Hot Chili firms up majority ownership of Productora and Cortadera
Following a $40 million capital raising earlier this month,
Hot Chili (ASX: HCH) has firmed up its majority ownership of Productora by
removing Compañia Minera del Pacifica’s (CMP) option to purchase an additional
interest in the project.
CMP secured a 20% stake in Productora back in May 2015 in
exchange for providing critical infrastructure access rights including water
pipeline and electricity easements and electricity.
As part of this CMP paid Hot Chili US$1.5 million which gave
it an option to purchase an extra 32% stake in Productora for between US$80
million and US$110 million.
Hot Chili has elected to repay the US$1.5 million option fee
to secure its 80% ownership of the project and remove CMP’s option to purchase
the additional 32%.
Costa Fuego copper project
Productora is part of Hot Chili’s wider Costa Fuego copper
project in Chile and is 10km from the project’s other primary deposit
Cortadera.
Costa Fuego has a resource of 724Mt at 0.48% copper
equivalent for 2.9Mt copper, 2.7Moz gold, 9.9Moz silver and 64,000t of
molybdenum.
Within that resource, Productora contributes 273Mt at 0.52%
copper equivalent for 1.2Mt copper, 800,000oz gold and 36,000t molybdenum,
while Cortadera accounts for 451Mt at 0.46% copper equivalent for 1.7Mt copper,
1.9Moz gold, 9.9Moz silver and 27,000t molybdenum.
The deposits are close to Chile’s Pan American Highway.
Strongly supported equity raising
Earlier this month, Hot Chili undertook a $40 million
raising which saw one of the world’s largest miners Glencore as a cornerstone investor.
The major miner bought up $14.4 million-worth of Hot Chili
shares to scoop up a 9.99% equity.
Making up the $40 million raising was a $35 million private
placement and a $5 million share purchase plan.
The share purchase plan was closed early after the company
received subscriptions for more than $10 million-worth of shares.
Almost 20% of Hot Chili’s existing shareholders applied to
participate in the share purchase.
Cementing ownership
As well as securing its 80% ownership of Productora, Hot Chili
is using proceeds from the raising to make a final acquisition payment for
Cortadera.
A US$15 million payment will give Hot Chili full ownership
of the deposit.
A major resource upgrade is due for Cortadera in the
December quarter.
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