Nine years ago, Hot Chili won the prestigious Emerging Company Award at Diggers & Dealers in Kalgoorlie and this week the company is presenting there again as one of only two companies worldwide to have made a major copper discovery since 2016 which has now attracted the interest of a mega resource house that is no slouch when it comes to developing large projects.
Hot Chili’s new dance partner at its rapidly developing Costa Fuego porphyry copper-gold project in Chile is Glencore, one of the largest natural resource companies in the world.
Glencore has agreed to pump A$14.4m into Hot Chili in return for a 9.99 per cent equity stake and an offtake agreement that will see it pick up 60 per cent of Hot Chili’s substantial offtake over an 8-year period at market prices.
Glencore will also have the right to appoint a Director to the Hot Chili board and also to its technical steering committee.
Glencore’s rights are subject to it maintaining at least a 7.5 per cent equity position in Hot Chili.
Hot Chili’s world-class Cortadera copper-gold discovery in Chile is part of the company’s colossal Costa Fuego porphyry copper-gold project and lies within the coastal region of Chile, around 600km north of the capital of Santiago. Unlike many other South American mineral projects, it has a rare low altitude site, with good access to infrastructure and only 50km by road to the port of Los Lasas. The company has government mining and processing approvals in place and has been granted an essential water licence. Additionally, it gets the environmental green tick as it can access solar power and seawater processing technology projects.
The current copper-gold resource for the Costa Fuego porphyry copper-gold project is a whopping 2.9 million tonnes of copper, 2.7million ounces of gold, 9.9 million ounces of silver and a not-to-be-sniffed-at, 64000 tonnes of molybdenum. The company says the metallurgy of its resource is excellent, allowing good recoveries at minimum cost with an arsenic-free copper-gold concentrate product.
The Costa Fuego porphyry copper-gold project area now hosts five porphyry discoveries including the massive Cortadera, Cortadera North and Productora projects in addition to the more modest San Antonio and Valentina ore systems. Hot Chili’s share performance has benefited from the company’s serious discoveries and is now 300 per cent higher than it was when it made the Cortadera deal in 2019. The company has a market capitalisation of $115 million and approximately $3.5 million in the bank.
The Cortadera acquisition and development timeline is extraordinary with the deal struck in early 2019, world-class drill results delivered by mid-2019, a maiden resource announced just over a year later.
40,000m of drilling was then kicked off in January this year and a major resource upgrade is expected by the end of 2021.
Cortadera is one of two major global copper discoveries of the past five years or so – the other is Rio Tinto’s Revered Winu project in WA.
Hot Chili is fully funded to complete an aggressive drilling program this year aimed at extending the maiden JORC resource of 451 million tonnes grading 0.46 per cent copper equivalent reported for Cortadera last October. The company’s rival in the major copper discovery space Rio’s Winu has a maiden resource of 503Mt at 0.45 per cent copper equivalent.
Since landing the deal to acquire Cortadera, Hot Chili has featured regularly in compilations of the best drill intercepts from multi-metal programs around the globe, with some stunning, 500-950m-wide mineralised diamond drilling results that have underlined the scale of the system and the growing metal endowment from near-surface to depths beyond a kilometre. Recent results from the imposing copper-gold porphyry system indicate that the deeper roots of the deposit host higher-grade copper mineralisation which is always a good thing given the incremental cost increase in deep mining.
Hot Chili’s nest of porphyry copper-gold deposits at Costa Fuego already makes the project one of the most globally significant copper discoveries in the last decade and Glencore’s interest in the project underlines its potential to be a “tier-one” copper mineral resource – Glencore rarely gets out of bed for anything less.
Hot Chili management says it remains focussed on the expansion of the current global resource at Costa Fuego which it says is likely to host significantly more of the lucrative red metal than is currently showing on its resource statement. The company is already sitting on an impressive pile of saleable metal in what is only the formative stage of the exploration cycle for Cortadera and wider Costa Fuego area.
Hot Chili Managing Director and prime mover Christian Easterday is bullish about the project saying it is “one of the few low-altitude, no-arsenic, tier 1-location, infrastructure ready major copper resources” worldwide – and it would appear that he has convinced Glencore too.
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