Hot Chili Executes Option to Secure Major Extension to Cortadera
Hot Chili Executes Option to Secure Major
Extension to Cortadera
NEWS RELEASE BY HOT CHILI LIMITED
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Perth, Australia | November 28, 2022 07:00 AM Eastern Standard Time
Fourth Porphyry Added to Cortadera
Hot Chili has executed an Option Agreement with Antofagasta Minerals S.A. (AMSA) to acquire a 100%
interest in five highly prospective mining rights, containing the potential western extension of Hot Chili’s
Cortadera copper-gold discovery, the centrepiece of the Company’s low-altitude, Costa Fuego senior copper
development in Chile
AMSA’s mining rights contain a large outcropping mineralised porphyry (Cuerpo 4 - 700m in strike
length and 300m in width), with similar dimensions to Cortadera’s main porphyry (Cuerpo 3)
The option enables the consolidation of Cortadera and near doubles the prospective strike length of the
existing Cortadera discovery from 2.3km to 4.1km
Five shallow reverse circulation drill holes for 1,056m* completed across Cuerpo 4 in 2005 confirmed several
significant shallow drilling intersections, including:
o 128m grading 0.5% CuEq** (0.4% copper (Cu) & 0.1g/t gold (Au)) from 28m downhole depth,
including 16m grading 1.3% CuEq** (1% Cu & 0.5g/t Au) from 28m
· First-pass 6,000m drilling programme to start as soon as possible to assess a potential material resource
addition to Costa Fuego
· Low-cost transaction and strong cash position of A$15.4M as at 30th September 2022
* Drilling data and associated drilling intersections not previously publicly reported, AMSA internal report, see JORC Code
Table 1 in this announcement for further details)
** Copper Equivalent (CuEq) reported for the drillhole intersections were calculated using the following 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 Metal Prices
applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz. The entirety of the
intersection is assumed as fresh. The recovery and copper equivalent formula for Cortadera – Recoveries of 83% Cu, 56% Au,
83% Mo and 37% Ag. CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x Ag(g/t)
Hot Chili Limited (ASX: HCH) (TSXV:HCH) (OTCQX: HHLKF) (“Hot Chili” or “Company”) is
pleased to provide details of a material transaction with Chilean copper major Antofagasta Minerals
S.A. (AMSA).
Hot Chili has executed an Option Agreement enabling Hot Chili to acquire a 100% interest in AMSA’s mining
rights adjoining the western margin of Hot Chili’s Cortadera copper-gold porphyry discovery, the centre-piece of
the Company’s Costa Fuego senior copper development in Chile.
This strategic option agreement consolidates the highly prospective AMSA mining rights, containing near-surface
drill intersections of copper-gold porphyry mineralisation, with Hot Chili’s contiguous Cortadera project.
Cortadera has been the growth engine for Hot Chili since the Company executed a transaction to acquire the project
in 2019.
Cortadera’s current Indicated resource of 471Mt grading 0.46% CuEq for 1.7Mt copper and 1.8Moz gold and
Inferred resource of 108Mt grading 0.35% CuEq for an additional 0.3Mt copper and 0.3Moz gold (ASX
announcement dated 31st March 2022) is contained within three porphyry centres, trending NW-SE, over a strike
extent of 2.3km.
The option enables the consolidation of Cortadera and near doubles the prospective strike length of the discovery,
increasing the near term, material resource growth potential for Hot Chili.
AMSA’s five mining rights cover 517 hectares and contain a large outcropping mineralised porphyry (Cuerpo 4 -
700m in strike length by 300m in width) with similar dimensions to Cortadera’s main porphyry (Cuerpo 3) as well
as other identified porphyry targets, trending N-S, over a prospective strike extent of approximately 1.8km.
In 2005, AMSA intersected significant copper-gold-molybdenum mineralisation at Cuerpo 4, with five shallow
Reverse Circulation (RC) drill holes totalling 1,056m (Drilling data and associated drilling intersections not
previously publicly reported, AMSA internal report, see JORC Code Table 1 in this announcement for further
details).
