Hot Chili Signs Binding Letter of Intent for Option to Acquire Cometa Project in Chile

Hot Chili Limited (ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) announced that the Company has entered into a binding letter of intent (“LOI”) with Bastion Minerals Limited (ASX: BMO) (“Bastion”) for the grant to Hot Chili of an option to acquire 100% of Bastion’s Cometa Project in Chile (“Cometa”), located near Hot Chili’s Costa Fuego Copper-Gold Project (“Costa Fuego” or “the Project”) in the coastal range of the Atacama Region, Chile.

Figure 1. Location of the Cometa Project in relation to Costa Fuego (CNW Group/Hot Chili Limited)

Cometa consists of exploration and mining concessions covering approximately 56km² in area located approximately 15km southeast of Costa Fuego’s planned operating centre (refer accompanying Figure 1) and contiguous with Hot Chili’s landholdings in the region.

The option is another step in Hot Chili’s consolidation strategy for the Costa Fuego copper project.

The Company’s recently published Preliminary Economic Assessment entitled Costa Fuego Copper Project – NI 43-101 Technical Report Preliminary Economic Assessment with an effective date of June 28, 2023 (the “PEA”)¹ 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 ahead of the delivery of the Costa Fuego Pre-Feasibility Study (“PFS”), expected in H2 2024. Cometa provides additional optionality for the discovery of further mineral deposits in the Costa Fuego Project area with the potential to provide supplemental feed and/or a longer mine life to the project laid out in the PEA.

The material terms of the LOI are as follows:

• Exclusivity period of 60 days for Hot Chili to conduct due diligence and for Hot Chili’s subsidiary Sociedad Minera La Frontera SpA (“Frontera”) to enter into a definitive option agreement with Bastion’s subsidiary SCM Cornet Constelación, the holder of a 100% interest in the concessions comprising Cometa, for the grant to Frontera of an option to acquire a 100% interest in the Cometa concessions (“Option”).
  
  
• Non-refundable cash payment of US$100,000 to Bastion upon grant of the Option.
  
  
• Non-refundable cash payment of US$200,000 within 12 months from the grant of the Option to keep the Option in good standing.
  
  
• Option may be exercised within 30 months of the date of grant.
  
  
• If the Option is exercised, the consideration payable to Bastion to purchase the Cometa concessions is:
  • US$2,400,000 if the Option is exercised by Hot Chili within 18 months from the date of grant of the Option; or
    
    
  • US$3,000,000 if the Option is exercised by Hot Chili within 30 months from the date of grant of the Option.
    
    
• Hot Chili may elect to satisfy the purchase consideration in cash (100%), or in cash (50%) and ordinary shares of Hot Chili (50%) issued at a price per share equal to the 15-day VWAP at the date of exercise of the Option, subject to applicable regulatory approvals, including the approval of the TSX Venture Exchange (“TSXV”).

The Company will provide further updates on the grant and any exercise of the Option in due course.

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1 The PEA is preliminary in nature and includes 3% inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. See Page 6 for additional cautionary language.

2 CuEq considers assumed commodity prices and average metallurgical recoveries from testwork. See page 9 for complete mineral resource disclosure of Costa Fuego.

3 See page 7 for full non-IFRS measures discussion.

Cortadera Expansion Drilling Update

Drilling operations at Cortadera continue, with nine Reverse Circulation (“RC”) drillholes completed so far for 2,010m.

Four of these drillholes have been completed across the western extension of the Cortadera porphyry resource, including one pre-collar in preparation for a deep diamond hole beneath Cuerpo 4. Following the drilling of RC pre-collars at Cortadera, the RC drill rig will begin a hydrogeological program at Cortadera commencing in mid-September.

One diamond drill rig is planned to commence double shift drilling in September. Preparations are underway to bring a second diamond drill rig online as the Company ramps up for its extensive 30,000m expansion drilling campaign across multiple exploration targets.

This announcement is authorised by the Board of Directors for release to ASX and TSXV.

Hot Chili’s Managing Director and Chief Executive Officer Mr Christian Easterday is responsible for this announcement and has provided sign-off for release to the ASX and TSXV.