PERTH (miningweekly.com) – Junior Hot Chili has accepted an offer from Chilean-government agency Empresa Nacional de Mineria (Enami) for the lease mining and processing of ore from the Productora copper/gold project, in Chile.
Subject to a formal agreement, Enami would lease the mining concession for a period of two years, at terms and conditions to be agreed upon, and could sublet sectors of the concessions to third parties who will exploit the site and deliver their production to the Enami plant in Vallenar.
Taking into consideration the existing underground mine development and average grade of historical production, Enami is estimating the production of some 10 000 t/m of ore could be achieved, at grades of 1%.
A 10% royalty would be applicable for the sale value of all minerals extracted from the concession area, and the payment of an additional bonus of $2/t of copper ore purchased from Vallenar would also be payable.
At the current copper price of $2.15/lb, the potential mining and processing agreement would represent some $400 000 to $500 000 in annual payments to Hot Chili for its 80% interest in Productora, while the royalty component would provide further payment upside, the ASX-listed company told shareholders.
Hot Chili on Thursday said that a formal agreement would be a win-win for the company and its key local and government stakeholders, and would likely see the company announce first production and revenue from its Chilean assets this year, while safeguarding 400 jobs at Enami’s Vallenar plant.