Reduction in Option
Payments of US$10 Million for 2024
PERTH,
AUSTRALIA, Dec. 7, 2023 /CNW/ - Hot Chili Limited
(ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) ("Hot Chili" or the
"Company") is pleased
to announce that the Company
has materially improved
the terms of several option
agreements ("Options") to acquire landholdings as part of the
Company's Costa Fuego Copper-Gold Project ("Costa Fuego" or "the
Project") in the coastal range of the Atacama Region, Chile.
Highlights
- Three Options due for exercise in 2024, have been terminated
and replaced with one new option agreement (the "El Fuego Option")
now exercisable in September
2026
- The El Fuego Option covers the San
Antonio, Valentina and Santiago Z privately-owned
landholdings located along the eastern extent of Costa Fuego (refer
to Figures 1 to 3)
- The new El Fuego Option:
- Materially reduces the Company's option payments due in 2024
from US$11 million to US$1 million
- Increases Hot Chili's ownership from 90% to
100%, subject to exercise of the option
- Extends the option expiry from 2024 to 2026 in exchange for
aggregate payments of US$4.3 million
over the next three years, including the US$1 million noted above
Hot Chili's
Managing Director Mr Christian Easterday
commented that the Option re-negotiation
is further confirmation of the strength of the Company's local
partnerships in Chile.
"Alignment of local partners
has been a key element
of our consolidation strategy for Costa Fuego.
"The El Fuego Option allows the Company to focus its balance sheet toward exploration and growth of our
mineral resource as opposed to property payments.
"Our near-term focus on increasing value per share and leverage
to future copper price for our shareholders centres around
enhancing Costa Fuego's mineral resource and potential economics in
advance of a planned pre-feasibility study.
"We are actively evaluating the region for consolidation opportunities, and we expect
to see further success on this front as we look to
up-scale Costa Fuego's potential study scale toward 150kt per annum
copper development, from its current 95kt per annum copper metal
production scale as outlined in our recent Preliminary Economic
Assessment1 (see news release dated 28th
June, 2023).
"Updates on growth drilling,
resource up-grades and water conceptual studies are also expected."
1 The
PEA is preliminary in nature and includes
3% inferred
mineral resources that are considered too speculative geologically
to have the economic
considerations applied to them that would enable
them to be categorized as mineral reserves,
and there is no certainty that the PEA will be
realized. Mineral resources that are not mineral reserves do
not have demonstrated economic viability. See Page 7 for additional
cautionary language.
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The remaining payments for the three
terminated Options covering
the El Fuego landholdings were:
- Hot Chili's subsidiary Sociedad Minera La Frontera SpA
("Frontera") had the right to earn a 90% interest, subject to final
exercise payments, in the following privately owned landholdings:
- Valentina – US$4,000,000
payable June 2024
- San Antonio – US$6,600,000 payable September 2024
- Santiago Z – US$400,000 payable January
2024
- Total Option payments previously due in 2024 –
US$11, 000, 000
The material terms of the El Fuego Option
covering the El Fuego landholdings now:
- Frontera has been granted the right to purchase 100% interest
in the El Fuego landholding, privately owned by Arnaldo and Alfredo
del Campo Arias (Arnaldo in his own
capacity and also through several vehicles with Alfredo), by making
the following payments:
- US$300,000 paid September 30th 2023 (already
satisfied)
- US$1,000,000 payable September 30th 2024
- US$1,000,000 payable September 30th 2025
- US$2,000,000 payable
at Frontera's election by September
30th 2026 to exercise the El Fuego Option.
- The total purchase price for the El Fuego landholdings, if the
El Fuego Option is exercised in 2026, is now US$4,300,000.
- If the option is not abandoned, additional payments of up to
US$4,000,000 in total are conditional
on the following matters:
- Additional payment of US$2,000,000, if the copper price average
US$ 5.00/lb or above for a period of
12 consecutive months, within a period that expires January 1st 2030.
- Additional payment US$2,000,000,
if an independently estimated JORC compliant Mineral Resource
is reported by Hot Chili or its subsidiaries containing 200 million
tonnes or greater within the El Fuego landholdings, within a period
that expires January 1st
2030. Such Mineral Resource shall be reported at or above Hot
Chili's current mineral resource reporting cut-off grade (+0.21%
copper equivalent1 (CuEq) for open pit and +0.3% CuEq
for underground).
- An additional payment is to be made by March 2027, if compliance of the condition that
justifies payment is verified until September 30th, 2026. From
October 2026, payment is to be paid
within 70 days after the relevant condition is satisfied.
- Continuation of existing lease mining agreements to third
parties in respect to the San
Antonio copper mine (limited to the mining rights
San Antonio 1 al 5; Santiago 15 al 19; Santiago 1 al 14/20; San Juan Sur 1 al and San
Juan Sur 6 al 23. The lease mining agreements are limited to 50,000
tonnes of material extracted per year and will expire
31st December 2025.
1 CuEq
considers assumed commodity prices and average metallurgical
recoveries from testwork. See page 10 for complete mineral resource
disclosure of Costa Fuego.
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Hot Chili thanks the Del Campo
family for their ongoing support of Hot Chili, both as shareholders
and partners, toward building a new large-scale copper mining
hub for the Huasco region of Chile.
This announcement is authorised by the Board of Directors
for release to ASX and TSXV.
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
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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
Qualifying Statements
Technical Report
Certain scientific, technical and economic
information contained in this news
release is derived from the PEA.
