Hot Chili Limited Provides Key Updates on Costa Fuego Copper-Gold Project
HCH (HCH) Share Update November 2024 Monday 11th
Hot Chili Limited Reveals Promising Costa Fuego Copper-Gold Project Updates
Hot Chili Limited (ASX: HCH, TSXV: HCH, OTCQX: HHLKF) has released a comprehensive update on its Costa Fuego Copper-Gold Project in Chile, highlighting its strategic plans and economic assessments.
Instant Summary:
- Costa Fuego is one of the largest undeveloped copper resources not controlled by a major miner.
- Post-tax NPV of US$1.10 billion with a 21% IRR over a 16-year mine life.
- Projected average annual production of 112 kt CuEq for the first 14 years.
- Low elevation and proximity to infrastructure reduce development risks.
- Forward-looking plans include a PFS delivery in Q1 2025.
Project Overview
Hot Chili Limited's Costa Fuego Copper-Gold Project is situated in Chile and is recognized as one of the largest scale, lowest elevation copper resources globally not controlled by a major mining company. The project boasts an Indicated Resource of 798 Mt grading 0.45% CuEq and an Inferred Resource of 203 Mt grading 0.31% CuEq, containing significant quantities of copper, gold, molybdenum, and silver.
Economic Assessment
The Preliminary Economic Assessment (PEA) reveals strong financial metrics, including a post-tax Net Present Value (NPV) of US$1.10 billion and an Internal Rate of Return (IRR) of 21%. The project is expected to produce an average of 112 kt CuEq annually for the first 14 years, with a low start-up capital requirement of US$1.05 billion. The production is expected to be highly leveraged to copper prices, with a US$100 million increase in NPV for every U$0.10/lb increase in copper price above US$3.85/lb.
Infrastructure and Development
Located at a low elevation of less than 1,000 meters and approximately 50 km from the port, the Costa Fuego project benefits from existing infrastructure, including a maritime water concession and power connections. The Environmental Impact Assessment is significantly advanced, and no large-scale desalination plant is required, which reduces both capital and operational costs.
Future Plans
Hot Chili Limited plans to deliver the Costa Fuego Pre-Feasibility Study (PFS) in Q1 2025, alongside the Huasco Water Business Case Study. The company is also pursuing further consolidation opportunities and targeting an increase in project scale to a 150 ktpa copper project for over 20 years through resource growth and optimization initiatives.
The updates on the Costa Fuego project are likely to positively influence Hot Chili Limited's stock, as the strong economic metrics and strategic location reduce development risks. The project's leverage to copper prices could attract investors looking for exposure to copper, especially given the projected structural shortage in copper supply.
Investor Reaction:
Analysts are expected to react positively to the Costa Fuego updates, given the project's robust financial metrics and strategic advantages. The low elevation and proximity to infrastructure are viewed as significant risk mitigators, enhancing the project's attractiveness.
Conclusion:
Investors should keep an eye on Hot Chili Limited's upcoming Pre-Feasibility Study and Huasco Water Business Case Study in Q1 2025. The company's strategic initiatives and strong project fundamentals position it well for future growth in the copper market.