Steve Garwin

Bulls n Bears

Hot Chili has applied for a second maritime concession in Chile as it looks to develop a new company that will have an overflowing stream of water infrastructure assets.

Management says the new company will be aimed at servicing the growing demand for the valued commodity from the community, other mining companies and local farmers within the fast-growing region.

The company today confirmed it had submitted its latest maritime concession application to support the potential for a whopping long-term, regional multi-user seawater and desalination water supply network for the Huasco valley area of the Southern Atacama region of Chile that sits about 600km north of the Santiago capital. The second application includes brine discharge for potential seawater desalination operations as part of a push to deliver both raw seawater and desalinated water from its proposed network.

Hot Chili is now preparing to transfer all of its water assets into the new standalone company that it will still control. It says positive discussions with several potential desalinated water customers in the Huasco Valley region have already taken place, in addition to engaging with potentially suitable infrastructure partners.

It has also held talks with Chilean Government regulators to determine the best approach for its proposed plans and is reviewing the potential for direct government support to assist with driving the project forward. Management believes such a positive development within the region could trigger substantial local mining investment and deliver impressive growth to the company’s market value.

Water scarcity is THE critical issue for new mine developments in the Atacama on both the Chilean and Argentinean side of the Andes. Hot Chili is the only Company holding most of the necessary permits required to provide desalinated water to the Huasco Valley – a prolific region for potential new global copper supply needed to support global electrification and decarbonation. Securing these assets has involved over a decade of commitment.

Hot Chili executive vice-president José Ignacio Silva

The company’s recently-completed concept study for a staged water network development indicated the viability of the project at an initial 300 litres per second scale, with an eventual ramp-up to 3700 litres per second.

The study assessed a potential 100 per cent renewable energy-driven desalination water project with the potential to supply those needing a reliable water supply, such as agricultural, community and new mining companies within the Huasco Valley region near to where the company’s Costa Fuego copper project sits. The region contains six major undeveloped copper projects and two new, large-scale copper discoveries, with all projects requiring desalinated water supply.

Hot Chili says it holds the only granted maritime water concession and most of the necessary permits to be able to provide much-needed critical water to the region. It says the Chilean Government is actively encouraging investment in multi-user water networks in the region, with water scarcity being one of the biggest obstacles facing new global copper supply.

The compelling Costa Fuego project’s total resource sits at 3.62 million tonnes of copper-equivalent, with resources in the indicated category of 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 resource classified as inferred 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 Costa Fuego project comprises the Cortadera, Productora, Alice and San Antonio deposits and management says they are all in close proximity and sit at low altitude – about 800m to 1000m.

Hot Chili’s push to build an in-demand water supply network could see it deliver tremendous value to the region and it may well find itself swimming in proposals from potential users.

Bulls n Bears

Hot Chili has nailed down the right to acquire a lucrative 140-square-kilometre patch of the historical Domekyo copper-gold mining centre, a mere 30km from its flagship Costa Fuego copper hub in Chile.

And it is a timely acquisition for the ASX-listed explorer as the price for the red metal hit US$10,000 (AU$15,244) a tonne last week for the first time since 2022. Supply disruptions following the forced closure of one of the world’s biggest copper mines in Panama late last year and ongoing drought conditions in Zambia that have impacted copper production, married up with increasing demand from green industries, have spurred the significant copper rally.

Under the terms of the acquisition agreement, Hot Chili – via its Chilean subsidiary La Frontera – will stump up US$4 million (AU$6.1 million) in staged payments over four years to earn a 100 per cent interest in the 12 exploration and 14 exploitation concessions at Domeyko. Additionally, the vendor will be granted a 1 per cent net smelter royalty (NSR) for the concession package and Frontera will have the first right of refusal to buy it back.

The Domeyko mining centre lays claim to several significant historical copper-gold mines where previous operators exploited the shallow oxide mineralisation, but never ventured deeper to test the potential copper sulphide source. Interestingly, management says the area is prospective for both porphyry and structurally-hosted styles of copper-gold mineralisation.

Hot Chili has been on a land grab of late, picking up the nearby historical Marsellesa and Cordillera copper mines and the Cometa project, all within an easy 30km trucking distance to its developing Costa Fuego project.

However, Domeyko – which boosts its land-holding by a hefty 25 per cent –is its biggest acquisition since 2019 when it stitched up its Cortadera concessions that sit adjacent to its Productora and San Antonio copper assets and collectively make up Hot Chili’s Costa Fuego copper hub.

The three deposits at Costa Fuego have a combined mineral resource estimate of 798 million tonnes of measured and indicated resources 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

Hot Chili released a preliminary economic assessment (PEA) in June last year showing the project will spit out a massive $309 million a year on average in free cash across a 16-year mine life. With the impressive set of numbers outlined, the project is emerging as one of the world’s biggest and lowest-cost copper plays, with an estimated post-tax net present value (NPV) of US$1.1 billion (AU$1.66 billion).

