July 2, 2024 | Capital 10X

Hot Chili (ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) held an investor webinar recently and laid out current investment priorities and what comes next for Costa Fuego, the company’s low cost, high return Chilean copper project.

Importantly, the company shared a copper price forecast using the Lassonde curve and gave their view on where we are in the current copper commodity cycle.

Below is a summary of all the important information shared on the webinar.

A Successful Recent Private Placement

Hot Chili’s A$25 million private placement was well subscribed and saw strong interest from investor’s across Australia, Europe and North America. The company also had to cap the number of current investors who could buy more shares even after upsizing the buyback option to A$7 million from A$5 million. Management reported that out of 24 participants in the capital raise, 17 were institutional, 13 were from North America and 6 were new to the company.

Glencore was also a participant in the capital raise and owns 7.5% of Hot Chili. Glencore’s desire to maintain its current ownership stake is an important positive mark for the potential of Hot Chili’s Costa Fuego project in Chile, one of the largest copper projects not owned by a major.

Costa Fuego One of the Lowest Cost Projects in Chile

Initiative Ongoing to Bring in More North American Investors

Hot Chili made forays into the North American market over the past two years and now has 8% of the registrar on the TSX coming from North American capital.

Hot Chili is moving towards financing on their large-scale copper asset and the company is expanding relations with investment banks and broker groups in North America with the long term goal of growing a stable group of shareholders.

Costa Fuego is High Return With Strong Leverage to Copper Prices

Hot Chili’s recent PEA for Costa Fuego showed that for every 10 cent move in the copper price above $3.85 /lb., the project value increases by $100 million.

$1.5Bn NPV and 26% IRR at Current Copper Prices ($4.35/lb)

This leverage puts them in line with six other large-scale copper producers on the TSX/ASX, outside of the majors that are +100,000 tons per annum projects.

At current copper prices of $4.35/lb Costa Fuego is worth US$1.5 billion to Hot Chili vs the company’s current market cap of only US$94 million.

Management believes that more capital will move from producers to developers with exposure to the copper price at copper prices above $4.00/lb.

Relative Performance

Looking at the performance of Hot Chili on the ASX over the past 18 months (red) the stock has done well on a relative basis, in line with most of the copper equities up 10% – 20% with the copper price. Xanadu Mines is the outperformer of the group.

Results were similar on the TSX; producers’ stock prices are up 20 to 30% over the past 3 months, with the expectation that the continuing bull market will also lift developers and explorers in time.

Chart shows the performance of several ASX copper equities (December 2022 to June 06, 2024)

Strategy: A Story of the Commodity Cycle

Understanding where we are in the commodity cycle is key for investors to understand how explorers, developers and producers are positioned in the market.

Hot Chili’s Non-Executive Chairman, Dr. Nicole Adshead-Bell gave some insights while highlighting 2 charts; one from Scotiabank quarterly’s commodity cycle chart and another from Investec’s Mining Clock.

The goal for investors is always to get in at the lows and ride the rebound.

A good example to look at is the past 2-year price action of lithium.

We saw the start of a lithium bull run in December 2020 which ultimately took the price up 12x, with almost all equities with exposure to lithium rising spectacularly as well.

Rising prices saw huge inflows of investment in discoveries and production. Due to rising production from the wave of investment, lithium prices have fallen lately, down significantly from the highs though still well above where they were in late 2020.

Lithium Price Performance (Dec 2020-Jun 2024)

Adshead-Bell believes that even after strong copper price performance so far in 2024, we are still at lows in the copper price looking at the cycle overall. She believes supply will continue to decline over the next 18 months supporting higher prices.

Provocatively, Hot Chili management strong believes the copper price needed to incentivize enough supply is between $6.00-$8.00/lb, 30%-70% above peak levels reached in the last cycle. 

Hot Chili’s goal is to manage their business to take advantage of where we are in the cycle. They are aggressively advancing the Costa Fuego project so that production can coincide with rising prices. Costa Fuego will be one of the first medium term projects to start up after a few projects from the majors begin producing in 2024 and 2025.

Hot Chili Production Timeline vs Industry Peers

Themes: Investor & Company Behavior

Hot Chili talked through different parts of the commodities cycle and the behavior of companies and investors depending on where in the cycle we are.

During a bear market, there are bankruptcies, asset sales and dilutive financings in the juniors sector, where capital is spent just to keep going, no investments are made that may move the equity price beyond the commodity price.

Generalist investors tend to buy high and sell low.

As prices stabilize (or in the case of copper, stay resilient) mining companies pinch pennies,; geologists are fired as companies attempt to avoid going under.

