PERTH,
Australia, July 28, 2023 /CNW/ -
Highlights
Costa Fuego Copper-Gold Project Preliminary Economic
Assessment (PEA)1 Outlines One of World's Lowest Capital
Intensity, Major Copper Developments
- Strong Economics: Costa Fuego PEA delivers using an 8%
discount rate and long-term metal price assumptions of US$3.85/lb copper (Cu) and US$1,750/oz gold (Au)
- Base-case post-tax Net Present Value (NPV8%) of
US$1.10 Billion (approximately,
within a range of US$733 Million to
US$1.46 Billion) and Internal Rate
of Return (IRR) of 21% (approximately, within a range of 17% to
25%)
- Low Start-up Capital: US$1.05
Billion estimated, resulting in fast 3.5-year payback.
Initial phases of open pit mining fully fund development of a bulk
underground operation
- Low Capital Intensity: One of the lowest capital
intensities of global copper development projects
- Approximately 112 ktpa Average
CuEq2 Production Rate: Including 95 kt Cu and
49 koz Au during primary production (first 14 years) at C1 Cash
Cost[3] of US$1.33/lb (estimated, net
of by-product credits)
- Initial Mine Life:
16-years with 1.41 Mt Cu and 718 koz Au produced for total revenue
of approximately US$13.52 Billion and
total free cash flow of approximately US$3.28 Billion (post-tax, after operating costs,
capital costs, and royalties)
US$15 Million Investment
Agreement with Osisko Gold Royalties
- Strong endorsement from a leading North American
royalty-streaming group with funds to be used to advance the Costa
Fuego Pre-feasibility Studies (PFS), resource growth drilling
programmes and general project advancement.
30,000 m drilling program
across multiple targets to commence shortly
Single, Large Pit Scenario for Cortadera being studied in H2
2023
Strong Cash balance of $26
million
__________________________
|
1 The
PEA is preliminary in nature and includes 3% of production feed
from Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorised as Mineral Reserves (NI
43-101) or Ore Reserves (JORC 2012), and there is no certainty that
the PEA will be realised. Mineral Resources that are not Mineral
Reserves or Ore Reserves do not have demonstrated economic
viability. References to "Mineral Reserves" in this announcement
include Ore Reserves (JORC 2012). See page 39 for additional
cautionary language.
2 The copper-equivalent (CuEq) annual production
rate was based on the combined processing feed (across all sources)
and used long-term commodity prices of: Copper US$3.85/lb, Gold
US$1,750/oz, Molybdenum US$17/lb, and Silver US$21/oz; and
estimated metallurgical recoveries for the production feed to the
following processes: Concentrator (87% Cu, 56% Au, 37% Ag, 58% Mo),
Oxide Leach (55% Cu only), & Low-grade Sulphide Leach (40% Cu
only).
3 See page 16 for full non-IFRS measures
disclaimer.
|
Hot Chili's Managing Director and Chief Executive Officer Mr
Christian Easterday is responsible
for this announcement and has provided sign-off for release to the
ASX and TSXV.
For more information please contact:
Christian Easterday
Managing Director – Hot
Chili
|
|
Tel: +61 8 9315
9009
Email:
admin@hotchili.net.au
|
Penelope Beattie
Company Secretary – Hot
Chili
|
|
Tel: +61 8 9315
9009
Email:
admin@hotchili.net.au
|
Harbor Access
Investor & Public
Relations (Canada)
|
|
Email:
Graham.Farrell@harbor-access.com
Email:
jonathan.paterson@harbor-access.com
|
or visit Hot Chili's website at www.hotchili.net.au
Cautionary Statement – JORC Code (2012)
The Preliminary
Economic Assessment referred to in this report is equivalent to a
Scoping Study under JORC Code (2012) reporting guidelines. It has
been undertaken for the purpose of initial evaluation of a
potential development of the Costa Fuego Copper Project in Chile.
It is a preliminary technical and economic study of the potential
viability of the Costa Fuego Copper Project. The PEA outcomes,
production target and forecast financial information referred to in
the report are based on low level technical and economic
assessments that are insufficient to support estimation of Ore
Reserves. The PEA is presented in US dollars to an accuracy level
of +/- 35%. While each of the modifying factors was considered and
applied, there is no certainty of eventual conversion to Ore
Reserves or that the production target itself will
be realised. Further exploration and evaluation and
appropriate studies are required before Hot Chili will be in a
position to estimate any Ore Reserves or to provide any assurance
of any economic development case. Given the uncertainties involved,
investors should not make any investment decisions based solely on
the results of the PEA.
Of the Mineral Resources scheduled for extraction in the PEA
production plan, approximately 97% are classified as Indicated and
3% as Inferred during the 18-year evaluation period. The Company
has concluded that it has reasonable grounds for disclosing a
production target which includes a small amount of Inferred Mineral
Resources. There is a low level of geological confidence associated
with Inferred Mineral Resources and there is no certainty that
further exploration work will result in the determination of
Indicated Mineral Resources or that the production target itself
will be realised. Inferred Mineral Resources comprise 2.5% of the
production schedule in the first four years of operation. The
viability of the development scenario envisaged in the PEA does not
depend on the inclusion of Inferred Mineral Resources.
The Mineral Resources underpinning the production target in the PEA
have been prepared by a competent person in accordance with the
requirements of the JORC 2012. For full details on the Mineral
Resource estimate, please refer to the ASX announcement of 31 March
2022. Hot Chili confirms that it is not aware of any new
information or data that materially affects the information
included in that release and that all material assumptions and
technical parameters underpinning the estimate continue to apply
and have not been changed.
To achieve the outcomes indicated in the PEA, including reaching
Definitive Feasibility Study ("DFS") stage, funding in the order of
US$1.10 Billion will be required, including pre-production and
working capital and assumed financing charges. Investors should
note that that there is no certainty that Hot Chili will be able to
raise that amount of funding when needed. One of the key
assumptions is that the funding for the Project will be available
when required. It is also possible that such funding may only be
available on terms that may be dilutive to or otherwise affect the
value of Hot Chili's existing shares. It is also possible that Hot
Chili could pursue other value realisation strategies such as debt
financing, a sale or partial sale of its interest in the Costa
Fuego Copper Project, sale of further royalties and/or streaming
rights, sale of non-committed offtake rights, and sale of non-core
assets.
This report contains forward-looking statements. Hot Chili has
concluded that it has a reasonable basis for providing these
forward-looking statements and believes it has a reasonable basis
to expect it will be able to fund development of the Costa Fuego
Copper Project. However, a number of factors could cause actual
results or expectations to differ materially from the results
expressed or implied in the forward-looking statements. Given the
uncertainties involved, investors should not make any investment
decisions based solely of the results of the PEA.
|
SUMMARY OF OPERATIONAL ACTIVITIES
Costa Fuego Copper-Gold Project Preliminary Economic
Assessment (PEA)1 Outlines One of World's Lowest Capital
Intensity, Major Copper Developments
The Costa Fuego PEA has been prepared by Wood Australia Pty.
Ltd. as an update to the historical Productora 2016 Pre-Feasibility
Study (the "2016 PFS"). It follows significant regional
consolidation and a near quadrupling of the Company's resource
inventory with the addition of the Cortadera porphyry resource, and
the San Antonio high-grade
satellite resource. The expanded resource base provided the
opportunity to lift the scale of development for a combined
development hub (Costa Fuego) and optimise infrastructure required
to transport these resources to a proposed centralised processing
plant at Productora. The PEA therefore presents a materially
different project to that contemplated in the 2016 PFS.
The Costa Fuego PEA presents the largest copper development
project listed on the Australian Securities Exchange (ASX). Already
the ASX's largest copper development resource, the PEA
confirms Costa Fuego as having the largest potential copper
production in the exchange's development pipeline, (refer to ASX
Announcement "Costa Fuego PEA Presentation", released 28th June 2023, slide 51 "New Material Copper
Supply") at a time when the ASX is losing its significant
copper-players, with Oz Minerals taken over by diversified-miner
BHP and Newcrest under takeover by US-based Newmont.
The strong economics of Costa Fuego are described below in Table
1, using financial assumptions of an 8% discount rate and long-term
metal price assumptions for the base case of US$3.85/lb copper (Cu) and US$1,750/oz gold (Au).