Four of AMSA’s five drill holes recorded wide intersections of mineralisation, including COR-03 which recorded
128m grading 0.5% CuEq (0.4% Cu & 0.1g/t Au) from 28m downhole depth, including 16m grading 1.3% CuEq
(1% Cu & 0.5g/t Au) from 28m.
The historical drilling across Cuerpo 4 clearly demonstrates open pit resource growth potential, given the shallow
nature of copper-gold-molybdenum mineralisation, and near-surface, copper-gold enrichment.
Next Steps – Rapid Resource Definition
A first-pass drilling programme comprising 16 holes for 6,000m is expected to start as soon as possible.
Drilling will test Cuerpo 4 and two other targets within AMSA’s landholding using RC and Diamond (DD) drilling.
Hot Chili and AMSA have agreed on the detail and staging of the planned drilling programme after a
collaborative and detailed geological review by both companies’ technical teams.
Drilling is also planned across Hot Chili’s Cortadera North target, where earlier exploration drilling targeting a large
surface molybdenum anomaly in 2020 intersected wide zones of silver mineralisation. This work vectored towards a
sizeable copper-gold porphyry target (Cuerpo 4) on AMSA’s adjacent mining right.
Hot Chili then ceased all exploration activities at Cortadera North until an agreement could be entered into with
AMSA to enable Hot Chili to acquire the adjacent landholding.
Revision to Costa Fuego Growth and Development Timetable
The transaction provides the next step in Hot Chili’s long term growth strategy. The AMSA mining rights provide
relatively low cost and highly accretive resource growth potential due to their proximity to the Company’s
Cortadera open pit resource base.
Hot Chili’s next resource update, which was proposed to be delivered in late 2022, is now expected to be finalised in
H2 2023 to include the proposed drilling on the AMSA mining rights.
The combined Pre-feasibility Study (PFS) for Costa Fuego, studying targeted annual production rates of up to 100kt
Cu and up to 70koz Au for a +20 year life of mine, will be paused until the Company can assess the impact of
resource growth potential at Cortadera. The Company’s decision to pivot the PFS ensures that future expenditure
relating to the PFS can be optimised for infrastructure location and a potentially larger scale copper operation.
Only critical PFS workstreams will be continued to secure long-lead time items (environmental and social) and key
value additions (metallurgical) to ensure Costa Fuego remains on-track to potentially be delivered into production in
2028.
A Preliminary Economic Assessment (PEA) of the combined Costa Fuego project at the current 20Mtpa sulphide
concentrator study scale is now planned to be delivered in H1 2023.
Hot Chili aims to ensure that Costa Fuego’s “clean and green” attributes, including low elevation/coastal location,
proximity to existing infrastructure, access to renewable power, use of seawater for processing and a central
processing strategy, can be leveraged with this consolidation and growth opportunity.
Costa Fuego remains one of a few front-runner, large copper development projects in the world that can be
advanced to production in a timely manner due to Hot Chili’s consolidation, development and permitting efforts
over the last decade.
Recent positive developments in Chile’s constitutional process and taxation review have reaffirmed Chile’s stable
and attractive standing as a top global mining investment jurisdiction.
Option Agreement to Acquire 100% Interest in AMSA’s Cortadera Mining Rights
Under an Option Agreement (Option) between Frontera SpA (“Frontera” - 100% subsidiary of Hot Chili) and
Antofagasta Minerals SA (AMSA), Frontera has the option to acquire a 100% interest in the AMSA mining rights
adjoining Cortadera within a two-year period on the following terms:
· Completion of 6,000m of drilling of any type, and
· Upon completion of the 6,000m drill commitment, Payment of a US$1.5 million Option exercise price to acquire
the AMSA’s mining rights, and
· Following exercise of the Option, AMSA has the right to buy-back a 55% interest in the AMSA mining rights
within 120 days of exercise of the Option, by repaying 55% of the Option exercise price and paying five times the
exploration expenditure incurred during the option period.
This transaction represents a strategic consolidation of the Cortadera porphyry deposit area and has the potential to
deliver relatively low-cost, organic resource growth to the Costa Fuego copper hub.
