Hot Chili Details Major Upcoming Catalysts in Q3 2024 Report

Highlights

• Costa Fuego PFS (Preliminary Feasibility Study) Study planned for release in early 2025
• Metallurgical work indicates significant opportuninities for improved recoveries in the coming PSF compared to the 2023 PEA (Preliminary Economic Assessment).
• Water company PFS-like study to be released in 1H 2025.
• Submission of Environmental Impact Assessment, a key milestone, planned within 9 months.
• US$17 million cash on hand and no debt. Funded for 2025 initiatives.

Summary of Quarterly Milestones

Costa Fuego Copper-Gold Project Pre-Feasibility Study Progresses

• All Costa Fuego Pre-feasibility Study (PFS) workstreams planned for completion in late 2024
• Completion of hydrogeological drilling at the planned Tailings Storage Facility (TSF), as well as additional seawater and freshwater flotation trade-off test work has re-confirmed that optimal processing for Costa Fuego will be achieved using raw seawater
• Metallurgical workstreams indicate potential improvements for both molybdenum flotation and copper oxide leach recoveries when compared to the 2023 Preliminary Economic Assessment (PEA)
• Concentrate market studies confirm a reduction of long-term treatment costs (TC) and refining charges (RC) assumptions, when compared to the 2023 PEA
• Improvement in long-term consensus commodity price forecasts for all potentially payable metals (copper, gold, molybdenum and silver), when compared to the 2023 PEA

Costa Fuego Environmental Impact Assessment Advancing

Costa Fuego Environmental Impact Assessment Advancing

• Completion of an additional winter-season environmental survey and commencement of a formal community engagement program with local stakeholders and some indigenous groups
• EIA document preparation underway in advance of planned submission in mid-2025

Huasco Water – A Growing Strategic Asset for Hot Chili

• Hot Chili (80% ownership) and its partner, Chilean iron ore company Compania Minera del Pacifico (CMP, 20% ownership), continue to advance plans for a regional, multi-user, seawater and desalinated water supply business through its newly established company “HW Aguas para El Huasco SpA” (Huasco Water)
• International engineering firm, ILF Group, appointed to complete regional Water Supply Business Case Study (PFS equivalent) for Huasco Water, due for completion in 1H 2025
• Hot Chili’s approach to potentially outsourcing its water infrastructure aims to provide capital cost savings and project finance optionality for the development of Costa Fuego

Exploration Activities Underway in Advance of Growth Drilling

• Ground magnetic geophysical survey, surface soil sampling and surface mapping completed across the recently secured, 18,000-hectare Domeyko landholding, with results pending
• Further regional consolidation opportunities being assessed, discussions advancing well
• Cash Position of A$25.7 Million

SUMMARY OF OPERATIONAL ACTIVITIES

Costa Fuego Copper-Gold Project Pre-Feasibility Study Update

During the quarter ending September 2024, the Company continued to focus on several development study workstreams for Costa Fuego’s Pre-Feasibility Study (PFS) and Environmental Impact Assessment (EIA).

Metallurgy
Potential for improved molybdenum flotation recovery has been determined as part of final PFS metallurgy work program, following review and analysis of previous flotation testwork. This higher recovery is expected to upgrade the value of molybdenum as a by-product credit in the PFS, when compared to reported values in the Company’s
2023 Preliminary Economic Assessment (PEA) and increase the annual quantity of molybdenum concentrate projected to be produced.

Additional geometallurgical testwork was completed for acid-consumption analysis, to support predictive relationships between geological and alteration units at Productora and Cortadera for the planned heap and run-ofmine leach processing. Analysis is nearing completion and will enable optimization of the throughput of the concentrator, as
well as acid cost and recovery within the leaching circuit. Early outcomes indicate significant improvements in copper oxide leach recoveries can be achieved through increased acid addition, when compared to the 2023 PEA.

A final round of Locked-Cycle Tests further confirmed the quality of the Costa Fuego concentrates, with low levels of arsenic and other deleterious elements. Additional seawater and freshwater flotation trade-off tests were also completed and re-confirmed the planned concentrator would see optimal recovery using seawater.

Mining
Mine design for the four Costa Fuego mining locations (Productora, Cortadera, Alice and San Antonio) is in the final stages of review, incorporating all geological, geotechnical and mining information to confirm open pit stability and flow within the proposed block cave at Cortadera. Mine designs are currently being scheduled using MineMax and Panel Caving Block Caving (PCBC) software to optimize the mining and stockpiling sequence, utiliizing Costa Fuego’s capital and operating cost framework.