__________________________
|
1 The
PEA is preliminary in nature and includes 3% of production feed
from Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorised as Mineral Reserves (NI
43-101) or Ore Reserves (JORC 2012), and there is no certainty that
the PEA will be realised. Mineral Resources that are not Mineral
Reserves or Ore Reserves do not have demonstrated economic
viability. References to "Mineral Reserves" in this announcement
include Ore Reserves (JORC 2012). See page 19 for additional
cautionary language.
|
Table 1. Copper Price Ranges: Lower-, Base-, and Upper-Case
Scenarios1,2
Project
Metric
|
Units
|
Copper
Price
|
Lower
(US$3.50/lb)
|
Base
(US$3.85/lb)
|
Upper
(US$4.20/lb)
|
Pre-Tax
|
NPV8%
|
US$M
|
1,046
|
1,540
|
2,029
|
IRR
|
%
|
19 %
|
24 %
|
29 %
|
Post-Tax
|
NPV8%
|
US$M
|
733
|
1,100
|
1,463
|
IRR
|
%
|
17 %
|
21 %
|
25 %
|
Annual Average
Revenue
|
US$M
|
779
|
845
|
911
|
Annual Average
EBITDA
|
US$M
|
384
|
445
|
506
|
Annual Average Free
Cash Flow
|
US$M
|
226
|
271
|
315
|
Payback period (From
First Production)
|
years
|
4.25
|
3.50
|
3.25
|
Post-Tax
NPV8% /Start-up Capital
|
|
0.7
|
1.1
|
1.4
|
Within the base-case scenario of the PEA, the positive economics
shown in Table 2 outline a project that leverages its low-elevation
advantage to achieve low start-up capital costs and consequently
one of the lowest capital intensities of global copper development
projects at this scale. Annual average revenue of around
US$845 Million allow the project to
achieve a fast 3.5-year payback on the back of initial open pit
mining that fully funds the project expansion and development of
underground bulk mining.
______________________________
|
1
Certain terms of measurement used in this news release are not
performance measures reported in accordance with International
Financial Reporting Standards ("IFRS"). Non-IFRS terms measures
used such as "Cash Cost", "All-in Sustaining Costs", "C1",
"Expansion Costs", "Free Cashflow" and "All-in costs" are included
because these statistics are measures that management uses
internally to evaluate performance, to assess how the Project ranks
against its peer projects and to assess the overall effectiveness
and efficiency of the contemplated mining operations. These
performance measures do not have a meaning within IFRS and,
therefore, amounts presented may not be comparable to similar data
presented by other mining companies. These performance measures
should not be considered in isolation as a substitute for measures
of performance in accordance with IFRS.
|
2 The
PEA is preliminary in nature and includes 3% of production feed
from Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorised as Mineral Reserves, and
there is no certainty that the PEA will be realised. Mineral
Resources that are not Mineral Reserves do not have demonstrated
economic viability. See page 19 for additional cautionary
language.
|
Table 2: Costa Fuego
PEA1 Economic
Highlights2- Base Case
Project
Metric
|
Units
|
Estimated
Value
|
Financial
Measures
|
Pre-tax
|
Cu
US$3.85/lb
|
NPV8%
|
US$M
|
1,540
|
IRR
|
%
|
24
|
Post-tax
|
Cu
US$3.85/lb
|
NPV8%
|
US$M
|
1,100
|
IRR
|
%
|
21
|
Payback period (from
start of operations)
|
years
|
3.5
|
Open Pit Strip
Ratio
|
W/P
|
1.8
|
Post-tax NPV/Start-up
Capex
|
Ratio
|
1.1
|
Capital Costs
Costs2
|
Total Pre-production
Capital Expenditure
|
US$M
|
1,046
|
Expansion
|
US$M
|
708
|
Sustaining
|
US$M
|
1,014
|
Total
|
US$M
|
2,768
|
Operating
Costs2
|
C1
|
$/lb Cu
|
1.33
|
Total Cash Cost (net
by-products and including royalties)
|
$/lb Cu
|
1.43
|
All-in-Sustaining
Cost
|
$/lb Cu
|
1.74
|
All-In Cost
LOM
|
$/lb Cu
|
2.31
|
Mine Life &
Metal Production
|
Primary Mine
Production Including Ramp-up
|
years
|
14
|
Mine Life (Life of
Mine Processing)
|
years
|
16
|
Primary Mine
Production – Average Annual Copper Equivalent Metal[9]
|
kt
|
112
|
Primary Mine
Production – Average Annual Copper Metal
|
kt
|
95
|
Primary Mine
Production – Average Annual Gold Metal
|
koz
|
49
|
Following the pre-production Capital Cost of around US$1.05 Billion, operations are expanded to
access the remaining deposits at an estimated Capital Cost of
US$708 Million, with Sustaining
Capital Costs bringing the total project Capital Cost to around
US$2.77 Billion. Capital Cost
incorporated a 20% contingency, with further contingency applied to
the mining pit shells, which were developed using a copper price of
US$3.30/lb to hedge against downside
price risk impacting the production feed inventory.
Operating costs for Costa Fuego average (estimated net of
by-products) a C1 Cash Cost of US$1.33/lb of copper, with an approximate average
production rate of 112 ktpa CuEq4: Including 95 kt
Cu and 49 koz Au during primary production (first 14 years).
__________________________
|
1 The
PEA is preliminary in nature and includes 3% of production feed
from Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorised as Mineral Reserves, and
there is no certainty that the PEA will be realised. Mineral
Resources that are not Mineral Reserves do not have demonstrated
economic viability. See page 39 for additional cautionary
language.
|
2
Certain terms of measurement used in this news release are not
performance measures reported in accordance with International
Financial Reporting Standards ("IFRS"). See page 40 for full
non-IFRS measures disclaimer.
|
3
Includes Payability
|
4 The
copper-equivalent (CuEq) annual production rate was based on the
combined processing feed (across all sources) and used long-term
commodity prices of: Copper US$3.85/lb, Gold US$1,750/oz,
Molybdenum US$17/lb, and Silver US$21/oz; and estimated
metallurgical recoveries for the production feed to the following
processes: Concentrator (87% Cu, 56% Au, 37% Ag, 58% Mo), Oxide
Leach (55% Cu only), & Low-grade Sulphide Leach (40% Cu
only).
|
The Costa Fuego life-of-mine processing runs for 16-years,
producing an estimated 1.41 Mt of copper and 718 koz of gold (plus
22 kt of molybdenum and 1.7 Moz of silver) for total revenue of
approximately US$13.52 Billion and
total free cash flow of approximately US$3.28 Billion (post-tax, after operating costs,
capital costs, and royalties)
Revenues from the PEA metal payload are described in Table 3
below, with 85% of revenue deriving from copper. Costa Fuego is
highly leveraged to the copper price, with analysis identifying
that for every US$0.10/lb increase
above US$ 3.85/lb Cu price,
US$100 Million (approximately) is
added in post-tax NPV8%
Table 3: Costa Fuego Revenue Breakdown1
LOM Revenue
Contribution
|
Revenue
(US$M)
|
% of
Total
|
Copper in
Concentrate
|
10,342
|
76 %
|
Copper
Cathode
|
1,218
|
9 %
|
Gold
|
1,132
|
8 %
|
Molybdenum
|
799
|
6 %
|
Silver
|
32
|
0.2 %
|
Total
|
13,523
|
100 %
|
Hot Chili has been systematic in its approach to de-risking the
project with over a decade of work in consolidating the deposits
and securing infrastructure easements and surface rights. Costa
Fuego is one of the very few projects globally that holds a granted
water permit, approval for power connection to the national grid
and the necessary easement corridors for water and power
infrastructure that would support the advancement of the project to
construction.
30,000 m drilling program
across multiple targets to commence shortly
The Company plans to rapidly begin drilling high priority growth
targets proximal to the current resource. Drilling will also test
promising greenfield targets as shown in Figure 1. Further
strategic regional consolidation options are concurrently being
pursued, with mineral resource estimate upgrades expected in Q4
2023 and H1 2025.
_________________________________
|
1
Includes Payability
|
Figure 1. Exploration Growth Targets Across
the Costa Fuego Project
Figure 2. Cortadera Porphyry Expansion
Targets1
______________________________________
|
1
Refer to announcement dated 28th August 2019 for further
information regarding Induced Polarisation (IP/MT– MIMDAS)
Survey.
* Resource Copper Equivalent (CuEq) considers assumed commodity
prices and average metallurgical recoveries for the Mineral
Resource from testwork. See Page 43 for complete Mineral Resource
disclosure of Costa Fuego.
|
Single, Large Pit Scenario for Cortadera being studied in H2
2023
The Company is investigating a large single open pit scenario
for Cortadera (no underground block cave) with the potential to
materially increase processing feed inventory and mine-life.
This scenario would necessitate a second PEA, studied while
refining of the model inputs for metallurgy, geotechnical
engineering and hydrogeology, to be incorporated into the
Pre-feasibility. Once both PEA scenarios are assessed, the Company
would select a single scenario to complete the final stages of its
PFS for Costa Fuego, which is expected to be completed by H2
2024.
