Hot Chili launches $9m capital raising

Copper explorer Hot Chili is targeting its first resource estimate for two projects in South America after announcing an oversubscribed $5 million placement and $3.9 million rights issue, with majority of the funds going towards a drilling restart at the Cortadera project in Chile.

The company, which announced the Cortadera acquisition last February, has the option to acquire the project from mining group SCM Carola through a $US31.5 million ($A49 million) payment over 30 months.

Hot Chili today said it would use the funds from the capital raising to pay off a $US2 million ($A3.1 million) fee, which will extend the remaining acquisition payment by a further 12 months.

The company is also looking to complete metallurgical testwork and a preliminary economic assessment for Cortadera as well as the San Antonio copper-gold project.

Managing director Christian Easterday said the capital raising would help reposition Hot Chili's copper-gold resources base.

“We look forward to continuing our push to rapidly grow Cortadera while also working towards establishing a new and expanded, combined development plan for our coastal copper-gold assets in Chile,” Mr Easterday said in an ASX announcement.

Under the placement, Hot Chili will issue approximately 333 million shares priced at 1.5 cents each, with Veritas Securities acting as lead manager.

The placement was overbid and closed within one day, Hot Chili said.

Settlement is expected to occur around May 22.

Further, the company will offer three new shares for every 20 company shares on the same terms as the placement, along with one free attaching option exercisable at 2.5 cents each.

The offer is not underwritten.

Shares in Hot Chili were down 15 per cent at 3:45pm AEST to trade at 1.7 cents.