Hot Chili gets power boost for Chilean copper project
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.
Hot Chili bolsters South American copper ground
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.
Hot Chili doubles down on South American copper play
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.
Copper Explorers coasting in Chile
The Mining Journal | Paul Harris | 23 January 2023
The drive north along Ruta 5 from La Serena towards Vallenar is to drive through more than a century of mining history. From the silver mines of the 1800s, to the iron ore mines of the late twentieth century, and the almost continual small-scale production of high-grade copper oxide. The four-lane highway passes through a wide valley with desert scrub and cacti, in parts reminiscent of Nevada or Arizona in the US, particularly with the cobalt blue sky and beating sun.
The drive passes a wind farm funded by Barrick Gold and various solar generation facilities but tucked away to the east of the Coastal Range and the Pacific Ocean, it also runs along part of the 2,000km-long north-south Atacama Fault in central Chile, which hosts iron, copper-iron and copper-gold deposits including IOCG, porphyry and vein deposits.
It also holds promise for Chile’s future copper developments, such as with companies like Hot Chili and Tribeca Resources, and further north, Capstone Copper’s Santo Domingo project, looking at bringing forward affordable projects which benefit from the rich regional infrastructure endowment, which includes access, high-tension power lines, local mining culture and port facilities. This should be music to the ears of mining investors who are still beating the capital discipline drum and nervous about development cost blowouts, which has made the greenlighting of new mine developments noticeable by their absence despite the copper price being notionally above the US$4 per pound incentive price. No wonder diversified miner Glencore and royalty company Osisko Royalties are interested.
Within this context, the long-overlooked coastal range in Chile is drawing increasing attention from copper explorers and developers who believe viable and economic deposits can be found, which, while smaller than the mega porphyries in the high cordillera which have powered the country’s copper production, can potentially be brought to market with less permitting, development and financing risk.
Hot Chili and its Costa Fuego project is growing into a strong development candidate south of Vallenar, with exploration bringing the project ever closer to the magical threshold of 1 billion tonnes of resources. While its Productora deposit has been around for a number of years, the more recent definition and integration of the Cortadera deposit 14km away into Costa Fuego via a 2022 resource update has increased the scale and attractiveness of the project. The continual fall in the average production grade in Chile adds shine to the project, which with each passing year, sees it get closer to and equalling production grade.
Diversified miner Glencore certainly sees the possibilities, having invested in the company and provided an offtake agreement in 2022. Glencore invested as Hot Chili debuted on the TSXV in 2022, participating in the C$30 million capital raise to take a 9.99% stake. “The Glencore investment gives us a solid endorsement and provides a good rubber stamp on what we’re doing and the asset we have,” Hot Chili chief executive Christian Easterday told Mining Journal at the time.
Glencore’s influence can be seen in the current drill programme at the Las Cañas target (body #1, Cortadera), to rapidly add further tonnes to its overall resource, with a prefeasibility study postponed until this drilling and the next resource update has been completed.
The consolidated March 2022 Costa Fuego resource featured an indicated resource of 725Mt grading 0.47% copper equivalent for 2.8Mt of copper, 2.6Moz of gold, 10.5Moz of silver and 67,000t of molybdenum, and inferred resources of 202Mt grading 0.36% copper equivalent. It also featured a high-grade indicated component of 156Mt grading 0.79% copper equivalent for 1Mt of copper, 850,000oz of gold, 2.9Moz of silver and 24,000 of molybdenum.
Hot Chili and Productora were widely dismissed by the market as being too small and too low-grade. That is no longer the case with the company looking at 100,000tpa of copper production for 20 years, and possibly more, although the market view perhaps still languishes in its past perception judging by the slow uptick of its share price. However, Costa Fuego is rapidly taking its position on the relatively short list of development stage projects that can be developed.
While Hot Chili’s star is starting to rise, the years spent in the investor doldrums saw the company use the time to advance low-cost but equally important work to derisk the project and make it a more robust and viable development proposition. “During the downturn in the market, we held onto Productora but stopped drilling and instead focused on the infrastructure we would need, such as obtaining the surface rights and easements we will need for access, power, a water pipeline and the maritime concession,” country manager Jose Ignacio Silver told Mining Journal during a site visit.