SUMMARY OF CORPORATE ACTIVITIES
US$15 Million Investment
Agreement with Osisko Gold Royalties
The significant investment by Osisko provides strong endorsement
from one of North America's
leading royalty-streaming groups. The key elements of the royalty
agreement, which closed in late July, are:
- US$15 million in funds for
growth and development with the investment (Royalty
Consideration) to be used to advance the Costa Fuego
Pre-Feasibility Studies (PFS), resource growth drilling programmes
and for the general advancement of the Project
- Clear "look-through" value given the Osisko NSR is
equivalent to a 1.12% CuEq1 NSR royalty across
payable metals for US$15 million and
Hot Chili's market capitalisation at the time of announcing the
royalty was US$80 million
- Buyback rights if a change of control event occurs prior
to the fourth anniversary of Closing. The Osisko NSR can be reduced
to 0.5% NSR royalty on copper and 2.5% NSR royalty on gold
- Osisko to have a Right of First Offer (ROFO) with
respect to the sale of any future royalty, stream, or similar
interests by Hot Chili
Development and Growth Funding
The Investment by Osisko has strengthened the Company's cash
position to approximately A$26
million and the project is now fully funded for the next 12
to 18 months to deliver the next steps in its growth and
development plan, (refer Figure 3) including:
- Commencement of 30,000 m drill
program – preparations well-advanced, drilling operations set
to commence in the coming week.
- Completion of Costa Fuego resource upgrade by late
2023.
- Delivery of Costa Fuego PFS by H2 2024 - The Company has
already considerably advanced its PFS (approximately 80% complete)
with minimal expenditure required for completion.
____________________________
|
1 CuEq
considers assumed commodity prices and average metallurgical
recoveries from test work. See qualifying statements on page
19.
|
Figure 3. Costa Fuego Project Roadmap1
Figure 4. Location of the Costa Fuego Project
Regionally in Relation to Key Infrastructure
______________________________
|
1 The
Mining Project delivery schedule mentioned herein is subject to
various risks inherent to the mining industry, and external factors
beyond the control of the project stakeholders, including but not
limited to, geological and processing challenges, government
policies, permits, or regulations, fluctuations in commodity
prices, or market conditions. These external factors can impact the
Project timeline and potentially result in delays. The delivery
schedule provided is based on the best estimates and assumptions
available at the time of its creation, and the Project team is
committed to minimising disruptions and implementing mitigation
measures to the best of their abilities. However, the effectiveness
of these measures in avoiding delays cannot be
guaranteed.
|
Drill Results Reported for Costa Fuego in Quarter 2 2023
No further drilling has been completed in Q2, subsequently there
are no details to report.
Additional ASX Disclosure Information
ASX Listing Rule 5.3.2: There was no substantive mining
production and development activities during the quarter.
ASX Listing Rule 5.3.3 - Schedule of Mineral Tenements as at
30 June 2023
The schedule of Mineral Tenements and changes in interests is
appended at the end of this activities report.
ASX Listing Rule 5.3.4: Reporting under a use of funds
statement in a Prospectus does not apply to the Company
currently.
ASX Listing Rule 5.3.5: Payments to related parties
of the Company and their associates during the quarter per Section
6.1 of the Appendix 5B totaled
$151,667. This is comprised of
directors' salaries and superannuation of $151,667.
Health, Safety, Environment and Quality
Field operations during the period included geological
reconnaissance activities, core-testing and logging, field mapping,
and sampling exercises across the Cortadera, El Fuego and
Productora landholdings. El Fuego field activities are run from the
Cortadera operations centre and safety statistics are combined for
reporting.
No safety incidents were recorded during the quarter. The
Company's HSEQ quarterly performance is summarised in Table 3
below.
Hot Chili's sustainability framework ensures an emphasis on
business processes that target long-term economic, environmental
and social value. The Company is dedicated to continual monitoring
and improvement of health, safety and the environmental systems.
There is no greater importance than ensuring the safety of our
people and their families.
Table 3 HSEQ Quarter 1 2023 Performance and
Statistics
Deposit
|
Productora
|
Cortadera
|
Las
Cañas
|
Timeframe
|
Q2
2023
|
Cum.
|
Q2
2023
|
Cum.
|
Q2
2023
|
Cum.
|
LTI events
|
0
|
0
|
0
|
6
|
0
|
1
|
NLTI events
|
0
|
2
|
0
|
5
|
0
|
1
|
Days lost
|
0
|
0
|
0
|
152
|
0
|
23
|
LTIFR index
|
0
|
0
|
0
|
24
|
0
|
170
|
ISR index
|
0
|
0
|
0
|
596
|
0
|
3,898
|
IFR Index
|
0
|
39
|
0
|
43
|
0
|
339
|
Thousands of manhours¹
|
2.1
|
51.2
|
7.9
|
257
|
0
|
5.9
|
Incidents on materials and assets
|
0
|
0
|
0
|
0
|
0
|
0
|
Environmental incidents
|
0
|
0
|
0
|
0
|
0
|
0
|
Headcount²
|
4
|
11
|
15
|
37
|
0
|
21
|
Notes: HSEQ is
the acronym for Health, Safety, Environment and Quality. LTIFR per
million-manhours. Safety performance is reported on a
monthly basis to the National Mine Safety Authority on a standard
E-100 form; (1) manhours; (2) Average monthly headcount (3)
Cumulative statistics since April 2019.
|
Tenement Changes During the Quarter
During the Quarter, the Company has renewed the mining
exploration concessions Porfiada I (replaces Porfiada I, which
expired on June, 14th, 2023), Porfiada II (replaces Porfiada II,
which expired on July, 5th, 2023), Porfiada III (replaces Porfiada
III, which expired on June, 15th, 2023) and Porfiada IV (replaces
Porfiada IV, which expired on July, 5th, 2023).
The Company's existing tenements are detailed in the table
below.
Table 4. Current Tenement (Patente) Holdings in Chile as at 30 June
2023
Cortadera Project
License ID
|
HCH % Held
|
HCH %
Earning
|
Area (ha)
|
Agreement
Details
|
MAGDALENITA
1/20
|
100% Frontera
SpA
|
|
100
|
|
ATACAMITA
1/82
|
100% Frontera
SpA
|
|
82
|
AMALIA 942 A
1/6
|
100% Frontera
SpA
|
|
53
|
PAULINA 10 B
1/16
|
100% Frontera
SpA
|
|
136
|
PAULINA 11 B
1/30
|
100% Frontera
SpA
|
|
249
|
PAULINA 12 B
1/30
|
100% Frontera
SpA
|
|
294
|
PAULINA 13 B
1/30
|
100% Frontera
SpA
|
|
264
|
PAULINA 14 B
1/30
|
100% Frontera
SpA
|
|
265
|
PAULINA 15 B
1/30
|
100% Frontera
SpA
|
|
200
|
PAULINA 22 A
1/30
|
100% Frontera
SpA
|
|
300
|
PAULINA 24
1/24
|
100% Frontera
SpA
|
|
183
|
