Hot Chili Limited Quarterly Report - Period Ending 30th September 2023 PERTH, Australia ,
PERTH, Australia, Oct. 31, 2023 /CNW/ -
Highlights
Hot Chili Files NI 43-101 Technical Report for the Costa Fuego Copper-Gold Project in Chile
The Company filed the report titled "Costa Fuego Copper Project NI 43–101 Technical Report Preliminary Economic Assessment" 1 and dated August 2023, with an effective date of June 28, 2023 (the "Technical Report"), prepared pursuant to CIM National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101")
The Technical Report supported the Costa Fuego PEA news release dated 28 June 2023, outlining Costa Fuego as one of world's lowest capital intensity, major copper developments, not controlled by a major miner 1
Closing of US$15 Million Investment Agreement with Osisko Gold Royalties
Closing of an Investment Agreement (see announcement dated 28th July 2023) and the receipt of US$15 million in funds in late July 2023 Strong endorsement from a leading North American royalty-streaming group with funds being used to advance the growth and development of Costa Fuego
Water Business Conceptual Study Underway
Potential to monetise water assets while securing water for Costa Fuego adds further non-dilutive funding optionality for Hot Chili
Drilling Programme Underway at Costa Fuego
Drilling operations re-commenced, initially focused on extensional targets to the Cortadera porphyry resource First drilling underway at the Corroteo target, located 5km SE of Cortadera
Further Regional Consolidation Steps
Binding letter of intent executed for an Option to acquire the Cometa Project, lying contiguous to the Company's Costa Fuego landholding (see announcement dated 28th August 2023)
Further opportunities being pursued to expand the scale of the Costa Fuego copper hub
Strong Cash Position of A$21.8 million
1 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 announcement include Ore Reserves (JORC 2012). See page 18 for additional cautionary language.
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 97% are classified as Indicated and 3% 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. 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. Inferred Mineral Resources comprise 2.5% of the production schedule in the first four years of operation. 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 exploration.
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. Hot Chili confirms that it is not aware of any new information or data that materially affects the information included in that release and that all material assumptions and technical parameters underpinning the estimate continue to apply and have not been changed.
To achieve the outcomes indicated in the PEA, including reaching Definitive Feasibility Study ("DFS") stage, 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. 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, 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
Hot Chili Files NI 43-101 Technical Report for the Costa Fuego Copper-Gold Project in Chile
The Company filed the report titled "Costa Fuego Copper Project NI 43–101 Technical Report Preliminary Economic Assessment"1 dated August 2023, with an effective date of June 28, 2023 (the "Technical Report"), prepared pursuant to CIM National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43- 101").
As outlined in the announcement dated Wednesday 28 June 2023 titled "Hot Chili Announces PEA for Costa Fuego", highlights from the Technical Report include:
Strong Economics: Costa Fuego PEA delivers using an 8% discount rate and long-term metal price assumptions of US$3.85/lb copper (Cu) and US$1,750/oz gold (Au)
Base-case post-tax Net Present Value (NPV8%) of US$1.10 Billion (approximately, within a range of US$733 Million to US$1.46 Billion) and Internal Rate of Return (IRR) of 21% (approximately, within a range of 17% to 25%)
Low Start-up Capital: US$1.05 Billion estimated, resulting in fast 3.5-year payback. Initial phases of open pit mining fully fund development of a bulk underground operation Low Capital Intensity: One of the lowest capital intensities of global copper development projects Approximately 112 ktpa Average CuEq2 Production Rate: Including 95 kt Cu and 49 koz Au during primary production (first 14 years) at C1 Cash Cost3 of US$1.33/lb (estimated, net of by- product credits)
Initial Mine Life: 16-years with 1.41 Mt Cu and 718 koz Au produced for total revenue of approximately US$13.52 Billion and total free cash flow of approximately US$3.28 Billion (post-tax, after operating costs, capital costs, and royalties)
Key Development Study Workstreams Advancing
Approximately 80% of Pre-feasibility Study (PFS) workstreams for Costa Fuego are already complete. Since completion of the PEA in late June 2023, the Company's development expenditure has been focused on advancing key long lead-time study items, such as:
Hydrogeology Drilling and Water Monitoring Programme: Eleven water monitoring wells for a total of 557m of drilling have been completed at Cortadera and Productora over the past month. Water and groundwater monitoring data is a key input requirement for the Company's Environmental Impact Assessment (EIA), which requires a minimum of one year of water monitoring data from down-stream water catchments. The data from this programme is one of the few remaining inputs required in advance of submission of an EIA for Costa Fuego.
Low-grade Leach Metallurgy Programme: Bulk samples, including 19 tonnes of underground ore from Productora and 3 tonnes of drill core from Cortadera, have been collected and sent to Nova Mineralis in Chile for preparation and long-duration column leach testwork using intermediate bulk containers. In addition, a further 1.5 tonne of drill core was collected for variability leach testwork using 1m columns. Long lead-time, leach recovery testwork is now underway to support PFS level metallurgy results for this component of Costa Fuego's process flow sheet.
__________ 1 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 announcement include Ore Reserves (JORC 2012). See page 18 for additional cautionary language.
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).
3 See page 19 for full non-IFRS measures disclaimer.
Water Business Conceptual Study Underway
Hot Chili has initiated a conceptual study of the Company's water assets (water easements, maritime concession and associated coastal land access rights) and their potential to underpin a future water utility business for the Huasco region of the Atacama, Chile.
Hot Chili controls one of the few registered maritime concessions in the region, and there is no other major water utility provider in the Huasco Valley.
Hot Chili's water licence for the extraction of 2,000 litres per second of sea water (maritime concession) can be expanded and is transferable. The Company is also assessing the application for the licence to be upgraded to include the supply of de-salinated water.
Based on the Technical Report, Costa Fuego is estimated to require approximately 600 litres per second of sea water at its current study scale of future annual metal production (95ktpa Cu & 49koz Au).
A large new water supplier could help to unlock multiple undeveloped mining projects in the Huasco Valley that do not currently have access to water supply. New mine developments are driving a forecast water supply deficit, which has been estimated at approximately 15,000 litres per second for the Atacama region.
The opportunity to potentially monetise a portion of the Company's Chilean water assets, while also securing future seawater supply for the Costa Fuego Projects, may add further non-dilutive funding optionality for Hot Chili.
Exploration Drilling Underway at Costa Fuego
Drilling re-commenced at Costa Fuego in late July 2023 with one Reverse Circulation (RC) drill rig in operation for the majority of the quarter. In addition, four diamond drill holes were completed over a four-week period (two completed during the quarter). Drilling expenditure is being prudently managed to maximize the impact of invested dollars, with only one RC drill rig planned to be operating for the remainder of this year.
A total of 26 holes for 6,442m of drilling was completed during the quarter with numerous low-grade significant intersections recorded. Tables 1 and 2 summarise details of drilling undertaken during the quarter and significant drill results received to date, respectively.
