Glencore doubles down on Hot Chili copper project

The West Australian | Matt Birney | March 3, 2022

Further drilling is expected to lift Hot Chili’s resource estimate for its Costa Fuego copper-gold project in Chile. Credit: File

Hot Chili Ltd has backed up an investment by international trading house Glencore with an eight-year offtake agreement for the Swiss commodity trader to purchase 60 per cent of the copper concentrate from Hot Chili’s Costa Fuego copper-gold project in Chile.

Glencore became Hot Chili’s largest shareholder after a series of investments last year where Glencore took a 9.96 per cent stake in the ASX-listed venture. It also won a seat at the board in the form of Mark Jamieson and further management in the form of participation on the technical steering committee, positions it can hold onto as long as Glencore keeps a minimum 7.5 per cent stake in the company.

Hot Chili is developing the large-scale Costa Fuego project that is a copper hub comprising two major deposits the company has been proving up in recent years, Productora and Cortadera.

The deposits are 14 kilometres apart and within 50 km of the port of Huasco, making it one of the lowest altitude major developments in South America and one of the world’s largest undeveloped copper resources not controlled by a major mining company – hence the interest from Glencore.

Costa Fuego is projected by the company to be in production within five years. A preliminary feasibility study forecast annual production of 100,000 tonnes of copper and 70-80,000 ounces of gold.

The company boasts resources of almost four million tonnes of copper and 2.7 million ounces of gold at grades between 0.44 and 0.54 per cent copper equivalent. The Cortadera deposit, one of four, includes a high-grade core of 104 million tonnes grading 0.74 per cent copper equivalent.

Another round of drilling recently wrapped up ahead of an expected further resource upgrade. Final results from the drilling program that kicked off late 2021 have returned a number of significant intersections from the margins of the Cuerpo 2 and Cuerpo 3 orebodies at Cortadera.

One hole yielded 927m grading 0.3 per cent copper equivalent and 0.1 grams per tonne gold from just 14m depth. The results mean it now has the confidence to convert some of its resource from inferred to indicated and then progress to a pre-feasibility study, or “PFS”.

We ensured project financing flexibility with 40% of our first eight years of concentrate production remaining uncommitted ahead of initiating project financing discussions in 2022, following completion of the Costa Fuego Pre-Feasibility Study.

Glencore’s expertise and support is welcomed and is an important part of our strategy to successfully transform the company into a material copper-gold producer.

Hot Chili Managing Director Christian Easterday

Boosting its international capability even further, Hot Chili recently appointed Dr Nicole Adshead-Bell as the company’s independent, non-executive chairman, after she joined the board in January. Residing in Canada, Dr Adshead-Bell has 25 years of technical and investment banking experience across the capital markets and resource sectors and also sits on the boards of Toronto-listed Altius Minerals and ASX-listed Matador Mining.

Hot Chili is determined to commission the Cortadera copper gold project in a time frame that would be the envy of most mining majors. With a locked in offtake agreement with its major shareholder and further upside to its resource base it appears Hot Chili has hit the ground running this year.

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Glencore doubles down on Hot Chili copper project