PERTH (miningweekly.com) – A preliminary economic assessment (PEA) for the Costa Fuego copper/gold project, in Chile, has estimated a startup capital requirement of $1.05-billion to support a production rate of 112 000 t/y copper equivalent.

ASX-listed Hot Chili on Wednesday told shareholders that the PEA estimated an initial mine life of 16 years, with 1.41-million tonnes of copper and 718 000 oz of gold to be produced generating total expected revenues of around $13.52-billion.

The PEA estimated a net present value of $1.1-billion and an internal rate of return of 21% on a post-tax basis, with a pay-back period of 3.5 years.

“The Costa Fuego PEA cements Hot Chili’s position as the largest copper developer listed on the ASX by both resource size and potential scale of copper production,” said Hot Chili MD Christian Easterday.

“Costa Fuego ranks highly amongst global peer projects and stands out as one of the world’s lowest capital intensity, major copper developments. The PEA indicates a strong investment case for advancing Costa Fuego to a prefeasibility study (PFS) for what would be a low-cost, low-risk, long-life, large-scale copper project, which is extremely leveraged to both resource growth and copper price appreciation.

“I am very pleased with our entire teams’ effort to deliver the PEA on time and within guidance and look forward to delivering on our objective to transform Hot Chili into the only 100 000 t copper producer listed on the ASX outside of the control of major miners.”

The PFS for Costa Fuego is planned for release by the second half of 2024, with 80% of the workstreams to support the study having already been completed.

Meanwhile, Hot Chili on Wednesday also announced a $15-million investment agreement with Osisko Gold Royalties for a 1.0% net smelter return (NSR) royalty on copper and a 3% NSR royalty on gold produced at Costa Fuego.

“The investment agreement is yet another strong endorsement and follows extensive due diligence of the company and its Costa Fuego copper/gold project by Osisko, renowned for their technical rigour and capabilities,” said Easterday.

“We consider that the Osisko investment will deliver a strong outcome for our shareholders by significantly strengthening our treasury without the dilution of a share issuance, while only adding a minor incremental royalty burden to Costa Fuego.

“Importantly, Osisko’s involvement alongside Glencore’s strategic shareholding in Hot Chili demonstrates Costa Fuego’s global relevance and the projects’ potential to deliver near-term, meaningful, new copper supply.”

The majority of the royalty consideration will be used to fund exploration, development and general advancement work at Costa Fuego. A 30 000 m drill programme is set to start at the close of the investment.