Drilling initially focused on satisfying the Company's remaining 3,000m drill commitment with Antofagasta Minerals (see announcement dated 28th November 2022) to acquire key leases lying along the western extension of Cortadera. In addition, numerous drill holes have been completed across extensional targets to the Cortadera resource, peripheral to Cuerpo 2 and Cuerpo 3.
Drill holes CRP0220 and CRP0222 have confirmed extensions to the south and east of Cuerpo 2, and drill hole CRP0217D has confirmed further extensions to the east at Cuerpo 3. These new results will add to other potential additions to the Cortadera Mineral Resource Estimate from drilling undertaken since March 2022. Further drill results from drilling undertaken during the quarter at Cortadera are pending.
Following completion of a limited hydrogeology drilling programme (11 RC holes for 557m) during October, RC drilling operations commenced at the large-scale Corroteo exploration target, located approximately 5km SE of Cortadera. A total of seven deep RC holes for approximately 2,000m are planned in the current first- pass exploration drill programme at Corroteo.
Corroteo features a surface alteration footprint measuring approximately 2km in strike length by 500m in width and has never previously been drilled. Detailed mapping and surface geochemical programmes confirm some similarities to the deposit style and footprint of the Company's Productora copper-gold resource.
Corroteo is one of several exploration targets being advanced toward first drill testing over the coming year.
SUMMARY OF CORPORATE ACTIVITIES
Closing of US$15 Million Investment Agreement with Osisko Gold Royalties
In late July 2023, Hot Chili closed its previously announced transaction with Osisko Gold Royalties Ltd ("Osisko"), pursuant to which Hot Chili received proceeds of US$15 million in exchange for the sale of a 1.0% Net Smelter Return (NSR) royalty on copper and a 3% NSR royalty on gold (the "Investment") across the Company's Costa Fuego Copper-Gold Project.
The Investment by Osisko has strengthened the Company's current cash position without the need for a dilutive equity capital raise, demonstrated strong look-through value of the Project's economics. It also provided another significant endorsement of Hot Chili's Costa Fuego project from one of North America's leading royalty-streaming groups (see the Company's announcement dated 28th June 2023, entitled "Hot Chili Announces US$15 Million Investment Agreement with Osisko Gold Royalties").
The Company is now well funded to deliver the next steps in its growth and development plan to advance the Costa Fuego Pre- Feasibility Studies (PFS), resource growth drilling programmes and general advancement of the Project.
Further Regional Consolidation Steps
In late August, the Hot Chili executed 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 Costa Fuego (see announcement dated 28th August).
Cometa consists of exploration and mining concessions covering an area of approximately 56km2, located almost 15km SE of Costa Fuego's planned operating centre and contiguous with Hot Chili's landholdings in the region (see Figure 1 below).
Figure 1 - Location of the Cometa Project in relation to the Costa Fuego Project (CNW Group/Hot Chili Limited)
The Option is another step in Hot Chili's consolidation strategy for the Costa Fuego copper project.
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 Company's 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 has recently agreed to an extension of the Exclusivity period by 45 days to allow for completion of due diligence in advance of exercise of the Option, expected by mid-December 2023.
Further opportunities are being pursued to expand the scale of the Costa Fuego copper hub, with multiple discussions underway on prospective exploration targets in the area.
Sustainability
The Company has continued local community engagement, holding several meetings with stakeholders and local indigenous communities. Continued support programs in the Vallenar municipality delivering water to irrigation, funding for social programmes and the development of counselling programmes for mental health support in partnership with the University of Chile.
A spring flora and vegetation survey was carried out on the entire Costa Fuego Project footprint, focused on strengthening the environmental baseline information for the EIA submission.
As the Company advances the Costa Fuego Project, it continues to focus on innovative techniques to minimise the environmental impact of the development, including the use of renewable energy for the delivery of power and the use of sea water for processing.
Cash Position and Capital Structure Changes
As of 30 September 2023, the company had cash of A$21.8 million and no debt.
The Company issued 345,000 service rights and 345,000 performance rights during the period to employees and consultants.
The Company has the following securities on issue:
119,445,206 ordinary fully paid shares 10,900,000 warrants at CAD$2.50 expiring 31 January 2024 1,259,789 options at CAD$1.85 expiring 31 January 2025 1,850,001 AUD$2.25 options expiring 30 September 2024 5,996,728 unvested services and performance rights.
Table 1 – Significant Drill Results for Costa Fuego in Quarter 3 2023
| HoleID _ | Coordinates | Azim | Dip | Hole Depth | Intersection | Interval | Copper | Gold | Silver | Moly¹ | Cu Eq* | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| North | East | RL | From | To | (m) | ( %) | (g/t) | (ppm) | (ppm) | ( %) | ||||
