Hot Chili Ltd.

Hot Chili Ltd. is a junior copper development company headquartered in Perth, Australia, operating primarily in South America. The company's portfolio consists of 1 development project. Key assets include Costa Fuego. The company's business model is centered on developing a large-scale project by leveraging significant, pre-existing infrastructure advantages, including proximity to power and major transport corridors. A key differentiator is the creation of a dedicated water subsidiary, which controls a granted maritime water concession and is being assessed as a potential standalone, multi-user water supply business. This approach of outsourcing and potentially monetizing critical infrastructure aims to reduce initial capital expenditure and provide project finance optionality. The operational plan incorporates both open pit and underground extraction methods feeding into a centralized processing facility. Development has focused on enhancing metallurgical processes, particularly for low-grade material. The business model is further de-risked through strategic agreements, including a Memorandum of Understanding with a nearby port to co-fund a feasibility study for bulk concentrate exports, positioning the entity as a potential foundation customer.

Strategic priorities are focused on a dual-track approach of advancing a core development project while actively pursuing regional consolidation and de-risking initiatives. The development roadmap is clearly defined, with milestones including a Pre-Feasibility Study targeted for completion by the end of 2024, an Environmental Impact Assessment in H1 2025, and a Definitive Feasibility Study in H1 2026. Growth is pursued through the acquisition of 100% interests in prospective landholdings via option agreements, all located within 30km of the planned processing hub, to build a pipeline of exploration targets. Capital allocation, bolstered by a recent A$31.9 million financing and a US$15 million royalty sale, is directed toward fast-tracking these studies and consolidation activities. A core element of the financial strategy involves evaluating the monetization of its water subsidiary, which could provide a significant, non-dilutive funding source for future development.

The board of directors consists of 5 members, including 2 independent directors, providing oversight through an Audit & Risk Committee, a Remuneration Committee, and an ESG & Nomination Committee. Executive leadership is spearheaded by a founding Managing Director, a geologist with over 20 years of experience in resource development and mineral economics. The board is led by an independent Chairman with over 29 years of experience as a geologist across the technical, corporate, and investment banking sectors. The company's governance and leadership philosophy are demonstrated through its executive remuneration framework, which is designed to attract and retain key personnel. The framework includes long-term incentive plans with performance rights tied to specific, measurable hurdles, including safety performance measured by LTIFR, relative shareholder return against a peer group, absolute share price growth, and increases in the mineral resource base.

The company's sustainability approach is governed at the board level through a dedicated ESG Committee, with a formal ESG Framework currently being finalized. Social performance is rooted in over a decade of community engagement, which is integrated into the development process. Specific initiatives include supporting local economic development through employment and procurement, providing direct aid such as water tanks and solar panels, and supporting two local orphanages. The organization also partners with a university-affiliated institution to deliver regional mental health counseling services. A program of early citizen participation ensures consultation with stakeholders, including Indigenous communities. Environmental stewardship is highlighted by a water strategy focused on using a maritime concession for seawater to preserve scarce continental water resources. Occupational health and safety are managed via an integrated policy and action plan, with performance monitored through the Lost Time Incident Frequency Rate.

The entity's primary operational activities are conducted through an 80% owned subsidiary, Sociedad Minera El Águila SpA, which is a joint venture with Compañía Minera del Pacífico S.A. (CMP) holding the remaining 20%. In 2024, this partnership was expanded with the formation of a new subsidiary, Aguas para El Huasco SpA, under the same 80/20 ownership structure to hold and develop strategic water assets. Major shareholders include Glencore, which holds a 7.56% interest. In July 2023, the company secured a US$15 million investment from Osisko Gold Royalties in exchange for a net smelter return royalty. The corporate structure is being expanded through regional consolidation, including recent option agreements to acquire 100% of the Cometa, Marsellesa, Cordillera, and Domeyko landholdings. In 2024, three previous option agreements were restructured into a single new option, extending the exercise term to 2026.