Hot Chili Secures US$15m Non-Dilutive Royalty Funding for La Verde

Hot Chili (ASX: HCH) has secured an additional US$15 million in non-dilutive funding from OR Royalties Inc after adding the La Verde project to the royalty footprint covering its broader Costa Fuego copper-gold project in Chile.

The binding amended and restated investment agreement lifts total royalty consideration under the OR arrangement to US$30m, following the original US$15m Costa Fuego royalty agreement completed in 2023.

Hot Chili will direct proceeds toward the advancement of La Verde and the wider Costa Fuego development hub, with closing expected this month subject to customary conditions.

The new funding follows A$40m in equity capital raised in February and strengthens Hot Chili’s funding position ahead of ongoing drilling, a maiden La Verde resource, and a revised Costa Fuego pre-feasibility study.

La Verde Added to Footprint

La Verde has been added to OR’s royalty footprint while still at pre-resource stage, giving Hot Chili a third-party valuation signal for an asset that has not yet been formally quantified.

OR’s original royalty investment in 2023 was secured against Costa Fuego when the project had a published preliminary economic assessment underpinned by a 725-million-tonne indicated resource.

Costa Fuego’s resource has since increased to 798Mt at 0.45% copper equivalent, forming the basis of the March 2025 pre-feasibility study.

Hot Chili considers OR’s further US$15m commitment to be a strong endorsement of La Verde’s district-scale exploration and resource potential within the broader Costa Fuego production hub.

Royalty Terms Updated

The amended agreement extends the existing net smelter return (NSR) royalty to include La Verde, while leaving the core royalty structure otherwise unchanged.

The royalty covers 1% of payable copper production and 3% of payable gold production from the project, equivalent to a 1.12% copper equivalent NSR royalty across payable metals.

Hot Chili retains a change-of-control buyback right before the fourth anniversary of the original royalty closing, allowing the royalty to be reduced to 0.5% NSR on copper and 2.5% NSR on gold.

OR will also retain a right of first offer over any future royalty, stream, or similar interest sold by Hot Chili.

Costa Fuego Hub Advances

Costa Fuego comprises a large copper-gold resource base in Chile’s Huasco Valley, with mineral resources combining the Cortadera, Productora, Alice, and San Antonio deposits.

The project’s total indicated resource contains 3.62Mt of copper equivalent, including 2.91Mt of copper, 2.64 million ounces of gold, 12.8Moz of silver, and 68,100 tonnes of molybdenum.

La Verde, which sits south of the main Costa Fuego resource area, has been positioned as a copper-gold discovery capable of adding growth to the planned production hub.

Hot Chili expects to use the added funding to continue advancing La Verde while maintaining momentum across the broader Costa Fuego development pathway.

Scale Opportunity Highlighted

Managing director Christian Easterday said OR’s decision to expand the royalty arrangement highlighted the scale opportunity at La Verde.

“When OR first invested in Costa Fuego in 2023, they were backing Hot Chili with a published PEA and a 725Mt Indicated resource base,” Mr Easterday said.

“This time, they are committing another US$15m to a pre-resource deposit, which speaks directly to the scale of what we see at La Verde and the potential impact it has for our future Costa Fuego copper-gold production hub.”

“This transaction achieves two things simultaneously: it funds the advancement of La Verde without share dilution; and it gives the market a credible third-party datapoint on the value of an asset that has yet to be formally quantified.”

Hot Chili currently has three drill rigs operating at La Verde as it works toward a maiden mineral resource estimate for the deposit, with a revised pre-feasibility study for Costa Fuego also planned.