Highlights
Hot Chili Announces Preliminary Feasibility Study (PFS) & Maiden Ore
Reserve for the Costa Fuego Cu-Au Project
- Low-risk, Chilean coastal copper development with advanced permitting – multi-decade mine life, top quartile copper production scale and lowest quartile capital intensity
- Strong economics and leverage to rising copper price:
- Post-tax Net Present Value (NPV8%) of US$1.2 billion (approximately, within a range of US$786 million to US$1.62 billion) and post-tax Internal Rate of Return (IRR) of 19% (approximately, within a range of 15% to 22%)
- Maiden ore reserve for Costa Fuego Copper-Gold Project (Costa Fuego) lowers operational risk:
- Probable Ore Reserves of 502 Mt at 0.37% Cu, 0.10 g/t Au, 0.49 g/t Ag and 97 ppm Mo: Across sulphide concentrator, oxide leach and low-grade sulphide leach processing streams
Hot Chili Announces PFS for Huasco Water & MOU for Seawater Supply to Costa Fuego
- Strong economics for a large, multi-user, water business opportunity
- Stage 1 PFS4 for 500L/s of potential seawater supply to Costa Fuego
- Post-tax NPV8% of US$122 million and IRR of 19%
- Staged approach for regional, desalinated water supply with large 4,000 L/s catchment of potential off-takers
- Stage 2 PFS for 1,300 L/s of potential desalinated water supply
- Post-tax NPV8% of US$977 million and IRR of 19%
- First-Mover Advantage, only active maritime license in the Huasco Valley region of Chile
Hot Chili Confirms Major Cu-Au Porphyry Discovery at La Verde
- Multiple new significant drill intersections underpin rapidly growing oxide and sulphide discovery, located
30km south of Costa Fuego, providing significant potential for front-end, open pit, mine life growth - Phase 1 drill programme completed on 10 April 2025, phase 2 planned and awaiting regulatory approval
- Assay results for nineteen holes pending and second Environmental Impact Assessment (EIA) commenced to integrate La Verde into Costa Fuego and materially enhance project economics
A$7.5M Cash and A$5.0M in Returns Expected (VAT and JV recoup)
- Expenditure reduced by 60% to 65% over next six months during Definitive Feasibility Study (DFS) planning & PFS optimisation phases
- Potential Strategic Funding Discussions Advancing
- Strong interest in asset-level investment opportunities for Costa Fuego and Huasco Water
Figure 1: Drilling operations continued at La Verde during the quarter, located 30km south of Costa Fuego in coastal Chile
Summary of Operational Activities
Costa Fuego PFS Delivered On-Time & Within Guidance
The Costa Fuego PFS was announced on 27th March 2025. The PFS delivered globally meaningful scale and a multi-decade project life for Costa Fuego.
Highlights included:
Globally Meaningful Scale & Multi-Decade Mine Life
- Project Life Extended to 20 Years
- Average Annual Production Increased 116 ktpa Average CuEq1 Production Rate: Including 95 kt Cu and 48 koz Au during primary production (first 14 years)
- Competitive Cost Position: Life of mine (LOM) average C1 Cash Cost2 of US$ 1.38/lb and All-in-Sustaining Cost of US$1.85/lb (both estimated net of by-product credits)
- Increase in Total Copper and Gold Production: 1.5 Mt Cu (3.31 Blb Cu) and 780 koz Au produced over the LOM
- Robust Financial Profile: Total LOM revenue of approximately US$17.3 billion and total LOM free cash flow of approximately US$3.86 billion (post-tax, after operating costs, capital costs, and royalties)
- Significant Risk Reduction: PFS prepared assuming ± 25% accuracy. An additional US$442 million of capital costs applied to significantly reduce key areas of risk, including changes in project scope and inflationary pressures
Strong Economics and Leverage to Rising Copper Price
- Post-tax NPV8% of US$1.2 billion (approximately, within a range of US$786 million to US$1.62 billion) and post-tax IRR of 19% (approximately, within a range of 15% to 22%).