This is when savvy investors begin to buy. They understand the cycle and know that prices are at lows demonstrated by companies implement efficiencies on the balance sheet.

Industry Behavior Through the Commodity Cycle

As prices finally begin to rise there is low-risk M&A, producers buy other producers.

In the past year BHP acquired Oz Minerals, and is currently negotiating to buy Anglo American, primarily for its copper assets.

As mid and small caps strengthen their balance sheets, their attractiveness to the majors increases. As the cycle continues and the underlying commodity price improves, capital becomes available for development, not just for mine expansion. We are here today.

Financings for mid and small cap companies are the green shoots of a bull market in the view of Adshead-Bell.

A Bull Market: More Opportunity, More Risk

The next phase of the cycle is development in more higher risk activities (e.g. exploration, development) as companies drill holes and make new discoveries.

At this point investors demand growth, and there are new IPOs, as companies strive to prove their exposure to the commodity.

At the top of the bull market, high risk M&A rules the day, as large caps start acquiring companies down the supply chain – including developers and higher risk explorers.

Generalist investors get involved, as they begin to do their research and invest. In order to maximize shareholder returns, companies should time the cycle.

We are definitely not in this stage according to Hot Chili.

The Lassonde Curve: A Visual of Optimal Investment Timing

So where does the Lassonde Curve fit into the cycle?

Adshead-Bell believes that the best time for alpha generation is in the discovery phase, when investor sentiment is at its highest, which is reflected in the share price.

Hot Chili is focusing on additional discovery drilling and increasing the total copper resource to drive value before making a construction decision in 2025.

Costa Fuego Resource Continues to Grow Driving Value for Shareholders

Hot Chili has 16 years of experience in Chile as a company in the market, and is currently fostering relationships with institutional and strategic investors.

The company believes that the best way to generate market excitement at the next stage of the curve, is material resource growth and success.

The path to exposure to alpha generation for developers is mainly through value in the drill bit; smart exploration with historic mining activity and/or oxide mineralization as evidence of a larger system.

Also managing the company efficiency allows to strike well asset acquisition opportunities take place. So the company is focused and ready to benefit as the copper price continues to rise quarter over quarter.

To learn more about Hot Chili, including upcoming catalysts and who the economics of Costa Fuego are so strong, we recommend browsing the company’s investor presentations found HERE

Hot Chili Limited is a market awareness client of Capital 10X. For more information, including potential conflicts of interest please see our Content Disclaimer.

July 30, 2024 | Jessica Cummins

It’s the quarterly season again as the ASX market announcements page becomes increasingly flooded with update lodgements.

To save you the trouble of trudging through it all, we’ve wrapped up the highlights from some of the (resources) reports that caught our eye.

Hot Chili (ASX:HCH)

Hot Chili continued to focus on several development studies workstreams during the quarter ahead of the planned delivery of a pre-feasibility study for the Costa Fuego copper hub in late 2024.

In March, the company entered an MOU with the existing Las Losas port facility in Chile to negotiate a binding port services agreement and in May $31.9m was raised by way of a $24.9m private placement and $7m share purchase plan to fund development and exploration activities over the next 18 months.

Development study drilling during the quarter focussed on metallurgical and hydrogeological drill programs at Productora as well as the planned Tailings Storage Facility (TSF) for Costa Fuego while several independent experts were engaged to review and provide assurance reports for all critical areas of the PFS.

On the exploration front, HCH kicked-off several programs at newly acquired concessions covering the Domeyko Cluster, which span an area of 141km2 and represents a 25% increase in the company’s total landholding at Costa Fuego.

Soil geochemistry, geophysics and surface mapping were among the activities with an extensive ground magnetics survey currently underway.

The survey data collection is expected to be finalised early Q3 and will aid in targeting across this most recent addition to HCH’s tenement package. Post quarter, HCH also announced the launch of a water supply business Huasco Water, with Costa Fuego as a foundation offtake partner.

But its assessments to date have shown there will be external demand sources, with access to critical water rights in the dry Atacama region a do or die proposition for many projects.

HCH finished the quarter with $33.8m in the bank, funding the company says will facilitate “completion of the Costa Fuego Pre-Feasibility Study, completion of the Water Supply Business Case Study, completion of the Costa Fuego Environmental Impact Assessment, commencement of a bankable feasibility study and further exploration activities over the next 18 months.”

Sunshine Metals (ASX:SHN)

SHN delivered thick gold and copper results from step-out drilling in the under-drilled Liontown Gap Zone at the 1,700km2 Ravenswood Consolidated project near Charters Towers in QLD.

