Hot Chili accepts a A$14.4 Million Investment from Glencore

Hot Chili (HCH:ASX), a leading junior copper developer in Chile, has announced a “strategic” investment by Glencore to acquire 9.99% interest in the company. The agreement is worth A$14.4 million.

Glencore will have the right to appoint a Director to the Board of Hot Chili, and the right to appoint members to a Technical Steering Committee to advise on operational matters. It will be granted offtake agreements over 60% of concentrate produced for a period of 8 years from commercial production on arms-length commercially competitive benchmark terms. These rights are subject to Glencore holding at least 7.5% of the share capital of Hot Chili, except where Glencore did not have the opportunity to participate in a dilution event.

Operations: Hot Chili has three key copper projects namely Cortadera, Productora, and El Fuego. These projects are all located in close proximity to one another. The company intends to set itself apart by creating a new mining hub on the coastal range of Chile called Costa Fuego.

• The Cortadera maiden Mineral Resource of 451Mt at 0.46% copper equivalent (CuEq) takes the total Mineral Resource estimate for Costa Fuego to 724Mt at 0.48% CuEq for 2.9Mt copper, 2.7Moz gold, 9.9Moz Silver and 64kt molybdenum. Cortadera also contains a higher grade component of 104Mt at 0.74% CuEq, and this has strong potential to continue growing rapidly with further drilling. It is hosted in hosted in the Totoralillo Group, a thick volcano-sedimentary sequence comprising andesitic volcanic and minor calcic bioclastic rocks and intercalated sedimentary rocks.
• The Productora is one of the best located large-scale copper developments globally. Mineral Resources already stand at 1.2Mt copper and 0.8Moz gold, with an Ore Reserve of 167Mt established which underpins long life, bulk open pit production, over a 10-year mine life, with first 8 year production averaging 66kt copper and 25koz gold annually. It is hosted in the (lower Cretaceous) Bandurrias Group, a thick volcano-sedimentary sequence comprising intermediate to felsic volcanic rocks and intercalated sedimentary rocks.
• El Fuego is located 5km east of Cortadera, where the Company has completed a first-pass 5,000m drilling program across two consolidated high grade copper mines (San Antonio and Valentina), which had seen little previous modern exploration owing to their private ownership for over 50 years. The majority of drilling was directed towards San Antonio which had reportedly produced approximately 2M tonnes grading 2% copper and 0.3g/t gold and 17g/t silver from shallow depths since mining commenced in 1964.

Costa Fuego ranks as one of the largest copper Mineral Resources in the world not controlled by a major mining company. Costa Fuego is also one of the few undeveloped large copper resources that is both low-altitude (less than 1,000m elevation) with no arsenic impurity.

An internal scoping study is underway to assess a combined development for Costa Fuego involving both open pit and underground operations which will leverage central processing and existing infrastructure access already secured by Hot Chili (power and sea water pipeline easements, surface rights). Glencore will provide a strong support for the completion of a feasibility study and development of Cost Fuego.

Hot Chili Managing Director, Mr Christian said: “Hot Chili welcomes the strategic alignment with Glencore, especially as the Company moves toward a dual listing on the TSX Venture exchange by the end of 2021.”