Hot Chili Continues 30,000 Meter Drill Program, Resource Upgrade Coming in Q1

Bottom Line: 

Hot Chili’s Costa Fuego project is already one of the ten largest and lowest cost copper mines not owned by a major miner and the upcoming pre-feasability resource upgrade will likely cement Costa Fuego as a top tier global copper mine.

Source: Hot Chili Investor Deck Jan 2024

Costa Fuego is on track to start up by 2028, at the front of the line when looking at all planned large copper mines globally. Just in time to harvest higher copper prices expected in the coming year as demand from renewable energy and transportation outpace supply.

Trading at a 75% discount to peers on both resource and discount to Project NPV, Hot Chili is a deeply discounted way to gain exposure to copper. 

Hot Chili Limited (ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) announced the commencement of the next phase of the Company’s 30,000 meter resource growth focused drill program for the Costa Fuego Copper-Gold Project (“Costa Fuego” or “the Project”), located in the coastal range of the Atacama Region, Chile.

A total of 47 Reverse Circulation (RC) drill holes for 11,500m have been completed since the Company’s resource growth focused drill program commenced in late July 2023.

Drilling aims to test multiple resource growth opportunities, which may allow Hot Chili to consider an up-lift in the Pre-feasibility study scale for Costa Fuego.

Highlights

  • Next phase of Hot Chili’s 30,000m resource growth focused drill program is underway, with doubleshift diamond drilling operations commencing on 12th January 2024 at the Company’s low-altitude, Costa Fuego copper-gold project in Chile.
  • Seven large-scale copper targets adjacent to the Cortadera and Productora mineral resources prepared (pre-collars completed) for diamond drill testing, with ten diamond drill tails planned.
  • First-pass Reverse Circulation drilling complete across three new satellite targets:

Selected significant drill results at Marsellesa include:

    • 25m grading 0.4% Copper (Cu) from surface including 10m grading 0.8% Cu from 7m depth
    • 16m grading 0.5% Cu from 197m depth downhole including 6m grading 1.1% Cu from 198m depth
    • 19m grading 0.5% Cu from 195m depth downhole including 2m grading 2.2% Cu from 195m depth

Selected significant drill results at Cordillera include:

    • 93m grading 0.3% Cu from surface including 14m grading 0.4% Cu from surface
    • 53m grading 0.3% Cu from 19m depth including 10m grading 0.4% Cu from 44m depth
    • 184m grading 0.2% Cu from surface including 14m grading 0.3% Cu from 42m depth.
  • Resource upgrade for Costa Fuego being finalized and expected to be announced in Q1 2024
  • Pre-feasibility study and water concept study workstreams advancing, updates expected this quarter

Drilling Program Targets

The first phase of drilling in H2 2023 focused on resource extensional potential at Cortadera and first-pass drilling across new satellite targets. In addition, several RC pre-collars were drilled in preparation for the second phase of diamond drill testing in 2024 adjacent to the Company’s two principal mineral resources: Cortadera; and Productora.

The second phase of drilling commenced on 12th January with one diamond drill rig operating on a 24-hour basis (double-shift). A program of 10 diamond (DD) drill holes for approximately 5,000m is initially planned. The initial diamond drill program comprises:

  • Five DD holes planned to test four large-scale targets at Cortadera (refer to Figures 2 and 3). The first DD hole is currently testing a large co-incident conductivity and chargeability geophysical anomaly located north
    of Cortadera.
  • A further five DD holes are planned to test three large-scale targets adjacent to Productora (refer to Figures 2 and 4)

The Company looks forward to providing further updates as DD drilling advances across these targets over the coming months.

First-Pass Exploration Drill Results Returned

Assay results have been received for first-pass drilling undertaken in late 2023 across three new satellite targets within the Costa Fuego landholding: Marsellesa, Cordillera and Corroteo.

Both Marsellesa and Cordillera are located approximately 10km southwest of Costa Fuego’s planned central processing hub at Productora, and Corroteo is located approximately 5km southeast of Cortadera (refer to Figures 1 and 2).

A total of 4 RC drill holes for 1,244m were completed across the historical Marsellesa open pit copper mine footprint (refer to Figure 5). Significant intersections were recorded in each of the four drill holes:

  • 25m grading 0.4% Copper (Cu) from surface including 10m grading 0.8% Cu from 7m depth
  • 16m grading 0.5% Cu from 197m depth downhole including 6m grading 1.1% Cu from 198m depth
  • 19m grading 0.5% Cu from 195m depth downhole including 2m grading 2.2% Cu from 195m depth
  • 8m grading 0.8% Cu from 1m depth downhole including 4m grading 1.0% Cu from 4m depth

Higher grade copper drilling intersections are associated with both copper oxide (Cu bearing limonite, brochantite and chrysocolla) and copper sulphide (chalcopyrite) mineralization localized within moderately east-dipping manto horizons (refer to Figure 5). Follow-up work is being planned to further assess mineralization continuity across the 500m of prospective strike length.

The Marsellesa mine area is laterally extensive, measuring 400m in length and 200m in width, with historical open pit and underground mine workings exposing multiple zones of shallowly-dipping, strata-bound (manto-style), copper mineralization.

A total of 6 RC drill holes for 1,450m were completed across the historical Cordillera copper mine footprint, located approximately 1km west of Marsellesa (refer to Figure 6). Significant intersections recorded, include:

  • 93m grading 0.3% Cu from surface including 14m grading 0.4% Cu from surface
  • 53m grading 0.3% Cu from 19m depth including 10m grading 0.4% Cu from 44m depth
  • 184m grading 0.2% Cu from surface including 14m grading 0.3% Cu from 42m depth

Wide RC drilling intersections returned at Cordillera relate to broad zones of oxide (Cu bearing limonite with very minor cuprite) and sulphide (chalcopyrite, molybdenite) porphyry copper mineralization confirmed below and surrounding the small surface mine workings.

Porphyry copper mineralization with well-developed stockwork and sheeted A and B style porphyry veining is exposed in the Cordillera open pit mine workings, and porphyry outcrop has been mapped across an area measuring 300m in length and 200m in width.

A total of 8 RC drill holes for 2,324m was completed across the greenfield Corroteo exploration target located 5km southeast of Cortadera (refer to Figure 7). No significant intersections were recorded.

Wide spaced RC drilling has tested approximately 1.8km strike extent of the large-scale Corroteo alteration footprint. Significant pyrite mineralisation was encountered in drilling toward the northern extent of the target area extending under a wide alluvial gravel plain. Final drilling directed under this alluvial cover confirmed the presence
of tonalitic porphyry.

Hot Chili’s exploration team is currently assessing the new drill results on each of these satellite exploration targets in preparation for potential follow-up drilling and exploration work programs.

Resource Upgrade Being Finalized

The Company is in the final stages of completing an upgrade to its mineral resource for Costa Fuego based on all drilling completed since February 2022.

The resource upgrade is expected to be released in Q1 2024.

Ongoing Development and Water Studies Advancing

The Company also looks forward to providing further updates on development study and water supply concept study advances this quarter.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Duane Hope is a Partner at Capital 10X, he brings over 15 years of communications and research experience to the firm. His research and writing have appeared in publications for North American, European and Asian audiences.

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