Cortadera has been a game-changer for the company, bringing high-grade outcropping material into the picture and almost quadrupling the resource base. The area has seen small-scale mining from local miners targeting high-grade copper oxide exposures on the mountain tops, with material containing 3% copper or more sent to the processing plants of state mineral company Enami. Their workings with the outcropping bluish-green chrysocolla mineral provide an obvious visual clue for explorers like Hot Chili to start their exploration efforts.
At Cortadera, which the company obtained in 2019, it has defined three ore bodies and an indicated resource of 471Mt grading 0.46% copper equivalent and an inferred resource of 108Mt grading 0.36% CuEq. The mineralisation outcrops at body #1, with mineralisation getting deeper and larger volumes moving to the southeast for body #2 and then again for body #3. Body #3 is the biggest and deepest, and where the company completed an 1185m hole which showed high-grade at depth in hole 13D (750m grading 0.6% Cu and 0.2g/t Au from 204m depth down-hole, including 188m grading 0.9% copper and 0.4g/t gold).
The area has been picked over by larger companies in the past, but seemingly in a half-hearted manner and never consolidated, perhaps using exploration results as a reason to move on rather than as a reason to stay and grow a resource. “Explorers didn’t want the Coastal Range as they were looking for the mega porphyries in the high Andes. There was also the issue of consolidating the concessions and the surface rights, which not everyone wants to take on,” geology manager Andrea Aravena told Mining Journal.
Piecing the project together is a task that the relatively young and ambitious Hot Chili team relished, particularly Silva, a lawyer who studied international trade law in the UK and spent some time working with the UK Serious Fraud Squad. There is a palpable enthusiasm for the exploration opportunities this now provides, with various new drill targets being worked up and permitted around both deposits. Silva has a similar enthusiasm for obtaining the infrastructure easements and entering the permitting process in the future. “I love this because we are building a long-term company and something that will have real value,” he said.
The next piece of the puzzle, and the one which may push the company over the 1Bt of resources threshold (already 927Mt), is an earn-in agreement with Antofagasta Minerals (AMSA) on the ground between Productora and Cortadera called Las Cañas for $1.5 million and 6,000m of drilling in two phases. The first phase is underway and will see 3,000m drilled as part of Hot Chili’s 10,000m initial exploration drill plan for 2023. Following a joint review of the results with AMSA, the second 3,000m will be drilled. AMSA previously drilled five holes at Las Cañas, and so the first Hot Chili holes are twinning some of those holes seeking to confirm the high-grade results previously obtained.
The evolution of Productora and Cortadera into Costa Fuego, with a central processing plant planned to be located at Productora, has energised the exploration team to find more ore bodies nearby in the Huasco Valley which could potentially feed into this. This is a task helped by growing confidence in the geological model they have developed and refined. Zones carrying mineralisation are characterized by the presence of tightly packed parallel quartz veinlets, which carry the copper sulphide mineral chalcopyrite, gold, silver and molybdenum credits.
Consulting geologist Dr Steve Garwin, a key member of the SolGold team which discovered the Alpala deposit in Ecuador, is also the lead technical advisor to Hot Chili and has trained the exploration team on the key things to record in core logging, such as the alteration, the number of veinlets and the presence of a molybdenum halo. With accurate core logging of crucial importance, one or both of the principal project geologists Miguel Tapia and Cristian Vasquez, are always on-site to ensure this is done correctly and consistently. “What we see at the #1 ore body at Cortadera we see at Las Cañas, which means we can advance quicker because we have a good idea of what is happening,” Tapia told Mining Journal.
“We always start by looking at the regional context as we think about the potential of having a cluster of deposits. Most deposits are structurally controlled by the north-south Atacama Fault structure and NW trending faults. The intersection of these can be zones of interest,” said Aravena.
Productora is a different beast as it is a structurally-controlled tourmaline breccia hosted in volcanic rocks, although exploration has also been guided by where small miners previously worked.
While undertaking a PFS on Costa Fuego has been postponed pending the Las Cañas drilling, the company has a general idea of how it wants to develop the project, having previously completed a PFS on Productora, as well as the majority of a PFS for the combined project. Mining would start with open pits at Productora and high-grade material from body #1 at Cortadera, with the company targeting a multi-decade project to produce approximately 100,000tpa of copper and up to 70,000ozpa of gold.