Stand-out hits include 16.2m at 4.54 g/t gold, 1.11% copper from 319m including 5m at 2.96 g/t gold from 310m and 6.2m at 9g/t gold as well as 2.52% copper from 329m.

SHN believes the Gap Zone presents an opportunity for resource extension, with the first of seven diamond holes (~2,500m) kicking off in mid-July.

A resource update is scheduled for December.

Sunshine finished the quarter well stocked to chase extensions and new discoveries at Ravenswood, with $3.4m in the bank after spending $982,000 on exploration and evaluation in the June term.

Antipa Minerals (ASX:AZY)

Completing Phase 1 RC and diamond drilling at the Minyari Dome gold-copper project in WA was AZY’s main goal for the quarter.

Results identified new zones of near-surface gold mineralisation along the northern edge of the GEO-01 discovery, at the GP01 target, and at the Minyari Southeastern Extension target.

Mineralisation at multiple GEO-01 lodes and the Minyari Southeastern Extension target remains open in most directions, adding to the existing maiden mineral resource opportunities.

Antipa already controls 1.8Moz at Minyari Dome, one of the largest resources in a region known for the legendary but ageing Telfer gold mine where consolidation is a live possibility, while it also boasts JVs with majors Rio, Newmont and IGO.

Including expenditure by those farm-in partners, AZY spent $3.27m on exploration in the June quarter, and held a total $8m in cash as of June 30. It also saw Lion Selection Group come in as a key institutional backer via a $2m investment, while Newmont topped up its 8.6% stake in the firm.

AZY additionally holds a $1m drill for equity deal with Topdrill, meaning it can stretch its cash balance further in pursuit of additional gold and copper resources.

Everest Metals Corporation (ASX:EMC)

EMC made significant headway on its portfolio of projects during the quarter beginning with the commencement of bulk sampling at the Revere gold project, which sets the company on the pathway for a maiden resource.

A process plant is due to be mobilised this quarter to the site, where 8000t of stockpiled high-grade near surface material has been prepared, with some samples grading up to 33g/t. Gold grades up to almost 100g/t in parts have also been identified in drilling at the site.

Over at Mt Edon, Phase 1 resource drilling continued to find multiple pegmatites including results up to 0.54% rubidium oxide and up to 1% lithium oxide.The extraction process in collaboration with Edith Cowan University (ECU) recovered ~75% rubidium, demonstration the project is developing into a standalone rubidium deposit. A maiden resource is due in August, with phase 2 drilling pegged for the December quarter.

EMC divested its uranium projects to Cobold Metals and looks forward to working with the team towards completing the IPO over the coming quarters.

It held $3.1m in cash at the end of June, with another $500,000 tranche from a recent $2.2m placement landing in July.

February 11, 2025 | Stockhead

• Hot Chili drilling intersects more broad zones of copper-gold mineralisation at La Verde
• Results highlight potential to be the company’s next major copper-gold discovery
• Assays pending for a further seven holes while step-out drilling is underway

Special Report: Hot Chili now has multiple new significant drill intersections from a further 10 holes to prove that its La Verde project in low elevation coastal Chile is a major copper-gold porphyry discovery.

The company first received a taste of the project’s potential back in mid-December 2024 after announcing very thick copper-gold intersections from its first two drill holes.

Hole DKP001 got the show on the road with a 174m intersection grading 0.4% copper and 0.1g/t gold from a down-hole depth of just 36m before DKP002 quickly blew Hot Chili’s (ASX:HCH) expectations out of the water with a stunning 308m interval at 0.5% copper and 0.3g/t gold from 46m to end of hole.

DPK002 also hosts a higher grade zone of 202m at 0.6% copper and 0.3g/t gold from 70m, which is encouraging from a development standpoint as its places the richest resources closer to surface.

A fantastic start no matter how you look at it and one that just got a whole lot better.

Assays from another 10 holes have now returned broad, consistently mineralised intersections extending over 300m vertically that start from shallow depths.

Notable intersections from the rapidly growing oxide and sulphide find are:

• 320m at 0.3% copper and 0.1g/t gold from 34m to EOH including 134m at 0.4% copper and 0.2g/t gold from 180m and 56m at 0.5% copper and 0.2g/t gold from 258m (DKP009)
• 200m at 0.4% copper and 0.1g/t gold from 48m to EOH including 38m at 0.5% copper and 0.2g/t gold from 68m (DKP005); and
• 172m at 0.4% copper and 0.2g/t gold from 48m including 20m at 0.5% copper and 0.2g/t gold from 62m with a separate intersection of 78m at 0.5% copper and 0.1g/t gold from 228m to EOH including 32m at 0.6% copper and 0.2g/t gold from 232m (DKP012).