| LCP0018 | 6815926 | 334600 | 863 | 270 | -59 | 300 | 34 | 42 | 8 | 0.1 | 0.0 | 0.3 | 9 | 0.1 |
| & | 86 | 88 | 2 | 0.1 | 0.6 | 0.3 | 5 | 0.4 | ||||||
| & | 94 | 122 | 28 | 0.1 | 0.0 | 0.3 | 4 | 0.1 | ||||||
| & | 172 | 192 | 20 | 0.1 | 0.0 | 0.3 | 3 | 0.1 | ||||||
| CRP0204 | 6816271 | 334840 | 937 | 91 | -60 | 300 | 214 | 242 | 28 | 0.1 | 0.0 | 0.4 | 4 | 0.1 |
| CRP0213 | 6813277 | 336232 | 1082 | 214 | -73 | 270 | 226 | 246 | 20 | 0.1 | 0.0 | 0.3 | 14 | 0.1 |
| CRP0214 | 6814012 | 335925 | 1007 | 94 | -60 | 252 | 150 | 210 | 60 | 0.1 | 0.0 | 0.2 | 7 | 0.1 |
| CRP0215 | 6813518 | 336053 | 1040 | 191 | -60 | 270 | 0 | 96 | 96 | 0.2 | 0.1 | 0.3 | 15 | 0.2 |
| Incl | 18 | 30 | 12 | 0.2 | 0.2 | 0.3 | 12 | 0.3 | ||||||
| CRP0216D | 6813389 | 336312 | 1055 | 129 | -70 | 546.4 | 6 | 78 | 72 | 0.2 | 0.0 | 0.3 | 15 | 0.2 |
| & | 100 | 120 | 20 | 0.2 | 0.1 | 0.3 | 6 | 0.2 | ||||||
| & | 130 | 190 | 60 | 0.2 | 0.0 | 0.3 | 13 | 0.2 | ||||||
| & | 208 | 234 | 26 | 0.2 | 0.0 | 0.3 | 24 | 0.2 | ||||||
| & | 304 | 458 | 154 | 0.2 | 0.1 | 0.3 | 99 | 0.2 | ||||||
| CRP0217 | 6813454 | 336343 | 1060 | 79 | -58 | 252 | 6 | 66 | 60 | 0.2 | 0.1 | 0.3 | 14 | 0.2 |
| 230 | 236 | 6 | 0.2 | 0.0 | 0.4 | 33 | 0.2 | |||||||
| CRP0218 | 6813718 | 336358 | 1047 | 91 | -80 | 173.5 | 164 | 168 | 4 | 0.2 | 0.0 | 0.3 | 65 | 0.3 |
| CRP0220 | 6813844 | 335665 | 1003 | 199 | -72 | 261 | 0 | 190 | 190 | 0.2 | 0.1 | 0.4 | 16 | 0.2 |
| Including | 0 | 88 | 88 | 0.2 | 0.1 | 0.5 | 15 | 0.3 | ||||||
| & including | 142 | 170 | 28 | 0.2 | 0.1 | 0.3 | 24 | 0.3 | ||||||
| CRP0221 | 6813914 | 335758 | 992 | 11 | -80 | 204 | 42 | 46 | 4 | 0.3 | 0.1 | 0.3 | 23 | 0.4 |
| CRP0222 | 6813850 | 335666 | 1003 | 111 | -71 | 210 | 2 | 70 | 68 | 0.2 | 0.1 | 0.4 | 14 | 0.3 |
| & | 130 | 190 | 60 | 0.2 | 0.0 | 0.3 | 13 | 0.2 | ||||||
| & | 208 | 234 | 26 | 0.2 | 0.0 | 0.3 | 24 | 0.2 | ||||||
| & | 304 | 458 | 154 | 0.2 | 0.1 | 0.3 | 99 | 0.2 |
Notes to Table 1:
Significant intercepts are calculated above a nominal cut-off grade of 0.1% Cu. Where appropriate, significant intersections may contain up to 30m down-hole distance of internal dilution (less than 0.1% Cu). Significant intersections are separated where internal dilution is greater than 30m down-hole distance. The selection of 0.1% Cu for intersection cut-off grade above is selected on the basis of exploration significance and is not meant to represent potential marginal economic cut-off grade for bulk tonnage polymetallic copper deposits of similar grade in Chile and elsewhere in the world.
Down-hole significant intercept widths are estimated to be at or around true-widths of mineralisation
¹ Molybdenum
- 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.
Cortadera CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x Ag(g/t)
Productora – Recoveries of 84% Cu, 47% Au, 47% Mo and 0% Ag (not reported).
Productora CuEq(%) = Cu(%) + 0.48 x Au(g/t) + 0.00026 x Mo(ppm)
San Antonio and Valentina – Recoveries of 88% Cu, 72% Au, 88% Mo and 69% Ag. San Antonio CuEq(%) = Cu(%) + 0.68 x Au(g/t) + 0.00047 x Mo(ppm) + 0.0076 x Ag(g/t)
Table 2 - Drill Holes Completed for Costa Fuego in Quarter 3 2023
| Prospect | HoleID _ | North | East | RL | Depth | Azimuth | Dip | Results |
|---|---|---|---|---|---|---|---|---|
| Cuerpo 4 | LCP0017 | 6816113 | 334616 | 859 | 300 | 88 | -60 | NSR |
| Cuerpo 4 | LCP0018 | 6815926 | 334600 | 863 | 300 | 270 | -59 | NSR |
| Cuerpo 4 | LCP0019 | 6816163 | 334587 | 857 | 246 | 269 | -59 | NSR |
| Cuerpo 4 | LCP0020D | 6815842 | 334867 | 927 | 755 | 245 | -60 | Results pending |
| Cortadera North | CRP0204 | 6816271 | 334840 | 937 | 300 | 91 | -60 | NSR |
| Cuerpo 3 | CRP0205 | 6813247 | 335815 | 1184 | 300 | 2 | -74 | NSR |
| Cuerpo 3 | CRP0206 | 6813249 | 335817 | 1184 | 300 | 59 | -75 | NSR |
| Cuerpo 3 | CRP0207 | 6813031 | 336070 | 1174 | 54 | 36 | -71 | NSR |
| Cuerpo 3 | CRP0208 | 6813030 | 336070 | 1174 | 84 | 31 | -74 | NSR |
| Cuerpo 3 | CRP0209 | 6813502 | 336655 | 1088 | 228 | 205 | -69 | NSR |
| Cuerpo 3 | CRP0210 | 6813502 | 336657 | 1088 | 90 | 359 | -77 | NSR |
| Cuerpo 3 North | CRP0211 | 6814125 | 336261 | 1090 | 174 | 98 | -57 | NSR |
| Cuerpo 2 | CRP0212 | 6813753 | 335463 | 1004 | 150 | 25 | -85 | NSR |
| Cuerpo 3 | CRP0213 | 6813277 | 336232 | 1082 | 270 | 214 | -73 | NSR |
| Cuerpo 3 | CRP0214 | 6814012 | 335925 | 1007 | 252 | 94 | -60 | NSR |
| Cuerpo 3 | CRP0215 | 6813518 | 336053 | 1040 | 270 | 191 | -60 | Significant result returned Q2 |
| Cuerpo 3 | CRP0216D | 6813389 | 336312 | 1055 | 546 | 129 | -70 | Significant result returned Q2 |
| Cuerpo 3 | CRP0217 | 6813454 | 336343 | 1060 | 252 | 79 | -58 | Significant result returned Q2 |
| Cuerpo 3 | CRP0218 | 6813718 | 336358 | 1047 | 174 | 91 | -80 | Significant result returned Q2 |
| Cuerpo 3 | CRP0219 | 6813591 | 336365 | 1045 | 84 | 87 | -66 | NSR |
| Cuerpo 2 | CRP0220 | 6813844 | 335665 | 1003 | 261 | 199 | -72 | Significant result returned Q2 |
| Cuerpo 2 | CRP0221 | 6813914 | 335758 | 992 | 204 | 11 | -80 | Significant result returned Q2 |
| Cuerpo 2 | CRP0222 | 6813850 | 335666 | 1003 | 210 | 111 | -71 | Results pending |
| Cuerpo 3 North | CRP0223 | 6814534 | 336075 | 1174 | 360 | 76 | -58 | Results pending |
| Cuerpo 2 North | CRP0224 | 6814227 | 335625 | 1058 | 198 | 65 | -58 | Results pending |
| Cortadera Hydro | CORMW01 | 6814879 | 334509 | 883 | 80 | 0 | -90 | Results pending |
Note 1: NSR – no significant intersection recorded.
