Hot Chili Issues Quarterly Report for Q3 2024
Hot Chili Issues Quarterly Report for Q3 2024
PERTH,
Australia
,
Oct. 31, 2024
/CNW/ -
Highlights
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
Completion of an additional winter-season environmental survey and commencement of a formal
community engagement programme 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
Cautionary Statement – JORC Code (2012)
The Preliminary Economic Assessment referred to in this Report is equivalent to a Scoping Study
under JORC Code (2012) reporting guidelines. It has been undertaken for the purpose of initial
evaluation of a potential development of the Costa Fuego Copper Project in
Chile
. It is a preliminary
technical and economic study of the potential viability of the Costa Fuego Copper Project. The PEA
outcomes, production target and forecast financial information referred to in the Report are based
on low level technical and economic assessments that are insufficient to support estimation of Ore
Reserves. The PEA is presented in US dollars to an accuracy level of +/- 35%. While each of the
modifying factors was considered and applied, there is no certainty of eventual conversion to Ore
Reserves or that the production target itself will be realised. Further exploration and evaluation and
appropriate studies are required before Hot Chili will be in a position to estimate any Ore Reserves
or to provide any assurance of any economic development case. Given the uncertainties involved,
investors should not make any investment decisions based solely on the results of the PEA.
Of the Mineral Resources scheduled for extraction in the PEA production plan, approximately 99%
are classified as Indicated and 1% as Inferred. The Company has concluded that it has reasonable
grounds for disclosing a production target which includes a small amount of Inferred Mineral
Resources, as permitted under the JORC Code. There is a low level of geological confidence
associated with Inferred Mineral Resources and there is no certainty that further exploration work
will result in the determination of Indicated Mineral Resources or that the production target itself will
be realised. The viability of the development scenario envisaged in the PEA does not depend on the
inclusion of Inferred Mineral Resources. However, it is reasonably expected that the majority of
Inferred Mineral Resources could be upgraded to Measured or Indicated Mineral Resource with
continued drilling.
The Mineral Resources underpinning the production target in the PEA have been prepared by a
competent person in accordance with the requirements of the JORC 2012. For full details on the
Mineral Resource estimate, please refer to the ASX announcement of
31 March 2022
. The Mineral
Resource Estimate update released in
February 2024
does not materially change the Mineral
Resource inventory that formed the basis of the 2023 PEA, and no new scientific or technical
information has been developed that would materially affect the outcome of the 2023 PEA and,
therefore, the results and conclusions of the 2023 PEA are considered current and have been
restated for this Report.
To achieve the outcomes indicated in the PEA, including reaching Definitive Feasibility Study ("DFS"),
mine construction and production stages, funding in the order of
US$1.10 Billion
will be required,
including pre-production and working capital and assumed financing charges. Investors should note
that that there is no certainty that Hot Chili will be able to raise that amount of funding when needed.
One of the key assumptions is that the funding for the Project will be available when required and on
acceptable terms. It is also possible that such funding may only be available on terms that may be
dilutive to, or otherwise affect the value of, Hot Chili's existing shares. It is also possible that Hot
Chili could pursue other value realisation strategies such as debt financing, a sale or partial sale of
its interest in the Costa Fuego Copper Project and/or Huasco Water, sale of further royalties and/or
streaming rights, sale of non-committed offtake rights, and sale of non-core assets.
This Report contains forward-looking statements. Hot Chili has concluded that it has a reasonable
basis for providing these forward-looking statements and believes it has a reasonable basis to
expect it will be able to fund development of the Costa Fuego Copper Project. However, a number
of factors could cause actual results or expectations to differ materially from the results expressed
or implied in the forward-looking statements. Given the uncertainties involved, investors should not
make any investment decisions based solely of the results of the PEA.
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 programme, 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-of-mine leach processing. Analysis is nearing completion and will enable
optimisation 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 optimise the mining and stockpiling sequence, utiliizing Costa Fuego's capital and
operating cost framework.
Infrastructure
Infrastructure analysis and design continued during the quarter, with optimisation focussed 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 optimise the Project footprint whilst minimising
potential environmental risks and impacts, while endeavouring 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 (CNW
Group/Hot Chili Limited)
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 non-indigenous stakeholders as part of Hot Chili's formal
community engagement programme. 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 – Sterilisation 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 utilised recently acquired geophysical datasets
(MIMDAS) to refine a mineralisation style which had not previously been explored at Productora
(Figure 2).