Major discovery

The new drill results outline La Verde’s potential scale with managing director Christian Easterday saying the project is shaping up to be the company’s next major copper-gold discovery that could lift the scale of its Costa Fuego project.

“With primary copper supply declining, copper and gold prices rallying, and a PFS on each of our planned businesses (copper-gold and water) nearing completion – momentum is building fast,” Easterday said.

“Following in the footsteps of our successes at Cortadera and Productora, we’ve secured full control of La Verde after years of strategic consolidation, finally allowing us unrestricted access to test this historically overlooked porphyry system.

“Drill results have exceeded expectations, revealing a much larger porphyry system than first recognised, with broad, consistent copper-gold mineralisation extending from shallow depths and largely hidden below shallow gravel cover.

“This discovery has all the signs of becoming our third bulk-tonnage, copper-gold deposit, and is open in all directions and growing fast. We’re also preparing to deploy AI-powered exploration to fast-track our nearby exploration growth pipeline, leveraging 16 years of expertise in Chile.

“With La Verde’s scale potential and the Costa Fuego copper-gold hub expanding, we’re at a major inflection point in Hot Chili’s growth story.”

The project, which hosts the historical La Verde copper mine, is at the core of the historical Domeyko mining district and in the centre of the company’s recently consolidated and larger Domeyko landholding.

La Verde drilling

To date, HCH has drilled 19 holes totalling 5700m at La Verde and received assays from 12 holes.

This has defined a discovery footprint measuring 550m by 400m that remains open in all directions.

Mineralisation starts from shallow depths and extends to more than 300m below surface with indications that its deeper potential remains untapped as eight of the holes reported to date ended in mineralisation.

Adding further interest, the gravel cover at La Verde could mask a much larger porphyry system with the company noting that step-out drilling is now underway.

Drill testing of the historical oxide copper open pit at the project is also pending.

HCH is now awaiting assays from seven additional reverse circulation holes.

It is also planning to carry out diamond drilling to test potential for deeper, higher-grade zones at depth and to test potential for +1km vertical depth extent, typical of other recent major porphyry discoveries, such as the company’s Cortadera discovery and BHP/Lundin Mining’s Filo del Sol find.

December 18, 2024 | Stockhead

• Hot Chili’s thick copper-gold intersections validate historical drilling at its La Verde project
• Second hole’s 308m intersection at 0.5% copper and 0.3g/t gold exceeds expectations
• It also highlights La Verde’s potential to host a higher-grade copper-gold zone

Special Report: Hot Chili’s initial drilling at La Verde has validated its decision to acquire the historical copper mine in Chile after returning thick copper-gold intersections.

While the first hole – DKP001 – provided a good show with a 174m intersection grading 0.4% copper and 0.1g/t gold from 36m, the second hole about 120m to the southeast really upped the ante after recording a 308m interval at 0.5% copper and 0.3g/t gold from a down-hole depth of 46m to the end of hole.

Not only did DKP002 exceed the company’s expectations and end in mineralisation, it also intersected a higher grade zone of 202m at 0.6% copper and 0.3g/t gold from 70m.

The results are hugely encouraging for Hot Chili (ASX:HCH) as the La Verde porphyry footprint measures about 850m by 700m, which is roughly comparable to its higher-grade Cortadera Cuerpo 3 copper-gold porphyry about 30km to the north.

Cuerpo 3 is also the largest porphyry at Cortadera with a higher confidence indicated resource of 798Mt grading 0.45% copper equivalent, or contained metal of 3.6Mt copper and 3Moz gold, and inferred resources of 203Mt at 0.31% CuEq.

What this means is that further drilling successes could unlock another resource of similar size, which will in turn provide a substantial boost to the company’s Costa Fuego copper hub.

La Verde mine

The historical La Verde open pit mine in the Domeyko mining district, which the company acquired in November 2024, was previously exploited by private interests for shallow porphyry copper-style oxide mineralisation with limited drill testing outside the central lease or at depth.

Importantly, it sits in the centre of the company’s recently consolidated and larger Domeyko landholding, secured in an option agreement back in April 2024.

This marks the first time the area has been consolidated, and provides the company with access to a much larger potential porphyry copper deposit footprint measuring around 1.4km by 1.2km.

HCH promptly launched and completed a 12-hole reverse circulation drill program totalling ~3150m with the first two holes designed to validate historical drill intercepts and test the interpreted northern extension of the porphyry from the open pit.

