Productora lease mining to start earlier and deliver more for Hot Chili
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Special Report: Cash flow from Hot Chili’s satellite Productora copper-gold project in Chile is imminent after lease mining started four months ahead of schedule.
Early cash flow is always welcome, particularly when it is likely to meatier that originally expected.
This is exactly the picture that Hot Chili (ASX:HCH) is admiring at its Productora copper-gold project where recent increases in copper and gold prices have led Chilean government agency Empresa Nacional de Mineria (ENAMI) to kick off operations well ahead of schedule.
Mining and processing operations will target a head grade of 1.8 per copper and 0.5 grams per tonne gold to generate revenue.
The company says it is pleased with the speed that ENAMI has moved to appoint an experienced local mining group and coordinate the needed approvals for mining at the project.
And there might be more coming with Hot Chili noting that it is in discussions with the agency to expand the scale of their existing 120,000 tonne per annum lease mining and processing agreement.
Managing director Christian Easterday says the upcoming first production is an important milestone and marked the beginning of first revenue for Hot Chili.
“We have been able to deliver a unique transition from explorer and project developer to producer without the requirement for capital or operating cost,” he noted.
“Higher copper and gold prices in combination with high grade ore production is set to deliver stronger than anticipated first revenue.
“This is welcome news ahead of our plans to shortly unveil a maiden resource estimate for our neighbouring world-class Cortadera copper-gold discovery.”
Under the two-year agreement, ENAMI will mine and process 120,000 tonnes per annum of ore from Productora through its Vallenar plant.
Hot Chili and its partner CMP (20 per cent) will be paid $US2 ($2.80) per tonne of ore processed and a 10 per cent royalty on the sale value of extracted minerals.
Lease mining will benefit from the existing Santa Innes and Productora underground mines and is not expected to materially deplete the project’s existing 167 million tonne ore reserve.
The agreement includes an option for a one-year extension.