- First Quartile Capital Intensity: Start-up Capital Cost of US$ 1.27 billion delivers a capital intensity of US$14,079/t of average annual CuEq. metal produced
- Highly Leveraged to Copper Price: At spot copper price of US$5.30/lb3, post-tax NPV8% increases to US$2.2 billion and post-tax IRR to 30%, respectively Low-Risk, Coastal Copper Development with Advanced Permitting
- Low Elevation and Over a Decade of Permitting Advance Provides a Foundation for Development: One of only a few global copper development projects at low elevation with a water permit, and grid power
- Preparing to submit Environmental Impact Assessment (EIA): Costa Fuego Stage-1 (EIA-1) based on current PFS-scale and definition Maiden Ore Reserve for Costa Fuego Lowers Operational Risk
- Maiden Ore Reserve for Costa Fuego. Probable Ore Reserves of 502 Mt at 0.37% Cu, 0.10 g/t Au, 0.49 g/t Ag and 97 ppm Mo: Across sulphide concentrator, oxide leach and low-grade sulphide leach processing streams
1 The copper-equivalent (CuEq) annual production rate was based on the combined processing feed (across all sources) and used long-term commodity prices of: Copper US$ 4.30/lb, Gold US$ 2,280/oz, Molybdenum US$ 20/lb, and Silver US$25/oz; and estimated metallurgical recoveries for the production feed to the following processes: Concentrator (86% Cu, 54% Au, 37% Ag, 70% Mo), Oxide Leach (65% Cu only), & Low-grade Sulphide Leach (39% Cu only).
2 See page Announcement page 3 for full non-IFRS measures disclaimer.
3 Copper price – Fast markets quote 26/03/2025. High of $5.37/lb closing price $5.24/lb
4 Hot Chili previously released Ore Reserves for Productora, a component of Costa Fuego, in the ASX announcement ‘Hot Chili Delivers PFS and Near Doubles Reserves at Productora’ 2 March 2016. Maiden Ore Reserve for Cortadera and San Antonio and Alice deposits, and updated Ore Reserve for Productora and as a whole Costa Fuego.
5 Hot Chili is a dual listed entity and complies with the JORC 2012 code for the ASX for the reporting of Exploration Results, Mineral Resources and Ore Reserves. The company complies with CIM Definition Standards for Mineral Resources and Mineral Reserves (10 May 2014) that are incorporated by reference into NI 43- 101 for the TSXV. Terminology of Ore Reserves and Mineral Reserves are interchangeable and have the same meaning within this announcement.
Figure 3. Costa Fuego PFS to PEA highlights across key metrics
Huasco Water PFS Outlines Valuable Strategic Asset
The Huasco Water PFS was announced on 31 March 2025. The Huasco Water PFS presented a robust business case for both Stage 1 and Stage 2 of its proposed regional scale seawater and desalinated water business, with a conceptual level study for Stage 3 desalinated water supply expansion. Highlights included:
Strong Economics for a Large, Multi-User, Water Business
• Stage 12 Water Supply PFS for 500L/s of Potential Seawater Supply: Post-tax NPV8% of US$122 million and IRR of 19%. Construction capital cost for seawater supply estimated at US$151 million with a 4.5-year payback
• Stage 2 Water Supply PFS for 1,300 L/s of Potential Desalinated Water Supply: Post-tax NPV8% of US$977 million and IRR of 19%. Construction capital cost for desalinated water supply estimated at US$1.4 billion with a 4-year payback. Stage 2 financial outcomes include Stage 1 capital and operating cashflows
• Stage 3 Conceptual Study for Expansion to 2,300 L/s of Potential Desalinated Water Supply Stage 1- Multi-Decade Seawater Supply to Costa Fuego
• 20 Year Seawater Supply with Foundation Off-taker: Memorandum of Understanding (MOU) executed for water supply of up to 500 L/s to Costa Fuego
• Long Lead-times Permits Secured: Granted maritime water concession to extract seawater, permit for coastal land access, Stage 1 pipeline easements and connection to the electrical grid secured
• Near-Term Development Decision Tied to Costa Fuego: First water supply planned for end of decade
Stage 2 and 3 – Regional, Desalinated Water Supply Opportunity
• Large Catchment of Potential Off-takers: Over 4,000 L/s of desalinated water demand identified, including six undeveloped mining projects without secured access to desalinated water supply. No offtake agreements have been secured for stage 2 or 3 and discussions with potential customers are ongoing
• Staged Growth Approach: Establishment of seawater supply infrastructure toward the end of the decade, followed by the commencement of initial desalinated water supply shortly thereafter, and subsequent staged expansion. The staged approach enables long term scalable water supply to support mining, community, and agriculture in the Huasco Valley region with potential to extend well beyond the initial project horizons
First-Mover Advantage
• Only Active Maritime License: HW Aguas para El Huasco SpA (Huasco Water), a joint venture between Hot Chili (80% interest) and Compañia Minera Del Pacifico “CMP” (20% interest), is the only company with permitted access to supply seawater in the Huasco Valley region following a ten-year regulatory approval process
• Desalination Permitting Advancing: Over a year advanced on regulatory applications to enable the supply of desalinated water from the existing maritime concession and a second maritime concession application by Huasco Water
• Long Permitting Timelines Continue: No regulatory changes have been made to Chile’s maritime permitting process since Huasco Water was granted its concession. Hot Chili maintains a competitive advantage as the first mover in the area for a water distribution business
• EIA Advanced: Stage 1 seawater supply is included within the Costa Fuego EIA, baseline studies complete.
