KALGOORLIE (miningweekly.com) – Copper developer Hot Chili has executed a joint infrastructure agreement with Chilean major Compañía Minera del Pacífico SA (CMP), which would see the company emerge as a major shareholder in the Productora copper project.

Hot Chili MD Christian Easterday told delegates at the last day of the Diggers & Dealers conference, in Kalgoorlie, that CMP would take a 17.5% stake in Productora by contributing surface rights, easements and its 35% interest in certain Productora tenements.

In addition, CMP would be free-carried to completion of a prefeasibility study on Productora, after which the company would be responsible for funding its share of expenditure.

“The CMP agreement will reduce the time and cost to develop Productora, putting the project on scale within half the time it would usually take for a project of this size,” Easterday said.

He added that the transfer of CMP’s 35% interest in certain mining rights over Productora would represent the final item of ownership consolidation at the copper project, a process that has taken Hot Chili six years to achieve. 

Meanwhile, Hot Chili would grant CMP an additional purchase option under which the Chilean miner could acquire a further 32.6% interest in Productora for a minimum of $80-million, following successful completion of a prefeasibility study, which was currently expected in the first half of 2015.

“Its always nice for a major partner to ask for the grant of an option to take a bigger stake in the project,” Easterday said on Wednesday.

He noted that the final asking price of the 32.6% stake would be determined by an independent expert.

Hot Chili would now seek shareholder approval for the joint infrastructure agreement, as well as the grant and exercise of the additional purchase option.

Productora currently has an ore reserve of 90.5-million tonnes, grading 0.48% copper, 0.11 g/t gold and 172 parts per million (ppm) molybdenum, as well as a resource of some 214.3-million tonnes, grading 0.48% copper, 0.1 g/t gold and 138 ppm molybdenum for one-million tonnes of contained copper, 675 000 oz of gold and 29 000 t of molybdenum.

Production at Productora has been targeted for 2018, and the project was expected to have a 15- to 20-year mine life.