Material from Cortadera is planned to be transported to Productora via a rope conveyor, one of three key elements to reduce the environmental footprint and lower operating costs for future operation. The tailings storage facility has been relocated down the valley to a site that will have greater storage capacity and be cheaper to build and operate. “This is not upstream of any river, so there should be no opposition from the Huasco Valley Agricultural Association. The rope conveyor towers have minimal surface disturbance, and the Project is being designed with all stakeholders in mind,” said Silva.
The company reported a key development in December about the award of a maritime concession from the government where it will build its seawater capture infrastructure, the culmination of eight years of work. Processing will use seawater, and not needing to build a desalination plant will save considerable capital and operating cost. “It also improves the copper recovery,” said Silva. Marimaca Copper, which is advancing its Marimaca project in the coastal range near Antofagasta, is also looking to use seawater for processing and also says this will improve recoveries.
With the wind in its sails, the coming milestones for Hot Chili are to complete a preliminary economic assessment during the first semester, a resource upgrade in the second semester, and then the PFS in the first half of 2024.
“Growth from the drill bit is very much Hot Chili’s focus in 2023, with the company confident of continued resource growth. This is underpinning the company and our shareholder Glencore’s view that Costa Fuego and our regional consolidation may support a long-life mine producing 150,000tpa of copper. This would put Costa Fuego toward the top-end of scale for new copper developments being advanced in the world,” said Easterday.
Silva also noticed a clear change in the government’s attitude towards mining following the rejection of a new draft constitution on September 4 last year. While the country will continue creating a new constitution, it will likely be a less radical and more centrist document than the rejected draft.
“After 4 September, everything felt more stable in Chile. The rejection of the new draft constitution was a defeat for the extreme Left and moved politics in Chile back into the centre. The new constitution will have limits as there are 12 basic aspects of the political structure which have been agreed upon and will not be changed,” said Silva. These include that Chile is one united nation with a separation of powers and the existence of an independent Central Bank, as well as an independent Prosecutor and Electoral Office.
Hot Chili is not alone in this new development thrust. Some 500km north near Antofagasta, Marrimaca Copper plans a feasibility study this year for its Marimaca coastal range deposit for a 50,000-60,000tpa operation from a measured and indicated resource of 140Mt grading 0.48% copper for 665,500t of contained copper. Capstone Copper’s permitted and shovel-ready Santo Domingo copper-iron-gold project near regional mining hub Copiapo is due to see a feasibility study update later this year, which will include additional processing circuits for cobalt and iron ore, and may see a lower capex than the $1.5 billion in the current feasibility through integration with its nearby Manto Verde mine.
Exploration spending in Chile has been increasing in recent years, amounting to US$713.2 million in 2022, according to state copper agency Cochilco, a 24.6% rebound from the low of $450 million in 2020, the lowest amount since before 2010. The majority of spending at $345 million is by miners around their mines, with large mining companies spending most on exploration at 74.6% of the total. Early-stage exploration accounted for $197.3 million in 2022, with the amount spent by junior explorers almost doubling from 2021 to 2022, increasing its share from 9% to 18%. Copper is the most sought mineral, accounting for 74% of spend, followed by gold at 21%.
A new crop of junior copper explorers in Chile includes Culpeo Minerals, Torq Resources, Atacama Copper, Pampa Metals, ATEX Resources, Solis Minerals, Rugby Resources, Alto Verde Copper, Great Southern Copper and Nobel Resources. The newest of all is Tribeca Resources, one of a new generation of copper exploration juniors in Chile’s IOCG belt whose La Higuera project, some 100km south of Costa Fuego echoes many of the attractions Hot Chili sees in the region.
Tribeca is also drawn by the fact the coastal region has been overlooked and under-appreciated in the past, even though it is possible to find a sizeable deposit. Lundin Mining’s Candelaria near Copiapo is the exemplar in this context. With infrastructure development being a key factor in development time and cost blowouts, the coastal zone and its proximity to existing infrastructure are very attractive.