Figure 2. Plan view of Cortadera displaying collar locations of significant drilling results returned during the quarter (CNW Group/Hot Chili Limited)
Figure 3. Cross-section view looking Northwest at Cortadera displaying new drillhole CRP0220 at Cuerpo 2 with the PEA pit shape and 2022 Resource model (+0.21% CuEq blocks outlined). Lithology is shown on the trace, Cu% assays shown as histograms downhole and the view is clipped at +/- 40m into and out of section (CNW Group/Hot Chili Limited)
Figure 4. Cross-section view looking Northeast at Cortadera displaying new drillhole CRP0222 at Cuerpo 2 with the PEA pit shape and 2022 Resource model (+0.21% CuEq blocks outlined). Lithology is shown on the trace, Cu% assays shown as histograms downhole and the view is clipped at +/- 40m into and out of section (CNW Group/Hot Chili Limited)
Figure 5. Cross-section view looking North at Cortadera displaying new drillhole CRP0217D at Cuerpo 3 with the PEA pit shape and 2022 Resource model (+0.21% CuEq blocks outlined). Lithology is shown on the trace, Cu% assays shown as histograms downhole and the view is clipped at +/- 40m into and out of section (CNW Group/Hot Chili Limited)
Additional ASX Disclosure Information
ASX Listing Rule 5.3.2: There was no substantive mining production and development activities during the quarter.
ASX Listing Rule 5.3.3 - Schedule of Mineral Tenements as of 30 September 2023
The schedule of Mineral Tenements and changes in interests is appended at the end of this activities report.
ASX Listing Rule 5.3.4: Reporting under a use of funds statement in a Prospectus does not apply to the Company currently.
ASX Listing Rule 5.3.5: Payments to related parties of the Company and their associates during the quarter per Section 6.1 of the Appendix 5B totaled $166,458. This is comprised of directors' salaries and superannuation of $166,458.
Health, Safety, Environment and Quality
Field operations during the period included geological reconnaissance activities, core-testing and logging, field mapping, and sampling exercises across the Cortadera, El Fuego and Productora landholdings. El Fuego field activities are run from the Cortadera operations centre and safety statistics are combined for reporting.
No safety incidents were recorded during the quarter. The Company's HSEQ quarterly performance is summarised in Table 3 below.
Hot Chili's sustainability framework ensures an emphasis on business processes that target long-term economic, environmental and social value. The Company is dedicated to continual monitoring and improvement of health, safety and the environmental systems. There is no greater importance than ensuring the safety of our people and their families.
Table 3 HSEQ Quarter 3 2023 Performance and Statistics
| Deposit | Productora | Cortadera | ||||
|---|---|---|---|---|---|---|
| Timeframe | Q2 2023 | Cum.² | Q2 2023 | Cum.² | Q2 2023 | Cum.² |
| LTI events | 0 | 0 | 0 | 6 | 0 | 7 |
| NLTI events | 0 | 2 | 0 | 5 | 0 | 8 |
| Days lost | 0 | 0 | 0 | 152 | 0 | 175 |
| LTIFR index | 0 | 0 | 0 | 22 | 0 | 20 |
| ISR index | 0 | 0 | 0 | 568 | 0 | 492 |
| IFR Index | 0 | 36 | 0 | 41 | 0 | 42 |
| Thousands of manhours | 4.7 | 56 | 10.5 | 268 | 17.4 | 356 |
| Incidents on materials and assets | 0 | 0 | 0 | 0 | 0 | 0 |
| Environmental incidents | 0 | 0 | 0 | 0 | 0 | 0 |
| Headcount¹ | 13 | 8 | 34 | 35 | 73 | 48 |
Notes: HSEQ is the acronym for Health, Safety, Environment and Quality. LTIFR per million-manhours. Safety performance is reported on a monthly basis to the National Mine Safety Authority on a standard E-100 form; (1) Average monthly headcount (2) Cumulative statistics since April 2019.
Tenement Changes During the Quarter
During the Quarter, the Company has claimed the exploitation concession Chilis 12 1/60 in use of the preferential right held by virtue of exploration concession Chilis 12 and renewed the following mining exploration concessions:
Chilis 13 replaces Chilis 13, which expired on August 9th, 2023, Chilis 14 replaces Chilis 14, which expired on August 19th, 2023, Chilis 15 replaces Chilis 15, which expired on July 29th, 2023, Chilis 16 replaces Chilis 16, which expired on August 17th, 2023, Chilis 17 replaces Chilis 17, which expired on July 29th, 2023, Chilis 18 replaces Chilis 18, which expired on August 25th, 2023, Porfiada G replaces Porfiada G, which expired on August 23rd, 2023, Porfiada V replaces Porfiada V, which expires on October 26th, 2023 and Porfiada VI replaces Porfiada VI, which expires on November 19th, 2023.
The Company's existing tenements are detailed in the table below.
Table 4 Current Tenement (Patente) Holdings in Chile as of 30 September 2023
Cortadera Project
| License ID | HCH % Held | HCH % Earning | Area (ha) | Agreement Details |
|---|---|---|---|---|
| MAGDALENITA 1/20 | 100% Frontera SpA | 100 | ||
| ATACAMITA 1/82 | 100% Frontera SpA | 82 | ||
| AMALIA 942 A 1/6 | 100% Frontera SpA | 53 | ||
| PAULINA 10 B 1/16 | 100% Frontera SpA | 136 | ||
| PAULINA 11 B 1/30 | 100% Frontera SpA | 249 | ||
| PAULINA 12 B 1/30 | 100% Frontera SpA | 294 | ||
| PAULINA 13 B 1/30 | 100% Frontera SpA | 264 | ||
| PAULINA 14 B 1/30 | 100% Frontera SpA | 265 | ||
| PAULINA 15 B 1/30 | 100% Frontera SpA | 200 | ||
