Hot Chili’s Productora resource is more valuable than ever

Hot Chili’s Productora resource is shaping up into a potential higher-grade, open pit satellite option for its broader Costa Fuego development in Chile.

The welcome news comes as the company moves to start a pre-feasibility study for Costa Fuego, which covers both Productora and its flagship Cortadera copper-gold porphyry discovery that are just 14km apart.

While Hot Chili (ASX:HCH) previously considered Productora to be a bulk tonnage open pit resource, reconciliation of lease mining results and reviewing block model estimation approaches has allowed the company to define higher grade resources with more than 0.4 per cent copper.

Notably, these zones are short range breccias that exist within the current drill density at the Santa Innes lease mine, giving the company the flexibility to consider Productora as either a bulk tonnage or higher-grade satellite ore source.

Improved economics

Rising copper prices have also increased net present value (NPV) and internal rate of return (IRR) for Productora by 500 per cent and 150 per cent respectively over the 2016 pre-feasibility study estimates to US$1.1bn and 38 per cent.

Both NPV and IRR are measures of a project’s profitability.

Lower power costs thanks to the proliferation of solar energy projects in the area have also allowed Hot Chili to consider adopting a finer grind size for Productora ore.

This is expected to increase sulphide copper recoveries by 2 per cent to 88 per cent.

Further metallurgical test work is also underway to optimise gold and oxide copper recoveries for the combined Costa Fuego PFS, with both of these items considered significant potential value levers for the project.

Results from its 40,000m drill program are ongoing at Cortadera, with expectations of an upgrade to its current resource of 451 million tonnes (Mt) grading 0.46 per cent copper equivalent.

Productora adds a resource of 273Mt at 0.52 per cent copper equivalent with a bulk tonnage open pit ore reserve of 166.9Mt at 0.43 per cent copper and 0.09g/t gold.

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.