Hot Chili acquires new copper discovery, combines Chilean operations to create larger development

Hot Chili ASX HCH acquires copper discovery mining Chile
Hot Chili has executed an option to acquire a 100% interest in the privately-owned, copper-gold porphyry discovery, named Cortadera, adjoining the company’s Productora and El Fuego copper projects.

Following 18 months of high-level discussions, Australian copper explorer Hot Chili (ASX: HCH) has executed a binding memorandum of understanding to acquire a landholding from Chilean mining group SCM Carola’s Vallenar, which includes a highly-prospective deposit adjoining Hot Chili’s flagship Productora and El Fuego projects in Chile.

Under the terms of the agreement, Hot Chili will have the option to acquire a 100% interest in Carola’s Cortadera copper-gold porphyry discovery for US$30 million, payable in three instalments over a 30-month term.

Successful completion of the transaction will lay the foundations for the creation of a globally-significant new copper development centred around Cortadera and the bulk tonnage Productora, which Hot Chili holds in joint venture with Chilean mining major Compania Minera Pacifica (CMP).

Cortadera is located 14 kilometres south-east of Productora on the Chilean coastal range and is considered one of the most significant of its kind since the discovery of SolGold’s Cascabel deposit in northern Ecuador.

The deposit remains largely open and has demonstrated potential to host significant copper-gold mineralisation which Hot Chili believes “may be amenable to open pit mining”.

Consolidating discoveries

The acquisition of Cortadera follows a similar move by Teck Resources and Barrick Gold at Chile’s Nueva Unión copper project, where the Relincho and El Morro deposits were combined to form a more robust, consolidated copper development.

Hot Chili managing director Christian Easterday said combining Cortadera and Productora “makes a lot of sense”.

“Cortadera looks likely to provide the immediate critical mass required to develop a large-scale, long-life, coastal copper mining centre to leverage off existing infrastructure advantages already secured at Productora,” he said.

“The new consolidated development has the potential to place within the production scale range of the top 30 largest operating copper mines globally.”

Purisima option

Hot Chili has also executed a formal option agreement to acquire 100% of the Purisima mining right which comprises approximately 500m of strike extent across the 2km-long Cortadera discovery zone.

Under the terms of the acquisition, Hot Chili will pay Sociedad Legal Minera Purisima Una Sierra La Cortadera US$1.5m in instalments over three years, and grant a net smelter return royalty of 1.5% for any future production from Purisima.

Almost 4000m of a total 23,231m of diamond drilling completed at Cortadera are contained within Purisima and account for one of three porphyry centres discovered to date.

Previous diamond drilling at the mining right recorded a best result of 214m grading 0.5% copper and 0.1 grams per tonne gold from surface, including 82m grading 0.7% copper and 0.1g/t gold.

Capital raising

This morning, Hot Chili announced it would raise funds for planned drilling activities at Cortadera via a $2.2 million non-renounceable entitlements offer of new shares on a two-for-seven basis, at an issue price of $0.01 per share.

Funds from the issue would also be combined with a separate $1 million private placement to sophisticated and professional investors and used for general working capital requirements.

“These funds will provide working capital to crystallise the biggest opportunity our company has ever identified,” Mr Easterday said.

The placement and rights issue are expected to be finalised by late March.

At midday, shares in Hot Chili were trading 36.36% higher at $0.015.

Imelda Cotton has over 20 years experience as a journalist and communications professional. She has spent the bulk of her career in the resources sector, having also worked directly with oil and gas majors and as a journalist covering a vast array of ASX listed companies within the resources, energy, science and health sectors.