| PAULINA 22 A 1/30 | 100% Frontera SpA | 300 | ||
| PAULINA 24 1/24 | 100% Frontera SpA | 183 | ||
| PAULINA 25 A 1/19 | 100% Frontera SpA | 156 | ||
| PAULINA 26 A 1/30 | 100% Frontera SpA | 294 | ||
| PAULINA 27A 1/30 | 100% Frontera SpA | 300 | ||
| CORTADERA 1 1/200 | 100% Frontera SpA | 200 | ||
| CORTADERA 2 1/200 | 100% Frontera SpA | 200 | ||
| CORTADERA 41 | 100% Frontera SpA | 1 | ||
| CORTADERA 42 | 100% Frontera SpA | 1 | ||
| LAS CANAS 16 | 100% Frontera SpA | 1 | ||
| LAS CANAS 1/15 | 100% Frontera SpA | 146 | ||
| CORTADERA 1/40 | 100% Frontera SpA | 374 | ||
| LAS CANAS ESTE 2003 1/30 | 100% Frontera SpA | 300 | ||
| CORROTEO 1 1/260 | 100% Frontera SpA | 260 | ||
| CORROTEO 5 1/261 | 100% Frontera SpA | 261 | ||
| ROMERO 1 AL 31 | 100% Frontera SpA | 31 | ||
| PURISIMA | 100% Frontera SpA | 20 | NSR 1.5% |
Note. Frontera SpA is a 100% owned subsidiary company of Hot Chili Limited
Productora Project
| License ID | HCH % Held | HCH % Earning | Area (ha) | Agreement Details |
|---|---|---|---|---|
| FRAN 1, 1-60 | 80% SMEA SpA | 220 | ||
| FRAN 2, 1-20 | 80% SMEA SpA | 100 | ||
| FRAN 3, 1-20 | 80% SMEA SpA | 100 | ||
| FRAN 4, 1-20 | 80% SMEA SpA | 100 | ||
| FRAN 5, 1-20 | 80% SMEA SpA | 100 | ||
| FRAN 6, 1-26 | 80% SMEA SpA | 130 | ||
| FRAN 7, 1-37 | 80% SMEA SpA | 176 | ||
| FRAN 8, 1-30 | 80% SMEA SpA | 120 | ||
| FRAN 12, 1-40 | 80% SMEA SpA | 200 | ||
| FRAN 13, 1-40 | 80% SMEA SpA | 200 | ||
| FRAN 14, 1-40 | 80% SMEA SpA | 200 | ||
| FRAN 15, 1-60 | 80% SMEA SpA | 300 | ||
| FRAN 18, 1-60 | 80% SMEA SpA | 273 | ||
| FRAN 21, 1-46 | 80% SMEA SpA | 226 | ||
| ALGA 7A, 1-32 | 80% SMEA SpA | 89 | ||
| ALGA VI, 5-24 | 80% SMEA SpA | 66 | ||
| MONTOSA 1-4 | 80% SMEA SpA | 35 | NSR 3% | |
| CHICA | 80% SMEA SpA | 1 | ||
| ESPERANZA 1-5 | 80% SMEA SpA | 11 | ||
| LEONA 2A 1-4 | 80% SMEA SpA | 10 | ||
| CARMEN I, 1-50 | 80% SMEA SpA | 222 | ||
| CARMEN II, 1-60 | 80% SMEA SpA | 274 | ||
| ZAPA 1, 1-10 | 80% SMEA SpA | 100 | ||
| ZAPA 3, 1-23 | 80% SMEA SpA | 92 | ||
| ZAPA 5A, 1-16 | 80% SMEA SpA | 80 |
| ZAPA 7, 1-24 | 80% SMEA SpA | 120 | ||
| CABRITO, CABRITO 1-9 | 80% SMEA SpA | 50 | ||
| CUENCA A, 1-51 | 80% SMEA SpA | 255 | ||
| CUENCA B, 1-28 | 80% SMEA SpA | 139 | ||
| CUENCA C, 1-51 | 80% SMEA SpA | 255 | ||
| CUENCA D | 80% SMEA SpA | 3 | ||
| CUENCA E | 80% SMEA SpA | 1 | ||
| CHOAPA 1-10 | 80% SMEA SpA | 50 | ||
| ELQUI 1-14 | 80% SMEA SpA | 61 | ||
| LIMARÍ 1-15 | 80% SMEA SpA | 66 | ||
| LOA 1-6 | 80% SMEA SpA | 30 | ||
| MAIPO 1-10 | 80% SMEA SpA | 50 | ||
| TOLTÉN 1-14 | 80% SMEA SpA | 70 | ||
| CACHIYUYITO 1, 1-20 | 80% SMEA SpA | 100 | ||
| CACHIYUYITO 2, 1-60 | 80% SMEA SpA | 300 | ||
| CACHIYUYITO 3, 1-60 | 80% SMEA SpA | 300 | ||
| LA PRODUCTORA 1-16 | 80% SMEA SpA | 75 | ||
| ORO INDIO 1A, 1-20 | 80% SMEA SpA | 82 | ||
| AURO HUASCO I, 1-8 | 80% SMEA SpA | 35 | ||
| URANIO, 1-70 | 0 % | 0 % | 350 | 25-year Lease Agreement US$250,000 per year (average for the 25 year term); plus 2% NSR all but gold; 4% NSR gold; 5% NSR non-metallic |
| JULI 9, 1-60 | 80% SMEA SpA | 300 | ||
| JULI 10, 1-60 | 80% SMEA SpA | 300 | ||
| JULI 11 1/60 | 80% SMEA SpA | 300 | ||
| JULI 12 1/42 | 80% SMEA SpA | 210 | ||
| JULI 13 1/20 | 80% SMEA SpA | 100 | ||
| JULI 14 1/50 | 80% SMEA SpA | 250 | ||
| JULI 15 1/55 | 80% SMEA SpA | 275 | ||
| JULI 16, 1-60 | 80% SMEA SpA | 300 | ||
| JULI 17, 1-20 | 80% SMEA SpA | 100 | ||
| JULI 19 | 80% SMEA SpA | 300 | ||
| JULI 20 | 80% SMEA SpA | 300 | ||
| JULI 21 1/60 | 80% SMEA SpA | 300 | ||
| JULI 22 | 80% SMEA SpA | 300 | ||
| JULI 23 1/60 | 80% SMEA SpA | 300 | ||
| JULI 24, 1-60 | 80% SMEA SpA | 300 | ||
| JULI 25 | 80% SMEA SpA | 300 | ||
| JULI 27 1/30 | 80% SMEA SpA | 150 | ||
| JULI 27 B 1/10 | 80% SMEA SpA | 50 | ||
| JULI 28 1/60 | 80% SMEA SpA | 300 | ||
| JULIETA 5 | 80% SMEA SpA | 200 | ||
| JULIETA 6 | 80% SMEA SpA | 200 | ||
| JULIETA 7 | 80% SMEA SpA | 100 | ||
| JULIETA 8 | 80% SMEA SpA | 100 | ||
| JULIETA 9 | 80% SMEA SpA | 100 | ||
| JULIETA 10 1/60 | 80% SMEA SpA | 300 | ||
| JULIETA 11 | 80% SMEA SpA | 300 | ||
| JULIETA 12 | 80% SMEA SpA | 300 | ||
| JULIETA 13, 1-60 | 80% SMEA SpA | 298 | ||
| JULIETA 14, 1-60 | 80% SMEA SpA | 269 | ||
| JULIETA 15, 1-40 | 80% SMEA SpA | 200 | ||
| JULIETA 16 | 80% SMEA SpA | 200 | ||
| JULIETA 17 | 80% SMEA SpA | 200 | ||
| JULIETA 18, 1-40 | 80% SMEA SpA | 200 | ||
| ARENA 1 1-6 | 80% SMEA SpA | 40 | ||
| ARENA 2 1-17 | 80% SMEA SpA | 113 | ||
| ZAPA 1 – 6 | 80% SMEA SpA | 6 | GSR 1% | |
| JULIETA 1-4 | 80% SMEA SpA | 4 |
Note. SMEA SpA is subsidiary company - 80% owned by Hot Chili Limited, 20% owned by CMP (Compañía Minera del Pacífico)
El Fuego Project
| Licence ID | HCH % Held | HCH % Earning | Area (ha) | Exploration and Expenditure Commitment- Payments |
|---|---|---|---|---|
| Santiago 21 al 36 | 90% Frontera SpA | 76 | ||
| Santiago 37 al 43 | 90% Frontera SpA | 26 | ||
| Santiago A, 1 al 26 | 90% Frontera SpA | 236 | ||
| Santiago B, 1 al 20 | 90% Frontera SpA | 200 | ||
| Santiago C, 1 al 30 | 90% Frontera SpA | 300 | ||
| Santiago D, 1 al 30 | 90% Frontera SpA | 300 | ||
| Santiago E, 1 al 30 | 90% Frontera SpA | 300 | ||
| Prima Uno | 90% Frontera SpA | 1 | ||
| Prima Dos | 90% Frontera SpA | 2 | ||
| Santiago 15 al 19 | 90% Frontera SpA | 25 | ||