Management says it is on track to deliver a prefeasibility study (PFS) on the project in the second half of this year.

Costa Fuego sits in the low coastal range of the Atacama Region, 600km north of the Chilean capital of Santiago in a country famed for its copper resources. With a compelling portfolio of new projects in the pipeline, all within easy trucking distance to Costa Fuego, Hot Chili looks set to strike at a time when the copper price is just starting to heat up.

July 8, 2024 | The West Australian

Hot Chili has entered into a new joint venture (JV) aimed at supplying seawater and desalinated water to mining projects throughout Chile’s Huasco Valley where it is pursuing its own mammoth Costa Fuego copper-gold project.

The company today confirmed it will hold an 80 per cent interest in Huasco Water and its critical water assets in the JV with Chilean iron ore company Compania Minera del Pacifico (CMP). The new company is expected to supply desalinated water to operations including Costa Fuego and CMP’s Los Colorados iron ore mine.

The JV says further offtake negotiations are already underway.

The Huasco Valley region in Chile’s Atacama Desert is one of the driest regions on Earth, inducing significant water demands from mining operations and local communities. The new water initiative reflects an increasing trend in the Atacama region towards collaborative water infrastructure development, highlighted by a recent US$600 million (AU$890 million) deal for Antofagasta Minerals’ Atacama water rights and assets.

The Company has been receiving increasing interest from potential strategic funding parties in its advanced Costa Fuego copper-gold development and its recently announced Water Supply Studies. This interest, in combination with a rising copper price environment, provides confidence to accelerate the Company’s growth and development plans whilst preserving control of these assets.

Hot Chili managing director Christian Easterday

The company holds the only granted maritime water concession and necessary permits to provide critical water access to the Huasco Valley. It has outlined about 3700 litres per second of potential future desalinated water demand from new mine developments around the valley alone.

The JV partners are likely to underpin Huasco Water as potential foundation offtakers with the Costa Fuego copper project requiring some 700 litres per second of future seawater demand, while Los Colorados needs a further 200 litres per second. Hot Chili says significant economic, environmental and social synergies exist for all potential customers in the Huasco Valley, especially given growing community and regulatory opposition to continental water extraction in the Atacama.

Initial offtake discussions are already underway with nearby mine developers, with additional non-mining desalinated water customers expected to come from the area immediately adjacent to the Costa Fuego copper hub.

The Costa Fuego copper-gold project, which lies some 740m up the hill from the proposed Huasco desalination plant, features a measured and indicated resource that sits at 798 million tonnes at 0.45 per cent copper equivalent for 3.62 million tonnes of copper equivalent, containing 2.91 million tonnes of copper, 2.64 million ounces of gold, 12.8 million ounces of silver and 68,100 tonnes of molybdenum. It makes it one of a limited number of “globally-significant” copper developments that are not in the hands of a major mining company.

Hot Chili recently executed a $29.9 million fundraising campaign on the back of a US$15 million (A$22.23 million) net smelter royalty (NSR) deal with Osisko Gold Royalties, aimed at driving its Costa Fuego copper hub in Chile into production. It comes as the red metal’s price recently launched to 60-year highs, prompting majors across the world to look to acquire copper-producing assets of scale.

The Costa Fuego prefeasibility study (PFS) is expected in the second half of this year.

By further securing its water supply and also creating a new company capable of luring significant offtake partnerships, Hot Chili now feels confident enough to sink another 25,000m of drilling into the project. It will also pursue more regional exploration and land consolidation in a show of confidence at the copper project, taking final steps forward before a bankable feasibility study and final investment decision.

Copper, water and deep pockets of cash have Hot Chili set up for an eventful second half of the year. And with copper prices remaining solid, the company appears well-positioned now to give its giant Costa Fuego project a good crack at development.

Hot Chili has loaded its financial base with a $29.9 million fundraising campaign aimed at supercharging its Costa Fuego copper hub in Chile – at a time when the reddish metal’s price is at a 60-year high.

The $119.45 million market-capped company’s significant raise, which it said drew strong demand from Australian and overseas institutional investors, coincides with a rising copper price sitting at about US$4.57 (A$6.91) per pound.

Management says it expects its private $24.9 million placement to be complemented by a further $5 million share purchase plan (SPP) to reach the $29.9 million in new funding. Shares were offered at $1 for both the placement and the SPP.

Following the completion of the raise, Hot Chili says it will move to finish its Costa Fuego prefeasibility study (PFS) in the second half of the year, further secure its water supply and also create a new water company, plug in 25,000m of drilling, pursue more exploration and land consolidation in the next 18 months and kick off a “bankable” feasibility study.