I drove to the site, a few hundred metres off the Pan-American highway, with chief executive Paul Gow in a VW Gol. Having a four-wheel drive truck was unnecessary, which also attests to Gow’s frugal and parsimonious financial management, a habit carried over from when he and partner Thomas Schmidt funded the early days of the company from their own pockets. Both Gow and Schmidt worked for Xstrata Copper in their previous lives. The company doesn’t have a corporate office and has a monthly burn rate of just $40,000, excluding drilling, while its drilling costs are just $130/m before assays and geological team.
Tribeca was also attracted by the presence of high-grade small-scale operations in the district and is leveraging the experience of Gow exploring for IOCG deposits around the Olympic Dam mine in Australia. Olympic Dam has several hundred metres of barren sedimentary cover above its mineralisation. “We are looking for a sulphide copper-gold system containing hundreds of millions of tonnes of resources. We see opportunity under the gravel cover in areas where there have been high-grade oxides exploited from the mountain tops. Copper is present in outcrops, and we follow them under the gravel,” Gow told Mining Journal during the visit.
Like Hot Chili, the Atacama Fault is the main regional controlling structure, and the northwest cross faulting is also relevant. With up to 60m of gravel cover, soil geochemistry is not such a useful exploration tool, but the presence of magnetite and hematite in IOCG deposits means geophysical methods like magnetics and gravity are.
Gow says good targets are near high magnetic anomalies, although the highest copper grade is not necessarily where the highest magnetic anomaly is. “My experience in the Olympic Dam province, particularly with the Prominent Hill discovery by Minotaur Resources, is that the mineralisation is related to hematite and is commonly offset from the magnetic anomaly. The magnetic anomaly tells you there is a hydrothermal system present, but then you have to identify where the mineralisation is located within that system.”
The company is also picking up where a previous explorer called Peregrine Metals left off. Peregrine drilled some 4000m in 12 holes at Gaby, which is Tribeca’s main target and where drilling began in November 2022. “We are drilling step-out holes to the north of the Peregrine drilling and have drilled up to 600m to the north,” Gow said.
Tribeca expects to release its first drill results in the coming weeks and show whether or not it has been successful in its initial aim of expanding the mineralisation footprint. “What got me into exploration was the excitement of waiting by the fax machine for the drilling results to come in,” said Gow. With the company’s concessions extending for another kilometre to the north, there is potential to continue expanding the footprint further.
For its first programme, Tribeca uses reverse circulation drilling to pre-collar the holes and penetrate the gravels and weathered zone before switching to diamond drilling for the tail to a total depth of about 400m. It plans some 2200m at Gaby and will then look to drill 600m at its Chirsposo target, 3km to the south.
Luck plays a role in exploration, and Tribeca appears to have had some already. It is perhaps the youngest copper explorer in Chile, having completed a reverse takeover transaction in October 2022 to list on the Toronto Stock Exchange Junior board when at least two other Chile copper exploration hopefuls delayed their listing efforts. “We raised US$2.1 million in January 2022 from mainly experienced mining people, so we didn’t look to raise any money when we listed, so we didn’t encounter any adverse market reaction,” said Gow.
Shares in Hot Chili are trading at C95c, valuing the company at C$114 million.
Shares in Tribeca Resources are trading at C36c, valuing the company at C$19 million.
Hot Chili to spice up copper play with new probe
The West Australian | Matt Birney | 13 Jan 2022
Drilling at the Cortadera copper-gold discovery in Chile. Credit: File
ASX-listed Hot Chili has launched a 10,000m probe of a recently secured land package which straddles the western extension of its massive 417 million tonne indicated Cortadera copper-gold discovery in Chile, South America. The company plans to evaluate four porphyry targets in the drill campaign and has unleashed both a diamond and RC rig to complete its two-pronged plan of attack.
Both drill rigs are currently plugging away at Cortadera’s fourth porphyry target known as “Cuerpo 4” where earlier programs struck a host of shallow copper-gold porphyry mineralisation. The best of the previously scored strikes was a 128m intercept at 0.5 per cent copper equivalent from 28m downhole. The 128m hit was comprised of 0.4 per cent copper and 0.1 gram per tonne gold and also included a 16m parcel at 1.3 per cent copper equivalent.