While DKP001 was successful in validating the most notable copper intercept from historical drilling, the assays from DPK002 really demonstrated the value of La Verde by highlighting its potential to host a higher-grade copper-gold zone.

The consistent higher-grade results confirm the extension of the porphyry system almost 400m to the northeast of the open pit, a significant step out considering the existing pit measures about 200m by 400m.

It is also located immediately beneath a gravel cover sequence which obscures the ultimate extent of the porphyry system.

Assays are pending for the remaining 10 holes though the success of the first holes has prompted HCH to expand the RC program by another 2000m of drilling, expected to be completed in late January 2025.

July 8, 2024 | The West Australian

Hot Chili has entered into a new joint venture (JV) aimed at supplying seawater and desalinated water to mining projects throughout Chile’s Huasco Valley where it is pursuing its own mammoth Costa Fuego copper-gold project.

The company today confirmed it will hold an 80 per cent interest in Huasco Water and its critical water assets in the JV with Chilean iron ore company Compania Minera del Pacifico (CMP). The new company is expected to supply desalinated water to operations including Costa Fuego and CMP’s Los Colorados iron ore mine.

The JV says further offtake negotiations are already underway.

The Huasco Valley region in Chile’s Atacama Desert is one of the driest regions on Earth, inducing significant water demands from mining operations and local communities. The new water initiative reflects an increasing trend in the Atacama region towards collaborative water infrastructure development, highlighted by a recent US$600 million (AU$890 million) deal for Antofagasta Minerals’ Atacama water rights and assets.

The Company has been receiving increasing interest from potential strategic funding parties in its advanced Costa Fuego copper-gold development and its recently announced Water Supply Studies. This interest, in combination with a rising copper price environment, provides confidence to accelerate the Company’s growth and development plans whilst preserving control of these assets.

Hot Chili managing director Christian Easterday

The company holds the only granted maritime water concession and necessary permits to provide critical water access to the Huasco Valley. It has outlined about 3700 litres per second of potential future desalinated water demand from new mine developments around the valley alone.

The JV partners are likely to underpin Huasco Water as potential foundation offtakers with the Costa Fuego copper project requiring some 700 litres per second of future seawater demand, while Los Colorados needs a further 200 litres per second. Hot Chili says significant economic, environmental and social synergies exist for all potential customers in the Huasco Valley, especially given growing community and regulatory opposition to continental water extraction in the Atacama.

Initial offtake discussions are already underway with nearby mine developers, with additional non-mining desalinated water customers expected to come from the area immediately adjacent to the Costa Fuego copper hub.

The Costa Fuego copper-gold project, which lies some 740m up the hill from the proposed Huasco desalination plant, features a measured and indicated resource that sits at 798 million tonnes at 0.45 per cent copper equivalent for 3.62 million tonnes of copper equivalent, containing 2.91 million tonnes of copper, 2.64 million ounces of gold, 12.8 million ounces of silver and 68,100 tonnes of molybdenum. It makes it one of a limited number of “globally-significant” copper developments that are not in the hands of a major mining company.

Hot Chili recently executed a $29.9 million fundraising campaign on the back of a US$15 million (A$22.23 million) net smelter royalty (NSR) deal with Osisko Gold Royalties, aimed at driving its Costa Fuego copper hub in Chile into production. It comes as the red metal’s price recently launched to 60-year highs, prompting majors across the world to look to acquire copper-producing assets of scale.

The Costa Fuego prefeasibility study (PFS) is expected in the second half of this year.

By further securing its water supply and also creating a new company capable of luring significant offtake partnerships, Hot Chili now feels confident enough to sink another 25,000m of drilling into the project. It will also pursue more regional exploration and land consolidation in a show of confidence at the copper project, taking final steps forward before a bankable feasibility study and final investment decision.

Copper, water and deep pockets of cash have Hot Chili set up for an eventful second half of the year. And with copper prices remaining solid, the company appears well-positioned now to give its giant Costa Fuego project a good crack at development.

July 8, 2024 | STOCKHEAD

• Hot Chili forms water joint venture with Chilean iron ore company Compania Minera del Pacifico
• Huasco Water will develop a multi-user seawater and desalinated water supply network
• This will supply future water demand for communities, agriculture and new mining developments for the Huasco Valley region

Special Report: Water is a valued resource that is scarce in areas like the Atacama, which is why copper-gold developer Hot Chili is pairing up with Chile’s Compania Minera del Pacifico to form a water joint venture.

The Atacama region includes the Atacama Desert – the world’s driest nonpolar desert in the world – and is unsurprisingly one of the most water stressed regions of the world.

