g/t gold from surface (including 412m grading 0.7% copper and 0.3g/t gold)
• 750m grading 0.6% copper and 0.2g/t gold from 204m down-hole depth (including 188m grading 0.9% copper and 0.4g/t gold)
• 848m grading 0.4% copper and 0.2g/t gold from 112m down-hole depth (including 184m grading 0.7% copper and 0.3g/t gold)
• 864m grading 0.4% copper and 0.1g/t gold from 62m down-hole depth (including 348m grading 0.6% copper and 0.2g/t gold),
• 649m grading 0.4% copper and 0.1g/t gold from 328m down-hole depth (including 440m grading 0.5% copper and 0.2g/t gold),
• 596m grading 0.5% copper and 0.2g/t gold from 328m down-hole depth (including 184m grading 0.7% copper and 0.3g/t gold), and
• 542m grading 0.5% copper and 0.2g/t gold from 422m down-hole depth, (including 218m grading 0.7% copper and 0.2g/t gold)

Note: Please refer to ASX announcement “Another Record Step-Out Drill Result at Cortadera” 20th March 2020 for Table 1 information relating to the reporting of exploration results, data and sampling techniques 

Source- Regulus Resources (TSXV. REG) November 2019 Corporate Presentation (slide 10) as per SNL financial, SNL search criteria include: >450 m interval, primarily copper interval & reported after Jan 1, 2018. Only longest reported interval considered. Results ordered by down-hole width of drill intersection and addition of CRP0029D and CRP0040D result. 

Cortadera is shaping up as a globally significant standalone copper-gold project which can utilise the Productora project resources, and leverage from a central processing and combined infrastructure approach along the coastline of Chile. 

The Company’s recent discovery and definition of a higher grade bulk tonnage underground development opportunity in combination with shallow, high grade bulk tonnage open pit sources – places Cortadera in a unique position amongst potential large-scale global copper-gold developments. 

Qualifying Statements 

Competent Person’s Statement- Exploration Results

Exploration information in this Announcement is based upon work compiled by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscientists (AIG). Mr Easterday has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a ‘Competent Person’ as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code). Mr Easterday consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Forward Looking Statements

This Announcement is provided on the basis that neither the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Announcement and nothing contained in the Announcement is, or may be relied upon as a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law. The Announcement contains material which is predictive in nature and may be affected by inaccurate assumptions or by known and unknown risks and uncertainties and may differ materially from results ultimately achieved.

The Announcement contains “forward-looking statements”. All statements other than those of historical facts included in the Announcement are forward-looking statements including estimates of Mineral Resources. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, copper, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade recovery rates from those assumed in mining plans, as well as political and operational risks and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of the Announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. All persons should consider seeking appropriate professional advice in reviewing the Announcement and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the Announcement nor any information contained in the Announcement or subsequently communicated to any person in connection with the Announcement is, or should be taken as, constituting the giving of investment advice to any person

Coline Sandell-Hay | The Assay | April 7, 2022

Hot Chili Limited’s (ASX:HCH) (TSXV:HCH) (OTCQX:HHLKF) application to join the US-based OTCQX market has been accepted and the company’s shares will commence trading in the US on the OTCQX Best Market under the ticker OTCQX: HHLKF on April 7, 2022.

 The OTCQX Best Market is the highest tier of OTC Markets Group’s market platforms, on which 12,000 US and international securities trade.

The OTCQX Market is designed for established, investor-focused U.S. and international companies. To qualify, companies must meet high financial standards, follow best practice corporate governance, and demonstrate compliance with applicable securities laws.

Managing Director, Christian Easterday, said Hot Chili Ltd has upgraded to OTCQX from the OTCQB Venture Market where it has been trading since 6 May 2021. By upgrading to the OTCQX the company is positioned to enhance its visibility and broaden its access to the extensive market of US retail, high net worth and institutional investors.

The primary advantages to North American investors of the company’s inclusion on the OTCQX platform include:

• It allows trading of HCH securities in the local time zone; appealing to investors and brokers who prefer securities that trade and settle during US trading hours.

• Trades and settlements are conducted in US Dollars with no exchange rate risk or additional FX fees.

 The company’s shares will continue to trade on the Australian Securities Exchange and the TSX Venture Exchange under the symbol HCH, with its shares now also tradeable on the OTCQX market (www.otcmarkets.com).

“We are delighted to be moving up to OTCQX, as we deliver the next level of growth. An upgrade to OTCQX is a logical next step for Hot Chili,” Mr Easterday said.

