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Kristie Batten: Hot Chili makes the case for why it’s the ASX’s next copper champion

Hot Chili (ASX:HCH) founder and managing director Christian Easterday returned to the stage at Diggers & Dealers in Kalgoorlie last week to opine on how far the company has come.

The company has been a mainstay at the conference since it listed on the ASX in 2010, even winning the Best Emerging Company Award in 2012, though it had been about five years since it had a presentation slot.

Easterday said in the company’s stage absence, it had survived a downturn in copper.

“Hot Chili could very much be the winner of the mining industry’s Steven Bradbury award as at that time, we were one of only a couple of copper developers and explorers that made it to the other side of that of that chasm,” he said.

“Probably now, in the coming couple of years, with Hot Chili really focusing on its execution phase now … as the next OZ Minerals of the Australian market, we may well be in line for the Diggers & Dealers Dealer or Digger award in the coming few years.”

Advanced project

Hot Chili holds the Costa Fuego project in coastal Chile, which has an indicated resource of 3.62 million tonnes of contained copper equivalent at 0.45% CuEq, as well as an inferred 640,000t of contained CuEq at 0.31% CuEq.

“Within the pecking order of large, independent, undeveloped copper resources in the world, we’re around 10th,” Easterday said.

The company completed a prefeasibility study on Costa Fuego last year, which outlined a US$1.27 billion, 14-year open pit operation to produce 116,000t of CuEq per year, comprising copper, gold, molybdenum and silver, at all-in sustaining costs of US$1.38 per pound of copper, net of by-product credits.

The study returned a post-tax net present value (8% discount rate) of US$1.2 billion, internal rate of return of 19% and payback period of 4.5 years at metal prices of US$4.30/lb for copper and US$2280 an ounce for gold.

Copper is now trading at US$6.50/lb, while gold is US$4300/oz.

“This is a project that is positioned very well in the pipeline of undeveloped major copper assets,” Easterday said.

“It’s bottom quartile on capital intensity, it’s top quartile on production capacity.

“It’s going to additionally be very leveraged to the long-term copper price and gold price and each of those are substantially higher than the numbers we put out on this project some 15 months ago.”

The game-changer?

In late 2024, Hot Chili acquired the La Verde project, 35km to the south of its proposed processing plant.

Since then, the company has made a new copper-gold porphyry discovery.

Earlier this year, it reported a hit of 725m at 0.42% CuEq from 18m.

“This is a discovery that is really shooting the lights out,” Easterday said.

“We’re putting out numerous world-class intercepts. It’s in its infancy.”

Hot Chili recently added a third rig to La Verde, with a fourth on the way, and the wide intercepts have continued to roll in.

New results reported in late July included 250m grading 0.5% CuEq from 64m, including 36m grading 0.72% CuEq.

The company is planning to release a maiden resource for La Verde later this year.

“A lot of drilling done over a very big footprint. We haven’t started pushing extensions,” Easterday said.

“We found a high-grade core straight off the bat, and a lot of the drilling has just been extending that very, very large footprint now all the way through to surface.”

Easterday said La Verde represented a higher-grade starter pit for Costa Fuego in the early years of the mine life.

The average grades being intersected at La Verde are 20-30% higher than the grades planned in the early years of Costa Fuego’s mine plan envisaged in the PFS.

He also said La Verde’s inclusion in a revised PFS could dramatically change the economics of the project.

“When you’re able to put a high-grade starter pit into this and you’re able to push out that mine life by another 10 years, what you’re talking about is something moving from about a 120,000t to around a 135,000-140,000t project,” he said.

“The four-and-a-half-year payback is pushing down to two-and-a-half years and the doubling of NPVs and IRRs.”

The revised study will follow the La Verde maiden resource with an environmental impact assessment to be submitted in the second quarter of next year.

A final investment decision is targeted in 2029, followed by first production in 2031.

As Hot Chili trades at a discount to its predominantly Toronto-listed peers, Easterday predicts the company will become the most leveraged meaningful copper developer in the world.

“When we say meaningful, if you’re not 50,000t of copper a year, you’re probably not meaningful to where this cycle is going,” he said.

“There is very little supply coming. These projects take multiple decades to position.

“And what that means is that when you have an 18-year head start, you become the company that everyone is focused on execution and new major supply.”