Hot Chili Limited (ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) released its annual Mineral Resources and Ore Reserves (MROR) statementfor the Costa Fuego Project(the “Project”)as of 30June 2024.
Costa Fuego comprises the Cortadera, Productora, Alice,and San Antonio deposits, all of which have updated Mineral Resource Estimates (“MRE“or “Resource“) completed during the reporting period. All depositslie proximal to one another, at low altitude (800 m to 1,000 m), approximately 600 km north of Santiago.
Indicated Mineral Resourcesare estimated at 2.9 million tonnes of copper, 2.6 million ounces of gold, 12.8 million ounces of silver, and 68 thousand tonnes of molybdenum.
Inferred Mineral Resourcesare estimated at 0.5 million tonnes of copper, 0.4 million ounces of gold, 2.3 million ounces of silver, and 12 thousand tonnes of molybdenum.
No Ore Reserves are currently reported fortheCosta FuegoProject.
Key Highlights
6% increase in copper equivalentcontained metal for the combined Indicated resource(including a 9% increase in copper equivalentcontained metalfor the higher–grade component of the Indicated resource)
16% decrease in break-even cutoff grade due to higher expected copper prices
Over 85% of Costa Fuego’s MREis now classified as Indicated
The updated MREsuggestsa strong platform to support theplannedCosta Fuego Preliminary Feasibility Study(PFS) to be released in late 2024.
The MRE update follows 24 months of material investment, totaling 24.5 km of drilling across Costa Fuego; a mix of development, metallurgical, geotechnical, resource expansion and exploration drilling, designed to progress the Project towards its PFSand maiden Ore Reserve, expected to be completed around the end of 2024.
The Costa Fuego Mineral Resource Statement as of 30 June 2024,with an effective date of 26February 2024,is shown in Table 1.
See footnotes at the bottom for more details:
Table 1: Costa Fuego Copper-Gold Project Mineral Resource, 30 June 2024, with an effective date of 26 February 2024
1 Mineral Resources are reported on a 100% Basis – combining Mineral Resource estimates for the Cortadera, Productora, Alice and San Antonio deposits. All figures are rounded, reported to appropriate significant figures and reported in accordance with the Joint Ore Reserves Committee Code (2012) and NI 43-101. Mineral Resource estimation practices are in accordance with CIM Estimation of Mineral Resource and Mineral Reserve Best Practice Guidelines (29 November 2019) and CIM Environmental, Social and Governance Guidelines for Mineral Resources and Mineral Reserve Estimation (8 September 2023) and reported in accordance CIM Definition Standards for Mineral Resources and Mineral Reserves (10 May 2014) that are incorporated by reference into NI 43-101. 2 The Productora deposit is 100% owned by Chilean incorporated company Sociedad Minera El Aguila SpA (SMEA). SMEA is a joint venture (JV) company – 80% owned by Sociedad Minera El Corazón Limitada (a 100% subsidiary of Hot Chili Limited), and 20% owned by Compañía Minera del Pacífico S.A (CMP). 3 The Cortadera deposit is controlled by a Chilean incorporated company Sociedad Minera La Frontera SpA (Frontera). Frontera is a subsidiary company – 100% owned by Sociedad Minera El Corazón Limitada, which is a 100% subsidiary of Hot Chili Limited. 4 The San Antonio deposit is controlled through Frontera (100% owned by Sociedad Minera El Corazón Limitada, which is a 100% subsidiary of Hot Chili Limited), and Frontera has an Option Agreement to earn a 100% interest. 5 The MRE in the tables above form coherent bodies of mineralization that are considered amenable to a combination of open pit and underground extraction methods based on the following parameters: Base Case Metal Prices: Copper US$3.00/lb, Gold US$1,700/oz, Molybdenum US$14/lb, and Silver US$20/oz. 6 All MRE were assessed for Reasonable Prospects of Eventual Economic Extraction (RPEEE) using both Open Pit and Block Cave Extraction mining methods at Cortadera and Open Pit mining methods at the Productora, Alice and San Antonio deposits. 