“This designation is OTC Market’s top tier and a step towards greater liquidity and support to our active North American investor outreach.”

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Funny man tries a spicy and hot dish from the national cuisine. He’s all red and is trying to cool his mouth with his hand

Copper is fast emerging as the go-to commodity for exposure to the energy transition, but a new wave of mines is needed to bridge the 6.5Mt supply gap experts are forecasting by 2030.

Bank of America warns the shortfall could arrive as early as 2025 following the completion of the current wave of project buildouts, the latest being Ivanhoe Mines’ massive Kamoa-Kakula project in the Democratic Republic of the Congo.

Even economic headwinds such as China’s slower than expected recovery and continued concerns that the US might enter into a recession will not alleviate the need for more copper production.

So it is a good thing that ASX copper developers like Xanadu Mines (ASX:XAM), Rex Minerals (ASX:RXM), Caravel Minerals (ASX:CVV) and Hot Chili (ASX:HCH) are working hard at bringing their near-term monster copper projects into production.

Bright future for copper production at Costa Fuego

Of these, Hot Chili might well have the biggest impact with the much-anticipated Preliminary Economic Assessment (PEA) for its Costa Fuego development packing a hefty punch as befitting such a large copper-gold resource.

Commonly referred to as a scoping study, the PEA looks at the economic factors to determine the potential viability of a mine – in this case Costa Fuego, which Hot Chili believes can be further optimised in the company’s planned PFS, due for completion in the second half of 2024.

From the estimated copper equivalent production rate of 112,000t per annum – consisting of 95,000t of copper and 49,000oz of gold over a 14-year period of a 16-year mine life – to the estimated revenue and free cash flow of US$13.52bn and US$3.28bn down to the post-tax net present value (a measure of profitability) of US$1.1bn, there’s nothing small about Costa Fuego.

That’s the equivalent of bringing another Oz Minerals (ASX:OZL) into production for the Australian market and should come as no surprise given the massive Measured and Indicated resource (high confidence stuff that you can base mine plans off) of 725Mt grading 0.47% copper equivalent.

Armed with an Inferred resource of 202Mt grading 0.36% copper equivalent, there’s still plenty of room to grow Costa Fuego’s mineable resources with Hot Chili targeting a potential increase in study scale towards 150,000tpa copper project for a +20 years mines life.

he largest development-scale project on ASX

In an interview with Stockhead, Hot Chili (ASX:HCH) managing director Christian Easterday says the company has taken a conservative approach, using a standard NPV 8% discount rate, a calculated 20% contingency on all items of capital and long-term US$3.30/lb copper price for optimisations.

“We’ve been working towards a combined project for our advanced resources at Costa Fuego for 10 years and have quadrupled our resource base in that time,” he explained.

“Most importantly, the metal production on the project will make it the largest development project by scale on the ASX.

“The capital to build Costa Fuego has come in at US$1bn and for the 112,000 tonnes of copper production coming out of this thing annually, what that means is that we have the lowest capital intensity project of large-scale undeveloped projects in the world – that’s a very, very important point one that really differentiates us from our counterparts.”

Pathway to production

Hot Chili has a clear pathway to production with plans to kick off a 30,000m drilling program targeting resource expansion and exploration targets ahead of an upcoming Costa Fuego resource upgrade by late 2023.

“We’ll be looking to see if we can pull that mine life out to plus 20 years which will be determined by our next steps on resource growth,” Easterday explained.

“This next resource upgrade will include about two years’ worth of drilling and will likely take us comfortably over 1 billion tonnes.

“Next year, we plan to deliver the pre-feasibility study – which is already 80% complete – by the mid-year mark and most importantly, before the end of 2024 we will deliver our environmental impact assessment for our final approval for mining and aiming for a definitive feasibility following that in the first half of 2026.”

Ample treasury of $26m to fund resource expansion drilling

Alongside the PEA, Hot Chili has executed a binding US$15m investment agreement with Osisko Gold Royalties for a 1.0% net smelter return (NSR) royalty on copper and a 3% NSR royalty on gold across the Costa Fuego copper-gold project, 600km north of Santiago.

While the cash injection is undoubtedly useful for…. it also clearly highlights the value that Osisko attributes to the Costa Fuego project given that Hot Chili has a market capitalisation of just $119m.

The funds provide the company with ample treasury of around $26m to undertake the upcoming 30,000m drilling program fully funded.

“Importantly, Osisko’s involvement alongside Glencore’s strategic shareholding in Hot Chili demonstrates Costa Fuego’s global relevance and the project’s potential to deliver near-term, meaningful, new copper supply,” Easterday said.