Huasco Water PFS Key Outcomes
1 Average Annual Price of Water for Costa Fuego. Price is calculated subject to each project’s location and requirements.
2 Average Annual Price of Water for customers supplied in the Stage 2. Price is calculated subject to each customers location and
requirements.
3 Stage 3 tariffs are the average for all customers for Stage 1, 2 and 3
4 Average Annual Price of Water for customers supplied in the Stage 3. Price is calculated subject to each customers location and
requirements.
La Verde Exploration Update
On 11 February 2025, Hot Chili reported a second round of strong assay results from its La Verde copper-gold discovery, located approximately 30km south of Costa Fuego.
Highlights included:
Rapidly Emerging Major Copper-Gold Porphyry Discovery
• New drill results from an additional ten Reverse Circulation (RC) drill holes confirm La Verde as a major copper-gold porphyry discovery in low elevation coastal Chile, with broad, consistently mineralised intersections extending over 300 m vertically, commencing at shallow depths.
• Multiple new significant drill intersections underpin rapidly growing oxide and sulphide discovery:
• 320 m grading 0.3% Cu and 0.1 g/t Au from 34 m to end-of-hole (DKP009)
o including 134 m at 0.4% Cu and 0.2 g/t Au from 180 m depth
o including 56 m at 0.5% Cu and 0.2 g/t Au from 258 m depth
• 200 m grading 0.4% Cu and 0.1 g/t Au from 48 m to end-of-hole (DKP005)
o including 38 m at 0.5% Cu and 0.2 g/t Au from 68 m depth
• 172 m grading 0.4% Cu and 0.2 g/t Au from 48 m (DKP012)
o including 20 m at 0.5% Cu and 0.2 g/t Au from 62 m depth and 78 m grading 0.5% Cu and 0.1 g/t Au from 228 m to end-of-hole
o including 32 m at 0.6% Cu and 0.2 g/t Au from 232 m depth
• 135.5 m grading 0.3% Cu and 0.1 g/t Au from 64 m to end-of-hole (DKP006)
o including 62 m at 0.4% Cu and 0.2 g/t Au from 124 m depth
o which included 26 m at 0.5% Cu and 0.3g/t Au from 124 m depth
• 32 m grading 0.4% Cu from surface (DKP011)
• 80 m grading 0.3% Cu and 0.1 g/t Au from 8 m depth (DKP004)
o including 34 m at 0.4% Cu from 8 m depth La Verde Discovery Keeps Growing – Large Scale Appeal
• New drill results reinforce La Verde’s potential scale, adding to the strong results reported on 18December 2024:
• 308 m grading 0.5% Cu, 0.3 g/t Au from 46 m to end-of-hole (DKP002)
o including 202 m at 0.6% Cu, 0.3g/t Au from 70 m depth
o which included 100 m at 0.7% Cu and 0.3g/t Au from 118 m depth
• 362 m grading 0.3% Cu, 0.1g/t Au from 28m to end-of-hole (DKP001)
o including 174 m at 0.4% Cu and 0.1 g/t Au from 36 m depth
o which included 22 m at 0.6% Cu, 0.2g/t Au from 144 m depth
Drilling Coverage at La Verde Doubled & Porphyry Mineralisation Remains Open
• First-pass drill coverage now extends across an area measuring 1,000 m by 550 m: 30 reverse circulation (RC) holes for 9,352 m drilled.