Hot Chili has flagged Cortadera as the jewel in the crown of its low-altitude, Costa Fuego copper development and has cited the asset’s bumper indicated resource of 471Mt grading 0.46 per cent copper equivalent for 1.7Mt of copper and 1.8 million ounces of gold as key merits in its designation. Notably, Cortadera also hosts a 108Mt inferred resource base at 0.35per cent copper equivalent for an additional 0.3Mt of copper and 0.3Moz gold.
The inventory is hosted in three porphyry centres coined Cuerpo 1, Cuerpo 2 and Cuerpo 3 which sit within a 2.3km strike length of the company’s Cortadera trend. Importantly, Hot Chili’s recent land grab which extended the western tenements of Cortadera also more than doubled the prospective strike length of the discovery from 2.3km to 5.2km and swelled the site’s near-term hopes for potential resource growth
According to the company, it is well placed to bankroll a suite of drilling this year and has a number of milestones in its crosshairs including a preliminary economic assessment and a resource upgrade.
Management states the play could permit an upgrade to its future annual metal production rates and an extension to its current mine life. If all goes to plan, Hot Chili envisions an extra production output of 100,000 tonnes of copper and 70,000 ounces of gold each year along with 20 years of additional mine life.
The company also plans to deliver a pre-feasibility study associated to Costa Fuego next year and says the project is amongst only a handful of near-term production projects in the world able to deliver more than 100,000 tonnes of copper in the next five years.
Copper is tipped to play an integral role in the world’s low-carbon future and is employed across a host of clean energy applications including wind turbines, solar panels, electric vehicle or “EV” batteries and wide-scale energy storage facilities. In addition, copper is prevalent in the construction of EVs with about 38kg of the material finding its way into hybrid and roughly 60kg going into every plug-in hybrid.
A recent study by the International Copper Association predicts by 2027 demand for EVs will rise by 900 per cent, a tantalising proposition for companies with massive copper plays such as Hot Chili.
Hot Chili copper play to spit out $309 million a year
The West Australian | Helen Barling | 28 June 2023
Hot Chili’s drill rig at its picturesque Cortadera project on Chile’s copper coastline. Credit: File
Hot Chili says its Costa Fuego project in Chile will spit out a whopping AU$309 million a year on average in free cash across a 16-year mine life.
With an impressive set of numbers outlined in a freshly-minted preliminary economic assessment (PEA), 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).
And in a heavy-hitting endorsement for the operation, leading US royalty streaming group Osisko Gold Royalties has tipped US$15 million (AU$22.4 million) into Hot Chili’s till.That up-front investment for down-the-track royalty payments is destined to fast-track the company’s ongoing prefeasibility study and will also be used to fund resource growth drilling.
Hot Chili managing director Christian Easterday says Osiko’s involvement, alongside mining giant Glencore’s strategic lead shareholding in the company, demonstrates Costa Fuego’s global relevance and the project’s potential to deliver a near-term, meaningful, new copper supply.
Osisko’s funding comes in exchange for a 1 per cent net smelter return (NSR) royalty on copper and a 3 per cent NSR on gold from across the Costa Fuego copper-gold project, which sits in the low coastal range of the Atacama Region, 600km north of the Chilean capital of Santiago.
Despite the eye-opening US$1.05 billion (AU$1.57 billion) Hot Chili says it will cost to build its project, it says its payback period will be just three and a half years. Average annual operating costs have clocked in at US$1.33 (AU$2) per pound of copper in the study, positioning the company at the low end of the cost curve among its industry peers.
Keys to the lower-cost estimates include the fact that at its relatively low altitude, it does not face the extraordinary costs of having to pump water up into the mountains, in addition to the fact it has proven better recoveries using salt water and does not need an expensive desalination plant. It is believed those factors alone save the company about US$1 billion (AU$1.51 billion).
The economic evaluation pegged a long-term average selling price at US$3.85 (AU$5.76) per pound of copper and US$1750 (AU$2620) per ounce of gold. But the company says that for every extra 10 cents added to that copper selling estimate – and at a time when global predictions of a significant price hike are growing by the day – it will add another US$100 million (AU$150.1 million) to its post-tax NPV.
An pre-tax internal rate of return of 24 per cent and a pre-tax NPV of US$1.54 billion (A$2.30 billion) are also predicted in the study.