Third commodity in the 21^st Century to make a step-change in price

From Hot Chili’s point of view, copper is primed as the third commodity of the 21^st Century to make a step-change in price, with all the ingredients for a 10-fold increase.

“The first commodity to do so was iron ore (the largest metal market in the world) in the early 2000s, moving from $20/tonne to $200/tonne and eventually balancing at around $90 to $120/tonne,” he said.

“The second commodity to do so has been lithium in the past five years.

“Copper is the second largest metal market in the world and has all the hallmarks of a commodity which has very little ability to respond with new supply to a demand shift that will require the market to add at least 50% more annual production in the next 10 years.

“I imagine in the next five to 10 years we will see copper prices driving north of US$8/lb – interestingly this is only double the current price.”

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• Hot Chili has entered into an MoU with the existing Las Losas port facility in Chile
• The two parties will work together to undertake a port feasibility study for a bulk tonnage copper concentrate facility to be developed
• Hot Chili plans to fund 20% of the US$4.6m study for two years

Special Report: Hot Chili has executed a five-year MoU deal with Puerto Las Losas SA (PLL) to evaluate bulk tonnage loading alternatives for copper concentrate from the Costa Fuego project in Chile.

The MoU with PLL provides Hot Chili (ASX:HCH) the right (for up to five years) to negotiate a binding port services agreement for Costa Fuego, which would include a ‘take or pay volume’ clause based on at least 80% of the project’s future annual concentrate production.

Under the terms of the agreement, HCH and PLL will undertake a port feasibility study, comprising pre-feasibility engineering (FEL2), feasibility engineering (FEL3) and environmental studies.

HCH will fund 20% of the port feasibility study, which is estimated to have a total cost of ~US$4.6m and will take roughly two years to complete.

Upon completion of the port feasibility study – and provided that a shipping solution for loading copper concentrates is agreed at existing or potential infrastructure in PLL – HCH will have a right of first refusal (ROFR) to ship copper concentrates through PLL’s facilities in Huasco Bay for a three-year period.

PLL may terminate the ROFR by reimbursing HCH’s port feasibility study costs.

Unlocking a significant copper infrastructure corridor

“Leveraging an existing port, 50km away, into a bulk concentrate export facility has the potential to unlock significant capital and operating savings for Costa Fuego and other potential mine developers in the Huasco region of Chile,” HCH managing director Christian Easterday says.

“Hot Chili plans to jointly develop a significant copper infrastructure corridor, enabling our own production and unlocking multiple projects within the region, which would benefit significantly from desalinated water supply and proximal bulk copper concentrate port facilities.”

Port feasibility study to begin shortly

Within the coming months, PPL will be responsible for selecting a suitably qualified, top-tier, independent engineering company to carry out a port feasibility study.

This study will evaluate bulk handling and loading alternatives for copper concentrates using the existing Las Losas port facilities, potentially with or without modifying the existing infrastructure for the port in operation.

Representatives from both PPL and HCH will form a technical committee to progress the studies and within the first month, aim to define key project deliverables, as well as a timetable for management of the completion of the feasibility study workstreams.

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Bulls n Bears

Hot Chili has applied for a second maritime concession in Chile as it looks to develop a new company that will have an overflowing stream of water infrastructure assets.

Management says the new company will be aimed at servicing the growing demand for the valued commodity from the community, other mining companies and local farmers within the fast-growing region.

The company today confirmed it had submitted its latest maritime concession application to support the potential for a whopping long-term, regional multi-user seawater and desalination water supply network for the Huasco valley area of the Southern Atacama region of Chile that sits about 600km north of the Santiago capital. The second application includes brine discharge for potential seawater desalination operations as part of a push to deliver both raw seawater and desalinated water from its proposed network.

Hot Chili is now preparing to transfer all of its water assets into the new standalone company that it will still control. It says positive discussions with several potential desalinated water customers in the Huasco Valley region have already taken place, in addition to engaging with potentially suitable infrastructure partners.

It has also held talks with Chilean Government regulators to determine the best approach for its proposed plans and is reviewing the potential for direct government support to assist with driving the project forward. Management believes such a positive development within the region could trigger substantial local mining investment and deliver impressive growth to the company’s market value.

Water scarcity is THE critical issue for new mine developments in the Atacama on both the Chilean and Argentinean side of the Andes. Hot Chili is the only Company holding most of the necessary permits required to provide desalinated water to the Huasco Valley – a prolific region for potential new global copper supply needed to support global electrification and decarbonation. Securing these assets has involved over a decade of commitment.