PAULINA 25 A
1/19
|
100% Frontera
SpA
|
|
156
|
PAULINA 26 A
1/30
|
100% Frontera
SpA
|
|
294
|
PAULINA 27A
1/30
|
100% Frontera
SpA
|
|
300
|
CORTADERA 1
1/200
|
100% Frontera
SpA
|
|
200
|
CORTADERA 2
1/200
|
100% Frontera
SpA
|
|
200
|
CORTADERA 41
|
100% Frontera
SpA
|
|
1
|
CORTADERA 42
|
100% Frontera
SpA
|
|
1
|
LAS CANAS 16
|
100% Frontera
SpA
|
|
1
|
LAS CANAS
1/15
|
100% Frontera
SpA
|
|
146
|
CORTADERA
1/40
|
100% Frontera
SpA
|
|
374
|
LAS CANAS ESTE 2003
1/30
|
100% Frontera
SpA
|
|
300
|
CORROTEO 1
1/260
|
100% Frontera
SpA
|
|
260
|
CORROTEO 5
1/261
|
100% Frontera
SpA
|
|
261
|
ROMERO 1 AL
31
|
100% Frontera
SpA
|
|
31
|
PURISIMA
|
100% Frontera
SpA
|
|
20
|
NSR 1.5%
|
Note. Frontera SpA is a
100% owned subsidiary company of Hot Chili Limited
|
Productora Project
License ID
|
HCH % Held
|
HCH %
Earning
|
Area (ha)
|
Agreement
Details
|
FRAN 1, 1-60
|
80% SMEA SpA
|
|
220
|
|
FRAN 2, 1-20
|
80% SMEA SpA
|
|
100
|
|
FRAN 3, 1-20
|
80% SMEA SpA
|
|
100
|
|
FRAN 4, 1-20
|
80% SMEA SpA
|
|
100
|
|
FRAN 5, 1-20
|
80% SMEA SpA
|
|
100
|
|
FRAN 6, 1-26
|
80% SMEA SpA
|
|
130
|
|
FRAN 7, 1-37
|
80% SMEA SpA
|
|
176
|
|
FRAN 8, 1-30
|
80% SMEA SpA
|
|
120
|
|
FRAN 12,
1-40
|
80% SMEA SpA
|
|
200
|
|
FRAN 13,
1-40
|
80% SMEA SpA
|
|
200
|
|
FRAN 14,
1-40
|
80% SMEA SpA
|
|
200
|
|
FRAN 15,
1-60
|
80% SMEA SpA
|
|
300
|
|
FRAN 18,
1-60
|
80% SMEA SpA
|
|
273
|
|
FRAN 21,
1-46
|
80% SMEA SpA
|
|
226
|
|
ALGA 7A,
1-32
|
80% SMEA SpA
|
|
89
|
|
ALGA VI,
5-24
|
80% SMEA SpA
|
|
66
|
|
MONTOSA 1-4
|
80% SMEA SpA
|
|
35
|
NSR 3%
|
CHICA
|
80% SMEA SpA
|
|
1
|
|
ESPERANZA
1-5
|
80% SMEA SpA
|
|
11
|
|
LEONA 2A 1-4
|
80% SMEA SpA
|
|
10
|
|
CARMEN I,
1-50
|
80% SMEA SpA
|
|
222
|
|
CARMEN II,
1-60
|
80% SMEA SpA
|
|
274
|
|
ZAPA 1, 1-10
|
80% SMEA SpA
|
|
100
|
|
ZAPA 3, 1-23
|
80% SMEA SpA
|
|
92
|
|
ZAPA 5A,
1-16
|
80% SMEA SpA
|
|
80
|
|
ZAPA 7, 1-24
|
80% SMEA SpA
|
|
120
|
|
CABRITO, CABRITO
1-9
|
80% SMEA SpA
|
|
50
|
|
CUENCA A,
1-51
|
80% SMEA SpA
|
|
255
|
|
CUENCA B,
1-28
|
80% SMEA SpA
|
|
139
|
|
CUENCA C,
1-51
|
80% SMEA SpA
|
|
255
|
|
CUENCA D
|
80% SMEA SpA
|
|
3
|
|
CUENCA E
|
80% SMEA SpA
|
|
1
|
|
CHOAPA 1-10
|
80% SMEA SpA
|
|
50
|
|
ELQUI 1-14
|
80% SMEA SpA
|
|
61
|
|
LIMARÍ 1-15
|
80% SMEA SpA
|
|
66
|
|
LOA 1-6
|
80% SMEA SpA
|
|
30
|
|
MAIPO 1-10
|
80% SMEA SpA
|
|
50
|
|
TOLTÉN 1-14
|
80% SMEA SpA
|
|
70
|
|
CACHIYUYITO 1,
1-20
|
80% SMEA SpA
|
|
100
|
|
CACHIYUYITO 2,
1-60
|
80% SMEA SpA
|
|
300
|
|
CACHIYUYITO 3,
1-60
|
80% SMEA SpA
|
|
300
|
|
LA PRODUCTORA
1-16
|
80% SMEA SpA
|
|
75
|
|
ORO INDIO 1A,
1-20
|
80% SMEA SpA
|
|
82
|
|
AURO HUASCO I,
1-8
|
80% SMEA SpA
|
|
35
|
|
URANIO, 1-70
|
0 %
|
0 %
|
350
|
25-year Lease
Agreement
US$250,000 per year
(average for the 25 year term); plus 2% NSR all but gold; 4% NSR
gold; 5% NSR non-metallic
|
JULI 9, 1-60
|
80% SMEA SpA
|
|
300
|
|
JULI 10,
1-60
|
80% SMEA SpA
|
|
300
|
|
JULI 11 1/60
|
80% SMEA SpA
|
|
300
|
|
JULI 12 1/42
|
80% SMEA SpA
|
|
210
|
|
JULI 13 1/20
|
80% SMEA SpA
|
|
100
|
|
JULI 14 1/50
|
80% SMEA SpA
|
|
250
|
|
JULI 15 1/55
|
80% SMEA SpA
|
|
275
|
|
JULI 16,
1-60
|
80% SMEA SpA
|
|
300
|
|
JULI 17,
1-20
|
80% SMEA SpA
|
|
100
|
|
JULI 19
|
80% SMEA SpA
|
|
300
|
|
JULI 20
|
80% SMEA SpA
|
|
300
|
|
JULI 21 1/60
|
80% SMEA SpA
|
|
300
|
|
JULI 22
|
80% SMEA SpA
|
|
300
|
|
JULI 23 1/60
|
80% SMEA SpA
|
|
300
|
|
JULI 24,
1-60
|
80% SMEA SpA
|
|
300
|
|
JULI 25
|
80% SMEA SpA
|
|
300
|
|
JULI 27 1/30
|
80% SMEA SpA
|
|
150
|
|
JULI 27 B
1/10
|
80% SMEA SpA
|
|
50
|
|
JULI 28 1/60
|
80% SMEA SpA
|
|
300
|
|
JULIETA 5
|
80% SMEA SpA
|
|
200
|
|
JULIETA 6
|
80% SMEA SpA
|
|
200
|
|
JULIETA 7
|
80% SMEA SpA
|
|
100
|
|
JULIETA 8
|
80% SMEA SpA
|
|
100
|
|
JULIETA 9
|
80% SMEA SpA
|
|
100
|
|
JULIETA 10
1/60
|
80% SMEA SpA
|
|
300
|
|
JULIETA 11
|
80% SMEA SpA
|
|
300
|
|
JULIETA 12
|
80% SMEA SpA
|
|
300
|
|
JULIETA 13,
1-60
|
80% SMEA SpA
|
|
298
|
|
JULIETA 14,
1-60
|
80% SMEA SpA
|
|
269
|
|
JULIETA 15,
1-40
|
80% SMEA SpA
|
|
200
|
|
JULIETA 16
|
80% SMEA SpA
|
|
200
|
|
JULIETA 17
|
80% SMEA SpA
|
|
200
|
|
JULIETA 18,
1-40
|
80% SMEA SpA
|
|
200
|
|
ARENA 1 1-6
|
80% SMEA SpA
|
|
40
|
|
ARENA 2 1-17
|
80% SMEA SpA
|
|
113
|
|
ZAPA 1 – 6
|
80% SMEA SpA
|
|
6
|
GSR 1%
|
JULIETA 1-4
|
80% SMEA SpA
|
|
4
|
|
Note. SMEA SpA is
subsidiary company - 80% owned by Hot Chili Limited, 20% owned by
CMP (Compañía Minera del Pacífico)
|
El Fuego Project
Licence ID
|
HCH % Held
|
HCH %
Earning
|
Area (ha)
|
Exploration and
Expenditure Commitment-
Payments
|
Santiago 21 al
36
|
|
90% Frontera
SpA
|
76
|
90% (HCH)-10% (Arnaldo
del Campo) JV.
6-year term.
USD 300,000 already
paid.
USD 300,000 to be paid
by September 7, 2023
USD 6,600,000 final
exercise payment to be paid by September 7, 2024.
|
Santiago 37 al
43
|
|
90% Frontera
SpA
|
26
|
Santiago A, 1 al
26
|
|
90% Frontera
SpA
|
236
|
Santiago B, 1 al
20
|
|
90% Frontera
SpA
|
200
|
Santiago C, 1 al
30
|
|
90% Frontera
SpA
|
300
|
Santiago D, 1 al
30
|
|
90% Frontera
SpA
|
300
|
Santiago E, 1 al
30
|
|
90% Frontera
SpA
|
300
|
Prima Uno
|
|
90% Frontera
SpA
|
1
|
Prima Dos
|
|
90% Frontera
SpA
|
2
|
Santiago 15 al
19
|
|
90% Frontera
SpA
|
25
|
San Antonio 1 al
5
|
|
90% Frontera
SpA
|
25
|
Santiago 1 AL 14 Y
20
|
|
90% Frontera
SpA
|
75
|
Mercedes 1 al
3
|
|
90% Frontera
SpA
|
50
|
Kreta 1 al 4
|
|
90% Frontera
SpA
|
16
|
Mari 1 al 12
|
|
90% Frontera
SpA
|
64
|
PORFIADA VII
|
|
90% Frontera
SpA
|
300
|
PORFIADA
VIII
|
|
90% Frontera
SpA
|
300
|
PORFIADA IX
|
|
90% Frontera
SpA
|
300
|
PORFIADA X
|
|
90% Frontera
SpA
|
200
|
PORFIADA A
|
|
90% Frontera
SpA
|
200
|
PORFIADA B
|
|
90% Frontera
SpA
|
300
|
PORFIADA C
|
|
90% Frontera
SpA
|
300
|
PORFIADA D
|
|
90% Frontera
SpA
|
300
|
PORFIADA E
|
|
90% Frontera
SpA
|
300
|
PORFIADA F
|
|
90% Frontera
SpA
|
300
|
PORFIADA G
|
|
90% Frontera
SpA
|
200
|
CORTADERA 1
|
100% Frontera
SpA
|
|
200
|
|
CORTADERA 2
|
100% Frontera
SpA
|
|
200
|
|
CORTADERA 3
|
100% Frontera
SpA
|
|
200
|
|
CORTADERA 4
|
100% Frontera
SpA
|
|
200
|
|
CORTADERA 5
|
100% Frontera
SpA
|
|
200
|
|
CORTADERA 6
|
100% Frontera
SpA
|
|
300
|
|
CORTADERA 7,
1-20
|
100% Frontera
SpA
|
|
93
|
|
SAN ANTONIO
1
|
100% Frontera
SpA
|
|
200
|
|
SAN ANTONIO
2
|
100% Frontera
SpA
|
|
200
|
|
SAN ANTONIO
3
|
100% Frontera
SpA
|
|
300
|
|
SAN ANTONIO
4
|
100% Frontera
SpA
|
|
300
|
|
SAN ANTONIO
5
|
100% Frontera
SpA
|
|
300
|
|
DORO 1
|
100% Frontera
SpA
|
|
200
|
|
DORO 2
|
100% Frontera
SpA
|
|
200
|
|
DORO 3
|
100% Frontera
SpA
|
|
300
|
|
SANTIAGO Z
1/30
|
|
100% Frontera
SpA
|
300
|
100% HCH Purchase
Option Agreement
USD 200,000 already
paid.