| San Antonio 1 al 5 | 90% Frontera SpA | 25 | ||
| Santiago 1 AL 14 Y 20 | 90% Frontera SpA | 75 | ||
| Mercedes 1 al 3 | 90% Frontera SpA | 50 | ||
| Kreta 1 al 4 | 90% Frontera SpA | 16 | ||
| Mari 1 al 12 | 90% Frontera SpA | 64 | ||
| PORFIADA VII 1 al 60 | 90% Frontera SpA | 300 |
| PORFIADA VIII 1 al 60 | 90% Frontera SpA | 300 | ||
| PORFIADA IX 1 al 60 | 90% Frontera SpA | 300 | ||
| PORFIADA X | 90% Frontera SpA | 200 | ||
| PORFIADA A 1 al 40 | 90% Frontera SpA | 200 | ||
| PORFIADA B | 90% Frontera SpA | 200 | ||
| PORFIADA C 1 al 60 | 90% Frontera SpA | 300 | ||
| PORFIADA D | 90% Frontera SpA | 300 | ||
| PORFIADA E 1 al 20 | 90% Frontera SpA | 100 | ||
| PORFIADA F 1 al 60 | 90% Frontera SpA | 300 | ||
| PORFIADA G | 90% Frontera SpA | 200 | ||
| CORTADERA 1 | 100% Frontera SpA | 200 | ||
| CORTADERA 2 | 100% Frontera SpA | 200 | ||
| CORTADERA 3 | 100% Frontera SpA | 200 | ||
| CORTADERA 4 | 100% Frontera SpA | 200 | ||
| CORTADERA 5 | 100% Frontera SpA | 200 | ||
| CORTADERA 6 | 100% Frontera SpA | 300 | ||
| CORTADERA 7, 1-20 | 100% Frontera SpA | 93 | ||
| SAN ANTONIO 1 | 100% Frontera SpA | 200 | ||
| SAN ANTONIO 2 | 100% Frontera SpA | 200 | ||
| SAN ANTONIO 3 | 100% Frontera SpA | 300 | ||
| SAN ANTONIO 4 | 100% Frontera SpA | 300 | ||
| SAN ANTONIO 5 | 100% Frontera SpA | 300 | ||
| DORO 1 | 100% Frontera SpA | 200 | ||
| DORO 2 | 100% Frontera SpA | 200 | ||
| DORO 3 | 100% Frontera SpA | 300 | ||
| SANTIAGO Z 1/30 | 100% Frontera SpA | 300 | 100% HCH Purchase Option Agreement USD 200,000 already paid. USD 400,000 to be paid by January 22, 2024. NSR 1.5% | |
| PORFIADA I | 100% Frontera SpA | 300 | ||
| PORFIADA II | 100% Frontera SpA | 300 | ||
| PORFIADA III | 100% Frontera SpA | 300 | ||
| PORFIADA IV | 100% Frontera SpA | 300 | ||
| PORFIADA V | 100% Frontera SpA | 200 | ||
| PORFIADA VI | 100% Frontera SpA | 100 | ||
| SAN JUAN SUR 1/5 | 90% Frontera SpA | 10 | 90% (HCH) Option Agreement USD 150,000 already paid USD 4,000,000 by June 1, 2024. | |
| SAN JUAN SUR 6/23 | 90% Frontera SpA | 90 | ||
| CHILIS 1 | 100% Frontera SpA | 200 | ||
| CHILIS 2 | 100% Frontera SpA | 200 | ||
| CHILIS 3 | 100% Frontera SpA | 100 | ||
| CHILIS 4 | 100% Frontera SpA | 200 | ||
| CHILIS 5 | 100% Frontera SpA | 200 | ||
| CHILIS 6 | 100% Frontera SpA | 200 | ||
| CHILIS 7 | 100% Frontera SpA | 200 | ||
| CHILIS 8 | 100% Frontera SpA | 200 | ||
| CHILIS 9 | 100% Frontera SpA | 300 | ||
| CHILIS 10 1 al 40 | 100% Frontera SpA | 200 | ||
| CHILIS 11 | 100% Frontera SpA | 200 | ||
| CHILIS 12 | 100% Frontera SpA | 300 | ||
| CHILIS 13 | 100% Frontera SpA | 300 | ||
| CHILIS 14 | 100% Frontera SpA | 300 | ||
| CHILIS 15 | 100% Frontera SpA | 300 | ||
| CHILIS 16 | 100% Frontera SpA | 300 | ||
| CHILIS 17 | 100% Frontera SpA | 300 | ||
| CHILIS 18 | 100% Frontera SpA | 300 | ||
| SOLAR 1 | 100% Frontera SpA | 300 | ||
| SOLAR 2 | 100% Frontera SpA | 300 | ||
| SOLAR 3 | 100% Frontera SpA | 300 | ||
| SOLAR 4 | 100% Frontera SpA | 300 | ||
| SOLAR 5 | 100% Frontera SpA | 300 | ||
| SOLAR 6 | 100% Frontera SpA | 300 | ||
| SOLAR 7 | 100% Frontera SpA | 300 | ||
| SOLAR 8 | 100% Frontera SpA | 300 | ||
| SOLAR 9 | 100% Frontera SpA | 300 | ||
| SOLAR 10 | 100% Frontera SpA | 300 | ||
| SOLEDAD 1 | 100% Frontera SpA | 300 | ||
| SOLEDAD 2 | 100% Frontera SpA | 300 | ||
| SOLEDAD 3 | 100% Frontera SpA | 300 | ||
| SOLEDAD 4 | 100% Frontera SpA | 300 | ||
| CF 1 | 100% Frontera SpA | 300 | ||
| CF 2 | 100% Frontera SpA | 300 | ||
| CF 3 | 100% Frontera SpA | 300 | ||
| CF 4 | 100% Frontera SpA | 300 | ||
| CF 5 | 100% Frontera SpA | 300 | ||
| CHAPULIN COLORADO 1/3 | 100% Frontera SpA | 3 | ||
| PEGGY SUE 1/10 | 100% Frontera SpA | 100 | ||
| DONA FELIPA 1 al 10 | 100% Frontera SpA | 50 | ||
| ELEANOR RIGBY 1/10 | 100% Frontera SpA | 100 | ||
| CF 6 | 100% Frontera SpA | 200 | ||
| CF 7 | 100% Frontera SpA | 100 | ||
| CF 8 | 100% Frontera SpA | 200 | ||
| CF 9 | 100% Frontera SpA | 100 | ||
| MARI 1 | 100% Frontera SpA | 300 | ||
| MARI 6 | 100% Frontera SpA | 300 |
| MARI 8 | 100% Frontera SpA | 300 | |
| FALLA MAIPO 2 1/10 | 100% Frontera SpA | 99 | |
| FALLA MAIPO 3 1/8 | 100% Frontera SpA | 72 | |
| FALLA MAIPO 4 1/26 | 100% Frontera SpA | 26 | |
| ARBOLEDA 7 1/2 | Option AMSA | 234 | 100% HCH Purchase Option Agreement USD 1,500,000 to be paid by November 15, 2024 |
| NAVARRO 1 41/60 | Option AMSA | 81 | |
| NAVARRO 2 21/37 | Option AMSA | 78 | |
| MONICA 21/40 | Option AMSA | 85 | |
| MONICA 41/52 | Option AMSA | 39 |
Note. Frontera SpA is a 100% owned subsidiary company of Hot Chili Limited
Qualifying Statements
Costa Fuego Combined Mineral Resource (Effective Date 31st March 2022)
Costa Fuego Combined Mineral Resource (Effective Date 31st March 2022) (CNW Group/Hot Chili Limited)
1 Mineral Resources are reported on a 100% Basis - combining Mineral Resource estimates for the Cortadera, Productora and San Antonio deposits. All figures are rounded, reported to appropriate significant figures, and reported in accordance with the Joint Ore Reserves Committee Code (2012) and the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves, Definitions (2014) and Guidelines (2019) prepared by the CIM Standing Committee on Reserve Definition, as required by National Instrument 43-101.