It is also where Hot Chili’s (ASX:HCH) Tier-1 Costa Fuego copper-gold project is located – specifically within the Huasco Valley that has a long history of mining.

Costa Fuego includes the outstanding Cortadera deposit with an indicated resource of 798Mt grading 0.45% copper equivalent for contained resources of 2.9Mt copper, 2.6Moz gold, 12.9Moz silver and 68,000t of molybdenum.

Costa Fuego also holds a further inferred resource of 203Mt @ 0.31% copper equivalent for 0.5Mt copper, 0.4Moz gold, 2.4Moz silver and 12,000t molybdenum.

Mines typically need considerable amounts of water to operate, a point highlighted by Hot Chili’s estimate the Huasco Valley may need up to 3,700 litres per second of desalinated water in the future for its new mine developments.

A water supply concept study released in February this year confirmed the potential for a large-scale, multi-user desalinated water network serving the entire Huasco Valley, which rather neatly aligns with the Chilean Government’s push for such networks in the Atacama.

Water supply security

Given how important a secure water supply is to mining developments – including Costa Fuego – agriculture and communities in the Huasco Valley, HCH and Chilean iron ore company Compania Minera del Pacifico have established a new water company HW Aguas para El Huasco SpA (Huasco Water).

The 80-20 joint venture will hold the maritime water extraction licence, water easements, costal land accesses and second maritime application previously held by Sociedad Minera El Águila SpA (SMEA), which is also jointly owned by the two companies.

Huasco Water aims to develop a multi-user seawater and desalinated water supply network to supply future water demand for communities, agriculture and new mining developments for the Huasco Valley region of Chile.

HCH and CMP will be foundation offtakers for Huasco Water with the former’s Costa Fuego project expected to consume some 700l/s of sea water while CMP’s Los Colorados iron ore mine will require about 200l/s of desalinated water.

Water offtake discussions are also underway with nearby mine developers and additional non-mining, desalinated water customers situated close to Costa Fuego.

Water infrastructure trends

The company noted that its approach towards potential outsourcing and development of shared infrastructure, in addition to preserving scarce continental water sources, is fast becoming the accepted and responsible approach for unlocking future mining developments in the world’s most prolific copper producing region.

It highlighted Antofagasta’s recent sale of their water assets and water rights to the Centinela copper mine for US$600 million to a consortium of Transelec and Almar Water, which will finance, build, own and operate an expansion project that will sell seawater to the Centinela mine expansion.

The consortium will build a 144km long seawater pipeline using Centinela’s water rights that will parallel the existing pipeline from port to mine, allowing Antofagasta to save US$380M in capital expenditure for the construction of its stage 2 water infrastructure expansion.

HCH said this highlights the strategic nature and implicit value of critical water access rights within the Atacama, and an increasing trend in Chile towards outsourcing in the industrial infrastructure sector.

Hot Chili has loaded its financial base with a $29.9 million fundraising campaign aimed at supercharging its Costa Fuego copper hub in Chile – at a time when the reddish metal’s price is at a 60-year high.

The $119.45 million market-capped company’s significant raise, which it said drew strong demand from Australian and overseas institutional investors, coincides with a rising copper price sitting at about US$4.57 (A$6.91) per pound.

Management says it expects its private $24.9 million placement to be complemented by a further $5 million share purchase plan (SPP) to reach the $29.9 million in new funding. Shares were offered at $1 for both the placement and the SPP.

Following the completion of the raise, Hot Chili says it will move to finish its Costa Fuego prefeasibility study (PFS) in the second half of the year, further secure its water supply and also create a new water company, plug in 25,000m of drilling, pursue more exploration and land consolidation in the next 18 months and kick off a “bankable” feasibility study.

The boost to its finances follows hot on the heels of its recent half-yearly figures that showed it already had A$13.3 million in cash at the bank after reducing its 2024 commitments by US$10 million (A$15.12 million) through consolidating its option agreements, securing its water supplies and filing its technical report for the Costa Fuego copper-gold project.

We control large-scale assets in two of the most critical commodities of our time – copper and water – with two of the most desirable attributes – low-risk and near-term. In combination with a rising copper price which indicates the initial stages of a new copper price cycle driven by lack of supply, this gives the Company confidence to accelerate its growth and development plans while preserving control of these assets for our shareholders.Hot Chili managing director Christian Easterday

Easterday said the company had received increasing interest from potential strategic funding parties to help Costa Fuego’s copper-gold development and its recently-announced water supply studies. He said the project remains one of a limited number of “globally-significant” copper developments that was not in the hands of a major mining company.