USD 400,000 to be paid
by January 22, 2024.
NSR 1.5%
|
PORFIADA I
|
|
100% Frontera
SpA
|
300
|
PORFIADA II
|
|
100% Frontera
SpA
|
300
|
PORFIADA III
|
|
100% Frontera
SpA
|
300
|
PORFIADA IV
|
|
100% Frontera
SpA
|
300
|
PORFIADA V
|
|
100% Frontera
SpA
|
200
|
PORFIADA VI
|
|
100% Frontera
SpA
|
100
|
SAN JUAN SUR
1/5
|
|
90% Frontera
SpA
|
10
|
90% (HCH) Option
Agreement
USD 150,000 already
paid
USD 4,000,000 by June
1, 2024.
|
SAN JUAN SUR
6/23
|
|
90% Frontera
SpA
|
90
|
CHILIS 1
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 2
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 3
|
100% Frontera
SpA
|
|
100
|
|
CHILIS 4
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 5
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 6
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 7
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 8
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 9
|
100% Frontera
SpA
|
|
300
|
|
CHILIS 10
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 11
|
100% Frontera
SpA
|
|
200
|
|
CHILIS 12
|
100% Frontera
SpA
|
|
300
|
|
CHILIS 13
|
100% Frontera
SpA
|
|
300
|
|
CHILIS 14
|
100% Frontera
SpA
|
|
300
|
|
CHILIS 15
|
100% Frontera
SpA
|
|
300
|
|
CHILIS 16
|
100% Frontera
SpA
|
|
300
|
|
CHILIS 17
|
100% Frontera
SpA
|
|
300
|
|
CHILIS 18
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 1
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 2
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 3
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 4
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 5
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 6
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 7
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 8
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 9
|
100% Frontera
SpA
|
|
300
|
|
SOLAR 10
|
100% Frontera
SpA
|
|
300
|
|
SOLEDAD 1
|
100% Frontera
SpA
|
|
300
|
|
SOLEDAD 2
|
100% Frontera
SpA
|
|
300
|
|
SOLEDAD 3
|
100% Frontera
SpA
|
|
300
|
|
SOLEDAD 4
|
100% Frontera
SpA
|
|
300
|
|
CF 1
|
100% Frontera
SpA
|
|
300
|
|
CF 2
|
100% Frontera
SpA
|
|
300
|
|
CF 3
|
100% Frontera
SpA
|
|
300
|
|
CF 4
|
100% Frontera
SpA
|
|
300
|
|
CF 5
|
100% Frontera
SpA
|
|
300
|
|
CHAPULIN COLORADO
1/3
|
100% Frontera
SpA
|
|
3
|
|
PEGGY SUE
1/10
|
100% Frontera
SpA
|
|
100
|
|
DONA FELIPA
|
100% Frontera
SpA
|
|
50
|
|
ELEANOR RIGBY
1/10
|
100% Frontera
SpA
|
|
100
|
|
CF 6
|
100% Frontera
SpA
|
|
200
|
|
CF 7
|
100% Frontera
SpA
|
|
100
|
|
CF 8
|
100% Frontera
SpA
|
|
200
|
|
CF 9
|
100% Frontera
SpA
|
|
100
|
|
MARI 1
|
100% Frontera
SpA
|
|
300
|
|
MARI 6
|
100% Frontera
SpA
|
|
300
|
|
MARI 8
|
100% Frontera
SpA
|
|
300
|
|
FALLA MAIPO 2
1/10
|
100% Frontera
SpA
|
|
99
|
|
FALLA MAIPO 3
1/8
|
100% Frontera
SpA
|
|
72
|
|
FALLA MAIPO 4
1/26
|
100% Frontera
SpA
|
|
26
|
|
ARBOLEDA 7
1/2
|
Option AMSA
|
|
234
|
100% HCH Purchase
Option Agreement
USD 1,500,000 to be
paid by November 15, 2024
|
NAVARRO 1
41/60
|
Option AMSA
|
|
81
|
NAVARRO 2
21/37
|
Option AMSA
|
|
78
|
MONICA 21/40
|
Option AMSA
|
|
85
|
MONICA 41/52
|
Option AMSA
|
|
39
|
Note. Frontera SpA
is a 100% owned subsidiary company of Hot Chili
Limited
|
Qualifying Statements
Costa Fuego Combined Mineral Resource (Effective Date
31st March 2022)
1 Mineral Resources are reported on a
100% Basis - combining Mineral Resource estimates for the
Cortadera, Productora and San Antonio deposits. All figures are
rounded, reported to appropriate significant figures, and reported
in accordance with the Joint Ore Reserves Committee Code (2012) and
the Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
Standards on Mineral Resources and Reserves, Definitions and
Guidelines prepared by the CIM Standing Committee on Reserve
Definition, as required by National Instrument 43-101.
|
2 The
Productora deposit is 100% owned by Chilean incorporated company
Sociedad Minera El Aguila SpA (SMEA). SMEA is a joint venture (JV)
company – 80% owned by Sociedad Minera El Corazón Limitada (a 100%
subsidiary of Hot Chili Limited), and 20% owned by CMP Productora
(a 100% subsidiary of Compañía Minera del Pacífico S.A
(CMP)).
|
3 The
Cortadera deposit is controlled by a Chilean incorporated company
Sociedad Minera La Frontera SpA (Frontera). Frontera is a
subsidiary company – 100% owned by Sociedad Minera El Corazón
Limitada, which is a 100% subsidiary of Hot Chili
Limited.
|
4 The
San Antonio deposit is controlled through Frontera (100% owned by
Sociedad Minera El Corazón Limitada, which is a 100% subsidiary of
Hot Chili Limited) and has an Option Agreement with a private party
to earn a 90% interest.
|
5 The
Mineral Resource estimates in the tables above form coherent bodies
of mineralisation that are considered amenable to a combination of
open pit and underground extraction methods based on the following
parameters: Base Case Metal Prices: Copper US$ 3.00/lb, Gold US$
1,700/oz, Molybdenum US$ 14/lb, and Silver US$20/oz.
|
6
Metallurgical recovery averages for each deposit consider Indicated
+ Inferred material and are weighted to combine sulphide flotation
and oxide leaching performance. Process recoveries: Cortadera and
San Antonio – Weighted recoveries of 82% Cu, 55% Au, 82% Mo and 37%
Ag. CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x
Ag(g/t). Productora – Weighted recoveries of 84% Cu, 47% Au, 47% Mo
and 0% Ag (not reported). CuEq(%) = Cu(%) + 0.46 x Au(g/t) +
0.00026 x Mo(ppm). Costa Fuego – Recoveries of 83% Cu, 53% Au, 69%
Mo and 23% Ag. CuEq(%) = Cu(%) + 0.52 x Au(g/t) + 0.00039 x Mo(ppm)
+ 0.0027 x Ag(g/t).
|
7 Resource
Copper Equivalent (CuEq) grades are calculated based on the
formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery) + (Mo
ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t ×
Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu
price 1% per tonne × Cu recovery). The base case cut-off grade for
mineral resources considered amenable to open pit extraction
methods at the Cortadera, Productora and San Antonio deposits is
0.21% CuEq while the cut-off grade for mineral resources considered
amenable to underground extraction methods at the Cortadera deposit
is 0.3% CuEq.
|
8 Mineral resources are not mineral
reserves and do not have demonstrated economic viability. These
Mineral Resource estimates include Inferred Mineral Resources that
are considered too speculative geologically to have economic
considerations applied to them that would enable them to be
categorised as Mineral Reserves. It is reasonably expected that the
majority of Inferred mineral resources could be upgraded to
Measured or Indicated Mineral Resources with continued
exploration.
|
9 The
effective date of the estimate of Mineral Resources is March 31st,
2022. Refer to ASX Announcement "Hot Chili Delivers Next Level of
Growth" ("Resource Announcement") for JORC Code Table 1 information
related to the Costa Fuego Resource Estimate (MRE) by Competent
Person Elizabeth Haren, constituting the MREs of Cortadera,
Productora and San Antonio (which combine to form Costa Fuego). Hot
Chili confirms it is not aware of any new information or data that
materially affects the information included in the Resource
Announcement and all material assumptions and technical parameters
stated for the Mineral Resource Estimates in the Resource
Announcement continue to apply and have not materially
changed.
|
10 Hot
Chili Limited is not aware of political, environmental or other
risks that could materially affect the potential development of the
Mineral Resources
|
Competent Person's Statement- Exploration Results
Exploration information in this Report is based upon work
compiled by Mr Christian Easterday,
the Managing Director and a full-time employee of Hot Chili Limited
whom is a Member of the Australasian Institute of Geoscientists
(AIG). Mr Easterday has sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a
'Competent Person' as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves' (JORC Code). Mr Easterday consents to
the inclusion in the report of the matters based on their
information in the form and context in which it appears.
