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Hot Chili's PEA for Costa Fuego Copper-Gold Project shows strong economics with a low start-up capital of US$1.05 billion, promising a fast payback within 3.5 years. The base-case post-tax Net Present Value (NPV 8%) is estimated between US$733 million to US$1.46 billion with an Internal Rate of Return (IRR) of 17% to 25%.
The project is estimated to have an average CuEq2 production rate of 112 kt pa, producing 1.41 Mt Cu and 718 koz Au over an initial mine life of 16 years. Total revenue for the period is estimated at US$13.52 billion with a total free cash flow of approximately US$3.28 billion after taxes, operating costs, capital costs, and royalties.
The project, one of few global copper developments projects at low elevation with a water permit and power connection, is set to begin a 30,000 m drilling program across multiple targets. Approximately 80% of workstreams to support a Pre-Feasibility Study (PFS) are completed, with minimal study costs remaining.
Hot Chili Limited has announced a binding US$15 million Investment Agreement with Osisko Gold Royalties, which will provide a 1.0% Net Smelter Return (NSR) royalty on copper and a 3% NSR royalty on gold across the Company’s Costa Fuego Copper-Gold Project.
The investment will be used to advance the Costa Fuego Pre-Feasibility Studies, resource growth drilling programs, and overall advancement of the Project, significantly boosting Hot Chili’s cash position to approximately A$26 million upon closing.
In the event of a change in control before the fourth anniversary of closing, buyback rights are available and Osisko will have a Right of First Offer (ROFO) with respect to the sale of any future royalty, stream, or similar interests by Hot Chili.
New drill assay results from the Cortadera copper-gold resource in Chile confirm significant mineralization outside of the current Cuerpo 1 mineralized envelope, increasing the potential for future Mineral Resource expansion.
Standout results include 270m grading 0.5% CuEq (0.4% Copper, 0.1g/t Gold) from surface (CRP0202D) and 84m grading 0.4% CuEq (0.4% Cu) from 336m depth downhole (CORMET001).
Results are pending for three additional drill holes, and planning is underway for a second-pass drill program on new AMSA landholding.