The boost to its finances follows hot on the heels of its recent half-yearly figures that showed it already had A$13.3 million in cash at the bank after reducing its 2024 commitments by US$10 million (A$15.12 million) through consolidating its option agreements, securing its water supplies and filing its technical report for the Costa Fuego copper-gold project.

We control large-scale assets in two of the most critical commodities of our time – copper and water – with two of the most desirable attributes – low-risk and near-term. In combination with a rising copper price which indicates the initial stages of a new copper price cycle driven by lack of supply, this gives the Company confidence to accelerate its growth and development plans while preserving control of these assets for our shareholders.Hot Chili managing director Christian Easterday

Easterday said the company had received increasing interest from potential strategic funding parties to help Costa Fuego’s copper-gold development and its recently-announced water supply studies. He said the project remains one of a limited number of “globally-significant” copper developments that was not in the hands of a major mining company.

Costa Fuego’s measured and indicated resource sits at 798 million tonnes at 0.45 per cent copper equivalent for 3.62 million tonnes of copper equivalent, containing 2.91 million tonnes of copper, 2.64 million ounces of gold, 12.8 million ounces of silver and 68,100 tonnes of molybdenum.

Hot Chili also recently inked a deal with Osisko Gold Royalties, pocketing US$15 million (A$22.68 million) in exchange for a 1 per cent net smelter return (NSR) royalty on copper and a 3 per cent NSR on gold across the Costa Fuego project. Management says the Osisko investment provided an endorsement of its project and its economics from one of North America’s leading royalty-streaming groups.

In addition, the company consolidated its tenure while expanding its ground footprint and kicked off its exploration and resource expansion drilling programs. It updated its resource numbers and obtained results from its initial drilling of its latest satellite targets at Marsellesa, Cordillera and Corroteo, with some good copper hits including 25m grading 0.4 per cent copper from surface with 10m at 0.8 per cent from just 7m depth at Marsellesa.

Hot Chili’s Costa Fuego is a boomer of a resource that is seems to be emerging at just the right time and the latest funding moves look set to put a solid set of wheels under the venture to get it fully on track.

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.

The West Australian | Matt Birney | 18 August 2022

Hot Chili says its pre-feasibility study will establish Costa Fuego as one of a few new material copper mines in the world set for near-term production. Credit: File

WA-based copper developer Hot Chili has dropped another piece of its Costa Fuego jigsaw into place after Chile’s Central Authority Electrical Regulator approved the company’s application for connection to the Maitencillo sub-electrical power station, 17km from the promising copper project.

Hot Chili says the approval is as a key step forward for the development of Costa Fuego because it will provide access not only to Chile’s national energy grid but also to multiple renewable energy providers.

Discussions have begun with electrical market advisers and providers and several non-binding quotations have been received for long-term power supply.

The selection process for a power provider or providers is expected to begin in the last quarter of this year.

Hot Chili controls 100 per cent of Sociedad Minera La Frontera, the operating company that owns Costa Fuego.

It regards Costa Fuego as one of the few global copper projects with low economic hurdles to clear and without infrastructure or permitting hurdles that might prevent its timely production.

Costa Fuego is at low altitude, about 600km north of the country’s capital, Santiago and only about 55km from the coast and the Las Losas port.

The company is aiming to tick as many “green” boxes as possible for the project and is taking a low-energy intensity development approach.

Water licences have already been granted to use sea water, without the need for desalination, for processing and existing infrastructure.

The company aims to operate the project on a 100 per cent renewable power mix of nearby solar generators, wind turbines and hydroelectric power to add to the project’s environmental credentials.

Hot Chili has been drilling the project’s Cortadera, Productora and Sant Antonio ore bodies to build its planned prefeasibility study, or “PFS” — expected in the first quarter of 2023.

The company says the PFS will establish the project as one of few new material copper mines in the world set for production in the near-term.

Earlier this year, good assay results helped boost Costa Fuego’s mineral resource estimate by more than two-thirds.

The total now stands at 725 million tonnes grading at 0.47 per cent copper equivalent for 2.8 million tonnes of contained copper and 2.6 million ounces of gold.

However, with exploration and resource growth drilling continuing, the company plans on a resource upgrade later this year.

With Hot Chili flagging more announcements across multiple work streams at the project, the rest of this year looks like being an especially busy period for the copper player.

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The West Australian | Matt Birney | 28 November 2022

Hot Chili has added scale to its South American copper hunt after completing a deal to pick five proximal mining rights. Credit: File

South American copper explorer Hot Chili has executed an option agreement with Antofagasta Minerals S.A. to procure a 100 per cent stake in five mining tenements that straddle the western extension of its Cortadera copper-gold discovery in Chile. The company is now gearing up to launch an initial 6000m drilling program to test its new ground and bolster its current resource.

