Size, Growth & Development Optionality at Low Elevation in Chile November 11th – 12th , 2024 2COMPANY PRESENTATION |
1COMPANY PRESENTATION |
www.hotchili.net.au
ASX: HCH
TSXV:HCH
OTCQX:HHLKF
Size, Growth & Development
Optionality at Low Elevation in Chile
November 11th – 12th , 2024
2COMPANY PRESENTATION |
www.hotchili.net.au
Disclaimer
This Presentation (the "Presentation") is to be used by the recipient for informational purposes only and does not purport to be complete or contain all of the information that may be material to the current or future business, operations, financial condition or prospects of Hot Chili Limited ("Hot Chili" or the "Company").
Each recipient should perform its own independent investigation and analysis of Hot Chili, and the information contained in this Presentation is not a substitute therefore. Hot Chili makes no representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this Presentation
or in any other written or oral communication transmitted to any recipient by any party. By accepting this Presentation, the recipient agrees that neither Hot Chili nor any of its officers, directors, employees or representatives has any liability for any representations or warranties, express or implied, contained in, or for any
omissions from, this Presentation or any such other written or oral communication from any person.
Certain information contained herein is based on, or derived from, information provided by independent third-party sources. Hot Chili believes that such information is accurate and that the sources from which it has been obtained are reliable; however, Hot Chili has not independently verified such information and does
not assume any responsibility for the accuracy or completeness of such information.
“Capital Intensity”, “Profitability Index”, “C1 Cash Cost” and “Free Cashflow” are not performance measures reported in accordance with International Financial Reporting Standards (“IFRS”). These performance measures are included because these statistics are key performance measures that management uses to
monitor performance. Management uses these statistics to assess how the Costa Fuego project compares against its peer projects and to assess the overall effectiveness and efficiency of the contemplated mining operations. These performance measures do not have a meaning within IFRS and, therefore, amounts
presented may not be comparable to similar data presented by other mining companies. These performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS.
This Presentation should not be considered as a recommendation from any person to purchase any securities. Each person for whom this Presentation is made available should consult its own professional advisors in making its own independent investigations and assessment and, after making such independent
investigations and assessments, as it deems necessary, in determining whether to proceed with any investment in the Company.
Forward-Looking Statements
This Presentation contains certain statements that are "forward-looking information" within the meaning of Canadian securities legislation and Australian securities legislation (each, a "forward-looking statement"). Forward-looking statements reflect the Company's current expectations, forecasts, and projections with
respect to future events, many of which are beyond the Company's control, and are based on certain assumptions. No assurance can be given that these expectations, forecasts, or projections will prove to be correct, and such forward-looking statements included in this Presentation should not be unduly relied upon.
Forward-looking information is by its nature prospective and requires the Company to make certain assumptions and is subject to inherent risks and uncertainties. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "believe", "could", "estimate",
"expect", “forecast”, “intends”, "may", "plan", "planned", "potential”, "project", “proposed”, "should", "will", “would”, “is coming” and similar expressions are intended to identify forward-looking statements.
The forward-looking statements within this Presentation are based on information currently available and what management believes are reasonable assumptions. Forward-looking statements speak only as of the date of this Presentation. In addition, this Presentation may contain forward-looking statements attributed to
third-party industry sources, the accuracy of which has not been verified by the Company.
In this Presentation, forward-looking statements relate, among other things, to: prospects, projections and success of the Company and its projects; expected cash inflows; whether or not it will enter into any royalty or streaming transactions and the terms thereof; the ability of the Company to expand mineral resources
beyond current mineral resource estimates; the results and impacts of planned drilling to extend mineral resources and to identify new deposits; the Company’s ability to convert mineral resources to mineral reserves; the timing and outcomes of current and future planned economic studies including the planned Costa
Fuego PFS and DFS and the planned Huasco Water PFS-level Study, and any subsequent studies; the timing and outcomes of regulatory processes required to obtain permits for the development and operation of the Costa Fuego Project, including the EIA; the ability of the Company to secure necessary infrastructure; the
terms and conditions related to use of existing port and electrical of regulatory processes required to obtain permits for the development and operation of the Costa Fuego Project as contemplated in this and future planned economic studies; whether or not the Company will make a development decision and the timing
thereof; the ability of the Company to consolidate additional landholdings around its project; whether the Costa Fuego project will get developed and therefore become a off-taker of Huasco Water; whether other potential Huasco Water customer projects go into production and, if so, will enter into water offtake
agreements with Huasco Water; whether the second maritime concession and desalination plant and pipeline expansion will be permitted and, if so, will it get built; the availability of funding, and on acceptable terms, for the proposed Costa Fuego and Huasco Water projects; the terms and conditions of any off-take
agreements for water entered into by Huasco Water.
Forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. A
number of factors could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking statements in this Presentation, including, but not limited to, the following material factors: operational risks; risks related to the cost estimates of exploration; sovereign risks
associated with the Company's operations in Chile; changes in estimates of mineral resources of properties where the Company holds interests; recruiting qualified personnel and retaining key personnel; future financial needs and availability of adequate financing; fluctuations in mineral prices; market volatility; exchange
rate fluctuations; ability to exploit successful discoveries; the production at or performance of properties where the Company holds interests; ability to retain title to mining concessions; environmental risks; financial failure or default of joint venture partners, contractors or service providers; competition risks; economic
and market conditions; and other risks and uncertainties described elsewhere in this Presentation and elsewhere in the Company's public disclosure record.
Although the forward-looking statements contained in this Presentation are based upon assumptions which the Company believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in
this Presentation, the Company has made assumptions regarding: future commodity prices and demand; availability of skilled labour; timing and amount of capital expenditures; future currency exchange and interest rates; the impact of increasing competition; general conditions in economic and financial markets;
availability of drilling and related equipment; effects of regulation by governmental agencies; future tax rates; future operating costs; availability of future sources of funding; ability to obtain financing; and assumptions underlying estimates related to adjusted funds from operations. The Company has included the above
summary of assumptions and risks related to forward-looking information provided in this Presentation to provide investors with a more complete perspective on the Company's future operations, and such information may not be appropriate for other purposes. The Company's actual results, performance or achievement
could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom.
For additional information with respect to these and other factors and assumptions underlying the forward-looking statements made herein, please refer to the public disclosure record of the Company, including the Company's most recent Annual Report, which is available on SEDAR+ (www.sedarplus.ca) under the
Company’s issuer profile. New factors emerge from time to time, and it is not possible for management to predict all those factors or to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statement.
The forward-looking statements contained in this Presentation are expressly qualified by the foregoing cautionary statements and are made as of the date of this Presentation. Except as may be required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-
looking statement to reflect events or circumstances after the date of this Presentation or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise. Investors should read this entire Presenation and consult their own professional advisors to ascertain
and assess the income tax and legal risks and other aspects of an investment in the Company.
The NI 43-101 Technical Report Mineral Resource Estimate Update dated April 8, 2024, with an effective date of February 26, 2024 (the “Technical Report") relating to the disclosure in this Presentation 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 Technical Report 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 Technical Report. The Technical Report 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 Technical Report.
