JOHANNESBURG (miningweekly.com) – ASX-listed junior developer Hot Chili has raised A$4.4-million, against a target of A$2.5-million, following a successful placement of shares at a discounted average price of 5c a share – 10.7% less than the company’s last close of 5.6c.

The placement exceeded its target, as it was heavily oversubscribed, prompting Hot Chili to accept additional subscriptions. The placement saw strong demand from existing major shareholders, as well as professional and sophisticated investors in Australia and Chile.

Hot Chili MD Christian Easterday noted that the strong response to the placement was encouraging, as the company was focused on achieving several near-term catalysts at its Chile-based Productora copper project.

Funds from the placement will be used to advance an assessment of the company’s high-grade Sierra Zapallo gold deposit at Productora, and to provide general working capital for the company.

“The company is well placed to add significant near-term value through the commencement of a low-cost exploration and resource development assessment of the Sierra Zapallo high-grade gold opportunity at Productora,” said Easterday.

ABOUT SIERRA ZAPALLO
Hot Chili recently confirmed that it had commenced evaluation of a new gold growth opportunity, Sierra Zapallo, which was located within the southern extent of the Productora copper-gold project area.

The Sierra Zapallo gold deposit had seen significant historical small-scale gold production, located immediately to the south of the existing deposit. The area boasts about 900 m in strike extent of primary high-grade, sub-vertical, gold-bearing quartz veins.

Assessment of the Sierra Zapallo deposit offered the potential to delineate a significant high-grade, openpit gold deposit in a short time.

JV PARTNERSHIP
Meanwhile, Hot Chili’s Chilean joint venture (JV) partner, Compañía Minera del Pacifico (CMP), had bought an additional 2.5% interest in the Productora for $1.5-million, taking CMP’s interest in Productora from 17.5% to 20%.

Funds from the transaction have been fully applied to reduce Hot Chili’s loan facility with natural resource lender Sprott Resource Lending Partnership.

Hot Chili last week reduced the facility balance to $6.5-million by paying Sprott $3-million. Sprott and Hot Chili have also executed a 12-month extension to the facility, which will now be due for payment on June 30, 2017.

Hot Chili noted on Friday that CMP’s increasing participation in Productora, and the reduction and extension of the facility, had substantially strengthened its financial position.

Chairperson Murray Black said the company was pleased to be cooperating well with its JV partner in mapping out an activity path for Productora.

“Productora is very well positioned – we are seeing an alignment of our planned future decision to mine and a rising copper market on the horizon.

Black added that, while current conditions for the copper sector were challenging, Hot Chili recognised several strong indicators toward a medium-term price recovery.

“We believe Productora will emerge into this next upward price cycle as a prized Chilean copper development option,” he said.

Black noted that the Hot Chili team had been preparing to commence with first drilling over several large-scale copper porphyry targets, among other steps at the project.

“Our primary focus will be to continue advancing Productora toward a decision to mine, in particular preparing for the commencement of a porphyry drilling campaign, which has the potential to be a game changer if drilling returns successful results,” added Easterday.