Hot Chili firms up majority ownership of Productora and Cortadera after oversubscribed raising

Hot Chili ASX HCH copper gold Productora Cortadera oversubscribed capital raising
Hot Chili has paid Compañia Minera del Pacifica US$1.5 million to remove its option to acquire an additional 32% of Productora.

Following a $40 million capital raising earlier this month, Hot Chili (ASX: HCH) has firmed up its majority ownership of Productora by removing Compañia Minera del Pacifica’s (CMP) option to purchase an additional interest in the project.

CMP secured a 20% stake in Productora back in May 2015 in exchange for providing critical infrastructure access rights including water pipeline and electricity easements and electricity.

As part of this CMP paid Hot Chili US$1.5 million which gave it an option to purchase an extra 32% stake in Productora for between US$80 million and US$110 million.

Hot Chili has elected to repay the US$1.5 million option fee to secure its 80% ownership of the project and remove CMP’s option to purchase the additional 32%.

Costa Fuego copper project

Productora is part of Hot Chili’s wider Costa Fuego copper project in Chile and is 10km from the project’s other primary deposit Cortadera.

Costa Fuego has a resource of 724Mt at 0.48% copper equivalent for 2.9Mt copper, 2.7Moz gold, 9.9Moz silver and 64,000t of molybdenum.

Within that resource, Productora contributes 273Mt at 0.52% copper equivalent for 1.2Mt copper, 800,000oz gold and 36,000t molybdenum, while Cortadera accounts for 451Mt at 0.46% copper equivalent for 1.7Mt copper, 1.9Moz gold, 9.9Moz silver and 27,000t molybdenum.

The deposits are close to Chile’s Pan American Highway.

Strongly supported equity raising

Earlier this month, Hot Chili undertook a $40 million raising which saw one of the world’s largest miners Glencore as a cornerstone investor.

The major miner bought up $14.4 million-worth of Hot Chili shares to scoop up a 9.99% equity.

Making up the $40 million raising was a $35 million private placement and a $5 million share purchase plan.

The share purchase plan was closed early after the company received subscriptions for more than $10 million-worth of shares.

Almost 20% of Hot Chili’s existing shareholders applied to participate in the share purchase.

Cementing ownership

As well as securing its 80% ownership of Productora, Hot Chili is using proceeds from the raising to make a final acquisition payment for Cortadera.

A US$15 million payment will give Hot Chili full ownership of the deposit.

A major resource upgrade is due for Cortadera in the December quarter.

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