HOT CHILI ANNOUNCES CLOSING OF CAD$33.8M – TSXV INITIAL PUBLIC OFFERING

Issue of Tranche 1 Shares

Not for Distribution to U.S. News Wire Services or Dissemination in the United States

Further to the announcement dated 21 December 2021, Hot Chili Limited (ASX: HCH) (TSXV: HCH) (OTCQB: HHLKF) (“Hot Chili” or the “Company”) is pleased to announce the successful closing of its Canadian initial public offering (the “Offering”) and the issue of 21,567,286 Shares under the Offering has been completed, following receipt of CAD$33,429,293 in gross proceeds.

A total of 12,812,541 new Shares were issued within the Company’s 15% placement capacity under listing rule 7.1 and a total of 8,754,745 new Shares were issued within the Company’s additional 10% placement capacity under listing rule 7.1A.

New Shares will be issued at a price of CAD$1.55 each.

The issue of 232,714 Shares, to Blue Spec Sondajes Chile SpA, a Company associated with Hot Chili’s chairman Murray Black, will be subject to shareholder approval. The issue of a total of 10,900,000 Warrants (one free attaching warrant for each two shares purchased, exercisable at CAD2.50 expiry 2 years) will be subject to shareholder approval.

The Company will convene a general meeting seeking shareholder approval of the issue of Shares to Blue Spec, the 10,900,000 Warrants and the 1,259,789 Underwriter Warrants (exercisable at CAD1.85 expiry 3 years), to be held on or around 24 January 2022.  A notice of meeting will be mailed shortly.

The Ordinary Shares are expected to commence trading the week of December 27, 2021 on the TSX Venture Exchange under the symbol “HCH”.

The Directors of Hot Chili look forward to providing further updates on the Company’s various work streams in Chile spanning exploration, resource drilling and development studies.

The Company’s fully funded 2022 work programmes aim to rapidly grow and advance Costa Fuego toward project financing as one of the few, low-altitude, senior copper developments in the Americas.

Details of the Offering

Under the Offering, an aggregate of 21,567,286 units of the Company were distributed (the “Units”) at a price of C$1.55, of which 2,445,000 Units were exercised under the underwriters’ over-allotment option. Each Unit consist of one ordinary share of the Company (an “Ordinary Share, and an Ordinary Share that comprises a part of a Unit, a “Unit Share”) and one-half of one Ordinary Share purchase warrant receipt (each whole warrant receipt a “Warrant Receipt”). Each full Warrant Receipt is convertible into one Ordinary Share purchase warrant (a “Warrant”) for no further consideration upon the satisfaction of shareholder approval. Each full Warrant shall be exercisable to acquire one Ordinary Share of the Company (a “Warrant Share”) for a period of 24 months from the date the Warrants are issued, at an exercise price of C$2.50 per Warrant Share. The Units have separated into their component parts immediately upon issue.

A final prospectus containing important information relating to these securities has been filed with securities commissions or similar authorities in certain jurisdictions of Canada. A copy of the final prospectus is available from the persons above and is on the SEDAR website at www.sedar.com. The final prospectus notes that an investment in the Ordinary Shares is speculative and involves a high degree of risk. The Company’s business is subject to the risks normally encountered in the mining industry. An investment in the Ordinary Shares is suitable only for those investors who are willing to risk a loss of some or all of their investment. For more information, potential investors should read the final prospectus, including the “Risk Factors” and the “Forward-Looking Statements”. 

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

Qualifying Statements

No Securities Authority Approval

No securities regulatory authority has either approved or disapproved of the contents of this news release.

The securities referred to in this announcement and the final prospectus have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws. Accordingly, such securities may not be offered or sold to, or for the account or benefit of, persons in the “United States” or “U.S. persons” (as such terms are defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to exemptions therefrom. This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities of HCH in any jurisdiction in which such offer, solicitation or sale would be unlawful. 

Qualified Person’s Statement

The scientific and technical information in this news release was derived from the Costa Fuego Technical Report and reviewed and approved by Boris Caro, Member of Chilean Mining Commission, and Elizabeth Haren, MAIG MAusIMM (CP), both of whom are independent Qualified Persons under National Instrument 43-101 – Standards of Disclosure for Mineral Projects. For further information on the Costa Fuego Project, refer to the Costa Fuego Technical Report, which is available for review under Hot Chili’s profile at www.sedar.com.

Competent Person’s Statement- Productora Mineral Resources

The information in this Announcement that relates to the Productora Project Mineral Resources, is based on information compiled by Mr N Ingvar Kirchner. 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). Mr Kirchner has 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). Mr Kirchner consents to the inclusion in this report of the matters based on the source information in the form and context in which it appears.

Competent Person’s Statement- Cortadera and Costa Fuego Mineral Resources

The information in this report that relates to Mineral Resources for the Cortadera and combined Costa Fuego Project is based on information compiled by Elizabeth Haren, a Competent Person who is a Member and Chartered Professional of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Elizabeth Haren is employed as an associate Principal Geologist of Wood, who was engaged by Hot Chili Limited. Elizabeth Haren has 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”. Elizabeth Haren consents to the inclusion in the report of the matters based on her information in the form and context in which it appears.

Reporting of Copper Equivalent

Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1 % per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,550 USD/oz, Mo=12 USD/lb, and Ag=18 USD/oz.  For Cortadera (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

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.

TSX Venture Exchange qualification

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Figure 1 Location of Productora and the Cortadera discovery in relation to the coastal range infrastructure of Hot Chili’s combined Costa Fuego copper project, located 600km north of Santiago in Chile.

Refer to ASX Announcement “Costa Fuego Becomes a Leading Global Copper Project” (12th October 2020) for JORC Table 1 information related to the Cortadera JORC compliant Mineral Resource estimate by Wood and the Productora re-stated JORC compliant Mineral Resource estimate by AMC Consultants

* Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,550 USD/oz, Mo=12 USD/lb, and Ag=18 USD/oz.  For Cortadera (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

** Reported on a 100% Basis – combining Cortadera and Productora Mineral Resources using a +0.25% CuEq reporting cut-off grade