Hot Chili Ltd. (HCH:ASX;HCH:TSXV;HHLKF:OTCQX) is an Australia-based copper company primarily engaged in mineral exploration. The firm is focused on copper exploration and development in Chile's Atacama Region.
The new press release this morning shares that the company has signed a binding letter of intent with Bastion Minerals Ltd. to acquire an option for the Cometa copper-gold project in Chile. Cometa is located near Hot Chili's Costa Fuego project in the Atacama region. The acquisition is part of Hot Chili's strategy to consolidate the Costa Fuego area and increase resource potential.
Under the agreement, Hot Chili will make an initial US$100,000 payment for exclusivity to conduct due diligence. If Hot Chili exercises the option within 18-30 months, the purchase price will be US$2.4-3 million, payable 50% in cash and 50% in Hot Chili shares. The project has the potential to provide additional mineral resources and extend Costa Fuego's 16-year mine life outlined in the recent Preliminary Economic Assessment. Hot Chili will provide further updates as the option progresses.
This press release also provided an update on Hot Chili's drilling operations at Cortadera. Currently, nine reverse circulation drill holes have been completed.
According to the company, "One diamond drill rig is planned to commence double shift drilling in September. Preparations are underway to bring a second diamond drill rig online as the Company ramps up for its extensive 30,000m expansion drilling campaign across multiple exploration targets."
Another report relates to the company's Costa Fuego project, a copper mining hub in Region III on the Chilean coastal range comprising the Cortadera, Productora, and San Antonio deposits.
The Cortadera deposit is a newer source of copper-gold discoveries, while Productora is an advanced-stage copper-gold project. Meanwhile, the El Fuego copper project encompasses two historic underground mines: San Antonio and Valentina.
Hot Chili Ltd.'s wholly-owned subsidiaries include Sociedad Minera El Corazón Limitada, Sociedad Minera Los Mantos SpA, Sociedad Minera Frontera SpA, and Sociedad Minera Bandera SpA.
The Catalyst: NI 43-101 Report Filed
On August 11, Hot Chili Ltd. issued a news release announcing the filing of a National Instrument 43-101 technical report for the Costa Fuego copper-gold project.
The report, which was officially titled "Costa Fuego Copper Project NI 43-101 Technical Report Preliminary Economic Assessment," has an effective date of June 28, 2023, and was prepared pursuant to the National Instrument 43-101 standards of disclosure for mineral projects.
National Instrument 43-101 provides the rules and guidelines for disclosure for companies to trade on stock exchanges overseen by the Canadian Securities Administrators or issue other instrumented securities within Canada.
On August 16, Jessica Cummins, reporting for Stockhead.au, explained that "Copper finally joined the ranks as a critical mineral in the U.S. last week alongside a list of 50 others, after a year of solid lobbying by U.S. senators and corporate bodies."
The newly issued report is available for review on both SEDAR+ — the Canadian Securities Administrators' national system that all market participants use for filings, disclosure, payments, and information searching in Canada's capital markets — and the Company's website.
The Technical Report supports the news release dated June 28 announcing the Costa Fuego Copper-Gold Project Preliminary Economic Assessment, which is also available on SEDAR+.
Hot Chili's Managing Director and Chief Executive Officer Christian Easterday, a Member of the Australasian Institute of Geoscientists (AIG) and a Qualified Person as defined in NI 43-101 is responsible for the announcement and has provided sign-off for release to the ASX and TSXV, suggesting that the company is seeking to further grow its Canadian ownership base.
Why This Sector? Copper Going Critical
On July 31, the U.S. Department of Energy (DOE) officially put copper on its critical materials list.
"Its exclusion from the list earlier this year sparked an uproar amongst U.S. senators whose home states are hubs of copper production and manufacturing."
"With market indicators (supply and demand) pointing to a potential 6 million tonne shortfall in the next five to ten years, the move to include copper to the U.S. Critical Minerals list feels like a no-brainer."
Hot Chili was also listed as one of the top ten companies to watch by The Stake Desk.
