ASX-listed Hot Chili has hit the go button on its option agreement to acquire the Cometa copper project in Chile, about 15km south-east of its planned mining centre at its Costa Fuego copper-gold operation.
The company previously agreed to a binding letter of intent for an option to acquire Bastion Minerals’ neighbouring tenements, adding exploration and mining concessions covering about 56 square kilometres directly south of its existing holdings.
Management says historical work by Bastion and previous explorers, including surface mapping and soil and rock sampling in addition to ground geophysics, identified several targets prospective for breccia-hosted iron oxide-copper-gold mineralisation.
As part of the new agreement, Hot Chili has made a non-refundable cash payment of US$100,000 (AU$152,000) to Bastion and it will be followed by another payment of US$200,00 (AU$304,000) in 12 months to keep the option in good standing.
Bastion will receive US$2.4 million (AU$3.65 million) if the option is exercised within 18 months of the grant, or US$3 million (AU$4.57 million) if it is exercised within 30 months. The purchase can be completed with 100 per cent cash or a split of 50 per cent cash and 50 per cent ordinary Hot Chili shares.
Management says the latest deal follows successful due diligence and is another step in its consolidation strategy for the Costa Fuego copper project that sits about 600km north of the Chilean capital city of Santiago in the low-altitude coastal ranges of the Atacama region.
The project boasts three deposits within a 10km radius – Productora, Cortadera and San Antonio – which have a combined mineral resource estimate of 725 million tonnes of measured and indicated resources grading 0.38 per cent copper for 2.75 million tonnes of the metal, 0.11 grams per tonne gold for 2.56 million ounces, silver grading at 0.45g/t for 10.5 million ounces and also 67,400 tonnes of molybdenum.
Late last year, management reduced its 2024 option payments by US$10 million (AU$15.3 million) after renegotiating a previous agreement for its El Fuego landholdings adjacent to its Costa Fuego copper-gold project in Chile.
Once exercised, the new deal will increase the company’s ownership of the tenements from 90 per cent up to 100 per cent and will extend the option expiry date to 2026, in exchange for aggregate payments of US$4.3 million (AU$6.58 million) over three years.
The company had three options due to be exercised next year for El Fuego, which would have cost the explorer US$11 million (AU$16.8 million). However, the latest agreement gives its subsidiary Sociedad Minera La Frontera a 100 per cent interest in EL Fuego through a US$300,000 (AU$459,000) payment that has already been made, two payments of US$1 million (AU$1.53 million) due in September next year and then again in 2025 and US$2 million (AU$3.06 million) set for September 2026.
Just last month, Hot Chili kicked-off a 30,000m diamond drilling campaign at Costa Fuego to target seven large-scale copper prospects ahead of an expected mineral resource upgrade. The company says it has started double shifts as it drills for more copper-gold nearby its already massive Cortadera and Productora mineral resources.
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