Tenements, Location and Access

Outside of the Company’s own landholding, Hot Chili has executed agreements with several parties in joint venture arrangements. Importantly, these parties control over 75% of the strike extent of defined mineralisation within this land position including the central mining lease of Productora which contains an operating underground copper mine. Hot Chili is actively pursuing further opportunities as they are identified to expand its project position at Productora.

An underground copper mine is in operation within the central mining lease of the Productora project. Under the terms of Hot Chili’s (SMEAL’s) agreement with the owners of this mining lease, the lease mining agreement will be allowed to continue throughout SMEAL’s five year exploration purchase option period with extraction limited to 1.3 million tonnes of ore, and mining terminated with a 120 day notice period upon exercise of the option at any time within the five year exploration period. The lease mining company will have 6 months from exercise of the option agreement in which to remove all equipment.

Productora is located 15km south of Vallenar in Region III of Chile, approximately half way between La Serena and Copiapo. The project lies 5km off the main sealed Pan-American Highway connecting Vallenar to La Serena in the south. This low altitude coastal range belt has good access to facilities in the regional mining centre of Vallenar.