Hot Chili executive vice-president José Ignacio Silva

The company’s recently-completed concept study for a staged water network development indicated the viability of the project at an initial 300 litres per second scale, with an eventual ramp-up to 3700 litres per second.

The study assessed a potential 100 per cent renewable energy-driven desalination water project with the potential to supply those needing a reliable water supply, such as agricultural, community and new mining companies within the Huasco Valley region near to where the company’s Costa Fuego copper project sits. The region contains six major undeveloped copper projects and two new, large-scale copper discoveries, with all projects requiring desalinated water supply.

Hot Chili says it holds the only granted maritime water concession and most of the necessary permits to be able to provide much-needed critical water to the region. It says the Chilean Government is actively encouraging investment in multi-user water networks in the region, with water scarcity being one of the biggest obstacles facing new global copper supply.

The compelling Costa Fuego project’s total resource sits at 3.62 million tonnes of copper-equivalent, with resources in the indicated category of 798 million tonnes grading 0.45 per cent copper-equivalent for 2.9 million tonnes of copper, 2.6 million ounces of gold, 12.9 million ounces of silver and 68,000 tonnes of molybdenum.

The total resource classified as inferred is 203 million tonnes at 0.31 per cent copper-equivalent for 500,000 tonnes of copper, 400,000 ounces of gold, 2.4 million ounces of silver and 12,000 tonnes of molybdenum.

The Costa Fuego project comprises the Cortadera, Productora, Alice and San Antonio deposits and management says they are all in close proximity and sit at low altitude – about 800m to 1000m.

Hot Chili’s push to build an in-demand water supply network could see it deliver tremendous value to the region and it may well find itself swimming in proposals from potential users.

Bulls n Bears

Hot Chili has nailed down the right to acquire a lucrative 140-square-kilometre patch of the historical Domekyo copper-gold mining centre, a mere 30km from its flagship Costa Fuego copper hub in Chile.

And it is a timely acquisition for the ASX-listed explorer as the price for the red metal hit US$10,000 (AU$15,244) a tonne last week for the first time since 2022. Supply disruptions following the forced closure of one of the world’s biggest copper mines in Panama late last year and ongoing drought conditions in Zambia that have impacted copper production, married up with increasing demand from green industries, have spurred the significant copper rally.

Under the terms of the acquisition agreement, Hot Chili – via its Chilean subsidiary La Frontera – will stump up US$4 million (AU$6.1 million) in staged payments over four years to earn a 100 per cent interest in the 12 exploration and 14 exploitation concessions at Domeyko. Additionally, the vendor will be granted a 1 per cent net smelter royalty (NSR) for the concession package and Frontera will have the first right of refusal to buy it back.

The Domeyko mining centre lays claim to several significant historical copper-gold mines where previous operators exploited the shallow oxide mineralisation, but never ventured deeper to test the potential copper sulphide source. Interestingly, management says the area is prospective for both porphyry and structurally-hosted styles of copper-gold mineralisation.

Hot Chili has been on a land grab of late, picking up the nearby historical Marsellesa and Cordillera copper mines and the Cometa project, all within an easy 30km trucking distance to its developing Costa Fuego project.

However, Domeyko – which boosts its land-holding by a hefty 25 per cent –is its biggest acquisition since 2019 when it stitched up its Cortadera concessions that sit adjacent to its Productora and San Antonio copper assets and collectively make up Hot Chili’s Costa Fuego copper hub.

The three deposits at Costa Fuego have a combined mineral resource estimate of 798 million tonnes of measured and indicated resources grading 0.45 per cent copper-equivalent for 2.9 million tonnes of copper, 2.6 million ounces of gold, 12.9 million ounces of silver and 68,000 tonnes of molybdenum

Hot Chili released a preliminary economic assessment (PEA) in June last year showing the project will spit out a massive $309 million a year on average in free cash across a 16-year mine life. With the impressive set of numbers outlined, the project is emerging as one of the world’s biggest and lowest-cost copper plays, with an estimated post-tax net present value (NPV) of US$1.1 billion (AU$1.66 billion).

Management says it is on track to deliver a prefeasibility study (PFS) on the project in the second half of this year.

Costa Fuego sits in the low coastal range of the Atacama Region, 600km north of the Chilean capital of Santiago in a country famed for its copper resources. With a compelling portfolio of new projects in the pipeline, all within easy trucking distance to Costa Fuego, Hot Chili looks set to strike at a time when the copper price is just starting to heat up.