Hot Chili to pump in $29.9m to develop Chilean copper play

Hot Chili has loaded its financial base with a $29.9 million fundraising campaign aimed at supercharging its Costa Fuego copper hub in Chile – at a time when the reddish metal’s price remains near 2022’s all-time high.

The $119.45 million market-capped company’s significant raise, which it said drew strong demand from Australian and overseas institutional investors, coincides with a rising copper price sitting at about US$4.57 (A$6.91) per pound.

Management says it expects its private $24.9 million placement to be complemented by a further $5 million share purchase plan (SPP) to reach the $29.9 million in new funding. Shares were offered at $1 for both the placement and the SPP.

Following the completion of the raise, Hot Chili says it will move to finish its Costa Fuego prefeasibility study (PFS) in the second half of the year, further secure its water supply and also create a new water company, plug in 25,000m of drilling, pursue more exploration and land consolidation in the next 18 months and kick off a “bankable” feasibility study.

The boost to its finances follows hot on the heels of its recent half-yearly figures that showed it already had A$13.3 million in cash at the bank after reducing its 2024 commitments by US$10 million (A$15.12 million) through consolidating its option agreements, securing its water supplies and filing its technical report for the Costa Fuego copper-gold project.

We control large-scale assets in two of the most critical commodities of our time – copper and water – with two of the most desirable attributes – low-risk and near-term. In combination with a rising copper price which indicates the initial stages of a new copper price cycle driven by lack of supply, this gives the Company confidence to accelerate its growth and development plans while preserving control of these assets for our shareholders.

Easterday said the company had received increasing interest from potential strategic funding parties to help Costa Fuego’s copper-gold development and its recently-announced water supply studies. He said the project remains one of a limited number of “globally-significant” copper developments that was not in the hands of a major mining company.

Costa Fuego’s measured and indicated resource sits at 798 million tonnes at 0.45 per cent copper equivalent for 3.62 million tonnes of copper equivalent, containing 2.91 million tonnes of copper, 2.64 million ounces of gold, 12.8 million ounces of silver and 68,100 tonnes of molybdenum.

Hot Chili also recently inked a deal with Osisko Gold Royalties, pocketing US$15 million (A$22.68 million) in exchange for a 1 per cent net smelter return (NSR) royalty on copper and a 3 per cent NSR on gold across the Costa Fuego project. Management says the Osisko investment provided an endorsement of its project and its economics from one of North America’s leading royalty-streaming groups.

In addition, the company consolidated its tenure while expanding its ground footprint and kicked off its exploration and resource expansion drilling programs. It updated its resource numbers and obtained results from its initial drilling of its latest satellite targets at Marsellesa, Cordillera and Corroteo, with some good copper hits including 25m grading 0.4 per cent copper from surface with 10m at 0.8 per cent from just 7m depth at Marsellesa.

Hot Chili’s Costa Fuego is a boomer of a resource that is seems to be emerging at just the right time and the latest funding moves look set to put a solid set of wheels under the venture to get it fully on track.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au