Costa Fuego holds 725 million tonnes of measured and indicated resources grading 0.47 per cent copper equivalent for 2.8 million tonnes of copper and 2.6 million ounces of gold with molybdenum credits.
A PEA study is similar in nature to an Australian JORC scoping study. Hot Chili believes its cursory assessment at its Costa Fuego project suggests it could churn out about 112,000 tonnes of copper equivalent each year for the first 14 years of an initial 16-year mine life.
Hot Chili is now one of a select group of companies with a copper development project of this scale of production that is not controlled by a major. The Company is also advantaged by its coastal, low elevation location and abundant existing infrastructure, reducing its economic hurdle and resulting in one of the lowest capital intensity of its global peer projects.
Hot Chili chairman Nicole Adshead-Bell
While copper prices have softened in recent months from this year’s high of US$4.27 (AU$6.39) per pound, demand for the red metal is set to skyrocket.
Billionaire copper juggernaut Robert Friedland, of Ivanhoe Electric, recently weighed in on the looming copper “train wreck”, predicting prices could increase tenfold amid expected global shortages.
Mr Friedland, who has been instrumental behind major copper discoveries in Mongolia and the Congo, believes the metal’s longer-term prospects will be supported by decarbonisation, ongoing Chinese demand, the emergence of India as a significant industry player and re-militarisation in the wake of Russia’s invasion of Ukraine.
Copper is yet to find a place on the critical metals lists of most developing nations. However, the metal is crucial in the global push towards net-zero carbon emissions due to its thermo-conductivity properties. The European Union recently proposed that both copper and battery-grade nickel be classified as critical raw materials key to the energy transition in a move designed to bolster its supplies.
Meanwhile, Hot Chili is warming up the drill rigs to start a 30,000m drilling blitz to target resource extensions, in addition to exploring additional priority prospects designed to feed into a resource upgrade later this year. The company has also completed the lion’s share of a prefeasibility study, which is due to be released next year.
Importantly, it still has only 119 million shares on issue, giving it a genuine opportunity to raise equity without blowing up its capital structure.
Timing, as the saying goes, is everything. With copper prices yet to reflect the dangerously low shortages of the critical metal, Hot Chili looks poised to develop its low-cost Costa Fuego project at precisely the right time.
It has been some ride for the company since it listed in 2010. It survived when the copper industry was largely decimated by a price downturn to build up to a billion-tonne resource after adding the Cortadera project to its original Productora play.
And while its project on an established Chilean copper coastline might sit in the shadows of the towering Andes mountain range, it appears to now be well on the way to putting other ASX-listed copper hunters in the shade.
Chilean Navy inks land deal for Hot Chili copper play
The West Australian | Matt Birney | 7 Dec 2022
The Chilean Navy and Hot Chili have come to a land use agreement Credit: File
Chile-focused copper player Hot Chili has put pen to paper on a land access deal with the South American country’s navy to extract sea water for its proposed Costa Fuego project processing plant.
The navy access deal grants Hot Chili access to the defence authority’s maritime concession 60km northwest of the Costa Fuego project in order to pump water from the ocean.
Hot Chili’s use of sea water will boost the project’s green credentials through negating the need to tap groundwater.
The Perth-based copper hopeful has spruiked the eco-cred of its project due to the fact it will be built on an existing infrastructure footprint, is close to some of Chile’s largest solar farms and will produce an arsenic-free concentrate.
Costa Fuego’s ore reserve currently sits at 166.9 million tonnes going 0.43 percent copper for 716,800t and grading 0.9 g/t gold for 470,000 ounces.
The company in September reported a total project mineral resource of 725Mt containing 0.38 per cent copper for 2.755Mt and grading 0.11 g/t for 2,564,000 ounces of gold.
That figure was nearly double the 2021 estimate achieved largely on the back of a 128Mt mineral resource expansion of the centrepiece Cordatera deposit.
Cordatera was acquired in 2021 from Chile’s SCM Carola and sits near two historic copper mines encompassed by Hot Chili’s third deposit, El Fuego.
The duo churned out high grade copper whilst active but have been shown little love by explorers in modern times.
