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Costa Fuego copper project, Chile – update

Aerial view of the Costa Fuego project

Photo by Hot Chili

1st September 2023

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Costa Fuego copper project.

Location
Coastal range of the Atacama region, Chile.

Project Owner/s
Costa Fuego comprises three mineral resources situated within a 10 km radius – Productora, Cortadera and San Antonio.

The Productora deposit is 100% owned by Chilean incorporated company Sociedad Minera El Aguila SpA (SMEA). SMEA is a joint venture company, 80%-owned by Sociedad Minera El Corazón Limitada (a 100% subsidiary of Hot Chili) and 20% owned by CMP Productora (a 100% subsidiary of Compañía Minera del Pacífico).

The Cortadera deposit is controlled by Chilean incorporated company Sociedad Minera La Frontera SpA (Frontera) – a subsidiary company 100% owned by Sociedad Minera El Corazón Limitada, which, in turn, is a 100% subsidiary of Hot Chili.

The San Antonio deposit is controlled by Frontera and has an option agreement with a private party to earn a 90% interest.

Project Description
The results of the preliminary economic assessment (PEA) on Costa Fuego outline a low-risk, long-life copper project benefiting from low startup capital and a high copper equivalent metal production profile of more than 112 000 t/y over a 16-year mine life, including 95 000 t copper and 49 000 oz gold during primary production (first 14 years).

The PEA proposes a combined openpit truck-and-shovel operation and an underground block cave using centralised processing for a conventional large-scale copper mine producing concentrate and copper cathode.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
In the base case ($3.85/lb), the project has a pretax net present value, at an 8% discount rate, of $1.54-billion and an internal rate of return of 24%, with a payback from first production of 3.5 years.

Capital Expenditure
$1.05-billion.

Planned Start/End Date
Not stated.

Latest Developments
Hot Chili has taken another step in its consolidation strategy for the Costa Fuego project, with a binding letter of intent (LoI) for an option to acquire Australia-listed Bastion’s Cometa project.

Cometa comprises exploration and mining concessions covering about 56 km2 in the area located about 15 km southwest of Costa Fuego’s planned operating centre and contiguous with Hot Chili landholdings in the region.

The company is focused on upscaling Costa Fuego’s resource base and potential study scale towards 150 000 t/y production profile ahead of the delivery of a prefeasibility study in the second half of 2024.

Cometa provides additional optionality for the discovery of further mineral deposits in the project area with the potential to provide supplemental feed and/or a longer mine life than laid out in the PEA.

In terms of the LoI, Hot Chili has been granted a 60-day exclusivity period for a due diligence and for its subsidiary, Sociedad Minera La Frontera to enter into a definitive option agreement with Bastion’s subsidiary.

Upon grant of the option, there is a $100 000 nonrefundable cash payment owing, and 12 months later, a $200 000 cash payment.

If the option is exercised, Hot Chili must pay Bastion $2.4-million within 18 months and $3-million within 30 months from the date of the grant of the option.

Key Contracts, Suppliers and Consultants
Wood Australia (PEA).

Contact Details for Project Information
Hot Chilli, tel +61 8 9315 9009 or email admin@hotchili.net.au.

 

Edited by Creamer Media Reporter

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