7 Metallurgical recovery averages for each deposit consider Indicated + Inferred material and are weighted to combine sulphide flotation and oxide leaching performance. Process recoveries: Cortadera – Weighted recoveries of 82% Cu, 55% Au, 81% Mo and 36% Ag. CuEq(%) = Cu(%) + 0.55 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x Ag(g/t). San Antonio – Weighted recoveries of 85% Cu, 66% Au, 80% Mo and 63% Ag. CuEq(%) = Cu(%) + 0.64 x Au(g/t) + 0.00044 x Mo(ppm) + 0.0072 x Ag(g/t). Alice – Weighted recoveries of 81% Cu, 47% Au, 52% Mo and 37% Ag. CuEq(%) = Cu(%) + 0.48 x Au(g/t) + 0.00030 x Mo(ppm) + 0.0044 x Ag(g/t). Productora – Weighted recoveries of 84% Cu, 47% Au, 48% Mo and 18% Ag. CuEq(%) = Cu(%) + 0.46 x Au(g/t) + 0.00026 x Mo(ppm) + 0.0021 x Ag(g/t). Costa Fuego – Recoveries of 83% Cu, 53% Au, 71% Mo and 26% Ag. CuEq(%) = Cu(%) + 0.53 x Au(g/t) + 0.00040 x Mo(ppm) + 0.0030 x Ag(g/t). 8 Copper Equivalent (CuEq) grades are calculated based on the formula: 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 base case cut-off grade for Mineral Resources considered amenable to open pit extraction methods at the Cortadera, Productora, Alice and San Antonio deposits is 0.20% CuEq, while the cut-off grade for Mineral Resources considered amenable to underground extraction methods at the Cortadera deposit is 0.27% CuEq. It is the Company’s opinion that all the elements included in the CuEq calculation have a reasonable potential to be recovered and sold. 9 Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. These MRE include Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorised as Mineral Reserves. It is reasonably expected that the majority of Inferred mineral resources could be upgraded to Measured or Indicated Mineral Resources with continued exploration. 10 The effective date of the MRE for the period ending 30 June 2024 is 26 February 2024 (the “2024 Effective Date”). Refer to ASX Announcement “Hot Chili Indicated Resource at Costa Fuego Copper-Gold Project Increases to 798 Mt” for JORC Table 1 information in this statement related to the Costa Fuego Mineral Resource Estimate (MRE) by Competent Person Elizabeth Haren, who is also a qualified person (within the meaning of NI 43- 101) constituting the MRE of Cortadera, Productora, Alice and San Antonio (which combine to form Costa Fuego). Hot Chili confirms it is not aware of any new information or data that materially affects the information included in the Resource Announcement and all material assumptions and technical parameters stated for the Mineral Resource Estimates in the Resource Announcement continue to apply and have not materially changed since the 2024 Effective Date. 11 Hot Chili Limited is not aware of political, environmental or other risks that could materially affect the potential development of the Mineral Resources, other than those common to all such projects, including the permitting of a mining operation, access to adequate funding on reasonable terms, etc. See “Risk Factors” in the current Technical Report available on Sedar and the Forward-Looking Statements in the Annual Report.
Commodity Price Assumptions
Commodity price assumptions used to estimate the 30 June 2024 Mineral Resources are provided below:
Copper: US$3.00/lb
Gold: US$1,700/oz
Silver: US$20/oz
Molybdenum: US$14/lb
Cut Off Grade and Reporting Copper Price Analysis
Following release of the Company’s Preliminary Economic Assessment (PEA) in June 2023, a review of MRE appropriate CuEq Cut-off Grades (COG) was completed, with revisions to long-term consensus copper price assumptions and breakeven grade assessments considered.
The long-term consensus copper price assumption changed from US$3.30/lb Cu in 2022, to US$3.85/lb Cu in 2024. The change in copper price, in combination with the latest costs, as informed by the Company’s PEA in June 2023, has reduced the breakeven grade for the Costa Fuego Project.
The revised COGs reflect these changes in assumptions and have been set appropriately higher than the calculated breakeven grade. These key assumptions in relation to COGs are summarized in Table 2.