Disclaimer & Forward-Looking Statements
3COMPANY PRESENTATION |
www.hotchili.net.au
Copper
THE Critical Commodity
Copper inventories at
critical levels with deficit
projected to continue
Declining copper production
grades & lack of major
new discoveries
Committed NEW copper
capacity lacking
Fiscal & geopolitical
uncertainty
Increasing copper demand
from NET ZERO mandates
Material delays in permitting
NEW & LARGE copper
projects
4COMPANY PRESENTATION |
www.hotchili.net.au
Costa Fuego Copper-Gold Project, Chile
One of the largest scale, lowest elevation copper resources in the world (not controlled by a major miner)
• Indicated Resource of 798 Mt
grading 0.45% CuEq¹ & Inferred
Resource of 203 Mt grading 0.31%
CuEq¹ (Feb 2024) containing:
• 2.9 Mt Copper (Cu) Indicated,
0.5 Mt Copper Inferred
• 2.6 Moz Gold (Au) Indicated,
0.4 Moz Gold Inferred
• 68.1 kt Molybdenum (Mo) Indicated,
12.5 kt Molybdenum Inferred
• 12.8 Moz Silver (Ag) Indicated,
2.4 Moz Silver Inferred
• Extremely leveraged to looming
structural shortage in copper supply
Top 10 Undeveloped
Copper Resource
(S&P 2022)
• Post-tax NPV8% of US$1.10 B
• Pre-tax NPV8% of US$1.54 B
• Low start-up capital, fast payback
• 16-year mine life for open pit and
underground operations
• 112 ktpa CuEq² average production:
95 kt Cu & 49 koz Au for first 14
years
• 97% of PEA inventory is Indicated
Resource
• Post-tax NPV8% increases by US$100
M for every U$0.10/lb increase in
copper price above US$3.85/lb
PEA – Strong
Economics
& Leverage
• Low elevation (<1,000 m), 50 km
from port and located along the
Pan American Highway, 600 km
north of Santiago
• Maritime water concession, power
connection, easements and surface
rights secured Environmental
Impact Assessment significantly
advanced
• No requirement for large-scale
desalination plant or expensive
high altitude water pipeline
Low Risk – Elevation,
Infrastructure
& Permitting
• Costa Fuego PFS delivery planned
for Q1 2025
• Delivery of Huasco Water
Business Case Study expected in
Q1 2025
• 30,000 m drill program continuing
• Further consolidation
opportunities being pursued
• Targeting a potential increase in
study scale toward 150 ktpa
copper project for +20 years
through resource growth and
optimisation initiatives
Next Growth Phase
& Up-Scale Strategy
The Preliminary Economic Assessment contained within the Technical Report (the “PEA”) is preliminary in nature and includes 3% of production feed from Inferred Mineral Resources that are considered too speculative geologically to
have the economic considerations applied to them that would enable them to be categorised as Mineral Reserves (NI 43-101) or Ore Reserves (JORC 2012), and there is no certainty that the PEA will be realised. Mineral Resources that
are not Mineral Reserves or Ore Reserves do not have demonstrated economic viability. References to “Mineral Reserves” in this Presentation include Ore Reserves (JORC 2012). See Slides 2 and 36 for additional cautionary language.
For further information on this PEA, refer to the Technical Report entitled "NI 43-101 Technical Report Mineral Resource Estimate Update" dated April 8, 2024, with an effective date of February 26, 2024.
¹ The Resource copper-equivalent (CuEq) considers assumed commodity prices and average metallurgical recoveries for the Mineral Resource from testwork. See slide 30 for complete Mineral Resource disclosure of Costa Fuego.
² The copper-equivalent (CuEq) annual production rate was based on the combined processing feed (across all sources) and used long-term commodity prices of: Copper US$ 3.85/lb, Gold US$ 1,750/oz, Molybdenum US$ 17/lb, and
Silver US$21/oz; and estimated metallurgical recoveries for the production feed to the following processes: Concentrator (87% Cu, 56% Au, 37% Ag, 58% Mo), Oxide Leach (55% Cu only), & Low-grade Sulphide Leach (40% Cu only).
