Hot Chili Outlines $1.2 Billion Net Present Value For Costa Fuego In Pre-Feasibility Study

Hot Chili Limited (TSXV: HCH) has completed a pre-feasibility study on its Costa Fuego copper-gold project in Chili. The study has outlined the project as having an after-tax net present value of US$1.2 billion, alongside an internal rate of return of 19% when using an 8% discount rate.

The latest estimate is based on a copper price of US$4.30 per pound and a gold price of US$2,280 per ounce. At the current spot copper price of US$5.30 per pound, the economics are said to improve to an after-tax NPV(8%) of US$2.2 billion, while the IRR moves to 30%.

The analysis is based on a project that would see a mine life of 20 years, producing on average 90,000 tonnes per annum of copper equivalent from both open pits as well as underground mining. Producing in the first 14 years are to average 116,000 tonnes of copper equivalent per annum, which equates to 95,000 tonnes of copper and 48,000 ounces of gold. Over the life of the mine, 3.3 billion pounds of copper and 780,000 ounces of gold are expected to be produced.

In terms of costing, start-up capital costs are pegged at $1.27 billion, while overall sustaining capital expenditure figures were not provided. Over the life of the mine, cash costs are estimated at $1.38 per pound of copper, while all in sustaining costs are estimated at $1.85 a pound.

As part of the study, Hot Chili notably announced its first mineral reserves, with Costa Fuego said to contain probable reserves of 502 million tonnes at 0.37% copper, 0.10 g/t gold, 0.49 g/t silver and 97 ppm molybdenum. The figures translate to 1.9 million tonnes of contained copper, 1.6 million ounces of gold, 8.0 million ounces of silver and 49,000 tonnes of molybdenum across the open pit and underground models.

In terms of mineral resources, the project is estimated to also contain 3.6 million tonnes of copper equivalent on a measured and indicated basis, and 640,000 tonnes of copper equivalent on an inferred basis.

The pre-feasibility study compares to a 2023 preliminary economic assessment, which outlined a US$1.1 billion net present value for Costa Fuego and an IRR of 21% on a post-tax basis using an 8% discount rate and US$3.85 per pound copper and US$1,750 gold. That estimate however was based on a mine life of 16 years, and average annual production of 112,000 tonnes per annum.

Hot Chili is said to now be in the process of submitting its stage one environmental impact assessment, alongside assembling a definitive feasibility study for the project.

Hot Chili last traded at $0.60 on the TSX Venture.

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