"In fact, according to the World Bank, the copper industry needs to produce as much of the red metal as humanity has produced in the last 5,000 years to keep up with demand over the next 20 or so years."
The report goes on to interview EM2 CEO Tim Mason, who explains that the addition of copper to the list could lead to copper projects being brought online faster.
"The U.S. has set a goal for 100% clean electricity by 2035, and copper is massively required to support clean energy through electricity, just because of its conductivity," he explains. "A lot of copper is going to be needed, and the U.S. is a net importer of refined copper."
Why This Company? Copious Deposits, International Ambitions
The Costa Fuego copper project represents the consolidation of the Cortadera porphyry copper-gold deposit and the Productora copper-gold deposit. The two deposits are set some 14 km apart in an excellent location for extraction: the low altitude, coastal range of Chile, an infrastructure-rich area with low capital intensity.
Currently, Hot Chili is working to advance its Costa Fuego Project through a preliminary feasibility study and testing several high-priority exploration targets. The Cortadera and Productora deposits contain an Indicated Resource of 391Mt grading 0.52% CuEq (copper equivalent), containing 1.7 Mt Cu, 1.5 Moz Au, 4.2 Moz Ag, and 37 kt Mo, and an Inferred Resource of 334Mt grading 0.44% CuEq containing 1.2Mt Cu, 1.2 Moz Au, 5.6 Moz Ag, and 27 kt Mo, at a cut-off grade of 0.25% CuEq.
Productora is 100% owned by Chilean-incorporated Sociedad Minera El Aguila SpA (SMEA). SMEA is a joint venture company, 80% owned by Sociedad Minera El Corazón Limitada (a 100% subsidiary of Hot Chili Ltd), and 20% owned by CMP Productora (a 100% subsidiary of Compañía Minera del Pacífico S.A (CMP).
Cortadera is 100% owned by a Chilean incorporated company, Sociedad Minera La Frontera SpA, a 100% subsidiary of Hot Chili Ltd. Cortadera also contains a higher grade component of 104Mt at 0.74% CuEq, and this has strong potential to continue growing rapidly with further drilling.
With these positions, Hot Chili has one of the largest copper mineral resource holdings and one of the largest gold mineral resource holdings of any ASX-listed emerging company.
It was also listed as one of the top ten companies to watch by The Stake Desk.
Why Now? Canada as a Bridge to the USA
As U.S. demand for copper deepens, the country's buyers will be looking first to adjacent, friendly markets to meet increasing demand. By filing a NI 43-101, Hot Chili Ltd is signaling its intention to expand from the rather limited confines of the ASX to the much wider (and wilder) world of the TSXV exchange.
Such a repositioning would put the company in the perfect place to begin to make inroads into the rapidly expanding U.S. market for friendly sources of copper and other critical minerals. If the company is sending signals that a TSXV listing is in its future, there seems little downside to getting onboard before that voyage is announced.
Streetwise Ownership Overview*Ownership and Share Structure
According to Reuters, 2.83% of Hot Chili is owned by management and insiders. Director and CEO Christian Easterday owns 0.51%, with 0.61 million, and Non-Executive Director and Chairman Dr. Nicole Sheri Adshead-Bell has 0.20%, with 0.23 million.
24.04% is with strategic investors. Glencore Plc. has 9.11%, with 10.89 million shares. GS Group Australia Pty. Ltd. has 4.73%, with 5.65 million. Blue Spec Sondajes Chile SpA has 3.39%, with 4.05 million, and Jaerica Pty. Ltd. has 2.13%, with 2.55 million.
0.93% is with institutions. CI Global Asset Management has 0.53%, with 0.63 million shares. Dimensional Fund Advisors LP has 0.27%, with 0.32 million, and Dimensional Fund Advisors Ltd. has 0.06%, with 0.07 million.
The rest is held by retail investors.
Market Watch reports that Hot Chili has a market cap of CA$105.85 million, with 119.45 million shares outstanding. It trades in the 52-week range between CA$0.5000 and CA$1.1100.
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