Hot Chili to claim total control of world-class Cortadera discovery on the back of $40 million raising

Hot Chili will take full control of the world-class Cortadera copper-gold discovery in Chile after raising $40 million for the growing Tier 1 deposit.

It comes hot on the heels of news the world’s largest commodities trader Glencore will take a 9.99% stake in the ASX-listed company, which is preparing to tap North America’s bountiful capital markets via a listing in Toronto.

Hot Chili (ASX:HCH) will rake in $35 million in a private placement and an additional $5 million via a share purchase plan. Glencore will maintain the stake announced last week and get the right to place a representative from the high-powered investor on the Hot Chili board.

The main purpose of the raising will be a US$15 million payment to secure 100% of the massive Cortadera discovery.

The large porphyry deposit is the fastest growing part of its Costa Fuego project in the South American copper superpower, which is part of a major pre-feasibility study announced by Hot Chili in June.

Overall Costa Fuego contains 724 million tonnes grading 0.48% CuEq, including 2.9Mt contained copper and 2.7Moz of gold.

On top of that are handy by-products of 9.9Moz of silver and 64,000t of molybdenum.

Cortadera is located about 14km from the smaller Productora deposit, the subject of a PFS in 2016, and hosts around two-thirds of the total resource at Costa Fuego, including 451Mt at 0.46% CuEq.

But it has shown potential for even more growth, and higher grades, with a recent intercept of 144m at 1% CuEq, 300m from its similarly high grade discovery hole and another containing as much as 836m of copper mineralisation at 0.5%CuEq.

It is little wonder then that securing Cortadera has been a long held priority for Hot Chili.

“The $40 million funding secures ownership of Cortadera, and Glencore’s investment and involvement is a strong endorsement of our future,” Managing Director Christian Easterday said.

Terms of the deal

The raising announced today was conducted at 3.2c a share, a 11.6% discount to Hot Chili’s last closing price.

Investors including Glencore, which took up a ~$14 million portion of the raising, and chairman Murray Black ($3 million) are already in the money, with Hot Chili stock soaring by almost 20% on the news.

The completion of the US$30 million Cortadera acquisition will give the company unfettered control of one of the biggest new global-scale discoveries of copper at a time of unprecedented optimism for the commodity.

The red metal is expected to see deficits of as much as 6.5Mt a year by 2030 due to its use in electric vehicles and renewable energy infrastructure.

Goldman Sachs, which earlier this year predicted copper prices could rise as high as US$15,000/t over the course of the decade, last week updated its 2021 calendar year forecast to US$5/lb, up from already high current levels of around US$4.40/lb.

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.