No significant drilling intersections were recorded, with the target now sterilised for planned site
infrastructure, allowing the Company to finalise 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 mineralisation 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 (CNW Group/Hot Chili Limited)
Regional Exploration Programmes 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 litho-structural 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%
Sample ID
East
North
RL
Cu %
Au ppm
Ag ppm
Mo ppm
M-48
319294
6791247
960
3.82
4.9
7.3
9
M-59
321708
6788289
972
3.46
0
22.3
1
M-35
318444
6791381
966
2.43
0.9
1.3
14
M-27
317493
6786330
875
2.42
0.3
0.9
6
M-31
319804
6786255
1047
1.72
0.1
8.9
25
M-55
319681
6789121
916
1.62
1.2
15.7
1
M-34
319025
6791473
969
1.4
1.9
1.3
12
M-45
319506
6791565
975
1.32
0
2.2
15
M-60
324159
6789542
1068
1.27
0.1
100
1
M-44
318329
6791572
982
1.25
10
4.8
1
M-57
318953
6790026
861
0.68
1.5
10.3
4
M-02
324378
6785903
1103
0.45
0
0.6
32
M-20
324463
6785778
1124
0.45
0
1.1
17
M-56
319614
6790239
881
0.42
0.2
1.4
3
M-16
324750
6785851
1121
0.41
0
0.1
1
M-13
324448
6785903
1115
0.35
0
1.2
11
M-47
319594
6791054
939
0.34
1.6
7.7
4
M-03
324335
6785889
1104
0.32
0
0.7
3
M-22
324528
6785708
1099
0.3
0
0.7
2
M-23
324688
6785540
1137
0.3
0
0.5
4
M-52
320020
6783421
1075
0.27
0.1
2.8
1
M-12
324178
6785910
1107
0.26
0
1.1
50
M-04
324277
6785844
1100
0.25
0
2.6
2
M-25
324583
6785649
1140
0.24
0
0.4
37
M-51
319273
6784143
996
0.24
0
1.8
0
M-17
324738
6785857
1119
0.17
0
0.2
3
M-01
324396
6785918
1105
0.16
0
2.2
17
M-14
324395
6785812
1116
0.16
0
0.4
23
M-07
324272
6785904
1110
0.15
0
0.2
4
M-09
324193
6785908
1088
0.14
0
0.5
73
M-18
324458
6785879
1117
0.12
0
0.5
38
M-30
319754
6786242
1033
0.12
0
1.8
37
M-46
319490
6791618
938
0.12
0.1
1
3
M-19
324480
6785834
1121
0.11
0.2
0.3
10
M-24
324627
6785627
1137
0.11
0
0.4
20
M-49
319190
6791171
948
0.11
0
0.3
3
M-06
324278
6785901
1110
0.1
0
0.9
13
M-21
324329
6785829
1118
0.09
0
0.3
10
M-10
324246
6786002
1137
0.08
1.5
5.4
70
M-05
324252
6785818
1109
0.07
0
0.4
54
M-08
324378
6785787
1124
0.06
0
0.6
12
M-15
324756
6785849
1121
0.06
0
0.5
0
M-39
318079
6790875
924
0.04
0
0.1
3
M-50
316024
6786640
832
0.04
0
0.2
0
M-58
318645
6790067
849
0.04
0
1.1
7
M-26
324478
6785667
1146
0.03
0
0.1
35
M-29
319638
6786195
1016
0.02
0
0.1
1
M-36
318406
6791480
962
0.02
0
0.3
1
M-43
319155
6791499
971
0.02
0
0.6
1
M-11
324147
6785914
1107
0.01
0
0.1
4
M-28
319252
6785709
978
0.01
0
0.2
1
M-32
319427
6786305
1031
0.01
0
0.2
1
M-33
316373
6789867
847
0.01
0
0.1
1
M-37
318363
6791526
965
0.01
0
0.1
0
M-40
318182
6790921
937
0.01
0
0.2
1
M-38
318294
6791487
974
0
0
0.1
1
M-41
318324
6790962
954
0
0
0.2
1
M-42
318363
6790862
936
0
0
0.1
0
M-53
320352
6783143
1168
0
0
0.1
0
M-54
321197
6786075
1041
0
0
0.3
0
The Company is well advanced in its regional exploration assessment of Domeyko ahead of
prioritising targets for initial drill testing.
Figure 3. Location of the Domeyko ground magnetics in relation to initial exploration targets (CNW
Group/Hot Chili Limited)
Figure 4. Location of the Domeyko soil sampling coloured by Cu/Zn assay ratio showing consistent
anomalous values at Panacea and La Verde (CNW Group/Hot Chili Limited)
Figure 5. Location of reconnaissance rock chip sampling, coloured by Cu% (CNW Group/Hot Chili
Limited)
Figure 6. Location of the Domeyko geological mapping in relation to initial exploration targets (CNW
Group/Hot Chili Limited)
Table 2 - Drill Holes Completed for Costa Fuego in Quarter 3 2024
Prospect
Hole ID
North
East
RL
Depth
Azimuth
Dip
Results
Productora Hydro
PROMW06
6827010
326460
597
42
0
-90
NSR
Productora Hydro
PROMW07
6826927
323821
550
36
0
-90
NSR
Productora Hydro
PROMW08
6826921
322951
526
84
0
-90
NSR
Productora Hydro
PROMW09
6830173
325356
616
66
0
-90
NSR
Productora Lithocap
PRD0020
6822550
322430
776
432
250
-60
NSR
Productora Lithocap
PRD0021
6822705
321788
664
440.7
90
-60
1m@ 1.3% Cu from 215m
Note: NSR – no significant intersection recorded. Only minor mineralisation encountered in
sterilisation drill hole PRD0021
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