Infrastructure
Infrastructure analysis and design continued during the quarter, with optimization focused on key infrastructure items including concentrator and the Solvent Extraction Electrowinning (SX-EW) plants, heap and dump leach pads, tailings dam storage facilities, and utility and access corridors between proposed mine sites and port facilities. Costa
Fuego’s utility and access corridor is planned to include access road works, seawater pipeline, power lines, concentrate transport route, port and rope conveyor.

Market Analysis
Assessment of the long-term copper concentrate market has indicated overcapacity in the smelter market, resulting in reduced global treatment costs (TC) and refining charges (RC) versus the assumptions used in the 2023 PEA. Current long-term TC/RC forecasts are materially lower than the USD $90/t concentrate TC and USD $0.09/lb Cu
RC applied in the 2023 PEA for Costa Fuego. These conditions are expected to continue for an extended period given the relatively new smelter additions and few net additions to the supply of copper concentrate.

Long-term commodity price forecasts of all potentially saleable products used in the 2023 PEA for Costa Fuego have increased over the past 15 months reflecting continuing strong demand. When compared to the 2023 PEA, current long-term commodity price forecasts for copper (+9%), gold (+14%), molybdenum (+25%) and silver (+14%) all sit below spot prices and are likely to benefit the financial metrics for the forthcoming PFS.

Environment
Advancement of environmental workstreams during the quarter focused on developing Costa Fuego’s Tailings Storage Facility (TSF) operational plan and design, including hydrogeological and environmental studies of the planned TSF footprint. An additional four groundwater monitoring boreholes for 228m were completed during the
quarter in association with infiltration tests as well as surface litho-structural mapping of the TSF area (Figure 1).

This work was supported through engagement with Chilean regulators to discuss the planned TSF approach, with the work being presented to the regulator for initial feedback.

A site visit at Costa Fuego was held in July 2024, attended by several of the Company’s Qualified Persons, key technical consultants, and the Hot Chili development team.

Attendees reviewed processing, mining and infrastructure designs on location, having regard for environmental and social considerations identified through Hot Chili’s baseline surveys and community engagement processes.

Infrastructure designs will continue to be refined to optimize the Project footprint whilst minimizing potential environmental risks and impacts, while endeavoring to ensure that the Project delivers net benefits to the surrounding communities and population.

In September 2024, the Company executed several small-scale, lease mining agreements with a number of local miners, continuing Hot Chili’s ongoing support for local mining employment. Hot Chili is dedicated to supporting the community and advancing sustainable mining in the region.

Figure 1. Location of hydrogeological boreholes completed at Costa Fuego’s planned TSF

Costa Fuego Environmental Impact Assessment Advancing

Hot Chili is in the advanced stages of preparing its EIA for Costa Fuego ahead of planned submission in mid 2025.

During the quarter, the Company’s environmental team completed another winter period environmental baseline study and Company’s community engagement team held several meetings with indigenous and nonindigenous stakeholders as part of Hot Chili’s formal community engagement program. The Company has also commenced documentation of over a decade of work undertaken in the Huasco region in support of its planned EIA submission.

Exploration Drilling at Productora – Sterilization for Mine Infrastructure

During the quarter, Hot Chili’s exploration team completed two drill holes for 873m to test a high-sulphidation epithermal (HSE) target identified within the mine development footprint, adjacent to the planned Productora open pit. Drill targeting utilized recently acquired geophysical datasets (MIMDAS) to refine a mineralization style which
had not previously been explored at Productora (Figure 2).

No significant drilling intersections were recorded, with the target now sterilized for planned site infrastructure, allowing the Company to finalize the mine infrastructure layout for the planned PFS and associated EIA.

Alteration zonation identified in drill hole PRD0020 have indicated potential for future HSE targets at depth towards the main Productora mineralization system. These targets will be reviewed and incorporated into the Company’s regional exploration target pipeline.

Figure 2. Top – North-facing IP resistivity section through Alice HSE target in relation to recently completed drilling. Bottom – Drill section displaying logged geology, copper assays and target geological features

Regional Exploration Programs Advancing – Domeyko landholding

An extensive ground magnetics survey comprising of 1,755-line km’s (100m spaced, north-south oriented survey lines) was completed in August 2024 at the recently acquired Domeyko landholding (Figure 2), to assist with targeting
across this large 18,000-hectare landholding.

In addition, the Company’s exploration team continued to complete a major regional soil sampling and surface lithostructural mapping campaign at Domeyko (Figure 3 – 6). Approximately 1,181 soil samples and 76 rock chip samples have been collected across the Domeyko landholding to date, with assays returned for approximately 70% of the soil
survey and 80% or rock chip samples collected to date.