Hot Chili plans to commence systematic exploration and resource definition drilling across this new landholding
addition at Cortadera as soon as possible.
The Directors thank AMSA for their commitment to work with Hot Chili and to enable the continued
consolidation of a globally significant, emerging copper hub for the Vallenar region of Chile.
This announcement is authorised by the Board of Directors for release to ASX and TSX.
Figure 1. Location of new mining rights (AMSA) relating to Cortadera, Productora, San Antonio, Valentina and
nearby coastal range infrastructure of Hot Chili’s combined Costa Fuego copper-gold project, located 600km north
of Santiago in Chile.
* Copper Equivalent (CuEq) reported for the resource were calculated using the following 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 Metal Prices applied in the CuEq calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20
USD/oz. Metallurgical recovery averages for each deposit consider Indicated + Inferred material and are weighted to combine
sulphide flotation and oxide leaching performance. The recovery and copper equivalent formula for each deposit is:
Cortadera and San Antonio – Weighted recoveries of 82% Cu, 55% Au, 82% Mo and 37% Ag.
CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x Ag(g/t)
Productora – Weighted recoveries of 84% Cu, 47% Au, 47% Mo and 0% Ag (not reported)
CuEq(%) = Cu(%) + 0.46 x Au(g/t) + 0.00026 x Mo(ppm)
Costa Fuego – Weighted recoveries of 83% Cu, 53% Au, 69% Mo and 23% Ag
CuEq(%) = Cu(%) + 0.52 x Au(g/t) + 0.00039 x Mo(ppm) + 0.0027 x Ag(g/t)
** Reported on a 100% Basis - combining Mineral Resource Estimates for the Cortadera, Productora and San Antonio deposits.
Figures are rounded, reported to appropriate significant figures, and reported in accordance with the JORC Code, CIM and NI
43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred.
Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground.
Table 1. Historical Significant DD Results from Cuerpo 4 (AMSA) at Cortadera
Note: All results represent 2m composites with appropriate analysis undertaken for Cu, Au and Mo by various independent
laboratories in Chile. Refer to Table1 of this announcement for further detail on sampling methodology, analytical techniques
and QA/QC procedures utilised.
* Copper Equivalent (CuEq) reported for the drillhole intersections were calculated using the following 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 Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz.
The entirety of the intersection is assumed as fresh. The recovery and copper equivalent formula for each deposit is:
Cortadera – Recoveries of 83% Cu, 56% Au, 83% Mo and 37% Ag. CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x Mo(ppm) +
0.0043 x Ag(g/t)
For Cortadera and Productora, significant intersections are calculated above a nominal cut-off grade of 0.2% Cu. Where
appropriate, significant intersections may contain up to 30m down-hole distance of internal dilution (less than 0.2% Cu).
Significant intersections are separated where internal dilution is greater than 30m down-hole distance. The selection of 0.2% Cu
for significant intersection cut-off grade is aligned with marginal economic cut-off grade for bulk tonnage polymetallic copper
deposits of similar grade in Chile and elsewhere in the world. Down-hole significant intersection widths are estimated to be at or
around true-widths of mineralisation.
Figure 2. Location of Cuerpo 4 and other immediate porphyry targets within the AMSA landholding, lying
immediately west of the Cortadera resource. Note outcrop photos from Cuerpo 4
Figure 3. Location of Cuerpo 4 and other immediate porphyry targets within the AMSA landholding, lying
immediately west of the Cortadera resource. Note the location of significant historical diamond drilling intersections
recorded in shallow drilling undertaken across Cuerpo 4 in 2005.
Figure 4. Location of Cuerpo 4 and other immediate porphyry targets within the AMSA landholding, lying
immediately west of the Cortadera resource. Note magnetic (RTP magnetics image – blue is low, red is high)
signature of the Cortadera deposit window in relation to A+B vein contours and late stage porphyry dykes.
11 Figure 5. Location of Cuerpo 4 and other immediate porphyry targets within the AMSA landholding, lying
immediately west of the Cortadera resource. Note surface molybdenum anomalies at Cortadera and Cortadera North
in relation to A+B vein contours and late stage porphyry dykes.