Hot Chili Unveils Pre-Feasibility Study Highlights for Costa Fuego
Hot Chili Limited Announces Pre-Feasibility Study Overview
Hot Chili Limited (OTCQX: HHLKF) is excited to share the results of its recent Pre-Feasibility Study (PFS) for the Costa Fuego copper-gold project. This comprehensive study follows the stringent guidelines laid out by NI 43-101, ensuring all data and projections are robust and credible.
Key Highlights of the PFS
The PFS reveals a strong financial outlook for the Costa Fuego Project:
- Project Longevity: The mine life has been extended to 20 years, enhancing the project's viability and importance.
- Increased Production Capacity: The average annual copper equivalent (CuEq) production is projected to reach 116 ktpa. This includes significant outputs of 95 kt of copper and 48 koz of gold within the initial 14-year production phase.
- Competitive Cost Structure: The estimated average C1 cash cost stands at US$1.38 per pound, with all-in-sustaining costs averaging US$1.85 per pound, after accounting for by-product contributions.
- Substantial Resource Generation: The total anticipated output over the mine's lifetime includes around 1.5 Mt of copper and 780 koz of gold.
- Strong Cash Flow Potential: The project is expected to generate roughly US$3.86 billion in free cash flow, post-tax.
- Risk Management: The PFS incorporates a rigorous risk approach, applying an additional US$442 million to mitigate key uncertainties, including fluctuations in project scope and inflationary pressures.
Economic Leverage to Copper Prices
With rising copper prices, the project's economics have substantial leverage:
- The PFS estimates a post-tax net present value (NPV8%) of US$1.2 billion, demonstrating a strong potential to increase to US$2.2 billion if current copper prices remain stable.
- The post-tax internal rate of return (IRR) is projected at 19%, with potential highs of 30% depending on market conditions.
Environmental and Permitting Advances
Positioned advantageously, Costa Fuego benefits from low elevation and significant permitting progress. The company is preparing to submit an Environmental Impact Assessment (EIA), marking a critical phase before commencing operations.
Initial Mineral Reserves
The maiden mineral reserve estimate for Costa Fuego indicates:
- Probable mineral reserves of 502 Mt at a grade of 0.37% copper, 0.10 g/t gold, 0.49 g/t silver, and 97 ppm molybdenum.
Opportunities for Scaling Up
Hot Chili is gearing up for further growth opportunities:
- Recent discoveries at La Verde Cu-Au porphyry could significantly enhance the project's scale.
- Plans for a new environmental impact assessment are underway to integrate La Verde into the Costa Fuego framework, potentially boosting project returns.
Mining and Processing Methods
Mining operations are set to employ both open-pit and underground block caving techniques, allowing for efficient ore extraction and processing:
- Oxide and sulphide materials will be processed using tailored methodologies designed for cost-effectiveness and yield maximization.
- The project is designed to process 20.7 Mtpa through its concentrator, optimizing recovery rates for copper and precious metals.
Growth Potential
The Costa Fuego project has been structured to capitalize on its preliminary successes and market conditions:
- The combination of established infrastructure and proximity to regional resources enhances operational feasibility and attractiveness to investors.
- Additional explorations in nearby tenements are poised to advance knowledge about regional resource potential.
Frequently Asked Questions
What is the Costa Fuego Project?
The Costa Fuego Project is a copper-gold project by Hot Chili Limited located at low elevation, featuring significant expected copper and gold production.
What are the key outputs of the Pre-Feasibility Study?
The PFS indicates a 20-year mine life and projected outputs of 1.5 Mt of copper and 780 koz of gold with a strong cash flow potential.
What is the expected capital cost for the project?
The start-up capital cost for the Costa Fuego Project is estimated to be approximately US$1.27 billion.
How does the project mitigate risks?
The PFS incorporates an additional US$442 million to address project risks associated with cost fluctuations and market variability.
What are the next steps for Hot Chili Limited?
Hot Chili plans to accelerate drilling at La Verde, submit the environmental impact assessment, and move towards a Definitive Feasibility Study.
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