Hot Chili Limited (TSXV: HCH) (OTCQX: HHLKF) has entered into Option Agreements to acquire 100% interest in two historical copper mine areas; Marsellesa and Cordillera, located near Hot Chili’s Costa Fuego CopperGold Project in the coastal range of the Atacama Region, Chile
Marsellesa and Cordillera are located approximately 10km southwest of Costa Fuego’s planned central processing hub.
Figure 1. Location of New Project Options in relation to Costa Fuego
Both mine areas have been privately held and historically exploited for shallow copper oxide and copper sulphide material but have never previously been drill tested.
The Marsellesa mine area is laterally extensive, measuring 400m in length and 200m in width, with mine workings exposing multiple zones of shallowly-dipping, strata-bound (manto-style), copper mineralisation.
Lying approximately 1km west of Marsellesa, the smaller Cordillera mine workings expose outcroppingporphyry copper mineralisation with well-developed stockwork and sheeted A and B style porphyry veining. First-pass Reverse Circulation (RC) drilling is planned to commence at Marsellesa and Cordillera in the coming week, following completion of drilling at the Company’s Corroteo exploration target, located 5km southeast of the Cortadera porphyry copper-gold deposit.
The Company’s recently published Preliminary Economic Assessment entitled Costa Fuego CopperProject – NI 43-101 Technical Report Preliminary Economic Assessment with an effective date of June 28, 2023 (the “PEA”) establishes Costa Fuego as a low-risk, long life copper project benefiting from a low start-up capital and a high annual copper equivalent2 metal production profile of over 100 kt for a 16-year mine life, including 95 kt copper and 49 koz gold during primary production (first 14 years) at C1 Cash Cost3 of US$1.33/lb (estimated net of by-product credits).
Hot Chili is focused on up-scaling Costa Fuego’s resource base and potential study scale towards a 150,000 tpa copper production profile, in order to further enhance project returns ahead of the delivery of the Costa Fuego Pre-Feasibility Study (“PFS”).
Material terms of the executed Marsellesa Option Agreement:
Figure 2: Location of the Marsellesa and Cordillera project Options in relation to planned central processing for Costa Fuego, 10km southwest of Productora
• Hot Chili’s subsidiary Sociedad Minera La Frontera SpA (“Frontera”) has executed a definitive option agreement with Hermanos Pefaur SpA, the holder of a 100% interest in the concession comprising Marsellesa, for the grant to Frontera of an option to acquire a 100% interest in the Marsellesa concession (“Marsellesa Option”).
• Non-refundable cash payment of US$100,000 to Pefaur upon grant of the Marsellesa Option.
• Non-refundable cash payment of US$100,000 within 12 months from the grant of the Marsellesa Option.
- Non-refundable cash payment of US$150,000 within 24 months from the grant of the Marsellesa Option.
- Option may be exercised within 36 months of the date of grant of the Marsellesa Option for a final non-refundable cash payment of US$1,000,000.
- Pefaur will also be granted a 1% NSR royalty over the Marsellesa concession on exercise of the Marsellesa Option. Frontera will have a right of first refusal to buy-back the NSR royalty.
Figure 3: Aeriel photo of surface and underground mine workings at Marsellesa.
The material terms of the executed Cordillera Option Agreement:
• Hot Chili’s subsidiary Sociedad Minera La Frontera SpA (“Frontera”) has executed a definitive option agreement with Mr Arnaldo Del Campo (“ADC”) the holder of a 100% interest in the concessions comprising Cordillera, for the grant to Frontera of an option to acquire a 100% interest in the Cordillera concessions (“Cordillera Option”).
• Non-refundable cash payment of US$100,000 to ADC upon grant of the Cordillera Option.
• Non-refundable cash payment of US$200,000 within 24 months from the grant of the Cordillera Option.
• Option may be exercised within 48 months of the date of grant of the Cordillera Option for a final non-refundable cash payment of US$3,700,000.
• Within the Cordillera concessions, ADC will also be granted a 1% NSR royalty over any material extracted from underground operations, and a 1.5% NSR royalty over any material extracted from open pit operations, on exercise of the Cordillera Option. Frontera will have a right of first refusal to buy-back the NSR royalties.
Hot Chili is well positioned with A$21.8 million in cash (as of 30th September 2023), and a near-term focus on regional land consolidation and rapid definition of additional high grade and bulk tonnage copper resources for Costa Fuego.The Company looks forward to providing further updates as exploration drilling activities progress across Corroteo, Marsellesa and Cordillera.
Figure 4. Limited exploration and surface copper mineralisation exposed in shallow surface and underground mine workings at Marsellesa and Cordillera
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