Hot Chili moves to seal port access for giant copper project

The West Australian

The Las Losas Port facility to be tasked with handling Hot Chili’s copper concentrate. Credit: File.

Hot Chili has made a key step towards securing port access – one of the final in-country advantages for its Costa Fuego copper-gold project in Chile – by securing a crucial memorandum of understanding (MOU) with local port managers.

The Los Losas port at the centre of the negotiations is just 50km west of the company’s project that boasts 3.62 million tonnes of contained copper-equivalent.

As part of the MOU, management says it will fund 20 per cent of a two-year, US$4.6 million (AUD$6.95 million) feasibility study into developing a bulk-tonnage copper concentrate facility at the port. The study will include bulk loading alternatives for copper concentrates from existing facilities, potentially without modifying the existing infrastructure at the port.

The company believes the developed port would be a stimulant for many other projects in the area.

Following the study, Hot Chili says it will have a right of first refusal to ship copper concentrates through Puerto Las Losas facilities for three years. The company says it now has up to five years to negotiate a binding port services agreement, which may include a “Take or Pay Volume” clause, based on at least 80 per cent of Costa Fuego’s projected future annual concentrate production.

Management has confirmed the first item to be addressed will be the formation of a technical committee to progress the feasibility study. The committee will take aim at defining key deliverables and a timetable for management of the completion of the study’s workstreams within the first month.

Leveraging an existing port, located 50km away, into a bulk concentrate export facility has the potential to unlock significant capital and operating savings for Costa Fuego and other potential mine developers in the Huasco region of Chile. Hot Chili plans to jointly develop a significant copper infrastructure corridor, enabling our own production, and unlocking multiple projects within the region, which would benefit significantly from desalinated water supply and proximal bulk copper concentrate port facilities.

Hot Chili managing director and chief executive officer Christian Easterday.

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Last month, Hot Chili unveiled a six per cent boost to the indicated copper-gold resource at its Costa Fuego project and management says 85 per cent of its mineral resource estimate now sits in the indicated category. The company’s proposed open pit mine development will dig away at 93 per cent of the resource and the remaining 7 per cent will be accessed via underground mining.

The total Costa Fuego resource in the indicated category is now 798 million tonnes grading 0.45 per cent copper-equivalent for 2.9 million tonnes of copper, 2.6 million ounces of gold, 12.9 million ounces of silver and 68,000 tonnes of molybdenum. The total inferred resource is 203 million tonnes at 0.31 per cent copper-equivalent for 500,000 tonnes of copper, 400,000 ounces of gold, 2.4 million ounces of silver and 12,000 tonnes of molybdenum.

The project sits at low altitude, between 800m and 100m above sea level, about 600km north of Chile’s capital of Santiago and is comprised of four deposits – Cortadera, Productora, Alice and San Antonio – which are all in close proximity. The majority of the resource contained within the Cortadera deposit contains about 64 per cent of total indicated resources and 69 per cent of total inferred estimates.

The company says it is engaging with several potential infrastructure partners and reviewing the potential for direct government support to assist with driving the project forward. Management says that drive includes a concept study for a 100 per cent renewable energy-driven desalination water project for the southern Atacama region.

The proposition has the potential to supply agricultural, community and new mining demand in the Huasco valley region, near the Costa Fuego project, of up to a massive 3700 litres per second.

With port talks well and truly underway, Hot Chili is busily converting data from 24.5km of drilling across Costa Fuego into a maiden mineral reserve for its upcoming prefeasibility study (PFS) that is expected to be completed in the second half of this year.

The company’s share price was up on today’s news to hit an intraday high of $1.07 on good volume, up almost 14 per cent from yesterday’s close of 94c.