Colin Sandell-Hay | The Assay | 28 Nov, 2022
Hot Chili Limited (ASX: HCH) has executed an Option Agreement with Chilean copper major Antofagasta Minerals S.A. (AMSA) enabling Hot Chili to acquire a 100% interest in AMSA’s mining rights adjoining the western margin of Hot Chili’s Cortadera copper-gold porphyry discovery, the centre-piece of the company’s Costa Fuego senior copper development in Chile.
This strategic option agreement consolidates the highly prospective AMSA mining rights, containing near- surface drill intersections of copper-gold porphyry mineralisation, with Hot Chili’s contiguous Cortadera project.
Cortadera has been the growth engine for Hot Chili since the company executed a transaction to acquire the project in 2019.
Cortadera’s current Indicated resource of 471Mt grading 0.46% CuEq for 1.7Mt copper and 1.8Moz gold and Inferred resource of 108Mt grading 0.35% CuEq for an additional 0.3Mt copper and 0.3Moz gold is contained within three porphyry centres, trending NW-SE, over a strike extent of 2.3km.
The option enables the consolidation of Cortadera and near doubles the prospective strike length of the discovery, increasing the near term, material resource growth potential for Hot Chili.
AMSA’s five mining rights cover 517 hectares and contain a large outcropping mineralised porphyry (Cuerpo 4 – 700m in strike length by 300m in width) with similar dimensions to Cortadera’s main porphyry (Cuerpo 3) as well as other identified porphyry targets, trending N-S, over a prospective strike extent of approximately 1.8km.
In 2005, AMSA intersected significant copper-gold-molybdenum mineralisation at Cuerpo 4, with five shallow Reverse Circulation (RC) drill holes totalling 1,056m (Drilling data and associated drilling intersections not previously publicly reported, AMSA internal report.
Four of AMSA’s five drill holes recorded wide intersections of mineralisation, including COR-03 which recorded 128m grading 0.5% CuEq (0.4% Cu & 0.1g/t Au) from 28m downhole depth, including 16m grading 1.3% CuEq (1% Cu & 0.5g/t Au) from 28m.
The historical drilling across Cuerpo 4 clearly demonstrates open pit resource growth potential, given the shallow nature of copper-gold-molybdenum mineralisation, and near-surface, copper-gold enrichment.
A first-pass drilling programme comprising 16 holes for 6,000m is expected to start as soon as possible.
Drilling will test Cuerpo 4 and two other targets within AMSA’s landholding using RC and Diamond (DD) drilling. Hot Chili and AMSA have agreed on the detail and staging of the planned drilling programme after a collaborative and detailed geological review by both companies’ technical teams.
Drilling is also planned across Hot Chili’s Cortadera North target, where earlier exploration drilling targeting a large surface molybdenum anomaly in 2020 intersected wide zones of silver mineralisation. This work vectored towards a sizeable copper-gold porphyry target (Cuerpo 4) on AMSA’s adjacent mining right.
Hot Chili then ceased all exploration activities at Cortadera North until an agreement could be entered into with AMSA to enable Hot Chili to acquire the adjacent landholding.
Revision to Costa Fuego Growth and Development Timetable
The transaction provides the next step in Hot Chili’s long term growth strategy. The AMSA mining rights provide relatively low cost and highly accretive resource growth potential due to their proximity to the Company’s Cortadera open pit resource base.
Hot Chili’s next resource update, which was proposed to be delivered in late 2022, is now expected to be finalised in H2 2023 to include the proposed drilling on the AMSA mining rights.
The combined Pre-feasibility Study (PFS) for Costa Fuego, studying targeted annual production rates of up to 100kt Cu and up to 70koz Au for a +20 year life of mine, will be paused until the Company can assess the impact of resource growth potential at Cortadera. The Company’s decision to pivot the PFS ensures that future expenditure relating to the PFS can be optimised for infrastructure location and a potentially larger scale copper operation.
Only critical PFS workstreams will be continued to secure long-lead time items (environmental and social) and key value additions (metallurgical) to ensure Costa Fuego remains on-track to potentially be delivered into production in 2028.
A Preliminary Economic Assessment (PEA) of the combined Costa Fuego project at the current 20Mtpa sulphide concentrator study scale is now planned to be delivered in H1 2023.