Hot Chili Signs Binding Letter of Intent for Option to Acquire Cometa Project in Chile

29 August 2023

Hot Chili Limited (ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) ("Hot Chili" or the "Company") has officially confirmed the establishment of a binding letter of intent ("LOI") with Bastion Minerals Limited (ASX: BMO) ("Bastion"). This LOI outlines the arrangement for Hot Chili to be granted an option to acquire full ownership (100%) of Bastion's Cometa Project in Chile, known as "Cometa". The Cometa Project is situated in proximity to Hot Chili's Costa Fuego Copper-Gold Project ("Costa Fuego"), located within the coastal range of the Atacama Region in Chile.

The Cometa Project encompasses exploration and mining concessions spanning approximately 56km2, situated roughly 15km southeast of the planned operational hub of the Costa Fuego Copper-Gold Project (referred to in Figure 1) by Hot Chili. The Cometa area also adjoins Hot Chili's existing landholdings in the same region.

This option agreement aligns with Hot Chili's overarching strategy to consolidate and strengthen the Costa Fuego copper project.

In the recently released Preliminary Economic Assessment (PEA), titled "Costa Fuego Copper Project – NI 43-101 Technical Report Preliminary Economic Assessment" with an effective date of June 28, 2023, Hot Chili positions Costa Fuego as a copper project characterized by longevity and low risk. The project boasts a favorable launch capital and substantial annual copper equivalent2 metal production, exceeding 100 kt over a 16-year mine life. This includes 95 kt of copper and 49 koz of gold during the primary production phase (initial 14 years). The C1 Cash Cost3 is estimated at US$1.33/lb, net of by-product credits.

Hot Chili's main focus revolves around elevating Costa Fuego's resource foundation and the potential scope of study, aspiring for a copper production level of 150,000 tpa (tons per annum) in anticipation of the delivery of the Costa Fuego Pre-Feasibility Study ("PFS"), projected to be presented in the second half of 2024. The addition of the Cometa Project introduces the prospect of uncovering further mineral deposits within the Costa Fuego Project vicinity, thereby offering supplementary sources of ore and potentially extending the projected mine life as outlined in the 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").

An update on the ongoing expansion drilling activities at Cortadera is as follows:

Drilling operations at Cortadera are currently in progress, with a total of nine Reverse Circulation ("RC") drillholes having been completed, amounting to a combined length of 2,010 meters.

Among these drillholes, four have been executed across the western extension of the Cortadera porphyry resource. Additionally, one of these drillholes was designed as a pre-collar, preparing for a deeper diamond drillhole beneath Cuerpo 4. After the completion of RC pre-collars at Cortadera, the RC drill rig is slated to initiate a hydrogeological program at the site, beginning in mid-September.

In the coming month of September, plans are set for one diamond drill rig to commence double shift drilling. Furthermore, preparations are actively underway to introduce a second diamond drill rig into the operation. This expansion is in anticipation of the company's extensive 30,000-meter expansion drilling campaign, which will encompass various exploration targets.


Source: prnewswire