Hot Chili (ASX: HCH) has inked an option agreement to buy 100 per cent of the historic La Verde copper mine in Chile, adding more land to its Domekyo concessions which it picked up earlier in the year.
The company says the move to connect the two sets of leases will consolidate and provide access to a much bigger potential porphyry copper deposit covering 1.68 square kilometres, 30km south of its flagship Costa Fuego copper project.
La Verde, which is in the centre of Domekyo - an area spanning 141 square kilometres - hosts 800m of strike, mainly from old open pit workings by prospectors looking for shallow porphyry copper oxide. The pits are just 15m deep and up to 200m wide in places, leaving plenty of exploration upside at depth. Historic drilling of the surrounding area has been very limited while the mining area itself has barely been touched.
The deal gives Hot Chili the option to buy 100 per cent of the La Verde concession and involves the total payment of US$8.89 million (AU$13.47 million) as a series of non-refundable cash payments across three years to local owner SLM Los Dominiceros una de la Sierra Los Chiquerosmade.
Starting with an upfront payment of US$320,000 (AU$485,000) to kick off the deal, the company must then stump up an additional US$680,000 (AU$1.03 million) within the first year and another US$1,000,000 (AU$1.5 million) by the second year. If Hot Chili then decides to go all-in, it can fully acquire La Verde within 36 months by making a final payment of US$6,890,000 (AU$10.44 million).
Since April, the company has been running a series of exploration exercises across the Domekyo region including soil sampling, mapping and magnetic surveys. The work has also specifically stretched onto to the La Verde copper mine area as part of due diligence prior to signing the latest option agreement.
Geological mapping of the outcrops in the open pit has revealed copper oxide mineralisation tied to porphyry-style quartz veins, fractures and faults, similar to its Cortadera deposit 30 km north.
The company has been provided with access to historic data generated by Hudbay Minerals which conducted a reverse circulation and diamond drilling campaign in the nearby area to trace La Verde’s mineralisation beyond the original lease.
A new 4,000-metre drilling program has already fired up at site. Two holes have been completed with early signs indicating extensive porphyry-style copper deposits, although assay results are still pending.
Hot Chili is additionally conducting a water supply business case study for its core Costa Fuego copper project in the Huasco Valley. The study has now been fast-tracked and is expected to be handed down at the same time as the prefeasibility study on the Costa Fuego project itself in the first quarter of 2025.
The water supply case study revolves around providing sea water to the project in the first instance followed by developing up a more extensive network of desalinated water supply to other mines and the local community.
Costa Fuego is a huge porphyry project, hosting 2.9 million tonnes of copper, 2.6 million ounces of gold, 12.8 million ounces of silver and 68,000 tonnes of molybdenum.
With $25.7 million in the bank as at the end of the September quarter, the company is well set up to keep moving forward. Not only is the water supply business model starting to take shape, but the prefeasibility study will also land in the next few months.
Coupled with busying the drill rig across the newly optioned ground at La Verde and the wider Domekyo, the company has plenty of irons in the fire as it bids to become a tier one copper producer in South America.
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