How Will Hot Chilis AU$40 Million Placement Impact Costa Fuegos Expansion?

Source: Kapitales Research

Highlights:

• Hot Chili Limited (ASX: HCH) has secured AU$40 million through a private placement, aimed at accelerating the development of its Costa Fuego Cu-Au Project in Chile.
• The capital will fund further drilling at the La Verde Cu-Au discovery, moving toward the feasibility study and resource expansion.
• The company has garnered strong support from institutional investors, including its three largest stakeholders.

Capital Raise to Propel Costa Fuego’s Development

Hot Chili Limited (ASX: HCH) has successfully completed a AU$40 million private placement to accelerate development at its Costa Fuego Cu-Au Project in the coastal range of Chile. The placement saw substantial interest from institutional investors, including the company’s major shareholders, and is designed to support the advancement of several key milestones.

At the time of writing, 24,242,425 new shares were issued at AU$1.65 per share, which represents a 15% discount compared to the company’s most recent closing price. The funds raised will directly support ongoing drilling at La Verde, a key discovery within the Costa Fuego area, and enable the company to continue progressing towards its feasibility study and resource expansion.

Purpose and Allocation of Funds

The AU$40 million will be used for multiple development initiatives:

1. Extensional and resource definition drilling at La Verde to establish a maiden mineral resource and refine a potential higher-grade starter pit for Costa Fuego.
2. Exploration drilling to assess highly prospective adjacent porphyry targets at La Verde.
3. The company plans to complete and submit an Environmental Impact Assessment (EIA) for the Costa Fuego Project by late 2026.
4. Evaluation of strategic funding options for Costa Fuego and the Huasco Water Project, with ongoing negotiations with potential partners.

The placement also provides the company with flexibility to continue evaluating and advancing strategic partnerships, with multiple parties involved in discussions for future collaborations.

Strong Strategic Partnering and Exploration Plans

Following the completion of Pre-feasibility Studies (PFS) for Costa Fuego and Huasco Water, the company initiated a strategic partnering process to secure partners capable of providing the necessary funding and expertise to help drive these projects forward. Several parties have already expressed interest, and negotiations are progressing well.

At the time of writing, Hot Chili continues to engage with potential partners, with a focus on identifying the right strategic alignment to advance these projects through development.

Forward-Looking Strategy

The AU$40 million placement positions Hot Chili strongly in the current copper and gold price environment. With a rising copper price cycle, the company is poised to continue advancing its development plans while maintaining flexibility to explore potential partnerships and capital-raising opportunities.

Investors will be watching closely for updates on the La Verde drilling results, the upcoming feasibility study for Costa Fuego, and the potential for further strategic partnerships as the company works to unlock the full potential of its assets.

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