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Stockhead TV

Peter Strachan | Stockhead TV

Peter Strachan | Stockhead TV

Barry FitzGerald STOCKHEAD

Special Report: Hot Chili has executed a five-year MoU deal with Puerto Las Losas SA (PLL) to evaluate bulk tonnage loading alternatives for copper concentrate from the Costa Fuego project in Chile.

The MoU with PLL provides Hot Chili (ASX:HCH) the right (for up to five years) to negotiate a binding port services agreement for Costa Fuego, which would include a ‘take or pay volume’ clause based on at least 80% of the project’s future annual concentrate production.

Under the terms of the agreement, HCH and PLL will undertake a port feasibility study, comprising pre-feasibility engineering (FEL2), feasibility engineering (FEL3) and environmental studies.

View across the existing Las Losas Port facility, Huasco Bay Chile in 2023. Pic: Supplied (HCH)

HCH will fund 20% of the port feasibility study, which is estimated to have a total cost of ~US$4.6m and will take roughly two years to complete.

Upon completion of the port feasibility study – and provided that a shipping solution for loading copper concentrates is agreed at existing or potential infrastructure in PLL – HCH will have a right of first refusal (ROFR) to ship copper concentrates through PLL’s facilities in Huasco Bay for a three-year period.

PLL may terminate the ROFR by reimbursing HCH’s port feasibility study costs.

Unlocking a significant copper infrastructure corridor

“Leveraging an existing port, 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,” HCH managing director Christian Easterday says.

“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.”

Port feasibility study to begin shortly

Within the coming months, PPL will be responsible for selecting a suitably qualified, top-tier, independent engineering company to carry out a port feasibility study.

This study will evaluate bulk handling and loading alternatives for copper concentrates using the existing Las Losas port facilities, potentially with or without modifying the existing infrastructure for the port in operation.

Representatives from both PPL and HCH will form a technical committee to progress the studies and within the first month, aim to define key project deliverables, as well as a timetable for management of the completion of the feasibility study workstreams.

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STOCKHEAD

The nearby Domeyko mountains of the Andes in copper-rich Chile. Pic via Getty Images

Special Report: Porphyry developer Hot Chili has acquired the ‘Domeyko cluster’ tenements to boost the size of its flagship 798Mt Costa Fuego copper-gold project in Chile by 25%.

Costa Fuego has a current resource of 798Mt at 0.45% copper equivalent for 2.9Mt copper, 2.6Moz gold, 12.9Moz silver and 68,000t molybdenum.

Two years of drilling and studies have the project now pegged as a low-risk, low-cost and long-life copper project in the world’s largest producer of the red metal.

Lately, Hot Chili (ASX:HCH) has been busy building out a network around its project with water supply and transport deals in the region.

It’s executed a five-year MoU deal with the nearby port to evaluate bulk tonnage loading alternatives for copper concentrate from Costa Fuego that would include a ‘take or pay volume’ clause based on at least 80% of the project’s future annual concentrate production.

The explorer has also announced a focus on water infrastructure and desalination in Chile’s Atacama region – one of the driest regions on earth.

Location of Costa Fuego, surrounding projects and the new addition of Domeyko. Pic supplied: (HCH)

A new addition to the south

Domeyko is the largest land consolidation undertaken by Hot Chili since Cortadera was added to Costa Fuego in 2019, adding 141km2 and representing a 25% lift in the company’s total tenure in the region.

The move contains several new tenement applications in addition to an option agreement to acquire 100% interest in several key tenements covering a highly prospective, 10km-long copper-gold mineralisation corridor.

The Domeyko mining centre hosts several significant historical copper-gold mines which were principally exploited for oxide mineralisation yet have had very limited exploration for copper sulphide mineralisation.

Both porphyry and structurally hosted styles of mineralisation are present in the area and historic datasets are currently being looked over across several highly prospective targets that have never been drilled.

The total exercisable option to purchase Domeyko comes to $4m, payable within two years to a private Chilean syndicate.

More drilling, exploration and development study workstreams across Costa Fuego are ongoing and further updates on progress of the company’s regional water supply business case study are expected soon.

STOCKHEAD

Chilean copper-gold developer Hot Chili is well on its way to nestle a mega raising to accelerate its Costa Fuego project. Pic via Getty Images

Special Report: Hot Chili is raising up to $29.9m through a private placement and share purchase plan to accelerate development of its meaty 798Mt Costa Fuego copper-gold project in Chile.