Disclaimer
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this report.
This report is to be used by the recipient for informational
purposes only and does not purport to be complete or contain all
the information that may be material to the current or future
business, operations, financial condition, or prospects of Hot
Chili Limited ("Hot Chili" or the "Company"). Each recipient should
perform its own independent investigation and analysis of Hot
Chili, and the information contained in this report is not a
substitute therefore. Hot Chili makes no representation or
warranty, express or implied, as to the accuracy or completeness of
the information contained in this report or in any other written or
oral communication transmitted to any recipient by any party.
Except for liability that cannot be disclaimed by law, by accepting
this Document, the recipient agrees that neither Hot Chili nor any
of its officers, directors, employees, or representatives has any
liability for any representations or warranties, express or
implied, contained in, or for any omissions from, this report or
any such other written or oral communication from any person.
Certain information contained herein is based on, or derived
from, information provided by independent third-party sources. Hot
Chili believes that such information is accurate and that the
sources from which it has been obtained are reliable; however, Hot
Chili has not independently verified such information and does not
assume any responsibility for the accuracy or completeness of such
information.
This report should not be considered as a recommendation from
any person to purchase any securities. Each person for whom this
report is made available should consult its own professional
advisors in making its own independent investigations and
assessment and, after making such independent investigations and
assessments, as it deems necessary, in determining whether to
proceed with any investment in the Company.
Technical Report
For readers to fully understand the information in this report,
they should read the PEA Technical Report prepared in accordance
with National Instrument 43-101 – Standards of Disclosure for
Mineral Projects ("NI 43-101") (to be available on www.sedar.com or
at www.hotchili.net.au within 45 days of June 30, 2023) in its entirety, including all
qualifications, assumptions, limitations and exclusions that relate
to the information set out in this report that qualifies the
technical information contained in the PEA. The PEA is intended to
be read as a whole, and sections should not be read or relied upon
out of context. The technical information in this report is subject
to the assumptions and qualifications contained in the PEA.
Qualified Persons – NI 43-101
The PEA was compiled by Wood Australia Pty Ltd with
contributions from a team of independent Qualified Persons within
the meaning of Canadian Securities Administrators' National
Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI
43 -101"). The scientific and technical information contained in
this report pertaining to Coast Fuego has been reviewed and
verified by the following independent qualified persons within the
meaning of NI 43-101:
- Ms Elizabeth Haren (MAUSIMM (CP)
& MAIG) of Haren Consulting – Mineral Resource Estimate
- Mr Dean David (FAUSIMM (CP)) of
Wood Pty Ltd – Metallurgy
- Mr Piers Wendlandt (PE) of Wood
Pty Ltd – Market Studies and Contracts, Economic Analysis
- Farzard Kossari (PE) of Wood Pty Ltd – Cost Estimation
- Mr Anton von Wielligh (FAUSIMM) of ABGM Consulting Pty Ltd –
Mine Planning and Scheduling
The independent qualified persons have verified the information
disclosed herein, including the sampling, preparation, security,
and analytical procedures underlying such information.
Disclosure regarding mine planning and infrastructure has been
reviewed and approved by Mr Grant
King, FAUSIMM, Hot Chili's Chief Operations Officer, and a
Qualified Person within the meaning of NI43-101.
Competent Persons – JORC
The information in this report that relates to Mineral Resources
for the Costa Fuego Project is based on information compiled
by:
- Ms Elizabeth Haren (MAUSIMM (CP)
& MAIG) of Haren Consulting – Mineral Resource Estimate
- Mr Dean David (FAUSIMM (CP)) of
Wood Pty Ltd – Metallurgy
- Mr Piers Wendlandt (PE) of Wood
Pty Ltd – Market Studies and Contracts, and Economic Analysis
- Mr Farzard Kossari (PE) of Wood Pty Ltd – Cost Estimation
- Mr Anton von Wielligh (FAUSIMM) of ABGM Consulting Pty Ltd –
Mine Planning and Scheduling
Ms Haren, Mr David, Mr Wendlandt, Mr Kossari and Mr von Wielligh have sufficient experience, which
is relevant to the style of mineralisation and types of deposits
under consideration and to the activities undertaken, to qualify as
a Competent Person as defined in the 2012 Edition of the
'Australasian Code of Reporting of Exploration Results, Mineral
Resources and Ore Reserves' and as Qualified Persons under
NI43-101.
For further information on the Costa Fuego Project, refer to the
technical report titled "NI 43-101 Resource Report for the Costa
Fuego Copper Project Located in Atacama, Chile", dated May 13,
2022 with an effective date of March
31, 2022, which is available for review on SEDAR
(www.sedar.com) under Hot Chili's issuer profile.
Cautionary Note for U.S. Investors Concerning Mineral
Resources
National Instrument 43-101 - Standards of Disclosure for Mineral
Projects ("NI 43-101") is a rule of the Canadian Securities
Administrators which establishes standards for all public
disclosure an issuer makes of scientific and technical information
concerning mineral projects. Technical disclosure contained in this
report has been prepared in accordance with NI 43-101 and the
Canadian Institute of Mining, Metallurgy and Petroleum
Classification System. These standards differ from the requirements
of the U.S. Securities and Exchange Commission ("SEC") and resource
information contained in this press release may not be comparable
to similar information disclosed by domestic United States companies subject to the SEC's
reporting and disclosure requirements.
All amounts in this report are in U.S. dollars unless otherwise
noted.
Non IFRS Financial Performance Measures
"Total Cash Cost", "All-in Sustaining Cost", "All-in cost LOM",
"C1", and "Free Cashflow" are not performance measures reported in
accordance with International Financial Reporting Standards
("IFRS"). These performance measures are included because these
statistics are key performance measures that management uses to
monitor performance. Management uses these statistics to assess how
the Costa Fuego Project compares against its peer projects and to
assess the overall effectiveness and efficiency of the contemplated
mining operations. These performance measures do not have a meaning
within IFRS and, therefore, amounts presented may not be comparable
to similar data presented by other mining companies. These
performance measures should not be considered in isolation as a
substitute for measures of performance in accordance with IFRS.
Scientific and Technical Information
The scientific and technical information contained in this
document was reviewed and approved by Ms Kirsty Sheerin, a Member of the Australian
Institute of Geoscientists, Hot Chili's Resource Development
Manager and a qualified person for the purposes of National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
Ms Sheerin has undertaken extensive data verification and is
satisfied with the exploration, sampling, security, and QA/QC
procedures employed by Hot Chili for Costa Fuego and that their
results are sufficient to produce data suitable for the purposes
described in the technical report titled "NI 43-101 Resource
Report for the Costa Fuego Copper Project Located in Atacama,
Chile", dated May 13, 2022 with an effective date of
March 31, 2022, as well as for public
reporting purposes subsequent to the technical report.
Sampling, Analysis and Data Verification
A fixed cone splitter was used to create two nominal 12.5%
samples (Sample "A" and "B"), along with the large bulk reject
sample. The "A" sample is always taken from the same sampling
chute, and comprises the primary sample submitted to the
laboratory. The "B" samples were retained for use as the field
duplicate sample. The coarse residues were collected into large
plastic bags and were retained on the ground near
the drillhole collar, generally in rows of 50 bags.
All RC drillhole sampling was executed at two metre intervals
for Costa Fuego. Within logged mineralisation zones, the 2-metre
sample ("A" sample) was submitted. Outside the main mineralised
zones (as determined by the logging geologist), 4-metre composites
were created from scoops of 2-metre sample residues over
this interval. The composited 4-metre samples were analysed
first and, if required, the individual and original 2-metre "A"
samples comprising this 4-metre interval were sent for analysis.
This ensured that no mineralisation was missed while
minimising analytical costs. The same procedure was applied to RC
drilling undertaken across Productora, however, drillhole
sampling was executed at 1-metre intervals.
At Costa Fuego, the majority of diamond core has had systematic
half-core sampled at 2-metre intervals. Half-core was chosen as the
preferred sampling method to ensure a representative sample was
submitted for analysis, while also retaining half-core for review
of lithology and mineralisation, and for further test work as
required.
Prior to the cutting and sample process, two additional samples
are also taken for Costa Fuego being Density and Geotechnical
samples.
- Density samples are selected every 30 metres if the geological
conditions allow it and are provided to the laboratory for
testwork.