• Assay results pending for nineteen drill holes: Assay turnaround time from laboratories slower than usual due to peak summer drilling season in the high Andes
• Shallow porphyry mineralisation remains open in all directions
• Phase 1 drill programme completed on 10th April 2025
Next Steps
• Regulatory application for further clearing access being advanced
• Phase 2 drill programme (RC and diamond drilling) planned to commence following regulatory approval
• Deeper diamond drill testing being planned: 8 of 12 RC drill holes reported to date recorded significant mineralisation to end-of-hole
• Advanced four-dimensional geological modelling underway in addition to regional scale exploration activities across the La Verde discovery area and Domeyko landholdings
• Second EIA commenced to integrate La Verde into Costa Fuego
View looking SW across the La Verde copper-gold porphyry discovery – showing the location of discovery drill hole DKP002 and historic copper oxide open pit area.
Figure 1: Plan view map of the La Verde porphyry system showing significant intercepts compared to recent drill hole collars (yellow circles), planned drill collars (white circles) historic drill collars (black circles), +1% A+B vein footprint from mapping and drillholes (blue outline) and copper mineralisation interpolants from returned assay results.
Figure 2. Plan view slice at 950 RL (± 50 m clipping) of modelled tonalitic (pink polygon) and dioritic porphyry (red polygon) intrusions. Returned Cu grades graphed downhole. Area currently being drill tested is outlined by the dashed blue box.
announcement “Hot Chili Confirms Major Cu-Au Porphyry Discovery at La Verde” dated 11 February 2025.
Table 1 – Drill Holes Completed for Costa Fuego in Quarter 1 2025
Table 2 – Significant Intersections returned for Costa Fuego in Quarter 1 2025
Summary of Corporate Activities
Cash Position and Capital Structure Changes
As of 31 March 2025, the Company had cash of A$7.5 million and no debt. The Company expects to receive approximately A$5 million in funds from VAT repayments and joint venture recoup from its partner CMP. The operating expenditure for quarter ended 31 March 2025 included payments for exploration and evaluation of A$7.9 million.
Included in this amount was A$4.0 million related to the completion of the two PFS for Costa Fuego and Huasco Water, and the advancement of the EIA.
A total of A$3.9 million was spent on exploration activities across the La Verde copper-gold porphyry discovery and southern landholdings included in the Domeyko project.
The investing expenditure for quarter ended 31 March 2025 related to payments for patentes (annual rent) for the Company’s mining tenements.
The Company expects monthly expenditure to be materially reduced by approximately 60% to 65% over the coming six months compared to this quarter, due to the completion and release of both the Costa Fuego and Huasco Water PFS, with only planning and optimisation activities expected during the next two quarters.
Exploration expenditure will also be significantly reduced, with phase 1 drilling activities at La Verde having been completed on 10 April 2025.
In addition, the Company is engaged in discussions related to potential renegotiation of forthcoming Option payments later in 2025 to maximise funds, while Hot Chili engages in potential future strategic funding discussions.
The following summarises the Company’s securities on issue:
- 151,596,149 ordinary fully paid shares
- 1,914,000 options at AUD $1.50 expiring 24 July 2026
- 5,938,248 service and performance rights
Mineral Resource Statement
Costa Fuego Combined Mineral Resource (Effective Date 26 February 2024)
Footnotes
1 Hot Chili previously released Ore Reserves for Productora, a component of Costa Fuego, in the ASX announcement ‘Hot Chili Delivers PFS and Near Doubles Reserves at Productora’ 2 March 2016. Maiden Ore Reserve for Cortadera and San Antonio and Alice deposits, and updated Ore Reserve for Productora and as a whole Costa Fuego.
2 Hot Chili is a dual listed entity and complies with the JORC 2012 code for the ASX for the reporting of Exploration Results, Mineral Resources and Ore Reserves. The company complies with CIM Definition Standards for Mineral Resources and Mineral Reserves (10 May 2014) that are incorporated by reference into NI 43- 101 for the TSXV. Terminology of Ore Reserves and Mineral Reserves are interchangeable and have the same meaning within this announcement.
3 S&P Market Intelligence. The Global Developer Peer Group of project studies were selected on the following basis: Global primary copper projects (not controlled by a major miner), with net by-product credits where applicable, reporting studies of average annual life-of-mine copper production of greater than 40 kt, which have been published within the last 5 years.
4 The Huasco Water Supply PFS has been aligned with the preliminary feasibility study for the Company’s Costa Fuego project (the “Costa Fuego PFS”) and shares the same assumptions for Costa Fuego in stage 1. See announcement dated 27th March 2025 “Hot Chili Announces PFS & Maiden Mineral Reserve for the Costa Fuego Cu-Au Project” outlining the results of the Costa Fuego PFS. An independent technical report for the Costa Fuego PFS, prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and JORC Code 20212 within 45 days thereof
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