Australian, Canadian and overseas institutional investors along with existing shareholders demonstrated their confidence in the company’s assets by quickly snapping up the $24.9 million shares priced at $1 each under the private placement.

The company has good reason to be confident.

In the past two years, Hot Chili (ASX:HCH) has built Costa Fuego into a low-risk, low-cost and long-life copper-gold project with a current indicated resource of 798Mt at 0.45% copper equivalent, or contained resources of 2.9Mt copper, 2.6Moz gold, 12.9Moz silver and 68,000t molybdenum.

Indicated resources grant enough certainty for the company to start mine planning and also serve as a platform for a maiden reserve estimate for the upcoming pre-feasibility study.

HCH has already executed a five-year MoU deal with the nearby port to evaluate bulk tonnage loading alternatives for copper concentrate from Costa Fuego that would include a ‘take or pay volume’ clause based on at least 80% of the project’s future annual concentrate production.

The company is also exploring the potential to develop a water supply network in the Huasco valley region – one of the driest places in the world.

Location of the Costa Fuego project in relation to new landholdings and coastal infrastructure. Pic via HCH

Fully funded to deliver key milestones

The placement is part of a broader capital raising that includes a share purchase plan offering existing shareholders the opportunity to subscribe for up to $30,000 worth of shares to raise up to $5m.

Taken together, the $29.9m capital raising ensures that HCH is fully funded to deliver the following key milestones in the growth and development of Costa Fuego:

It will also increase the company’s s trading liquidity on the TSX Venture exchange.

“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,” Hot Chili managing director Christian Easterday said.

“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 while preserving control of these assets for our shareholders.”

Easterday is bullish the world is currently witnessing the early stages of a new copper price cycle, with a valuation of US$9,910/t on the LME at the time of writing.

Three-month contract prices rose around 18% in April alone, with a $60bn bid by BHP for Anglo American demonstrating the dearth of significant new copper developments in the global pipeline.

“The placement and share purchase plan maintain the company’s strategic funding optionality, while ensuring Costa Fuego remains one of a limited number of globally significant copper developments, not owned by a major mining company, that could deliver meaningful new copper supply this decade,” Easterday said.

“Market conditions are indicative of the initial stages of a new copper price cycle being driven by a lack of new supply. The company is now well funded to take advantage of controlling the right assets at the right time in the right place.”

STOCKHEAD

Hot Chili wants to provide desalinated water to the mining-intensive Huasco Valley. Pic via Getty Image

Special Report: Tier 1 copper-gold mine developer Hot Chili is expanding its horizons beyond traditional mining ventures with a focus on water infrastructure in Chile’s Atacama region – where water scarcity is a major challenge.

Hot Chili (ASX:HCH) is developing its flagship Costa Fuego copper-gold project, where 24 months of extensive drilling has confirmed the endowment of a 798Mt at 0.45% copper equivalent for 2.9Mt copper, 2.6Moz gold and 12.9Moz silver – with 68,000t of molybdenum to boot.

While the Costa Fuego project plans to utilise raw seawater, HCH sees an opportunity to build a water company focused on desalination operations along the Huasco coastline where major iron ore and copper mining projects exist and water scarcity is the current reality.

Beyond Costa Fuego: HCH is establishing a water company

Aligning with the Chilean Government’s push for multi-user desalination networks in the Atacama, HCH’s proactive approach positions it to address the critical challenge of water scarcity for new mining projects.

water supply concept study released in February confirmed the potential for a large-scale, multi-user desalinated water network serving the entire Huasco Valley.

It’s now submitted a second maritime concession application to establish a multi-user network there and is preparing to transfer its water assets, including permits and land access, to a new water company under its control.

HCH says the application is crucial for developing this large-scale water supply, which aims to deliver up to 3,700L/s in the long term in the region and is the culmination of over a decade of permitting efforts for HCH’s Costa Fuego project.

Location of the second maritime application for seawater intake and desalination. Pic supplied: (HCH)

Hot Chili executive VP José Ignacio Silva says water scarcity is a critical issue for projects in the Atacama, where Costa Fuego is surrounded by existing and potential mine developments.

“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 decarbonisation,” Silva says.

“Securing these assets has involved over a decade of commitment. Socially and environmentally, multiclient and multipurpose water infrastructure is the new reality.”

A water supply business case study is underway and engagement with potential customers, infrastructure partners, and government regulators is ongoing.