5COMPANY PRESENTATION |
www.hotchili.net.au
Corporate
Overview
Fully funded into H2
2025
Capital Structure
Exchange ASX/TSXV: HCH
OTCQX: HHLKF
Shares Outstanding 151.4 M
Options & Performance Rights 9.1 M
Cash A$25.7 M
(as of 30 September 2024)
Market Capitalisation1 A$127 M (04 November 2024)
Analyst Coverage
Veritas Securities Piers Reynolds
Cormark Securities Stefan Ioannou
Beacon Securities Michael Curran
Paradigm Capital Jeffrey Woolley
1HCH (ASX) share price of AU$0.84 as of 04 November 2024
Advancing
funding optionality
from a potential
water business –
Huasco Water
Glencore
7.5% GS Group
5.7%
Blue Spec
5.5%
Insiders
0.7%
Institutional
31.4%
Retail, 49.3%
INVESTORS BY TYPE
Australia , 84%
North America ,
11%
Other , 5%
Investors By Location
6COMPANY PRESENTATION |
www.hotchili.net.au
1
2
3
4
6
Water Risk Removed
✓ Granted maritime concession with land access
✓ All water required for operations secured
Permitting Timelines Reduced
✓ Secured easement corridors for power and water pipelines
✓ Secured many of proposed mining infrastructure surface rights
Offtake Not Fully Committed
✓ Glencore can purchase up to 60% of concentrate for first 8 years life of
mine – at benchmark terms but must maintain >7.5% ownership in
Company
Power Line Risk Removed
✓ Secured electrical connection to grid
✓ Opportunity to be 100% renewable
Access to Existing Infrastructure
✓ Reduces future capital expenditure
✓ Improves environment, social and governance metrics
5 Port MOU Executed
✓ MOU executed with Puerto Las Losas SA for the right to negotiate a
binding Port Services Agreement
Low Elevation Advantage – Lowers Economic Hurdle
Long-term Commitment to Risk-Reduction of Future Development
7COMPANY PRESENTATION |
www.hotchili.net.au
MOU1 for Port Services Agreement
Significant Step Towards Securing Final
Infrastructure Advantage for Costa Fuego
• Leveraging an existing port to potentially unlock significant capital
and operating cost savings
• MOU1 with Puerto Las Losas SA for the right to negotiate a
binding Port Services Agreement for five years
• Hot Chili will fund 20% of an estimated two-year, US$4.6 million
Feasibility Study for a bulk tonnage copper concentrate facility
• Following the Feasibility Study, Hot Chili shall have a ROFR2 to
ship copper concentrates through Puerto Las Losas facilities for
three years
Commitment to Jointly Fund Feasibility Study for Bulk Concentrate Exports
1 Memorandum of Understanding
2 Right of First Refusal
8COMPANY PRESENTATION |
www.hotchili.net.au
Productora Indicated Inferred
Cortadera Indicated Inferred
San Antonio Indicated Inferred
Costa Fuego Indicated Resource Increased to 798 Mt
Costa Fuego Mineral Resource update (26 February 2024):
• 6% increase in contained CuEq metal for the total Indicated Resource
(798 Mt grading 0.45% CuEq) 1,2
• 9% increase in contained CuEq metal for the higher-grade (>0.6%
CuEq) Indicated Resource (173 Mt grading 0.78% CuEq) 1,2
1 Reported on a 100% Basis - combining Mineral Resource estimates for the Cortadera, Productora, Alice and San Antonio deposits.
Figures are rounded, reported to appropriate significant figures, and reported in accordance with CIM and NI 43-101. Metal rounded
to nearest thousand, or if less, to the nearest hundred. Total Resource reported at +0.20% CuEq for open pit and +0.27% CuEq for
underground. See slide 30 for complete Mineral Resource disclosure of Costa Fuego.
Long-Section View of Productora – Looking North-West (+/- 100 m clipping)
Oblique Long-Section View of Cortadera – Looking North-East
2.3 km
Over 85% of Costa Fuego’s contained CuEq metal classified as Indicated
2 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. For Cortadera (Inferred + Indicated) the average Metallurgical Recoveries are Cu=82%, Au=55%, Mo=81%, and Ag=36%. For San Antonio (Indicated + Inferred) the average
Metallurgical Recoveries are 85% Cu, 66% Au, 80% Mo and 63% Ag. For Alice (Indicated + Inferred) the average Metallurgical Recoveries are 81% Cu, 47% Au, 52% Mo and 37% Ag. For Productora (Inferred + Indicated), the average Metallurgical Recoveries are Cu=84%,
Au=47%, Mo=48% and Ag=18%. For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries are Cu=83%, Au=53%, Mo=71% and Ag=26%.
3 See announcement dated 6th September 2011 “First Resource at Productora” for details on historical MRE reporting. 4 See announcement dated 12th October 2020 “Costa Fuego Becomes a Leading Global Copper Project” for details on historical MRE reporting
5 See announcement dated 31st March 2022 “Hot Chili Delivers Next Level of Growth” for details on historical MRE reporting.