Hot Chili (ASX:HCH) has received $15 million from the sale of a 1% net smelter royalty (NSR) on copper and a 3% NSR on gold across its Costa Fuego Copper-Gold Project in Chile.
Upon completing the transaction with Osisko Gold Royalties (TSE:OR), the $175.58 million market capitalisation company has a cash position of about $26 million.
Hot Chili will now begin a 30,000m drilling program in the coming weeks, complete a resource upgrade for Costa Fuego by late 2023, and deliver a Prefeasibility Study (PFS) in the second half of 2024. The company notes it has already ‘considerably’ advanced its PFS with minimal expenditure required for completion.
Commenting on the deal, Hot Chili Managing Director and Chief Executive Officer (CEO) Christian Easterday says: “We are very pleased to have closed the investment with Osisko Gold Royalties enabling the company to advance the project without the dilution of a share issuance.
Costa Fuego is globally relevant, being one of only a handful of projects with potential to deliver near-term, meaningful, new copper supply into a looming global copper supply shortage.”
On 28 June 2023, Hot Chili reported a preliminary economic assessment (PEA) that demonstrated Costa Fuego had an estimated start-up capital cost of US$1.05 billion, a base-base post-tax net present value (NPV) of US$1.1 billion and internal rate of return (IRR) of 21%, and a base-case pre-tax NPV of US$1.54 billion and IRR of 24%.
The PEA outlined an initial mine life of 16-years with 1.41 million tonnes of copper and 718,000 ounces of gold produced for a total revenue of about US$13.52 billion, and a total free cash flow of about US$3.28 billion.
Hot Chili is an Australian copper explorer on a mission to develop its Costa Fuego Copper-Gold Project in the coastal range of the Atacama region in Chile. The project lies 600km north of Santiago, and hosts the Cortadera, Productora, and El Fuego deposits.
Write to Harry Mulholland at Mining.com.au
Images: Hot Chili Ltd