Table 2. Summary of Cut-Off Grades and Copper Price changes
1 Copper Equivalent (CuEq) grades are calculated based on the formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery) + (Mo ppm × Mo price per g/t × Mo_recovery) + (Au ppm × Au price per g/t × Au_recovery) + (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne × Cu recovery). Metallurgical recovery averages for each deposit consider Indicated + Inferred material and are weighted to combine sulphide flotation and oxide leaching performance. Process recoveries: Cortadera – Weighted recoveries of 82% Cu, 55% Au, 81% Mo and 36% Ag. CuEq(%) = Cu(%) + 0.55 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x Ag(g/t). San Antonio – Weighted recoveries of 85% Cu, 66% Au, 80% Mo and 63% Ag. CuEq(%) = Cu(%) + 0.64 x Au(g/t) + 0.00044 x Mo(ppm) + 0.0072 x Ag(g/t). Alice – Weighted recoveries of 81% Cu, 47% Au, 52% Mo and 37% Ag. CuEq(%) = Cu(%) + 0.48 x Au(g/t) + 0.00030 x Mo(ppm) + 0.0044 x Ag(g/t). Productora – Weighted recoveries of 84% Cu, 47% Au, 48% Mo and 18% Ag. CuEq(%) = Cu(%) + 0.46 x Au(g/t) + 0.00026 x Mo(ppm) + 0.0021 x Ag(g/t). Costa Fuego – Recoveries of 83% Cu, 53% Au, 71% Mo and 26% Ag. CuEq(%) = Cu(%) + 0.53 x Au(g/t) + 0.00040 x Mo(ppm) + 0.0030 x Ag(g/t). Base Case Metal Prices: Copper US$ 3.00/lb, Gold US$ 1,700/oz, Molybdenum US$ 14/lb, and Silver US$20/oz. It is the Company’s opinion that all the elements included in the CuEq calculation have a reasonable potential to be recovered and sold 2 The preliminary economic assessment (the “PEA”) relating to the disclosure in this Document has been posted on the Company’s website at www.hotchili.net.au and filed on SEDAR+ (www.sedarplus.ca) under the Company’s issuer profile. For readers to fully understand the information in this Presentation, they should read the PEA in its entirety, including all qualifications, assumptions, limitations and exclusions that relate to the information set out in this Presentation that qualifies the technical information contained in the PEA. The PEA is intended to be read as a whole, and sections should not be read or relied upon out of context. The technical information in this Presentation is subject to the assumptions and qualifications contained in the PEA. The Company confirms that all material assumptions underpinning the production targets and forecast financial information in the PEA continue to apply and have not materially changed with the release of the updated Mineral Resource Estimate.
Footnotes:
1Reported on a 100% Basis –combining Mineral Resource estimates for the Cortadera, Productora, Alice and San Antonio deposits comprising the Costa Fuego project.Figures are rounded to nearest thousand, or if less, to the nearest hundred. Reported to appropriate significant figuresand in accordance with the Joint Ore Reserves Committee Code (2012) and National Instrument 43–101 –Standards of Disclosure for Mineral Projects (“NI 43–101″). Mineral resource estimation practices are in accordance with CIM Estimation of Mineral Resource and Mineral Reserve Best Practice Guidelines (29 November 2019) and CIM Environmental, Social and Governance Guidelines for Mineral Resources and Mineral Reserve Estimation (8 September2023) and reported in accordance CIM Definition Standards for Mineral Resources and Mineral Reserves (10 May 2014) that are incorporated by reference into NI 43–101.Total Resource reported at +0.20% CuEq for open pit and +0.27% CuEq for underground. 2For details on how the copper equivalent grade was calculated, see Note 8 to Table 1 below. 3 The ‘higher–grade‘component of the Costa Fuego Mineral Resource Estimateincludes material above a cut–off grade of 0.6% CuEq. 4 Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. These Mineral Resource estimates include Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. It is reasonably expected that the majority of Inferred mineral resources could be upgraded to Measured or Indicated Mineral Resources with continued exploration.
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