Costa Fuego’s measured and indicated resource sits at 798 million tonnes at 0.45 per cent copper equivalent for 3.62 million tonnes of copper equivalent, containing 2.91 million tonnes of copper, 2.64 million ounces of gold, 12.8 million ounces of silver and 68,100 tonnes of molybdenum.

Hot Chili also recently inked a deal with Osisko Gold Royalties, pocketing US$15 million (A$22.68 million) in exchange for a 1 per cent net smelter return (NSR) royalty on copper and a 3 per cent NSR on gold across the Costa Fuego project. Management says the Osisko investment provided an endorsement of its project and its economics from one of North America’s leading royalty-streaming groups.

In addition, the company consolidated its tenure while expanding its ground footprint and kicked off its exploration and resource expansion drilling programs. It updated its resource numbers and obtained results from its initial drilling of its latest satellite targets at Marsellesa, Cordillera and Corroteo, with some good copper hits including 25m grading 0.4 per cent copper from surface with 10m at 0.8 per cent from just 7m depth at Marsellesa.

Hot Chili’s Costa Fuego is a boomer of a resource that is seems to be emerging at just the right time and the latest funding moves look set to put a solid set of wheels under the venture to get it fully on track.

STOCKHEAD

The nearby Domeyko mountains of the Andes in copper-rich Chile. Pic via Getty Images

• Landholding increased by 25% at flagship Costa Fuego project, which has a current resource of 798Mt at 0.45% copper equivalent
• Domeyko concessions bought as exercisable options to purchase for $4m
• Domeyko mining centre hosts several significant historical copper-gold mines, unexplored at depth

Special Report: Porphyry developer Hot Chili has acquired the ‘Domeyko cluster’ tenements to boost the size of its flagship 798Mt Costa Fuego copper-gold project in Chile by 25%.

Costa Fuego has a current resource of 798Mt at 0.45% copper equivalent for 2.9Mt copper, 2.6Moz gold, 12.9Moz silver and 68,000t molybdenum.

Two years of drilling and studies have the project now pegged as a low-risk, low-cost and long-life copper project in the world’s largest producer of the red metal.

Lately, Hot Chili (ASX:HCH) has been busy building out a network around its project with water supply and transport deals in the region.

It’s executed a five-year MoU deal with the nearby port to evaluate bulk tonnage loading alternatives for copper concentrate from Costa Fuego that would include a ‘take or pay volume’ clause based on at least 80% of the project’s future annual concentrate production.

The explorer has also announced a focus on water infrastructure and desalination in Chile’s Atacama region – one of the driest regions on earth.

A new addition to the south

Domeyko is the largest land consolidation undertaken by Hot Chili since Cortadera was added to Costa Fuego in 2019, adding 141km2 and representing a 25% lift in the company’s total tenure in the region.

The move contains several new tenement applications in addition to an option agreement to acquire 100% interest in several key tenements covering a highly prospective, 10km-long copper-gold mineralisation corridor.

The Domeyko mining centre hosts several significant historical copper-gold mines which were principally exploited for oxide mineralisation yet have had very limited exploration for copper sulphide mineralisation.

Both porphyry and structurally hosted styles of mineralisation are present in the area and historic datasets are currently being looked over across several highly prospective targets that have never been drilled.

The total exercisable option to purchase Domeyko comes to $4m, payable within two years to a private Chilean syndicate.

More drilling, exploration and development study workstreams across Costa Fuego are ongoing and further updates on progress of the company’s regional water supply business case study are expected soon.

STOCKHEAD

• Hot Chili has secured $24.9m through a private placement and is raising up to $5m under a share purchase plan
• Funds will support a Costa Fuego PFS, drilling, exploration and land consolidation
• Proceeds will also be used to set up a new water company

Special Report: Hot Chili is raising up to $29.9m through a private placement and share purchase plan to accelerate development of its meaty 798Mt Costa Fuego copper-gold project in Chile.

Australian, Canadian and overseas institutional investors along with existing shareholders demonstrated their confidence in the company’s assets by quickly snapping up the $24.9 million shares priced at $1 each under the private placement.

The company has good reason to be confident.

In the past two years, Hot Chili (ASX:HCH) has built Costa Fuego into a low-risk, low-cost and long-life copper-gold project with a current indicated resource of 798Mt at 0.45% copper equivalent, or contained resources of 2.9Mt copper, 2.6Moz gold, 12.9Moz silver and 68,000t molybdenum.