Several encouraging results up to 3.5% copper, +10g/t gold and +100g/t silver have been returned from individual rock chip samples collected to date (Table 1).

Of the 60 results returned so far, 10 samples recorded copper grade above 1.0%, 8 samples recorded gold grades above 0.5g/t and 4 samples recorded silver grades above 10g/t. Further rock chip results are pending.

Table 1. Domeyko rock chip samples returned in Quarter 3 2024, sorted by Cu%

The Company is well advanced in its regional exploration assessment of Domeyko ahead of prioritizing targets for initial drill testing.

Figure 3. Location of the Domeyko ground magnetics in relation to initial exploration targets

Figure 4. Location of the Domeyko soil sampling coloured by Cu/Zn assay ratio showing consistent anomalous values at Panacea and La Verde

Figure 5. Location of reconnaissance rock chip sampling, colored by Cu%

Figure 6. Location of the Domeyko geological mapping in relation to initial exploration targets

Table 2 – Drill Holes Completed for Costa Fuego in Quarter 3 2024

SUMMARY OF CORPORATE ACTIVITIES

Huasco Water – A Growing Strategic Asset for Hot Chili

Hot Chili announced on 8th July 2024, the establishment of a new subsidiary water company – Huasco Water – and commenced transfer of water assets previously held by Hot Chili’s subsidiary Sociedad Minera El Águila SpA (80% Hot Chili, 20% CMP). The launch of Huasco Water (80% Hot Chili, 20% CMP) leverages Hot Chili’s first-mover advantage to potentially supply future water demand for communities, agriculture and new mining developments in the Huasco Valley region of Chile.

In August 2024, Huasco Water appointed international engineering firm ILF Group to manage Huasco Water’s regional Water Supply Business Case Study, which is well underway and due for completion in H1 2025 at a level of detail and confidence similar to a PFS.

The pre-feasibility level Water Supply Business Case Study is focussed on the initial stages of potential water supply to the Huasco region, being:

1. Establishing sea water supply for Costa Fuego at a minimum scale of 600 Litres per second (l/s) by 2028. Hot Chili is positioned as a potential foundation customer and negotiation for a water off-take agreement is planned to commence in late 2024; and
2. Establishing scalable, desalinated water supply for third parties in the Huasco Valley region at an initial scale of up to 1,300 l/s from 2030 onwards. Potential customers include projects like CMP’s Las Colorados as well as other community, industrial and non-mining projects.

Huasco Water controls the only active granted maritime water concession and most of the necessary permits to provide non-continental water supply to the Huasco Valley, following over a decade of permitting advance for Hot Chili’s coastal range Costa Fuego copper-gold project.

A conceptual study completed by Hot Chili in February 2024 (see announcement dated 26 February 2024) outlined potential for significant economic, environmental and social benefits for a variety of potential customers in the Huasco Valley, especially given growing community and regulatory opposition to continental water extraction in the Atacama,
and the long lead times involved in securing maritime concessions and associated permitting in Chile.

Hot Chili is in discussion with potential water off-takers in the Huasco Valley and is also engaging with potential infrastructure partners in relation to the potential financing and development of Huasco Water’s future industrial water infrastructure.

Hot Chili’s approach to potentially outsourcing its water infrastructure aims to provide capital cost savings and project finance optionality for the development of Costa Fuego.

Figure 7. Location of Hot Chili’s existing water assets, in relation to the Costa Fuego Project, local communities and potential customers in the Huasco valley region of the southern Atacama, Chile

Figure 8. Location of Huasco Water’s existing water assets in relation to new potential customers in the Huasco Valley

Cash Position and Capital Structure Changes

As of 30 September 2024, the Company had cash of A$25.7 million and no debt.
The operating expenditure for period ended 30 September 2024 included payments for exploration and evaluation of $4.1M. Included in this amount was $3m related to the advancement of the Pre-Feasibility Study and the Environmental Impact Assessment. $1.1M was spent on exploration activities on the Domeyko landholding.

The investing expenditure for period ended 30 September 2024 included payments for tenements of $1.9M, relating to landholding Option Agreement payments (including US$1 million Option payment for El Fuego).

The following summarizes the Company’s securities on issue:

• 151,420,450 ordinary fully paid shares
• 1,850,001 options at AUD$2.25 expiring 30 September 2024
• 1,259,789 options at CAD$1.85 expiring 31 January 2025
• 1,914,000 options at AUD $1.50 expiring 24 July 2026
• 5,429,240 service and performance rights.

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