Hot Chili closes US$15m investment by Osisko Gold Royalties for Chilean copper-gold project

StockHead | 26 July 2023

The company is now fully funded for its 30,000m drilling program in the coming weeks. Pic via Getty Images.

The company is now fully funded for its 30,000m drilling program in the coming weeks. Pic via Getty Images.

Hot Chili has closed its transaction with Osisko Gold Royalties, receiving proceeds of US$15 million in exchange for the sale of a 1% Net Smelter Return (NSR) royalty on copper and a 3% NSR royalty on gold across its Costa Fuego copper-gold project in Chile.

Not only is the transaction a significant endorsement of the project from one of North America’s leading royalty-streaming groups, it’s also a nice boost to the company’s cash position to around A$26m – which means the upcoming 30,000m drill program is fully funded.

The deal also clearly highlights the value Osisko attributes to the project.

Hot Chili (ASX:HCH) MD Christian Easterday says that Osisko’s involvement, alongside Glencore’s strategic shareholding, demonstrates “Costa Fuego is globally relevant, being one of only a handful of projects with potential to deliver near-term, meaningful, new copper supply into a looming global copper supply shortage.”

“We are very pleased to have closed the Investment with Osisko Gold Royalties enabling the Company to advance the project without the dilution of a share issuance,” he said.

Near-term drilling and PFS in H2

The Costa Fuego project has a massive measured and indicated resource of 725Mt grading 0.47% copper equivalent.

And the recent scoping study flagged an estimated copper equivalent production rate of 112,000t per annum – consisting of 95,000t of copper and 49,000oz of gold over a 14-year period of a 16-year mine life – to the estimated revenue and free cash flow of US$13.52bn and US$3.28bn down to the post-tax net present value (a measure of profitability) of US$1.1bn.

For context, that’s the equivalent of bringing another Oz Minerals (ASX:OZL) into production.

The project also has an inferred resource of 202Mt grading 0.36% copper equivalent, meaning there’s still plenty of room to grow with Hot Chili targeting a potential increase in study scale towards 150,000tpa copper for a +20-year mine life.

Now the Osisko deal is wrapped up, Hot Chili is well-funded to kick off its 30,000m drilling program in the coming weeks which is targeting a resource expansion, and exploration targets ahead of an upcoming resource upgrade by late 2023.

Hot Chili is also aiming to deliver the Pre-Feasibility Study (PFS) – which is currently around 80% complete – in H2 2024.

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