Acquisition of what the company describes as a world-class resource was heralded as key to developing a long-life, large-scale copper mine by Hot Chili.
The deposit was expanded in November with the purchasing of adjacent tenements via a government auction.
As a result Cordatera now boasts a 5.2km prospective strike length and drilling on the new sites is expected by the company to begin imminently.
Chile produces some 28 per cent of the world’s copper, more than any other nation and like many others has set a bold climate change agenda to achieve net-zero emissions by 2050.
Targets set by Chilean government on industry include a 70 per cent reduction of greenhouse gas emissions on 2018 levels.
Hot Chili’s eagerness to become a clean green Chilean copper machine appears to sit well with the South American nation’s newfound environmental focus.
Hot Chili looks at fourth Chilean copper discovery
The West Australian | Matt Birney | 14 June 2022
Early drilling results from Hot Chili’s Valentina prospect has revealed a significant extension to the orebody with strong visual copper cores. Credit: File
Follow-up drilling on Hot Chili’s Valentina prospect, only a few kilometres from its three existing copper orebodies, has revealed a significant extension to the discovery with strong visual copper intersections. The discovery could beef up the numbers in the company’s pre-feasibility study on the low altitude, coastal Costa Fuego copper gold project.
Hot Chili has been driving the Costa Fuego deposits towards commercialisation for several years. The company says its low-cost overheads and proximity to local port export facilities make the project one of the most significant copper-gold discoveries of the past decade.
The explorer has been drilling out the Cortadera, Productora and San Antonio orebodies and the early indications from the Valentina drilling looks to be adding to the numbers associated with Costa Fuego.
The latest buzz has been generated from a 17m visual core of interesting copper mineralisation from 22m depth including malachite, copper clays, chalcopyrite, chalcocite and covellite.
An additional 8m visual estimate of interesting copper mineralisation from 28m depth shows chalcocite, cuprite, chalcopyrite, covellite, malachite, copper clays with cuprite, covellite and chalcocite all being all high-grade copper ore minerals.
The company says the visual estimates of sulphide and oxide minerals are not an accurate representation of final assay values and are provided for indicative purposes only.
It is expecting the lab results for the 10 drill holes Hot Chili has punched into Valentina in the coming weeks with another eight drill holes planned into the step-out target.
Hot Chili has two drill rigs currently spinning the bit at the Valentina and San Antonio deposits, 5km east of its Cortadera copper porphyry discovery.
Once the current round of drilling at Valentina and San Antonio is completed, Hot Chili is shifting to test several large growth targets including Santiago Z and porphyry extensions along strike from Cortadera.
A wider look at Costa Fuego so far has delivered an indicated resource of 391 million tonnes grading 0.52 per cent copper equivalent, containing 1.7 Mt of copper, 1.5 million ounces of gold, 4.2 Moz silver, and 37kt molybdenum as well as an inferred resource of 334Mt grading 0.44 per cent containing 1.2 Mt copper, 1.2 Moz gold, 5.6 Moz silver and 27 Kt molybdenum, at a cut-off grade of 0.25 per cent copper equivalent.
Hot Chili controls 80 per cent of the Costa Fuego operating company, Sociedad Minera La Frontera that wholly owns the project.
It says port access and associated services negotiations are progressing well with initial proposals under discussion.
Hot Chili produces record copper grades for Chile project
The West Australian | Matt Birney | Aug 09, 2022
RC drilling at Hot Chili’s Valentina deposit in Chile. Credit: File
Copper explorer Hot Chili has recorded its highest-grade intersection to date at the company’s Costa Fuego copper project in Chile whilst also extending the strike of its Valentina deposit by 120m.
Assays returned from RC drilling at the historical Valentina copper mine recorded an 8m intersection at 5.9 per cent copper equivalent from 27m.
The company says the copper equivalent breaks down to 5.7 per cent copper and 24.1 grams per tonne silver.
A deeper 2m intersection from the same hole read 1.9 per cent copper equivalent from 46m whilst a 7m section from a separate drill hole recorded 2 per cent copper equivalent from 163m.
Of the nine holes that have returned assays from the latest round of drilling, four recorded significant intersections.
Hot Chili says the latest results confirm continuity of the mineralised structure 120m south of current underground workings at Valentina.
