Hot Chili retains full ownership of strategic Productora copper gold asset
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Hot Chili continues on the path to becoming an ASX copper major, eliminating Compañía Minera del Pacífico’s (CMP) option to purchase a big chunk of the ‘Productora’ copper-gold project in Chile.
CMP is a subsidiary of Compañia de Aceros del Pacifico S.A. (CAP), Chile’s largest iron ore miner, infrastructure, and integrated steel business.
In May 2015, CMP acquired a 20% interest in Productora, in exchange for providing critical infrastructure access rights (water pipeline easements, electricity easements, surface rights) and CMP’s interests in several lease holdings at the project.
CMP also paid Hot Chili (ASX:HCH) a $US1.5 million reimbursable fee for an option to purchase an additional 32% interest in Productora for a valuation of between US$80 million to US$110 million.
In March 2016, Hot Chili completed a pre-feasibility study at Productora, which boasts a substantial 1.2mt copper, 800,000oz gold, and 36,000t molybdenum resource.
CMP elected at that time to contribute to expenditure in the project going forward, but not exercise its option.
HCH has now repaid CMP the US$1.5 option fee and CMP has accepted the payment.
“The Board of Hot Chili look forward to continuing its strong partnership with CMP and all key stakeholders toward developing Costa Fuego into a major, coastal, copper-gold production centre,” the company says.
Hot Chili recently locked in $40m of funding to acquire the Cortadera copper-gold porphyry discovery in Chile – down the road from Productora — “and deliver rapid resource growth”.
This includes a $35m private placement cornerstoned by mining major Glencore, which will emerge as HCH’s biggest shareholder (9.99%).
Hot Chili’s managing director Christian Easterday says Glencore’s investment and involvement “is a strong endorsement of our future”.
HCH is now funded to deliver a major resource upgrade and pre-feasibility study for the wider ‘Costa Fuego’ project, which has a current resource of 2.9Mt copper, 2.7Moz gold and 9.9Moz silver and 64,000t molybdenum.
This article was developed in collaboration with Hot Chili, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.