2 The Productora deposit is 100% owned by Chilean incorporated company Sociedad Minera El Aguila SpA (SMEA). SMEA is a joint venture (JV) company – 80% owned by Sociedad Minera El Corazón Limitada (a 100% subsidiary of Hot Chili Limited), and 20% owned by CMP Productora (a 100% subsidiary of Compañía Minera del Pacífico S.A (CMP)).
3 The Cortadera deposit is controlled by a Chilean incorporated company Sociedad Minera La Frontera SpA (Frontera). Frontera is a subsidiary company – 100% owned by Sociedad Minera El Corazón Limitada, which is a 100% subsidiary of Hot Chili Limited.
4 The San Antonio deposit is controlled through Frontera (100% owned by Sociedad Minera El Corazón Limitada, which is a 100% subsidiary of Hot Chili Limited) and has an Option Agreement with a private party to earn a 90% interest. 5 The Mineral Resource estimates in the tables above form coherent bodies of mineralisation that are considered amenable to a combination of open pit and underground extraction methods based on the following parameters: Base Case Metal Prices: Copper US$ 3.00/lb, Gold US$ 1,700/oz, Molybdenum US$ 14/lb, and Silver US$20/oz.
6 Metallurgical recovery averages for each deposit consider Indicated + Inferred material and are weighted to combine sulphide flotation and oxide leaching performance. Process recoveries: 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 – 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).
7 Resource Copper Equivalent (CuEq) grades are calculated based on the 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 base case cut-off grade for mineral resources considered amenable to open pit extraction methods at the Cortadera, Productora and San Antonio deposits is 0.21% CuEq while the cut-off grade for mineral resources considered amenable to underground extraction methods at the Cortadera deposit is 0.3% CuEq.
8 Mineral resources are not mineral reserves and do not have demonstrated economic viability. These Mineral Resource estimates include Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorised as Mineral Reserves. It is reasonably expected that the majority of Inferred mineral resources could be upgraded to Measured or Indicated Mineral Resources with continued exploration.
9 The effective date of the estimate of Mineral Resources is March 31st, 2022. Refer to ASX Announcement "Hot Chili Delivers Next Level of Growth" ("Resource Announcement") for JORC Code Table 1 information related to the Costa Fuego Resource Estimate (MRE) by Competent Person Elizabeth Haren, constituting the MREs of Cortadera, Productora and San Antonio (which combine to form Costa Fuego). Hot Chili confirms it is not aware of any new information or data that materially affects the information included in the Resource Announcement and all material assumptions and technical parameters stated for the Mineral Resource Estimates in the Resource Announcement continue to apply and have not materially changed.
10 Hot Chili Limited is not aware of political, environmental or other risks that could materially affect the potential development of the Mineral Resources
Competent Person's Statement - Exploration Results
Exploration information in this Report is based upon work compiled by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscientists (AIG). Mr Easterday has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a 'Competent Person' as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (JORC Code). Mr Easterday consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.
Disclaimer
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this report.
This report is to be used by the recipient for informational purposes only and does not purport to be complete or contain all 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 report 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 report or in any other written or oral communication transmitted to any recipient by any party. Except for liability that cannot be disclaimed by law, by accepting this Document, 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 report 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.
This report should not be considered as a recommendation from any person to purchase any securities. Each person for whom this report 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.
Technical Report
For readers to fully understand the information in this report, they should read the PEA Technical Report prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") (available on www.sedar.com or at www.hotchili.net.au) in its entirety, including all qualifications, assumptions, limitations and exclusions that relate to the information set out in this report 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 report is subject to the assumptions and qualifications contained in the Technical Report.
Qualified Persons – NI 43-101
The Technical Report was compiled by Wood Australia Pty Ltd with contributions from a team of independent Qualified Persons within the meaning of Canadian Securities Administrators' National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43 - 101"). The scientific and technical information contained in the Technical Report pertaining to Coast Fuego was reviewed and verified by the following independent qualified persons within the meaning of NI 43-101:
Ms Elizabeth Haren (MAUSIMM (CP) & MAIG) of Haren Consulting – Mineral Resource Estimate Mr Dean David (FAUSIMM (CP)) of Wood Pty Ltd – Metallurgy Mr Piers Wendlandt (PE) of Wood Pty Ltd – Market Studies and Contracts, Economic Analysis Mr Jeffrey Steven (PE) of Wood Pty Ltd – Capital and Operating Costs Mr Anton von Wielligh (FAUSIMM) of ABGM Consulting Pty Ltd – Mine Planning and Scheduling Mr Edmundo Laporte (PE) of GAC – Environmental Studies, Permitting and Social or Community Impact Mr Dave Morgan (PE) of Knight Piésold – Project Infrastructure (TSF)
The independent qualified persons have verified the information in the Technical Report, including the sampling, preparation, security, and analytical procedures underlying such information.
Disclosure regarding mine planning and infrastructure has been reviewed and approved by Mr Grant King, FAUSIMM, Hot Chili's Chief Operations Officer, and a Qualified Person within the meaning of NI43-101.
