Interview with Christian Easterday, Managing Director & CEO of Hot Chili Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/hot-chili-asxhch-growth-pivot-positions-for-copper-price-upside-3930

Recording date: 3rd March 2024

Hot Chili Ltd (ASX:HCH) is developing the advanced-stage Costa Fuego copper-gold project in Chile, aiming to help fill an impending global supply gap. With one of the world's largest undeveloped copper resources, strong project economics, and unique infrastructure advantages, Hot Chili presents a compelling opportunity for investors.

Costa Fuego boasts an updated Costa Fuego resource totaling 1.0 billion tonnes grading 0.45% copper equivalent (CuEq). Over 80% of this resource now sits in the higher-confidence Measured and Indicated (M&I) categories at similar grades, including 0.8 billion tonnes at 0.45% CuEq. This positions Costa Fuego as one of the largest undeveloped copper resources globally.

Several factors contribute to Costa Fuego's low-cost profile. The deposit starts at surface, enabling low-strip open-pit mining. The ore is amenable to conventional flotation processing, achieving high recoveries at a coarse grind size. Critically, Costa Fuego is located just 20 km from the Pacific Ocean at low elevations, allowing the use of low-cost seawater instead of expensive desalinated water.

Northern Chile is facing severe water restrictions, forcing most miners to consider expensive and time-consuming desalination projects. Hot Chili, in contrast, has already secured maritime concessions allowing for the direct use of seawater, eliminating the need for desalination. It's a key differentiator that enhances the project's economics and development timeline.

Looking beyond Costa Fuego, Hot Chili sees potential to leverage its water rights to facilitate broader mine development in the region. The company's maritime concession provides enough water to support not just Costa Fuego, but up to five other deposits nearby. By enabling these mines to "piggyback" on its infrastructure, Hot Chili could help unlock stranded assets and bring new supply online sooner.

With a pre-feasibility study expected in H2 2024, Hot Chili is making rapid progress. Upcoming catalysts include a maiden reserve, completion of the PFS, commencement of a full feasibility study, and potential water infrastructure partnerships. As these milestones are achieved, the company's current modest market valuation could quickly be re-rated by investors.

In a market facing a structural supply deficit and strengthening copper prices, Hot Chili stands out as an attractively valued investment with significant upside. The company is well-positioned to be Chile's next major coastal copper mine, with the unique ability to enable and benefit from regional development. As the Costa Fuego story gains momentum, investors would be wise to pay attention.

View Hot Chili's company profile: https://www.cruxinvestor.com/companies/hot-chili-limited

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