Assay results are pending for 17 holes at Valentina in addition to 16 drill holes from the neighbouring San Antonio high-grade copper resource.
A total of 13 RC holes and three diamond drill holes have been completed at San Antonio with the aim of upgrading the deposit’s resource to “indicated” ahead of a planned resource upgrade for the Costa Fuego project.
The company says one of the diamond holes at Valentina recorded a stunning 17m visual intersection with results awaiting ore grade analysis.
Earlier this year the resource at Costa Fuego was estimated 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.
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.
Hot Chili considers its operation to be one of the few global copper projects with low economic hurdles to clear and without infrastructure or permitting hurdles preventing timely production.
The Valentina prospect is only a few kilometres from the company’s three existing copper orebodies at Cortadera, Productora and San Antonio.
Of the three deposits, Cortadera hosts the lion’s share of the greater project with an indicated resource of 471 million tonnes at 0.46 per copper equivalent.
Despite much of the resource drilling focusing on Cortadera and Productora, San Antiono has delivered an encouraging 4.2 million tonnes grading at 1.2 per cent copper equivalent utilising only 4922 metres.
The Perth-based explorer says drilling is now underway at its Santiago Z porphyry target.
A recent report by market intelligence group S&P Global expects world-wide copper demand to grow from 25 million tonnes in 2021 to about 50Mt by 2035.
If upcoming assays from Valentina continue to break records for Hot Chili, the company’s production plans will potentially be one step closer to fruition.
Hot Chili moves to secure Chilean port access
ASX-listed copper developer Hot Chili has entered into negotiations for a port access and services deal at the Chilean port of Huasco. The company said it has begun the process of securing the final critical item of infrastructure for the development of its massive Costa Fuego copper project, one of the world’s largest copper discoveries.
It has inked a letter of intent with local port services firm Puerto Las Losas SA, or “PLL” to finance a study to investigate using the existing PLL dock facilities to ship copper concentrates and other products from the Costa Fuego mine that is located some 50 kilometres away.
PLL has three months to present Hot Chili with a binding port services offer that may include required upgrades. Both parties are looking to start operations during the last quarter of 2025.
Securing port services will be a major step forward for Costa Fuego. Leveraging off existing port infrastructure will materially reduce Costa Fuego’s environmental footprint during construction and operations.
As no new port or areas will be required for construction or subject to environmental permitting, we expect a positive impact to our construction capital requirements and overall permitting/construction timelines.Hot Chili Ltd Country Manager and Chief Legal Counsel, Jose Ignacio Silva.
“Costa Fuego continues to benefit from its low altitude location and proximity to existing transport, power and port infrastructure, resulting in low capital intensity.”
“Our Letter of Intent with PLL demonstrates our continued commitment to advancing Costa Fuego within an ESG framework that reduces the overall environmental impact and uses Chilean goods, services and businesses where possible.” Hot Chili Ltd Managing Director, Christian Easterday.
The Costa Fuego project is one of the two largest copper discoveries made in the world since 2016 and takes in a massive 724 million tonne resource base grading 0.48 per cent copper equivalent, largely from two main deposits, Cortadera and Productura that sit just 14 kilometres apart.
Hot Chili has so far drilled out a 451 million tonne resource at Cortadera grading 0.46 per cent copper equivalent in the indicated and inferred categories. The deposit contains more than 1.6 million tonnes of copper, about 1.9 million ounces of gold, nearly 10 million ounces of silver and some 27,000 tonnes of molybdenum.
Productora boasts a 273 million tonne resource at a 0.52 per cent copper equivalent.
The company says the next stage in the development of the two deposits will focus on upgrading the Cortadera resource to a higher confidence resource category and advancing a preliminary feasibility study on the broader, multi-deposit Costa Fuego project.
It will also seek to test other high-priority exploration targets identified at the tenure.
Hot Chili took 100 per cent ownership of Cortadera last year and recently became a dual-listed company after its shares commenced trading on the Canadian TSXV post a C$30 million capital raise.
With money in the bank and massive mineralisation in the ground, Hot Chili appears well on its way to getting the development of this major project off the ground. Should it be able to secure port access to export facilities it will have secured yet another key piece of the puzzle – and arguably perhaps the most vital piece.