For readers to fully understand such information, they should
read the PEA technical report prepared in accordance with National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects ("NI 43-101") (available on www.sedarplus.ca or at
www.hotchili.net.au) in its entirety, including all qualifications,
assumptions, limitations and exclusions that relate to the
information set out in this news release. 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 news release
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 NI 43-101).
The scientific, technical and economic
information contained in this news release
pertaining to Coast Fuego is based
on the PEA, which was prepared 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
- Mr Jeffrey Steven (PE) of Wood
Pty Ltd – Capital and Operating Costs
- Mr Anton von Wielligh (FAUSIMM) of ABGM Consulting Pty Ltd –
Mine Planning and Scheduling
- Mr Edmundo Laporte (PE) of GAC –
Environmental Studies, Permitting and Social or Community
Impact
- Mr Dave Morgan (PE) of Knight
Piésold – Project Infrastructure (TSF)
The independent qualified persons have verified the information disclosed
in the PEA, 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 NI 43-101.
The scientific and technical information in this new release,
other than such information derived from the PEA, has been reviewed
and approved by Mr Christian
Easterday, MAIG, Hot Chili's Managing Director and Chief
Executive Officer, and a qualified person within the meaning of NI
43-101.
Competent Persons – JORC
The information in this announcement that relates to Exploration Results
for the Marsellesa and Cordillera projects
is based upon information 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 deposits
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.
The information in this announcement that relates to Mineral Resources
for the Costa Fuego Project
is based on information compiled by Ms Elizabeth Haren, Mr Dean
David, Mr Piers Wendlandt, Mr
Jeffrey Steven, Mr Anton von
Wielligh, Mr
Edmundo Laporte and Mr Dave Morgan. Ms Haren is a full-time
employee of Haren Consulting Pty Ltd and a Member and
Chartered Professional of The Australasian Institute of Mining and
Metallurgy and a Member of the Australian Institute of
Geoscientists. Mr David is a full-time employee of Wood Pty Ltd and
a Fellow of The Australasian Institute of Mining and Metallurgy. Mr
Wendlandt is a full-time employee of Wood Pty Ltd and a Registered
Professional Engineer in the State of
Colorado. Mr Steven is a full-time
employee of Wood Pty Ltd and a Registered Professional Engineer in the State of British
Columbia. Mr von Wielligh is a full-time
employee of ABGM Consulting Pty Ltd and a Fellow
of the Australasian Institute of Mining
and Metallurgy. Mr Laporte is a full-time
employee of GAC and a registered Professional Engineer in Alberta,
Nova Scotia and Ontario, Registered Member of the Society for
Mining, Metallurgy & Exploration and a Chartered Professional
Engineer in Australia. Mr Morgan is a full-time
employee of Knight
Piésold Pty Ltd and a Member of the Australasian Institute
of Mining and Metallurgy and Chartered Professional Engineer.
Ms Haren, Mr David, Mr Wendlandt, Mt Steven, Mr von Wielligh, Mr Laporte and Mr Morgan 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'.
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 news release.
Cautionary Note for U.S. Investors Concerning Mineral Resources
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 news release 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 news 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 news release are in U.S. dollars unless otherwise noted.
Forward Looking Statements
This news release 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 news release 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 "believe",
"could", "estimate", "expect", "may", "plan", "planned",
"planning", "potential", "project", "projections", "should",
"up-scale", "will", "would" and similar expressions are intended to
identify forward-looking statements.
The forward-looking statements within this news release are
based on information currently available and what management
believes are reasonable assumptions. Forward-looking statements
speak only as of the date of this news release. In addition, this
news release may contain forward-looking statements attributed to
third-party industry sources, the accuracy of which has not been
verified by the Company.
In this news release, forward-looking statements relate, among
other things, to: the Company's timing and ability to enter
into a definitive agreement with respect
to the Option; the completion of the conditions to exercise the Option; receipt
of all regulatory approvals in respect of the Option,
including the approval of the TSXV (if required); prospects,
projections and success of the Company and its projects; the
ability of the Company to expand mineral resources beyond current
mineral
resource estimates; the results and impacts of current and planned drilling,
to extend mineral
resources and to identify new deposits,
including at Marsellesa, Cordillera and Corroteo; the Company's
ability to convert mineral resources to mineral reserves;
opportunities for growth in mineral projects; the timing and
outcomes of future planned economic studies; the Company's ability
to up-scale the Project to 150,000 tpa of copper production; the
timing and outcomes of regulatory
processes required to obtain permits
for the development and operation of the Costa Fuego Project
as contemplated in the
PEA and/or 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 across
multiple Corroteo, Marsellesa and Cordillera.
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
news release,
including, but not limited to, the following material factors: the ability of the Company
to complete the conditions to exercise the
Option; obtaining all regulatory approvals for the completion of
the Option; 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 news release and
elsewhere in the Company's public disclosure record.
Although the forward-looking statements contained in this news
release 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 news
release, 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 news release
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.sedarplus.ca) 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 news release
are expressly qualified by the foregoing cautionary
statements and are made as of the date of this
news
release. 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 news release 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 news release 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.
Mineral Resource Statement
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.
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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)).
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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.
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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 100% interest.
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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.
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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).
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7 Resource Copper Equivalent (CuEq)
grades are calculated based on the formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery) + (Mo ppm
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× 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
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× 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.
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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.
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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.
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10 Hot
Chili Limited is not aware of political, environmental or other
risks that could materially affect the potential development of the
Mineral Resources.
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SOURCE Hot Chili Limited