Competent Persons – JORC
The information in the Technical Report that relates to Mineral Resources for the Costa Fuego Project is based on information compiled by:
Ms Elizabeth Haren (MAUSIMM (CP) & MAIG) of Haren Consulting – Mineral Resource Estimate Mr Dean David (FAUSIMM (CP)) of Wood Pty Ltd – Metallurgy Mr Piers Wendlandt (PE) of Wood Pty Ltd – Market Studies and Contracts, and Economic Analysis Mr Jeffrey Steven (PE) of Wood Pty Ltd – Capital and Operating Costs Mr Anton von Wielligh (FAUSIMM) of ABGM Consulting Pty Ltd – Mine Planning and Scheduling Mr Edmundo Laporte (PE) of GAC – Environmental Studies, Permitting and Social or Community Impact Mr Dave Morgan (PE) of Knight Piésold – Project Infrastructure (TSF)
Ms Haren, Mr David, Mr Wendlandt, Mr Steven, Mr von Wielligh, Mr Laporte and Mr Morgan have sufficient experience, which is relevant to the style of mineralisation and types of deposits under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves' and as Qualified Persons under NI43-101.
For further information on the Costa Fuego Project, refer to the technical report titled "NI 43-101 Resource Report for the Costa Fuego Copper Project Located in Atacama, Chile", dated May 13, 2022 with an effective date of March 31, 2022, which is available for review on SEDAR (www.sedar.com) under Hot Chili's issuer profile.
Cautionary Note for U.S. Investors Concerning Mineral Resources
National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") is a rule of the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Technical disclosure contained in this report has been prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System. These standards differ from the requirements of the U.S. Securities and Exchange Commission ("SEC") and resource information contained in this press release may not be comparable to similar information disclosed by domestic United States companies subject to the SEC's reporting and disclosure requirements.
All amounts in this report are in U.S. dollars unless otherwise noted.
Non IFRS Financial Performance Measures
"C1 cash cost" is 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.
Scientific and Technical Information
The scientific and technical information contained in this document was reviewed and approved by Ms Kirsty Sheerin, a Member of the Australian Institute of Geoscientists, Hot Chili's Resource Development Manager and a qualified person for the purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Ms Sheerin has undertaken extensive data verification and is satisfied with the exploration, sampling, security, and QA/QC procedures employed by Hot Chili for Costa Fuego and that their results are sufficient to produce data suitable for the purposes desc ribed in the Technical Report, as well as for public reporting purposes subsequent to the technical report.
Sampling, Analysis and Data Verification
A fixed cone splitter was used to create two nominal 12.5% samples (Sample "A" and "B"), along with the large bulk reject sample. The "A" sample is always taken from the same sampling chute, and comprises the primary sample submitted to the laboratory. The "B" samples were retained for use as the field duplicate sample. The coarse residues were collected into large plastic bags and were retained on the ground near the drillhole collar, generally in rows of 50 bags.
All RC drillhole sampling was executed at two metre intervals for Costa Fuego. Within logged mineralisation zones, the 2-metre sample ("A" sample) was submitted. Outside the main mineralised zones (as determined by the logging geologist), 4-metre composites were created from scoops of 2-metre sample residues over this interval. The composited 4-metre samples were analysed first and, if required, the individual and original 2-metre "A" samples comprising this 4-metre interval were sent for analysis. This ensured that no mineralisation was missed while minimising analytical costs. The same procedure was applied to RC drilling undertaken across Productora, however, drillhole sampling was executed at 1-metre intervals.
At Costa Fuego, the majority of diamond core has had systematic half-core sampled at 2-metre intervals. Half-core was chosen as the preferred sampling method to ensure a representative sample was submitted for analysis, while also retaining half-core for review of lithology and mineralisation, and for further test work as required.
Prior to the cutting and sample process, two additional samples are also taken for Costa Fuego being Density and Geotechnical samples.
Density samples are selected based on the deposit type. For Productora this was completed every 5m on drill core, for Cortadera it was every 30 metres, and for San Antonio a total of 107 measurements across 44 drillholes, if the geological conditions allowed it and wereprovided to the laboratory for testwork.
Geotechnical samples are taken for tests including triaxial (one sample per 250 m) and uniaxial tests (one sample per 50 m).
Once assigned a sample number, individual samples to be sent to ALS laboratories were sealed using a staple gun and accompanied by three identical sample tickets (one stapled to plastic bag to identify any tampering/breakage of seal prior to opening at the laboratory in preparation and another placed in the bag). Any broken staple seals on samples were to be notified by ALS to Hot Chili. No sealed bags were reported as being opened or broken by ALS.
For both RC and diamond samples, sample bags were placed inside larger plastic bags and delivered by a dedicated truck to the ALS analytical laboratory in Coquimbo and Copiapó (Chile) for sample preparation and routine analysis.
Following analysis at ALS, the RC and diamond drilling coarse rejects were returned to site and stored in sequence in plastic bags under shade cloth at Hot Chili's nearby Productora core farm. The laboratory pulps were returned and stored at the Productora core farm where they are stored in organised, dry and safe storage containers.
Hot Chili has strict chain of custody security procedures for all samples sent to and from the analytical laboratories.
The ALS analytical laboratory in Coquimbo (Chile) completed all sample preparation and specific gravity test work, while ALS Santiago (Chile) completed all gold analysis, and ALS Lima (Peru) completed all other multielement analysis for the Cortadera assays used in the resource estimate. Hot Chili has implemented rigorous sample preparation and analytical procedures for both RC and diamond core samples, following consultation with ALS in Chile, to ensure that mineralised assays were reported with a high degree of confidence and a wide range of appropriate commodities were assessed.
Samples have been analysed by certified laboratories in Chile and Lima, Peru by standard analytical techniques including:
Copper, silver and molybdenum were analysed by 4-acid digestion (Hydrochloric-Nitric- Perchloric-Hydrofluoric) followed by evaluation using Inductively Coupled Plasma - Optical Emission Spectrometry ("ICP-OES") or Atomic Absorption Spectrometry ("AAS");
Copper results > 10,000 ppm were analysed by "ore grade" method Cu-AA62 (upper limit 40% Cu);
Samples within the oxide and transitional weathering domains (as determined by geologists' logging) were analysed for "soluble copper" (upper limit 10% Cu) to detect the leachability of copper oxide minerals within these domains; and Gold was analysed by 30 or 50 g lead-collection Fire Assay, followed by ICP-OES or AAS.
The verification of input data included the use of company QA/QC blanks and reference material, field and laboratory duplicates, umpire laboratory checks and independent sample and assay verification.
The Qualified Person has assessed the drillhole database validation work and QAQC undertaken by Hot Chili and was satisfied the input data could be relied upon for the estimation of Indicated and Inferred Classified Mineral Resources.
All laboratories used are independent of Hot Chili and the work is performed under a commercial arrangement.