- Geotechnical samples are taken for tests including triaxial
(one sample per 250 m) and uniaxial
tests (one sample per 50 m).
Once assigned a sample number, individual samples to be sent to
ALS laboratories were sealed using a staple gun and accompanied by
three identical sample tickets (one stapled to plastic bag to
identify any tampering/breakage of seal prior to opening at the
laboratory in preparation and another placed in the bag). Any
broken staple seals on samples were to be notified by ALS to Hot
Chili. No sealed bags were reported as being opened or broken by
ALS.
For both RC and diamond samples, sample bags were placed inside
larger plastic bags and delivered by a dedicated truck to the ALS
analytical laboratory in Coquimbo (Chile) for sample preparation and routine
analysis.
Following analysis at ALS, the RC and diamond drilling coarse
rejects were returned to site and stored in sequence in plastic
bags under shade cloth at Hot Chili's nearby Productora core farm.
The laboratory pulps were returned and stored at the Productora
core farm where they are stored in organised, dry and safe storage
containers.
Hot Chili has strict chain of custody security procedures for
all samples sent to and from the analytical laboratories.
The ALS analytical laboratory in Coquimbo (Chile) completed all sample preparation and
specific gravity test work, while ALS Santiago (Chile) completed all gold analysis, and ALS
Lima (Peru) completed all other
multielement analysis for the Cortadera assays used in the resource
estimate. Hot Chili has implemented rigorous sample preparation and
analytical procedures for both RC and diamond core samples,
following consultation with ALS in Chile, to ensure that mineralised assays were
reported with a high degree of confidence and a wide range of
appropriate commodities were assessed.
Samples have been analysed by certified laboratories in
Chile and Lima, Peru by standard analytical techniques
including:
- Copper, silver and molybdenum were analysed by 4-acid digestion
(Hydrochloric-Nitric- Perchloric-Hydrofluoric) followed by
evaluation using Inductively Coupled Plasma - Optical Emission
Spectrometry ("ICP-OES") or Atomic Absorption Spectrometry
("AAS");
- Copper results > 10,000 ppm were analysed by "ore grade"
method Cu-AA62 (upper limit 40% Cu);
- Samples within the oxide and transitional weathering domains
(as determined by geologists' logging) were analysed for "soluble
copper" (upper limit 10% Cu) to detect the leachability of copper
oxide minerals within these domains; and
- Gold was analysed by 30 or 50 g lead-collection Fire Assay,
followed by ICP-OES or AAS.
The verification of input data included the use of company QA/QC
blanks and reference material, field and laboratory duplicates,
umpire laboratory checks and independent sample and assay
verification.
The Qualified Person has assessed the drillhole database
validation work and QAQC undertaken by Hot Chili and was satisfied
the input data could be relied upon for the estimation of Indicated
and Inferred Classified Mineral Resources.
All laboratories used are independent of Hot Chili and the work
is performed under a commercial arrangement.
Forward Looking Statements
This report contains certain statements that are
"forward-looking information" within the meaning of Canadian
securities legislation and Australian securities legislation (each,
a "forward-looking statement"). Forward-looking statements reflect
the Company's current expectations, forecasts, and projections with
respect to future events, many of which are beyond the Company's
control, and are based on certain assumptions. No assurance can be
given that these expectations, forecasts, or projections will prove
to be correct, and such forward-looking statements included in this
report should not be unduly relied upon. Forward-looking
information is by its nature prospective and requires the Company
to make certain assumptions and is subject to inherent risks and
uncertainties. All statements other than statements of historical
fact are forward-looking statements. The use of any of the words
"anticipate", "believe", "could", "estimate", "expect", "may",
"plan", "potential", "project", "should", "will", "would" and
similar expressions are intended to identify forward-looking
statements.
The forward-looking statements within this report are based on
information currently available and what management believes are
reasonable assumptions. Forward-looking statements speak only as of
the date of this report. In addition, this report may contain
forward-looking statements attributed to third-party industry
sources, the accuracy of which has not been verified by the
Company.
In this report, forward-looking statements relate, among other
things, to: prospects, projections and success of the Company and
its projects; expected cash inflows; the ability of the Company to
expand mineral resources beyond current mineral resource estimates;
the results and impacts of current and planned drilling to convert
inferred mineral resources to indicated, to extend mineral
resources and to identify new deposits; the timing and results of
the planned 30,000m drill program;
the results of planned update to current mineral resource
estimates; the Company's ability to convert mineral resources to
mineral reserves; the outcome of the review of a possible large pit
scenario at Cortadera, including the economics thereof and the
comparison with the existing PEA scenario; the timing and results
of the planned updated PEA (if completed) and the PFS;
opportunities for growth in mineral projects; the ability of the
Company to secure necessary infrastructure; the terms and
conditions related to use of existing port and electrical
infrastructure, including the ability to access renewable energy
sources; the timing and outcomes of this current and future planned
economic studies; the timing and outcomes of regulatory processes
required to obtain permits for the development and operation of the
Costa Fuego Project as contemplated in this and future planned
economic studies; whether or not the Company will make a
development decision and the timing thereof; the ability of the
Company to consolidate additional landholdings around its project;
estimates of cost; and estimates of planned exploration.
Forward-looking statements involve known and unknown risks,
uncertainties, and other factors, which may cause the actual
results, performance, or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. A number of factors could cause actual results to
differ materially from a conclusion, forecast or projection
contained in the forward-looking statements in this report,
including, but not limited to, the following material factors:
operational risks; risks related to the cost estimates of
exploration; sovereign risks associated with the Company's
operations in Chile; changes in
estimates of mineral resources of properties where the Company
holds interests; recruiting qualified personnel and retaining key
personnel; future financial needs and availability of adequate
financing; fluctuations in mineral prices; market volatility;
exchange rate fluctuations; ability to exploit successful
discoveries; the production at or performance of properties where
the Company holds interests; ability to retain title to mining
concessions; environmental risks; financial failure or default of
joint venture partners, contractors or service providers;
competition risks; economic and market conditions; and other risks
and uncertainties described elsewhere in this report and elsewhere
in the Company's public disclosure record.
Although the forward-looking statements contained in this report
are based upon assumptions which the Company believes to be
reasonable, the Company cannot assure investors that actual results
will be consistent with these forward-looking statements. With
respect to forward-looking statements contained in this report, the
Company has made assumptions regarding: future commodity prices and
demand; availability of skilled labour; timing and amount of
capital expenditures; future currency exchange and interest rates;
the impact of increasing competition; general conditions in
economic and financial markets; availability of drilling and
related equipment; effects of regulation by governmental agencies;
future tax rates; future operating costs; availability of future
sources of funding; ability to obtain financing; and assumptions
underlying estimates related to adjusted funds from operations. The
Company has included the above summary of assumptions and risks
related to forward-looking information provided in this report to
provide investors with a more complete perspective on the Company's
future operations, and such information may not be appropriate for
other purposes. The Company's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what benefits the Company will derive therefrom.
For additional information with respect to these and other
factors and assumptions underlying the forward-looking statements
made herein, please refer to the public disclosure record of the
Company, including the Company's most recent Annual Report, which
is available on SEDAR (www.sedar.com) under the Company's issuer
profile. New factors emerge from time to time, and it is not
possible for management to predict all those factors or to assess
in advance the impact of each such factor on the Company's business
or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in
any forward-looking statement.
The forward-looking statements contained in this report are
expressly qualified by the foregoing cautionary statements and are
made as of the date of this report. Except as may be required by
applicable securities laws, the Company does not undertake any
obligation to publicly update or revise any forward-looking
statement to reflect events or circumstances after the date of this
report or to reflect the occurrence of unanticipated events,
whether as a result of new information, future events or results,
or otherwise. Investors should read this entire report and consult
their own professional advisors to ascertain and assess the income
tax and legal risks and other aspects of an investment in the
Company.