Cortadera forms part of Hot Chili’s larger Costa Fuego project that boasts a mammoth 725 million tonne resource base going 0.47 per cent copper equivalent. The figure is derived from inventories embedded across two key deposits which sit 14 kilometres apart: Cortadera and Productura.

Productora offers a 253 million tonnes measured and inferred resource at 0.49 per cent copper equivalent.

At Cortadera Hot Chili has carved out a 471 million tonne resource grading 0.46 per cent copper equivalent in the indicated and inferred categories. The deposit houses more than 1.7 million tonnes of copper, about 1.8 million ounces of gold and 32,000 tonnes of molybdenum.

Importantly, the company says its latest acquisition virtually doubles the prospective strike length of Cortadera’s existing discovery from 2.3km to 4.1km.

Management believes its new ground is vastly prospective and houses a large-scale outcropping mineralised porphyry. At 700m in strike length and 300m in width the company argues the ore body is of similar stature to Cortadera’s main porphyry – Cuerpo 3.

A 2005 drilling campaign across a porphyry coined “Cuerpo 4” inside one of Hot Chili’s new mining rights returned several near surface intercepts including 16m grading 1.3 per cent copper equivalent from 28m inside a broader 128m parcel at 0.5 per cent copper equivalent from 28m.

The company says the nature of the strikes at Cuerpo 4 suggests it could establish an open pit resource at the site – a play that could allow it to vector in on the ground’s shallow copper, gold and molybdenum mineralisation.

Hot Chili now plans to drill test a pair of targets within Cuerpo 4 using a cocktail of RC and diamond-lead programs.

To claim a 100 per cent stake in the mining rights Hot Chili is obliged to complete 6000m of drilling and finalise the payment of a US$1.5 million option exercise price.

After the option has been exercised, Antofagasta Minerals S.A. has the opportunity to re-establish a 55 per cent interest in the mining rights by paying 55 per cent of the option’s exercise price and five times the option period’s exploration costs.

Management says the deal represents a strategic consolidation of the Cortadera porphyry deposit region and has the potential to provide the Costa Fuego copper hub with an economic and organic pathway to resource expansion.

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The West Australian | Matt Birney | 30 Nov 2022

Core logging at a Hot Chili copper project in South America. Credit: File

Hot Chili has completed another land grab in South America, picking up seven new tenements for 757 hectares that have extended the boundaries of its Cortadera copper-gold discovery in Chile.

The purchase is hot on the heels of an adjacent acquisition yesterday that landed it a five-piece package of prospective copper ground that flanks the western rim of Cortadera.

The newly acquired tenements were obtained at a total cost of just US$110,000 through a government-run open auction.

The company says three of the tenements coined “Falla Maipo 2”, “Falla Maipo 3” and “Falla Maipo 4” bore the entirety of the financial burden whilst the remaining four were granted following forfeiture of overlapping third-party mining rights.

The Falla Maipo tenements adjoin the company’s existing copper ground at Cortadera and extend its potential strike length to 5.2 km.

Hot Chili says the acquisition of the seven new tenements are significant as they house four substantial copper porphyries that could expand the scope of its overall Costa Fuego copper-gold development.

Additionally, the acquisition consolidates Cortadera’s western extension and permits the company to get boots on the ground to explore a potentially much larger porphyry cluster.

Porphyry copper deposits are ore bodies formed when hydrothermal fluids deposit minerals from magma chambers and are major sources of the metal. The deposits are commonly found in regions of volcanic activity and a suite of them are currently being worked across Canada, Peru, Chile and Mexico.

Notably, the four new porphyries located within Hot Chili’s new tenements add a significant prospective strike length to a pair of mineralised trends.

The company’s Las Canas trend which hosts 4 porphyry targets has been extended by 1.8km whilst the Cortadera trend has been stretched by an additional 1.1km.

The Cortadera trend hosts a large porphyry target along strike from the Cortadera deposit and also takes in a mineralised fault corridor that connects the company’s Cortadera and Productora copper-gold deposits.

Cortadera is a fragment of Hot Chili’s larger Costa Fuego project that houses a gargantuan 725 million tonne resource base going 0.47 per cent copper equivalent. The number is drawn from two key assets located about 14 kilometres apart: Cortadera and Productora.

The Cortadera deposit hosts a 471 million tonne indicated and inferred resource going 0.46 per cent copper equivalent. The deposit takes in more than 1.7 million tonnes of copper, 1.8 million ounces of gold and 32,000 tonnes of molybdenum.

Productora hosts a 253 million tonnes measured and inferred resource grading 0.49 per cent copper equivalent.

In what could serve as a shot in the arm for Hot Chili a recent report by the Mineral Council of Australia suggests global demand for copper is tipped to rise from about 23.5 million tonnes in 2019 to 31.1 million tonnes in 2030.

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