La Verde Added to Costa Fuego Royalty Footprint
Hot Chili Limited (ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) announced the execution of a binding Amended and Restated Investment Agreement (the “A&R Investment Agreement”) with OR Royalties Inc., formerly Osisko Gold Royalties Ltd (“OR”) pursuant to which the Company has agreed to grant to OR a Net Smelter Return (“NSR”) royalty on the Company’s La Verde Project, as part of the broader Costa Fuego Cu-Au Project (“Costa Fuego” or “the Project”), in consideration for cash payment of US$15 million.
The A&R Investment Agreement brings total royalty consideration under the OR royalty arrangement to US$30
million (see the Company’s press releases dated 28 June 2023, and 26 July 2023) with Hot Chili to receive US$15
million (“Royalty Consideration”) at closing of the transactions contemplated by the A&R Investment Agreement.
Closing remains subject to the satisfaction or waiver of certain customary conditions precedent for a transaction
of this nature and is expected to occur in July 2026.
Highlights
- US$15 million in additional non-dilutive funding brings total OR royalty consideration to US$30 million,
with proceeds directed toward La Verde and broader Costa Fuego advancement. - La Verde added to OR’s royalty footprint, a pre-resource asset, representing a significant
endorsement by one of North America’s most technically rigorous royalty companies. - The original 2023 OR royalty arrangement for Costa Fuego was executed at the time of the
Company’s published Preliminary Economic Assessment (“PEA”) in June 2023, which was underpinned
by a then current 725 Mt Indicated Mineral Resource Estimate (“MRE”) for Costa Fuego (effective March
2022). La Verde currently carries no defined MRE, making OR’s commitment of a further US$15M
to its royalty arrangement a compelling statement on district scale exploration and resource
potential. - The Company has subsequently updated its mineral resources to a 798 Mt Indicated Mineral
Resource (effective 26 February 2024), which formed the basis of the Preliminary Feasibility Study
(“PFS”) completed in March 2025 and filed on SEDAR+ on 9 May 2025. The 2023 PEA has been
superseded by the 2025 PFS and should no longer be relied upon. - Updated Change of Control Buyback prior to the fourth anniversary of the original royalty closing. The
OR NSR can be reduced to 0.5% NSR royalty on copper and 2.5% NSR royalty on gold. - OR to have a Right of First Offer (“ROFO”) with respect to the sale of any future royalty, stream, or
similar interests by Hot Chili. - Clear “look-through” value given the OR royalty is equivalent to a 1.12% CuEq NSR royalty across
payable metals for a total consideration of US$30 million, and Hot Chili’s current market capitalisation of
approximately US$280 million. - Strong Funding Approach with A$40 million equity funding in February 2026 followed by expected
closing of non-dilutive US$15 million (approx A$21.3 million) OR A&R Investment Agreement in July 2026.
1 CuEq considers assumed commodity prices and average metallurgical recoveries from test work. See qualifying statements below.
Hot Chili’s Managing Director Mr Christian Easterday commented, “When OR first invested in Costa
Fuego in 2023, they were backing Hot Chili with a published PEA and a 725 Mt Indicated resource base.
This time, they are committing another US$15 million to a pre-resource deposit, which speaks directly to the
scale of what we see at La Verde and the potential impact it has for our future Costa Fuego copper-gold
production hub.
This transaction achieves two things simultaneously: it funds the advancement of La Verde without share
dilution; and it gives the market a credible third-party datapoint on the value of an asset that has yet to be
formally quantified. We look forward to rewarding OR’s confidence with results.”
Hot Chili’s financial advisor is National Bank Financial Inc., and its Canadian legal counsel is Bennett Jones LLP.
Figure 1. Location map of La Verde in relation to Costa Fuego, Huasco Valley, Chile. Hot Chili’s Costa Fuego tenement landholdings related to the Original OR royalty agreement shown in grey, and additions to the tenement holdings related to the new OR royalty agreement are shown in green.
1 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 Metal Prices applied in the calculation were: Cu=4.30 USD/lb, Au=2,280 USD/oz, Mo=20 USD/lb, and Ag=27 USD/oz. Recoveries of 83% Cu, 56% Au, 83% Mo and 37% Ag. CuEq (%) = Cu(%) + 0.69 x Au(g/t) + 0.00044 x Mo(ppm) + 0.0043 x Ag(g/t).
Summary of Material Terms of Amendment Agreement
The A&R Investment Agreement among Hot Chili, its Chilean subsidiaries holding title to the properties
comprising the Costa Fuego Project (each a “Seller”), and OR, provides for the purchase by OR of a royalty
from each Seller, the material terms of which are summarised below:
The Company will receive US$15 million (approximately A$21.3 million) Royalty Consideration at closing of
the transactions contemplated by the A&R Investment Agreement, expected in July 2026.
The Directors look forward to an exciting period ahead with three drill rigs in operation at La Verde. The
Company expects to continue delivering strong news flow ahead of a maiden Mineral Resource Estimate
for La Verde and a revised Pre-Feasibility Study for Costa Fuego.
For more on Hot Chili, see the company’s previous drill results at La Verde
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