Appendix 5B
Mining exploration entity or oil and gas
exploration entity
quarterly cash flow report
Name of
entity
|
Hot Chili
Limited
|
ABN
|
|
Quarter ended ("current
quarter")
|
91 130 955
725
|
|
30 June 2023
|
Consolidated
statement of cash flows
|
Current quarter
$A'000
|
Year to date
(12 months)
$A'000
|
1.
|
Cash flows from operating
activities
|
-
|
-
|
1.1
|
Receipts from
customers
|
1.2
|
Payments for
|
(2,577)
|
(13,816)
|
|
(a)
exploration & evaluation
|
|
(b)
development
|
-
|
-
|
|
(c)
production
|
-
|
-
|
|
(d)
staff costs
|
(680)
|
(2,089)
|
|
(e)
administration and corporate
costs
|
(735)
|
(3,390)
|
1.3
|
Dividends received (see
note 3)
|
-
|
-
|
1.4
|
Interest
received
|
31
|
160
|
1.5
|
Interest and other
costs of finance paid
|
-
|
-
|
1.6
|
Income taxes
paid
|
-
|
-
|
1.7
|
Government grants and
tax incentives
|
-
|
-
|
1.8
|
Other (provide details
if material)
|
-
|
-
|
1.9
|
Net cash from /
(used in) operating activities
|
(3,961)
|
(19,135)
|
|
2.
|
Cash flows from
investing activities
|
-
|
-
|
2.1
|
Payments to acquire or
for:
|
|
(a)
entities
|
|
(b)
tenements
|
(286)
|
(1,518)
|
|
(c)
property, plant and equipment
|
-
|
-
|
|
(d)
exploration & evaluation
|
-
|
-
|
|
(e)
investments
|
-
|
-
|
|
(f)
other non-current assets
|
-
|
-
|
2.2
|
Proceeds from the
disposal of:
|
-
|
-
|
|
(a)
entities
|
|
(b)
tenements
|
-
|
-
|
|
(c)
property, plant and equipment
|
-
|
-
|
|
(d)
investments
|
-
|
-
|
|
(e)
other non-current assets
|
-
|
-
|
2.3
|
Cash flows from loans
to other entities
|
-
|
-
|
2.4
|
Dividends received (see
note 3)
|
-
|
-
|
2.5
|
Other (provide details
if material)
|
-
|
-
|
2.6
|
Net cash from /
(used in) investing activities
|
(286)
|
(1,518)
|
|
3.
|
Cash flows from
financing activities
|
-
|
-
|
3.1
|
Proceeds from issues of
equity securities (excluding convertible debt
securities)
|
3.2
|
Proceeds from issue of
convertible debt securities
|
-
|
-
|
3.3
|
Proceeds from exercise
of options
|
-
|
-
|
3.4
|
Transaction costs
related to issues of equity securities or convertible debt
securities
|
-
|
-
|
3.5
|
Proceeds from
borrowings
|
-
|
-
|
3.6
|
Repayment of borrowings
(CMP option)
|
-
|
-
|
3.7
|
Transaction costs
related to loans and borrowings
|
-
|
-
|
3.8
|
Dividends
paid
|
-
|
-
|
3.9
|
Other (provide details
if material)
|
-
|
-
|
3.10
|
Net cash from /
(used in) financing activities
|
-
|
-
|
|
4.
|
Net increase /
(decrease) in cash and cash equivalents for the
period
|
|
|
4.1
|
Cash and cash
equivalents at beginning of period
|
7,389
|
23,722
|
4.2
|
Net cash from / (used
in) operating activities (item 1.9 above)
|
(3,961)
|
(19,135)
|
4.3
|
Net cash from / (used
in) investing activities (item 2.6 above)
|
(286)
|
(1,518)
|
4.4
|
Net cash from / (used
in) financing activities (item 3.10 above)
|
-
|
-
|
4.5
|
Effect of movement in
exchange rates on cash held
|
45
|
118
|
4.6
|
Cash and cash
equivalents at end of period
|
3,187
|
3,187
|
5.
|
Reconciliation of
cash and cash equivalents
at the end of the quarter (as shown in the
consolidated statement of cash flows) to the
related items in the accounts
|
Current quarter
$A'000
|
Previous quarter
$A'000
|
5.1
|
Bank
balances
|
2,036
|
4,740
|
5.2
|
Call
deposits
|
1,151
|
2,649
|
5.3
|
Bank
overdrafts
|
|
|
5.4
|
Other (provide
details)
|
|
|
5.5
|
Cash and cash
equivalents at end of
quarter (should equal item 4.6 above)
|
3,187
|
7,389
|
6.
|
Payments to related parties of the entity and their
associates
|
Current quarter
$A'000
|
6.1
|
Aggregate amount of
payments to related parties and their associates included in
item 1
|
152
|
6.2
|
Aggregate amount of
payments to related parties and their associates included in
item 2
|
-
|
Note: if any amounts
are shown in items 6.1 or 6.2, your quarterly activity report must
include a description of, and an explanation for, such
payments.
|
7.
|
Financing facilities
Note: the term "facility' includes all forms of financing
arrangements available to the entity.
Add notes as necessary for an understanding of the sources of
finance available to the entity.
|
Total facility
amount at quarter end
$A'000
|
Amount drawn at quarter end
$A'000
|
7.1
|
Loan
facilities
|
-
|
-
|
7.2
|
Credit standby
arrangements
|
-
|
-
|
7.3
|
Other (please
specify)
|
-
|
-
|
7.4
|
Total financing
facilities
|
-
|
-
|
|
|
|
7.5
|
Unused financing
facilities available at quarter end
|
|
7.6
|
Include in the box
below a description of each facility above, including the
lender, interest rate, maturity date and whether it is secured
or unsecured. If any additional
financing facilities have beenentered into or are proposed to be
entered into after quarter end, include a note providing
details of those facilities as well.
|
|
8.
|
Estimated cash available for future operating
activities
|
$A'000
|
8.1
|
Net cash from / (used
in) operating activities (item 1.9)
|
(3,961)
|
8.2
|
(Payments for
exploration & evaluation classified
as investing activities) (item
2.1(d))
|
-
|
8.3
|
Total relevant
outgoings (item 8.1 + item 8.2)
|
(3,961)
|
8.4
|
Cash and cash
equivalents at quarter end (item 4.6)
|
3,187
|
8.5
|
Unused finance
facilities available at quarter end (item 7.5)
|
-
|
8.6
|
Total available funding
(item 8.4 + item 8.5)
|
3,187
|
|
|
|
8.7
|
Estimated quarters
of funding available (item 8.6 divided by
item 8.3)
|
0.80
|
Note: if the entity
has reported positive relevant outgoings (ie a net cash inflow) in
item 8.3, answer item 8.7 as "N/A". Otherwise, a figure
for the estimated quarters of funding available must be included in
item 8.7.
|
8.8
|
If item 8.7 is
less than 2 quarters, please provide answers to the following
questions:
|
|
8.8.1 Does the entity expect
that it will continue to have the current level of net operating
cash flows for the time being and, if not, why not?
|
|
Answer: Yes. The
company has executed a US$15 million Investment Agreement with
Osisko Gold Royalties Limited ("Osisko"). See ASX announcement
dated 28 June 2023.
|
|
8.8.2 Has the entity taken
any steps, or does it propose to take any steps, to raise further
cash to fund its operations and, if so, what are those steps and
how likely does it believe that they will be successful?
|
|
Answer: Completion of
the Agreement and the receipt of US$15 million ("Royalty
Consideration") by the Company as announced 26 July
2023.
|
|
8.8.3 Does the entity expect
to be able to continue its operations and to meet its business
objectives and, if so, on what basis?
|
|
Answer: Yes. The
receipt of the Royalty Consideration from Osisko will be applied to
the commencement of drilling activities across multiple growth
targets and the completion and delivery of the resource upgrade in
H2 2023 and the PFS for Costa Fuego in H2 2024.
|
|
Note: where
item 8.7 is less than 2 quarters, all of questions 8.8.1,
8.8.2 and 8.8.3 above must be answered.
|
Compliance statement
- This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
- This statement gives a true and fair view of the matters
disclosed.
Date:
.................28 July
2023.........................................
Authorised by: ...........By the
Board.....................................................
(Name of body or officer
authorising release – see note 4)
Notes
1.
|
This quarterly cash
flow report and the accompanying activity report provide a basis
for informing the market about the entity's activities for the past
quarter, how they have been financed and the effect this has had on
its cash position. An entity that wishes to disclose additional
information over and above the minimum required under the Listing
Rules is encouraged to do so.
|
|
|
2.
|
If this quarterly cash
flow report has been prepared in accordance with Australian
Accounting Standards, the definitions in, and provisions of,
AASB 6: Exploration for and Evaluation of Mineral Resources
and AASB 107: Statement of Cash Flows apply to this report.
If this quarterly cash flow report has been prepared in accordance
with other accounting standards agreed by ASX pursuant to Listing
Rule 19.11A, the corresponding equivalent standards apply to
this report.
|
|
|
3.
|
Dividends received may
be classified either as cash flows from operating activities or
cash flows from investing activities, depending on the accounting
policy of the entity.
|
|
|
4.
|
If this report has been
authorised for release to the market by your board of directors,
you can insert here: "By the board". If it has been authorised for
release to the market by a committee of your board of directors,
you can insert here: "By the [name of board committee –
eg Audit and Risk Committee]". If it has been authorised for
release to the market by a disclosure committee, you can insert
here: "By the Disclosure Committee".
|
|
|
5.
|
If this report has been
authorised for release to the market by your board of directors and
you wish to hold yourself out as complying with
recommendation 4.2 of the ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations, the
board should have received a declaration from its CEO and CFO that,
in their opinion, the financial records of the entity have been
properly maintained, that this report complies with the appropriate
accounting standards and gives a true and fair view of the cash
flows of the entity, and that their opinion has been formed on the
basis of a sound system of risk management and internal control
which is operating effectively.
|
|
|
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SOURCE Hot Chili Limited