Indicated resources grant enough certainty for the company to start mine planning and also serve as a platform for a maiden reserve estimate for the upcoming pre-feasibility study.

HCH has already executed a five-year MoU deal with the nearby port to evaluate bulk tonnage loading alternatives for copper concentrate from Costa Fuego that would include a ‘take or pay volume’ clause based on at least 80% of the project’s future annual concentrate production.

The company is also exploring the potential to develop a water supply network in the Huasco valley region – one of the driest places in the world.

Fully funded to deliver key milestones

The placement is part of a broader capital raising that includes a share purchase plan offering existing shareholders the opportunity to subscribe for up to $30,000 worth of shares to raise up to $5m.

Taken together, the $29.9m capital raising ensures that HCH is fully funded to deliver the following key milestones in the growth and development of Costa Fuego:

• Completion the Costa Fuego PFS, expected in H2 2024
• Advance the water supply study and create a new water company, expected in H2 2024
• Up to 25,000m of drilling, exploration and further land consolidation over next 18 months, and,
• Commencement of a bankable feasibility study over the next 18 months

It will also increase the company’s s trading liquidity on the TSX Venture exchange.

“We control large-scale assets in two of the most critical commodities of our time – copper and water – with two of the most desirable attributes – low-risk and near-term,” Hot Chili managing director Christian Easterday said.

“The company has been receiving increasing interest from potential strategic funding parties in its advanced Costa Fuego copper-gold development and its recently announced water supply studies.

“This interest, in combination with a rising copper price environment, provides confidence to accelerate the Company’s growth and development plans while preserving control of these assets for our shareholders.”

Easterday is bullish the world is currently witnessing the early stages of a new copper price cycle, with a valuation of US$9,910/t on the LME at the time of writing.

Three-month contract prices rose around 18% in April alone, with a $60bn bid by BHP for Anglo American demonstrating the dearth of significant new copper developments in the global pipeline.

“The placement and share purchase plan maintain the company’s strategic funding optionality, while ensuring Costa Fuego remains one of a limited number of globally significant copper developments, not owned by a major mining company, that could deliver meaningful new copper supply this decade,” Easterday said.

“Market conditions are indicative of the initial stages of a new copper price cycle being driven by a lack of new supply. The company is now well funded to take advantage of controlling the right assets at the right time in the right place.”

STOCKHEAD

Hot Chili wants to provide desalinated water to the mining-intensive Huasco Valley. Pic via Getty Image

• Hot Chili is the only company in the Atacama region holding most necessary permits/licences to provide desalinated water supply to Huasco valley
• HCH has now submitted second maritime concession application to support a potential multi-user, water network for the Huasco valley area
• Both raw seawater and desalinated water could be provided by a potential water network
• HCH’s water assets to be transferred to a new, wholly owned water company

Special Report: Tier 1 copper-gold mine developer Hot Chili is expanding its horizons beyond traditional mining ventures with a focus on water infrastructure in Chile’s Atacama region – where water scarcity is a major challenge.

Hot Chili (ASX:HCH) is developing its flagship Costa Fuego copper-gold project, where 24 months of extensive drilling has confirmed the endowment of a 798Mt at 0.45% copper equivalent for 2.9Mt copper, 2.6Moz gold and 12.9Moz silver – with 68,000t of molybdenum to boot.

While the Costa Fuego project plans to utilise raw seawater, HCH sees an opportunity to build a water company focused on desalination operations along the Huasco coastline where major iron ore and copper mining projects exist and water scarcity is the current reality.

Beyond Costa Fuego: HCH is establishing a water company

Aligning with the Chilean Government’s push for multi-user desalination networks in the Atacama, HCH’s proactive approach positions it to address the critical challenge of water scarcity for new mining projects.

A water supply concept study released in February confirmed the potential for a large-scale, multi-user desalinated water network serving the entire Huasco Valley.

It’s now submitted a second maritime concession application to establish a multi-user network there and is preparing to transfer its water assets, including permits and land access, to a new water company under its control.

HCH says the application is crucial for developing this large-scale water supply, which aims to deliver up to 3,700L/s in the long term in the region and is the culmination of over a decade of permitting efforts for HCH’s Costa Fuego project.

Hot Chili executive VP José Ignacio Silva says water scarcity is a critical issue for projects in the Atacama, where Costa Fuego is surrounded by existing and potential mine developments.

“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 decarbonisation,” Silva says.

“Securing these assets has involved over a decade of commitment. Socially and environmentally, multiclient and multipurpose water infrastructure is the new reality.”

A water supply business case study is underway and engagement with potential customers, infrastructure partners, and government regulators is ongoing.