PERTH (miningweekly.com) – Junior developer Hot Chili has raised A$8.1-million in a share placement to seven of the company’s largest shareholders.

The share placement was priced at 12c a share, and was in line with the company’s 20-day volume weighted average price.

Hot Chili told shareholders on Monday that the capital would enable the company to complete the prefeasibility study (PFS) on its Productora copper project, in Chile, without increasing debt, and would allow the company to maintain its financial position.

The raising also meant that Hot Chili would not be required to draw down the remaining $8.5-million available under a credit facility, and meant that the credit facility could be used for drilling.

“The financial strength and the options it gives us are highly significant, given we are not under way with first drill testing of large-scale porphyry potential in the centre of our planned development,” said Hot Chili MD Christian Easterday.

“The support we have received from our major shareholders is a great vote of confidence in the outlook for Productora.”

The completion of the PFS would trigger a $26-million payment from Hot Chili’s joint venture partner in the Productora project, which would represent the first tranche of Compania Minera del Pacifico’s agreed payment should the partner exercise its option to increase its stake in the project from its current 17.5% to 50.1%

The agreed total price for exercising this option was between $80-million and $110-million, with the final figure to be determined by an independent valuation following the completion of a PFS.

The remaining amount of the option agreement would be payable upon the completion of a definitive feasibility study.

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